The use of performance measures that enable aspects of health care delivered in different institutions to be compared are fraught with difficulties. However, despite inherent international concerns—about validity, comparability, and usefulness—they are here to stay. The challenge for all health systems is to find ways of using performance measures to promote real improvements in care. Questions such as whether public disclosure of comparative performance measures should be used to make external judgements—for example, in the form of league tables—or whether are they better used as tools for internal reflection to support quality improvement are the focus of active international debate. Changes in the use of performance data in any system have implications for others.¹ The new approach to be implemented in the UK will therefore be watched with interest.

The recently published 10 year plan for the NHS² contained an initiative that has profound implications for both performance management and quality of care. The NHS performance assessment framework (PAF)³ already makes comparative indicator data publicly available, including clinical indicators such as readmission rates and perioperative mortality rates. The annual publication of these performance indicators⁴ by the NHS is about to be supplemented by a new “traffic light” grading system for NHS organisations. On the basis of a selection of performance measures all organisations will be categorised as “red”, “yellow”, or “green”. This approach is taking the use of league tables to another level.

Organisations categorised as green will be “meeting all core national targets and will score in the top 25% of organisations on the PAF”. Yellow organisations will be meeting “all or most national core targets”, while red organisations will reflect “poor absolute standards of performance”. Green organisations will have access as of right to development funds, with a lesser degree of regional and national monitoring, greater freedom to decide local organisation of services, and will be used as beacons or exemplars with the ability to take over persistently failing red light organisations. Their staff will act as advisors on the Modernisation Board and on a National Independent Panel to advise on contested NHS changes. They may also be deployed to help failing trusts or even take them over.

In contrast, red organisations that are seen to be “failing” will be subject to review every two years from the Commission for Health Improvement. Action will be instigated to ensure a baseline of minimum acceptable performance throughout the NHS. While there will still be access to performance funds for red organisations, these will be carefully controlled and monitored. Furthermore, there will be a rising scale of intervention to reflect the level of perceived problems. Red organisations whose performance calls for “special measures” will have to produce detailed recovery plans and, if they fail, as a last resort they can be brought under the control of new management teams or taken over by other organisations.

Yellow organisations, who are meeting all or most national standards, will have access to funds but will be required to draw up plans for further improvement with their regional office.

Will this work? Of course time will tell, but success relies on a number of factors, not least of which is whether such judgements of an organisation's performance are valid and reliable.^5,6 Will those designated as green truly be in the top 25% overall? Will red organisations be failing or will they simply be underfunded or working in areas where the health and social status of the local population limits their capacity to create change?

Clearly, trusts will want to avoid being classified as red although whether they will all aspire to be categorised as green is an interesting question. There may, indeed, be some comfort in the relative anonymity of the yellow classification. This raises another key issue—namely, whether published performance measures upon which significant external judgements are to be made lead to distortion of activity, gaming, and perverse incentives? Experience from elsewhere suggests that it may well do.⁷

In the UK aggregated data on standardised assessment of school children's progress are published to allow comparison of school performance, purportedly to support enhanced parental choice and performance management. However, because of the form in which these are published, it is claimed that some schools have concentrated efforts to bring children in the middle range to an “above average” level, with less effort expended on those at the upper and lower ends of the performance range, in some cases potentially writing off children with poor achievement.

Furthermore, a recent report of an official inquiry by the Inspectorate of Constabulary on behalf of the UK Home Office has concluded that British police forces “massage” their crime figures and detection rates to “put them in the best possible light”. These are figures that influence the distribution of the annual £7 billion police budget. Massaging the figures by some forces depressed their recorded crime rate and raised detection or clear up rates, with crimes being wrongly classified as less serious. This particularly affected areas such as car crime and home burglaries where there are national reduction targets. The report described this as “unethical recording”.⁸

Health care itself has examples of similar effects. Thus, the initial publication of the Patient's Charter standards in the UK included the percentage of patients seen in A&E within five minutes as a key indicator. This led to the wide adoption of the pejoratively entitled “hello nurse” in A&E departments to ensure that patients were seen quickly, leading to good performance against this measure and probable improvements in public perception. However, this was not reflected in the quality of clinical treatment.⁹

The NHS faces a challenging time ahead for performance management. Our concern would be that many of the positive developments in the performance management framework—including a shift from concentration on efficiency alone to more apposite measures of quality—could be undermined by a crude and poorly conceptualised populist approach. Nonetheless, what happens as a result of this policy in the UK is likely to have important lessons for other systems internationally.