Abstract Background China is exploring payment reform methods for patients to address the escalating issue of increasing medical costs. While most district hospitals were still in the stage of Single Disease Payment (SDP) due to conditions, there is a scarcity of research on comprehensive assessment of SDP. This study aims to evaluate the implementation of SDP in a district hospital, and provided data support and scientific reference for improving SDP method and accelerating medical insurance payment reform at district hospitals. Methods Data was collected from 2337 inpatient medical records at a district hospital in Fuzhou, China from 2016 to 2021. These diagnoses principally included type 2 diabetes, planned cesarean sections, and lacunar infarction. Structural variation analysis was conducted to examine changes in the internal cost structure and dynamic shifts in medical expenses for both the insured (treatment group) and uninsured (control group) patients, pre- and post-implementation of the SDP policy on August 1, 2018. The difference-in-differences (DID) method was employed to assess changes in hospitalization expenses and quality indicators pre- and post-implementation. Furthermore, subjective evaluation of medical quality was enhanced through questionnaire surveys with 181 patients and 138 medical staff members. Results The implementation of SDP decreased the medical expenses decreased significantly (P