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The hepatopulmonary syndrome (HPS) is present in 15–20% of patients with cirrhosis undergoing orthotopic liver transplantation (OLT) evaluation. Both preoperative and post-OLT mortality is increased in HPS patients particularly when hypoxemia is severe. Screening for HPS could enhance detection of OLT candidates with sufficient hypoxemia to merit higher priority for transplant and thereby decrease mortality. However, the cost-effectiveness of such an approach has not been assessed. Our objective was to perform a cost-effectiveness analysis from a third-party payer's perspective of screening for HPS in liver OLT candidates. The costs and outcomes of 3 different strategies were compared: (1) no screening, (2) screening patients with a validated dyspnea questionnaire, and (3) screening all patients with pulse oximetry. Arterial blood gas analyses and contrast echocardiography were performed in patients with dyspnea or a pulse oximetry (SpO2) ≤97% to define the presence of HPS. A Markov model was constructed simulating the natural history of cirrhosis in a cohort of patients 50 years old over a time horizon of their remaining life expectancy. Transition probabilities were obtained from published data available through Medline and U.S. vital statistics. Costs represented Medicare reimbursement data at our institution. Costs and health effects were discounted at a 3% annual rate. No screening was associated with a total cost of $291,898 and a life expectancy of 11.131 years. Screening with pulse oximetry was associated with a cost of $299,719 and a life expectancy of 12.27 years. Screening patients with the dyspnea-fatigue index was associated with a cost and life expectancy of $300,278 and 12.28 years, respectively. The incremental cost-effectiveness ratio of screening with pulse oximetry (compared to no screening) was $6,867 per life year gained, whereas that of the dyspnea-fatigue index (compared to pulse oximetry) was $55,900 per life year gained. The cost-effectiveness of screening depended on the prevalence and severity of HPS, and the choice of screening strategy was dependent on the sensitivity of the screening modality. In conclusion, screening for HPS, especially with pulse oximetry, is a cost-effective strategy that improves survival in transplant candidates predominantly by targeting the transplant to the subgroup of patients most likely to benefit. The utility of screening depends on the prevalence and severity of HPS in the target population. Liver Transpl, 2006. © 2006 AASLD.