Abstract: Research on differences of medical expenses in Qingdao could provide reference to take control of medical expenses reasonably. This study uses hierarchical cluster analysis of two variables, outpatient costs for each people and hospitalization expenses for each day of Qingdao in the first half of 2012. According to the medical cost, the 22 governmental hospitals in Qingdao are divided into four grades: "lowest cost", "lower cost", "higher cost", "highest cost". Then make the clustering results for significant test using the single factor variance, LSD method and S-N-K method. It shows that the four levels have obvious differences. Finally, the countermeasure for controlling medical expenses is put forward in Qingdao, China.