The relative cost of outpatient parenteral antibiotic treatment of bone and joint infections with the investigational drug teicoplanin was compared with the cost of inpatient treatment. A private practice infectious disease group used teicoplanin to treat 49 patients (53 treatment courses) with bone and joint infections. The outpatient treatment program "saved" $403,680 compared with inpatient treatment, based on per diem reimbursements of $700 for inpatient treatment and $220 for outpatient treatment. Any cost analysis should be interpreted carefully because accurate calculation of outpatient treatment savings requires distinguishing among actual costs, charges, and reimbursements. In addition, there may be hidden costs related to lack of efficacy, toxicity, or litigation. Consideration should also be given to whoever is the beneficiary of the savings. Is it the indemnity insurance company, the provider, or the patient? Specific characteristics of the treatment, including ease of use, effectiveness, and monitoring requirement, may affect the savings. Our study showed that teicoplanin allows once-daily dosing, is easily administered, is generally efficacious, and has minimum requirements for blood level monitoring. These characteristics improve the cost effectiveness of using the drug in an outpatient treatment program.