Objectives: Inappropriate hospital admissions are commonly believed to represent a potential for significant cost reductions. However, this presumes that these patients can be identified before the hospital stay. The present study aimed to investigate to what extent this is possible.

Methods: Consecutive admissions to a department of internal medicine were assessed by two expert panels. One panel predicted the appropriateness of the stays from the information available at admission, while final judgments of appropriateness were made after discharge by the other.

Results: The panels correctly classified 88% of the appropriate and 27% of the inappropriate admissions. If the elective admissions predicted to be inappropriate had been excluded, 9% of the costs would have been saved, and 5% of the gain in quality-adjusted life-years lost. The corresponding results for emergency admissions were 14% and 18%.

Conclusions: The savings obtained by excluding admissions predicted to be inappropriate were small relative to the health losses. Programs for reducing inappropriate health care should not be implemented without investigating their effects on both health outcomes and costs.