OBJECTIVES: This study was undertaken to quantify the cost of hospitalization for cardiovascular disease (CVD) in patients with diabetes over a 5-year period. METHODS: The cohort of patients with diabetes was identified in the 1996 Massachusetts inpatient database using ICD-9 codes and unique patient identifiers. Index admission was defined as the first admission in 1996 where a diagnosis of diabetes was recorded. Readmissions over the subsequent 5 years (1996-2000) for ischemic heart (IHD) disease, cerebrovascular disease, congestive heart failure (CHF) and other CVD were tallied for each patient. Massachusetts hospital costs, including all accommodations and ancillary services were estimated from the all payer discharge databases adjusted to national values, for medical inflation, by cost-to-charge ratios, and are reported in 2002 US dollars. RESULTS: Of the 52,859 patients with diabetes identified in 1996, one third was admitted for CVD at index, mean age was 68 years and 47% were male. Case fatality rate during the index admission was 4%. Subsequently, 21,778 (44%) of index admission survivors had at least one readmission (mean: 2.5, range: 1-33) for a CVD problem within five years (57% readmission rate for those admitted for CVD at index). IHD accounted for 31% of CVD-related readmissions (mean cost per stay: $12,500), cerebrovascular events for 11% (mean: $8,100), CHF for 33% (mean: $8,000) and 25% other CVD (mean: $11,100). Total cumulative cost for all CVD-related admissions over 5 years was roughly $670 million. CONCLUSIONS: A substantial proportion of hospitalized patients with diabetes can be expected to require additional hospital-level care for CVD within a 5-year period. Although the total hospital cost for CVD-related events reported here is impressive, it is conservative, as it captures only one aspect of care for CVD in these patients. These results emphasize the profound economic consequences of cardiovascular complications in patients with diabetes.