Abstract Background Surgery is increasingly being omitted in older patients with operable breast cancer in the Netherlands. Although omission of surgery can be considered in frail older patients, it may lead to inferior outcomes in non-frail patients. Therefore, the aim of this study was to evaluate the effect of omission of surgery on relative and overall survival in older patients with operable breast cancer. Methods Patients aged 80 years or older diagnosed with stage I–II hormone receptor-positive breast cancer between 2003 and 2009 were selected from the Netherlands Cancer Registry. An instrumental variable approach was applied to minimize confounding, using hospital variation in rate of primary surgery. Relative and overall survival was compared between patients treated in hospitals with different rates of surgery. Results Overall, 6464 patients were included. Relative survival was lower for patients treated in hospitals with lower compared with higher surgical rates (90·2 versus 92·4 per cent respectively after 5 years; 71·6 versus 88·2 per cent after 10 years). The relative excess risk for patients treated in hospitals with lower surgical rates was 2·00 (95 per cent c.i. 1·17 to 3·40). Overall survival rates were also lower among patients treated in hospitals with lower compared with higher surgical rates (48·3 versus 51·3 per cent after 5 years; 15·0 versus 19·7 per cent after 10 years respectively; adjusted hazard ratio 1·07, 95 per cent c.i. 1·00 to 1·14). Conclusion Omission of surgery is associated with worse relative and overall survival in patients aged 80 years or more with stage I–II hormone receptor-positive breast cancer. Future research should focus on the effect on quality of life and physical functioning.