OBJECTIVE: To examine the health resource use by patients with chronic obstructive airway disease (COAD) from the perspective of a public health organization. METHODS: Seventy-one patients with exacerbation of COAD admitted to the medical wards of a public hospital in Hong Kong during a six-week period were studied. They were interviewed using a structured questionnaire and their medical history was reviewed. During the interview, patients’ background, level of disease knowledge and their drug treatment were obtained. Direct medical costs during hospitalization were estimated from their hospital records. The annual direct medical costs due to COAD were estimated from the number of COAD hospital admissions and the median cost of hospitalization of our study patients. RESULTS: 72% percent of patients attended regular follow-up visits for COAD but none attended the rehabilitation programme offered on an outpatient basis. 85% of patients had used bronchodilator inhalation therapy on a regular basis. The disease knowledge of the study patients was generally poor. For the current exacerbation, 42% of patients had visited private medical practitioners prior to admission. The median duration of hospital stay was 5 days (range 3 - 33 days). There were a total of 42,241 admissions per year due to COAD in the whole territory. Average cost of hospitalization was HK$3,632/day (1US$=7.8HK$). The annual hospital cost for patients with COAD exacerbation was estimated to be about HK$767 million, representing about 2.4% of the annual total health care budget in Hong Kong. CONCLUSION: The cost of hospitalization of patients with COAD exacerbation was high. Patient knowledge could be improved and outpatient rehabilitation programme could be further publicized.