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DRGs Explained: The Payment System Every Healthcare Accountant Must Know

Corey Philip
July 30, 2025
1 min read
YouTube video

Learn more about our Healthcare Accounting & Finance CPE Series

Transcript:

What most accountants don’t realize is that hospitals don’t get paid for every service they provide. Under Medicare, in-patient care is reimbursed using DRGs—Diagnosis-Related Groups. Each DRG assigns a flat payment based on the diagnosis and severity. So whether a patient stays 2 days or 5, the hospital gets the same amount. That changes the whole game for finance. If care costs more than the DRG pays? The hospital eats the loss. If it costs less? That’s margin. As an accountant, this impacts budgeting, cost control, revenue forecasting, and even how departments are evaluated. DRGs are one of the core building blocks of healthcare finance. We explain how it all works in Wisdify’s Healthcare Accounting and Finance series—Nasba-accredited, and packed with the industry-specific skills you actually need


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Corey Philip

Corey Philip

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Corey

Corey is the owner of Wisdify.  He is passionate about learning and development, he loves helping people achieve their professional and personal goals. Corey is a big believer in the power of online learning and community with 15 years of finance and accounting experience.

Joe

Joe is the owner of Wisdify.  He is passionate about learning and development, he loves helping people achieve their professional and personal goals. Joe is a big believer in the power of online learning and community with 20 years of finance and accounting experience.

 

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Kelsey earned a BA in Economics and Mathematics from Wellesley College.

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Madison earned a BA in English from Brigham Young University.

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Maryn earned a BA in Economics from Wellesley College.

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