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Accounting Principles and Measuring Health Care Quality

Dev Jayaraman, MD, FRCP; Howard Rivenson, PhD
JAMA. 2008;299(7):764-765. doi:10.1001/jama.299.7.764-a
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To the Editor: In their Commentary, Dr Pronovost and colleagues1 discussed generally accepted accounting principles (GAAP) and quality measurement. Although we agree that a standardized reporting system using GAAP as a model is a good idea in theory, there are several cautionary lessons from a relatively simple system like accounting to keep in mind when compared with the complexities of quality assurance measurements in medicine.

Information conveyed in external reports may lack detail required by internal reports, and vice versa. Therefore, the level of detail to be included in a GAAP-style report must be specified for either external or internal audiences. It is not unusual for basic financial statements that consist of a balance sheet, income statement, statement of changes in equity, and statement of cash flows (often 4 pages) to be followed by a footnote section that can be more than 20 pages long.2 Companies may also have to comply with several external standards that differ from GAAP, such as one for the Securities and Exchange Commission and another for Medicare.3 Even in accounting, where the data are relatively straightforward, there are lively debates about the superiority of GAAP vs the International Accounting Standards used outside of the United States and Canada4 5 ; a similar trans-Atlantic debate about performance indicators for medicine would likely be even more contentious.

The demands of substantive relevance and timeliness are likely to be harder to satisfy in medicine than in finance because technology and treatments change rapidly. Therefore, a GAAP-style system for medicine has to be relatively flexible and responsive. The information must also be reliable and comparable between sites and therefore must involve building consensus, similar to the process for GAAP, because a potential major pitfall of a standardized reporting system is the ability to misrepresent under the veil of standardization. Finally, to set up a verification system, detailed cost-benefit and cost-effectiveness analyses would be necessary to avoid causing net harm by pulling limited resources away from other opportunities.

AUTHOR INFORMATION

Financial Disclosures: None reported.

REFERENCES

Pronovost PJ, Miller M, Wachter RM. The GAAP in quality measurement and reporting.  JAMA. 2007;298(15):1800-1802
PubMedCrossRef
Zelman WN, McCue MJ, Millikan AR, Glick ND. Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts, and Applications. Malden, MA: Blackwell Publishing; 2003:37-74
Kane NM, Magnus SM. The Medicare Cost Report and the limits of hospital accountability: improving financial accounting data.  J Health Polit Policy Law. 2001;26(1):81-106
PubMedCrossRef
Bullen HG, Crook K. Revisiting the concepts: a new conceptual framework project. http://www.fasb.org/project/communications_paper.pdf. Accessed January 15, 2008
Ding Y, Jeanjean T, Stoloway H. Why do National GAAP differ from IAS? the role of culture.  Int J Account. 2005;40325-350
CrossRef

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Pronovost PJ, Miller M, Wachter RM. The GAAP in quality measurement and reporting.  JAMA. 2007;298(15):1800-1802
PubMedCrossRef
Zelman WN, McCue MJ, Millikan AR, Glick ND. Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts, and Applications. Malden, MA: Blackwell Publishing; 2003:37-74
Kane NM, Magnus SM. The Medicare Cost Report and the limits of hospital accountability: improving financial accounting data.  J Health Polit Policy Law. 2001;26(1):81-106
PubMedCrossRef
Bullen HG, Crook K. Revisiting the concepts: a new conceptual framework project. http://www.fasb.org/project/communications_paper.pdf. Accessed January 15, 2008
Ding Y, Jeanjean T, Stoloway H. Why do National GAAP differ from IAS? the role of culture.  Int J Account. 2005;40325-350
CrossRef
February 20, 2008
Peter J. Pronovost, MD, PhD; Marlene Miller, MD, MSc; Robert M. Wachter, PhD
JAMA. 2008;299(7):764-765.
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