In 1985, two policies designed to reduce hospitalization charges for mastectomy patients were instituted at the M.D. Anderson Cancer Center at Houston. The first was a policy of "same-day" admissions for elective surgery patients, and the second was early postoperative discharge for mastectomy patients with suction catheter drains in place. The economic savings resulting from these policies was analyzed by comparing demographics, operation, stage of disease, hospital stay, hospital charges, and complications for two groups of patients. Fifty-nine consecutive mastectomy patients treated between 1983 and 1984, before these policy changes, had "standard management" consisting of hospital admission 24 hours before surgery and discharge only after the surgical drains were removed. Sixty-one consecutive mastectomy patients treated between 1986 and 1987, after these policy changes went into effect, were admitted from the recovery room after surgery and were discharged with drainage catheters in place, usually within 72 hours. All operations were performed by the same faculty surgeon as a representative experience of the General Surgery faculty. The average hospital stay was reduced from 10.5 to 4.3 days. A mean 39% reduction in hospital charges (from $4867.00 to $2981.00) was achieved by instituting the policies of "same-day" admission and early postoperative discharge with drainage catheters in place. Complication rates were not changed. Implementation of this policy resulted in an estimated savings of $750,000.00 in the hospital care of approximately 400 patients treated at the M.D. Anderson Cancer Center at Houston each year. Adjustments in patient care delivery systems from a predominantly inpatient to an outpatient setting required changes in outpatient nursing responsibilities (although not in new personnel). Patient education and written instructions for home care of surgical wounds and drainage catheters were essential for implementing an early discharge policy. With these facts in mind, hospital admission on the day of operation and early postoperative discharge with drainage catheters in place should be the goal for most mastectomy patients.