Long Island Health Network developed a provider-initiated pay-for-performance (PI-PFP) program beginning in 2004 and operated by 10 clinically integrated hospitals. The PI-PFP administrative processes, length of stay, patient satisfaction, and Hospital Quality Alliance measures are elaborated. PI-PFP has evolved over time and supports best practice sharing. We document how the risk amount is determined and then allocated to the Network and the individual hospitals based on performance, and we quantify the success of the program in achieving the goal of improved performance. A PI-PFP can prepare physicians and management for pay-for-performance or value-based purchasing programs operated by payers. Being self-administered, such a program can go beyond payer-run programs to focus attention on issues that are considered important by the hospitals and medical staffs, and that may not be feasible to measure or to include in a mandatory payer-run program.