As policy makers design national programs aimed at managing the quality and costs of health care, it is important to understand the potential impact on minority and poor patients and the hospitals that provide most of their care. We analyzed a range of hospital data and assigned hospitals to various categories, including “best”—high-quality, low-cost institutions—and “worst”—where quality is low and costs high. We found that the “worst” hospitals—typically small public or for-profit institutions in the South—care for double the proportion (15 percent versus 7 percent) of elderly black patients as the “best” hospitals—typically nonprofit institutions in the Northeast. Similarly, elderly Hispanic and Medicaid patients accounted for 1 percent and 15 percent, respectively, of the patient population at the best hospitals, while at the worst hospitals, these groups represented 4 percent and 23 percent of the patients. Patients with acute myocardial infarction at the worst hospitals had 7–10 percent higher odds of death compared to patients with those conditions admitted to the best hospitals. Our findings have important implications for Medicare’s forthcoming value-based purchasing program. The worst institutions in particular will have to improve on both costs and quality to avoid incurring financial penalties and exacerbating disparities in care.