This research examines the safety and cost effectiveness of an institutional policy on discharge of preterm infants with Apnea of Prematurity (AOP) from the Virginia Commonwealth University Medical Center Newborn Intensive Care Unit (VCUNC NICU) with caffeine therapy and a cardiorespiratory monitor. This practice policy was developed over a decade ago as a cost containment measure in neonatal care and continues to be implemented today despite the lack of a formal evaluation. The secondary objective was to examine through a review of the literature the psychosocial impact of premature birth on the family and the potential effect on the infant's hospital discharge. The evaluation of this policy is based on the conceptual framework of effectiveness, efficiency, and equity in health care. Results were used to generate policy recommendations.This is a retrospective case study of 933 infants admitted to the VCU Medical Center and the community hospital NICU between 1993 and 2002 diagnosed with Apnea of Prematurity. Data was obtained from the Neonatal Information System database at Virginia Commonwealth University Health System (VCUHS), the Virginia Department of Health, and the VCUHS hospital information system. In this mixed methods study, the infants were divided into two groups: 1) those discharged from the hospital on caffeine citrate therapy, and a cardiorespiratory monitor for continued management of apnea; and 2) those that were hospitalized until resolution of apnea. Data was analyzed for differences in mortality and morbidity, hospital readmissions and cost of hospital care from birth to 1 year of age. Interviews were conducted with NICU clinicians to obtain a qualitative perspective on this policy. No significant differences were found in the mortality rate between the two groups (p=.65), and the causes of the four deaths were unrelated to Apnea of Prematurity. Mean hospital costs were approximately $58,000 in both groups. Bronchiolitis was the leading cause for hospital readmission and there was no difference in the rate of hospital readmissions. Based on interviews with NICU clinicians, the policy works well and early discharge is advantageous to the infant and family. Therefore, we find no reason to not continue this policy. Study results support the importance and direction for further research on early discharge of infants with AOP and enhanced epidemiologic surveillance of this population.