The public sector value (PSV) framework appropriates tenets of the private
sectors method of evaluating shareholder value, applies them to government
organizations in order to determine the value they create for citizens and evaluates
how the maximum benefits from investments in health-related technologies can
Definition of PSV
As part of a major research program to identify the characteristics of high-performance
businesses and governments, it became clear that a way to identify high performance
in the public sector was needed. To address this need, a more holistic approach
to measuring value was developed. Designed to work in conjunction with existing
performance measures, and flexible enough to be applied globally, the PSV model
is a disciplined approach to defining public sector outcomes and quantifying
results (see Figure 1).
PSV involves a rigorous approach for measuring and driving value. It uses a
quantitative methodology to define an agencys intended results and outcomes,
which are a combination of strategic goals and stakeholder expectations. A structured
and balanced framework quantifies results by linking achievement of objectives
In the current political environment, governments must allocate scarce resources
in order to perform more services. The PSV mindset requires an agency to prioritize
goals by assigning weights to targeted factors in its organization. Historical
performance trends are analyzed to establish a baseline. Future performance
is then projected from the baseline.
Agencies can make decisions by comparing their performance results from year
to year, learning from historical performance, evaluating trade-offs and understanding
the impacts that investment decisions will have on their overall performance.
PSV reinforces a good governance mindset that continually balances outcomes
and cost and enables policy and budget decision making grounded in a metrics-based
Using PSV to Evaluate Investments in Healthcare
The public sector traditionally has evaluated discrete operational process
measures with incomparable units, such as changes in satisfaction levels. The
day-to-day operational perspective in a single agency department provides a
limited snapshot that may give a false sense of agencywide performance. PSV
evaluates how well a government agency is able to attain its objective in delivering
healthcare by aggregating multiple outcome-driven, agencywide metrics to assess
the overall value the agencys care creates for citizens its stakeholders.
It pinpoints areas within the healthcare agency which indicate underperformance
in healthcare cost, effectiveness and efficiency. The tool enables comprehensive
benchmarking and decision making, by allowing agencies to compare care methods
and performance over time within themselves as well as with peer organizations.
Results of such an analysis can be used in multiple ways, including, for example,
to provide justification for targeted and detailed budget requests to legislatures.
A state Medicaid agency preparing to testify regarding a budget request can,
for example, use the PSV framework first to decide how to allocate its scarce
resources, then to create details for its state Medicaid performance story in
order to legitimize its request to the legislature. Agencies have also explored
PSV as a decision-making tool for project approvals and continual resource allocation.
PSV Metrics and Analyses
A typical PSV analysis includes the following five steps:
- Developing an agency outcome model and selecting metrics;
- Assigning weights to the factors involved;
- Calculating the overall outcome score;
- Calculating the cost-effectiveness score; and
- Analyzing results and developing recommendations.
PSV requires that an agency determine the end results they want to deliver
to key internal and external stakeholders. This often entails defining and delineating
the objectives or raison detre, in as quantitative and measurable a manner
as possible. The next step is to prioritize objectives and identify raw metrics
for determining successful achievement of this raison detre. Finally, the raw
metrics must be filtered through multiple screens of feasibility and validity
to decide which will drive results most effectively, and which are most critical
to include in aggregate measures.
Developing PSV analyses requires close collaboration of PSVtrained practitioners
with the agency in question. Assigning quantitative value or measures to health-associated
measures is always challenging. However, general objectives such as improving
the quality of healthcare are too broad and vague to measure and the goal
of PSV is to get the agency to a stage such that it is able to measure performance
and value delivered. An intense workshop-style forum is often required to determine
the agencys key goals and desired outcomes and then drill down into sub-outcomes,
metrics and sub-metrics to determine how to measure those agency outcomes.While
most goverment health agencies have similar goals, priorities may differ as
may availability of metrics and information.
To measure outcomes, a large pool of eligible metrics is often explored. This
may include industry best practices and currently tracked data. However, many
health organizations have many metrics, or metrics that are too general, irrelevant
or vague for use. Metrics are thus passed through two filters: a) the intentions
filter; and b) the feasibility filter.
The intentions filter locates metrics that are outcome-focused, customer-focused,
measurable and actionable; and
The feasibility filter determines the metrics that are affordable to measure,
aligned to resources, comprehensive and meaningful.
Once metrics have been determined, it is critical to weight them. The weighting
exercise is telling in requiring agencies to prioritize key areas according
to availability and quality of data as well as importance to mission.
For example, a state Medicaid agency can use PSV to rank desired outcomes that
increase program results and cost-effectiveness. Its outcomes can be illustrated
along with the respective weights assigned to each according to the filtering
method described above. The agency can filter metrics over four years to create
a PSV analysis that shows its performance over time (see Figure 2).
Results of a PSV analysis can be demonstrated graphically. Outcomes are graphed
on one axis, cost-effectiveness on another and a trend line is drawn to indicate
performance. Movements in different directions indicate where the agency has
either under or over-performed with respect to its own average performance over
time (see Figure 3).
When such an analysis is complemented by qualitative information on key investments
and key policy directions, it tells a powerful story regarding an agencys performance
and direction over time. An agency can thus use such analysis to justify its
budget, spending decisions and policy decisions going forward.
For one specific agency for which a PSV was conducted, analysis indicated that
outcomes improved despite the overall reduction in adjusted cost per enrollee.
The story the agency chief was able to tell was compelling, indicating ability
to use technology effectively to increase revenue and customer service, maintaining
enrollment in Medicaid and improving utilization of preventive care, such as
prenatal care and community carebased services, has improved, while slowing
utilization of inpatient hospital services.
PSV Use for EHR
EHR can have an integral relationship with PSV. Government agencies can use
PSV to evaluate, prioritize and justify investments in clinical information
technology and development of EHR systems. Conversely EHR can also be used to
support PSV analyses, since it is an outstanding tool for measuring care performance
and values. As a method for delivering records effectively and efficiently,
EHR is an important factor in the public agencys process and overall outcomes.
EHR gathers data about the agencys stakeholders to effectively provide seasoned
case management, which aids in the mission of effective and efficient governance.
It minimizes an agencys administrative burdens by reducing the time spent to
gather and input the stakeholders data and allowing management to focus on
the more critical task of maximizing effective utilization of those data.
EHR improves patient safety, but healthcare agencies must first determine
what the phrase ultimately means to their organizations. Does it mean ensuring
drugs are prescribed appropriately, the right diagnostic tests are performed,
patients requiring care from specialists see them promptly? The agency must
define the phrase on its own terms, and then develop its patient safety metrics
and expected outcomes so that they can be integrated within the PSV framework
for credible and quantitative results.
Multiple countries and localities are adopting EHR, but because their purposes
and methods of use vary due to different objectives and values, EHR design must
also be modified to reflect multiple systems. PSV can be used to quantify the
different data and specifics from locale to locale, and its overall framework
need not be altered to produce targeted results and outcomes. An important key
to success for this issue occurs in initial meetings with public sector clients,
when they must determine their priorities and outcomes objectives.
Many public agencies must make major decisions in healthcare policy and spending
on a regular basis, and they must subject those decisions to detailed scrutiny
by government legislatures. Rigorous examination of EHR usage is also to be
expected by officials. If an agency invests in EHR, how can it justify that
decision unless it shows that EHR has improved care performance and by how much?
Traditional methods used by healthcare agencies are inefficient for drawing
correlations. Granular metrics are needed to produce graphs showing how outcomes
and costs have changed over time. Those must be supplemented with qualitative
and historical information, which the PSV framework provides.
Key for Success
A critical factor in successful PSV usage is the involvement of the key stakeholders
from all departments participating in the process. These include administrators,
IT departments, nurses and physicians, who must be given the opportunity to
offer opinions about desired outcomes, factor weighting and metrics. Decisions
must not be made in a vacuum; otherwise, stakeholders will reject utilization
PSV provides government agencies with a credible tool for determining if performance
is improving or deteriorating over time, and pinpointing areas within the organizations
that are underperforming. Results offer a high-level perspective on how agencies
compare to their peers in benchmarking analyses. How they compare to their own
average and best performance can provide justification for budget requests to
federal, state and local legislatures, and can be used to inform policy direction
and decisions in the long term.
As the current economic climate in the public sector increases pressure on
time and resources, agencies can use PSV to determine how to allocate their
resources for patient care more effectively and efficiently. At the same time,
EHR is an integral part of PSV, because its data-gathering procedures are an
important factor that drives the public sector in its quest to achieve an overall
effective healthcare model.