This article presents an integrative model of the relations among health status, quality of care, and resource expenditure. It defines medical care quality in terms of outcomes, measured as the expected improvements in health status attributable to care. The consideration of how quality so defined is affected by the unconstrained, efficient use of resources for care leads to the specification of the absolutist definition of quality. Consideration of the incidence of individual and external costs and benefits of care provides the basis for distinguishing further between the individualized definition of quality, which depends upon individual preferences and ability to pay, and the social definition of quality, which includes consideration of external benefits, full social definition of quality, which includes consideration of external benefits, full social costs, and preferences for the distribution of welfare. An additional distinction is made between clinical efficiency and production efficiency. This article examines in detail the implications, for the selection of optimal strategies of care, of the three definitions of quality (absolutist, individualized, and social) and the two types of efficiency (clinical and production).