Background Contracting for HIV service provision is now an established part of the National Health Service commissioning process. AIDS is a heterogeneous condition, comprising Various opportunistic illnesses which require different services and which have different resource implications. This study describes the use of hospital services and associated costs for the management of different AIDS defining conditions. Method A retrospective case-notes analysis was performed, of 335 AIDS patients treated at St Mary's Hospital, London, between 1 January 1983 end 30 September 1989, as well as a costing exercise of 37 clinical departments to calculate HIV-related costs. Results Mean age at time of AIDS diagnosis for these predominantly homosexual men was 38 years. Use of services varied. as did associated costs - from pound 8163 per patient-year for patients with Constitutional Disease to pound 42124 for those with Cytomegalovirus Disease. Most diagnostic categories showed a shift over the study period from an in-patient- to an out-patient-based service. Patients diagnosed after 1987 had overall lower costs per patient-year compared with those diagnosed before 1987; whereas out-patient costs for most groups had increased, in-patient expenditure decreased. For most categories, in-patient care costs and out-patient drugs prescribed provided the greatest proportion of total costs. Average costs per in-patient day ranged from pound 334 to pound 433, and average costs per out-patient visit ranged from pound 99 to pound 411 for different AIDS defining conditions. Conclusions Different opportunistic illnesses of symptomatic HIV disease have different treatment and resource implications. Casemix will need to be taken into consideration when contracting for HIV services, including extra-contractual referrals.