This study was conducted to evaluate the ability of AN-DRG version 3.1 to predict variation in patients' length of stay in hospital (LOS) and identify other factors that can influence the LOS by using routinely collected hospital morbidity data. A total of 18 DRGs that comprised 4,589 episodes were analysed. Multiple regression was used to model length of stay as a function of a number of independent variables. Overall only 37.6% of variation in mean length of stay could be explained. DRGs predicted 30% of the total variation. Other factors such as age, payment classification, source of referral, specialty of doctor, and ethnic group also influenced patient length of stay. It was concluded that the limited explanation was a consequence of a lack of a better indicator of severity within DRGs.