The goal of this paper is to measure the marginal change in facility-level costs of medical care for children under five due to an increase in service quality achieved through the integrated management of childhood illness (IMCI) strategy. Since the beneficial effects of IMCI training on child health outcomes are due to IMCI's effects on service quality, costs of IMCI are regressed against measures of service quality in this paper. Our model shows that quality, as measured by a WHO-index of integrated child assessment is 44% higher in facilities with at least one health worker trained in IMCI as compared to facilities with no health workers trained in IMCI, adjusting for facility utilization as well as type of facility ownership. Our marginal analysis that tied IMCI training to quality and quality to costs shows that on the margin, investing in IMCI training at a primary facility level can yield a significant 44.3% improvement in service quality for a modest 13.5% increase in annual facility costs. Copyright © 2007 John Wiley & Sons, Ltd.