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Surgical complications contribute substantially to costs. Most important, surgical complications contribute to morbidity and mortality, and some may be preventable. This study estimates costs of specific surgical complications for patients undergoing general surgery in VA hospitals using merged data from the VA Surgical Quality Improvement Program and VA Decision Support System.Costs associated with 19 potentially preventable complications within 6 broader categories were estimated using generalized, linear mixed regression models to control for patient-level determinants of costs (eg, type of operation, demographics, comorbidity, severity) and hospital-level variation in costs. Costs included costs of the index hospitalization and subsequent 30-day readmissions.In 14,639 patients undergoing general surgical procedures from 10/2005 through 9/2006, 20% of patients developed postoperative surgical complications. The presence of any complication significantly increased unadjusted costs nearly 3-fold ($61,083 vs $22,000), with the largest cost differential attributed to respiratory complications. Patients who developed complications had several markers for greater preoperative severity, including increased age and a lesser presurgery functional health status. After controlling for differences in patient severity, costs for patients with any complication were 1.89 times greater compared to costs for patients with no complications (P < .0001). Within major complication categories, adjusted costs were significantly greater for patients with respiratory, cardiac, central nervous system, urinary, wound, or other complications.Surgical complications contribute markedly to costs of inpatient operations. Investment in quality improvement that decreases the incidence of surgical complications could decrease costs.