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Measures of surgical utilization studied are the number of elective tests performed preoperatively and the total cost per case. The unit of analysis is a matched pair of patients who underwent the same elective procedure, one a Veterans Administration patient, and the other a municipal or voluntary hospital patient. Federal ownership of the hospital ahd the strongest impact on tests and cost per case. On average, costs for the VA patients were 52 percent more per case. The foreign medical graduate variable had a large positive (inflationary) effect on the number of tests, but a slight downward influence in the cost regressions. The fraction of surgeons with faculty appointments had a strong negative (curtailing) impact on elective testing, but an upward influence on cost per case. Additional variables such as age, average laboratory turnaround time, and fraction of the medical school's students doing their surgical clerkship at the hospital ahd a slight upward influence on utilization. The three policy issues raised in the study involve changing the hospital reimbursement incentives, targeting continuing education programs to categories of staff that need it most, and redistributing faculty and students.