The Value Quotient: Looking at the combined effects of quality & cost - Administration and Leadership - @

The Value Quotient: Looking at the combined effects of quality & cost


Mic Gunderson | From the March 2009 Issue | Wednesday, March 11, 2009

Stewardship is a fundamental role of EMS administrators. The community may provide funding through taxes and user fees, or it may grant permission to an organization to be their EMS provider. Regardless, the community has entrusted the EMS organization with a responsibility to make the best use of resources to serve the needs of the community.

To use resources wisely, an administrator must consider both quality and cost. In terms of quality, the community expects EMS organizations to meet the needs of patients and other stakeholders. In terms of cost, the community expects EMS organizations to effectively use the financial resources it has been granted (through taxes, user fees, memberships, grants, etc.).

The community isn_t well served when high-quality care is being provided at an inappropriately high cost. The worst scenario is low-quality care at an inappropriately high cost. From the community_s standpoint, the ideal scenario is high-quality care at a low cost.

The Value Equation

Fortunately, there_s a concrete way for administrators to measure their success in meeting community expectations. The combined effects of quality and cost are referred to as "value" and can be expressed quantitatively as the "value quotient."

Making better use of resources causes value to increase. This can be accomplished by:

>Increasing quality at the same cost;

>Decreasing cost at the same quality; or

>Implementing any combined change in quality and cost that has a net increase in value.

For example, consider the need of the patient who has experienced an episode of sudden cardiac arrest. Their primary need is successful resuscitation that restores their pre-episodic levels of physical and mental function. A community gives its EMS system stewardship of resources to meet this need. Quality in this case could be expressed as the percentage of patients who survive the episode and return to their pre-arrest status.

Cost could be expressed as the cost per capita spent in the community to provide the EMS capability for resuscitation services. Imagine a community in which $25 is spent per capita each year in tax subsidies, third-party payments and user fees for EMS. Their rate of survival to hospital discharge for prehospital cardiac arrest cases is 10%. This specific system is providing a value quotient of .004 (.10/25).

Now, consider another community that also has a 10% survival rate but spends only $12.50 annually per capita on EMS. That would be .10/12.5, which results in a value quotient of .008ƒdouble that of the first community.

Which Manager Are You?

Some managers and organizations focus on increasing quality (the numerator) to increase value. These "numerator managers" might ask for additional funding each year for more ambulances or rescue vehicles, more training, more equipment, more technology, more salary or more anythingƒthinking these things might improve any of their organization_s measures of quality. Although quality may improve, it does so with higher costs. The potential increase in the value quotient from the higher level of quality may be partially or completely offset by the increases in cost.

Other managers focus on decreasing cost (the denominator) to increase value. These "denominator managers" try to cut costs wherever they can, short of violating any contractual obligations or regulations. The potential increase in the value from these cost cuts may be partially or completely offset by resulting decreases in quality.

The best managers consider the combined effects of quality and cost on the value that their systems and processes provide. This can be accomplished in many different ways, but the quality, cost and value indicators should be applied consistently so that changes can be evaluated over time.

The Total Package

Most performance indicators used by EMS systems are focused on quality. Given the importance of stewardship and accountability, cost indicators should be added to the mix. The quality and cost indicators should then be appropriately merged to yield value indicators. The best EMS administrators will develop ways to look at the performance of their systems and processes from the perspective of costs, quality and value.

More information on value quotients is available

Mic Gunderson is the president of Integral Performance Solutionsƒa firm that has specialized in system and process design, assessment, education and improvement in EMS, fire and 9-1-1 communications. Mic also serves as a member of the online adjunct faculty for the master_s in Emergency Health Services program at University of Maryland, Baltimore County, and was a section editor for the new NAEMSP textbook, EMS and Disaster Medicine: Clinical Practice and Systems Oversight. Contact him

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Related Topics: Administration and Leadership, Operations and Protcols, Jems Features

Mic GundersonMic Gunderson is the president of Integral Performance Solutions and a member of the online adjunct faculty for the master’s in Emergency Health Services program at University of Maryland, Baltimore County. Contact him at


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