The mission of medical schools underwent significant change in the post-Sec
ond World War period, which resulted in a de-evaluation of teaching, which
in turn impacted on the type of assessment methods that emerged in the latt
er part of the twentieth century. Assessment based on direct observation di
d not receive the same degree of attention as methods such as multiple choi
ce guestion and the objective structured clinical examination. During the p
ast two decades medical educators have begun to emphasize the importance of
teaching and assessing professional behaviour. It is suggested in this pap
er that assessment of professional behaviour can best be achieved by means
of direct observation. A review of the area of assessment of clinical compe
tence over the past 50 years reveals that it has been dominated by assessme
nt methods that for the most pan have been removed from the clinical settin
g in which medical students work and learn. In this paper it is proposed th
at there is a need to focus attention on methods of assessment which are ba
sed on the direct observation of performance that can be used in the clinic
al setting. Specifically, more attention needs to be directed at two areas
of performance: (1) professionalism, and (2) medical error, both of which h
ave given rise to increasing concern in the medical profession, healthcare
agencies and the public at large.