The authors examined the issue of learning by doing in terms of both the cost and outcome of treating coronary artery disease at one hospital between 1977 and 1981. Over time, the quality of outcome improved for both medical and surgical patients. During this time of cost-plus reimbursement, there was less conclusive evidence of concurrent technical efficiency gains. These findings are consistent with the hypothesis that the benefits of experience can be substantial but they do not just happen: they require proper provider motivation.