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There are important gaps in knowledge of the optimal treatment of cystic fibrosis pulmonary exacerbations. Previous observational studies comparing inpatient with outpatient treatment have suffered from methodologic weaknesses, especially indication bias.We analyzed data from the Epidemiologic Study of Cystic Fibrosis using techniques to control for indication bias to determine whether there is an advantage to inpatient treatment of cystic fibrosis pulmonary exacerbations.We identified typical pulmonary exacerbations in patients ages 6 years and older during the 3-year observation period ending in 2005. In our primary analysis, we used the instrumental variables method, implemented using two-stage least squares regression, to evaluate the effect of the proportion of total time that intravenous treatment was administered on an inpatient (versus outpatient) basis on the likelihood of return of percent predicted forced expiratory volume in 1 second to greater than or equal to 90% of baseline post-treatment. We also evaluated two other indicators of treatment setting, three other measures of treatment response, and two alternative modeling techniques, and we also looked for differences between children and adults.Our final analysis included 4,497 pulmonary exacerbations in 2,773 individual patients at 75 sites. We calculated the mean proportion of intravenous treatment time that was provided in the hospital setting at each site. The median across sites was 0.581 (interquartile range, 0.396-0.753). The median treatment success rate across sites was 74.2% (interquartile range, 67.9 to 79.2%). Univariate analysis and two-stage least squares models showed a positive relationship between treatment success and proportion of inpatient treatment days. Our primary model revealed an absolute increase of 9.08% (95% confidence interval, 2.55-15.61; P = 0.006) in the achievement of a return of percent predicted forced expiratory volume in 1 second to greater than or equal to 90% of baseline comparing complete inpatient treatment with no inpatient treatment. Treatment response was not related to duration of intravenous therapy. Similar results were found for all our modeling techniques and outcomes.Patients with cystic fibrosis treated at sites with more reliance on inpatient treatment were more likely to achieve successful forced expiratory volume in 1 second recovery. There was no relationship between treatment duration and recovery of forced expiratory volume in 1 second.