An explicit focus on health outcomes has the potential to improve health if applied at the local level. However, clinical services require clear and practical support in the measurement and analysis of health outcome indicators. This paper suggests 12 steps for departments or services to take in promoting an outcomes orientation, based on our experiences in the Central Sydney Area Health Service. These include determining commitment at the service level, setting up a working group, specifying service consumers, their health problems and intervention processes, specifying desired health changes, consulting the literature and peers, identifying existing resources, pilot-testing and refining outcome measures, collecting data and responding to sub-optimal results with evidence-based interventions. The paper also reviews common criticisms of the health outcomes approach and key issues which have arisen in the course of applying these steps at the local level.