Background: Approximately 9% of patients in hospital have a hospital acquired infection (HAl). These infections place a burden on the health sector, patients and carers. Objectives: To assess the incidence of, and independent risk factors for HAls occurring in adult surgical patients; to assess the impact of these infections on the hospital sector; and to show how this information may be used to assess the potential benefits of prevention. Design: A prospective survey of the incidence of HAl was conducted. Resources used by both infected and uninfected patients were recorded and costed. Generalised linear modelling techniques were used to estimate the impact of HAl on the observed variation in costs. Logistic regression analysis was used to determine independent risk factors for HAI. Setting: A district general hospital in England SubJects: 2469 adult patients admitted to five surgical specialties between April 1994 and May 1995. Results: 7.5% (95% Cl: 6.4, 8.6) acquired one or more HAls that presented during the in-patient period. The incidence, economic impact and independent risk factors varied with site of infection. On average HAls increased hospital costs by a factor of 2.3 (95% Cl: 2.0, 3.0), equivalent to an additional £2,254 (95% Cl: £1,738, £2,770) per case and increased length of stay by a factor of 2.1 (95% Cl: 1.8, 2.5), equivalent to an extra 7.8 days (95% Cl: 5.7, 10.0) per case. The estimates represent the average gross benefits of prevention. Net benefits depend on the cost and effectiveness of prevention activities. Estimates of the gross benefits of a 15% reduction in infection rates and a framework for assessing the net benefits of prevention are presented. Conclusion: The study provides an estimate of HAl by specialty and site for surgical patients. It calculates the burden on the hospital sector and shows the benefits that might accrue if HAl rates were reduced.