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To compare the 6-month mortality rate of chronically ventilated patients treated either exclusively in a traditional acute-care hospital or transferred during hospitalization to a long-term acute-care facility. To analyze the hospital cost of care and estimate the amount of uncompensated care incurred by acute-care hospitals under the Medicare prospective payment diagnostic related groups system.Retrospective chart review and questionnaire.Fifty-four acute-care referral hospitals and 26 long-term acute-care institutions.A total of 432 ventilated patients selected from 3,266 patients referred but not transferred to a study long-term acute-care facility and 1,702 ventilated patients from 4,174 patients referred and then subsequently transferred to the long-term acute-care facility. Six-month outcomes were determined for the subgroup of patients ≥65 yrs old (279 and 1,340 patients, respectively). Hospital charges were available for 192 of the 279 nontransferred patients who were ≥65 yrs old and 1,332 of the 1,340 transferred patients.None.The 6-month mortality rate was 67.4% for the 279 nontransferred patients and 67.2% for the 1,340 transferred patients. On multiple regression analysis, variables associated with the 6-month mortality rate included initial admitting diagnosis, age, the acute physiology score, and presence of decubitus ulcer. After controlling for these variables, there was no significant difference in 6-month mortality rate, but admission to the long-term acute-care facility was associated with a longer mean survival time. Average total hospital costs for the 192 nontransferred patients was $78,474, and estimated Medicare reimbursement was $62,472, resulting in an average of $16,002 of uncompensated care per patient. Estimated costs for the long-term acute-care facility admissions were $56,825.Patients undergoing prolonged ventilation have high hospital and 6-month mortality rates, and 6-month outcomes are not significantly different for those transferred to long-term acute-care facilities. These patients generate high costs, and acute-care hospitals are significantly underreimbursed by Medicare for these costs. Acute-care hospitals can reduce the amount of uncompensated care by earlier transfer of appropriate patients to a long-term acute-care facility.