Although fine needle aspiration (FNA) biopsy of the breast has been shown to be a safe and accurate technique, many surgeons question whether it is reliable enough to replace excisional biopsy. If FNA biopsy is followed by excisional biopsy for confirmation, it would seem that the cost of diagnostic work-up would be increased. In this study, however, the authors show that the major economic benefit of FNA biopsy is not that it replaces excisional biopsy, but that it allows the surgeon to triage which patients should have a 1-stage inpatient procedure with frozen section and which patients should have an excisional biopsy as an outpatient under local anesthesia. Over the past 2 years, the average cost at the East Carolina University School of Medicine of excisional outpatient biopsy (negative) was +702 +/- 348; inpatient biopsy (negative) was +1410 +/- 262; inpatient 1-stage procedure (positive) was +4135 +/- 361; and outpatient biopsy (positive) followed by inpatient procedure was +4822 +/- 586. The authors' last 100 FNA biopsies were read as 23 positive, three suspicious, 65 negative, and nine insufficient. There were no false-positives and four false-negatives, for a sensitivity of 87%, specificity of 100%, and accuracy of 96%. Using the above figures, it is possible to calculate the cost per case if all 100 cases had been biopsied by the 1-stage inpatient technique (+2227), by the 2-stage outpatient method (+1938), or guided by the FNA biopsy where positive and suspicious readings are followed by an inpatient 1-stage procedure and negative and insufficient readings followed by an outpatient 2-stage procedure (+1759). Since the FNA biopsy costs +75, it resulted in a savings per case of +393 over routine inpatient biopsy and +104 per case over routine outpatient biopsy. Computer analysis revealed that the FNA biopsy would still be economically favorable if the sensitivity of the test fell as low as 37%, the specificity as low as 80%, or if the percentage of cases of cancer in the population biopsied fell as low as 13%. Since FNA biopsy is cost effective even when followed by an excisional or frozen section biopsy for confirmation, it would be safe and reasonable to expand its use to smaller hospitals where the personnel may be initially less experienced with the technique.