OBJECTIVE To conduct an economic analysis of the Hlabisa community-based directly observed therapy management strategy for tuberculosis and to project costs of three alternative strategies.   
 SETTING Hlabisa health district, KwaZulu-Natal, South Africa.   
 METHODS An economic analysis comparing the current tuberculosis management strategy in Hlabisa with three alternative strategies (the Hlabisa strategy prior to 1991 based on hospitalisation, the national strategy and sanatorium care) in terms of costs to both health service and patient and of cost-effectiveness.   
 RESULTS The current Hlabisa strategy was the most cost-effective (R3799 per patient cured), compared with R98307 for the strategy used prior to 1991, R9940 for the national strategy, and R11145 for sanatorium care. Between 71% and 88% of treatment costs lie with the health service, and hospitalisation (R119 per day) is the most expensive item. Prolonged hospitalisation is extremely expensive, but community care is cheaper (community clinic visit, R28; community health worker visit, R7). The total cost of supervising a patient in the community under the current Hlabisa strategy was R503, equivalent to 4.2 days in hospital. Drug costs (R157) are equivalent to just 1.3 days in hospital.   
 CONCLUSION Cost to both health service and patient can be substantially reduced by using community-based directly observed therapy for tuberculosis, a strategy that is cheap and cost-effective in Hlabisa. These findings have important national implications, supporting the goals of the new tuberculosis control programme.
True