Abstract
How do we judge the intrinsic quality of an organization using data from its
multiple subordinate units, each being evaluated on multiple measures? In this
research, we first show that using simple averages may lead to several traps.
Then we propose a hierarchical framework to evaluate the overall quality of an
organization.
We apply our framework in evaluating the operational quality of US hospitals. We use a recently available public database containing the compliance outcomes of a set of best-practice procedures for treating three conditions (heart attack, heart failure, and pneumonia) for all major US hospitals. Finally with the obtained quality ranking of all hospital, we answer the question: are better-quality hospitals more profitable?