To compare costs of care and quality outcomes between teaching and nonteaching hospitalist services, while testing the assumption that resident-driven care is more expensive. Records of inpatients with the top 20 Medicare Severity Diagnosis-Related Groups admitted to the University Teaching Service (UTS) and nonteaching hospitalist service (NTHS) at Houston Methodist Hospital from 2014-2015 were analyzed retrospectively. Direct costs of care, length of stay (LOS), in-hospital mortality (IHM), 30-day readmission rate (30DRR), and consultant utilization were compared between the UTS and NTHS. Propensity score matching and case mix index (CMI) were used to mitigate differences in baseline characteristics. To compare outcomes between matched groups, the Wilcoxon rank sum test and chi-square test were used. A sensitivity analysis was conducted using multivariable regression analysis. From the overall study population of 8,457 patients, 1,041 UTS and 3,123 NTHS patients were matched. CMI was 1.07 for each group. The UTS had lower direct costs of care per case ($5,028 vs. $5,502, P = .006), lower LOS (4.7 vs. 5.2 days, P = .0002), and lower consultant utilization (1.0 vs. 1.6, P ≤ .0001) versus the NTHS. The UTS and NTHS 30DRR (17.2% vs. 19.3%, P = .110) and IHM (2.9% vs. 3.7%, P = .206) were comparable. The multivariable regression analysis validated the matched data and identified an incremental cost savings of $333/UTS patient. Patients of an academic hospitalist service had significantly shorter LOS, fewer consultants, and lower direct care costs than comparable patients of a nonteaching service.