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The aim of this study was to determine the effectiveness of annual screening for hypothyroidism requiring thyroxine treatment (HRTT) in a hospital-based diabetes clinic.A retrospective study of case records of patients attending a hospital-based diabetes clinic was undertaken. Random samples of 400 patients with type 1 diabetes and 400 patients with type 2 diabetes were included. Patient data including thyroid function tests and thyroxine use were recorded. The outcomes were the prevalence of HRTT, and the cost-per-diagnosis of screening for HRTT in the diabetes clinic.Type 1 diabetes patients were younger (41 vs 60 years, p<0.001) and their diabetes was of longer duration (median 9.5 vs 5 years, p<0.05) than those with type 2 diabetes. Hypothyroidism was common in patients with type 1 (10.8%) or type 2 diabetes (10.8%). The prevalence of HRTT was 6.8% in type 1 diabetes and 6.0% in type 2 diabetes, with the majority being female (81% and 83%). The prevalence of HRTT increased after 50 years of age in type 1 diabetes, and somewhat later in type 2 diabetes, in the over 60s reaching 18.8% in type 1 diabetes and 8.4% in type 2 diabetes. Annual screening detected one case of HRTT for every 470 blood tests, equating to €4600 per diagnosis.In conclusion, hypothyroidism was common in patients with type 1 or type 2 diabetes who attended a hospital-based diabetes clinic. However, annual screening at the hospital clinic only rarely found new cases of HRTT, and so is questionable from a cost:benefit viewpoint. Copyright © 2010 John Wiley & Sons.