A careful and detailed cost analysis that measured all the costs, direct and indirect, generated in the course of an episode of surgical care demonstrated that there are very large savings from the substitution of surgical day care for inpatient care. Surgical day care appears to be an ideal alternative to inpatient care, from the points of view of those who pay for medical care (governments) as well as those who provide it (hospitals and health professionals) and those who receive it (patients). From an economic perspective the potential savings have not been achieved, and present policies provide no incentives to encourage these savings. These problems, together with strategies to encourage cost savings, are discussed.