Little has been published on the design, use and evaluation of peer groupings of hospitals. This article explores the issue in the context of public hospitals in New South Wales. TheÊ process, established over the last two years by New South Wales Health, aims to meet six principles of peer grouping. Through a six-step procedure, the methodology focuses on the classification of hospitals by role, size and measure of acuity. Further research is needed to compare benchmarking across States and to identify which of the methodologies should be adopted nationally. Background