Cost measure. Many studies chose total hospital expenditures to reflect costs of services; however, with this cost measure, patient-specific resource use is not reflected in detail. Two studies determined costs per patient by transforming hospital charges into patient costs using a cost-to-charge ratio. This method assumed that hospital charges would exceed cur- rent expenses because of the need for replacement of equipment and facilities over and above these expenses and because some payers would not pay full charges (they take a discount). The charges are converted to costs by using a constant ratio of cost-to-charge, which is estimated by dividing total hospital operation expenditure with hospital revenue. The main concern of using this method was that a constant cost-to-charge ratio was an inappropriate assumption. Drug A costs $10 to produce and can be sold for $11 while drug B costs $10 to produce and can be sold for $10.50. If a cost to charge ratio is 10%, it could reflect the actual costs of drug A but would fail to show the actual costs of drug B.