Therefore, the framework proposed in this paper might be expected to measure and assess healthcare performance more comprehensively from diversified contributing factors to healthcare outcomes. Indicators in the PSF category may be “formative” elements which lead to changes in the values of latent conditions, while those in the healthcare outcome category may work as “reflective” variables which are the results of the changes in the latent conditions. This formative–reflective distinction will help us provide useful implications for creating improvement actions or initiatives, e.g., particular PSF indicators can produce an action plan for improving a problem that can be identified by healthcare outcome indicators. However, an isolated view of hospital performance by a single indicator may possibly lead to wrong interpretation of the current status ,and therefore one should carefully assess the hospital performance by integrating the indicators in both the PSF and the healthcare outcome categories, considering their inter-relationships for a particular phenomenon or problem.