Exploring the ethical concerns of diagnosis related group system in healthcare

The Diagnosis-Related Group (DRG) system is widely used in healthcare financing to help standardize hospital reimbursement and control cost. However, its implementation gives rise to ethical concerns which includes undertreatment of patients, financial driven medical decision making and disparities of healthcare access. This study examines the ethical concerns associated with DRG system by comparing its application in Australia, Germany, the USA and Malaysia. Through a comparative analysis, the research identifies the key ethical concerns and evaluates how each countries adapted their DRG models to mitigate to these concerns. Findings indicate while Australia and Germany have incorporated quality-based incentives in order to reduce ethical risks, the USA faces ongoing criticism for cost-containment strategies that compromises patient care. Malaysia, a developing adopter of DRG struggles with implementation consistency and resource limitations. Based on these insights, the study proposes recommendations to enhance the ethical integrity of this DRG system, consisting of the integration of patient-centred care incentives, improved transparency in reimbursement models and stronger regulatory oversight. Addressing these ethical concerns can help healthcare policymakers to further refine the DRG frameworks to ensure a balance between financial efficiency and equitable, high-quality patient care. This research further contributes to the ongoing discourse on ethical healthcare financing and offers practical strategies for improving DRG implementation in diverse healthcare settings.