The purpose of study is to demonstrate the approaches and procedures of establishing department-specific key performance indicators in the healthcare industries. First, the importance of the functional department, total quality management activities, and organizational maintenance and improvement activities to the department-specific daily activities was emphasized. Secondly, the ten procedures of establishing key performance indicators and the twelve steps of indicator formation process were specifically introduced. Finally, an empirical experience of using key performance indicators in daily management activities in a regional teaching hospital in central Taiwan was provided. Readers of this article were expected to gain fundamental knowledge about the key performance indicators.