Background: Proposed changes to financing of teaching hospitals and new quality-based performance incentives may differentially impact the financial health of teaching and safety-net institutions. Few data have examined the potential impact of these financial changes on teaching institutions. Objectives: To determine the association of hospital teaching intensity with processes and outcomes of care for the most common inpatient diagnoses in the United States. Research Design: Cross-sectional analysis of the 2008 Hospital Quality Alliance and 2007 American Hospital Association databases, adjusted for hospital characteristics. Subjects: A total of 2418 hospitals distributed across the country with available data on teaching intensity (resident-to-bed ratio), quality-of-care process measures, and risk-adjusted readmission and mortality rates for acute myocardial infarction (AMI), congestive heart failure (CHF), and pneumonia. Measures: Hospital-level quality-of-care process indicators and 30-day risk-adjusted readmission and mortality rates for AMI, CHF, and pneumonia. Results: Multivariable analysis demonstrates that all hospitals perform uniformly well on quality-of-care process measures for AMI, CHF, and pneumonia. However, when compared with nonteaching hospitals, increasing hospital teaching intensity is significantly associated with improved risk-adjusted mortality for AMI and CHF, but higher risk-adjusted readmission rates for all 3 conditions. Among high teaching intensity hospitals, those with larger Medicaid populations (safety-net institutions) had particularly high readmission rates for AMI and CHF. Conclusions: In this nationally representative evaluation, we found significant variation in performance on risk-adjusted mortality and readmission rates, and differences in readmission rates based on safety-net status. Our findings suggest that high teaching intensity and safety-net institutions may be disproportionately affected by upcoming changes in hospital payment models.