OBJECTIVE To compare the hospital costs, charges, and reimbursement for treatment of pediatric femur fractures by two treatment methods: external fixation and 90-90 traction with spica casting. METHODS Retrospective clinical review. METHODS Department of Orthopaedic Surgery, Children's Hospital Oakland, regional pediatric trauma center. METHODS Twenty-nine consecutive patients between the ages of five and ten with a fracture of the femoral shaft were treated by one of two methods: external fixation (sixteen patients) or 90-90 skeletal traction followed by spica casting (thirteen patients). METHODS External fixation or 90-90 traction followed by spica casting. METHODS Hospital billing data including costs, charges, reimbursement for the initial inpatient hospitalization, and outpatient financial data until fracture union and cessation of treatment. RESULTS There was no difference in age, total treatment time, mechanism of injury, or number of associated injuries between the two groups. The average charge for treatment with skeletal traction and spica casting was $32,094 per patient versus $21,439 for external fixation (p < 0.001). The average cost for treatment with traction and spica casting was $22,396 per patient versus $11,520 for external fixation (p < 0.001); reimbursement was $30,846 and $7,490, respectively (p < 0.001). The number of days in the hospital was larger for the traction group than for the external fixation group (22.3 days versus 4.7 days, p < 0.0001). CONCLUSIONS External fixation of pediatric femoral shaft fractures results in decreased hospital costs and length of hospitalization, but produces significantly less income for the hospital when compared with skeletal traction followed by spica casting.