By MICHAEL MILLENSON

The Leapfrog Group has just released its latest report grading the safety of hundreds of individual hospitals, but the real news isn’t the“incremental progress.” It’s how a group started by some of the most powerful corporations in America has quietly devolved into just one more organization hoping press releases produce change.

Amid the current enthusiasm for “value-based purchasing” by employers and possible privatization of Medicare, it is worth examining why Leapfrog’s initial notion that corporations would spearhead a crackdown on crummy care failed and what we can learn from that publicly unacknowledged failure.

Leapfrog was launched with the hoopla of a high-powered initiative. A widely publicized 1999 report by the Institute of Medicine declared that up to 98,000 patients die every year in hospitals from preventable errors and more than one million are injured. In November, 2000, the newly formed Leapfrog Group announced three targeted “leaps” in patient safety that promised to save some 58,000 lives, prevent a half million medication errors and (in calculations that came later) save billions of dollars.

“The number of tragic deaths brought about by preventable medical errors is too striking for those of us in the business community to ignore,” declared Lewis Campbell, chairman and CEO of Textron TXT -0.29%, at the group’s launch.

Campbell was head of a health care task force of the Business Roundtable, an elite group of corporate leaders that sponsored Leapfrog. Wielding the power of the checkbook to enforce “aggressive but feasible target dates” was “a straightforward business approach to tackling a complex problem,” Campbell explained.

As someone who played a small part in that launch, I shared in the optimism of the “Founding Frogs” from big companies like General Electric and GTE, a predecessor to Verizon. But real change requires a sustained commitment to keep up the pressure. Let’s look at what happened to Leapfrog’s three original “leaps”:

Leap No. 1: “Computer physician order entry (CPOE).” Using computers to check the type of medication and dosage before it reached the patient was said at Leapfrog’s launch to reduce prescribing errors in hospitals by “more than 50 percent.” While that may have been true, the cost to hospitals of adopting CPOE turned out to be much higher than anticipated. Corporate America might have been able to force hospitals to become more efficient, but it didn’t.

Although CPOE has finally begun to take hold, even Leapfrog CEO Leah Binder acknowledges it’s because of the government’s “meaningful use” rules, which came I the wake of the 2009 federal stimulus bill giving out billions to hospitals and doctors to buy computers. In return, they had to show they were using the equipment for clinically meaningful improvements, such as safer care.

In other words, the government “carrot” of massive subsidies (bribery) trumped the “stick” of Leapfrog (we’ll tell our health plan to possibly not contract with you).

Leap No. 2: “Evidence-based hospital referral.” Patients should be sent to hospitals whose doctors performed a high volume of a procedure, said Leapfrog, thereby reducing a patient’s risk of dying by “more than 30 percent.” Unfortunately, that volume-outcome link turned out to be more complicated as more research was done. As one review of the medical literature concluded, the relationship between a hospital’s volume and mortality “appears largely to be specific to the procedure being studied.”

In any event, the business community never got serious about “evidence-based” contracting. Whatever the public pronouncements, the private message to health plans remained, “Give us a low price.” And, by the way, don’t stop contracting with any hospital our employees like to use.

Leap No. 3: “Intensive care unit (ICU) staffing by physicians trained in critical care medicine.”

Let’s think about this goal for a moment. At the time it was announced, “virtually no ICU met the Leapfrog standards.” While some research strongly supported the standard, other research found “weak or no scientific evidence.”Even ICU directors who overwhelmingly endorsed it pointed to implementation barriers such as “loss of control, loss of income, and increased cost to hospital administration.”

For Leapfrog to have succeeded, you’d have to believe that top business executives would order mid-level benefits managers to second-guess doctors about a life-and-death staffing decision.

In reality, the Business Roundtable quietly began backing away almost immediately. Worried that if they certified a hospital for being safe, an employee who was the victim of a medical error could sue them, the Roundtable decided to fund Leapfrog for a while but to sever any official affiliation.

And maybe they were right. The federal government has far more purchasing clout than any business coalition can dream of and, with far more at stake both financially and in human terms for its “constituents,” is much readier to wield that influence. The elderly on Medicare and the poor on Medicaid use more medical services, and therefore are at greater risk for poor care, than the working-age population. Big corporations have enough challenges without picking fights with local hospitals often seen as pillars of their communities.

Fortunately, as corporate America copped out, the American government stepped in ­– not as evil regulator but as savvy purchaser. Beginning under President George W. Bush and continuing under President Obama, the feds have set “aggressive but feasible target dates,” as Textron’s CEO put it, for hospitals to either improve care and eliminate “never events” or watch their reimbursement cut. Leapfrog deserves credit for helping push the federal government in that direction, but it was the government that eventually led the way for reasons that made eminent economic sense.

Private insurers followed in the government’s wake, one told me, because of market forces: if they tried to tell a prominent hospital they wouldn’t pay for care related to an error, the hospital could threaten to not sign a contract. But no hospital could afford to drop Medicare; ergo, the big “leaps” in patient safety came from government pressure.

Michael L. Millenson is president of Health Quality Advisors LLC in Highland Park, IL; the Mervin Shalowitz, MD Visiting Scholar at the Kellogg School of Management; and a board member of the Society for Participatory Medicine. This post originally appeared in Forbes.