Developing a Measure of Value in Health Care

There is broad support to pay for value, rather than volume, for health care in the United States. Despite the support, practical approaches for measuring value remain elusive. Value is commonly defined as quality divided by costs, where quality reflects patient outcomes and costs are the total costs for providing care, whether these be costs related to an episode, a diagnosis, or per capita. Academicians have proposed a conceptual approach to measure value, in which we measure outcomes important to patients and costs using time-driven activity-based costing. This approach is conceptually sound, but has significant practical challenges. In our commentary, we describe how health care can use existing quality measures and cost accounting data to measure value. Although not perfect, we believe this approach is practical, valid, and scalable and can establish the foundation for future work in this area.