The change in the hospital cost of total hip arthroplasty over a ten-year period at the Lahey Clinic was evaluated by comparison of the hospital bills for forty-four hip replacements that had been performed in 1981 with the bills for 104 such operations that had been done in 1990. Each hospital charge was converted to cost with use of government-mandated hospital-specific cost-to-charge ratios. The average actual hospital cost for total hip arthroplasty increased 46.5 per cent, from $8428 in 1981 to $12,348 in 1990. However, in inflation-adjusted dollars, the cost increased only 1.9 per cent. During this period, the cost for a patient room decreased from 50 per cent of the hospital cost in 1981 to 37 per cent of the hospital cost in 1990. In sharp contrast, the cost of hip prostheses increased from 11 per cent of the hospital cost in 1981 to 24 per cent of the hospital cost in 1990. The actual dollar cost of the hip prostheses increased 212 per cent, and the inflation-adjusted dollar cost increased 117 per cent. The hospital cost of total hip arthroplasty during the 1980's was controlled by decreases in the length of stay in the hospital and in the volume of services delivered. The unit costs of supplies and, specifically, the cost of hip prostheses were not controlled. In the 1990's, efforts to control the hospital cost of total hip arthroplasty must concentrate on decreasing the cost of the prostheses and on controlling the unit costs of personnel and of hospital supplies.