Hospital administrative data are being used to identify hospitals with hospital-acquired complications such as iatrogenic pneumothorax. This was a retrospective cross-sectional study of hospitalization records to estimate the positive predictive value (PPV) of the Agency for Healthcare Research and Quality (AHRQ) Patient Safety Indicator for iatrogenic pneumothorax. A probability sample of inpatient medical records from 2006 to 2007 was reviewed in a national sample of 28 volunteer hospitals. Among the 200 flagged cases, the PPV was 78% (95% confidence interval = 73%-82%). False positive cases were mostly a result of exclusionary conditions (11%) and pneumothoraxes that were present on admission (7%). About 44% of events followed attempted central venous catheter (CVC) placement. Of the 69 CVC-associated events, only 5 occurred with ultrasound guidance. AHRQ's iatrogenic pneumothorax indicator can serve in quality of care improvement. At least 1725 hospital-acquired pneumothoraxes could have been prevented in 2004 through universal use of ultrasound guidance during internal jugular cannulation.