Using information from the Papworth Hospital heart transplant service, a model was developed to link the main clinical events after cardiac transplantation to survival and costs. On the basis of the clinical and survival experience of 387 patients treated with triple-drug immunosuppression between 1986 and 1993, together with protocols for patient management, resource use, and costs, a 5-year Markov model with three time periods was used to simulate survival and estimate costs. The model accurately mirrors observed actuarial survival; 1- and 5-year survival rates were 81% and 65%, respectively. An average cost per patient of 26,000 pounds over 5 years (discounted at a rate of 6%) was estimated. The expense of routine care for patients accounts for the majority of the costs; a patient who remains well throughout the 5-year period would incur costs of 23,000 pounds. The sensitivity of the estimates to alternative assumptions is presented, and the way in which the model can be used to compare alternative future scenarios is explored.