Richard L. Clarke, DHA, FHFMA

In health care today, a mission that focuses only on quality is only half a mission.

Providing high-quality care is a key aspect of the mission for most healthcare organizations. And high-quality care is critical to patients and their families. But a mission based solely on high-quality care misses an important aspect of today's economic and political environment. That issue is cost. In today's environment, healthcare leaders must focus on quality and cost-in other words, they must focus on value.

Value is defined as the relationship of quality to cost. High quality at inappropriately high cost does not produce value. Likewise, low quality at low cost also does not produce value. Relentlessly driving toward both high quality and low cost is what produces value. Given our current environment, it is critical for healthcare organizations to make achieving value a key strategy.

In the past, high cost was assumed to indicate high quality. Conversely, low cost was thought to indicate low quality. When consumers were shielded from the economic consequences of their choices, opting for apparent high quality and high cost was acceptable. Of course, in the past, it was very difficult to discern either cost or quality given the lack of transparency and dependable, consumer-friendly sources of this information.

Now, however, data on both quality and cost are becoming more widely available, and the link between high cost and high quality is being questioned. As Commonwealth Fund President Karen Davis points out in this issue of hfm, "Despite having the most costly health system in the world, the United States consistently underperforms on most dimensions of performance compared with other industrialized countries." As a result, policymakers are increasingly looking for ways to pay for health services that will drive value through the system, including what Davis calls "widespread and explicit rewards for results." The current economic crisis has only intensified purchasers' desire to control the costs of care.

This issue of hfm describes several cost management strategies, including process improvement, benchmarking, spending transparency, and cross-discipline collaboration. Cost reduction in tandem with quality improvement, however, must be more than a strategy-it must be a component of mission.

A mission to produce the highest quality at the lowest cost possible demonstrates a focus on value. A high-value provider of services
recognizes that quality, while important, is not sufficient to create a sustainable healthcare organization. Value is the key. And purchasers (government, employers, payers, and consumers) will insist on it.

Publication Date: Wednesday, April 01, 2009

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