Objective: Budgeting is an effective tool for cost control available to management. This study examines the budgeting systems of six large teaching hospitals in northern Taiwan. Specifically, budgeting theories and applications are compared and contrasted to identify opportunities for further improvements to budgeting systems in Taiwanese Hospitals. Method: Using a structured questionnaire, interviews were conducted with the financial or accounting managers of the six hospitals involved in the study. The survey was conducted in June and July‘2002. Result: Overall, the budgeting system of hospital C was superior to others in terms of managerial functions, and can serve as a practical model for other hospitals. Conclusion: Hospital budgeting systems in Taiwan are still in the early stage of development compared to those in the U.S. To adapt to the rapidly changing health care environment, flexible budgeting is necessary for Taiwanese hospitals.