Knowing when to use diagnostic testing and surgery in the management of low back pain is often a dilemma for practitioners. This paper reviews the effectiveness of clinical practice guidelines in managing 1,796 cases of low back pain or herniated lumbar disk reviewed by Health Risk Management, Inc. between November 1990 and October 1991. In all cases (except cauda equina syndrome or other rapidly progressing neurological deficit) a trial of conservative treatment, always including physical therapy, was requested prior to recommendation for diagnostic testing or surgery. Ninety-one percent (1,628 cases) had completed an adequate trial of conservative therapy or had a lesion requiring immediate intervention. These cases were recommended for the requested procedure or hospitalization. Of the 168 cases that were not recommended immediately for imaging, surgery, or hospitalization, 84.5% improved with conservative management and neither imaging nor surgery was necessary over a period of at least 12 months following the time of review. Efficacy of conservative management was independent of age, sex, part of the country in which the treatment took place, and primary diagnosis. Net savings realized after subtracting employer costs for the reviews were well over a third of a million dollars in this small group of patients.