Acute medical conditions commonly seen by physician assistants (PAs) or physicians were assigned costs for all resources used to treat an episode of illness. Included in the analysis were data on the provider of record for the episode, patient characteristics, health status, diagnosis, treatment, referrals, medication, imaging, laboratory studies, and return visits. In every medical condition managed by PAs, the total episode cost was less than a similar episode managed by a physician, regardless of patient age, gender, health status, and department. Few differences emerged in the use of resources and the rate of return visits for a diagnosis between physicians and PAs. In this setting PAs appear to be cost-effective from an employment standpoint.