That's actually a genius way to reduce administrative overhead as well. Problem is that the exams select only for people that are good at taking exams. Not always the most interesting/well rounded students.
With this scheme, if a school inflates their grades it will have a larger adjustment down. It's entirely based on past performance of people from the school, so there's no standardized tests to worry about. Theoretically, one could have an adjustment upwards, but I've never heard of it happening (I participated in department meetings where they discussed admissions in general). The adjustments are usually somewhere between 20 and mid to high 20s percent. Some are higher (not many), but a few are lower but not by much.