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Background: Combined mortality rates for pneumonia and influenza suggest that the 2 conditions represent the sixth leading cause of death in the United States. The total cost of pneumonia, including indirect costs, was estimated to be approximately $23 billion per year in 1994., Objective: The objective of this study was to assess variables that may be significantly associated with the cost of treating patients hospitalized with community-acquired pneumonia (CAP). We also assessed the impact of treatment guidelines for management of CAP (developed by managed care plans) on total costs., Methods: Patients in 3 managed care plans who were hospitalized with a primary or secondary diagnosis of CAP in Maryland and Washington, DC, between January 1, 1997, and April 30, 1997, or between January 1, 1998, and April 30, 1998, were identified based on International Classification of Diseases, Ninth Revision codes. Clinical data were abstracted from patients' medical charts by nurses, and billing data were acquired from these plans. A retrospective data analysis was carried out using billing data from 3 managed care plans and clinical data from hospitals associated with the plans. A multivariate regression model was developed using the natural logarithm of cost as the dependent variable. Independent variables that were studied included severity of illness, days in the intensive care unit (ICU), triage per guidelines, drug therapy per guidelines, mortality, and managed care plan identifiers., Results: The charts of 569 patients were assessed. The mean age of the study sample was 75.3 years. ICU days (P < 0.001), mortality, and drug therapy (both P < 0.01) per guidelines significantly affected costs. As expected, an increase in the number of ICU days led to an increase in costs. However, patients who received drug therapy recommended by the guidelines had significantly lower costs than patients not treated according to the guidelines (P = 0.001)., Conclusions: The findings of this study suggest that guidelines for CAP management, such as those developed by managed care plans, may help reduce costs by minimizing unnecessary ICU admissions and appropriately managing patients with CAP.