Objective: Patients undergoing tracheostomy represent a unique cohort, as often they have prolonged hospital stay, require multi-disciplinary, resource-intensive care, and may have poor outcomes. Currently, there is a lack of data around overall healthcare cost for these patients and their outcomes in terms of morbidity and mortality. The objective of the study was to estimate healthcare costs and outcomes associated in tracheostomy patients at a tertiary level hospital in South Australia. Design: Retrospective review of prospectively collected data in patients who underwent tracheostomy between July 2009 and May 2015. Methods: Overall healthcare-associated costs, length of mechanical ventilation, length of intensive care unit stay, and mortality rates were assessed. Results: A total of 454 patients with tracheostomies were examined. Majority of the tracheostomies (n = 386 (85%)) were performed in intensive care unit patients, predominantly using bedside percutaneous approach (85%). The median length of hospital stay was 44 (29–63) days and the in-hospital mortality rate was 20%. Overall total cost of managing a patient with tracheostomy was median $192,184 (inter-quartile range $122560–$295553); mean 225,200 (range $5942–$1046675) Australian dollars. There were no statistically significant differences in any of the measured outcomes, including costs, between patients who underwent percutaneous versus surgical tracheostomy and patients who underwent early versus late tracheostomy in their intensive care unit stay. Factors that predicted (adjusted R2= 0.53) the cost per patient were intensive care unit length of stay and hospital length of stay. Conclusion: Hospitalised patients undergoing tracheostomy experience high morbidity and mortality and typically experience highly resource-intensive and costly healthcare.