To determine the impact of the use of synthetic surfactant on hospital resource use and charges, we analyzed the economic data from a multicenter, randomized, placebo-controlled clinical trial of synthetic surfactant in infants with neonatal respiratory distress syndrome and birth weights between 700 and 1350 gm. Two 5 ml/kg doses of a synthetic surfactant (Exosurf Neonatal) or air placebo were administered to 419 infants who were receiving mechanical ventilation and had an arterial/alveolar oxygen tension ratio < 0.22. In addition to the clinical endpoints for safety and efficacy, data were collected on length of hospital stay, days in the neonatal intensive care unit, days of mechanical ventilation, days of oxygen supplementation, and hospital charges until the infant reached 1 year adjusted age. Growth and development of infants who received synthetic surfactant therapy in the study and survived to 1 year adjusted age were equivalent to those of the survivors in the air placebo group. For 1-year survivors, synthetic surfactant reduced the average length of stay at the different levels of care needed during the hospitalization such as neonatal intensive care unit days, days of mechanical ventilation, and days of oxygen supplementation. For nonsurvivors, synthetic surfactant increased the average length of stay, especially at more intense levels of care. Total hospital charges for the initial hospitalization and through 1 year adjusted age for a hypothetic cohort of 100 infants treated with synthetic surfactant were, on average, the same as those for a comparable cohort of infants in the air placebo group. These results indicate that rescue therapy with synthetic surfactant in infants with respiratory distress syndrome and birth weights from 700 to 1350 gm can result in significantly improved survival without significant increases in hospital charges. (J PEDIATR 1995;126:94-101).