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A study was performed to assess the impact of intensive inpatient rehabilitation on the outcome after a fracture of the femoral neck or an intertrochanteric fracture. Before 1990, our hospital did not have an inpatient rehabilitation program. On January 1, 1990, a diagnosis-related-group-exempt (DRG-exempt) acute rehabilitation program was initiated. Patients were discharged to this program after evaluation by a staff physiatrist. Before 1990, twenty-seven (9.0 per cent) of 301 patients were discharged to an outside rehabilitation facility. After January 1990, the percentage of patients who were discharged to the DRG-exempt program increased yearly, from nineteen (17 per cent) of 113 patients in 1990 to forty-one (64 per cent) of sixty-four patients in 1993; this difference was significant (p < 0.01). Before 1990, the average duration of the stay in the hospital was 21.9 days. After January 1990, the average duration for the patients who did not enter the rehabilitation program was 20.0 days whereas the average duration for those who did was 31.4 days (16.1 days for acute care and 15.6 days for the rehabilitation program). There were no differences in the hospital discharge status or in the walking ability, place of residence, need for home assistance, or independence in basic and instrumental activities of daily living at the six and twelve-month follow-up examinations between patients who had been managed before initiation of the rehabilitation program and those managed after it or between patients who had been discharged to this program after its initiation and those who had not. These results raise serious questions regarding the global cost-effectiveness of these programs for patients who have had a fracture of the femoral neck or an intertrochanteric fracture.