Chapter 2 introduces fundamental concepts of healthcare quality measurement or provider profiling, including the appropriate level(s) of performance measure attribution (e.g., physician, department, hospital, and system); cross-sectional versus longitudinal analyses; single (univariate) versus multiple (multivariate) endpoints; and commensurate (similar scales) versus non-commensurate (different scales) measures. The concept of “quality” as an unobservable latent variable reflecting provider performance is discussed, as well as our preference for hierarchical models to estimate quality. Examples are provided including hospital-specific, short-term mortality following coronary artery bypass grafting surgery; longitudinal, hospital-specific surgical mortality and morbidity (complications); hospital-specific process measures for pneumonia; and mental healthcare quality across service networks.