BACKGROUND To facilitate the discussion on the increasing number of total hip replacements (THR) and their effectiveness, we apply a joint evaluation of hospital case costs and health outcomes at the patient level to enable comparative effectiveness research (CER) based on the preoperative health state. METHODS In 2012, 292 patients from a German orthopedic hospital participated in health state evaluation before and 6 months after THR, where health-related quality of life (HRQoL) and disease specific pain and dysfunction were analyzed using EQ-5D and WOMAC scores. Costs were measured with a patient-based DRG costing scheme in a prospective observation of a cohort. Costs per quality-adjusted life year (QALY) were calculated based on the preoperative WOMAC score, as preoperative health states were found to be the best predictors of QALY gains in multivariate linear regressions. RESULTS Mean inpatient costs of THR were 6,310 Euros for primary replacement and 7,730 Euros for inpatient lifetime costs including revisions. QALYs gained using the U.K. population preference-weighted index were 5.95. Lifetime costs per QALY were 1,300 Euros. CONCLUSIONS The WOMAC score and the EQ-5D score before operation were the most important predictors of QALY gains. The poorer the WOMAC score or the EQ-5D score before operation, the higher the patient benefit. Costs per QALY were far below common thresholds in all preoperative utility score groups and with all underlying calculation methodologies.