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Objective: In Korea, the Value Incentive Program (VIP) was first applied to selected clinical conditions in 2007 to evaluate the performance of medical institutes. We examined whether the condition-specific performance of the VIP resulted in measurable improvement in quality of care and in reduced medical costs.Design: Population-based retrospective observational study.Setting: We used two data set including the results of quality assessment and hospitalization data from National Health Claim data from 2011 to 2014.Participants: Participants who were admitted to the hospital for obstetrics and gynecology were included. A total of 535 289 hospitalizations were included in our analysis.Methods: We used a generalized estimating equation (GEE) model to identify associations between the quality assessment and length of stay (LOS). A GEE model based on a gamma distribution was used to evaluate medical cost. The Poisson regression analysis was used to evaluate readmission.Main Outcome Measures: The outcome variables included LOS, medical costs and readmission within 30 days.Results: Higher condition-specific performance by VIP participants was associated with shorter LOSs, decreases in medical cost, and lower within 30-day readmission rates for target and non-target surgeries. LOS and readmission within 30 days were different by change in quality assessment at each medical institute.Conclusions: Our findings contribute to the body of evidence used by policy-makers for expansion and development of the VIP. The study revealed the positive effects of quality assessment on quality of care. To reduce the between-institute quality gap, alternative strategies are needed for medical institutes that had low performance. [ABSTRACT FROM AUTHOR]