Australian Health Ministers have endorsed the hospital standardised mortality ratio (HSMR) as a key indicator of quality and safety, and efforts are currently underway towards its national implementation. In the United Kingdom, Canada, the Netherlands and the United States, the HSMR has been used for several years within organisations to monitor performance and response to various quality and safety programs. In the UK and Canada, the HSMR is also publicly reported and used to compare performance between hospitals. The validity and reliability of the HSMR as a screening tool for distinguishing low-quality from high-quality hospitals remain in doubt, and it has not yet been proven that HSMR reporting necessarily leads to worthwhile improvement in quality of care and patient outcomes. Institutions may respond to an unfavourable HSMR by "gaming" administrative data and risk-adjustment models or implementing inappropriate changes to care. Despite its apparent low cost and ease of measurement, the HSMR is currently not "fit for purpose" as a screening tool for detecting low-quality hospitals and should not be used in making interhospital comparisons. It may be better suited to monitoring changes in outcomes over time within individual institutions.