Limits on health care resources mean that resource allocation decisions should be guided by considerations of cost in relation to benefits. A method of economic evaluation, (cost-utility analysis) was used to evaluate the costs and benefits of a physiotherapy outpatient department. The quality of life of 56 patients was measured before and after physiotherapy intervention and the costs of the treatment compared with the benefits gained. Within the limitations of the study, physiotherapy was found to be good value for money compared with other health care interventions, with treatment for chronic conditions such as back pain, neck pain and osteoarthritis representing better value for money than treatment for acute conditions such as strains and sprains and fractures.