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This study was designed to determine if an accelerated treatment protocol administered to acute asthmatics presenting to a Hospital Emergency Department Observation Unit (EDOU) can offset the need for inpatient admissions and reduce total cost per episode of care without sacrificing patient quality of life.The authors used a prospective randomized controlled trial comparing postintervention patient quality of life for EDOU care versus standard inpatient care as measured by the standardized Medical Outcomes Study (MOS) SF-36 instrument. Other measures reported include: clinical status as measured by peak flow rates, total cost pertreatment arm using microcosting techniques, and relapse-free survival 8 weeks after treatment. Eligible patients (n = 113) were assigned randomly to an EDOU or inpatient care from a consecutive sample of 250 acute asthmatic patients presenting to an urban hospital emergency department who could not resolve their acute asthma exacerbation after 3 hours of emergency department therapy.Patients assigned to the EDOU had lower mean costs of treatment (EDOU = $1,202 versus Hospital Inpatient = $2,247) and higher quality of life outcomes after intervention in five of eight domains measured by the MOS SF-36: Physical Functioning, Role Functioning-Emotional, Social Functioning, Mental Health, and Vitality. No differences were found in clinical outcomes as measured by peak flow rates or postintervention relapse-free survival. Univariate comparative findings were re-examined and confirmed through multivariable analysis when baseline SF-36 scores and postintervention peak expiratory flow rates clinical status were used as covariates.The study showed that the EDOU was a lower cost and more effective treatment alternative for a refractory asthmatic population presenting to the Emergency Department. Several baseline MOS SF-36 domains proved useful in predicting or validating posttreatment clinical status, relapse, and total costs of care. Outcome SF-36 domain scores were also useful in identifying patients with the most favorable clinical, cost, and relapse rate outcomes at the study endpoint.