OBJECTIVES: To determine factors affecting costs (based on main payor's perspective) and length of hospital stay in patients hospitalised for CAP in Germany. METHODS: Within an international study (Germany, France, Japan, USA), 12 months’ retrospective data (July 2001 to June 2002) of 603 CAP-patients (14 sites) were collected by chart review in Germany and analysed for factors likely to affect costs and length of hospitalisation (linear- and Cox-PH-regressions, respectively). Costs were calculated from the perspective of the German public health insurance (GKV) for the year 2001, based on daily fees per ward minus patient deductible/co-payment. RESULTS: Patients (mean age 63 years) were predominantly male (58%), living with family (64%), retired (56%) and publicly insured (88%); 82% had any prior disease, 43% prior respiratory diseases. At hospitalisation, mainly due to worsening of pneumonia (55%), the mean modified FINE score was 90 (low/moderate risk). A total of 57% of patients had low (classes I, II, III), 23% moderate (class IV) and 20% high (class V) modified FINE scores. Besides antibiotics, concomitant medications were mostly cough/cold suppressants. The median duration of hospitalisation was 12 days. Costs were calculated to amount to an average of 3892€ per hospital stay. Extrapolation to population levels results in almost 1000€ million CAP-related costs per year. Factors associated with both higher costs and prolonged hospital stays (p <0.05) included combination/multiple antibiotic treatment and inappropriate antibiotic treatment (i.e. antibiotics given not likely to/did not cover CAP-related pathogens), current smoking status and non-teaching hospital. Multimorbid patients were likely to incur higher costs. Increasing age was correlated with longer hospital stays. CONCLUSIONS: In Germany, treatment of patients hospitalised for CAP is costly from the payor’s perspective and amounts to almost 1000€ million per year. Appropriate antibiotic treatment was associated with lower costs and shorter hospital stays.