OBJECTIVES: The objective of this study was to develop a flexible health economic simulation Markov cohort model that can be used to assess the cost-effectiveness of different treatment strategies within the hip and knee arthroplasty area in Sweden. METHODS: The Markov cohort model included the following health states: No event, Revision, re-revision and dead. The model have stochastic capabilities and the uncertainty in the risk of revision, mortality after revision, costs and quality of life were accounted for by bootstrapping technique. For exemplification the model was used to estimate the cost-effectiveness of a cemented implants with antibiotics compared to cemented implants without antibiotics in a Swedish setting for both patients with THA and TKA. Data used to populate the model was mainly derived from the Swedish National Hip Arthroplasty Register and the Swedish Knee Arthroplasty Register and the Swedish National Inpatient Register. The analysis had a societal perspective (i.e. the aim is to include all relevant costs irrespective of who incur them). In the base case simulations patient were followed for 10 years after the arthroplasty. RESULTS: An antibiotic cemented implant compared to an implant without antibiotics was found cost saving both for patients having a THA and TKA was found to be cost saving when patients were followed for 10 years after the procedure in the model. When the costs in added life were included the cost per QALY gained was SEK 187 888 for THA and SEK 186 217 for TKA. CONCLUSIONS: The developed cost-effectiveness model indicated that antibiotic cemented implants compared to implants with no antibiotics was cost-effective for the use in THA and TKA. The model is highly adaptable for the evaluation of other treatments strategies such as prostheses but it can also be used to evaluate waiting times or the procedure as a whole.