OBJECTIVES: Treatment for post dialysis infections imposes a significant economic burden on the national health care system.  The rate of hospitalization for bloodstream infections for Hemodialysis (HD) alone has increased 51 percent with an estimated cost in excess of $US 23,000 per hospitalization.  The new bundled payments for care improvement (BPCI) initiative, promotes healthcare interventions that improve patient outcomes at a lower cost.  Peritoneal dialysis (PD) has been purported to lower the risk of bloodstream infections, which could potentially reduce hospitalization costs.  The purpose of this study was to estimate the cost per hospitalizations averted by substituting PD for HD.   METHODS: Data on treatment costs, and hospitalization rates for HD and PD were obtained from the USRDS registry.  Using a payer perspective, a decision tree model was used to estimate the ICER.  Univariate sensitivity analysis was done to assess the robustness of the results. RESULTS: Using PD was clearly cost-effective with an average cost of $50,320.08 per patient per year and resulted in 1,202 dialysis related hospitalizations; compared to HD which cost $69,916.28 per patient per year and resulted in 1,462 dialysis-related hospitalizations. CONCLUSIONS: PD resulted in overall lower mean costs and hospitalization rates compared to HD.  Considering the “payment for results” nature of the BPCI, PD has a high likelihood of being adopted as the preferred intervention in ESRD.