Diabetes is the fourth leading cause of death in the U.S. and a major cause of blindness and heart disease. Studies have demonstrated that tight glycemic control prevents long-term microvascular/macrovascular complications and may offset the associated substantial healthcare costs. It has been demonstrated that 1.0% or greater improvement in glycemic control resulted in cost saving of $685-950/patient/year. OBJECTIVES: To evaluate relationship between total healthcare costs/utilization and changes in hemoglobinA1c (HbA1c) levels as a proxy for aggressive glycemic control in type2 diabetic patients. METHODS: A retrospective database analysis of laboratory data, pharmacy, and medical claims from a managed care organization. Patients were selected from a comprehensive diabetes management clinic and had at least two HbA1c tests that were between 3 and 9-months apart. All patients had at least one oral anti-diabetic medication 6-months prior to the first HbA1c-test. Follow-up time was time between two HbA1c tests and varied among patients. Costs and utilization per-member-per-month were compared between two cohorts, improving glycemic control and worsening control stratified by HbA1c changes (+/-1%). Outcomes were adjusted by age, gender, co-morbid conditions, insulin-use, previous hospitalizations, physician visits, and prescription counts. RESULTS: A total of 491 patients were identified, with mean age of 70.8 (+/-10.5) years, 46.6% female (n=229), and mean initial-HbA1c-level of 7.2% (+/-1.4;min=3.5,max=13.8). Among them, 45.2% (n=222) exhibited improved-control and 48.9%(n=240) exhibited worsened-control. Patients with improved control had significantly higher adjusted average hospital costs than those who worsened, $1,374vs.$449 (p<0.05). Although not statistically significant, patients with improved in glycemic control had a higher average number of anti-diabetic medications and physician visits than those who worsened. CONCLUSIONS: Improved glycemic control is associated with greater short-term healthcare utilization and costs. Despite relatively well managed by the specialty-clinic, patients showed further improvement in glycemic control after hospital events. Future research is needed to assess the long-term impact of glycemic control on healthcare costs.