OBJECTIVES: The objective of this study was to measure influenza-related hospitalization rates and cost in a managed care population. METHODS: All subjects possessing an influenza diagnosis (ICD-9-CM=487) in PharMetrics’ Integrated Outcomes Database between January 1, 1997 and June 30, 1998 were eligible for inclusion. Subjects with an influenza diagnosis one-year prior to their index date and subjects with less than 3 months of data available for analysis prior to or following first diagnosis were excluded. Comorbidities, influenza vaccinations, antiviral and antibiotic prescriptions were also identified during the study period. RESULTS: A total of 18,000 subjects met all inclusion criteria. The mean age of all subjects was 29.1 years (Std Dev=20.7). Inpatient costs accounted for over 35% of the $12.8 million in total costs incurred during the study period, even though only 3% (472) of the sample required hospitalization for influenza. The mean cost of an influenza related hospitalization was $9,667 (Std Dev=20,940) per subject hospitalized. Antibiotics were prescribed in approximately 28% of the subjects, however antivirals were prescribed to only (7%) of the subjects. CONCLUSIONS: Although hospitalization for influenza was rare (3%), the costs associated with this outcome were significant. Prevention of hospitalizations related to influenza could result in significant cost savings for managed care organizations.