Introduction: Increasing costs for health care has forced its providers to economize with current resources. This paper reports on cost analysis from a randomized study where the study group (SG) was subjected to pre-operative education and postoperative home-based rehabilitation after total hip replacement (THR). The comparison group (CG ) comprised patients treated according to routine pathway at the time.

Methods: Between 1997 and 2000 a total of 50 patients were operated on in two hospitals, 29 at the Landspíta-linn University Hospital in Reykjavík and 21 in a nearby rural hospital. They were randomized into a study group (SG) of 27 patients and control group of 23. All contacts with the health care during a six month period after the operations were registered. The effectiveness of the treatments was measured with the Oxford Hip Score (OHS).

Results: The average hospital costs totalled $5,848 in the SG and $7,291 in the CG. Total health care costs was $6,402 on average in the SG and $9,248 in the CG. By including average patient related costs the total rose to $9,570 in the SG and $13,377 in the CG (all costs in 1999 USD). The difference was statistically significant (p=0.0001) for the total costs. The group variable was statistically significant – regression analysis adjusted for age gender etc., not excluding significant factors according to the Ramsey RESET test. The recovery according to the OHS was from 33.1 preoperatively down to 14.2 after six months follow up for the study group. For the CG it was 36.6 and 20.5 respectively. Thus the cost difference (ΔC) was $3,807 and an effectiveness difference (ΔE) of 6.3. No significant difference was found in cost between hospitals, although indications favoured the rural hospital

Conclusions: Our method of shortening hospital stay and transferring parts of the postoperative treatment to the patient’s homes appears to be an effective way of reducing the unit price of THR in Iceland.