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Substantial care variation occurs in a number of pediatric diseases.We evaluated the variability in healthcare resource utilization and its association with clinical outcomes among children, aged 1–18 years, hospitalized with community-acquired pneumonia (CAP). Each of 29 children’s hospitals contributing data to the Pediatric Hospital Information System was ranked based on the proportion of CAP patients receiving each of 8 diagnostic tests. Primary outcome variable was length of stay (LOS), revisit to the emergency department or readmission within 14 days of discharge.Of 21,213 children hospitalized with nonsevere CAP, median age was 3 years (interquartile range: 1–6 years). Laboratory testing and antibiotic usage varied widely across hospitals; cephalosporins were the most commonly prescribed antibiotic. There were large differences in the processes of care by age categories. The median LOS was 2 days (interquartile range: 1–3 days) and differed across hospitals; 25% of hospitals had median LOS ≥ 3 days. Hospital-level variation occurred in 14-day emergency department visits and 14-day readmission, ranging from 0.9% to 4.9% and from 1.5% to 4.4%, respectively. Increased utilization of diagnostic testing was associated with longer hospital LOS (P = 0.036) but not with probability of 14-day readmission (Spearman ρ = 0.234; P = 0.225). There was an inverse correlation between LOS and 14-day revisit to the emergency department (ρ = −0.48; P = 0.013).Wide variability occurred in diagnostic testing for children hospitalized with CAP. Increased diagnostic testing was associated with a longer LOS. Earlier hospital discharge did not correlate with increased 14-day readmission. The precise interaction of increased use with longer LOS remains unclear.