The financial impact of a comprehensive pharmacy program on patient charges and hospital operating costs in a 45-bed community hospital was studied. Data were collected retrospectively for the fiscal year prior to initiating pharmacy services (FY73), the fiscal year during program development (FY74) and the fiscal year following full operations (FY75). The total cost of pharmacy services increased 75% from FY73 to FY75, with the largest dollar increase being in pharmacy salaries. Large increases among other cost items also were noted. The average total cost for pharmacy services increased from $3.28 per patient day in FY73 to $6.04 in FY75 (84%). Total hospital cost per patient day increased by approximately $35 from FY73 to FY75 (5%). The pharmaceutical services fee per dose of medication administered did not change from FY73 to FY75. Patient charges per day for medications and pharmaceutical services increased $0.55 (9.8%) from FY73 to FY75. There was a 55% reduction in the number of items carried in pharmacy inventory from FY73 to FY74 following the initiation of a formulary and a unit dose drug distribution system.