OBJECTIVES: Previous economic analyses of gram+ cSSTIs have not included costs related to outpatient parenteral antibiotic therapy (OPAT). The objective of this analysis was to develop a core model framework and appropriate inputs to estimate medical and drug costs within both inpatient and outpatient components of care for treating gram+ cSSTIs and serve as a basis for comparing vancomycin with newer antibiotics. METHODS: A 4-week decision model was developed to estimate the direct total, inpatient, and outpatient costs of treating gram+ cSSTIs from a payer perspective taking into account successes, failures, and adverse events. Published literature provided clinical inputs and resource use data, with validation by expert opinion. Cost data was derived from literature and standard CPT coding reimbursements. Sensitivity analyses tested efficacy, complication rates, length of stay, and other resource use parameters. Costs were reported in 2008US$. RESULTS: Drug acquisition cost for 14 days of vancomycin 1gm IV q12hr was $257; however, the total 4-week cost of treatment including clinical failures, complications, and OPAT ranged from $8,214 - $13,133 (66-86% of cost inpatient, 14-33% outpatient).  Important vancomycin cost drivers beyond the inpatient stay ($1219/day) included OPAT cost ($175/day), line placement and complications related to OPAT ($739/patient), physician visits ($192/patient), injection supply/admin costs ($183/patient), and lab work ($98/patient). Antibiotics with favorable dosing/administration profiles reduced OPAT costs and provided opportunity for early discharge. The most sensitive model variables for total cost were the MRSA efficacy rate, length of hospital stay, days of OPAT and line complications. CONCLUSIONS: The model framework and results suggest that the costs associated with generic vancomycin for treatment of cSSTIs may be substantial, with a significant portion of costs extending into the outpatient arena. The budget impact of newer antimicrobials should be evaluated in the context of total medical cost offsets from both inpatient and outpatient perspectives.