The occurrence of fever and neutropenia following cancer chemotherapy generally prompts hospitalisation for evaluation and treatment. Colony-stimulating factors (CSFs) have been shown to reduce the risk of febrile neutropenia (FN) and the need for hospitalisation in such patients. This study was undertaken to obtain estimates of the actual institutional costs associated with FN and the impact of these costs on threshold estimates for the appropriate use of CSFs. Total hospital expenditures for patients admitted with FN over a 2 year period were studied. A cost allocation function was utilised to allocate all direct costs for non-revenue-generating support centres to revenue-generating service centres as indirect costs. A cost accounting function was then utilised to allocate direct and indirect costs for each service centre to the charge code level. Two groups of patients were defined based on diagnostic codes to represent the spectrum of patients with FN. Total hospital costs were estimated and incorporated into a cost model for the use of CSFs. Variation in the total cost of hospitalisation for FN relates primarily to differences in the average length of stay. The daily cost of hospitalisation was comparable in the groups studied, averaging between US$1675 and US$1892. Incorporation of these cost estimates into the cost model yielded FN risk threshold projections for CSF use in the range of 20-25%. Preliminary studies suggest that incorporation of non-medical, indirect and intangible costs into the CSF decision models will further decrease FN risk threshold projections. Total hospitalisation cost estimates for managing patients with FN are greater than those previously reported, reducing projected FN risk thresholds for CSF use.