We included in a prospective, randomized study 68 patients aged 70 years or older, with displaced cervical hip fractures. The patients were randomized to internal fixation with hook-pins (36) or primary arthroplasty (32) (total or hemiarthroplasty due to their prefracture status) and followed for 2 years. Patients with rheumatoid arthritis, mental confusion and/or residence in an institution were excluded. The postoperative stay in hospital, rehabilitation wards or nursing homes were recorded as well as complications and the costs of surgery. The aim of this study was to compare the accumulated costs of each method, during the first 2 years after the fracture. In the internal fixation group, 15/36 were considered failures, as compared to 1/32 in the arthroplasty group. As regards primary treatment of the fracture, the durations of surgery and hospital stay were shorter after internal fixation, but the total need for hospitalization/institutionalization was somewhat longer in these patients. The mean 2-year cost for a patient with internal fixation was USD 21,000 and of one with primary arthroplasty USD 15,000. We conclude that primary arthroplasty is a cost-efficient treatment. Considering the very much higher failure rate after internal fixation--leading to increased suffering for these patients--primary arthroplasty stands out as the best method for displaced fractures of the femoral neck.