Value-based cost management: the foundation of a balanced performance measurement system

Healthcare organizations need critical performance measures if they are to lead, manage, and operate effectively. Traditional financial measures or report cards on patient satisfaction and clinical outcomes are insufficient, however. Value-based cost management directly links cost accounting, processes, clinical outcomes, and patient and employee satisfaction through organizational, work environment, and financial relations measures. These measures address three levels of performance: strategic, diagnostic, and operational. Their linkages identify value in three areas: business-related financial and operational measures; employee-related measures such as those related to satisfaction and well-being; and learning and patient-related measures linked to clinical outcomes, satisfaction, and population.