Cholecystectomy is the surgical removal of the gallbladder. It is the most common method for treating symptomatic gallstones. Despite the existence of well-established treatment guidelines, the rate of cholecystectomy varies widely across Europe. We analyse patients in 10 countries that had undergone surgery for the treatment of symptomatic gallstones. We test the performance of three models in explaining variation in the (log of) cost of the inpatient stay (seven countries) or length of stay (three countries). The first model includes only the diagnosis-related group (DRG) variables to which cholecystectomy patients were coded (MD), the second uses a core set of patient characteristics and episode-specific explanatory variables (MP), and finally, the third model combines both sets of variables (MF). Countries vary both in the number of DRGs used to classify cholecystectomy patients (range: 2–8), and in the percentage of patients covered by a single DRG (range: 50%–92%). The ability of combining both DRGs and patient level variables to explain cost variation among patients ranges from 58% in Spain to over 81% in Finland. The comparison of models' performance suggests that incorporating relevant patient characteristics may significantly improve DRG systems. Copyright © 2012 John Wiley qqqamp; Sons, Ltd.