A consortium of cardiac surgeons, nurses, and administrators in Virginia has developed a clinical/financial database to identify sites with best outcomes and replicate best practices statewide. The financial value of quality improvements is estimated from the incremental savings gained by reducing postoperative complications. The group studied 7,417 coronary artery bypass graft cases in 2003-2004. The average costs of atrial fibrillation, stroke, mediastinitis, renal failure, reoperation for bleeding, and prolonged use of ventilation were measured using charge data and ratios of costs-to-charges. Costs ranged from 18,093 US dollars to 28,136 US dollars in eight hospitals. Lower-cost hospitals had lower standardized mortality ratios. Average total costs were 19,049 US dollars for cases with no complications. Cases with postoperative atrial fibrillation were 21,415 US dollars, an incremental cost of 2,366 US dollars (p<0.0001), and reached 54,671 US dollars for mediastinitis (deep sternal wound infections) and 57,360 US dollars for renal failure. Overall, 16.1% of 5,230 coronary artery bypass graft patients developed atrial fibrillation in 2003. Incidence ranged from <5% to nearly 30% across 14 hospitals. Reducing the incidence of complications by small fractions can yield significant savings. Paying for performance may lead to more comparative analysis, peer-to-peer collaboration, and new approaches to quality improvement and efficiency measurement.