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The authors describe the relation of provider characteristics to processes, costs, and outcomes of medical care for elderly patients hospitalized for community-acquired pneumonia.Using Medicare claims data, Medicare beneficiaries discharged from Pennsylvania hospitals during 1990 with community-acquired pneumonia were identified. Claims data were used to ascertain mortality, readmissions, use of procedures and physician consultations, and the costs of care. The relationship of these measures to provider characteristics was analyzed using regression techniques to adjust for patient characteristics, including comorbidity and microbial etiology.Among 22,294 pneumonia episodes studied, 30-day mortality was 17.0%. After adjusting for patient characteristics, 30-day mortality and readmission rates were unrelated to hospital teaching status or urban location or to physician specialty. Use of procedures and physician consultations was more common and costs were 11% higher among patients discharged from teaching hospitals compared with nonteaching hospitals. Similarly, costs were 15% higher at urban hospitals compared with rural hospitals. General internists and medical subspecialists used more procedures and had higher costs than family practitioners.Processes and costs of care for community-acquired pneumonia varied by provider characteristics, but neither mortality nor readmission rates did. These differences cannot be explained by clinical variables in the database. Further studies should determine whether less costly patterns of care for pneumonia, and perhaps other conditions, could replace more costly ones without compromising patient outcomes.