This study examined the impact of cost outliers in term of hospital resources consumption, the financial impact of the outliers under the Belgium casemix-based system, and the validity of two "proxies" for costs: length of stay and charges. The cost of all hospital stays at three Belgian general hospitals were calculated for the year 2001. High resource use outliers were selected according to the following rule: 75th percentile +1.5 xinter-quartile range. The frequency of cost outliers varied from 7% to 8% across hospitals. Explanatory factors were: major or extreme severity of illness, longer length of stay, and intensive care unit stay. Cost outliers account for 22-30% of hospital costs. One-third of length-of-stay outliers are not cost outliers, and nearly one-quarter of charges outliers are not cost outliers. The current funding system in Belgium does not penalize hospitals having a high percentage of outliers. The billing generated by these patients largely compensates for costs generated. Length of stay and charges are not a good approximation to select cost outliers.