Hospital UKM is the first hospital to implement case·mix system in Malaysia. The objective of the programme is to utilise case-mix system as a tool in improving efficiency and quality of care. From July 2002 to June 2004, a total of 35,568 cases were grouped using IRDRG-Version 1.1 case-mix grouper. Out of these, 3,622 cases or 10.2 % were cardiology cases in MDC 05 (Diseases and Disorders of the Circulatory System). Medical Cardiology cases consist of 86.5% and the remaining 13.5% were Surgical Cardiology. Most of the cases were in severity level one (43.4%), 29.5 % in severity level two and 27.1% in severity level three. The mortality rates for severity level one, two and three were 1.0%, 2.6% and 11.5% respectively. Top three cardiology cases were Acute Myocardial Infarction Without Comorbidity and Complication (IRDRG 05331) (8.4%), Acute Myocardial Infarction With Major Comorbidity and Complication (IRDRG 05333) (7.6%) and Cardiac Catheterization for Ischemic Heart Disease Without Comorbidity and Complication (IRDRG 05311) (7.4%). Step-down costing was carried out to obtain the cost for each DRG group. The mean cost per episode of care for Medical Cardiology cases was RM 3,562 (SD= RM 2, 1 19) with average LOS of 6.4 days (SD= 3 .8days) . For the Surgical Cardiology cases, the mean cost per episode ofcare was RM 6,526 (SD= RM 4,585) and average LOS of5.8 days (SD= 4.1 days). The main components of cost for Medical Cardiology cases are ICU cost (28.8%), pharmacy (17.3%) and Ward Services (15.3%). In Surgical Cardiology, the biggest component of cost was for Operation Theatre (27.9%), followed by Ward Services (25 .4%) and pharmacy (8.5%). Multivariate analysis using multiple linear regression showed that factors which significantly influence the treatment cost of cardiology cases were length of stay, age of the patient, discharge outcome, case type ('surgical partition') and severity level.