Introduction Recurrent instability following a first-time anterior shoulder dislocation (FTASD) is very common and approaches 100% in some reports. Arthroscopic stabilization can decrease the rate of recurrent instability and improve outcomes, but the decision for surgery remains complex. Multiple patient and provider specific factors exist that affect this treatment algorithm. In this paper, we examine the interaction of these complex factors and provide threshold values at which either surgery or non-operative treatment is preferred. Methods A Markov Monte Carlo decision model comparing non-operative versus surgical treatment for a FTASD was constructed using TreeAge Pro (Williamstown, MA, 2007). Four health states were incorporated into the model: initial dislocation, stable shoulder, recurrent instability and revision stabilization. Input parameters included patient-specific variables (age, gender, activity level, time lost from work or sport, and coping with instability) and physician-specific variables such as success of surgery as well as outcome probabilities and effectiveness. Values were derived from the literature or estimated by expert opinion where necessary. The primary outcome, treatment-related quality of life years, was calculated based upon the Western Ontario Shoulder Instability index (WOSI). Specific factors examined were age, gender, time lost from work or sport, surgical success rate, activity level and ability to cope with instability. Multivariate sensitivity analyses were performed to identify key variables that influenced the preferred treatment strategy. Results Surgery for a FTASD was preferred for all men age 15-35 and for women age 30 and younger. For high-risk patients such as overhead athletes, surgery was preferred for all men age 15-35 and women age 33 and younger. Non-operative management was preferred when the relative risk of dislocation after surgery rises above 0.7 and 0.5, for men and women, respectively. Non-operative management was preferred for men with an unstable shoulder when they were comfortable with a 14 point drop in WOSI score or when the WOSI benefit of surgery lasted 2.1 years or less. For women these values were 8 WOSI points and 3.6 years. Time lost from work or sport strongly effected the decision for surgery. This relationship is displayed in Figure 1, a two-way sensitivity analysis of time lost from work or sport against age at first dislocation. Conclusion Surgery for a first time anterior shoulder dislocation resulted in improved outcomes (WOSI) for all men and women under age 30 and was therefore the preferred treatment. Beyond age 30, patient and provider specific factors exerted strong influences on the decision for surgery. Our study clarified the relationship among these factors and indicated threshold values at which surgery resulted in improved outcomes. These thresholds could potentially be useful for guiding clinical decision-making, designing future studies, or benchmarking.