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OBJECTIVE: To develop and test a new outcome measure, Conditional Length of Stay (CLOS), to assess hospital performance when deaths are rare and complication data are not available. DATA SOURCES: The 1991 and 1992 MedisGroups National Comparative Data Base. STUDY DESIGN: We use engineering reliability theory traditionally applied to estimate mechanical failure rates to construct a CLOS measure. Specifically, we use the Hollander-Proschan statistic to test if LOS distributions display an "extended" pattern of decreasing hazards after a transition point, suggesting that "the longer a patient has stayed in the hospital, the longer a patient will likely stay in the hospital" versus an alternative possibility that "the longer a patient has stayed in the hospital, the faster a patient will likely be discharged from the hospital." DATA COLLECTION/EXTRACTION METHODS: Abstracted records from 7,777 pediatric pneumonia cases and 3,413 pediatric appendectomy cases were available for analysis. PRINCIPAL FINDINGS: For both conditions, the Hollander-Proschan statistic strongly displays an "extended" pattern of LOS by day 3 (p<.0001) associated with declining rates of discharge. This extended pattern coincides with increasing patient complication rates. Worse admission severity and chronic disease contribute to lower rates of discharge after day 3. CONCLUSIONS: Patient stays tend to become prolonged after complications. By studying CLOS, one can determine when the rate of hospital discharge begins to diminish--without the need to directly observe complications. Policymakers looking for an objective outcome measure may find that CLOS aids in the analysis of a hospital's management of complicated patients without requiring complication data, thereby facilitating analyses concerning the management of patients whose care has become complicated.