OBJECTIVES: The decision to utilize a particular product may depend on formal hospital guidelines, physician practice patterns, negotiated reimbursement schedules with insurance companies, and other local (geographic and/or hospital) characteristics. These elements are mostly unobservable for the purpose of statistical inference. A hospital fixed-effects model specification, in essence, controls for unobservable within-hospital time-invariant characteristics. Focusing on the relationship between iso-osmolar contrast media (CM) and low-osmolar CM agents (LOCM) and renal failure events in patients undergoing inpatient interventional procedures, this study highlights the importance of controlling for such factors by comparing statistical specifications with and without hospital fixed-effects. METHODS: The Premier database was used to identify patients between January 2008 and September 2013. Eligible patients had a primary procedure of angioplasty defined by International Classification of Diseases, 9th Revision (ICD-9) and/or Current Procedural Terminology (CPT®) codes, inpatient admission, and LOCM or iso-osmolar CM agent. Renal failure during the visit was determined by ICD-9 diagnosis codes. Two different statistical approaches were employed to assess the relationship between renal failure and CM use – Ordinary Least Squares (OLS) cross-sectional and hospital fixed-effects model specification. RESULTS: A total of 385,290 interventional procedure visits met the inclusion criteria. The unadjusted univariate analysis showed 1.7% (p<0.01) more renal events in the iso-osmolar CM cohort compared to LOCM. The most saturated (OLS) cross-sectional analysis showed 1.4% (p<0.01) fewer renal events in the iso-osmolar CM cohort compared to patients who received LOCM. Controlling for unobserved heterogeneity across hospitals using the most saturated hospital fixed-effect specification, we found 2.3% (p < 0.01) fewer renal failure events with iso-osmolar CM. CONCLUSIONS: This study illustrated the importance of controlling for observable and for unobservable, within-hospital time invariant characteristics through a hospital fixed-effects specification when the decision-making factors for selection of CM may vary from hospital to hospital.