The prevalence and cost savings of therapeutic interchange (TI) among teaching, nonteaching, and investor-owned hospitals in the United States was studied. A survey was sent to all directors of pharmacy at hospitals listed in the 1999 American Hospital Association directory as having more than 100 beds; 463 (29.8%) hospitals responded. The survey elicited data about hospital demographics, the policies and personnel involved in TI, and the estimated cost savings incurred by the use of TI. Eighty-eight percent of teaching, 89% of nonteaching, and 100% of investor-owned hospitals reported having established TI policies and procedures; 88% of responding hospitals reported the use of TI as a means of formulary management. Individuals involved in the decision-making process for TI policies included physicians, pharmacists, and pharmacy and therapeutics committee members. Most responding hospitals reported having an automatic interchange procedure, and few required physician consent before the substitution was made. The most commonly substituted medication classes were histamine H2-receptor antagonists, proton-pump inhibitors, antacids, and quinolones. Differences in TI procedures and the medication classes commonly substituted were not significant between teaching and nonteaching hospitals. The annual dollar savings was estimated by 36% of teaching, 38% of nonteaching, and 50% of investor-owned hospitals and determined by record keeping in 18% of teaching, 20% of nonteaching, and 40% of investor-owned hospitals. Eighty-eight percent of teaching, 89% of nonteaching, and 100% of investor-owned hospitals have established TI policies. Significant variation in cost savings occurred when hospitals attempted to estimate the annual dollar savings, as no adequate commercially available software exists to perform this task.