OBJECTIVE: Hip fracture has long been associated with significantly increased morbidity as well as mortality. It is argued that the currently available methodological guidance on cost assessment falls short of distinguishing between costs associated with a hip fracture and costs associated with 'old age'. METHODS: It is suggested that additional insight into this question can be gained by linking data on a patient¢s resource consumption with his or her outcomes data: In order to establish that costs were directly attributable to the sustained hip fracture, they needed to be accompanied by corresponding changes in physical functioning, and changes in physical functioning which the patient might associate with the sustained hip fracture rather than 'old age'. An analysis of the incremental health and social care costs associated with 449 hip fractures in Tayside, Scotland (UK) in the year following the fracture suggests that in only a minority of patients did long-term costs due to changes in accommodation needs coincide with a decline in physical functioning. RESULTS: Even fewer patients attributed any changes that did occur in this respect to the sustained fracture. Taking outcomes data into account thus reduced the costs, which can be directly attributed to a hip fracture by 40% in this patient group. CONCLUSIONS: The data of this patient group thus appears to suggest that cost estimates of hip fracture based on current methodologies of cost assessment are overestimating the real costs of the condition by 40%.