INTRODUCTION: Because of concern about increasing health care costs, we undertook a study to find patient risk factors associated with increased hospital costs and to evaluate the relationship between increased cost and in-hospital mortality and serious morbidity. METHODS: More than 100 patient variables were screened in 1221 patients undergoing cardiac procedures. Simultaneously, patient hospital costs were computed from the cost-to-charge ratio. Univariate and multivariate statistics were used to explore the relationship between hospital cost and patient outcomes, including operative death, in-hospital morbidity, and length of stay. RESULTS: The greatest costs were for 31 patients who did not survive operation ($74,466, 95% confidence interval $27,102 to $198,025), greater than the costs for 120 patients who had serious, nonfatal morbidity ($60,335, 95% confidence interval $28,381 to $130,897, p = 0.02) and those for 1070 patients who survived operation without complication ($31,459, 95% confidence interval $21,944 to $49,849, p = 0.001). Breakdown of the components of hospital costs in fatalities and in cases with nonfatal complications revealed that the greatest contributions were in anesthesia and operating room costs. Significant (by stepwise linear regression analysis) independent risks for increased hospital cost were as follows (in order of decreasing importance): (1) preoperative congestive heart failure, (2) serum creatinine level greater than 2.5 mg/dl, (3) New York state predicted mortality risk, (4), type of operation (coronary artery bypass grafting, valve, valve plus coronary artery bypass grafting, or other), (5) preoperative hematocrit, (6) need for reoperative procedure, (7) operative priority, and (8) sex. These risks were different than those for in-hospitality death or increased length of stay. Hospital cost correlated with length of stay (r = 0.63, p < 0.001), but there were many outliers at the high end of the hospital cost spectrum. CONCLUSIONS: We conclude that operative death is the most costly outcome; length of stay is an unreliable indicator of hospital cost, especially at the high end of the cost spectrum; risks of increased hospital cost are different than those for perioperative mortality or increased length of stay; and ventricular dysfunction in elderly patients undergoing urgent operations for other than coronary disease is associated with increased cost. Certain patient factors, such as preoperative anemia and congestive heart failure, are amenable to preoperative intervention to reduce costs, and a high-risk patient profile can serve as a target for cost-reduction strategies.