A New York Times article (April 13,2011) describes a study doe by the VA hospital to screen patients for MRSA, require use gloves and gowns and hand washing by care providers.   The study reported a 62 % drop in infections and 45 % drop in MRSA.  The study reports annual infection cost of $ 28 to $ 34 billion.  In short, attention to hygiene detail can significantly decrease costs.  This realization has the potential to cause government agencies to levy penalties for patient infections and refuse payment for re-admissions.  How should hospitals be incented to take steps that decrease costs ? Will a “stick” based policy result in the required procedural changes or could it cause the intended impact of less competition for care for more fragile patients  ? What other approaches align the interests of hospitals and patients ?