The aim of this study was to estimate the incidence of adverse events in acute surgical admissions for cardiac disease in admitted episodes in the year 2003-2004 and to estimate the cost of these complications to the Victorian health system. Cardiac surgery adverse events are among the most frequent and significant contributors to the morbidity, mortality and cost associated with hospitalisation. Patient-level costing data set for major Victorian public hospitals in 2003-2004 was analysed for adverse events using C-prefixed markers, denoting complications that arose during the course of hospital treatment for cardiac surgery diagnosis related groups (DRGs). The cost of adverse events was estimated by linear regression modelling, adjusted for age and co-morbidity. A total of 16,766 multi-day cardiac disease cases were identified, of whom 6,181 (36.85%) had at least one adverse event. Patients with adverse events stayed approximately 7 days longer and had four times the case fatality rate than those without. After adjustment for age and co-morbidity, the presence of an adverse event adds AUS$5,751. The sum of the total cost of adverse events for each DRG was AUS$42.855 million, representing 21.6% of total expenditure on cardiac surgery and adding 27.5% in broad terms to the cardiac surgery budget.