OBJECTIVES: Mastectomy and lumpectomy procedures are often carried out using electrocautery; however, clinical evidence has demonstrated that the use of ultrasonic energy may reduce blood loss, seroma formation, wound infection, flap necrosis, hematoma, prolonged axillary drainage and length of stay.  In the Canadian healthcare environment hospitals are faced with increasingly restrictive budgets, creating a critical need to demonstrate the cost-effectiveness of new technologies. This study was conducted to determine whether the reduction in complications associated with the use of ultrasonic energy in mastectomy and lumpectomy procedures offsets the increased device costs in a Canadian hospital. METHODS: We examined the budget impact of replacing electrocautery devices with ultrasonic energy in a hospital that performs 100 lumpectomies and 100 mastectomies annually.  The model incorporates the costs associated with surgery, length of stay (taking into account facility and staff costs) and postoperative complications. The cost data was obtained from the Ontario Case Costing Initiative and case costing from a large Canadian hospital.  Patient outcomes data was obtained from pooling published, peer reviewed literature after completing a comprehensive literature review. A multivariate sensitivity analysis was completed to ensure scientific rigour. RESULTS: The use of electrocautery in mastectomy and lumpectomy procedures is associated with lower device costs when compared to the use of ultrasonic energy devices. However, mastectomies and lumpectomies completed with ultrasonic energy devices demonstrate reduced operating time, a reduction in length of stay and a reduction in post-operative complications which offsets the increased device costs. The model establishes that replacing electrocautery with ultrasonic devices in a Canadian hospital performing 100 mastectomies and 100 lumpectomies annually would allow for a potential cost avoidance of $171,966. CONCLUSIONS: In a Canadian hospital, the use of ultrasonic energy in mastectomy and lumpectomy procedures provides a cost savings when compared to the use of electrocautery.