BACKGROUND CONTEXTDegenerative cervical myelopathy (DCM) is a form of acquired spinal cord compression and contributes to reduced quality of life secondary to neurological dysfunction and pain. There remains uncertainty regarding optimal management for individuals with mild myelopathy. Specifically, owing to lacking long-term natural history studies in this population, we do not know whether these individuals should be treated with initial surgery or observation. PURPOSEWe sought to perform a cost-utility analysis to examine early surgery for mild degenerative cervical myelopathy from the healthcare payer perspective. STUDY DESIGN/SETTINGWe utilized data from the prospective observational cohorts included in the Cervical Spondylotic Myelopathy AO Spine International and North America studies to determine health related quality of life estimates and clinical myelopathy outcomes. PATIENT SAMPLEWe recruited all patients that underwent surgery for DCM enrolled in the Cervical Spondylotic Myelopathy AO Spine International and North America studies between December 2005 and January 2011. OUTCOME MEASURESClinical assessment measures were obtained using the Modified Japanese Orthopedic Association scale and health-related quality of life measures were obtained using the Short Form-6D utility score at baseline (preoperative), 6 months, 12 months and 24 months postsurgery. Cost measures inflated to January 2015 values were obtained using pooled estimates from the hospital payer perspective for surgical patients. METHODSWe employed a Markov state transition model with Monte Carlo microsimulation using a lifetime horizon to obtain an incremental cost utility ratio associated with early surgery for mild myelopathy. Parameter uncertainty was assessed through deterministic means using one-way and two-way sensitivity analyses and probabilistically using parameter estimate distributions with microsimulation (10,000 trials). Costs and utilities were discounted at 3% per annum. RESULTSInitial surgery for mild degenerative cervical myelopathy was associated with an incremental lifetime increase of 1.26 quality-adjusted life years (QALY) compared to observation. The associated cost incurred to the healthcare payer over a lifetime horizon was $12,894.56, resulting in a lifetime incremental cost-utility ratio of $10,250.71/QALY. Utilizing a willingness to pay threshold in keeping with the World Health Organization definition of "very cost-effective" ($54,000 CDN), the probabilistic sensitivity analysis demonstrated that 100% of cases were cost-effective. CONCLUSIONSSurgery compared to initial observation for mild degenerative cervical myelopathy was cost-effective from the Canadian healthcare payer perspective and was associated with lifetime gains in health-related quality of life.