BACKGROUND: Drug-eluting intracoronary stents decrease restenosis and later revascularization. The US Department of Health and Human Services (HHS), recognizing the financial and clinical impact of this technology, recently proposed accelerated reimbursement to hospitals. METHODS AND RESULTS: A disease state-transition computer model simulated the clinical and economic consequences to hospitals of drug-eluting stents over 5 years. Model parameters combined information from a longitudinal clinical database, a hospital cost-accounting system, and a survey instrument. Simulations were repeated 1000 times for each set of parameters. With 85% of stent procedures shifted to drug-eluting stents in the first year of availability, the mean number of repeat revascularizations dropped by 60.4% at year 5. With no changes in reimbursement policy, a hospital with a catheterization laboratory volume of 3112 patients yearly converted from a 2.01 million dollars (M) annual profit to an 8.10 M dollars loss in the first year (95% CI 8.09 M dollars to 8.12 M dollars) and 8.7 M dollars annual losses in later years. This represented an overall change in cash flow of 55.71 M dollars (95% CI 55.66 M dollars to 55.76 M dollars) away from the hospital over 5 years. The incremental reimbursement proposed by HHS reduced this loss to 4.75 M dollars in the first year and to 5.6 M dollars annually thereafter. In sensitivity analyses, the conversion of patients from bypass surgery to drug-eluting stents was the largest driver of overall cash flow shifts. CONCLUSIONS: Although Medicare has proposed to increase reimbursement to ease the impact of drug-eluting stents on hospitals, this increase will not totally offset the costs.