In 1998 a group of large employers came together to discuss how they could work together to use the way they purchased health care to have an influence on its quality and affordability.  They recognized that there was a dysfunction in the health care market place. Employers were spending billions of dollars on health care for their employees with no way of assessing its quality or comparing health care providers.

A 1999 report by the Institute of Medicine gave the Leapfrog founders an initial focus – reducing preventable medical mistakes.  The report found that up to 98,000 Americans die every year from preventable medical errors made in hospitals alone.  In fact, there are more deaths in hospitals each year from preventable medical mistakes than there are from vehicle accidents, breast cancer, and AIDS.  The report actually recommended that large employers provide more market reinforcement for the quality and safety of health care.  The founders realized that they could take ‘leaps’ forward with their employees, retirees and families by rewarding hospitals that implement significant improvements in quality and safety.  Funding to set up Leapfrog came from the Business Roundtable (BRT) and The Leapfrog Group was officially launched in November 2000.  Leapfrog is supported by the BRT, The Robert Wood Johnson Foundation, Leapfrog members and others.