OBJECTIVES: Guidelines for costing of health services recommend the use of costs of several providers in forming a variable used to measure unit cost. In the Canadian national list of provincial costs hospital costs were aggregated by all hospitals within each province and were compared between provinces. In this paper we validate the provincial cost measure, using data from Manitoba hospitals. METHOD: The conceptual measure for our analysisis the Cost per Weighted case (CWC) which is equal to the total inpatient costs divided by total weighted cases. The actual (published) measure of CWC was not audited for standardization; it was compared with a revised measure, which was adjusted following an assessment exercise. The revised measure was based on the following standardization criteria: (1) the measure of total cost should include all relevant resources used and appropriately allocated and (2) weighted cases should reflect the year in which costs were measured. Adjustments were made using data from each hospital: inpatient costs were based on provincially reported costs according to a Management Information System (MIS) coding system and weighted cases were based on the Case Mix Group measure of the Canadian Institute for Health Information. RESULTS: Of the 38 hospitals reporting data, 7 (18%) reported a change in CWC of > 10%, 16 reported an adjustment of <10%, and 15 reported no adjustment. The overall change in CWC was substantial: of those hospitals with confirmed data, the mean adjusted CWC was $4538 compared with an adjusted value of $2195. CONCLUSIONS: The large adjustment in CWC occurred in only a few hospitals, yet it substantially changed the overall CWC, which would serve as a standard value for economic studies. It is necessary to validate individual hospital cost measures in order to ensure that systemwide costs are comparable and represent actual resource use.