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Although internal fixation is recommended for most nondisplaced fractures of the femoral neck, the optimal treatment for displaced fractures of the femoral neck is controversial. Options for operative treatment of displaced fractures of the femoral neck include: reduction and internal fixation; unipolar hemiarthroplasty; bipolar hemiarthroplasty; and total hip arthroplasty. One hundred eighty-six displaced fractures of the femoral neck in elderly patients were treated surgically with internal fixation (in 120 patients), hemiarthroplasty (in 43 patients), and total hip arthroplasty (in 23 patients). One hundred twenty patients with displaced fractures treated with internal fixation were compared with 66 patients with displaced fractures treated with arthroplasty. Criteria for comparison were reoperation, mortality, hospital discharge disposition, functional outcome, living status, and cost effectiveness. There was no difference in rates of reoperation or mortality, but arthroplasty produced a longer interval to reoperation or death. Arthroplasty was associated with more independent living, and arthroplasty was more cost-effective than internal fixation. Total hip arthroplasty was the best treatment for displaced fractures of the femoral neck in elderly patients in this series.