Objective: To assess the direct and indirect costs of hip fracture in dependence of postoperative care setting. Study design: Prospective cohort study. Methods: 227 consecutive patients in three hospitals (city, town, and small town) presenting with hip fracture. For 177 patients there was follow-up regarding post-operative care-setting. During follow-up the costs of the remaining patient at 1, 3, 6 months were recorded and afterwards adjusted to the distribution of the initial cohort. To obtain information on patient characteristics, assessments during hospital stay and follow up have been performed. Results: There was a relevant difference in costs depending on the care setting after hip fracture. The nursing home - nursing home, community community, and community - nursing home resulted in total costs at 6 months of 17,701 DM, 27,102 DM and 54,503 DM, respectively (average: 24,508 DM). Nursing home costs contributed significantly to the differences between groups. Valid and predictive measures could not be established in first analysis of performed assessments. Conclusion: Due to the high incidence of hip fractures (100,000/y) indirect costs play a major role in the economic impact of this illness. The analysis of the effectiveness of interventions has to take into account these costs to achieve adequate conclusions.