OBJECTIVES: Surveillance endoscopy aims to identify progression to high-grade dysplasia (HGD) or oesophageal adenocarcinoma (OA) at an early stage in patients with Barrett's metaplasia (BM). There are variations in surveillance practice, clinical outcomes and economic analyses. The study examined long-term survival and financial impact in patients undergoing annual surveillance of BM. METHODS: Patients with BM and considered fit for curative treatment between January 1994 and July 2001 were studied. Surveillance was scheduled as annual endoscopy with quadrantic biopsies every 2 cm. Financial analysis was based on standard National Health Service costs to death or follow-up to 5 years. Comparison was made with patients presenting with OA over the same time period. RESULTS: Three hundred and two patients were identified with BM. Minimum follow-up was 5 years with a total follow-up of 654 patient-years. Two patients developed HGD and six OA. Median time between last nondysplastic biopsy and development of OA or HGD was 16 months (range 9-55). Five underwent potentially curative treatment. The remaining patients were unfit (n=1), refused surgery (n=1) or had metastatic disease (n=1). Four of five treated patients survived up to 5 years. The total cost of the surveillance programme including subsequent surgical or palliative treatment was euro240 682, euro30 085 per patient who progressed and for the prevalent cancer group (n=74) euro630 480 or euro8520 per patient. Only two patients in this group survived beyond 5 years. The additional cost of surveillance was euro4493 per life year gained. CONCLUSION: A surveillance programme leads to improved 5-year survival. It is cost-effective compared with dealing with unselected patients.