This study uses hospital records for 7,000 births in McLennan County, Texas, during the period June 1987-July 1989 to examine the association between prenatal care and birth outcome and the implications for hospital costs of newborn infants. After controlling for a variety of maternal and birth factors, a significant relationship between prenatal care and birth outcome remained. Females who failed to receive prenatal care were almost three times as likely to have a low-birth-weight infant (weighing less than 2,500 grams) than females who did. Using an ordinary least squares (OLS) estimating equation (R2 = .24), the net expected hospital cost savings for females who received prenatal care was over $1,000.