Seven diagnosis-related groups (DRGs) prospective payment system is going to expand to all hospitals including university hospitals this year. However there are few studies on the change of practice pattern under prospective payment system in the university hospital setting. So This study was intended to predict the practice pattern change after the introduction of 7 DRGs prospective payment system in a university hospital setting. To predict the change of practice pattern, this study used simulation technique. Five hundred and nineteen patients classified as 5 DRGs in a university hospital were selected for simulation. The change of practice pattern were predicted based on clinicians` opinion. We also predicted payment change by service items. Major findings of this study are as follows. First, the total rnedical payrnent was reduced by 1 4.4%. The drug payrnent change (8.8%) took rnost of total payrnent reduction. The followings are the change of treatrnent rnaterial cost (3.2%), the change of laboratory tests cost (1.8%), the change of roorn charge (0.5%), and other payrnent change (0.1%), respectively. Second, rnost of the reduction in total rnedical payrnent resulted from the decreased amount of medical services themselves. The transfer of medical services to outpatient setting took up only 4.9% of the total payment reduction. The change of unit price or composition took up 5.5% of the total payment reduction. In this study we found that it is possible to reduce the inpatient services through practice pattern change in university hospital setting. However, it needs to be careful to adjust DRG payment after the reduction of provided services, because most of reduction was not due to service transfer but to service volume reduction. It is desirable to utilize the saving from practice pattern change as incentive to improve qualityofcare.