In today’s environment, many within the healthcare field view the success of a health system based on size. However, health system size is a very incomplete measure of performance. While the number of hospitals, number of physicians, number of covered lives and geographic reach are often used as indicators of success, these aggregate measures can hide variation in quality and population health across local markets. A large health system may perform exceptionally well in some communities while underperforming in others, yet still be perceived as “successful” due to its scale.
Policymakers, purchasers, employers, patients and regulators typically focus on quality, access, affordability, outcomes and value. Nevertheless, size and growth continue to receive substantial attention in strategic discussions among health system leaders and boards, often serving as shorthand indicators of organizational strength and influence.
A more meaningful definition of success is needed. I propose that health system performance be defined by three dimensions measured at the local level:
- Quality
- Population health
- Improvement over time
The prevailing measures of success in healthcare are system-centric. A more meaningful framework would disaggregate, then aggregate, success of local, community-level measures of quality and health outcomes and thus be more patient- or community-centric.
The limits of size as a measure of success
Health system size has become a convenient shorthand for success. Larger systems are assumed to be more resilient, more efficient and more capable of investing in innovation. Scale can indeed confer advantages, such as purchasing power, access to capital, shared services and the ability to absorb risk.
Importantly, size is not the only metric traditionally associated with success. Financial performance, measured by operating margin, days cash on hand, credit ratings and long-term sustainability, has long been used by boards, lenders and executives to assess organizational performance. These measures remain essential because health systems cannot fulfill their missions without financial viability. However, financial strength should be viewed as an enabling capability rather than the ultimate objective of a health system.
However, when success is defined primarily by size and growth, strategic focus shifts toward expansion, through acquisitions, new markets and broader networks. This “going wide” approach can dilute attention from performance at the local level. In contrast, redefining success around local outcomes encourages organizations to “go deep” and invest in frontline care, leadership and community health where care is delivered.
Healthcare is local: A microsystem perspective
Healthcare is inherently local. Patients receive care in specific facilities, interact with local clinicians, and live within distinct social and environmental contexts. As described in the foundational work of Nelson, Batalden and colleagues, outcomes are produced within microsystems, which are the small, functional units where patients and care teams interact.
Evaluating performance at the aggregate health system level masks variation across these microsystems. A more rigorous approach is to assess how many local markets achieve high performance, and how many are improving.
For example, is a system with 10 high-performing markets and five underperforming ones more successful than a system with six markets where all perform at a high level? Traditional metrics favor the former; a local-performance framework would favor the latter.
A framework for measuring success
To operationalize this concept, I propose the following Health System Success Index.
| Quality | Result |
| Percent of hospitals with Leapfrog Safety Grade “A” or greater than or equal to 4 CMS stars | Percent A |
| Percent of hospitals in the top quartile nationally for patient experience on the overall question | Percent B |
| Percent of sites with ED wait time from arrival to discharge home in the top quartile nationally | Percent C |
| Percent of local markets where a chronic disease target is met for at least 80% of all the patients (e.g., HbA1c less than 9 or blood pressure less than 140/90) | Percent D |
| Percent of local markets where there is a significant reduction in a disparity in one quality measure | Percent E |
| 2. Population health | Result |
| Percent of counties in a local market with life expectancy higher than state average (from the county health rankings) | Percent F |
| Percent of counties in a local market with infant mortality lower than the state average (from the county health rankings) | Percent G |
| Percent of counties where primary care access (number of primary care physicians per capita from county health rankings) is greater than the national average | Percent H |
| Percent of counties where a preventive measure (such as vaccination rates) is greater than the state average | Percent I |
| 3. Improvement over time | Result |
| Percent of markets demonstrating year-over-year improvement in at least four of the nine above measures | Percent J |
Health System Success Index equals percent sum of A through J divided by 10
In the above formula, each row is weighted equally. With further discussion, weights can be altered, as well as the measures. It is also clear that health systems are more than general acute care hospitals and physician groups. Health systems have post-acute care facilities, home health, housing and numerous other healthcare and health related entities. They all play a factor in quality and population health. The key is to start with the above framework to begin a greater dialogue regarding how to measure health system success.
Measuring success at the community level presents important methodological challenges. First, community outcomes are influenced by demographic, socioeconomic, behavioral and environmental factors that are difficult to fully account for. Second, attribution remains challenging. Community health outcomes are rarely produced by a single health system. Public health agencies, employers, schools, community organizations, insurers and competing providers all contribute to population health. Third, public policy can significantly influence outcomes. Medicaid expansion, minimum wage laws, housing policies, transportation infrastructure, public health investments and other social policies often affect health outcomes independent of health system performance. These challenges should not discourage measurement of community outcomes. Rather, they reinforce the importance of using multiple measures, assessing performance over time, and emphasizing improvement in addition to absolute performance levels.
The index is intended as a conceptual framework rather than a finalized measurement system. The specific measures, thresholds and weighting methodology should be refined through discussion among health system leaders, policymakers, employers, researchers and patients. Future versions could incorporate affordability, access, workforce stability, financial sustainability and other dimensions of performance.
Strategy and investment follow measurement
What organizations measure determines what they prioritize. If success is defined by size, strategy will prioritize expansion. If success is defined by local quality and health outcomes, strategy shifts toward:
- Strengthening frontline clinical teams
- Investing in data infrastructure at the point of care
- Building community partnerships
- Addressing social determinants of health
- Reducing unwarranted variation across sites
In this model, size, scale, and efficiency are not ends, but they are means to enable better local performance.
Size matters. Financial sustainability matters. Access matters. Quality matters. Health matters. Yet none alone fully captures whether a health system is fulfilling its mission. A more complete definition of success should evaluate whether a health system consistently delivers high-quality care, improves health outcomes and demonstrates measurable improvement across the communities it serves.
The proposed Health System Success Index is intended to complement, not replace, existing performance measures by bringing greater attention to local accountability and community-level results. Moving from macro to micro — from aggregate scale to local accountability — provides a more accurate, actionable and effective definition of health system success.
References
Nelson EC, Batalden PB, Huber TP, et al. “Microsystems in health care: Part 1. Learning from high-performing front-line clinical units.” The Joint Commission Journal on Quality and Patient Safety. 2002.
Maulik Joshi, DrPH, is the president and CEO of Hagerstown, Md.-based Meritus Health, and president and professor at Meritus School of Osteopathic Medicine.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.