Pulse oximetry appears to improve quality of care by the early detection of hypoxia noninvasively. We tested the hypothesis that the widespread use of pulse oximetry over a 5-year period in the operating rooms at our institution had resulted in a reduction in blood gas measurements and in departmental operating costs. The total number of blood gas determinations per hour of anesthetic time at our institution decreased by 44%, from 7.64 to 4.26 measurements per 100 operating room hours. The number of capnography units in the operating rooms increased from 8 to 14, the number of pulse oximeters increased from 0 to 22, and oximeter use increased from 0 to 100% for all anesthetics. The total cost to provide oximetry, capnography, and blood gas measurements in 1989-1990 was less than the cost to provide blood gas measurements alone in 1985-1986. The introduction of these technologies was accomplished without an increase in cost: $76,880 in 1985-1986 versus $71,025 in 1989-1990.