OBJECTIVES: In 2004, the concept of diagnosis-related-groups (DRG) will be implemented in the reimbursement procedure of German hospitals. Presently, the hospitals are reimbursed on a daily lump sum basis. To evaluate the treatment costs of community-acquired pneumonia (CAP) from the hospital's perspective, a prospective health economic study has been in progress since the end of 2002. An interim analysis revealed first cost results. METHODS: Open, non-randomized prospective observational study from the perspective of the German hospital administration. From six study centres, 84 patients were enrolled. A total number of 300 patients is foreseen. A process-cost-analysis was performed to determine the costs for the German hospital sector starting from the admission up to the discharge of the patient. The cost calculation comprises diagnostic and therapeutic measures, drugs, hotel costs and nursing. Both personnel costs and material costs were included. Due to the dualistic hospital reimbursement system, acquisition values of medical devices were not included into the analysis. RESULTS: The enrolled patients suffered from moderate to severe stages of CAP with a mean length-of-stay of 11.7 days (peripheral ward: 11.2; ICU 0.5). Mean costs per patient amounted to €2204 (SD: €1654). The most important cost-driving factor was nursing, amounting to mean costs of €902, followed by hotel costs amounting to €666. Drug acquisition cost resulted in €291, whereas costs for diagnostics (€163) and therapeutic measures (€181) were comparatively low. According to the actual German financing procedure (based on length-of-stay / lump sum per day), a hospital would be reimbursed with approximately €2990 per patient with CAP. CONCLUSIONS: Before the implementation of the DRG system into the hospital reimbursement procedure, the treatment of CAP is profitable from the hospital's perspective. This will probably change after the implementation of the DRG-based reimbursement.