OBJECTIVES: The objective of this study is to estimate the five-year impact on costs associated with hospitalization in patients under renal replacement therapy (RRT) when a shift in treatment modality from hemodialysis (HD) to peritoneal dialysis (PD) is assumed. METHODS: An Excel-based budget impact model (BIM) was developed to assess the impact of a shift in treatment modality share. Model inputs included dialysis modality shares, patient years at risk, hospital days and costs of hospitalization per patient per year per modality, annual growth rate of end stage renal disease (ESRD), and years to reach new modality shares. The study used data from the monthly clinical report (MCR) for the year 2005 in the network of renal clinics of Renal Therapy Services (RTS) Colombia. The entire hospitalization events were included. Cost data were obtained from a renal unit from the RTS network and imputed on a daily basis. RESULTS: A total of 7,441 patients were under RRT in the RTS network in Colombia in 2005. 57.2% were on HD and 42.8% on PD. For patients on PD, 79.5% were on continuous ambulatory PD (CAPD) and 20.5% on automated PD (APD). The average daily costs of a hospital admission per patient in 2006 US dollars were estimated to be $334 for HD, $175 for CAPD, and $206 for APD. The annual growth rate of ESRD was estimated to be 8%. A hypothesized shift of 5% of the patients in treatment modality from HD to PD in a five-year period represented a cumulative net savings of $2,332,423 in total hospital costs. CONCLUSION: This simulation model analysis indicates that an increased use of PD results in substantial savings in the hospital costs of patients in RRT, and in a significant impact on the budget of the healthcare system.