American hemodialysis patients have short lifespans, frequent hospitalizations, and aggregate Medicare inpatient expenditures of $4 billion/year. Dose of dialysis, as quantified by the parameter, Kt/V, corresponds strongly with survival and is estimated to be inadequate (Kt/V <1.2) in one fourth of patients. However, little is known about the morbidity and cost implications of inadequate dialysis. We sought to determine the independent relationship between dose of dialysis and (1) number of hospitalizations, (2) hospital days, and (3) Medicare inpatient reimbursements. We randomly selected 674 patients from all 22 hemodialysis units in northeast Ohio and examined hospitalizations, hospital days, and Medicare inpatient reimbursements for a 6-month interval following a 90-day quantification of dialysis dose. Every 0.1 decrease in Kt/V was independently associated with more hospitalizations (rate ratio, 1.11; 95% confidence interval [CI], 1.07 to 1.15), increased hospital days (rate ratio, 1.12; 95% CI, 1.03 to 1.22), and higher Medicare inpatient expenditures ($940; 95% CI, $450 to $1,440) after adjustment for patient age, sex, race, cause of renal failure, number of years on dialysis, and number of comorbid conditions. We estimate that increasing dialysis doses to a Kt/V of 1.2 for all patients nationally may decrease Medicare inpatient expenditures by $150 million annually. In conclusion, inadequate dialysis dose is independently associated with increased hospitalizations, hospital days, and Medicare inpatient expenditures. Improving dialysis adequacy may both improve patient morbidity and lessen health care costs.