BACKGROUND:Never events (NE) and hospital-acquired conditions (HAC) are used by Medicare/Medicaid Services to define hospital performance measures that dictate payments/penalties. Pre-op patient comorbidity may significantly influence HAC development. METHODS:We studied 8,118,615 patients from the NIS database (2002-2012) who underwent upper/lower gastrointestinal and/or hepatopancreatobiliary procedures. Multivariate analysis, using logistic regression, was used to identify HAC and NE risk factors. RESULTS:A total of 63,762 (0.8%) HAC events and 1645 (0.02%) NE were reported. A total of 99.9% of NE were retained foreign body. Most frequent HAC were: pressure ulcer stage III/IV (36.7%), poor glycemic control (26.9%), vascular catheter-associated infection (20.3%), and catheter-associated urinary tract infection (13.7%). Factors correlating with HAC included: open surgical approach (AOR: 1.25, P < 0.01), high-risk patients with significant comorbidity [severe loss function pre-op (AOR: 6.65, P < 0.01), diabetes with complications (AOR: 2.40, P < 0.01), paraplegia (AOR: 3.14, P < 0.01), metastatic cancer (AOR: 1.30, P < 0.01), age > 70 (AOR: 1.09, P < 0.01)], hospital factors [small vs. large (AOR: 1.07, P < 0.01), non-teaching vs teaching (AOR: 1.10, P < 0.01), private profit vs. non-profit/governmental (AOR: 1.20, P < 0.01)], severe preoperative mortality risk (AOR: 3.48, P < 0.01), and non-elective admission (AOR: 1.38, P < 0.01). HAC were associated with increased: hospitalization length (21 vs 7 days, P < 0.01), hospital charges ($164,803 vs $54,858, P < 0.01), and mortality (8 vs 3%, AOR: 1.14, P < 0.01). CONCLUSION:HAC incidence was highest among patients with severe comorbid conditions. While small, non-teaching, and for-profit hospitals had increased HAC, the strongest HAC risks were non-modifiable patient factors (preoperative loss function, diabetes, paraplegia, advanced age, etc.). This data questions the validity of using HAC as hospital performance measures, since hospitals caring for these complex patients would be unduly penalized. CMS should consider patient comorbidity as a crucial factor influencing HAC development.