This study quantitates cost savings achieved by a home intravenous antibiotic (HIVA) program in a Medicare managed health care program. In 1998, 66 treatment courses of HIVA therapy were administered for a total of 1542 patient-days of therapy. The calculated cost of HIVA therapy included the actual costs of drugs, supplies, nursing and therapists' salaries, and laboratory studies. Savings were calculated based on the average daily direct variable cost (DDVC) for hospital acute unit or skilled nursing facility (SNF) care associated with the patient's discharge diagnosis-related-group. The number of days on HIVA therapy was assumed to equal the number of days in the hospital acute unit or hospital-based SNF. The average cost per day of HIVA therapy was $122, whereas average DDVC of hospital acute unit care was $798, and the average DDVC of SNF care was $541. In 1 year, the HIVA program saved our health care system $646,000-$834,000, which demonstrates that HIVA programs are powerful tools to reduce costs in Medicare managed health care programs.