Current marketplace incentives and financing systems do not, in general, predictably and systematically reward higher quality. This project will focus on areas of health care where significant misalignment exists between business and quality improvement incentives. National experts representing providers, purchasers, insurers, and patients will describe and analyze how current financing and incentive systems affect the flow of resources into quality improvement. A series of six case studies will highlight the relationship between business imperatives and quality improvement. Project staff will also produce policy recom- mendations for restructuring payment systems along more rational lines. Finally, work will begin on the design of a local demonstration project that will incorporate the proposed changes. If successful, this effort could lead to a future demonstration project on a national level. The Institute for Healthcare Improvement will provide cofunding for the project.