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It is assumed in economic models that insulin pump therapy produces long-term reductions in complications which offset the short-term costs. It is not always apparent that there may also be short-term resource benefits of relevance to a local health community. We retrospectively observed patients' use of primary and secondary care health services before and after initiation of insulin pump therapy in our locality.Data on emergency admissions, outpatient appointments, HbA1c, lipids, weight and blood pressure were collected on 34 patients, up to five years before and five years after insulin pump therapy was commenced. Data regarding primary care contacts were also available for 17 patients for a period of two years before and after initiation of pump therapy.Significant reductions in consultant hospital diabetes outpatient visits (0.20 vs 0.11 appointments per month, p<0.001), reductions in hospital admissions (0.03 vs 0 admissions per month, p<0.002), and similar reductions in total primary care contacts, following initiation of pump therapy were demonstrated. We estimated that these reductions in service use for 100 pump patients equate to £22 684– £38 181 per year at current NHS tariffs. Clinical measures of HbA1c (8.84 vs 7.62%, p<0.001) and total cholesterol (5.12 vs 4.45mmol/L, p<0.001) also showed improvement after insulin pump therapy.By showing benefits on health service utilisation in the short term, to both primary and secondary care, we have strengthened the local case for supporting insulin pump therapy in our service. The calculation of total annual saving per 100 patients treated is an easily understood representation of cost savings which can be set against treatment costs.The methods used could be of value to other diabetes departments considering starting a pump service or wishing to evaluate their current provision. Copyright © 2007 John Wiley & Sons.