Health gains for patients treated on the surgical service of the University Hospital in Saskatoon have been measured using an illness index matrix and these gains have been related to financial costs. Although many patients benefited, 46.5% did not, either because they suffered self-limiting complaints or because their diseases were beyond the surgeon's ability to help. This 60-bed surgical service generated costs of $8 million in 1979, of which about $3 million were for services from which there was little or no gain for the patient. Since 72% of expenditures were for basic bed, board and nursing costs, more exacting use of hospital beds holds the greatest potential for increasing efficiency. There is evidence, too, that our use of medical manpower may be improvident.