The Greek Ministry of Health has announced a significant reform planned for 2026: the transition of private hospitals from the current system of Closed Consolidated Hospitalizations (KEN) to Diagnosis Related Groups (DRGs).
This ambitious shift aims to modernize hospital reimbursement by linking payments more closely to the nature and complexity of medical cases, rather than a fixed pricing scheme.
While DRGs are widely used in many healthcare systems around the world and are associated with increased transparency and cost efficiency, the upcoming reform presents several practical, financial, and operational challenges for private hospitals in Greece.
Budgetary Constraints and the Burden of VAT
One of the primary concerns revolves around the already limited budget that the National Organization for the Provision of Health Services (EOPYY) allocates to private hospitals.
Unlike public hospitals, private healthcare providers rely on predictable and sufficient reimbursements to manage their operations and investments. Yet, the EOPYY budget remains limited and, more critically, includes a 24% Value Added Tax (VAT).
This inclusion of VAT means that nearly a quarter of the payment a private hospital receives for services rendered returns to the state in the form of taxes, severely limiting the effective revenue.
The Challenge of Doctor Training in a Compressed Timeline
Transitioning to DRG reimbursement demands significant changes in medical coding practices, documentation, and data reporting. Physicians play a central role in accurately recording diagnoses, treatments, and patient outcomes, each of which directly affects the classification and reimbursement under DRGs.
However, most doctors affiliated with private hospitals in Greece are independent contractors or external collaborators.
These professionals often split their time across institutions and may lack both the time and motivation to undertake intensive training on DRG methodologies.
Expecting widespread training and adaptation within a limited time frame is unrealistic, especially without a structured and incentivized national training initiative. Inadequate preparation raises the risk of improper or incomplete coding, leading to suboptimal reimbursement.
Adapting IT Systems: A Costly and Complex Undertaking
In addition to human resource challenges, private hospitals must also make necessary adaptations to their information systems. DRGs rely on precise and standardized data collection, processing, and reporting, which require hospital information systems that are fully integrated and interoperable with EOPYY’s platforms.
Such an adaptation represents a major undertaking for hospitals, many of which are still recovering from the financial strain of the pandemic and years of economic instability. For smaller institutions, the cost and complexity of this transformation could be prohibitive without a phased implementation.
Suboptimal-Coding and the Risk of Revenue Loss
With the introduction of DRGs, reimbursement will depend on the specific grouping assigned to each hospitalization. This, in turn, hinges on the accuracy and detail of medical coding.
Inexperienced staff or insufficient training can result in “sub-coding,” where a case is classified under a less complex, and therefore of lower reimbursement group than is justified.
This risk is particularly significant during the early stages of DRG implementation, when providers are still learning the system. Even unintentional underreporting can cause severe financial shortfalls, particularly when compounded across hundreds or thousands of patient cases.
Minimum Hospitalization Days: A Disincentive for Efficiency?
Adding to financial uncertainty is the proposed minimum length of stay requirement for several DRG categories. Although intended to ensure thorough treatment and discourage premature discharges, this measure could have counterproductive effects on private hospitals.
Many private facilities, especially those emphasizing efficiency and patient-centered care, pride themselves on delivering high-quality outcomes with shorter hospital stays. Under the new system, these same hospitals may be penalized for early discharges, even when they are clinically appropriate—if they fall below the specified minimum days.
The result is a system that disincentivizes innovation and operational efficiency, rewarding longer (and potentially unnecessary) stays instead.
Disruption of Financial Planning and Operational Stability
Collectively, these issues threaten to upend the budgeting and strategic planning of private hospitals. Facilities that have built their financial models around the predictability of the KEN system now face a volatile environment where revenues depend on complex coding rules, IT capabilities, and bureaucratic interpretations.
Without a phased approach, many institutions may find themselves facing substantial losses.
Conclusion: Reform with Real Risks
The transition to DRGs in Greece’s private healthcare sector is a bold reform aimed at modernizing reimbursement practices and aligning incentives with outcomes. However, the success of such a transformation hinge on adequate preparation, clear communication, and meaningful support from the state.
For this transition to be successful, the Ministry of Health must consider extending the implementation timeline, and support IT upgrades offering comprehensive training programs, and revisiting several of the minimum hospitalization requirements.
Without these safeguards, the 2026 DRG implementation could not only fail to deliver its intended benefits but it may destabilize a vital part of Greece’s healthcare system.
