Clinical, socioeconomic, and ethical dilemmas have prompted reevaluation of traditional methods of providing intensive care. Six years ago, we established a noninvasive respiratory care unit (NRCU) for selected patients in need of intensive respiratory monitoring and therapy, particularly those requiring prolonged mechanical ventilation. One impetus for the formation of the NRCU was the expectation that it might prove to be a less costly alternative to the intensive care unit (ICU) for selected patients. We reviewed data from all patients admitted to the NRCU from July 1, 1987 through June 30, 1988 to identify characteristics of the patient population and to evaluate potential cost savings. During one year of operation, 136 patients were admitted to the unit, 107 of whom were mechanically ventilated. Overall, hospital costs for these patients exceeded payments by $1,519,477. Losses were greatest for mechanically ventilated patients and those for whom Medicare or Medicaid were the primary payors. Daily costs of care for mechanically ventilated patients were $1,976 lower in the NRCU than in the medical intensive care unit (MICU). We conclude that the NRCU represents a cost-effective approach to the care of substantial numbers of patients requiring specialized respiratory care.