Optimizing adaptation of TCM hospitals under the C-DRG: a dynamic compensation model analysis

With rising healthcare costs, controlling expenses while improving service quality is crucial in global healthcare reform. The C-DRG medical insurance payment system aims to optimize resource allocation and control costs by classifying diseases and setting fixed payments. However, it faces challenges in adapting to Traditional Chinese Medicine (TCM) hospitals, particularly due to the conflict between the personalized nature of TCM treatments and standardized payment requirements. This study focuses on 12 TCM hospitals in W city participating in the C-DRG system. The entropy weight TOPSIS method is used to construct a dynamic service weight calibration model to assess the multidimensional adaptability of TCM hospitals. By analyzing cost structures and profit‒loss balances, the study reveals the “TCM participation intensity‒payment adjustment‒compensation effect” mechanism and develops a compensation model based on hospitalization expense data. Surgery fees, drug costs, and examination fees are the main drivers, while TCM medicine and technology fees have less impact. The compensation model shows that after payment standards are adjusted for TCM-advantaged C-DRG groups, 24 groups with continuous profits align with precompensation, and the average loss of 164 loss-making groups decreases by 25.83%, with 26 groups reversing profit and loss. The overall compensation compliance rate reaches 89.4%. This study highlights the adaptation challenges of TCM hospitals within the C-DRG system, especially regarding cost structure and treatment duration. By employing a dynamic compensation model, the study provides decision support for scientific quantification of TCM-specific payment standards, offering empirical evidence for optimizing the payment system and balancing healthcare quality improvement with cost control.