BACKGROUND: Outpatient healthcare organisations worldwide participate in quality improvement (QI) programmes. Despite the importance of understanding the financial impact of such programmes, there are no established standard methods for empirically assessing QI programme costs and their consequences for small outpatient healthcare organisations. Objective and METHODS: The costs and cost consequences were evaluated for a diabetes QI programme implemented throughout the USA in federally qualified community health centres. For five case study centres, survey instruments and methods for data analysis were developed. RESULTS: Two types of cost/revenue were evaluated. Direct costs/revenues, such as personnel time, items purchased and grants received, were evaluated using self-administered surveys. Cost/revenue consequences, which were cost/revenue changes that may have occurred due to changes in patient utilisation or physician behaviour, were evaluated using electronic billing data. Other methods for evaluating cost/revenue consequences if electronic billing data are not available are also discussed. CONCLUSION: This paper describes a practical taxonomy and method for assessing the costs and revenues of QI programmes for outpatient organisations. Results of such analyses will be useful for healthcare organisations implementing QI programmes and also for policy makers designing incentives for QI participation.