Four NHS trusts were removed from the shortlist for the first wave of foundation hospitals yesterday after failing to make the grade in league tables.
The four were casualties of the star rating system that assesses NHS trusts across 45 indicators of performance, including waiting times, deaths after surgery and the quality of hospital food.
Each of the four - Aintree in Liverpool, Walsall in the West Midlands, Newcastle upon Tyne and Essex Rivers - slipped from the three stars needed for foundation status to two after missing targets. The trusts questioned the basis of the judgement.
John Rostill, chief executive of Walsall Hospitals trust, said yesterday that all the staff had put in a supreme effort over the past few months.
"It is hugely demoralising. The only trust that beat our total score in this area is the University of Birmingham trust. The question people are asking me is what do we have to do to get three stars?" he said. Mr Rostill is leaving Walsall to take over Worcester NHS trust, awarded one star in yesterday's ratings, in September.
The tables for 2002 to 2003 showed improving performance across the NHS in England, with more hospitals meeting tougher targets. There were 53 top-performing three-star trusts, which each receive up to £1m. The figure last year was 45, from a total of 156 acute trusts in England.
But there was also a sharp increase in the number of failing "no-star" hospitals, up from 10 last year to 14. No-star trusts have a year to improve their performance or risk being put out for "franchising" - being taken over by another hospital's management team.
The lowest scoring no-star trusts were the Royal United Hospital Bath and the Maidstone and Tunbridge Wells. The Bath trust scored no stars last year but despite a change of chief executive failed to improve sufficiently to move off the bottom ranking.
Fifty acute trusts improved their star rating and 35 saw their rating fall, with the remainder staying the same.
The Commission for Health Improvement (CHI), the independent NHS watchdog that took over running of the star-rating system from the Department of Health last year, emphasised that the process had been run free from political pressure to show the NHS in a good light.
Dame Deirdre Hine, chairman of the commission, said: "These are CHI's ratings. They provide a realistic and credible picture of the way improvement is taking place or, in some cases, not taking place."
She admitted there were shortcomings in the measures. "We all recognise star ratings are far from perfect. We are looking at ways to make them more representative of the true performance of trusts, more relevant to the public and more recognisable by staff."
Matt Tee, CHI project director for the star ratings, said: "This year's ratings are better than last year's and last year's were better than the year before." But Jim Johnson, chairman of the British Medical Association, said: "Nobody should use star ratings to judge how well a hospital is doing.
"They measure little more than hospitals' ability to meet political targets and take inadequate account of clinical care or factors such as social deprivation. It is grossly unfair on staff working in low-rated trusts that public confidence in them is being undermined."
The Royal College of Nursing said it was concerned at the impact of the ratings on patients' confidence and staff morale. But the NHS Confederation, representing managers, said they were "an important step forward" in providing better information about the health service.
Liam Fox, Tory health spokesman, said the "ludicrous" system should be scrapped. "The ratings bear no relation to the quality of care that patients are receiving."
John Reid, the Secretary of State for Health, said patients needed to know how their health service was performing, to be able to exercise choice. The ratings showed that the Government was serious about making the NHS open and accountable.
"The purpose of this exercise is not to condemn or shame those trusts who fail to make the grade on any particular indicator but to help them overcome local difficulties and to offer better services for patients in the future."