Few issues in health care have recently generated as much discussion as the two seemingly unrelated topics of out-of-hospital health care financing and compassionate care of patients at the end of life. These two topics meet where health care costs cross paths with the economic viability of hospice and palliative medicine. In this study, we evaluated 101 admissions to a large Medicare-certified hospice in the last quarter of 1995 to assess factors associated with timing of referral to hospice. Mean length of stay in hospice was 55 days; median was 23 days. The majority of patients had cancer diagnoses (74%). Contrary to our hypothesis, there was no statistically significant difference in mean patient lengths of stay between oncologist-referred and nononcologist-referred patients. However, when we compared patient lengths of stay lasting less than--versus longer than--30 days, more patients referred by nononcologists were in hospice longer than 30 days (chi 2 = 3.92, P < 0.05). With further evaluation, this difference was attributable to longer stays by patients covered by the Medicine hospice benefit, by those with noncancer diagnoses, and by those who were older. More of these patients were referred by nononcologists. The difference in referral patterns between oncologists and nononcologists disappeared when only cancer patients were considered. Consistent with initial hypotheses, caregivers of patients with shorter lengths of stay were significantly less satisfied with hospice care (t = -4.06, P < 0.001). These results suggest that health care benefits and other patient-specific issues influence timing of hospice referral rather than simply preferences by types of physicians. The impact on Medicare expenditures and hospice viability is discussed.