Background. Indicators of hospital quality, such as hospital standardized mortality ratios (HSMR), have been used increasingly to assess and improve hospital quality. Our aim has been to describe and explain variation in new HSMRs for the Netherlands. Methods. HSMRs were estimated using data from the complete population of discharged patients during 2003 to 2005. We used binary logistic regression to indirectly standardize for differences in case-mix. Out of a total of 101 hospitals 89 hospitals remained in our explanatory analysis. In this analysis we explored the association between HSMRs and determinants that can and cannot be influenced by hospitals. For this analysis we used a two-level hierarchical linear regression model to explain variation in yearly HSMRs. Results. The average HSMR decreased yearly with more than eight p