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There is evidence that collaborations between hospitals and physicians in particular regions of the country have led to improvements in the quality of care. Even so, there have not been many of these collaborations. We review one, the Michigan regional collaborative improvement program, which was paid for by a large private insurer, has yielded improvements for a range of clinical conditions, and has reduced costs in several important areas. In general and vascular surgery alone, complications from surgery dropped almost 2.6 percent among participating Michigan hospitals-a change that translates into 2,500 fewer Michigan patients with surgical complications each year. Estimated annual savings from this one collaborative are approximately $20 million, far exceeding the cost of administering the program. Regional collaborative improvement programs should become increasingly attractive to hospitals and physicians, as well as to national policy makers, as they seek to improve health care quality and reduce costs.