ABSTRACT.Understanding our government's new prospective payment system for hospitals can be likened to heeding rumors of the proposed“New Math”of the 60's: one felt that if he or she had a proficient background in adding and dividing in the traditional way, one would be able to build on past knowledge to function commendably in this“new way”of the future.Hearing my peers question what implications prospective payment and the DRG system hold for us as health care professionals, my interest was aroused about what brought us to this new method of reimbursement, its mechanics and how it would affect our hospitals, our physicians and ourselves.In writing this paper I have attempted to share with you the research I did to satisfy my curiosity about where my hospital and I fit into the system of United States healthcare today, and how we will adapt astutely to changes now, and in the future.