Objective:The paper attempts to explore refined management pathways for the disease group structure of public hospitals under DIP payment, develop a regional classification management tool for disease groups, and provide an evidence-based reference for decision-making. Methods:Based on two consecutive years of DIP settlement and medical charge data in S City, a four-quadrant disease matrix was constructed using DIP-CMI and average balance per case as core indicators. Disease groups were categorized into strategic, advantageous, problematic, and special groups. Their distribution characteristics, resource consumption, and annual evolution trends were comparatively analyzed. Results:During the study period, the overall distribution of surplus and deficit diseases in S City was relatively balanced, with the number of overspending diseases slightly exceeding that of profitable ones. Matrix analysis shows that the current disease structure is dominated by advantageous and problematic diseases, while strategic and special diseases have relatively small admission volumes. Longitudinal tracking indicates that the city’s disease structure is continuously optimizing towards a more rational and balanced direction: the proportion of cases in the profitable range is steadily increasing, the concentration of inefficient problematic diseases has been effectively reduced, and the overspending loss magnitude of high-difficulty special diseases has been substantially narrowed. Conclusion:Public hospitals in S City are in a critical transition period from scale expansion to intensive development. Hospital administrators are advised to adopt matrix thinking and implement differentiated strategies—specifically to "strengthen strategic groups, stabilize advantageous groups, remediate problematic groups, and mitigate special groups"—to drive high-quality hospital development.