NPC health bars are almost as bad. The proper way to do it is to change the apperance of the NPC: make his armor look damaged, show bleeding, limping, dismembered limbs (all this requires more work, of course).
Cool. Now do Black Pudding or Gelatinous Cube.
Damage numbers and health bars are also signs of annoying bullet sponge mechanics; if NPCs were not bullet sponges there would be less "need" for damage numbers and health bars, since the NPC would die much quicker.
Health bars are crap because they don't really tell how many hps we still need to take down before the enemy croaks. Is that 1 out of 10 or 100 out of 1000?