Abstract We develop a framework to measure the role of hospital allocation in racial disparities in health care and use it to study Black and white heart attack patients. Black patients receive care at lower-performing hospitals than white patients. However, over two decades, the performance gap between hospitals treating Black and white patients shrank by over two-thirds. This progress is due to more rapid performance improvement at hospitals that tended to treat Black patients rather than reallocation of patients. Hospital improvement is correlated with adoption of a productivity-raising input, beta blockers. Our work highlights reallocation and performance improvement as future disparity-reduction levers.