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Context: Palliative care consultation services (PCCS) decrease costs for patients by matching treatments received to patients' and families' goals of care. However, few studies have examined the costs of a specialized palliative care unit (PCU)., Objectives: To quantitatively describe Mount Sinai Hospital's PCU's first two years of operation; to examine how patient-related costs changed in the days before and after transfer to PCU; and to compare cost savings of PCU to those of PCCS., Methods: Cost and administrative data from PCU patients from the first 24.5 months of our PCU's operation were analyzed. To compare costs between PCU and PCCS patients, we matched PCU patients to similar PCCS patients and used propensity scores to adjust for differences across groups., Results: The PCU admitted 1107 patients in its first 24.5 months. Over this time frame, there was a statistically significant (P < 0.001) decrease in average daily direct costs per patient. The mean of patients' average cost per day was $687 less while on the PCU than before transfer to PCU. Among patients who died in the hospital, average daily direct cost per patient in the days after transfer to PCU was $240 lower as compared with patients being followed by PCCS on the general hospital wards (SE = $45, P < 0.001)., Conclusion: Among patients who died in the hospital, transfer to a PCU is associated with significant cost savings as compared with patients on hospital wards who are seen by a PCCS., (Published by Elsevier Inc.)