This paper reports the results of an analysis designed to estimate the expected annual cost per patient of treating venous leg ulcers, and to evaluate the relative cost-effectiveness of a systematic treatment regimen using a four-layer compression bandaging system (Profore) compared with usual care. A Markov model has been developed which simulates the transition of patients between health states (healed and unhealed) over a 52-week period. Healing rates used in the model are derived from those reported in the literature. By running the model for a cohort of 100 patients over 52 weeks it is possible to estimate expected outcomes and annual budgetary costs for alternative treatment regimens. Results suggest that, when compared with usual care, a systematic treatment regimen using Profore is unambiguously more cost-effective. Patient outcomes are improved and annual treatment costs reduced. An important implication is that failure to co-ordinate treatment policies and to use the most cost-effective treatments may result in substantial inefficiency in the use of NHS resources. This inefficiency could represent the equivalent of between 350,000 Pounds and 1.08 million Pounds annually for a typical health authority.