This chapter argues that issues relate in greater or lesser ways to the grouping of patient episodes for the purposes of prevention, diagnostic assessment, care and support. The criteria used in the development of these classifications of episodes of care have been summarized by Fetter and his colleagues who identified four key characteristics to be included in the design, and these have been generally accepted as the model for subsequent developments. The trial application of Diagnosis Related Groups (DRGs) in England occurred first in 1982/83, but was more systematically applied in the Resource Management Programme in 1988/89. This application involved collaboration with clinical directors, who accepted the general purpose of DRGs, but were unhappy with the clinical meaningfulness of the DRGs in English clinical practice. Activity-based resource groups depend upon the concept that there are consistent patterns of activity within a treatment episode. Episodes of hospital care can be fairly readily standardized, since the start and end point are clear.