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SummaryPerformance appraisal is a daily, homework, fair, and open appraisal of each hospital, which can mobilize the enthusiasm and creativity of the employees to the greatest extent so that both the company and the employees can achieve development. At present, the ascendant information revolution has become an important factor in promoting the development of the times. The use of advanced information technology to develop advanced information systems to conduct fair and open assessments of the ever‐increasing number of company employees has become the trend of the times. This article makes a historical review of the development and function of the performance appraisal system, and fully analyzes the new features and new functions of the performance appraisal system in the new period, and details the solution. This system develops and uses .NET development platform and SQL Server 2005 database. Using a distributed approach, the system's development costs have reduced, and the system's maintainability and scalability are improved. This paper studies the establishment of a performance‐based distribution model based on diagnostic relevance grouping theory (DRGs) in public hospitals. Based on the DRGs as a theoretical basis, after a long period of historical data collection, a theoretical model was established, repeated regression calculations, and focused evaluations. A performance‐distribution scheme centered on workload has established to reflect the factors such as the labor risk, technical difficulty, and labor cost of the attending doctors in relation to different patient conditions. The formulation and implementation of the new performance plan embodies the input of labor value and conforms to the spirit of the new medical reform.