OBJECTIVES: To quantify community acquired pneumonia (CAP) treatment outcomes and costs from a managed care perspective by the level of macrolide resistance corresponding to the Metropolitan Statistical Area (MSA) where patients lived. METHODS: A retrospective analysis was conducted using the i3 Magnifi database (May 2000 – May 2005) and the Prospective Resistant Organism Tracking and Epidemiology for the Ketolide Telithromycin (PROTEKT) Database. Continuously enrolled patients aged 18 years and older residing in MSAs with PROTEKT data that had an outpatient CAP-related ICD-9 code and with one antibiotic pharmacy claim within 7 days were included. Patients were excluded for having a prior conditions or drug treatment which could mimic CAP or precipitate infections, or for recent hospitalizations. Treatment costs by level of resistance in the patient's MSA and by treatment outcome were measured and adjusted for differences in baseline patient characteristics. RESULTS: The study identified 9965 CAP patients (average age of 47.6 yrs, 52.1% male). The majority (56.3%) resided in an MSA with macrolide resistance rates < 25%. The overall treatment success rate was 81.6%, with success rates of 82.5% and 80.5% for MSAs with resistance levels <25% and =25% respectively (P<.001). Treatment failure resulting in hospitalization was higher in resistance areas =25% at 13.1% versus 8.0% in areas with resistance <25% (P<.001). Average adjusted treatment costs were $623 higher for those treated in areas with resistance levels =25% than those treated in areas where resistance was <25%. Treatment success was associated with average adjusted costs that were $1478 less than those whose initial treatment failed, controlling for level resistance (P<.001). CONCLUSION: This study observed an association with community level macrolide resistance and treatment and economic outcomes. Treatment failure rates costs were higher for CAP patients treated in areas with macrolide resistance rates =25% than those treated in areas where resistance was =25%.