Background: Measuring quality of care and ranking hospitals with outcome measures poses two major methodological challenges: case-mix adjustment and variation that exists by chance. Aim: To compare methods for comparing and ranking hospitals that considers these. Methods: The Netherlands Stroke Survey was conducted in 10 hospitals in the Netherlands, between October 2002 and May 2003, with prospective and consecutive enrolment of patients with acute brain ischaemia. Poor outcome was defined as death or disability after 1 year (modified Rankin scale of >3). We calculated fixed and random hospital effects on poor outcome, unadjusted and adjusted for patient characteristics. We compared the hospitals using the expected rank, a novel statistical measure incorporating the magnitude and the uncertainty of differences in outcome. Results: At 1 year after stroke, 268 of the total 505 patients (53%) had a poor outcome. There were substantial differences in outcome between hospitals in unadjusted analysis (X2= 48, 9 df, P<0.0001). Adjustment for 12 confounders led to halving of the X2(X2= 24). The same pattern was observed in random effects analysi