Thesis advisor: Francis M. McLaughlin / This thesis examines the impact of the hospital regulatory system in the state of Maryland. The system has been highly successful in lowering the gross charge-to-cost ratios that hospitals charge to their patients. In many states, these charge markups appear to be exorbitantly high, which is a great concern since the cost of health care is becoming more and more expensive for Americans. This thesis will include a description of the regulatory agency in Maryland, an explanation of how it works, and how it affects the Maryland hospital sector. Econometric analysis will then be employed in order to determine whether or not the regulatory system successfully helps hospitals reduce costs, a high priority objective of the system. In this model, Maryland hospital costs will be compared with nearby hospitals in Virginia. The paper will conclude with an evaluation of the merits of the system, and a recommendation on whether or not it would be useful in other states. / Thesis (BS) — Boston College, 2008. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics. / Discipline: College Honors Program. / Discipline: Economics Honors Program.