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Background: This paper provides an overview of the Referral Evaluation Project, which took place in South East Wales, UK during 2007–2008. Aim: To engage general practitioners (GPs) and consultants in the local hospitals of Gwent Healthcare Trust in discussions as to the validity, quality and appropriateness of GPs' referrals and to increase the quality of those referrals. To discuss with other healthcare professionals the use of community-based services, which could be used instead of referral to hospital. Method: A year-long scheme whereby GPs were funded for weekly protected time to discuss their referrals retrospectively by peer review, and to attend six-weekly cluster meetings where representatives from the practices met with consultants to discuss the appropriateness of those referrals and the use of alternative community-based services. Referral data were fed back to the practices by personnel from the local health board (LHB). The evaluation involved three practices in Torfaen, South East Wales; Torfaen LHB staff, consultants in Gwent Healthcare Trust, and other health professionals. The main outcomes used were indicators of referral quality as judged by the GPs, referral rates to hospital orthopaedics and emergency admissions, and evidence of increased use of community-based services. Results: The quality of referrals as judged by doctors' peers improved. Referral rates in orthopaedics and emergency admissions showed a striking reduction by up to 50%, variability between practices decreased, and referrals to local services increased. Alternative community-based services were explored and an understanding of the best local pathways for some common conditions was reached. Conclusion: This approach was felt to be a more sustainable and more intuitive method of improving the quality of referrals and reducing inappropriate demand compared to other approaches, for example, conventional referral management centres.