I think it's best to think of this as an overextended metaphor, rather than a clumsy attempt to provide a rigorous relationship. The message to take away from this 'equation' is:
* more appropriateness means more quality; * better outcomes means more quality; * better service means more quality; * less waste means more quality.
It's a small minority of people who give a shit about mathematics. The children who used to whine about, 'When are we every going to use this?' grow up to be adults who complain about not having learnt about how to complete their tax returns at school.
The equation above is an aide de memoire for people managing healthcare facilities. It's irrelevant to people who understand that it's an abuse of mathematical ideas.
The 'Fixing mathiness' section, however, is very good. This article is from a survey company, so this is about increasing the validity of the results you get from their product, but it speaks to the problem of inappropriate statistical methods being used to manufacture signals from noise.