OBJECTIVES: Lung cancer is the leading cause of cancer related death in Canada. Lobectomy is the most common form of treatment for early stage lung cancer and can be performed using an open approach with a thoracotomy incision or as a minimally-invasive procedure using Video-Assisted Thoracic Surgery (VATS). Several recent studies have demonstrated that open and VATS lobectomies achieve onocologically equivalent outcomes, which has lead to rising popularity for VATS. In the Canadian healthcare environment hospitals are faced with increasingly restrictive budgets, creating a critical need to demonstrate the cost-effectiveness of procedures performed. This study was conducted to determine the budget impact of increasing the proportion of VATS vs. open lobectomies in a Canadian hospital.  METHODS: We examined the budget impact of increasing the proportion of VATS cases from 25% to 75%, while decreasing the proportion of open cases by the same amount in a hospital that performs 150 lobectomies annually. The model incorporates the costs associated with surgery, length of stay (taking into account facility and staff costs) and common postoperative complications. The cost data used in the model was obtained from peer reviewed literature, the Ontario Case Costing Initiative and case costing from a large Canadian hospital.  Data on patient outcomes was obtained from peer reviewed literature. A multivariate sensitivity analysis using a Monte Carlo simulation was completed to ensure scientific rigour.  RESULTS: VATS lobectomies are associated with higher procedural costs, but this is offset by a shorter length of stay and a lower postoperative complication rate. The model establishes that for a Canadian hospital performing 150 lobectomies increasing the proportion of VATS cases from 25% to 75% allows for a potential cost savings of CAD $226,066.01 annually. CONCLUSIONS: In a Canadian hospital, VATS lobectomy is a more cost-effective procedure than open lobectomy for early stage lung cancer.