OBJECTIVESCost of care is essential for burden of illness and cost-effectiveness studies. However, collecting cost data is very difficult. In traditional clinical trials challenges to completeness and accuracy of cost data and protocol-induced bias may reduce generalizability of results. "Real-world" trials are potentially useful but few have been conducted. With readily available claims data, the practical approach is to use cost-to-charge ratio to estimate the dollar value of consumed resources. This paper examines the characteristics and cost-to-charge ratio for CABG patients by hospital and department over time. METHODS: Premier data for 17,000 CABG patients from 187 US hospitals between 2002 and 2004 were used. Hospital cost-to-charge ratios were estimated with patient level total cost and charges at discharge and within each department. Cost-to-charge ratio by hospital type and location were assessed. RESULTS: Cost-to-charge ratios were not associated with hospital bed size although from 2002 to 2004, the ratios decreased ranging from 2% to 14% percent indicating improved efficiency for all hospitals. The cost-to-charge ratio disparity between teaching and non-teaching hospitals is shrinking over time (0.43 vs. 0.40 and 0.39 vs. 0.38 at year 2002 and 2004, respectively). The cost-to-charge ratio gap between urban and rural hospitals remains over time (0.48 vs. 0.40 at year 2002, 0.46 vs. 0.37 at year 2004). With regard to departmental cost-to-charge ratio, they differ greatly by hospital department and vary across hospitals. Except for anesthesia, for teaching hospitals departmental cost-to-charge ratios declined on average by 14% (4% to 28%) from 2002 to 2004. For non-teaching hospitals, changes over time were mixed. For urban hospitals, departmental cost-to-charge ratios had declining patterns similar to that of teaching hospitals. CONCLUSIONS: Cost-to-charge ratio for CABG patients varies by hospital type and these differences declined over time. Appropriate cost-to-charge ratios must be used in order to produce valid cost estimates.