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Admissions to the observation unit comprised over one third of all admissions from a pediatric ED. Certain pediatric illnesses appear to be well suited for admission to the observation unit, with low likelihood of the need for subsequent admission to the inpatient unit. Given the current trends in third-party payer reimbursements for short (<24 hours) admissions, observation unit use provides a more attractive alternative to inpatient admission for many pediatric patients.