The objective of this study was to compare measures of MedCath heart hospital patient severity, quality, and Medicare-related expenditures for comparable services to a group of comparison heart hospitals. This analysis is relevant to stakeholders' concerns over the emergence of the specialty care hospital industry. The study incorporates Medicare data for seven MedCath hospitals as compared with 1192 hospitals that performed open-heart surgery in federal fiscal year 2001. The authors developed cardiac-specific patient severity measures based on All Patient Refined-Diagnostic Related Groups and all subsequent analyses were standardized for differences in case mix between MedCath and comparison group hospitals. Study results indicate that MedCath hospitals have higher cardiac case mix severity, fare better in indicators for quality of care, and provide care at less expense to Medicare than comparison group heart hospitals. These results imply that “cherry picking” arguments and quality-of-care concerns of the specialty care hospital industry critics do not seem applicable for MedCath hospitals.