Patient outcomes at discharge from acute care after knee arthroplasty were investigated in a prospective observational outcome study at three Melbourne public acute care hospitals during a five-month period from November 1999 to March 2000. The participants were 105 consecutive patients (35 at each hospital), with a mean age of 71 years. Outcome measures were length of stay, destination (home or rehabilitation), knee range of movement, and functional mobility at discharge from the acute care facility. During the study period, mean hospital length of stay across the three hospitals was 6.5 days, more than 30% less than the Victorian average for the preceding year. In that time, 56% of patients had achieved functional independence sufficient for discharge directly home, however only 36% were actually discharged home. The reasons identified for discharge to rehabilitation despite the achievement of sufficient functional independence included pressure on clinicians to decrease length of stay and the need to make decisions regarding discharge early in the post-operative recovery when the eventual patient outcome may still be unclear. Unnecessary discharges to rehabilitation increase the overall length of stay in the health care system and costs per patient. This finding suggests a method of risk screening is required to assist clinical decision making with regard to discharge.