OBJECTIVES: Short bowel syndrome (SBS) results from extensive surgical removal of portions of the small intestine, and leads to serious morbidity and shortened life expectancy. A recent trial showed that use of somatropin [rDNA origin] for injection (rhGH) significantly reduces the need for standard treatments such as parenteral nutrition (PN), which significantly impair quality of life. This study sought to evaluate the economic impact of this new treatment. METHODS: A discrete event simulation was developed to compare a regimen of daily rhGH for four weeks with PN alone in the management of patients with SBS. Risks of treatment- and disease-related complications and resource use were modeled in two identical cohorts of 1000 patients for two years. Rates of disease-related events (e.g., biliary problems), including age-dependent mortality, were assumed to be the same across strategies. Risk functions for each strategy were estimated from the literature and one randomized clinical trial. Direct medical costs were obtained from Medicaid and the literature. Sensitivity analyses were conducted on key parameters. Direct medical costs are reported in US$2004. All outcomes were discounted at 3%/yr. RESULTS: Overall, 96.0% of patients receiving rhGH reduced or eliminated PN use within six weeks of initiating the regimen; one-third weaned completely; and PN use decreased 2.8 days. PN was estimated to cost $118,099 in year one and $132,935 in year two, totaling $251,033 vs rhGH cost of $84,309, including $17,459 for treatment, in year one, a savings of $33,790 per patient; over two years $165,559, for a total savings of $85,474. Cost neutrality is achieved within eight months. Sensitivity analyses showed no significant change in results. CONCLUSIONS: The reduction of PN use or complete weaning in the vast majority of patients with rhGH results in a substantial savings and improvement in quality of life – a dominant strategy.