Background Proposed neonatal quality measures have included structural measures such as average daily census, and outcome measures such as mortality and rates of complications of prematurity. However, process measures have remained largely unexamined. The objective of this research was to examine variation in surfactant use as a possible process measure of neonatal quality. Methods We obtained data on infants 30 to 34 weeks gestation admitted with respiratory distress syndrome (RDS) within 48 hours of birth to 16 hospitals participating in the Pediatric Health Information Systems database from 2001-2006. Models were developed to describe hospital variation in surfactant use and identify patient and hospital predictors of use. Another cohort of all infants admitted within 24 hours of birth was used to obtain adjusted neonatal intensive care unit (NICU) mortality rates. To assess the construct validity of surfactant use as a quality metric, adjusted hospital rates of mortality and surfactant use were compared using Kendall's tau. Results Of 3,633 infants, 46% received surfactant. For individual hospitals, the adjusted odds of surfactant use varied from 2.2 times greater to 5.9 times less than the hospital with the median adjusted odds of surfactant use. Increased annual admissions of extremely low birth weight infants to the NICU were associated with greater surfactant use (OR 1.80, 95% CI 1.02-3.19). The correlation between adjusted hospital rates of surfactant use and in-hospital mortality was 0.37 (Kendall's tau p = 0.051). Conclusions Though results were encouraging, efforts to examine surfactant use in infants with RDS as a process measure reflecting quality of care revealed significant challenges. Difficulties related to adequate measurement including defining RDS using administrative data, accounting for care received prior to transfer, and adjusting for severity of illness will need to be addressed to improve the utility of this measure.