A case-mix index is calculated by first choosing a period of time, such as a year. The hospital procedures should then be placed in diagnosis-related groups that the hospital billed, and the relative numeric weights should be gathered. Divide the sum of relative weights with the total diagnostic-related groups.
The case-mix index is a gauge of the comparative cost needed to treat a patient group in a hospital within a calendar year. A measure for one hospital may be compared with other hospitals in the same patient mix. An index of one indicates that it costs the national average amount of resources per patient to treat the hospital’s specific patient group. A hospital that performs higher cost or resource operations, such as neurosurgery or cardiac surgery, has a higher CMI compared with another that performs less costly care. For example, if hospital "A" has a CMI of 1 and hospital "B" has a CMI of 2, a patient group in hospital B will cost twice as much to treat as the same group in hospital A.
Hospitals also use CMI to budget for fiscal periods. Differences in financial predictions and the actual CMI can cause revenue shortfalls for a hospital. A drop in the measure could indicate a decline in surgical or medical volumes.