# Adaptability research on lean management under medical insurance payment reform: threshold effect of DRG/DIP reform intensity and operational efficiency of traditional Chinese medicine hospitals

## TL;DR

This study examines how changes in medical insurance payment methods affect the efficiency of traditional Chinese medicine hospitals, finding a threshold effect and proposing adaptive policies.

## Contribution

The study introduces a three-dimensional adaptive model and dual-threshold monitoring system for TCM hospital payment reforms.

## Key findings

- An efficiency inflection point exists for reform intensity, affecting 85% of disease types.
- Lean management mediation effect increases to 58.5% when TCM service proportion exceeds 25.1%.
- A differentiated policy framework is proposed to balance cost control and TCM inheritance.

## Abstract

Against the backdrop of deepening reforms in medical insurance payment methods, traditional Chinese medicine (TCM) hospitals face structural contradictions between cost control pressures and the inheritance of distinctive features. This study focuses on the nonlinear impact of the intensity of Diagnosis-Related Groups (DRG)/Diagnosis-Related Prospective Payment (DIP) reforms on the operational efficiency of tertiary public TCM hospitals. It innovatively constructs a triple-level econometric model system: revealing the inverted U-shaped relationship between reform intensity and efficiency through a fixed-effects model, identifying the critical threshold of TCM service proportion using a panel threshold model, and analyzing the transmission mechanism of lean management through a mediation effect model. Based on panel data from 10 sample hospitals spanning 2019–2022, the core findings are as follows: (1) For the first time, empirical evidence verifies the existence of an efficiency inflection point for reform intensity, covering 85% of disease types—below this threshold, standardized rules improve efficiency, while beyond it, efficiency declines due to the exclusion of distinctive TCM services; (2) It innovatively discovers a dual threshold effect for the proportion of TCM services, with the mediation effect of lean management significantly enhancing to 58.5% after surpassing the critical value of 25.1%, thus transforming reform pressure into efficiency momentum; (3) A model adjusting for the intensity of medical insurance-driven reforms is constructed, revealing the structural enhancement of reform sensitivity in regions with high medical insurance expenditure proportions. The study proposes a differentiated policy framework: hospitals with a TCM service proportion exceeding 25% implement a dynamic floating mechanism for payment coefficients (with a maximum increase of 20%), and establish dual-track assessments for clinical pathway implementation rates and cost accounting accuracy; hospitals in the transition period are provided with a reform transition period and subsidies for supporting lean management capacity building. The theoretical breakthrough of this study lies in constructing an “intensity-capability-management” three-dimensional adaptive model for TCM hospital payment reforms, while its practical value lies in proposing a dual-threshold monitoring and early warning system, providing empirical evidence to resolve the paradox between cost control goals and the inheritance of TCM.