Objective To investigate the medical management costs of estrogen plus progestogen hormone therapy (HT) among postmenopausal women taking HT primarily as a preventive treatment for osteoporosis. Design Retrospective longitudinal comparative analysis of HT users and demographically matched nonusers using administrative databases on physician services, hospital stays and prescription medications. Setting: Saskatchewan, Canada. Patients: a total of 5762 women aged 55 years or more who took HT sometime between 1990 and 1997 and 5762 demographically matched controls who did not take HT from 1990 to 1997. Main outcome measures: total medical care expenditures and apparent costs of managing adverse events associated with HT. Results Excluding drug acquisition costs for HT and costs of care for osteoporosis, women in their first year of postmenopausal HT had total medical care costs about $400 greater than women who had never used HT (1997 Canadian dollars). This total medical care cost differential falls to about $90 to $120 per annum after the first year of therapy. If osteoporosis-related medical care costs are not excluded, the cost differential is about $390 during the first year of therapy and $80 to $110 per annum after the first year of therapy. These excess costs primarily are the result of excess rates of resource utilization for uterine- and breast-related diagnostic and treatment procedures. Conclusion Medical management costs for HT may be substantial during the first year of therapy, and some medical management costs may persist over several years. These short-term management costs, combined with recent data about the long-term safety of HT as a preventive therapy, reinforce the importance of considering therapeutic alternatives to HT.