Public reporting of the quality of care delivered in hospitals and nursing homes is thought to foster improvements in care. When information is available, consumers may choose high-quality providers. That choice, in turn, may stimulate providers to improve quality as a way to attract a larger share of the market. However, these assumptions have gone largely untested. We examined short-stay care provided at 8,137 nursing homes after the Nursing Home Compare public reporting requirements went into effect in 2002. We found that quality improved both because consumers chose higher-quality nursing homes and because providers improved the care they delivered. These findings support the continued use of public reporting to improve quality.