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This study was designed to evaluate the impact of laparoscopic rectal resection on short-term postoperative morbidity and costs.A total of 168 patients with rectal cancer were randomly assigned to laparoscopic (n = 83) or open (n = 85) resection. Outcome parameters were: postoperative morbidity, length of hospital stay, quality of life, long-term survival, and local recurrences. The mean follow-up period was 53.6 months. Cost-benefit analysis was based on hospital costs.Operative time was 53 minutes longer in the laparoscopic group (P< 0.0001). Postoperative morbidity rate was 28.9 percent in the laparoscopicvs.40 percent in the open group (P= 0.18). The mean length of hospital stay was 10 (4.9) days in the laparoscopic group and 13.6 (10) days in the open group (P= 0.004). Local recurrence rate and five-year survival were similar in both groups; however, the limited number of patients does not allow firm conclusions. Quality of life was better in the laparoscopic group only in the first year after surgery (P< 0.0001). The additional charge in the laparoscopic group was $1,748 per patient randomized ($1,194 the result of surgical instruments and $554 the result of longer operative time). The saving in the laparoscopic group was $1,396 per patient randomized ($647 the result of shorter length of hospital stay and $749 the result of the lower cost of postoperative complications). The net balance resulted in $351 extra cost per patient randomly allocated to the laparoscopic group.Short-term postoperative morbidity was similar in the two groups. Laparoscopic resection reduced length of hospital stay, improved first-year quality of life, and slightly increased hospital costs.