Data maintained by medical insurance plans can be used to evaluate the incidence of death and nonfatal complications following medical care, to test hypotheses about the outcomes of care, and to identify hospitals with unusually high or low death rates. These uses are illustrated for prostatectomy, utilizing claims data from the Maine Medicare and Manitoba Health Services Commission files. The study shows important differences in death rates between individual hospitals and higher cumulative probability of reoperation following transurethral compared with open prostatectomy. The advantages of claims data are low cost, ease of patient follow-up over long periods, and the absence of reporting bias. The limitations are the adequacy of the data used to control for patient comorbidity and the lack of outcome information on functional status. The effective use of claims data for monitoring requires the active participation of physicians in improving the data base and interpreting the findings.