DRG winners and losers affect profits under prospective payment.

Medicare's patient classification system, DRGs, has built-in inequities in the payment rates that cause DRG "winners" and "losers." The effect of these winners and losers on hospital profits and on health care and medical practice can be important. Therefore, hospitals must be aware of the discrepancies in the DRG rates, and the definitions of the DRGs themselves, to effectively evaluate physician performance and make better business decisions.