Guoxin Pharmaceutical's opinion:
1) The Regional Point Method Total Budget and Payment by Disease Type (DIP) are powerful additions to CHS-DRGs. Payment by disease type is a disease type (DIP) point payment technical specification based on big data. The disease type is directly formed from a natural combination of the main diagnosis and associated surgical operations, and the total medical insurance budget is combined with the point method to achieve a diversified complex payment method based on DIP for hospitalization. Compared to CHS-DRGs, the difficulty of implementing DIP payments will be reduced, the schedule will be accelerated, and the scope of the pilot is expected to expand. Domestic health insurance payments are undergoing a period of historical transformation from “quantity of services” to “payment by quality of service” and “by value of service”.
2) Interpretation of the key points of the DIP policy document: from an incremental game to an inventory game, and hospitals will not be able to predict the allocation of health insurance funds; each region will extract disease catalogues based on case data from the previous three years, form each city's own score catalogue, and include all hospitalized cases; funds are earmarked for one month and promoted hierarchical diagnosis and treatment by changing the adjustment factors of hospitals at various levels; building data centers to integrate national data to lay the foundation for subsequent national implementation.
3) Judging from the historical experience of some domestic markets and overseas, the implementation of DRGs will achieve precise cost control and control the growth of health insurance spending. Jinhua City in Zhejiang Province fully implemented the medical insurance “disease group point method” payment reform in 2018 to achieve full coverage of inpatient medical institutions throughout the city. In 3 years of implementation, expenses for more than 400 hospital groups fell or remained flat every year, accounting for more than 80%. In 1983, the US used DRGs to pay for Medicare, and Hungary, Italy, Australia, etc. followed suit, and the coverage rate of DRGs hospitals in most European and American countries reached 100%.
4) Analysis of the impact of major events: The main theme is short-term fee control and price reduction, which will have a profound impact on the pharmaceutical industry in the medium to long term. DRGs is a prepaid system. Whether it's CHS-DRG or DIP, it changes the original “by quantity of services” to “by quality of service/value” service. When the total amount is fixed, drugs and tests will become the hospital's cost center. Hospitals have strong initiative and external pressure to reduce the amount of medication prescribed and tested. However, potential demand in the medical field is eternal. Regardless of the introduction of any policies, the current various policies are squeezing out unreasonable diagnosis and treatment within the medical system in the past. The structure of the domestic pharmaceutical industry is in a large cycle of industrial upgrading and import substitution. As the quality of domestic brands continues to improve, breakthroughs have been achieved in various fields. Looking at the medium to long term, the implementation of DRGs will greatly facilitate the substitution of imports by Chinese products in various main industrial lines. Furthermore, by analyzing the sales system, we believe that a sea of stars in the valuation level of pharmaceutical companies must look forward to overseas exports, and that companies that have established overseas direct sales capabilities are expected to become “the first crab-eaters.”
5) Investment suggestions: The DRGs pilot will be further expanded to grasp the three main lines of pharmaceutical investment. The launch of the DIP pilot is a powerful complement to DRGs, which will further regulate the domestic medical environment and medical insurance expenditure structure, and have a profound impact on the entire pharmaceutical industry chain. Grasp the three main investment lines: 1.
High-quality innovation with global competitiveness in the pharmaceutical industry, focusing on enterprises that have established overseas direct sales channels; 2.
“DRGS-free”: varieties with strong consumer attributes, ICL sector that benefits from detecting outflows, IVD sector that benefits from import substitution, core upstream resources (raw materials and equipment, patented APIs); 3.
Medium- to long-term development of the medical service circuit. It is recommended to buy Hengrui Pharmaceutical, Fosun Pharmaceutical (02196), Mindray Medical, Lepu Medical, Dian Diagnosis, Capp Biology, Changchun Hi-Tech, Berry Gene, and Aer Ophthalmology; Hong Kong stocks recommend buying China Biopharmaceuticals, Xianjian Technology, and Fuhong Hanlin (02696).