A peer review program to evaluate the quality of medical care was established by the Health Insurance Plan of Greater New York in 1973. Physician performance is assessed through application of explicit process criteria to medical care as recorded in the patient record. A total of 6,788 records were reviewed in terms of the clinical management of acute otitis media, hypertension and breast lesions. Follow-up procedures to bring about positive changes in delivery of health care were integrated into the program at the time of the initial audit. Reaudit of 715 records were used to measure change in physician compliance with medical care standards. Results of this audit/reaudit process demonstrated statistically significant improvement in quality of clinical practice as measured by the assessment parameters.