The cost-effectiveness of a Fractured Hip Management Programme (FHMP) was evaluated by considering available measures of patient outcome and comparing the cost of the programme with the value of resources freed by reductions in length of hospital stay. The FHMP adopted a multidisciplinary team approach to care for elderly patients with hip fracture. The aims of the programme were to reduce delays before surgery; provide specialist geriatric medical supervision; improve early post-operative mobility; plan for hospital discharge with rehabilitation in the patient's normal environment; and provide continuity of care by a small number of staff. The cost of managing patients with fractured hip averaged $Aus11,060 per patient before the programme was introduced and $Aus9280 per patient after the FHMP was in place. This reduction in cost was achieved without impairing health outcomes. Patients treated by the programme were no worse off compared with those treated conventionally. In conclusion, the FHMP provided a cost-effective alternative in the management of fractured hip in elderly people.