Systems Concepts – Part 3: Quality Cost and Value

This vlog post is the third in a series about the concept of systems. Quality is important, but it’s not the only dimension of system performance. This post explores the relationships between quality, cost and value and how that applies to systems of care. (Duration – 6:02)

Notes and Resources

  • Related article:  Gunderson M: The EMS Value Quotient: Looking at the Combined Effects of Costs and Quality. Journal of Emergency Medical Services (JEMS). March 2009. (Last visited 2018-Jan-18). NOTE: This article took a slightly different approach to the calculation by using the survival rate as a fraction (e.g.,  0.50) rather than a percentage (e.g., 50%). However, the principle remains the same. This shows why a standardized approach and definitions are needed.
  • Originally posted: January 2018


Every medical condition has an associated ‘system’ that delivers care. For a given condition, the systems of care in different communities or regions have tremendous variation in both clinical outcomes and cost. As you watch this post, I’d like you to think about is how well the systems of care for various high-risk time-sensitive conditions in your community or region perform in terms of both outcomes –and- cost. How effective is your system of care, for out-of-hospital cardiac arrest as an example, in resolving the acute clinical condition and returning the patient to their pre-event health status? How efficiently is the system of care in using its finite resources to produce those clinical results? We need to think about both of these dimensions – the quality of care as expressed in outcomes as well as what it costs to get those outcomes.

The combined impact of quality and cost is called value. Value is getting a lot more attention lately as we seek to improve the overall healthcare system here in the US. Other countries are grappling with many of the same challenges.

Some systems of care are very effective in treating a condition but are not very efficient. In other words, they get a good clinical outcome compared to other similar communities, but at a much higher cost. Some are very efficient, but they are not very effective. In other words, they have a low cost but do not provide good clinical outcomes. Here is the key point. The best systems of care do both. They have great clinical outcomes and do so at a low cost. Unfortunately, this is relatively rare. But, those systems that get great outcomes at a low cost are the best ones to study and benchmark.

So let’s consider a specific type of system of care. The archetype for high-risk time-sensitive conditions is out-of-hospital cardiac arrest. There is an international consensus standard for how survival rates from out-of-hospital cardiac arrest are measured. The most often used metric from that standard is for cases with an arrest of presumed cardiac origin, with a witnessed onset, and presenting in a shockable rhythm when a defibrillator is first applied. The top-performing out-of-hospital cardiac arrest systems of care consistently get survival to hospital discharge rates in the 50-60% range. But what did it cost to get those results?

Cost of care calculations on individual cases can be quite complex. However, one way to consider at least the EMS phase of care is the total cost per capita that is spent on the EMS system in the community. Suppose that we have two communities with a 50% out-of-hospital cardiac arrest survival rate using the parameters I mentioned earlier.

In one community, the annual cost per capita for the EMS system is $100. To quantify the value calculation, we use the value equation with the quality figure in the numerator – which would be the survival rate as a percentage – and the cost figure in the denominator – which would be the annual cost per capita in dollars. That gives us 50 over 100, which gives us a value quotient of 0.50.

In the other community, they also have the 50% survival rate, but they operate more efficiently with a cost per capita for their EMS system of only $75. With 50 in the numerator and 75 in the denominator, we get a much higher value quotient of .67. They are doing as just as well clinically, but with much better efficiency. This is better performing system, yet the cost and value dimensions are not often considered by most observers.

These sort of value considerations are becoming an increasingly important factor in healthcare system policy. As the shift continues to take place from fee-for-service payment to alternative payment models using methods ranging from bundled payments to full capitation, our systems of care will be instrumental in making improvements in quality outcomes, cost efficiencies, and overall value.

So even if you have the best parts, and connect them all together well, you might not have the cost efficiency needed to provide the best value. The best of the best will do well in both quality and cost – which brings the highest levels of value. The pursuit of value is something we are all going to hear about more and more as our overall healthcare systems evolve. The healthcare industry has a long road ahead in developing standardized cost metrics to complement our standardized quality metrics. We need both to objectively measure value. Why is that so important? Because you can’t effectively improve what you can’t effectively measure – and we need to measure and improve quality, cost, and value across the entire system of care.