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Background: Orthopaedic surgeons vary in their management of displaced intracapsular fractures of the hip in healthy older patients. The aim of this investigation was to determine the functional, clinical, and resource consequences of three different types of surgical treatment.Methods: The study was a multicenter randomized controlled trial. Reduction and fixation was compared with bipolar hemiarthroplasty with cement and total hip replacement with cement. Participating surgeons elected to randomize their patients to be treated with either one of the three types of procedures or with either fixation or bipolar hemiarthroplasty. Functional outcomes were measured with a hip-rating questionnaire and the EuroQol health status measure. Clinical outcomes included mortality and complications. The direct health service costs were compared. Participants were followed up for two years.Results: Two hundred and seven patients were randomized to be treated with one of the three operations, and ninety-one were randomized to be treated with either fixation or bipolar hemiarthroplasty. There were no differences in the mortality rates among the treatment groups. The rate of secondary surgery was highest in the fixation group (39% compared with 5% in the group treated with bipolar hemiarthroplasty and 9% in the group treated with total hip replacement). The fixation group had the worst hip-rating-questionnaire and EuroQol scores at four and twelve months. The total hip replacement group had significantly better functional outcome scores at twenty-four months than the other two groups. Although fixation was initially the least costly procedure, this short-term advantage was eroded by significantly higher costs for subsequent hip-related hospital admissions.Conclusions: Arthroplasty is more clinically effective and cost-effective than reduction and fixation in healthy older patients with a displaced intracapsular fracture of the hip. The long-term results of total hip replacement may be better than those of bipolar hemiarthroplasty.Level of Evidence: Therapeutic Level II. See Instructions to Authors for a complete description of levels of evidence.