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The utility and cost effectiveness of salivary gland fine-needle aspiration (FNA) is controversial. Some authorities argue FNA has no added value over clinical-radiographic study because most salivary gland nodules occur in the parotid and the tumor's relationship to the facial nerve determines the operative procedure rather than the histology. Other experts contend FNA is of value by reducing the overall number of operative procedures performed. We studied 306 salivary gland nodules (214 parotid and 92 submandibular gland) undergoing FNA. One hundred and seventy one were subsequently surgically resected and the remaining 135 followed clinically. A 16% error rate was associated with the nonoperative group, necessitating later surgical resection. The cost of the FNAs and surgical resections (when performed) was calculated based on Medicare reimbursement rates. Costs were based on all cases undergoing initial FNA. The expense of initial resection was based on the observed percentage of patients undergoing resection in our series. The costs of resections related to erroneous FNA diagnoses were based on the error rate associated with FNA diagnoses clinically followed (i.e., chronic sialadenitis). Costs of FNAs, initial resections, and subsequent resections related to FNA errors were summed and compared with the cost which would have occurred if all nodules had been primarily resected.FNA reduced the number of operative procedures by approximately 65% for submandibular nodules and 35% for parotid nodules. Diagnoses which resulted in nonsurgical management included chronic radiation-induced sialadenitis, intraparotid lymph node, recurrent lymphoma, and accessory nodules or lobes of the parotid gland. Pure surgical management was associated with a cost of $275,750.00 per 100 patients. FNA management was associated with an expenditure of $206,632.00 per 100 patients, representing a savings of $69,118.00 (33% savings over surgical management alone). Based on these data, FNA appears to be cost effective in addition to supplying preoperative diagnoses helpful in counseling, operative planning, and allaying patient anxiety.