Reliable information on cost and value in microsurgery is not readily avail
able in the literature. Driving factors for cost, determinants of complicat
ions, and cost-reduction strategies have not been elucidated in this popula
tion, despite such progress in other areas of medicine. Clearly, the time-c
onsuming and costly nature of this endeavor demands that appropriate indica
tions and patient management be delineated; to operate preactively in this
cost-conscious time, financial and outcome determinations are critical. One
hundred seven consecutive free-tissue transfers performed from 1991 to 199
4 by a single microsurgeon were studied. Retrospective chart review for cli
nical parameters was combined with analysis of hospital costs and professio
nal charges. Operating room and anesthesia costs were based on a microcost
analysis of actual operating room time, materials, labor, and overhead. Oth
er patient level costs were generated by Transition 1, a hospital cost-acco
unting system. The following issues were addressed: (1) flap survival; (2)
total costs and length of stay for all free flaps; (3) payments received fr
om various insurers; (4) breakdown of operating room costs by labor, suppli
es, and overhead; (5) breakdown of inpatient costs by category; (6) additio
nal costs of complications and takebacks; (7) factors associated with compl
ications and flap takebacks; and (8) cost-reduction strategies. Mean free f
lap operating room costs (exclusive of professional fees) ranged among case
types from $4439 to $6856 and were primarily a function of operating room
times. Elective patient cases lasted a mean 440 minutes. There was a large
disparity in reimbursement: private insurers covered hospital costs (not ch
arges) completely, whereas Medicare paid 79 percent and Medicaid only 64 pe
rcent. Length of stay, operative procedures, and complications had the grea
test influence on inpatient costs in this group of free flap patients. Pote
ntial cost savings as a result of possible practice changes (e.g., shorteni
ng intensive care unit stays and avoiding staged operations) can be predict
ed. This analysis has caused a revision in these institutions' practice pat
terns and lays the foundation for planned outcome studies in this populatio
n.