The increase in costs of hospitalization for patients with drug-resistant infection may be associated with drug resistance itself or with the severity of the underlying illness that predisposes patients to acquire the drug-resistant infection. To address this issue, risk factors and cost of hospitalization were compared for patients infected or colonized with vancomycin-susceptible Enterococcus faecium (VSEF) or vancomycin-resistant E. faecium (VREF) in a large tertiary-care hospital in New York City. From January 1995 through December 1996, 157 patients with VSEF and 262 patients with VREF were identified. CMI (case-mix index) was assigned to each patient as a measure of severity of illness, with a CMI of 1 considered to represent illness of average severity. For all patients who were assigned a CMI of <3, the cost per day of hospitalization for patients with VREF was significantly greater than that for patients with VSEF. However, for patients with a CMI of >3, there was no difference between cost of hospitalization for patients with VREF and that for patients with VSEF. These observations indicate that, although vancomycin resistance is associated with an increased cost of hospitalization for less severely ill patients with VREF, patients with severe underlying illness, regardless of vancomycin resistance, incur similar hospitalization costs.