Abstract: The era of new medical reform brings opportunities and challenges to hospitals, faced with the impact of some medical services cost price inversion, insufficient financial allocation, grading diagnosis and treatment and medical insurance payment policies, the operating environment and the financial environment of public hospitals are increasingly complicated and difficult. This paper starts with the necessity and importance of cost management in public hospitals, then proposes ways and suggestions to strengthen the cost management of public hospitals, to solve the problems existing in the cost management. The author believes that the establishment of a comprehensive cost management system for public hospitals, through the scientific and effective cost management, can improve the use of hospital resources, improve the self-compensation ability of medical service costs, achieve the balance of hospital financial revenue and expenditure, proving a effective ways for sustainable development of hospitals.

Key words: new medical reform ,  public hospitals ,  cost management ,  sustainable ,  development