Objective. To examine the association between the scope of quality improvement (QI) implementation in hospitals and hospital performance on selected indicators of clinical quality. Data Sources. Secondary data from 1997 mailed survey of hospital QI practices, Medicare Inpatient Database, American Hospital Association's Annual Survey of Hospitals, the Bureau of Health Professions' Area Resource File, and two proprietary data sets compiled by Solucient Inc. containing data on managed care penetration and hospital financial performance. Study Design. Cross-sectional study of 1,784 community hospitals to assess relationship between QI implementation approach and six hospital-level quality indicators. Data Collection/Abstraction Methods. Moreover, as much as one-third of some hospital procedures expose patients to risks without improving their health; one-third of drugs prescribed are not indicated; and one-third of laboratory tests showing abnormal results do not get followed up by clinicians (Dubois and Brook 1988;Brook et al. 1990;Leape 1994; Institute of Medicine 2000).Many believe that quality improvement (QI) represents a promising strategy for improving hospital quality of care. QI is a systemic approach to planning and implementing continuous improvement in performance. QI emphasizes continuous examination and improvement of work processes by teams of organizational members trained in basic statistical techniques and problem solving tools and empowered to make decisions based on their analysis of the data. The systemic focus of QI complements a growing recognition in the field that the quality of the care delivered by clinicians depends substantially on the performance capability of the organizational systems in which they work. While individual clinician competence remains important, many increasingly see the capability of organizational systems to prevent errors, coordinate care among settings and practitioners, and ensure that relevant, accurate information is available when needed as critical elements in providing high quality care (Institute of Medicine 2000). Reflecting the growing emphasis on organizational systems of care, the Joint Commission on Accreditation of Healthcare Organizations, the National Committee for Quality Assurance, and the Peer Review Organizations of the Centers for Medicare and Medicaid have all encouraged hospitals to use QI methods.Although QI holds promise for improving quality of care, hospitals that adopt QI often struggle with its implementation (Shortell, Bennett, and Byck 1998). By implementation, we refer to the transition period, following a decision to adopt a new idea or practice, when intended users put that new idea or practice into use--for example, when clinical and nonclinical staff begin applying QI principles and practices to improve clinical care processes ( et al. 2004). In addition, the systemic nature of many quality problems implies that the effectiveness of a QI initiative may depend on its implementation across many conditions, disciplines, and departme...