The literature on continuous quality improvement (CQI) has produced some evidence, based on nonrandomized studies, that its clinical application can improve outcomes of care while reducing costs. Its effectiveness is enhanced by a nucleus of physician involvement, individual practitioner feedback, and a supportive organizational culture. The few randomized studies, however, suggest no impact of CQI on clinical outcomes and no evidence to date of organization-wide improvement in clinical performance. Further, most studies address misuse issues and avoid examining overuse or underuse of services. The clinical application of CQI is more likely to have a pervasive impact when it takes place within a supportive regulatory and competitive environment, when it is aligned with financial incentives, and when it is under the direction of an organizational leadership that is committed to integrating all aspects of the work.