By collecting inpatient data of prostate cancer patients in tertiary hospitals in a specific region of Jiangsu province, this paper uses the difference-in-differences method to evaluate the impact of the diagnosis related group (DRG) policy on inpatient costs and healthcare service efficiency. Through the application of the degree of structural variation and grey relational analysis, it explores the dynamic changes in cost composition. A comparative analysis was conducted on the differences in inpatient costs, number of hospitalizations, and length of hospital stay of prostate cancer patients before and after the DRG payment policy to evaluate the regulatory effect of the policy on the consumption of medical resources by prostate cancer patients and provide data support for the optimization of the DRG policy. The results indicate that the implementation of the DRG payment reform has a significant impact on patients' drug costs, comprehensive medical service fees, diagnostic fees, treatment fees, and total costs. The Degree of Structural Variation (DSV) is 27.92%, and drug costs have the largest Variation in Structural Value (VSV) and Contribution to Structural Variation (CSV). Drug costs also rank first in the grey relational degree. Therefore, after the implementation of DRG, the inpatient cost structure for prostate cancer patients has become more balanced, and the DRG payment reform has achieved considerable success in controlling medical costs.