A hospital pharmacy's efforts to advance clinical pharmacy practice and reduce pharmacy costs as part of a hospitalwide re-engineering program are described. In 1995, a 321-bed community hospital in Wisconsin undertook a three-year re-engineering program aimed at reducing operating expenses, primarily labor costs. The pharmacy department focused its efforts within the program on improving the efficiency of product-related functions, mainly through automation, and redeploying staff to value-added clinical functions. This involved installation of a hospitalwide pneumatic-tube system, use of unit-based automated medication dispensing devices, and implementation of a dedicated clinical pharmacy services program. Implementation of this program was to occur incrementally, with the first 12 months to be used primarily in developing a service model, initiating a staff-development program, and hiring additional clinical staff. Services added under the program included i.v. to oral conversion, dosage adjustments for patients with renal impairment, advanced patient counseling, development of care plans, and rounds in all areas of the hospital. After the first full year of implementation of the program, a cost-benefit analysis was undertaken; costs were composed primarily of pharmacists' salaries and benefits, and benefits were composed primarily of drug cost savings. A benefit to cost ratio of 2.61:1 and a net saving of $217,551 were calculated. The introduction of clinical pharmacy services as part of a hospitalwide re-engineering program was associated with a positive benefit to cost ratio and a substantial net cost saving.