Diagnostic related groups (DRGs) alter the way consumers use the health care delivery system. Acute care facilities provide care for serious health problems while less serious problems are treated in outpatient agencies. Inpatient stays decrease while use of skilled nursing and home health services increase. This we have already seen. The purpose of this article is to examine appropriate use of baccalaureate nurses (BSN) as a method for providing cost effective quality care.The BSN is prepared to function in five major roles — caregiver, manager/leader, health promotion/supervision, teaching/counseling, and health/illness screening.1In addition, they are prepared to identify researchable problems and incorporate research findings into clinical practice. The preparation for these roles provide the BSN with the abilities necessary to perform ideally under a prospective payment system.