This Health Affairs article explores the effect of performance-based incentives through interviews of hospital leaders and unit nurses in 25 hospitals in 2008. Interviewees expressed favorable impressions of the impact that incentive policies have on quality and safety, but raised concerns about the policies' effects on the nurse workforce, given current hospital staffing levels, work environment, salaries, and turnover. We recommend that policy makers invest in implementation support, redesign hospital incentives to reward teamwork, and involve nursing leaders in the design of future incentive policies.