Objective The study estimated cost of illness from the provider's perspective for diabetic patients who received treatment during the fiscal year 2008 at Waritchaphum Hospital, a 30-bed public district hospital in Sakhon Nakhon province in northeastern Thailand.

Methods This retrospective, prevalence-based cost-of-illness study looked at 475 randomly selected diabetic patients, identified by the World Health Organization's International Classification of Diseases, 10th revision, codes E10–E14. Data were collected from the hospital financial records and medical records of each participant and were analysed with a stepwise multiple regression.

Key findings The study found that the average public treatment cost per patient per year was US$94.71 at 2008 prices. Drug cost was the highest cost component (25% of total cost), followed by inpatient cost (24%) and outpatient visit cost (17%). A cost forecasting model showed that length of stay, hospitalization, visits to the provincial hospital, duration of disease and presence of diabetic complications (e.g. diabetic foot complications and nephropathy) were the significant predictor variables (adjusted R² = 0.689).

Conclusions According to the fitted model, avoiding nephropathy and foot complications would save US$19 386 and US$39 134 respectively per year. However, these savings are missed savings for the study year and the study hospital only and not projected savings, as that would depend on the number of diabetic patients managed in the year, the ratio of complicated to non-complicated cases and effectiveness of the prevention programmes. Nonetheless, given the high avoidable cost associated with complications of diabetes, healthcare providers in Thailand should focus on initiatives that delay the progression of complications in diabetic patients.