Case-mix classification has made it possible to analyze acute care delivery case volumes and resources. Data arising from observed differences have a role in planning health policy. Aggregated length of hospital stay (LOS) and total charges (TC) as measures of resource use were calculated from 34 case-mix groups at 469 hospitals (1 721 274 eligible patients). The difference between mean resource use of all hospitals and the mean resource use of each hospital was subdivided into three components: amount of variation attributable to hospital practice behavior (efficiency); amount attributable to hospital case-mix (complexity); and amount attributable to the interaction. Hospital characteristics were teaching status (academic or community), ownership, disease coverage, patients, and hospital volume. Multivariate analysis was employed to determine the impact of hospital characteristics on efficiency. Mean LOS and TC were greater for academic than community hospitals. Academic hospitals were least associated with LOS and TC efficiency. Low disease coverage was a predictor of TC efficiency while low patient volume was a predictor of unnecessarily long hospital stays. There was an inverse correlation between complexity and efficiency for both LOS and TC. Policy makers should acknowledge that differentiation of hospital function needs careful consideration when measuring efficiency.