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A previous randomized controlled trial showed that artificially elevating the pulse oximetry display resulted in fewer hospitalizations with no worse outcomes. This suggests that management decisions based mainly on pulse oximetry may unnecessarily increase health care costs. This study assessed the incremental cost of altered relative to true oximetry in infants with mild to moderate bronchiolitis.A cost analysis was undertaken from the health care system and societal perspectives using patient-level data from the randomized controlled trial, with a 5-day time horizon after emergency department visit. Infants aged 4 weeks to 12 months with mild to moderate bronchiolitis were randomized to pulse oximetry measurements with true or altered saturation values displayed by artificially increasing saturation 3% points above true values. Direct and indirect health care costs were measured. Sensitivity analyses were performed to assess parameter uncertainty.From the health care system perspective, the average cost per patient was Can $1155 for altered oximetry and $1967 for true oximetry, with a net savings of $812. From a societal perspective, the average cost per patient was $1559 for altered oximetry and $2473 for true oximetry, with a net savings of $914. Probabilistic analyses demonstrated that altered oximetry remained the less costly study group, with an average savings of $810 (95% confidence interval, $748–$872) from the health care system perspective and $910 (95% confidence interval, $848–$973) from the societal system perspective.Reliance on oximetry as a major determinant in the decision to hospitalize infants with mild to moderate bronchiolitis is associated with significantly greater costs.