The impact and associated costs of new urolithiasis treatment methods, including extracorporeal shock wave lithotripsy (ESWL), were examined in a series of 1781 patients treated between March 1, 1983, and February 28, 1985. An accounting cost methodology was used to derive estimates of direct and indirect hospital costs, as distinct from charges billed to the patient. The average hospital cost per case for ESWL was lower by 27% and significantly different (P less than 0.05) than the average cost for surgically treated patients. The difference in cost between ESWL and percutaneous lithotripsy was not statistically significant. The invasiveness of the treatments studied was directly related to length of hospital stay and cost. Projecting our findings to the entire urolithiasis population of the United States, we estimate that the usage of ESWL, if applied only to patients who would otherwise receive surgery, could result in an annual hospital cost savings of $124,436,520. We conclude that although the institutional cost of acquiring ESWL is high, its application results in a significant cost savings for patients previously requiring surgery, it is no more expensive than percutaneous stone removal, and it has the advantage of being less invasive than any other treatment method. The potential national savings in health care costs may not be realized if the indications for this less invasive technology are defined more broadly than are those for open surgical procedures, as seems likely, and unless limits are placed on the number of lithotripters made available nationally. Indications for ESWL need to be clearly defined based on careful studies of risks, potential benefits, and costs.