*MAGENTA IS DIE-CUT & FOLDLINES - DO NOT PRINT
8.5”
.25”
OUTSIDE
27.5”
One Park Plaza
Nashville, Tennessee 37203
www.HCAhealthcare.com
Corporate Information
Transfer Agent and Registrar
EQ Shareowner Services
P.O. Box 64874
St. Paul, Minnesota 55164-0874
Toll free: 800-468-9716
Certified/Overnight Mail
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, Minnesota 55120
Independent Registered
Public Accounting Firm
Ernst & Young LLP
Nashville, Tennessee
Corporate Headquarters
One Park Plaza
Nashville, Tennessee 37203
615-344-9551
Form 10-K
The Company has filed an annual report on Form 10-K for the year ended
December 31, 2021 with the United States Securities and Exchange Commission
(SEC). Shareholders may obtain a copy of this report, without charge, by writing:
Investor Relations, HCA Healthcare, Inc., One Park Plaza, Nashville, TN 37203
or by visiting the Company’s website at www.hcahealthcare.com.
Common Stock and Dividend Information
The Common Stock of HCA Healthcare, Inc. is listed on the New York Stock
Exchange (NYSE) under the symbol “HCA”. On February 25, 2022, the Company
had approximately 400 shareholders of record. On January 26, 2022, the
Company’s Board of Directors declared a quarterly dividend of $0.56 per share
on our common stock payable on March 31, 2022 to shareholders of record on
March 17, 2022. Future declarations of quarterly dividends and the establishment
of future record and payment dates are subject to the final determination of the
Company’s Board of Directors.
Annual Meeting of Shareholders
The annual meeting of shareholders will be held on April 21, 2022,
at 2:00 pm local time in a virtual meeting format only, via live webcast at
www.virtualshareholdermeeting.com/HCA2022. Shareholders of record as
of February 25, 2022 are invited to attend the virtual meeting.
Directors
Thomas F. Frist Ill
Chairman
HCA Healthcare
Founder and
Managing Principal
Frist Capital
Samuel N. Hazen
Chief Executive Offi cer
HCA Healthcare
Meg G. Croft on
Retired President
Parks and Resorts Operations
The Walt Disney Company
Executive Offi cers
Samuel N. Hazen
Chief Executive Offi cer
and Director
Jennifer L. Berres
Senior Vice President and
Chief Human Resources Offi cer
Phillip G. Billington
Senior Vice President –
Internal Audit Services
Jeff E. Cohen
Senior Vice President –
Government Relations
Michael S. Cuff e, M.D.
Executive Vice President and
Chief Clinical Offi cer
Jon M. Foster
President – American Group
Robert J. Dennis
Retired Chairman and
Chief Executive Offi cer
Genesco Inc.
Nancy-Ann DeParle
Co-founder and
Managing Partner
Consonance Capital
Partners
William R. Frist
Principal
Frist Capital
Charles O. Holliday, Jr.
Retired Chairman and
Chief Executive Offi cer
DuPont
Charles J. Hall
President – National Group
Michael R. McAlevey
Senior Vice President and
Chief Legal Offi cer
A. Bruce Moore, Jr.
President – Service Line
and Operations Integration
Sammie S. Mosier
Senior Vice President and
Chief Nurse Executive
P. Martin Paslick
Senior Vice President and
Chief Information Offi cer
Deborah M. Reiner
Senior Vice President –
Marketing and
Communications
Hugh F. Johnston
Vice Chairman and
Chief Financial Offi cer
PepsiCo, Inc.
Michael W. Michelson
Retired Member
KKR Management LLC
Wayne J. Riley, M.D., M.B.A.
President of SUNY
Downstate Health
Sciences University
Andrea B. Smith
Retired Chief
Administrative Offi cer
Bank of America Corporation
William B. Rutherford
Executive Vice President
and Chief Financial Offi cer
Joseph A. Sowell, III
Senior Vice President and
Chief Development Offi cer
Kathryn A. Torres
Senior Vice President –
Payer Contracting
and Alignment
Kathleen M. Whalen
Senior Vice President and
Chief Ethics and
Compliance Offi cer
Christopher F. Wyatt
Senior Vice President
and Controller
12”
.25
2021
Annual Report
to Shareholders
12”
17.25”
5.25”
2021
Letter to our
Shareholders
B
Left: Arian Culp, MD, Med Surg,
Research Medical Center; David
Porter, PA; Yvonne Adams, LPN;
Aubree Hosiner, RN
To our valued
shareholders,
This past year was another remarkable one for HCA Healthcare. Our hospitals
managed through some of the highest COVID-19 surges of the pandemic while
also improving our enterprise capabilities, allowing us to better support our 182
hospitals and more than 2,200 ambulatory sites of care.
We are proud that HCA Healthcare ended 2021 in its best position in decades
based upon key metrics that we believe position our facilities as a provider system
of choice in the communities we serve.
We could not have performed at this level without the resilience of our
approximately 284,000 colleagues — and 45,000 affiliated physicians — who
remained committed to providing our patients with high-quality care, even
while the COVID-19 pandemic continued to surge. Through more than 35 million
patient encounters, HCA Healthcare nurses, physicians, and colleagues across the
enterprise withstood adversity and delivered patient-centered care every day.
HCA Healthcare’s momentum continued to accelerate throughout this past
year. We were able to accomplish this while staying true to our mission. We
expanded our footprint in the communities we serve while also developing
more comprehensive resources to support our caregivers and colleagues. We
invested more in technology to improve our patients’ experiences, advance our
clinical capabilities, and gain efficiencies. And finally, we discovered new ways to
capitalize on our diverse footprint by partnering with leading companies to help
accelerate these strategic initiatives.
1
Strong financial
performance
Our momentum, financial stewardship, and disciplined operating
culture also allowed us to deliver a strong financial performance during
2021. Our revenues for the year totaled $58.7 billion, a 14% increase
from 2020. Diluted earnings per share increased 93% to $21.16.
Aft er suspending certain programs during 2020 in
response to the COVID-19 pandemic, we were able to
resume a balanced approach to capital allocation by:
capital expenditures to support and
grow our facilities
hospitals and other sites of care, such
as home health and urgent care
1 Investing more than $3.5 billion of
2 Spending $1.1 billion on acquisitions of
3 Repurchasing $8.2 billion, or over
4 Reinstating our quarterly dividend
37 million shares, of common stock
In addition, we divested non-strategic assets, which generated
over $2.1 billion of pre-tax proceeds to redeploy.
2
We are proud of the impact this performance
had on our people and our communities:
25.5%
46%
Our payroll and benefits for our
approximately 284,000 colleagues
were $26.7 billion.
We cared for those who are uninsured
or under-insured by providing
uncompensated care at an estimated
cost of $3.3 billion. Approximately 25.5%
of our inpatient admissions and 46% of
our emergency room visits were for the
treatment of patients who were either
uninsured or covered under Medicaid.
As a taxpaying healthcare provider, we
incurred approximately $5.5 billion of
federal, state, and local taxes, including
$2.8 billion of income, property, and
sales and use taxes.
3
Supporting
our caregivers
Again, it was because of our nurses,
physicians, and colleagues that we were
able to care for so many patients, loved
ones, and community members. But the
challenging labor environment and the
growing demand for healthcare services
present hurdles. That is why we have a
multipronged strategy designed to meet
these challenges and advance
HCA Healthcare’s mission.
In 2021, demand for healthcare remained
strong and was influenced by three
different COVID-19 surges. We saw
growth in most major categories of
our business, and we expect to see
continued growth in 2022. With this
expected growth, HCA Healthcare
continues to confront two critical
staffing needs — nurses and physicians
— by growing our clinical education
and comprehensive graduate medical
education programs, in addition to
initiatives discussed below.
Similar to 2020, in 2021, we focused
on caring for those suffering from
the COVID-19 pandemic. From
February 2020 to December 2021, our
facilities cared for more than 271,000
COVID-19 inpatients, including more
than 160,000 inpatients in 2021.
4
5
Enhancing the
nursing pipeline
Enhancing the nursing pipeline has become increasingly important to meet the
ongoing demands of patient care throughout the healthcare industry. For us,
responding to this need starts with strengthening our recruitment and retention
functions. For example, we have advanced our benefits and invested in creating an
environment where nurses can treat their patients and, ultimately, discharge them
in a more productive manner. Additionally, in June 2021, we created a $50 million
“Investing in Our Colleagues” initiative to respond to feedback gathered through our
Vital Voices program, an employee engagement survey conducted multiple times
each year. Each facility used its portion of this initiative’s additional funds based on
our nurses’ assessments of areas of greatest need to enhance patient care. We also
continue to provide well-being support and resources through a partnership with
PsychHub, a free COVID-19 mental health resource hub, and Nurse Care, a 24/7
free and confidential counseling program, to meet the needs of HCA Healthcare’s
hospital-based nurses.
6
Additionally, in June 2021, we created a $50
million “Investing in Our Colleagues” initiative
to respond to feedback gathered through our
Vital Voices program, an employee engagement
survey conducted multiple times each year.
We have also increased our investments in our
Galen College of Nursing, one of the largest
educators of nurses in the United States. In
2021, we announced the expansion of our
nursing college in Austin, Texas; Nashville,
Tennessee; and Myrtle Beach, South Carolina.
We have announced seven campuses since the
acquisition in 2020. Furthermore, Galen College
of Nursing has helped develop an innovative and
evidence-based curriculum to prepare nurses
for today’s workforce and meet the needs
of patients. It has also provided a significant
pipeline of nurses for our facilities, and, on an
annual basis, we hope to hire three times the
number of graduates over the next few years
compared to the number of annual
hires today.
Top: Janie Holmes, MSN, RN, CPN Nurse
Residency Cohort Graduate Manager of
Pediatric ICU, TriStar Centennial Medical Center
Bottom: Cardiac Sonographers Jill Romero,
RDCS; Crystal Thompson, RDCS; Alexis Kohnle,
RDCS; Andrew McCann, RDCS, Research
Medical Center
7
Right: Alosh Madala, MD, Board
Certified Urologist, Research
Medical Center
Strengthening
programs for
tomorrow’s
physicians
HCA Healthcare recently announced that we off ered 1,982 positions for our July
2021 graduate medical education (GME) programs — our largest incoming class to
date and the largest among teaching hospitals in the United States. As a result,
HCA Healthcare has become a significant provider of clinical and medical education
and is the largest sponsor of GME programs in the United States, with 299
Accreditation Council for Graduate Medical Education (ACGME) accredited
programs, more than 4,800 residents and fellows, and 59 teaching hospitals
across 16 states. By growing our GME program, we strive to build our pipeline of
physicians for our facilities and meet the growing needs of our communities.
We respect the autonomy and expertise of our physicians and advanced practice
providers and collaborate with them through physician governance councils,
operational and service line support, physician engagement and patient safety
culture surveys, and our network of physician relationship specialists.
We have also invested in more clinical resources for our physicians, building
state-of-the-art operating rooms, upgrading facilities, and advancing technology
capabilities, like telehealth, to increase access to care and further support and
protect our physicians. As one of the nation’s leading healthcare providers, we are
committed to investing in clinical resources so we can provide high-quality care
to our patients.
8
9
Advancing
our clinical
excellence
Clinical excellence is what we stand
for as an organization — quality and
compassionate care that we’d expect for
ourselves, our families, and our friends.
In its 2021 Hospital Safety Grades, The
Leapfrog Group recognized 84% of
HCA Healthcare hospitals with an A
or B rating, as compared to 58% of
hospitals nationally. In February 2021,
14 HCA Healthcare hospitals were
recognized among the “250 Best
Hospitals” by Healthgrades, which
also recognized Mission Hospital, an
HCA Healthcare affiliated hospital, as
one of the “50 Best Hospitals.” In
addition, 16 of the best performing
hospitals in the nation are part of
HCA Healthcare, according to Fortune/
IBM Watson Health’s 2021 “Top 100
Hospitals” Annual Study. This recognition
testifies to the hard work of our nurses,
physicians, and colleagues, and it’s
because of their dedication to clinical
excellence that HCA Healthcare continues
to advance healthcare standards.
We have also continued to share best
practices to optimize our service lines
across our facilities. As a result, in 2021,
18 HCA Healthcare facilities received
Press Ganey Pinnacle of Excellence or
Guardian of Excellence awards for
patient experience.
10
Below, right: Vincent Narciso, MD, General
Surgeon; AJ Eisenhart, Surgical Tech, and surgical
team at Overland Park Regional Medical Center
In February 2021, 14 HCA Healthcare
hospitals were recognized among the
“250 Best Hospitals” by Healthgrades,
which also recognized Mission Hospital,
an HCA Healthcare affiliated hospital,
as one of the “50 Best Hospitals.” In
addition, 16 of the best performing
hospitals in the nation are part of
HCA Healthcare, according to Fortune/
IBM Watson Health’s 2021 “Top 100
Hospitals” Annual Study.
11
We believe leveraging our unique scale
can accelerate learning. For example,
early in 2021, HCA Healthcare’s clinical
research team formed a consortium of
prominent public and private research
institutions to use our organization’s
vast data on COVID-19 hospital care to
improve patient outcomes and public
knowledge. The COVID-19 Consortium
of HCA Healthcare and Academia for
Research GEneration (CHARGE) provides
a framework for cooperation and
coordination among all its members to
pose research questions, scrutinize, and
validate methods, and, most importantly,
share and act on innovative ideas that
will help lead to impactful results. The
member institutions — including the
federal Agency for Healthcare Research
and Quality (AHRQ), Johns Hopkins
University, Duke University, Meharry
Medical College, Harvard Pilgrim Health
Care Institute, and others — accessed
the data in a research program directed
by the HCA Healthcare Research Institute
(HRI). As of December 31, 2021, 12 studies
were being conducted or had been
completed using de-identified data from
more than 210,000 patients in the
HCA Healthcare COVID-19 Registry.
Topics include the effi cacy of
therapeutics, operational effi ciency in
treating patients, predictive modeling
for needing intensive care, and the
eff ects of disparities.
12
Left: Elizabeth Catapang, ASCP, Microbiology
Medical Technologist, Research Medical Center
Right: Ghadah Kazem, Medical Laboratory
Scientist (ASCP), General Laboratory Manager,
Research Medical Center
For example, early in 2021,
HCA Healthcare’s clinical
research team formed a
consortium of prominent
public and private research
institutions to use our
organization’s vast data on
COVID-19 hospital care to
improve patient outcomes
and public knowledge.
Preparing
for the next
generation of
healthcare
Next-generation patient care
will require data-driven support
to allow a sharper focus on safe,
effi cient, and eff ective patient
care. HCA Healthcare is committed
to establishing partnerships and
exploring new initiatives to
enhance care delivery.
14
In May, we announced a multi-year
strategic partnership with Google Cloud
to enhance HCA Healthcare’s use of
information technology to accelerate
digital transformation.
The partnership is designed to help
create a secure and dynamic data
analytics platform for HCA Healthcare
and help develop next-generation
operational models focused on actionable
insights and improved workflows.
In combination with significant
investments in mobility to support
clinical care, the partnership with Google
Cloud is expected to empower physicians,
nurses, and others with workflow tools,
analysis, and alerts on their mobile
devices to help clinicians respond quickly
to changes in a patient’s condition.
The partnership will also focus on
aiding non-clinical support areas that
may benefit from improved workflows
through better use of data and insights,
such as supply chain, human resources,
and physical plant operations.
The partnership is designed
to help create a secure and
dynamic data analytics platform
for HCA Healthcare and
help develop next-generation
operational models focused
on actionable insights and
improved workfl ows.
15
16
In the spring of 2021, HCA Healthcare’s Information Technology Group (ITG) and
Clinical Operations Group (COG) hosted a Coding for Caregivers “Hackathon”
event that asked nurses to submit their ideas for improving work effi ciencies at
the patient bedside. HCA Healthcare nurses submitted more than 5,000 ideas
which were reviewed by 29 teams comprised of nearly 600 participants — including
clinical representatives, developers, project managers, and quality analysts — who
provided solutions to improve care effi ciencies for nurses across the organization.
The collaboration produced a list of projects that are currently under development,
including the introduction of an automated process for notifying clinicians when
patient medications are refilled in their dispensing cabinets — saving valuable time
and resources.
An additional clinical area of focus is care transformation. In 2021, we established a
new offi ce of Care Transformation and Innovation (CT&I) dedicated to using
HCA Healthcare’s capacity and scale to help care teams achieve better, more effi cient,
digitally-enabled outcomes through increased integration of technology into clinical
care. This work is supported by a variety of experts across our clinical care, data
science, and technology groups.
Additionally, telehealth continues to be an essential point of access to healthcare
for many of the communities we serve, and we are continuing to invest in our
telehealth capabilities. For instance, in the past year, we’ve enabled multiple
telehealth video and mobile applications to be used by 6,000 providers in our
outpatient and hospital-based clinics and added more than 3,000 telehealth
endpoints in our hospitals.
In 2021, we established a new
offi ce of Care Transformation
and Innovation (CT&I) dedicated
to using HCA Healthcare’s
capacity and scale to help care
teams achieve better, more
effi cient, digitally-enabled
outcomes through increased
integration of technology
into clinical care.
17
HCA Healthcare
shows up
When a patient needs care, we show
up. When a natural disaster strikes
our community, we show up. When a
colleague needs support, we show up.
Day in and day out, HCA Healthcare
nurses and other colleagues show up to
care for patients across our 182 hospitals
and more than 2,200 ambulatory sites
of care. Likewise, our more than 45,000
active and affi liated physicians across
HCA Healthcare continually display
courage and skill while caring for others.
In addition to the patient care given in
our healthcare facilities, HCA Healthcare
teams serve their communities in
many ways.
In May 2021, the HCA Healthcare
Foundation announced the Healthier
Tomorrow Fund, a new $80 million
community impact fund focused on
addressing high-priority community
needs and health equity. The
fund provides grants to nonprofit
organizations in 25 communities where
HCA Healthcare has a presence.
Just as important, HCA Healthcare
continued to support our communities
aff ected by natural disasters. When
Hurricane Ida made landfall in August
2021 as a Category 4 hurricane,
our teams ensured our Louisiana
hospitals had appropriate staff ,
medications, supplies, food, water,
and generator power while also safely
coordinating patient transfers to sister
hospitals and other nearby facilities.
When a severe tornado system struck
Kentucky, HCA Healthcare stepped up
to provide care at TriStar Greenview
Regional Hospital and contributed
$250,000 in funding to support
organizations providing relief services.
When floods impacted Middle Tennessee,
aff ecting many of our colleagues and
neighbors, HCA Healthcare and the
HCA Healthcare Foundation contributed
$250,000 to support relief eff orts. We
are also continuing to partner nationally
with charitable organizations like the
American Red Cross and March of Dimes.
18
In May 2021, the HCA Healthcare
Foundation announced the
Healthier Tomorrow Fund, a new
$80 million community impact
fund focused on addressing
high-priority community needs
and health equity.
19
Top, left: Twenty-six HCA Healthcare volunteers, including Spencer Jones
and Bev Sears (pictured), spent a day building a Habitat for Humanity
home in Columbia, Tennessee.
Bottom: Matthew Pierson, MD, Neurosurgeon, Research Medical Center
Additionally, HCA Healthcare colleagues across the country acted against food
insecurity with a holiday food drive and fundraiser that delivered nearly 370,000 meals
to food banks in the communities we serve. The eff ort supported HCA Healthcare’s
inaugural Healthy Food for Healthier Tomorrows Food & Nutrition Drive, and included
77,830 meals donated by colleagues, 52,000 meals provided by colleague charitable
donations, and 240,000 meals from $60,000 in grants provided by the
HCA Healthcare Foundation.
And while the opioid crisis continues to aff ect our communities, HCA Healthcare
collected 15,566 pounds of unused and expired medications, exceeding last year’s
record of 13,523 pounds, during our third annual “Crush the Crisis” opioid take-back
events. A total of 96 HCA Healthcare facilities across 17 states held events that were
aimed at educating communities on the dangers of opioid misuse and the importance
of safe and proper disposal of expired and unused prescription medications. The
events collectively disposed of an estimated 10.7 million doses of medication.
As part of our continued commitment to providing equitable access to high-quality
care for all patients, HCA Healthcare formed the Health Equity Council in January 2021
to help identify and address health disparities within and outside of our hospitals, as
well as to develop strategies that advance health equity. This cross-functional group of
senior leaders led by our chief medical offi cer and chief diversity offi cer analyzes race,
ethnicity, and other data to address disparities and improve patient quality, safety, and
satisfaction outcomes for diverse populations.
20
We've also made a $10 million commitment
over three years to support Historically
Black Colleges and Universities (HBCUs)
and Hispanic-Serving Institutions (HSIs) in
communities near our hospitals. We know
our ability to serve diverse communities most
eff ectively depends on a workforce that
reflects those communities. In December
2021, HCA Healthcare donated $1.5 million
to Florida A&M University’s School of Allied
Health Sciences. This donation and future
partnerships are intended to strengthen
student pathways from undergraduate
to graduate to management careers in
healthcare, while also advancing diversity in
healthcare and supporting the next generation
of healthcare leaders.
Our dedication to the communities we
serve reflects our desire to address critical
environmental, social, and governance (ESG)
issues. For instance, one of the ways we are
accelerating our eff orts and embracing our
role in creating healthier tomorrows is through
our environmental sustainability strategy.
The strategy includes four main pillars:
managing energy and water responsibly,
enhancing our climate resilience, sourcing
and consuming effi ciently, and greening our
capital programs. These pillars guide our work
to build a balanced plan to support Scope
1 and 2 emissions reduction and to ensure
our environmental strategy is designed to
complement our commitment to the care and
improvement of human life, which extends to
our environment.
This is how HCA Healthcare shows up. We are
proud of the work we have accomplished and
look forward to sharing even more news as
the year progresses.
21
Carrying our
momentum
HCA Healthcare’s success in 2021 is primarily due to the exceptional work of our
nurses, physicians, and colleagues, along with the strong partnerships we have with
outstanding organizations. From their efforts, we were named a 2021 World’s Most
Ethical Company by Ethisphere for the 11th year and were recognized on the 2021
LinkedIn Top Companies list.
The positive impact HCA Healthcare’s caregivers and colleagues have on the
communities we serve is profound, unmatched, and continues to grow. To that
point, in 2021, we expanded our reach by opening and acquiring new facilities in
Colorado, Florida, Tennessee, and Georgia. We also acquired a majority stake in
Brookdale Health Care Services which is foundational to our ongoing efforts to
provide quality home health and hospice care to our patients. We believe this joint
venture will lead to improved care coordination across the HCA Healthcare network.
Moving forward, we are confident that we are well-positioned with many diversified
opportunities to allocate capital in a productive manner.
We believe HCA Healthcare’s future is very bright. While COVID-19 continued
to affect the country, our operating model delivered care for our patients,
facilitated market share growth, and produced solid returns for our shareholders.
We accomplished a lot in 2021, and we will continue working to carry this
momentum into the new year.
Thomas F. Frist III
Chairman of the Board
Samuel N. Hazen
Chief Executive Officer
22
23
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2021
Or
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number 1-11239
HCA Healthcare, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
One Park Plaza
Nashville, Tennessee
(Address of Principal Executive Offices)
27-3865930
(I.R.S. Employer
Identification No.)
37203
(Zip Code)
Registrant’s telephone number, including area code: (615) 344-9551
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $0.01 Par Value
Trading
Symbol(s)
HCA
Name of Each Exchange
on Which Registered
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if
Act. Yes ‘ No È
Indicate by check mark if
Act. Yes ‘ No È
the Registrant
is a well-known seasoned issuer, as defined in Rule 405 of
the Securities
the Registrant
is not
required to file reports pursuant
to Section 13 or Section 15(d) of
the
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes È No ‘
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was
required to submit such files). Yes È No ‘
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer È
Non-accelerated filer ‘
‘
Accelerated filer
Smaller reporting company ‘
Emerging growth company ‘
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. È
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È
Auditor PCAOB ID Number: 42 Auditor Name: Ernst & Young LLP Auditor Location: Nashville, Tennessee, United States of America
As of January 31, 2022, there were 303,600,000 outstanding shares of the Registrant’s common stock. As of June 30, 2021, the aggregate
market value of the common stock held by nonaffiliates was approximately $51.895 billion. For purposes of the foregoing calculation only,
Hercules Holding II and the Registrant’s directors and executive officers have been deemed to be affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive proxy materials for its 2022 Annual Meeting of Stockholders are incorporated by reference into
Part III hereof.
INDEX
Page
Reference
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial
Item 9.
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . .
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
36
60
61
61
61
62
63
64
86
86
86
86
88
88
88
89
89
89
90
Item 9A.
Item 9B.
Item 9C.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
Item 16.
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
91
105
106
2
Item 1.
Business
General
PART I
HCA Healthcare, Inc. is one of the leading health care services companies in the United States. At
December 31, 2021, we operated 182 hospitals, comprised of 175 general, acute care hospitals; five psychiatric
hospitals; and two rehabilitation hospitals. In addition, we operated 125 freestanding surgery centers and
21 freestanding endoscopy centers. Our facilities are located in 20 states and England.
The terms “Company,” “HCA,” “we,” “our” or “us,” as used herein and unless otherwise stated or indicated
by context, refer to HCA Healthcare, Inc. and its affiliates. The term “affiliates” means direct and indirect
subsidiaries of HCA Healthcare, Inc. and partnerships and joint ventures in which such subsidiaries are partners.
The terms “facilities” or “hospitals” refer to entities owned and operated by affiliates of HCA, and the term
“employees” refers to employees of affiliates of HCA.
Our primary objective is to provide a comprehensive array of quality health care services in the most cost-
effective manner possible. Our general, acute care hospitals typically provide a full range of services to
accommodate such medical specialties as internal medicine, general surgery, cardiology, oncology, neurosurgery,
orthopedics and obstetrics, as well as diagnostic and emergency services. Outpatient and ancillary health care
services are provided by our general, acute care hospitals, freestanding surgery centers, freestanding emergency
care facilities, urgent care facilities, walk-in clinics, diagnostic centers and rehabilitation facilities. Our
psychiatric hospitals provide a full range of mental health care services through inpatient, partial hospitalization
and outpatient settings.
Our common stock is traded on the New York Stock Exchange (symbol “HCA”). Through our predecessors,
we commenced operations in 1968. HCA Healthcare, Inc. was incorporated in Delaware in October 2010. Our
principal executive offices are located at One Park Plaza, Nashville, Tennessee 37203, and our telephone number
is (615) 344-9551.
Available Information
We file certain reports with the Securities and Exchange Commission (the “SEC”), including annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The SEC maintains an Internet
site at http://www.sec.gov that contains the reports, proxy and information statements and other information we
file. Our website address is www.hcahealthcare.com. Please note that our website address is provided throughout
this report as an inactive textual reference only. We make available free of charge, through our website, our
annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to
those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act, as soon as reasonably
practicable after such material is electronically filed with or furnished to the SEC. The information provided on
our website is not part of this report, and is therefore not incorporated by reference unless such information is
specifically referenced elsewhere in this report.
Our Code of Conduct is available free of charge upon request to our Investor Relations Department, HCA
Healthcare, Inc., One Park Plaza, Nashville, Tennessee 37203, and is also available on the Ethics and
Compliance and Corporate Governance portion of our website at www.hcahealthcare.com.
3
Business Strategy
We are committed to providing the communities we serve with high quality, cost-effective health care while
growing our business and creating long-term value for our stockholders. We strive to be the provider system of
choice in the communities we serve and to support our operations with unique enterprise capabilities and
best-in-class economies of scale. To achieve these objectives, we align our efforts around the following growth
agenda:
•
•
•
•
•
grow our presence in existing markets;
achieve industry-leading performance in clinical, operational and satisfaction measures;
recruit and employ physicians to meet the need for high quality health services;
continue to leverage our scale and market positions to grow the Company; and
pursue a disciplined development strategy.
Health Care Facilities
We currently own, manage or operate hospitals, freestanding surgery centers, freestanding emergency care
facilities, urgent care facilities, walk-in clinics, diagnostic and imaging centers, radiation and oncology therapy
centers, comprehensive rehabilitation and physical therapy centers, physician practices, home health, hospice,
outpatient physical therapy home and community-based services providers, and various other facilities.
At December 31, 2021, we owned and operated 175 general, acute care hospitals with 48,030 licensed beds.
Most of our general, acute care hospitals provide medical and surgical services, including inpatient care,
intensive care, cardiac care, diagnostic services and emergency services. The general, acute care hospitals also
provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and
physical therapy. Each hospital has an organized medical staff and a local board of trustees or governing board,
made up of members of the local community.
At December 31, 2021, we operated five psychiatric hospitals with 593 licensed beds. Our psychiatric
hospitals provide therapeutic programs, including child, adolescent and adult psychiatric care and adolescent and
adult alcohol and drug abuse treatment and counseling.
We also operate outpatient health care facilities, which include freestanding ambulatory surgery centers
(“ASCs”), freestanding emergency care facilities, urgent care facilities, walk-in clinics, diagnostic and imaging
centers, comprehensive rehabilitation and physical therapy centers, radiation and oncology therapy centers,
physician practices and various other facilities. These outpatient services are an integral component of our
strategy to develop comprehensive health care networks in select communities. Most of our ASCs are operated
through partnerships or limited liability companies, with majority ownership of each partnership or limited
liability company typically held by a general partner or member that is an affiliate of HCA.
Certain of our affiliates provide a variety of management services to our health care facilities, including
patient safety programs, ethics and compliance programs, national supply contracts, equipment purchasing and
leasing contracts, accounting,
reimbursement assistance,
construction planning and coordination, information technology systems and solutions, legal counsel, human
resources services and internal audit services.
systems, governmental
financial and clinical
COVID-19 Pandemic
On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Patient
volumes and the related revenues for most of our services were significantly impacted during the latter portion of
the first quarter and the first half of the second quarter of 2020 and have continued to be impacted as various
policies were implemented by federal, state and local governments in response to the COVID-19 pandemic.
4
During the second quarter of 2021, our patient volumes improved as the effects of the pandemic moderated and
certain pandemic-related restrictions and policies were eased. For the remainder of 2021, our patient volumes
exhibited consistent growth over the prior year, with the exception of inpatient surgeries, and included a
resurgence of COVID-19 admissions and the re-imposition of pandemic-related restrictions in certain markets.
We believe the extent of the COVID-19 pandemic’s impact on our operating results and financial condition has
been and will continue to be driven by many factors, most of which are beyond our control and ability to
forecast. Because of these uncertainties, we cannot estimate how long or to what extent the pandemic will impact
our operations.
Summary Risk Factors
You should carefully read and consider the risk factors set forth under Item 1A, “Risk Factors,” as well as
all other information contained in this annual report on Form 10-K. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also affect us. If any of these risks occur, our
business, financial position, results of operations, cash flows or prospects could be materially, adversely
affected. Our business is subject to the following principal risks and uncertainties:
Risks related to the COVID-19 pandemic and other potential pandemics:
• The COVID-19 pandemic is significantly affecting our operations and could affect our business and
financial condition. Our liquidity could also be negatively impacted by the COVID-19 pandemic,
particularly if the U.S. economy remains unstable for a significant amount of time.
• We are unable to predict the ultimate impact of the CARES Act (as defined below) and other existing
or future stimulus and relief legislation,
that such legislation and other
governmental responses intended to assist providers in responding to COVID-19 may have on our
business, financial condition, results of operations or cash flows. There can be no assurance as to the
total amount of financial assistance or types of assistance we will receive, that we will be able to
comply with the applicable terms and conditions to retain such assistance, or that we will be able to
benefit from provisions intended to increase access to resources and ease regulatory burdens for health
care providers.
if any, or the effect
• The emergence and effects related to a potential future pandemic, epidemic or outbreak of an infectious
disease could adversely affect our operations.
Risks related to our indebtedness:
• Our substantial leverage could adversely affect our ability to raise additional capital to fund our
operations, limit our ability to react to changes in the economy or our industry, expose us to interest
rate risk to the extent of our variable rate debt and prevent us from meeting our obligations.
• We may not be able to generate sufficient cash to service all of our indebtedness and may not be able to
refinance our indebtedness on favorable terms. If we are unable to do so, we may be forced to take
other actions to satisfy our obligations under our indebtedness, which may not be successful.
• Our debt agreements contain restrictions that limit our flexibility in operating our business.
• Discontinuation, reform or replacement of LIBOR may adversely affect our borrowing costs.
Risks related to human capital:
• Our operations may be adversely affected by competition for staffing, the shortage of experienced
nurses and other health care professionals, vaccine mandates and labor union activity.
• We may be unable to attract, hire, and retain a highly qualified and diverse workforce, including key
management.
• Our performance depends on our ability to recruit and retain quality physicians.
5
Risks related to technology, data privacy and cybersecurity:
• A cybersecurity incident could result in the compromise of our facilities, confidential data or critical
data systems. A cybersecurity incident could also give rise to potential harm to patients; remediation and
other expenses; and exposure to liability under HIPAA (as defined below), consumer protection laws,
common law theories or other laws. Such incidents could subject us to litigation and foreign, federal and
state governmental inquiries, damage our reputation, and otherwise be disruptive to our business.
• Our operations could be impaired by a failure of our information systems.
• Health care technology initiatives, particularly those related to patient data and interoperability, may
adversely affect our operations.
• We may not be reimbursed for the cost of expensive, new technology.
Risks related to governmental regulation and other legal matters:
• Our results of operations may be adversely affected by health care reform efforts, including efforts to
significantly change the Affordable Care Act (as defined below). We are unable to predict what, if any,
and when additional health reform measures will be adopted or implemented, and the effects and
ultimate impact of any such measures are uncertain.
• Changes in government health care programs may adversely affect our revenues.
•
•
If we fail to comply with extensive laws and government regulations, we could suffer penalties or be
required to make significant changes to our operations.
State efforts to regulate the construction or expansion of health care facilities could impair our ability
to operate and expand our operations.
• We may incur additional tax liabilities.
• We have been and could become the subject of government investigations, claims and litigation.
• We may be subject to liabilities from claims brought against our facilities, which are costly to defend
and may require us to pay significant damages if not covered by insurance.
Risks related to operations, strategy, demand and competition:
• Our hospitals face competition for patients from other hospitals and health care providers.
• A deterioration in the collectability of uninsured and patient due accounts could adversely affect our
results of operations.
•
If our volume of patients with private health insurance coverage declines or we are unable to retain and
negotiate favorable contracts with private third-party payers, including managed care plans, our
revenues may be reduced.
• Changes to physician utilization practices and treatment methodologies, third-party payer controls
designed to reduce inpatient services or surgical procedures and other factors outside our control that
impact demand for medical services may reduce our revenues.
• We may encounter difficulty acquiring hospitals and other health care businesses and challenges
integrating the operations of acquired hospitals and other health care businesses and become liable for
unknown or contingent liabilities as a result of acquisitions.
• Our facilities are heavily concentrated in Florida and Texas, which makes us sensitive to regulatory,
economic, public health, environmental and competitive conditions and changes in those states.
• Our business and operations are subject to risks related to climate change.
• The industry trend toward value-based purchasing may negatively impact our revenues.
6
Risks related to macroeconomic conditions:
• Our overall business results may suffer during periods of general economic weakness.
• We are exposed to market risk related to changes in the market values of securities and interest rates.
Risks related to ownership of our common stock:
• There can be no assurance that we will continue to pay dividends.
• Certain of our investors may continue to have influence over us.
Sources of Revenue
Hospital revenues depend upon inpatient occupancy levels, the medical and ancillary services ordered by
physicians and provided to patients, the volume of outpatient procedures and the charges or payment rates for
such services. Reimbursement rates for inpatient and outpatient services vary significantly depending on the type
of third-party payer, the type of service (e.g., medical/surgical, intensive care or psychiatric) and the geographic
location of the hospital. Inpatient occupancy levels fluctuate for various reasons, many of which are beyond our
control.
We receive payments for patient services from the federal government under the Medicare program, state
governments under their respective Medicaid or similar programs, managed care plans (including plans offered
through the American Health Benefit Exchanges (“Exchanges”)), private insurers and directly from patients. Our
revenues by primary third-party payer classification and other (including uninsured patients) for the years ended
December 31, 2021, 2020 and 2019 are summarized in the following table (dollars in millions):
Years Ended December 31,
2021
Ratio
2020
Ratio
2019
Ratio
Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed Medicare . . . . . . . . . . . . . . . . . . . . . . . . .
Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed Medicaid . . . . . . . . . . . . . . . . . . . . . . . . .
Managed care and other insurers . . . . . . . . . . . . . . .
International (managed care and other insurers) . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
$10,447
8,424
2,290
3,124
30,295
1,336
2,836
17.8% $10,420
14.3
6,997
3.9
1,965
5.3
2,621
51.6
26,535
2.3
1,120
4.8
1,875
20.2% $10,798
6,452
13.6
1,572
3.8
2,450
5.1
26,544
51.5
1,162
2.2
2,358
3.6
21.0%
12.6
3.1
4.8
51.6
2.3
4.6
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$58,752
100.0% $51,533
100.0% $51,336
100.0%
Medicare is a federal program that provides certain hospital and medical insurance benefits to persons
age 65 and over, some disabled persons, persons with end-stage renal disease and persons with Lou Gehrig’s
Disease. Medicaid is a federal-state program, administered by the states, that provides hospital and medical
benefits to qualifying low-income individuals. All of our general, acute care hospitals located in the United States
are eligible to participate in Medicare and Medicaid programs. Amounts received under Medicare and Medicaid
programs are generally significantly less than established hospital gross charges for the services provided.
Our hospitals generally offer discounts from established charges to certain group purchasers of health care
services, including private health insurers, employers, health maintenance organizations (“HMOs”), preferred
provider organizations (“PPOs”) and other managed care plans, including health plans offered through the
Exchanges. These discount programs generally limit our ability to increase revenues in response to increasing
costs. See Item 1, “Business — Competition.” For services under Medicare, Medicaid, HMOs, PPOs and other
managed care plans, patients are generally responsible for any exclusions, deductibles or coinsurance features of
their coverage. The amounts of such exclusions, deductibles and coinsurance continue to increase. Collection of
amounts due from individuals is typically more difficult than from government health care programs or other
7
third-party payers. We provide discounts to uninsured patients who do not qualify for Medicaid or for financial
relief under our charity care policy. We may attempt to provide assistance to uninsured patients to help determine
whether they may qualify for Medicaid, other federal or state assistance or charity care under our charity care
policy. If an uninsured patient does not qualify for these programs, the uninsured discount is applied.
Medicare
In addition to the reimbursement reductions and adjustments discussed below, the Budget Control Act of
2011 (the “BCA”) requires automatic spending reductions to reduce the federal deficit, including Medicare
spending reductions of up to 2% per fiscal year, with a uniform percentage reduction across all Medicare
programs. In 2013, the Centers for Medicare & Medicaid Services (“CMS”) began imposing a 2% reduction on
Medicare payments. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and related legislation
temporarily suspended these reductions through March 31, 2022 and reduced the sequestration adjustment from
2% to 1% from April 1 through June 30, 2022. The full 2% reduction will resume on July 1, 2022. The BCA
sequestration has been extended through 2030, with the reductions for 2030 set to increase to 2.25% for the first
six months and to 3% for the second six months. In addition, the American Rescue Plan Act of 2021 (“ARPA”)
increased the federal budget deficit in a manner that triggers an additional sequestration mandated under the Pay
As You Go Act of 2010 (“PAYGO Act”). As a result, a further payment reduction of up to 4% was required to
take effect in January 2022. However, Congress has delayed implementation of this payment reduction until
2023.
Inpatient Acute Care
Under the Medicare program, we receive reimbursement under a prospective payment system (“PPS”) for
general, acute care hospital inpatient services. Under the hospital inpatient PPS, fixed payment amounts per
inpatient discharge are established based on the patient’s assigned Medicare severity diagnosis-related group
(“MS-DRG”). MS-DRGs classify treatments for illnesses according to the estimated intensity of hospital
resources necessary to furnish care for each principal diagnosis. MS-DRG weights represent the average
resources for a given MS-DRG relative to the average resources for all MS-DRGs. MS-DRG payments are
adjusted for area wage differentials. Hospitals, other than those defined as “new,” receive PPS reimbursement for
inpatient capital costs based on MS-DRG weights multiplied by a geographically adjusted federal rate. When the
cost to treat certain patients falls well outside the normal distribution, providers typically receive additional
“outlier” payments. These payments are financed by offsetting reductions in the inpatient PPS rates. A high-cost
outlier threshold is set annually at a level that will result in estimated outlier payments equaling 5.1% of total
inpatient PPS payments for the fiscal year.
MS-DRG rates are updated, and MS-DRG weights are recalibrated, using cost-relative weights each federal
fiscal year (which begins October 1). The index used to update the MS-DRG rates (the “market basket”) gives
consideration to the inflation experienced by hospitals and entities outside the health care industry in purchasing
goods and services. Each federal fiscal year, the annual market basket update is reduced by a productivity
adjustment based on the Bureau of Labor Statistics (“BLS”) 10-year moving average of changes in specified
economy-wide productivity. A decrease in payment rates or an increase in rates that is below the increase in our
costs may adversely affect our results of operations.
For federal fiscal year 2021, CMS increased the MS-DRG rate by approximately 2.9%. This increase
reflected a market basket update of 2.4%, increased by a positive 0.5 percentage point adjustment in accordance
with the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”). For federal fiscal year 2022,
CMS increased the MS-DRG rate by approximately 2.5%. This increase reflects a market basket update of 2.7%,
adjusted by a negative 0.7 percentage point productivity adjustment and a positive 0.5 percentage point
adjustment required by MACRA. Additional adjustments may apply, depending on patient-specific or hospital-
specific factors. For example, the two midnight rule limits payments to hospitals when services to Medicare
8
beneficiaries are payable as inpatient services. In addition, under the post-acute care transfer policy, Medicare
reimbursement rates may be reduced when an inpatient hospital discharges a patient in a specified MS-DRG to
certain post-acute care settings.
CMS has implemented and is implementing a number of programs and requirements intended to transform
Medicare from a passive payer to an active purchaser of quality goods and services. For example, hospitals that
do not successfully participate in the Hospital Inpatient Quality Reporting Program are subject to a 25%
reduction of the market basket update. Hospitals that do not demonstrate meaningful use of electronic health
records (“EHRs”) are subject to a 75% reduction of the market basket update.
Medicare does not allow an inpatient hospital discharge to be assigned to a higher paying MS-DRG if
certain designated hospital acquired conditions (“HACs”) were not present on admission and the identified HAC
is the only condition resulting in the assignment of the higher paying MS-DRG. In this situation, the case is paid
as though the secondary diagnosis was not present. There are currently 14 categories of conditions on the list of
HACs. In addition, the 25% of hospitals with the worst risk-adjusted HAC scores in the designated performance
period receive a 1% reduction in their inpatient PPS Medicare payments. CMS has also established three
National Coverage Determinations that prohibit Medicare reimbursement for erroneous surgical procedures
performed on an inpatient or outpatient basis.
Under the Hospital Readmission Reduction Program (“HRRP”), payments to hospitals may also be reduced
based on readmission rates. Each federal fiscal year, inpatient payments are reduced if a hospital experiences
“excess” readmissions within the 30-day time period from the date of discharge for conditions designated by
CMS. For federal fiscal year 2017 and subsequent years, CMS has designated six conditions or procedures,
including heart attack, pneumonia and total hip arthroplasty. Hospitals with what CMS defines as excess
readmissions for these conditions or procedures receive reduced payments for all inpatient discharges, not just
discharges relating to the conditions or procedures subject to the excess readmission standard. The amount by
which payments are reduced is determined by assessing a hospital’s performance relative to hospitals with
similar proportions of dual eligible patients, subject to a cap established by CMS. The reduction in payments to
hospitals with excess readmissions can be up to 3% of a hospital’s base payments. Each hospital’s performance is
publicly reported by CMS.
In addition, under the Hospital Value-Based Purchasing (“HVBP”) Program, CMS reduces the inpatient
PPS payment amount for all discharges by 2.0%. The total amount collected from these reductions is pooled, and
the entire amount collected is redistributed as incentive payments to reward hospitals that meet certain quality
performance standards established by CMS. CMS scores each hospital based on achievement (relative to other
hospitals) and improvement ranges (relative to the hospital’s own past performance) for each applicable
performance standard. Hospitals that meet or exceed the quality performance standards receive greater
reimbursement under the value-based purchasing program than they would have otherwise. Hospitals that do not
achieve the necessary quality performance receive reduced Medicare inpatient hospital payments. Hospitals are
scored on a number of individual measures that are categorized into four domains: clinical outcomes; efficiency
and cost reduction; safety; and person and community engagement.
For the duration of the national public health emergency (“PHE”) declared as a result of the COVID-19
pandemic, which is ongoing, CMS has implemented a measure suppression policy across various hospital quality
measurement and value-based purchasing programs. The policy is intended to ensure that these programs neither
reward nor penalize hospitals based on circumstances caused by the PHE that the measures were not designed to
accommodate. For example, CMS is modifying certain readmissions measures within the HRRP to exclude
COVID-19 diagnosed patients. Under the HVBP Program in federal fiscal year 2022, as a result of the measure
suppression policy, hospitals will receive a net neutral payment adjustment for each discharge that is equal to the
2% withheld under the program. In addition, facilities that experience extraordinary circumstances beyond their
control that prevent satisfaction of program reporting requirements may request an exception from CMS.
9
Outpatient
CMS reimburses hospital outpatient services (and certain Medicare Part B services furnished to hospital
inpatients who have no Part A coverage) on a PPS basis. Hospital outpatient services paid under PPS are
classified into groups called ambulatory payment classifications (“APCs”). Services for each APC are similar
clinically and in terms of the resources they require. A payment rate is established for each APC. Depending on
the services provided, a hospital may be paid for more than one APC for a patient visit. The APC payment rates
are updated for each calendar year. Each calendar year, the annual market basket update is further reduced by a
productivity adjustment based on the BLS 10-year moving average of changes in specified economy-wide
productivity. For calendar year 2021, CMS increased APC payment rates by an estimated 2.4%. This increase
reflected a market basket increase of 2.4%. For calendar year 2022, CMS increased payment rates under the
outpatient PPS by an estimated 2.0%. This increase reflects a market basket increase of 2.7% with a negative 0.7
percentage point productivity adjustment. CMS requires hospitals to submit quality data relating to outpatient
care to avoid receiving a 2.0 percentage point reduction in the annual payment update under the outpatient PPS.
Certain items and services furnished by off-campus provider-based departments, subject
to certain
exceptions, are not covered as outpatient department services under the outpatient PPS, but are reimbursed under
the Medicare Physician Fee Schedule (“Physician Fee Schedule”), subject to adjustments as specified by CMS.
In calendar year 2019, CMS began a two-year phase-in of an expanded site-neutral policy under which clinic
visit services provided at all off-campus provider-based departments are reimbursed at the Physician Fee
Schedule rate, which is generally lower than the PPS rate. Previously, this rate did not apply to “excepted”
provider-based departments. In September 2019, a federal judge invalidated the expansion of the site-neutral
payment policy for 2019. CMS appealed this decision and won, but had begun reprocessing the 2019 claims paid
at the lower rates. As a result of its successful appeal, CMS has begun to reprocess the 2019 claims provided at
excepted provider-based departments so that they are paid at the same rate as non-excepted provider-based
departments for those services under the Physician Fee Schedule. For calendar year 2020, CMS issued a final
rule implementing year two of the policy phase-in. For calendar year 2021 and beyond, CMS is continuing the
expanded site-neutral payment policy.
The 340B program allows participating hospitals to purchase certain outpatient drugs from manufacturers at
discounted rates. These hospitals are reimbursed for the discounted drugs under the same Medicare payment
methodology and rates as are applied to non-340B-discounted drugs. In a final rule effective January 1, 2018, the
U.S. Department of Health and Human Services (“HHS”) reduced the Medicare payments under the outpatient
PPS for most drugs obtained at the 340B-discounted rates. This payment policy has been heavily litigated. In
2020, HHS prevailed at the circuit court level, with the court upholding its authority to implement this policy.
However, in 2021, the group of hospitals challenging the policy appealed to the U.S. Supreme Court. Depending
upon the decision and any prescribed remedy, this case could result in a decrease to the Company’s outpatient
Medicare reimbursement. For calendar year 2022, HHS will continue to pay the reduced rates that took effect
beginning in 2018.
Rehabilitation
CMS reimburses inpatient rehabilitation facilities (“IRFs”) on a PPS basis. Under the IRF PPS, patients are
classified into case mix groups that reflect the relative resource intensity typically associated with the patient’s
clinical condition. The case mix groups are based upon impairment, age, functional motor and cognitive scores,
and comorbidities (additional diseases or disorders from which the patient suffers).
IRFs are paid a
predetermined amount per discharge that reflects the patient’s case mix group that is adjusted for facility-specific
factors, such as area wage levels, proportion of low-income patients, and location in a rural area. Each federal
fiscal year, the IRF rates are updated using a market basket index, which is reduced by a productivity adjustment
based on the BLS 10-year moving average of changes in specified economy-wide productivity. For federal fiscal
year 2021, CMS increased IRF payment rates by an estimated 2.4%. For federal fiscal year 2022, CMS increased
IRF payment rates by an estimated 1.9%, reflecting an IRF market basket update of 2.6% with a negative
10
0.7 percentage point productivity adjustment. In addition, CMS requires IRFs to report quality measures to avoid
receiving a reduction of 2.0 percentage points to the market basket update. CMS has indicated that it is working
toward a unified payment system for post-acute care services, including those provided by IRFs.
In order to qualify for classification as an IRF, at least 60% of a facility’s inpatients during the most recent
12-month CMS-defined review period must have required intensive rehabilitation services for one or more of
13 specified conditions. IRFs must also meet additional coverage criteria, including patient selection and care
requirements relating to pre-admission screenings, post-admission evaluations, ongoing coordination of care and
involvement of rehabilitation physicians. A facility that fails to meet the 60% threshold, or other criteria to be
classified as an IRF, will be paid under either the acute care hospital inpatient or outpatient PPS, which generally
provide for lower payment amounts. As of December 31, 2021, we had two rehabilitation hospitals and
63 hospital rehabilitation units.
Psychiatric
Inpatient hospital services furnished in psychiatric hospitals and psychiatric units of general, acute care
hospitals and critical access hospitals are reimbursed on a PPS basis. The inpatient psychiatric facility (“IPF”)
PPS is based upon a per diem payment, with adjustments to account for certain patient and facility
characteristics. The IPF PPS contains an “outlier” policy for extraordinarily costly cases and an adjustment to a
facility’s base payment if it maintains a full-service emergency department. CMS has established the IPF PPS
payment rate in a manner intended to be budget neutral. Each federal fiscal year, IPF payment rates are updated
using a market basket index, which is reduced by a productivity adjustment based on the BLS 10-year moving
average of changes in specified economy-wide productivity. For federal fiscal year 2021, CMS increased IPF
payment rates by an estimated 2.2%. For federal fiscal year 2022, CMS increased IPF payment rates by an
estimated 2.0%, which reflects a 2.7% IPF market basket increase with a negative 0.7 percentage point
productivity adjustment. Together with other policy changes, total payments to IPFs are anticipated to increase
by 2.1% in federal fiscal year 2022. Inpatient psychiatric facilities are required to report quality measures to
CMS to avoid receiving a 2.0 percentage point reduction to the market basket update. As of December 31, 2021,
we had five psychiatric hospitals and 44 hospital psychiatric units.
Ambulatory Surgery Centers
CMS reimburses ASCs using a predetermined fee schedule. Reimbursements for ASC overhead costs are
limited to no more than the overhead costs paid to hospital outpatient departments under the Medicare hospital
outpatient PPS for the same procedure. If CMS determines that a procedure is commonly performed in a
physician’s office, the ASC reimbursement for that procedure is limited to the reimbursement allowable under
the Physician Fee Schedule, with limited exceptions. All surgical procedures, other than those that pose a
significant safety risk or generally require an overnight stay, are payable as ASC procedures. From time to time,
CMS expands the services that may be performed in ASCs, which may result in more Medicare procedures that
historically have been performed in hospitals being moved to ASCs, reducing surgical volume in our hospitals.
Also, more Medicare procedures that historically have been performed in ASCs may be moved to physicians’
offices. Some commercial third-party payers have adopted similar policies.
Historically, CMS updated reimbursement rates for ASCs based on changes to the consumer price index.
However, for calendar years through 2023, CMS updates to ASC reimbursement rates will be based on the
hospital market basket index, partly to promote site-neutrality between hospitals and ASCs. For each federal
fiscal year, the ASC payment system update is reduced by a productivity adjustment based on the BLS 10-year
moving average of changes in specified economy-wide productivity. For calendar year 2021, CMS increased
ASC payment rates by 2.4%, which reflected a market basket increase of 2.4%. For calendar year 2022, CMS
increased ASC payment rates by 2.0%, which reflects a market basket increase of 2.7% and a negative
0.7 percentage point productivity adjustment. In addition, CMS has established a quality reporting program for
11
ASCs under which ASCs that fail to report on specified quality measures receive a 2.0 percentage point reduction
to the market basket update.
Home Health
CMS reimburses home health agencies under the Home Health PPS. Home health agencies are paid a
national, standardized 30-day period payment rate if a period of care meets a certain threshold of home health
visits (periods of care that do not meet the visit threshold are paid a per-visit payment rate for the discipline
providing care). The daily home health payment rate is adjusted for case-mix and area wage levels. An outlier
adjustment may be paid for periods of care where costs exceed a specific threshold amount. Each calendar year,
home health payment rates are updated using a market basket index, which is reduced by a productivity
adjustment based on the BLS 10-year moving average of changes in specified economy-wide productivity. For
calendar year 2022, CMS increased home health payment rates by an estimated 3.2%, which reflects a 3.1%
market basket increase reduced by a negative 0.5 percentage point productivity adjustment, among other changes.
Home health agencies that do not submit required quality data are subject to a 2.0 percentage point reduction to
the market basket update. In addition, beginning January 1, 2022, home health agencies are required to submit a
one-time Notice of Admission (“NOA”) for each patient that establishes that the beneficiary is under a Medicare
home health period of care. Failure to submit the NOA within 5 calendar days from the start of care will result in
a reduction to the 30-day period payment amount for each day from the start of care date until the date the NOA
is submitted.
Effective January 1, 2022, CMS began implementing a nationwide expansion of the Home Health Value-
Based Purchasing (“HHVBP”) Model. Under the model, home health agencies will receive increases or
reductions to their Medicare fee-for-service payments of up to 5%, based on performance against specific quality
measures relative to the performance of other home health providers. Data collected in each performance year
will impact Medicare payments two years later. Calendar year 2023 is the first performance year under the
expanded HHVBP Model, which will affect payments in calendar year 2025.
Payment of claims for home health services may be impacted by the Review Choice Demonstration, a
program intended to identify and prevent home health services fraud, reduce the number of Medicare appeals,
and improve provider compliance with Medicare program requirements. The program applies only to home
health agencies in certain states, including North Carolina, Florida and Texas. Providers in these states may
initially select from the following claims review and approval processes: pre-claim review, post-payment review
or a minimal post-payment review with a 25% payment reduction. Home health agencies that maintain high
levels of compliance are eligible for additional, less burdensome options.
The Improving Medicare Post-Acute Care Transformation Act of 2014 (“IMPACT Act”) requires HHS, in
conjunction with the Medicare Payment Advisory Commission, to propose a unified post-acute care payment
model by 2023. A unified post-acute care payment system would pay post-acute care providers, including home
health agencies, under a single framework according to a patient’s characteristics, rather than based on the post-
acute care setting where the patient receives treatment.
Hospice
Medicare beneficiaries who have a terminal illness and a life expectancy of six months or less may elect to
receive hospice benefits (palliative care) instead of standard coverage of treatment for the terminal illness and
related conditions. Hospice services are paid under the Hospice PPS, under which CMS sets a daily rate for each
day a patient is enrolled in the hospice benefit. The daily rate depends on the level of care provided to a patient
(routine home care, continuous home care, inpatient respite care, or general inpatient care). Daily rates are
adjusted for factors such as area wage levels. Each federal fiscal year, hospice payment rates are updated using a
market basket index, which is reduced by a productivity adjustment based on the BLS 10-year moving average of
12
changes in specified economy-wide productivity. For federal fiscal year 2022, CMS increased hospice payment
rates by 2.0%, which reflects a 2.7% market basket update and a negative 0.7 percentage point productivity
adjustment. Hospices that fail to satisfy quality reporting requirements receive a 2 percentage point reduction to
the market basket update. Beginning in 2024, the payment reduction for failure to report quality data will
increase to 4 percentage points.
Overall payments made by Medicare to each hospice are subject to an inpatient cap and an aggregate cap.
The inpatient cap limits the number of days of inpatient care to no more than 20% of total patient care days. The
aggregate cap limits the amount of Medicare reimbursement a hospice may receive, based on the number of
Medicare patients served. The aggregate cap is updated annually. In federal fiscal year 2022, the aggregate cap is
$31,297.61. If a hospice’s Medicare payments exceed its inpatient or aggregate caps, it must repay Medicare for
the excess amount.
Physician Services
Physician services are reimbursed under the Physician Fee Schedule system, under which CMS has assigned
a national relative value unit (“RVU”) to most medical procedures and services that reflects the various resources
required by a physician to provide the services, relative to all other services. Each RVU is calculated based on a
combination of work required in terms of time and intensity of effort for the service, practice expense (overhead)
attributable to the service and malpractice insurance expense attributable to the service. These three elements are
each modified by a geographic adjustment factor to account for local practice costs and are then aggregated.
While RVUs for various services may change in a given year, any alterations are required by statute to be
virtually budget neutral, such that total payments made under the Physician Fee Schedule may not differ by more
than $20 million from what payments would have been if adjustments were not made. CMS annually reviews
resource inputs for select services as part of the potentially misvalued code initiative. To determine the payment
rate for a particular service, the sum of the geographically adjusted RVUs is multiplied by a conversion factor.
For calendar year 2022, CMS reduced the conversion factor by approximately 3.71%. However, Congress
approved a 3.0% payment increase for calendar year 2022, which will partially offset this reduction.
Medicare payments are adjusted based on participation in the Quality Payment Program (“QPP”), a payment
methodology intended to reward high-quality patient care. Physicians and certain other health care clinicians are
required to participate in one of two QPP tracks. Under both tracks, performance data collected in each
performance year will affect Medicare payments two years later. CMS expects to transition increasing financial
risk to providers as the QPP evolves. The Advanced Alternative Payment Model (“Advanced APM”) track
makes incentive payments available for participation in specific innovative payment models approved by CMS.
Providers may earn a 5% Medicare incentive payment through 2024 and will be exempt from the reporting
requirements and payment adjustments imposed under the Merit-Based Incentive Payment System (“MIPS”) if
the provider has sufficient participation (based on percentage of payments or patients) in an Advanced APM.
Alternatively, providers may participate in the MIPS track. Currently, providers electing this option may receive
payment incentives or be subject to payment reductions based on their performance with respect to clinical
quality, resource use, clinical improvement activities, and meeting Promoting Interoperability standards related
to the meaningful use of EHRs. Performance data collected in 2022 will result in payment adjustments of up to
9% in 2024. CMS makes available an exception that permits clinicians to request reweighting of any or all
performance categories if they encounter an extreme and uncontrollable circumstance or public health
emergency, such as COVID-19, that is outside of their control. For performance year 2022, providers will
generally be required to submit an application in order to request an exception.
Other
CMS uses fee schedules to pay for physical, occupational and speech therapies, durable medical equipment,
clinical diagnostic laboratory services, nonimplantable orthotics and prosthetics and services provided by
independent diagnostic testing facilities.
13
Under PPS, the payment rates are adjusted for area differences in wage levels by a factor (“wage index”)
reflecting the relative wage level in the geographic area compared to the national average wage level and taking
into account occupational mix. The redistributive impact of wage index changes is not anticipated to have a
material financial impact for 2022.
Medicare reimburses hospitals for a portion (65%) of deductible and coinsurance amounts that are
uncollectable from Medicare beneficiaries.
CMS has implemented contractor reform whereby CMS competitively bids the Medicare fiscal intermediary
and Medicare carrier functions to Medicare Administrative Contractors (“MACs”), which are geographically
assigned across 12 jurisdictions to service both Part A and Part B providers. While providers with operations
across multiple geographies had the option of having all hospitals use one home office MAC, we chose, in most
cases, to use the MACs assigned to the geographic areas in which our hospitals are located. CMS periodically
re-solicits bids, and the MAC servicing a geographic area can change as a result of the bid competition. MAC
transition periods can impact claims processing functions and the resulting cash flows.
CMS contracts with third parties to promote the integrity of the Medicare program through reviews of
quality concerns and detections, and corrections of improper payments. Quality Improvement Organizations
(“QIOs”), for example, are groups of physicians and other health care quality experts that work on behalf of
CMS to ensure that Medicare pays only for goods and services that are reasonable and necessary, and that are
provided in the most appropriate setting. Under the Recovery Audit Contractor (“RAC”) program, CMS
contracts with RACs on a contingency basis to conduct post-payment reviews to detect and correct improper
payments in the fee-for-service Medicare program. The compensation for RACs is based on their review of
claims submitted to Medicare for billing compliance, including correct coding and medical necessity, and the
amount of overpayments and underpayments they identify. CMS limits the number of claims that RACs may
audit by limiting the number of records that RACs may request from hospitals based on each provider’s claim
denial rate for the previous year. CMS has implemented the RAC program on a permanent, nationwide basis and
expanded the RAC program to the Managed Medicare program and Medicare Part D. CMS has transitioned some
of its other integrity programs to a consolidated model by engaging Unified Program Integrity Contractors
(“UPICs”) to perform audits, investigations and other integrity activities.
We have established policies and procedures to respond to requests from and payment denials by RACs and
other Medicare contractors. Payment recoveries resulting from reviews and denials are appealable through
administrative and judicial processes, and we pursue reversal of adverse determinations at appropriate appeal
levels. We incur additional costs related to responding to requests and denials, including costs associated with
responding to requests for records and pursuing the reversal of payment denials and losses associated with
overpayments that are not reversed upon appeal. Currently, there are significant delays in the Medicare appeals
process. Depending upon changes to and the growth of the RAC program and other Medicare integrity programs
and our success in appealing claims in future periods, our cash flows and results of operations could be
negatively impacted.
Medicare reimburses teaching hospitals for portions of the direct and indirect costs of graduate medical
education (“GME”) through statutory formulas that are generally based on the number of medical residents and
which take into account patient volume or the number of hospital beds. Accrediting organizations review GME
programs for compliance with educational standards. Many of our hospitals operate GME or other residency
programs to train physicians and other allied health professionals.
Managed Medicare
Under the Managed Medicare program (also known as Medicare Part C, or Medicare Advantage), the
federal government contracts with private health insurers to provide members with Medicare Part A, Part B and
Part D benefits. Managed Medicare plans can be structured as HMOs, PPOs or private fee-for-service plans. In
14
addition to covering Part A and Part B benefits, the health insurers may choose to offer supplemental benefits
and impose higher premiums and plan costs on beneficiaries. CMS makes fee payment adjustments based on
service benchmarks and quality ratings and publishes star ratings to assist beneficiaries with plan selection.
According to CMS, over 40% of all Medicare enrollees participate in managed Medicare plans.
Medicaid
Medicaid programs are funded jointly by the federal government and the states and are administered by
states under approved plans. As a result of the COVID-19 pandemic, Medicaid enrollment has increased, and the
federal government has made available enhanced federal Medicaid funding.
Most state Medicaid program payments are made under a PPS or are based on negotiated payment levels
with individual hospitals. Medicaid reimbursement is often less than a hospital’s cost of services. The Patient
Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010
(collectively, the “Affordable Care Act”) requires states to expand Medicaid coverage to all individuals under
age 65 with incomes effectively at or below 138% of the federal poverty level. However, states may opt out of
the expansion without losing existing federal Medicaid funding. A number of states, including Texas and Florida,
have opted out of the Medicaid expansion. For these states, the maximum income level required for individuals
and families to qualify for Medicaid varies widely from state to state.
Because most states must operate with balanced budgets and because the Medicaid program is often a
state’s largest program, many states have adopted or may consider adopting various strategies to reduce their
Medicaid expenditures. Outside of the government response to the COVID-19 pandemic, budgetary pressures
have, in recent years, resulted and likely will continue to result in decreased spending, or decreased spending
growth, for Medicaid programs in many states. Certain states in which we operate have adopted broad-based
provider taxes to fund the non-federal share of Medicaid programs or fund indigent care within the state. Many
states have also adopted, or are considering, legislation designed to reduce coverage, enroll Medicaid recipients
in managed care programs and/or impose additional taxes on hospitals to help finance or expand the states’
Medicaid systems. Some states use, or have applied to use, waivers granted by CMS to implement Medicaid
expansion, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary
from federal standards. The prior presidential administration increased state flexibility in the administration of
Medicaid programs,
including by allowing states to condition enrollment on work or other community
engagement. However, in January 2021, President Biden issued an executive order directing agencies to
re-examine measures that reduce health insurance coverage or undermine Medicaid programs, including work
requirements, and throughout 2021 CMS rescinded approvals of waivers involving certain eligibility and
enrollment restrictions, including those allowing for work and community engagement requirements.
The Texas Healthcare Transformation and Quality Improvement Program (“Texas Waiver Program”) is
operated under a waiver granted by CMS under Section 1115 of the Social Security Act. The program provides
funding for uncompensated care and supports several delivery system reform initiatives. However, there is
currently uncertainty regarding the duration of the Texas Waiver Program. Although the previous presidential
administration approved a 10-year extension of the program, through September 2030, CMS rescinded this
extension in April 2021. Without the extension, the waiver would expire September 30, 2022. The Texas
Attorney General filed a lawsuit challenging the rescission, and, in August 2021, a federal district judge granted a
preliminary injunction temporarily reinstating the extension. While the lawsuit is pending, the Texas Health and
Human Services Commission (“Texas HHSC”) has re-submitted its application to extend the Texas Waiver
Program. Additionally, the Texas HHSC’s proposed directed payment program has not yet been renewed for the
current program year that began September 1, 2021. Our supplemental Medicaid revenues from the directed
payment program have been, and will continue to be, negatively impacted until the Texas HHSC and CMS
finalize certain components of the program.
15
Federal funds under the Medicaid program may not be used to reimburse providers for treatment of certain
provider-preventable conditions. Each state Medicaid program must deny payments to providers for the treatment
of health care-acquired conditions designated by CMS as well as other provider-preventable conditions that may
be designated by the state.
Congress has expanded the federal government’s involvement in fighting fraud, waste and abuse in the
Medicaid program through the Medicaid Integrity Program. CMS employs UPICs to perform post-payment
audits of Medicaid claims, identify overpayments, and perform other program integrity activities. The UPICs
collaborate with states and coordinate provider investigations across the Medicare and Medicaid programs. In
addition, state Medicaid agencies are required to establish Medicaid RAC programs. These programs vary by
state in design and operation.
Managed Medicaid
Enrollment in managed Medicaid plans has increased in recent years, as state governments seek to control the
cost of Medicaid programs. Managed Medicaid programs enable states to contract with one or more entities for
patient enrollment, care management and claims adjudication. The states usually do not relinquish program
responsibilities for financing, eligibility criteria and core benefit plan design. We generally contract directly with
one or more of the designated entities, usually a managed care organization. The provisions of these programs are
state-specific. Many states direct managed care plans to pass through supplemental payments to designated
providers, independent of services rendered, to ensure consistent funding of providers that serve large numbers of
low-income patients. In an effort to more closely tie funds to delivery and outcomes, CMS is limiting these “pass-
through payments” to managed Medicaid plans and will generally prohibit such payments by 2027. However, CMS
permits new pass-throughs of supplemental provider payments for up to a three-year period when states are
transitioning Medicaid populations or services from a fee-for-service system to a managed care system.
Accountable Care Organizations and Bundled Payment Initiatives
An Accountable Care Organization (“ACO”) is a network of providers and suppliers that work together to
invest in infrastructure and redesign delivery processes to attempt to achieve high quality and efficient delivery
of services. Promoting accountability and coordination of care, ACOs are intended to produce savings as a result
of improved quality and operational efficiency. ACOs that achieve quality performance standards established by
HHS are eligible to share in a portion of the amounts saved by the Medicare program. There are several types of
ACO programs, including the Medicare Shared Savings Program.
The CMS Innovation Center is responsible for establishing demonstration projects and other initiatives in
order to identify, develop, test and encourage the adoption of new methods of delivering and paying for health
care that create savings under the Medicare and Medicaid programs, while improving quality of care. For
example, providers participating in bundled payment initiatives agree to receive one payment for services
provided to Medicare patients for certain medical conditions or episodes of care, accepting accountability for
costs and quality of care. By rewarding providers for increasing quality and reducing costs and penalizing
providers if costs exceed a set amount, these models are intended to lead to higher quality, more coordinated care
at a lower cost to the Medicare program. Hospitals may receive supplemental Medicare payments or owe
repayments to CMS depending on whether overall CMS spending per episode exceeds or falls below a target
specified by CMS and whether quality standards are met. The CMS Innovation Center has implemented bundled
payment models, including the Bundled Payment Care Improvement Advanced (“BPCI Advanced”) program,
which is voluntary and expected to run through December 2023. Participation in bundled payment programs is
generally voluntary, but CMS currently requires providers in selected geographic areas to participate in a
mandatory bundled program for specified orthopedic procedures and a model for end-stage renal disease
treatment. In addition, CMS will require certain hospitals to participate in a radiation oncology model beginning
as early as January 1, 2023.
In October 2021, CMS published an outline of the CMS Innovation Center’s strategy for the next decade,
noting the need to accelerate the movement to value-based care and drive broader system transformation. By
16
2030, the CMS Innovation Center aims to have all fee-for-service Medicare beneficiaries and most Medicaid
beneficiaries in a care relationship with accountability for quality and total cost of care. CMS also indicated it
will streamline its payment model portfolio and consider how to ensure broad provider participation, including
by implementing more mandatory models. Moreover, several private third-party payers are increasingly
employing alternative payment models, which may increasingly shift financial risk to providers.
Disproportionate Share Hospital and Medicaid Supplemental Payments
In addition to making payments for services provided directly to beneficiaries, Medicare makes additional
payments to hospitals that treat a disproportionately large number of low-income patients (Medicaid and
Medicare patients eligible to receive Supplemental Security Income). Disproportionate Share Hospital (“DSH”)
payment adjustments are determined annually based on certain statistical information required by HHS and are
paid as a percentage addition to MS-DRG payments. CMS also distributes a payment to each DSH hospital that
is allocated according to the hospital’s proportion of uncompensated care costs relative to the uncompensated
care amount of other DSH hospitals. Pending litigation challenging the methodology for calculating DSH
payment adjustments may affect how CMS calculates these payments and may increase or decrease our payments
in the future.
Some states make additional payments to providers through the Medicaid program for certain specific
claims. These supplemental payments may be in the form of Medicaid DSH payments, which help to offset
hospital uncompensated care costs, or upper payment limit supplemental payments, which are intended to
address the difference between Medicaid fee-for-service payments and Medicare reimbursement rates. CMS is
considering changes to both types of payments. The federal government distributes federal Medicaid DSH funds
to each state based on a statutory formula. The states then distribute the DSH funding among qualifying
hospitals. States have broad discretion to define which hospitals qualify for Medicaid DSH payments and the
amount of such payments. The Affordable Care Act and subsequent legislation provide for reductions to the
Medicaid DSH hospital program, but Congress has delayed the implementation of these reductions through 2023
(to begin in federal fiscal year 2024). Under current law, Medicaid DSH payments will be reduced by $8 billion
in each of federal fiscal years 2024 through 2027.
TRICARE
TRICARE is the Department of Defense’s health care program for members of the armed forces. For
inpatient services, TRICARE reimburses hospitals based on a DRG system modeled on the Medicare inpatient
PPS. For outpatient services, TRICARE reimburses hospitals based on a PPS that is similar to that utilized for
services furnished to Medicare beneficiaries.
Annual Cost Reports
All hospitals participating in the Medicare, Medicaid and TRICARE programs, whether paid on a
reasonable cost basis or under a PPS, are required to meet certain financial reporting requirements. Federal and,
where applicable, state regulations require the submission of annual cost reports covering the revenues, costs and
expenses associated with the services provided by each hospital
to Medicare beneficiaries and Medicaid
recipients.
Annual cost reports required under the Medicare and Medicaid programs are subject to routine audits, which
may result in adjustments to the amounts ultimately determined to be due to us under these reimbursement
programs. These audits often require several years to reach the final determination of amounts due to or from us
under these programs. Providers also have rights of appeal, and it is common to contest issues raised in audits of
cost reports.
Managed Care and Other Discounted Plans
Most of our hospitals offer discounts from established charges to certain large group purchasers of health
care services, including managed care plans and private health insurers. Admissions reimbursed by commercial
17
managed care and other insurers were 31%, 29% and 28% of our total admissions for the years ended
December 31, 2021, 2020 and 2019, respectively. Managed care contracts are typically negotiated for terms
between one and three years. While we generally received contracted annual average increases of approximately
4% from managed care payers during 2021, there can be no assurance that we will continue to receive increases
in the future. Price transparency initiatives may impact our ability to obtain or maintain favorable contract terms.
Effective January 1, 2022, the No Surprises Act (enacted as part of the Consolidated Appropriations Act, 2021
(“CAA”)) requires providers to send to a patient’s health plan a good faith estimate of the expected charges for
furnishing scheduled items or services, including billing and diagnostic codes, prior to the scheduled date of the
items or services. The estimate must cover any item or service that is reasonably expected to be provided in
conjunction with the primary items or services, including those that may be delivered by another provider.
However, HHS is deferring enforcement of certain requirements of the No Surprises Act related to the good faith
estimates for scheduled items or services for insured patients. In addition, among other consumer protections, the
No Surprises Act prohibits providers from charging patients an amount beyond the in-network cost sharing
amount for emergency services rendered by out-of-network providers and non-emergency services rendered by
out-of-network providers at certain in-network facilities, including hospitals. HHS has established a dispute
resolution process for out-of-network providers and health plans to resolve payment disagreements when surprise
billing protections apply. It is not clear what impact, if any, these or future health reform efforts at the federal and
state levels, consolidation within the third-party payer industry and vertical integration among third-party payers
and health care providers will have on our ability to negotiate reimbursement rates.
Uninsured and Self-Pay Patients
Self-pay revenues are derived from providing health care services to patients without health insurance
coverage and from the patient responsibility portion of payments for our health care services that are not covered
by an individual’s health plan. Collection of amounts due from individuals is typically more difficult than
collection of amounts due from government health care programs or private third-party payers. Any increases in
uninsured individuals, changes to the payer mix or greater adoption of health plan structures that result in higher
patient responsibility amounts could increase amounts due from individuals. Effective January 1, 2022, the No
Surprises Act requires providers to provide uninsured and self-pay patients a good faith estimate of the expected
charges for furnishing scheduled items or services, including billing and diagnostic codes, prior to the scheduled
date of the items or services. The estimate must cover any item or service that is reasonably expected to be
provided in conjunction with the scheduled item or service or that is reasonably expected to be delivered by
another provider. If the actual charges are substantially higher than the estimate, the patient can invoke a dispute
resolution process to challenge the higher amount.
A high percentage of our uninsured patients are initially admitted through our emergency rooms. For the
year ended December 31, 2021, approximately 85% of our admissions of uninsured patients occurred through our
emergency rooms. The Emergency Medical Treatment and Labor Act (“EMTALA”) requires any hospital that
participates in the Medicare program to conduct an appropriate medical screening examination of every person
who presents to the hospital’s emergency room for treatment and, if the individual is suffering from an
emergency medical condition, to either stabilize that condition or make an appropriate transfer of the individual
to a facility that can handle the condition. The obligation to screen and stabilize emergency medical conditions
exists regardless of an individual’s ability to pay for treatment. In addition, health insurers are required to
reimburse hospitals for emergency services provided to enrollees without prior authorization and without regard
to whether a participating provider contract is in place.
Hospital Utilization
We believe the most important factors relating to the overall utilization of a hospital are the quality and
market position of the hospital and the number and quality of physicians and other health care professionals
providing patient care within the facility. Generally, we believe the ability of a hospital to be a market leader is
determined by its breadth of services, level of technology, quality and condition of the facilities, emphasis on
18
quality of care and convenience for patients and physicians. Other factors that impact utilization include the
growth in local population, local economic conditions and market penetration of managed care programs.
The following table sets forth certain operating statistics for our health care facilities. Health care facility
operations are subject to certain seasonal fluctuations, including decreases in patient utilization during holiday
periods and increases in the cold weather months.
Number of hospitals at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of freestanding outpatient surgery centers at end of period(a) . . .
Number of licensed beds at end of period(b) . . . . . . . . . . . . . . . . . . . . . . .
Weighted average beds in service(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Admissions(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equivalent admissions(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average length of stay (days)(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average daily census(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy rate(h)
Emergency room visits(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient surgeries(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inpatient surgeries(k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Days revenues in accounts receivable(l)
. . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient revenues as a % of patient revenues(m) . . . . . . . . . . . . . . . . . .
2021
2020
2019
182
125
48,803
42,148
2,089,975
3,536,238
5.2
29,752
185
121
49,265
42,246
2,009,909
3,312,330
5.1
27,734
184
123
49,035
41,510
2,108,927
3,646,335
4.9
28,134
71%
66%
68%
8,475,345
1,008,236
522,069
49
37%
7,450,307
882,483
522,385
45
35%
9,161,129
1,009,947
566,635
50
39%
(a) Excludes freestanding endoscopy centers (21 at December 31, 2021 and 2020, and 20 at December 31, 2019).
(b) Licensed beds are those beds for which a facility has been granted approval to operate from the applicable
state licensing agency.
(c) Represents the average number of beds in service, weighted based on periods owned.
(d) Represents the total number of patients admitted to our hospitals and is used by management and certain
investors as a general measure of inpatient volume.
(e) Equivalent admissions are used by management and certain investors as a general measure of combined
inpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatient
volume) by the sum of gross inpatient revenue and gross outpatient revenue and then dividing the resulting
amount by gross inpatient revenue. The equivalent admissions computation “equates” outpatient revenue to
the volume measure (admissions) used to measure inpatient volume, resulting in a general measure of
combined inpatient and outpatient volume.
(f) Represents the average number of days admitted patients stay in our hospitals.
(g) Represents the average number of patients in our hospital beds each day.
(h) Represents the percentage of hospital beds in service that are occupied by patients. Both average daily
census and occupancy rate provide measures of the utilization of inpatient rooms.
(i) Represents the number of patients treated in our emergency rooms.
(j) Represents the number of surgeries performed on patients who were not admitted to our hospitals. Pain
management and endoscopy procedures are not included in outpatient surgeries.
(k) Represents the number of surgeries performed on patients who have been admitted to our hospitals. Pain
management and endoscopy procedures are not included in inpatient surgeries.
(l) Revenues per day is calculated by dividing the revenues for the fourth quarter of each year by the days in
the quarter. Days revenues in accounts receivable is then calculated as accounts receivable at the end of the
period divided by revenues per day.
(m) Represents the percentage of patient revenues related to patients who are not admitted to our hospitals.
Competition
Generally, other hospitals in the communities we serve provide services similar to those offered by our
hospitals. Additionally, the number of freestanding specialty hospitals, surgery centers, emergency departments,
19
urgent care centers and diagnostic and imaging centers in the geographic areas in which we operate continues to
increase. As a result, most of our hospitals operate in a highly competitive environment. In some cases,
competing facilities are more established than our hospitals. Some competing facilities are physician-owned or
are owned by tax-supported government agencies and many others are owned by not-for-profit entities that may
be supported by endowments, charitable contributions and/or tax revenues and are exempt from sales, property
and income taxes. Such exemptions and support are not available to our hospitals and may provide the
tax-supported or not-for-profit entities an advantage in funding capital expenditures. In certain localities there are
large teaching hospitals that provide highly specialized facilities, equipment and services that may not be
available at most of our hospitals. We also face competition from specialty hospitals and from both our own and
unaffiliated freestanding ASCs for market share in certain high margin services. Psychiatric hospitals frequently
attract patients from areas outside their immediate locale and, therefore, our psychiatric hospitals and units
compete with both local and regional hospitals, including the psychiatric units of general, acute care hospitals.
Trends toward clinical and pricing transparency may impact our competitive position in ways that are
difficult to predict. For example, hospitals are currently required to publish online a list of their standard charges
for all items and services, including discounted cash prices and payer-specific and de-identified negotiated
charges, in a publicly accessible online file. Hospitals are also required to publish a consumer-friendly list of
standard charges for certain “shoppable” services (i.e., services that can be scheduled by a patient in advance)
and associated ancillary services or, alternatively, maintain an online price estimator tool. CMS may impose civil
monetary penalties for noncompliance with these price transparency requirements. Effective January 1, 2022, the
No Surprises Act imposes additional price transparency requirements, including the requirement that providers
send patients and health plans a good faith estimate of the expected charges and diagnostic codes prior to the
scheduled date of the item or service. HHS is deferring enforcement of certain requirements of the No Surprises
Act regarding providing good faith estimates for scheduled items or services for insured individuals.
Our strategies are designed to ensure our hospitals are competitive. We believe our hospitals compete within
local communities on the basis of many factors, including the quality of care, ability to attract and retain quality
physicians, skilled clinical personnel and other health care professionals,
location, breadth of services,
technology offered, and quality and condition of the facilities. We focus on operating outpatient services with
accessibility and convenient service for patients and predictability and efficiency for physicians.
Two of the most significant factors that impact the competitive position of a hospital are the number and
quality of physicians affiliated with or employed by the hospital. Although physicians may at any time terminate
their relationship with a hospital we operate, our hospitals seek to retain physicians with varied specialties on the
hospitals’ medical staffs and to attract other qualified physicians. We believe physicians refer patients to a
hospital on the basis of the quality and scope of services it renders to patients and physicians, the quality of
physicians on the medical staff, the location of the hospital and the quality of the hospital’s facilities, technology,
technology,
equipment and employees. Accordingly, we strive to maintain and provide quality facilities,
equipment, employees and services for physicians and patients. Our hospitals face competition from competitors
that are implementing physician alignment strategies, such as employing physicians, acquiring physician practice
groups and participating in ACOs or other clinical integration models.
Another major factor in the competitive position of our hospitals is our ability to negotiate service contracts
with group purchasers of health care services. Managed care plans attempt to direct and control the use of
hospital services and obtain discounts from hospitals’ established gross charges. Similarly, employers and
traditional health insurers continue to attempt to contain costs through negotiations with hospitals for managed
care programs and discounts from established gross charges. Generally, hospitals compete for service contracts
with group purchasers of health care services on the basis of price, market reputation, geographic location,
quality and range of services, quality of the medical staff and convenience. Our future success will depend, in
part, on our ability to retain and renew our contracts with third-party payers and enter into new contracts on
favorable terms. Other health care providers may impact our ability to enter into contracts with third-party payers
or negotiate increases in our reimbursement and other favorable terms and conditions. For example, some of our
20
competitors may negotiate exclusivity provisions with managed care plans or otherwise restrict the ability of
managed care companies to contract with us. Price transparency initiatives and increasing vertical integration
efforts involving third-party payers and health care providers, among other factors, may increase these
challenges. Moreover, the trend toward consolidation among private third-party payers tends to increase payer
bargaining power over fee structures. In addition, health reform efforts may lead to private third-party payers
increasingly demanding reduced fees or being unwilling to negotiate reimbursement increases. Health plans
increasingly utilize narrow networks that restrict the number of participating providers or tiered networks that
impose significantly higher cost sharing obligations on patients that obtain services from providers in a
disfavored tier. The importance of obtaining contracts with group purchasers of health care services varies from
community to community, depending on the market strength of such organizations.
State certificate of need (“CON”) laws, which place limitations on a health care facility’s ability to expand
services and facilities, make capital expenditures and otherwise make changes in operations, may also have the
effect of restricting competition. We currently operate health care facilities in a number of states with CON laws
or that require other types of approvals for the establishment or expansion of certain facility types or services.
Before issuing a CON or other approval, these states consider the need for additional, changes in, or expanded
health care facilities or services. Removal of these requirements could reduce barriers to entry and increase
competition in our service areas. In those states that do not require state approval or that set relatively high levels
of expenditures before they become reviewable by state authorities, competition in the form of new services,
facilities and capital spending is more prevalent. Other federal and state laws and regulations may also adversely
impact our ability to expand, such as a regulation commonly known as the “36 Month Rule,” which restricts the
assumption of Medicare billing privileges for certain home health agencies. In addition, changes in licensure or
other laws or regulations and recognition of new provider types or payment models could impact our competitive
position. See Item 1, “Business — Regulation and Other Factors.”
We and the health care industry as a whole face the challenge of continuing to provide quality patient care
while dealing with rising costs and strong competition for patients. Changes in medical technology, existing and
future legislation, regulations and interpretations and contracting for provider services by third-party payers
remain ongoing challenges.
Admissions, average lengths of stay and reimbursement amounts continue to be negatively affected by
third-party payer pre-admission authorization requirements, utilization review and pressure to maximize
outpatient and alternative health care delivery services for less acutely ill patients. Increased competition,
admission constraints and third-party payer pressures are expected to continue. To meet these challenges, we
intend to expand and update our facilities or acquire or construct new facilities where appropriate, enhance the
provision of a comprehensive array of outpatient services, offer market competitive pricing to group purchasers
of health care services, upgrade facilities and equipment and offer new or expanded programs and services.
Regulation and Other Factors
Licensure, Certification and Accreditation
Health care facility construction and operation are subject to numerous federal, state and local regulations
relating to the adequacy of medical care, equipment, personnel, operating policies and procedures, maintenance
of adequate records, fire prevention, rate-setting, building codes and environmental protection. Facilities are
subject to periodic inspection by governmental and other authorities to assure continued compliance with the
various standards necessary for licensing and accreditation. We believe our health care facilities are properly
licensed under applicable state laws. Each of our acute care hospitals located in the United States is eligible to
participate in Medicare and Medicaid programs and is accredited by The Joint Commission, with the exception
of one hospital which is accredited by DNV. If any facility were to lose its Medicare or Medicaid certification,
the facility would be unable to receive reimbursement from federal health care programs. From time to time, we
may acquire a facility that is not accredited but for which we will seek accreditation. If any facility were to lose
21
accreditation, the facility would be subject to state surveys, potentially be subject to increased scrutiny by CMS
and likely lose payment from private third-party payers.
The Controlled Substances Act and Drug Enforcement Administration (“DEA”) regulations require every
person who dispenses controlled substances to be registered with the DEA at each principal place of business or
professional practice where the person dispenses controlled substances, subject to limited exceptions. Each
hospital or clinic must hold a DEA registration at each location and may be subject to similar state registration
requirements. In addition, we are subject to a variety of federal and state statutes and regulations that govern
operational issues related to pharmaceuticals and controlled substances, such as those related to packaging,
storing, and dispensing of pharmaceutical drugs, inventory control and recordkeeping requirements for controlled
substances, and other standards intended to prevent diversion of controlled substances. The DEA, the Department
of Justice (“DOJ”), HHS, and state boards of pharmacy have broad enforcement powers, may conduct audits and
investigations and can impose substantial fines and other penalties, including revocation of registration.
Management believes our facilities are in substantial compliance with current applicable federal, state, local
and independent review body regulations and standards. The requirements for licensure, certification and
accreditation are subject to change, and, in order to remain qualified, it may become necessary for us to make
changes in our facilities, equipment, personnel and services. The requirements for licensure, certification and
accreditation also include notification or approval in the event of the transfer or change of ownership or certain
other changes. Failure to provide required notifications or obtain necessary approvals in these circumstances can
lapses in
result
reimbursement or other penalties.
in the inability to complete an acquisition or change of ownership,
loss of licensure,
Certificates of Need
the acquisition of existing facilities,
In some states where we operate hospitals and other health care providers, the construction or expansion of
health care facilities,
the transfer or change of ownership, capital
expenditures and the addition of new beds or services may be subject to review by and prior approval of, or
notifications to, state regulatory agencies under a CON program. Such laws generally require the reviewing state
agency to determine the public need for additional or expanded health care facilities and services or other change.
Failure to provide required notifications or obtain necessary state approvals can result in the inability to expand
facilities, complete an acquisition or expenditure or change ownership or other penalties.
Federal Health Care Program Regulations
Participation in any federal health care program, including the Medicare and Medicaid programs, is heavily
regulated by statute and regulation. If a hospital or other provider fails to substantially comply with the numerous
conditions of participation in the Medicare and Medicaid programs or performs certain prohibited acts, the
provider’s participation in the federal health care programs may be terminated, or civil and/or criminal penalties
may be imposed. Civil monetary penalties are adjusted annually based on updates to the consumer price index.
Anti-kickback Statute
A section of the Social Security Act known as the “Anti-kickback Statute” prohibits providers and others
from directly or indirectly soliciting, receiving, offering or paying any remuneration with the intent of generating
referrals or orders for services or items covered by a federal health care program. Courts have interpreted this
statute broadly and held that there is a violation of the Anti-kickback Statute if just one purpose of the
remuneration is to generate referrals, even if there are other lawful purposes. Furthermore, knowledge of the law
or the intent to violate the law is not required. Violations of the Anti-kickback Statute may be punished by
criminal fines of up to $100,000 per violation, imprisonment, substantial civil monetary penalties per violation
that are subject to annual adjustment based on updates to the consumer price index and damages of up to three
times the total amount of the remuneration and/or exclusion from participation in federal health care programs,
22
including Medicare and Medicaid. In addition, submission of a claim for services or items generated in violation
of the Anti-kickback Statute may be subject to additional penalties under the federal False Claims Act (“FCA”)
as a false or fraudulent claim.
incentive arrangements that constitute suspect practices,
The HHS Office of Inspector General (the “OIG”), among other regulatory agencies, is responsible for
identifying and eliminating fraud, abuse and waste. The OIG carries out this mission through a nationwide
program of audits, investigations and inspections. The OIG provides guidance to the industry through various
methods, including advisory opinions and “Special Fraud Alerts.” These Special Fraud Alerts do not have the
force of law, but identify features of arrangements or transactions that the government believes may cause the
arrangements or transactions to violate the Anti-kickback Statute or other federal health care laws. The OIG has
identified several
including: (a) payment of any
incentive by a hospital each time a physician refers a patient to the hospital, (b) the use of free or significantly
discounted office space or equipment in facilities usually located close to the hospital, (c) provision of free or
significantly discounted billing, nursing or other staff services, (d) free training for a physician’s office staff in
areas such as management techniques and laboratory techniques, (e) guarantees which provide, if the physician’s
income fails to reach a predetermined level, the hospital will pay any portion of the remainder, (f) low-interest or
interest-free loans, or loans which may be forgiven if a physician refers patients to the hospital, (g) payment of
the costs of a physician’s travel and expenses for conferences or payments to a physician for speaking
engagements, (h) coverage on the hospital’s group health insurance plans at an inappropriately low cost to the
physician, (i) payment for services (which may include consultations at the hospital) which require few, if any,
substantive duties by the physician, (j) purchasing goods or services from physicians at prices in excess of their
fair market value, (k) rental of space in physician offices, at other than fair market value terms, by persons or
entities to which physicians refer, and (l) physician-owned entities (frequently referred to as physician-owned
distributorships or PODs) that derive revenue from selling, or arranging for the sale of, implantable medical
devices ordered by their physician-owners for use on procedures that physician-owners perform on their own
patients at hospitals or ASCs. The OIG has encouraged persons having information about hospitals who offer the
above types of incentives to physicians to report such information to the OIG.
The OIG also issues “Special Advisory Bulletins” as a means of providing guidance to health care
providers. These bulletins, along with the Special Fraud Alerts, have focused on certain arrangements that could
be subject to heightened scrutiny by government enforcement authorities, including: (a) contractual joint venture
arrangements and other joint venture arrangements between those in a position to refer business, such as
physicians, and those providing items or services for which Medicare or Medicaid pays, and (b) certain
“gainsharing” arrangements, i.e., the practice of giving physicians a share of any reduction in a hospital’s costs
for patient care attributable in part to the physician’s efforts.
In addition to issuing Special Fraud Alerts and Special Advisory Bulletins, the OIG issues compliance
program guidance for certain types of health care providers. The OIG guidance identifies a number of risk areas
under federal fraud and abuse statutes and regulations. These areas of risk include compensation arrangements
with physicians, recruitment arrangements with physicians and joint venture relationships with physicians.
As authorized by Congress, the OIG has published safe harbor regulations that outline categories of
activities deemed protected from prosecution under the Anti-kickback Statute. Currently, there are statutory
exceptions and safe harbors for various activities, including the following: certain investment interests, space
rental, equipment rental, practitioner recruitment, personnel services and management contracts, sale of practice,
referral services, warranties, discounts, employees, group purchasing organizations, waiver of beneficiary
coinsurance and deductible amounts, managed care arrangements, obstetrical malpractice insurance subsidies,
investments in group practices, freestanding surgery centers, ambulance replenishing, referral agreements for
specialty services, care coordination arrangements, arrangements for patient engagement and support,
CMS-sponsored model arrangements, cybersecurity technology and related services, and value-based
arrangements.
23
The fact that conduct or a business arrangement does not fall within a safe harbor or is identified in a
Special Fraud Alert, Special Advisory Bulletin or other guidance does not necessarily render the conduct or
business arrangement illegal under the Anti-kickback Statute. However, such conduct and business arrangements
may lead to increased scrutiny by government enforcement authorities.
We have a variety of financial relationships with physicians and others who either refer or influence the
referral of patients to our hospitals, other health care facilities and employed physicians, including employment
contracts, leases, medical director agreements and professional service agreements. We also have similar
relationships with physicians and facilities to which patients are referred from our facilities and other providers.
In addition, we provide financial incentives, including minimum revenue guarantees, to recruit physicians into
the communities served by our hospitals. While we endeavor to comply with the applicable safe harbors, certain
of our current arrangements, including joint ventures and financial relationships with physicians and other
referral sources and persons and entities to which we refer patients, do not qualify for safe harbor protection.
Although we believe our arrangements with physicians and other referral sources and referral recipients
have been structured to comply with current law and available interpretations, there can be no assurance
regulatory authorities enforcing these laws will determine these financial arrangements comply with the Anti-
kickback Statute or other applicable laws. An adverse determination could subject us to liabilities under the
Social Security Act and other laws, including criminal penalties, civil monetary penalties and exclusion from
participation in Medicare, Medicaid or other federal health care programs.
Stark Law
The Social Security Act also includes a provision commonly known as the “Stark Law.” The Stark Law
prohibits physicians from referring Medicare and Medicaid patients to entities with which they or any of their
immediate family members have a financial relationship, if these entities provide certain “designated health
services” reimbursable by Medicare or Medicaid unless an exception applies. The Stark Law also prohibits
entities that provide designated health services reimbursable by Medicare and Medicaid from billing the
Medicare and Medicaid programs for any items or services that result from a prohibited referral and requires the
entities to refund amounts received for items or services provided pursuant to the prohibited referral on a timely
basis. “Designated health services” include inpatient and outpatient hospital services, clinical laboratory services
and radiology services. Sanctions for violating the Stark Law include denial of payment, substantial civil
monetary penalties per claim submitted and exclusion from the federal health care programs. Failure to refund
amounts received as a result of a prohibited referral on a timely basis may constitute a false or fraudulent claim
and may result in civil penalties and additional penalties under the FCA. The statute also provides for a penalty
for a circumvention scheme. These penalties are updated annually based on changes to the consumer price index.
There are exceptions to the self-referral prohibition for many of the customary financial arrangements
between physicians and providers, including employment contracts, leases, recruitment agreements and personal
service arrangements. Unlike safe harbors under the Anti-kickback Statute with which compliance is voluntary, a
financial relationship must comply with every requirement of a Stark Law exception or the arrangement is in
violation of the Stark Law. Although there is an exception for a physician’s ownership interest in an entire
hospital, the Affordable Care Act prohibits physician-owned hospitals established after December 31, 2010 from
billing for Medicare or Medicaid patients referred by their physician owners. As a result, the law effectively
prevents the formation of new physician-owned hospitals that participate in Medicare or Medicaid. While the
Affordable Care Act grandfathers existing physician-owned hospitals, it does not allow these hospitals to
increase the percentage of physician ownership and significantly restricts their ability to expand services.
Through a series of rulemakings, CMS has issued final regulations implementing the Stark Law. While
these regulations were intended to clarify the requirements of the exceptions to the Stark Law, it is unclear how
the government will interpret many of these exceptions for enforcement purposes. Further, we do not always
have the benefit of significant regulatory or judicial interpretation of the Stark Law and its implementing
24
regulations. We attempt to structure our relationships to meet an exception to the Stark Law, but the regulations
implementing the exceptions are detailed and complex, and are subject to continuing legal and regulatory change.
We cannot assure that every relationship complies fully with the Stark Law.
Other Fraud and Abuse Provisions
Certain federal fraud and abuse laws apply to all health benefit programs and provide for criminal penalties.
The Social Security Act also imposes criminal and civil penalties for making false claims and statements to
Medicare and Medicaid. False claims include, but are not limited to, billing for services not rendered or for
misrepresenting actual services rendered in order to obtain higher reimbursement, billing for unnecessary goods
and services and cost report fraud. Federal enforcement officials have the ability to exclude from Medicare and
Medicaid any business entities and any investors, officers and managing employees associated with business
entities that have committed health care fraud, even if the officer or managing employee had no knowledge of the
fraud. Criminal and civil penalties may be imposed for a number of other prohibited activities, including failure
to return known overpayments, certain gainsharing arrangements, billing Medicare amounts that are substantially
in excess of a provider’s usual charges, offering remuneration to influence a Medicare or Medicaid beneficiary’s
selection of a health care provider, contracting with an individual or entity known to be excluded from a federal
health care program, making or accepting a payment to induce a physician to reduce or limit services, and
soliciting or receiving any remuneration in return for referring an individual for an item or service payable by a
federal health care program. Like the Anti-kickback Statute, these provisions are very broad. Civil penalties may
be imposed for the failure to report and return an overpayment within 60 days of identifying the overpayment or
by the date a corresponding cost report is due, whichever is later. To avoid liability, providers must, among other
things, carefully and accurately code claims for reimbursement, promptly return overpayments and accurately
prepare cost reports.
Some of these provisions, including the federal Civil Monetary Penalty Law, require a lower burden of
proof than other fraud and abuse laws, including the Anti-kickback Statute. Substantial civil monetary penalties
may be imposed under the federal Civil Monetary Penalty Law. These penalties will be updated annually based
on changes to the consumer price index. In some cases, violations of the Civil Monetary Penalty Law may result
in penalties of up to three times the remuneration offered, paid, solicited or received. In addition, a violator may
be subject to exclusion from federal and state health care programs. Federal and state governments increasingly
use the federal Civil Monetary Penalty Law, especially where they believe they cannot meet the higher burden of
proof requirements under the Anti-kickback Statute. Further, individuals can receive up to $1,000 for providing
information on Medicare fraud and abuse that leads to the recovery of at least $100 of Medicare funds under the
Medicare Integrity Program.
In addition, the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) establishes criminal penalties
for paying, receiving, soliciting or offering any remuneration in return for referring a patient to a laboratory,
clinical treatment facility or recovery home, or in exchange for an individual using the services of one of these
entities. The EKRA prohibitions apply to services covered by government health care programs and by private
health plans. There is limited guidance with respect to the application of EKRA.
State Fraud and Abuse Laws
Many states in which we operate also have laws intended to prevent fraud and abuse within the health care
industry. Some of these laws are similar to the Anti-kickback Statute, prohibiting payments to physicians for
patient referrals, and to the Stark Law, prohibiting certain self-referrals. These state laws often apply regardless
of the source of payment for care, and little precedent exists for their interpretation or enforcement. These
statutes typically provide for criminal and civil penalties, as well as loss of licensure.
The Federal False Claims Act and Similar State Laws
We are subject to state and federal laws that govern the submission of claims for reimbursement and
prohibit the making of false claims or statements. One of the most prominent of these laws is the FCA, which
25
may be enforced by the federal government directly or by a qui tam plaintiff, or whistleblower, on the
government’s behalf. The government may use the FCA to prosecute Medicare and other government program
fraud in areas such as coding errors, billing for services not provided and submitting false cost reports. In
addition, the FCA covers payments made in connection with the Exchanges created under the Affordable Care
Act, if those payments include any federal funds. When a private party brings a qui tam action under the FCA,
the defendant is not made aware of the lawsuit until the government commences its own investigation or makes a
determination whether it will intervene. If a defendant is determined by a court of law to be liable under the FCA,
the defendant may be required to pay three times the actual damages sustained by the government, plus
substantial mandatory civil penalties for each separate false claim. These penalties are updated annually based on
changes to the consumer price index.
There are many potential bases for liability under the FCA. Liability often arises when an entity knowingly
submits a false claim for reimbursement to the federal government. The FCA defines the term “knowingly”
broadly. Though simple negligence will not give rise to liability under the FCA, submitting a claim with reckless
disregard to its truth or falsity constitutes a “knowing” submission under the FCA and, therefore, may create
liability. Submission of claims for services or items generated in violation of the Anti-kickback Statute
constitutes a false or fraudulent claim under the FCA. Whistleblowers and the federal government have taken the
position, and some courts have held, that providers who allegedly have violated other statutes, such as the Stark
Law, have thereby submitted false claims under the FCA. False claims under the FCA also include the knowing
and improper failure to report and refund amounts owed to the government in a timely manner following
identification of an overpayment. An overpayment is deemed to be identified when a person has, or should have
through reasonable diligence, determined that an overpayment was received and quantified the overpayment.
Every entity that receives at least $5 million annually in Medicaid payments must have written policies for
all employees, contractors or agents, providing detailed information about false claims, false statements and
whistleblower protections under certain federal laws, including the FCA, and similar state laws. In addition,
federal law provides an incentive to states to enact false claims laws comparable to the FCA. A number of states
in which we operate have adopted their own false claims provisions as well as their own whistleblower
provisions under which a private party may file a civil lawsuit in state court. We have adopted and distributed
policies pertaining to the FCA and relevant state laws.
HIPAA Administrative Simplification and Privacy, Security and Interoperability Requirements
The Administrative Simplification Provisions of the Health Insurance Portability and Accountability Act of
1996 (“HIPAA”) and implementing regulations require the use of uniform electronic data transmission standards
and code sets for certain health care claims and payment transactions submitted or received electronically. In
addition, HIPAA requires that each provider use a National Provider Identifier. These provisions are intended to
encourage electronic commerce in the health care industry.
The privacy and security regulations promulgated pursuant to HIPAA extensively regulate the use and
disclosure of individually identifiable health information, known as “protected health information,” and require
covered entities, including health plans and most health care providers, to implement administrative, physical and
technical safeguards to protect the security of such information. Certain provisions of the security and privacy
regulations apply to business associates (entities that handle protected health information on behalf of covered
entities), and business associates are subject to direct liability for violation of these provisions. In addition, a
covered entity may be subject to penalties as a result of a business associate violating HIPAA, if the business
associate is found to be an agent of the covered entity.
Covered entities must report breaches of unsecured protected health information to affected individuals
without unreasonable delay but not to exceed 60 days after discovery of the breach by a covered entity or its
agents. Notification must also be made to HHS and, in certain situations involving large breaches, to the media.
HHS is required to publish on its website a list of all covered entities that report a breach involving more than
26
500 individuals. All non-permitted uses or disclosures of unsecured protected health information are presumed to
be breaches unless the covered entity or business associate establishes that there is a low probability the
information has been compromised. Various state laws and regulations may also require us to notify affected
individuals in the event of a data breach involving individually identifiable information.
Violations of the HIPAA privacy and security regulations may result in criminal penalties and in substantial
civil penalties per violation. These civil penalties are updated annually based on updates to the consumer price
index. HHS enforces the regulations and performs compliance audits. In addition to enforcement by HHS, state
attorneys general are authorized to bring civil actions seeking either injunction or damages in response to
violations that threaten the privacy of state residents. HHS may resolve HIPAA violations through informal
means, such as allowing a covered entity to implement a corrective action plan, but HHS has the discretion to
move directly to impose monetary penalties and is required to impose penalties for violations resulting from
willful neglect. We enforce compliance in accordance with HIPAA privacy and security regulations. The
Information Protection and Security Department monitors our compliance with the HIPAA privacy and security
regulations. The HIPAA privacy regulations and security regulations have and will continue to impose significant
costs on our facilities in order to comply with these standards.
There are numerous other laws and legislative and regulatory initiatives at the federal and state levels
addressing privacy and security concerns. Our facilities remain subject to federal or state privacy-related laws
that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and could impose
additional penalties. For example, the Federal Trade Commission uses its consumer protection authority to
initiate enforcement actions in response to data breaches. The California Consumer Privacy Act of 2018 (the
“CCPA”), which was significantly amended by the California Privacy Rights Act (“CPRA”) effective January 1,
2022, affords consumers expanded privacy protections. Additionally, Virginia and Colorado passed
comprehensive privacy legislation in 2021, and several privacy bills have been proposed both at the federal and
state level that may result in additional legal requirements that impact our business. The potential effects of these
laws are far-reaching and may require us to modify our data processing practices and policies and to incur
substantial costs and expenses in order to comply. For example, residents in states with comprehensive privacy
laws have expanded rights to access and require deletion and portability of their personal information, opt out of
certain personal information sharing and receive detailed information about how their personal information is
used. The CCPA and CPRA provide for civil penalties for violations, as well as a private right of action for data
breaches.
Many foreign data privacy regulations (including the UK Data Protection Legislation) are more stringent
than those in the United States. In the case of non-compliance with these regulations, regulators may impose
administrative fines which are based on a multi-factored approach.
Health care providers and industry participants are also subject to a growing number of requirements
intended to promote the interoperability and exchange of patient health information. For example, beginning
April 5, 2021, health care providers and certain other entities are subject to information blocking restrictions
pursuant to the 21st Century Cures Act that prohibit practices that are likely to interfere with the access, exchange
or use of electronic health information, except as required by law or specified by HHS as a reasonable and
necessary activity. Violations may result in penalties or other disincentives.
EMTALA
All of our hospitals in the United States are subject to EMTALA. This federal law requires any hospital
participating in the Medicare program to conduct an appropriate medical screening examination of every
individual who presents to the hospital’s emergency room for treatment and, if the individual is suffering from an
emergency medical condition, to either stabilize the condition or make an appropriate transfer of the individual to
a facility able to handle the condition. The obligation to screen and stabilize emergency medical conditions exists
regardless of an individual’s ability to pay for treatment. There are severe penalties under EMTALA if a hospital
27
fails to screen or appropriately stabilize or transfer an individual or if the hospital delays appropriate treatment in
order to first inquire about the individual’s ability to pay. Penalties for violations of EMTALA include exclusion
from participation in the Medicare program and civil monetary penalties. These civil monetary penalties are
the
adjusted annually based on updates to the consumer price index. In addition, an injured individual,
individual’s family or a medical facility that suffers a financial loss as a direct result of a hospital’s violation of
the law can bring a civil suit against the hospital.
The government broadly interprets EMTALA to cover situations in which individuals do not actually
present to a hospital’s emergency room, but present for emergency examination or treatment to the hospital’s
campus, generally, or to a hospital-based clinic that treats emergency medical conditions or are transported in a
hospital-owned ambulance, subject to certain exceptions. At least one court has interpreted the law also to apply
to a hospital that has been notified of a patient’s pending arrival in a non-hospital owned ambulance. In recent
years, the government has undertaken enforcement actions in which it has broadly interpreted a hospital’s
obligations with respect
to screening and stabilizing patients who present with a psychiatric emergency.
EMTALA does not generally apply to individuals admitted for inpatient services. The government has expressed
its intent to investigate and enforce EMTALA violations actively.
Corporate Practice of Medicine/Fee Splitting
Some of the states in which we operate have laws prohibiting corporations and other entities from
employing physicians, practicing medicine for a profit and making certain direct and indirect payments to, or
entering into fee-splitting arrangements with, health care providers designed to induce or encourage the referral
of patients to, or the recommendation of, particular providers for medical products and services. Possible
sanctions for violation of these restrictions include loss of license and civil and criminal penalties. In addition,
agreements between the corporation and the physician may be considered void and unenforceable. These statutes
vary from state to state, are often vague and have seldom been interpreted by the courts or regulatory agencies.
Health Care Industry Investigations
Significant media and public attention has focused in recent years on the hospital industry. This media and
public attention, changes in government personnel and other factors have led to increased scrutiny of the health
care industry. Except as may be disclosed in our SEC filings, we are not aware of any material investigations of
the Company under federal or state health care laws or regulations. It is possible that governmental entities could
initiate investigations or litigation in the future at facilities we operate and that such matters could result in
significant penalties, as well as adverse publicity. It is also possible that our executives and managers could be
included in governmental investigations or litigation or named as defendants in private litigation.
Our substantial Medicare, Medicaid and other governmental billings result in heightened scrutiny of our
operations. We continue to monitor all aspects of our business and have developed a comprehensive ethics and
compliance program that is designed to meet or exceed applicable federal guidelines and industry standards.
Because the law in this area is complex and constantly evolving, governmental investigations or litigation
may result in interpretations that are inconsistent with our practices or industry practices.
In public statements surrounding current investigations, governmental authorities have taken positions on a
number of issues, including some for which little official interpretation previously has been available, that appear
to be inconsistent with practices that have been common within the industry and that previously have not been
challenged in this manner. In some instances, government investigations that have in the past been conducted
under the civil provisions of federal law may now be conducted as criminal investigations.
Both federal and state government agencies have increased their focus on and coordination of civil and
criminal enforcement efforts in the health care area. Through the national Health Care Fraud and Abuse Control
28
Program, the OIG and the DOJ coordinate federal, state and local law enforcement activities with respect to
health care fraud against both public and private health plans. The OIG and DOJ have, from time to time,
established national enforcement
target all hospital providers, focusing on specific billing
practices or other suspected areas of abuse. In addition, governmental agencies and their agents, such as MACs,
fiscal intermediaries and carriers, may conduct audits of our health care operations. Private third-party payers
may conduct similar post-payment audits, and we also perform internal audits and monitoring.
initiatives that
In addition to national enforcement initiatives, federal and state investigations have addressed a wide variety
of routine health care operations such as: cost reporting and billing practices, including for Medicare outliers;
financial arrangements with referral sources; physician recruitment activities; physician joint ventures; and
hospital charges and collection practices for self-pay patients. We engage in many of these routine health care
operations and other activities that could be the subject of governmental investigations or inquiries. For example,
we have significant Medicare and Medicaid billings, numerous financial arrangements with physicians who are
referral sources to our hospitals, and joint venture arrangements involving physician investors. Certain of our
individual facilities have received, and other facilities may receive, government inquiries from, and may be
subject to investigation by, federal and state agencies. Any additional investigations of the Company, our
executives or managers could result in significant liabilities or penalties to us, as well as adverse publicity.
Health Care Reform
The health care industry is subject to changing political, regulatory, and other influences, along with various
scientific and technological initiatives and innovations. In recent years, Congress and certain state legislatures
have passed a large number of laws and regulations intended to effect major change within the U.S. health care
system, including the Affordable Care Act. The Affordable Care Act affects how health care services are
covered, delivered and reimbursed through expanded health insurance coverage, reduced growth in Medicare
program spending, reductions in Medicare and Medicaid DSH payments, and the establishment of programs that
tie reimbursement to quality and integration. The Affordable Care Act increased health insurance coverage
through a combination of private sector health insurance requirements, public program expansion and other
reforms. For example, expansion in public program coverage has been driven primarily by expanding the
categories of individuals eligible for Medicaid coverage and permitting individuals with relatively higher
incomes to qualify. However, a number of states, including Texas and Florida, have opted out of the Medicaid
expansion provisions, which they may do without losing federal funding.
The Affordable Care Act has been subject to legislative and regulatory changes and court challenges. For
example, effective January 1, 2019, the penalty associated with the individual mandate to maintain health
insurance was eliminated. This change resulted in legal challenges to the constitutionality of the individual
mandate and the validity of the Affordable Care Act as a whole. However, in June 2021, the U.S. Supreme Court
determined that the plaintiffs lacked standing, allowing the law to remain in place.
The current presidential administration has indicated that it generally intends to protect and strengthen the
Affordable Care Act and Medicaid programs. For example, in January 2021, President Biden issued an executive
order that instructed certain governmental agencies to review and reconsider their existing policies and rules that
limit access to health insurance coverage. In a final rule published in September 2021, HHS extended the annual
open enrollment period for coverage through federal marketplaces and granted state exchanges flexibility to
lengthen their open enrollment periods.
The Affordable Care Act has had a net positive effect on the Company to date, before considering the
impact of Medicare reductions that began in 2010, and it is expected that the law, as presently implemented, will
continue to have a positive contribution to the Company’s results of operations. However, there is uncertainty
regarding the ongoing net effect of the Affordable Care Act due to the potential for continued changes to the
law’s implementation and its interpretation by government agencies and courts, among other factors. There is
also uncertainty regarding the potential impact of other reform efforts at the federal and state levels. For example,
29
some members of Congress have proposed measures that would expand government-sponsored coverage,
including proposals to expand coverage of federally-funded insurance programs as an alternative to private
insurance or establish a single-payer system (such reforms often referred to as “Medicare for All”). Some states
have implemented or are considering measures such as individual health insurance mandates and public health
insurance options. Other
including those aimed at price transparency and
out-of-network charges, may impact prices and the relationships between health care providers, insurers and
patients. For example, the No Surprises Act requires providers to send an insured patient’s health plan a good
faith estimate of expected charges, including billing and diagnostic codes, prior to when the patient is scheduled
to receive the item or service. HHS is deferring enforcement of this requirement until it issues additional
regulations. These issues are further discussed in Item 1A, “Risk Factors.”
initiatives and proposals,
General Economic and Demographic Factors
The health care industry is impacted by changes in or uncertainty regarding the overall U.S. economy. The
COVID-19 pandemic has adversely impacted, and may in the future adversely impact, economic conditions in
the United States. In addition, budget deficits at federal, state and local government entities have had a negative
impact on spending for many health and human service programs, including Medicare, Medicaid and similar
programs, which represent significant payer sources for our hospitals and other providers. We anticipate that the
federal deficit, the growing magnitude of Medicare and Medicaid expenditures and the aging of the U.S.
population will continue to place pressure on government health care programs. Other risks we face during
periods of economic weakness and high unemployment include potential declines in the population covered
under managed care agreements, increased patient decisions to postpone or cancel elective and nonemergency
health care procedures (including delaying surgical procedures), potential
increases in the uninsured and
underinsured populations, increased adoption of health plan structures that shift financial responsibility to
patients and increased difficulties in collecting patient receivables for copayment and deductible amounts.
Compliance Program
We maintain a comprehensive ethics and compliance program that is designed to meet or exceed applicable
federal guidelines and industry standards. The program is intended to monitor and raise awareness of various
regulatory issues among employees and to emphasize the importance of complying with governmental laws and
regulations. As part of the ethics and compliance program, we provide annual ethics and compliance training to
our employees and encourage all employees to report any violations to their supervisor, an ethics and compliance
officer or to the Company’s ethics line available 24 hours a day by phone and internet portal.
Antitrust Laws
The federal government and most states have enacted antitrust laws that prohibit certain types of conduct
deemed to be anti-competitive. These laws prohibit price fixing, market allocation, bid-rigging, concerted refusal
to deal, market monopolization, price discrimination, tying arrangements, acquisitions of competitors and other
practices that have, or may have, an adverse effect on competition. Violations of federal or state antitrust laws
can result in various sanctions, including criminal and civil penalties. Antitrust enforcement in the health care
industry is currently a priority of the Federal Trade Commission and the DOJ, including with respect to hospital
and physician practice acquisitions. We believe we are in compliance with such federal and state laws, but courts
or regulatory authorities may reach a determination in the future that could adversely affect our operations and
growth strategy.
Environmental Matters
We are subject to various federal, state and local statutes and ordinances regulating the discharge of
materials into the environment. We do not believe that we will be required to expend any material amounts in
order to comply with these laws and regulations as presently in effect. Regulations limiting greenhouse gas
30
emissions and energy inputs may increase in coming years, which may increase our costs associated with
compliance, disrupt and adversely affect our operations and could materially adversely affect our financial
performance.
Our environmental strategy is designed to complement our mission of the care and improvement of human
life, which extends to the environment. This strategy is centered on incorporating the following four pillars into
our operations:
• Managing energy and water responsibly,
• Enhancing our climate resilience,
•
Sourcing and consuming efficiently, and
• Greening our capital programs.
We are baselining our scope 1 and scope 2 greenhouse gas emissions and have engaged specialists to assist
in identifying best practices and developing plans to reduce emissions while maximizing operational efficiencies.
These efforts are led by task forces that examine operations in four key areas: construction and major renovation,
energy and water, waste stream and environmentally preferable purchasing.
While we currently believe that compliance with existing environmental laws and regulations does not have
a material impact on our operations, changes in consumer preferences and additional legislation or regulatory
requirements, including those associated with the transition to a low-carbon economy, may increase costs
associated with compliance, the operation of our facilities and supplies.
Insurance
As is typical in the health care industry, we are subject to claims and legal actions by patients in the ordinary
course of business. Subject, in most cases, to a $15 million per occurrence self-insured retention, our facilities are
insured by our insurance subsidiary for losses up to $75 million per occurrence. The insurance subsidiary has
obtained reinsurance for professional liability risks generally above a retention level of either $25 million or
$35 million per occurrence, depending on the jurisdiction for the related claim. We also maintain professional
liability insurance with unrelated commercial carriers for losses in excess of amounts insured by our insurance
subsidiary.
We purchase, from unrelated insurance companies, coverage for cyber security incidents, directors and
officers liability and property loss in amounts we believe are adequate and subject to terms of coverage we
believe to be reasonable.
Human Capital Resources
Our workforce is comprised of approximately 284,000 employees (as of December 31, 2021), including
approximately 80,000 part-time employees (references herein to “employees” refer to employees of our
affiliates). Our Board of Directors and its committees oversee human capital matters through regular reporting
from management and advisors.
Diversity, Equity and Inclusion
We are committed to fostering a culture of inclusion that embraces and supports our patients, colleagues,
partners, physicians and communities. Our workforce is comprised of approximately 78% women and 42%
people of color. Our policies prohibit discrimination on the basis of age, gender, disability, race, color, ancestry,
citizenship, religion, pregnancy, sexual orientation, gender identity or expression, national origin, medical
condition, marital status, veteran status, payment source or ability, or any other basis prohibited by federal, state
or local law.
31
We are dedicated to being an employer of choice. We seek to recruit diverse candidates at all stages of their
careers and through a variety of venues and programs. In the beginning of 2020, we launched a data-driven
diversity, equity and inclusion (“DEI”) strategy based on internal and external research to support
the
advancement of people of color and women into leadership roles. We also partner with national organizations
which promote diversity in leadership positions. Our Chief Diversity Officer leads a team that is responsible for
advancing DEI and cultural competence initiatives across the Company. We have also established an Executive
Diversity Council, sponsored by our Chief Executive Officer and comprised of executive leaders from the
Company,
to champion DEI across the Company and inform strategic decisions towards DEI goals and
objectives. In addition to the Executive Diversity Council, we recently implemented fifteen Division Diversity,
Equity and Inclusion Councils, comprised of diversity leaders and facility representatives, to support deployment
of key DEI strategies and programs across the enterprise.
The Company’s Corporate Governance Guidelines reinforce its commitment to diversity by requiring the
initial pool of candidates from which the Nominating and Corporate Governance Committee may recommend
director nominees to include qualified female and racially/ethnically diverse candidates and the Nominating and
Corporate Governance Committee to request that any third-party search firm that it engages to identify such
candidates to include qualified female and racially/ethnically diverse candidates in such initial pool.
We encourage you to review the “Diversity, Equity and Inclusion” section of our website, as well as the
“Part of the Solution” section of our 2021 Impact Report (available at www.hcahealthcareimpact.com) for more
detailed information regarding our DEI and pay equity programs and initiatives. Nothing on our website,
including our 2021 Impact Report or sections thereof, shall be deemed incorporated by reference into this annual
report on Form 10-K.
Compensation and Benefits
To recruit and retain a highly qualified and diverse workforce, we design competitive compensation and
benefits programs to support, recognize and reward the performance of our employees. In addition to salaries,
these programs (which vary by location) include an Employee Stock Purchase Plan, a 401(k) Plan, health care
and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care
resources, flexible work schedules, employee assistance programs, tuition and student loan assistance and on-site
services, such as cafeterias and fitness centers, among many others.
Serving the Community
We provide our colleagues with opportunities to learn, serve, lead and give in their communities. By joining
forces with other leading organizations, we maximize our ability to provide care for patients and populations.
Through research, partnerships, policies and investments, we are tackling problems in our communities, from
disaster relief to environmental sustainability. We also support the HCA Healthcare Foundation, whose mission
is to promote health and well-being and strive to make a positive impact in all the communities HCA Healthcare
serves by providing leadership, service and financial support to effective non-profit organizations.
Culture and Talent Development
HCA Healthcare’s culture is critical to our success. We seek to instill a culture across our system that
includes making a positive impact on our patients, communities and each other. We seek to nurture a
collaborative culture built on inclusion, compassion and respect. To assess and improve employee retention and
engagement, we conduct colleague pulse surveys throughout the year and take action to address areas of concern.
During 2021, we directed our efforts to improve our colleagues’ sense of belonging and leveraged the findings
from our innovative pandemic survey to better respond to the needs of our communities and colleagues. We also
seek to support our colleagues throughout their career journey, providing education, training, and opportunities to
grow as clinicians and leaders. We also support our colleagues’ development through programs such as tuition
32
reimbursement, clinical training and certification, loan forgiveness and award-winning programs offered through
the HCA Healthcare Leadership Institute.
Health, Safety and Wellness
We provide our employees and their families with access to a variety of health and wellness programs. In
response to the COVID-19 pandemic, we implemented changes to address the interests of our patients,
employees, medical staff members and contractors, as well as the communities in which we operate, such as
providing PPE, COVID-19 screening for patients and certain hospital staff, and scrub laundering. During
2021:
• Over 33,000 quarantined caregivers unable to work received 100% of base pay through our Quarantine
Pay Program;
• Approximately 25,000 calls were placed to the HCA Nurse Care line, a free, confidential 24-hour
phone counseling support program for nurses; and
•
$10.7 million in assistance was provided by the HCA Healthcare Hope Fund to HCA Healthcare
colleagues, including more than $1 million provided to colleagues to help with the loss of household
income, childcare costs or other unexpected financial challenges related to the COVID-19 pandemic.
Labor Matters
We are subject to various state and federal laws that regulate wages, hours, benefits and other terms and
conditions relating to employment. At December 31, 2021, certain employees at 37 of our domestic hospitals
are represented by various labor unions. During 2021, a decertification election was held that resulted in the
elimination of a bargaining unit at a facility in Missouri. While no other elections are scheduled in 2022, it is
possible that employees at additional hospitals may unionize in the future, or employees currently represented
by labor unions may choose to reject that representation. We consider our employee relations to be good and
have not experienced work stoppages that have materially, adversely affected our business or results of
operations. However, it is possible that a material work stoppage at one or more of our hospitals may occur in
the future.
Physicians are an integral part of the success of our hospitals in delivering quality care to our patients. Our
hospitals are staffed by licensed physicians, including both employed physicians and physicians who are not
employees of our hospitals. Some physicians provide services in our hospitals under contracts, which generally
describe a term of service, provide and establish the duties and obligations of such physicians, require the
maintenance of certain performance criteria and fix compensation for such services. Any licensed physician may
apply to be accepted to the medical staff of any of our hospitals, but the hospital’s medical staff and the
appropriate governing board of the hospital, in accordance with established credentialing criteria, must approve
acceptance to the staff. Members of the medical staffs of our hospitals often also serve on the medical staffs of
other hospitals and may terminate their affiliation with one of our hospitals at any time.
Our facilities, like most health care facilities, have experienced rising labor costs and turnover. In some
markets, nurse and medical support personnel availability and retention have become significant operating issues
to health care providers, which issues have been exacerbated by the effects that the COVID-19 pandemic has had
on health care personnel. Nurse and medical support shortages could result in a number of adverse impacts to our
business, including capacity and growth constraints, reduced patient satisfaction, reduced physician satisfaction,
impact on services offered, and increased costs, among others. To address this challenge, we have implemented
several initiatives to improve retention, recruiting, compensation programs and productivity.
We may be required to continue to enhance wages and benefits to recruit and retain nurses and other
medical support personnel or to hire more expensive temporary or contract personnel. As a result, our labor costs
33
could continue to increase. We also depend on the available labor pool of semi-skilled and unskilled employees
in each of the markets in which we operate. If there is additional union organizing activity or a significant portion
of our employee base unionizes, our costs could increase. In addition, we operate in several states that have
adopted mandatory nurse-staffing ratios. If these states reduce mandatory nurse-staffing ratios or additional states
in which we operate adopt mandatory nurse-staffing ratios, such changes could significantly affect labor costs,
and have an adverse impact on revenues if we are required to limit patient admissions in order to meet the
required ratios.
The inability to attract and retain quality clinical and non-clinical personnel could impair our capacity,
ability to grow and our results of operations.
Information about our Executive Officers
As of February 1, 2022, our executive officers were as follows:
Name
Age
Position(s)
Samuel N. Hazen . . . . . . . . . . . . . .
Jennifer L. Berres . . . . . . . . . . . . . .
Phillip G. Billington . . . . . . . . . . . .
Jeff E. Cohen . . . . . . . . . . . . . . . . .
. . . . . . . . .
Michael S. Cuffe, M.D.
Jon M. Foster . . . . . . . . . . . . . . . . .
Charles J. Hall . . . . . . . . . . . . . . . . .
Michael R. McAlevey . . . . . . . . . . .
. . . . . . . . . . . .
A. Bruce Moore, Jr.
Sammie S. Mosier . . . . . . . . . . . . . .
P. Martin Paslick . . . . . . . . . . . . . . .
Deborah M. Reiner . . . . . . . . . . . . .
William B. Rutherford . . . . . . . . . .
Joseph A. Sowell, III
. . . . . . . . . . .
Kathryn A. Torres . . . . . . . . . . . . . .
Kathleen M. Whalen . . . . . . . . . . . .
. . . . . . . . . . .
Christopher F. Wyatt
61
51
54
50
56
60
68
58
61
47
62
60
58
65
58
58
44
Chief Executive Officer and Director
Senior Vice President and Chief Human Resources Officer
Senior Vice President — Internal Audit Services
Senior Vice President — Government Relations
Executive Vice President and Chief Clinical Officer
President — American Group
President — National Group
Senior Vice President and Chief Legal Officer
President — Service Line and Operations Integration
Senior Vice President and Chief Nurse Executive
Senior Vice President and Chief Information Officer
Senior Vice President — Marketing and Communications
Executive Vice President and Chief Financial Officer
Senior Vice President and Chief Development Officer
Senior Vice President — Payer Contracting and Alignment
Senior Vice President and Chief Ethics and Compliance Officer
Senior Vice President and Controller
Samuel N. Hazen has served as Chief Executive Officer since January 2019 and was appointed as a director
in September 2018. From November 2016 through December 2018, Mr. Hazen served as the Company’s
President and Chief Operating Officer. Prior to that, he served as Chief Operating Officer of the Company from
January 2015 to November 2016 and as President — Operations of the Company from 2011 to 2015. He also
served as President — Western Group from 2001 to 2011 and as Chief Financial Officer — Western Group of
the Company from 1995 to 2001. Prior to that time, Mr. Hazen served in various hospital, regional and division
Chief Financial Officer positions with the Company, Humana Inc. and Galen Health Care, Inc.
Jennifer L. Berres was appointed Senior Vice President and Chief Human Resources Officer effective
November 1, 2019. Ms. Berres joined HCA in 1993 and served in various capacities, including as Vice President
— Human Resources from April 2013 through October 2019.
Phillip G. Billington was appointed Senior Vice President — Internal Audit Services effective January 1,
2019. Mr. Billington previously served as Vice President — Corporate Internal Audit from June 2005 to
December 2018. Prior to joining HCA, Mr. Billington worked as a managing director for FTI Consulting, Inc., a
director for KPMG LLP and was a senior manager at Arthur Andersen LLP.
34
Jeff E. Cohen was appointed Senior Vice President — Government Relations effective October 1, 2019.
Prior to joining HCA, Mr. Cohen spent 20 years with the Federation of American Hospitals, most recently as
Executive Vice President of Public Affairs, where he managed all advocacy, public affairs and communications
for the association.
Michael S. Cuffe, M.D. was appointed Executive Vice President and Chief Clinical Officer effective
January 1, 2022. He previously served as President — Physician Services Group from October 2011 through
December 2021. From October 2011 to January 2015, Dr. Cuffe also served as a Vice President of the Company.
Prior to that time, Dr. Cuffe served Duke University Health System as Vice President for Ambulatory Services
and Chief Medical Officer from March 2011 to October 2011 and Vice President Medical Affairs from June
2005 to March 2011. He also served Duke University School of Medicine as Vice Dean for Medical Affairs from
June 2008 to March 2011, Deputy Chair of the Department of Medicine from August 2009 to August 2010 and
Associate Professor of Medicine from March 2005 to October 2011. Prior that time, Dr. Cuffe served in various
leadership roles with the Duke Clinical Research Institute, Duke University Medical Center and Duke University
School of Medicine.
Jon M. Foster was appointed President — American Group in January 2013. Prior to that, Mr. Foster served
as President — Southwest Group from February 2011 to January 2013 and as Division President for the Central
and West Texas Division from January 2006 to February 2011. Mr. Foster joined HCA in March 2001 as
President and CEO of St. David’s HealthCare in Austin, Texas and served in that position until February 2011.
Prior to joining the Company, Mr. Foster served in various executive capacities within the Baptist Health System
in Knoxville, Tennessee and The Methodist Hospital System in Houston, Texas.
Charles J. Hall was appointed President — National Group in February 2011. Prior to that, Mr. Hall served
as President — Eastern Group from October 2006 to February 2011. Mr. Hall had previously served the
Company as President — North Florida Division from April 2003 until October 2006, as President of the East
Florida Division from January 1999 until April 2003, as a Market President in the East Florida Division from
January 1998 until December 1998, as President of the South Florida Division from February 1996 until
December 1997, as President of the Southwest Florida Division from October 1994 until February 1996, and in
various other capacities since 1987.
Michael R. McAlevey was appointed Senior Vice President and Chief Legal Officer in January 2022. Prior
to joining HCA, Mr. McAlevey served in senior legal and executive roles at General Electric, most recently as
Vice President, General Counsel and Business Development Leader for GE Healthcare since 2018. Prior to that,
he served as General Counsel and Business Development Leader for GE Aviation from 2011 to 2018 and Chief
Corporate, Securities and Finance Counsel for GE from 2003 to 2011. Before joining GE, Mr. McAlevey served
as Deputy Director of the United States Securities and Exchange Commission’s Division of Corporation Finance
from 1998 to 2002.
A. Bruce Moore, Jr. was appointed President — Service Line and Operations Integration in February 2011.
Prior to that, Mr. Moore had served as President — Outpatient Services Group since January 2006. Mr. Moore
served as Senior Vice President and as Chief Operating Officer — Outpatient Services Group from July 2004 to
January 2006 and as Senior Vice President — Operations Administration from July 1999 until July 2004.
Mr. Moore served as Vice President — Operations Administration of the Company from September 1997 to
July 1999, as Vice President — Benefits from October 1996 to September 1997, and as Vice President —
Compensation from March 1995 until October 1996.
Sammie S. Mosier was appointed Senior Vice President and Chief Nurse Executive effective December 1,
2021. Dr. Mosier joined HCA in 1992 as a medical-surgical bedside nurse at Frankfort Regional Medical Center
and has held progressive leadership roles, including as Vice President and Assistant Chief Nursing Executive-
Clinical Services Group from 2019 to 2021.
35
P. Martin Paslick was appointed Senior Vice President and Chief Information Officer in June 2012. Prior to
that time, he served as Vice President and Chief Operating Officer of Information Technology & Services from
March 2010 to May 2012 and Vice President — Information Technology & Services Field Operations from
September 2006 to February 2010. From January 1998 to September 2006, he served in various Vice President roles
in the Company’s Information Technology & Services department. Mr. Paslick joined the Company in 1985.
Deborah M. Reiner was appointed Senior Vice President — Marketing and Communications in October
2017. Prior to that time, she served as Vice President of Marketing and Customer Relationship Management from
August 2017 to October 2017 and Vice President of Customer Relationship Management from January 2012 to
August 2017. Ms. Reiner joined the Company in 2000 and served in various roles with the Company’s Mountain
Division from 2000 to 2012.
William B. Rutherford has served as Executive Vice President and Chief Financial Officer since January
2014. Mr. Rutherford previously served as Chief Operating Officer of the Company’s Clinical and Physician
Services Group from January 2011 to January 2014 and Chief Financial Officer of the Company’s Outpatient
Services Group from November 2008 to January 2011. Prior to that time, Mr. Rutherford was employed by
Summit Consulting Group of Tennessee from July 2007 to November 2008 and was Chief Operating Officer of
Psychiatric Solutions, Inc. from March 2006 to June 2007. Mr. Rutherford also previously served in various
positions with the Company from 1986 to 2005, including Chief Financial Officer of what was then the
Company’s Eastern Group, Director of Internal Audit and Director of Operations Support.
Joseph A. Sowell, III was appointed as Senior Vice President and Chief Development Officer in December
2009. From 1987 to 1996 and again from 1999 to 2009, Mr. Sowell was a partner at the law firm of Waller
Lansden Dortch & Davis where he specialized in the areas of health care law, mergers and acquisitions, joint
ventures, private equity financing, tax law and general corporate law. He also co-managed the firm’s corporate
and commercial transactions practice. From 1996 to 1999, Mr. Sowell served as the head of development, and
later as the Chief Operating Officer of Arcon Healthcare.
Kathryn A. Torres was appointed Senior Vice President — Payer Contracting and Alignment (formerly
Senior Vice President — Employer and Payer Engagement) in July 2016. Ms. Torres joined HCA in 1993 and
served in various capacities,
including as Vice President of Employer and Payer Engagement and Vice
President — Strategy.
Kathleen M. Whalen was appointed Senior Vice President and Chief Ethics and Compliance Officer
effective January 1, 2019. Prior to that time, Ms. Whalen served as Vice President — Ethics and Compliance
from August 2013 through December 2018 and Assistant Vice President — Ethics and Compliance Program
Development from March 2000 through July 2013. Prior to joining HCA in January 1998, Ms. Whalen served as
Associate Counsel to President Clinton with responsibility for the White House’s ethics program. She began her
government service in the ethics division of the General Counsel’s Office at the U.S. Commerce Department.
Prior to that, she practiced labor and employment law in Dayton, Ohio.
Christopher F. Wyatt was appointed Senior Vice President and Controller in April 2016. Prior to that time,
Mr. Wyatt served the Company as Vice President and Chief Financial Officer — IT&S from January 2013 to
April 2016 and Chief Financial Officer — Clinical Services Group from October 2010 until January 2013. From
2000 to 2010, Mr. Wyatt served in various capacities with Ernst & Young LLP.
Item 1A. Risk Factors
If any of the events discussed in the following risk factors were to occur, our business, financial position,
results of operations, cash flows or prospects could be materially, adversely affected. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may also affect us. The COVID-19
pandemic amplifies and exacerbates many of the risks we face in our business operations, including those
discussed below. Our business is subject to the following material risks and uncertainties.
36
Risks related to the COVID-19 pandemic and other potential pandemics:
The COVID-19 pandemic is significantly affecting our operations and could affect our business and financial
condition. Our liquidity could also be negatively impacted by the COVID-19 pandemic, particularly if the U.S.
economy remains unstable for a significant amount of time.
HHS first declared a PHE due to the COVID-19 pandemic in January 2020 and has since then continuously
renewed this declaration. On March 11, 2020, the World Health Organization designated COVID-19 as a global
pandemic. The COVID-19 pandemic continues to significantly affect our employees, patients, hospitals,
communities and business operations, as well as the U.S. economy and financial markets. Although certain
economic conditions improved throughout 2021, the pandemic continues to evolve. For example, the spread of
differing variants of COVID-19 led to the reintroduction of certain public health controls during the second half
of 2021. The full extent to which the COVID-19 pandemic will impact our business, results of operations,
financial condition and liquidity will depend on future developments that are uncertain and cannot be accurately
predicted. We are unable to predict the severity or duration of the pandemic, including whether there will be
additional periods of increases in the number of COVID-19 cases in areas in which we operate, the availability,
utilization and effectiveness of medical treatments and vaccines (including booster shots), the efficacy of public
health controls, or the impact of any mutations of the virus. Florida and Texas, our two largest markets, have
been and may in the future be “hot spots” of the COVID-19 pandemic. We are particularly sensitive to the
increase in COVID-19 cases in Texas and Florida, where the pandemic could have a disproportionate effect on
our business.
We have been working with federal, state and local health authorities to respond to COVID-19 cases in the
markets we serve and continue to take and support measures to try to limit the spread of the virus and to mitigate
the burden on the health care system. For example, we are subject to COVID-19 data reporting requirements, and
some states are requiring hospitals to maintain a reserve of PPE and mandating COVID-19 screening for new
patients and certain hospital staff. CMS has made COVID-19 data reporting requirements a Medicare condition
of participation for hospitals, such that noncompliance with these requirements could result in termination from
the Medicare program. We have incurred and will continue to incur additional costs related to protecting the
health and well-being and meeting the needs of our patients, employees, medical staff members and contractors,
including pandemic pay programs, hoteling our staff and additional scrub laundering. We expect to continue to
incur additional costs, which may be significant, as we continue to implement operational changes in response to
this pandemic. Further, our management is focused on mitigating the impact of the COVID-19 pandemic, which
has required and will continue to require a substantial investment of time and resources across our enterprise, and
which may affect management focus and impact our ability to properly prioritize and successfully execute on the
Company’s other strategic initiatives.
As a front line provider of health care services, we have been and will continue to be impacted by the health
and economic effects of COVID-19. Although we have implemented considerable safety measures, treatment
of COVID-19 patients has associated risks to our employees, patients and physicians. These risks, and how
clinical staff perceive and respond to them, may adversely affect our operating capacity. Despite considerable
efforts to source vital supplies, we have experienced and may continue to experience supply chain disruptions,
including delays and price increases in equipment, pharmaceuticals and medical supplies, and supply shortages.
Our current PPE inventory is satisfactory, but we cannot be certain that our supplies will remain sufficient in the
future. In addition, restrictive measures taken by governmental authorities to address the COVID-19 pandemic
have impacted, and may continue to impact, the availability of employed and contract labor staffing for corporate
support services, including, but not limited to, coding, billing, collection and other business office functions,
which could adversely affect our execution of established control procedures that may not be sufficiently
mitigated through execution of our business continuity plans. Continued staffing, equipment,
laboratory
resources and pharmaceutical and medical supplies shortages may impact our ability to schedule, admit and treat
patients. In addition, the impact of labor shortages across the health care industry may result in other health care
facilities, such as nursing homes, limiting admissions, which may constrain our ability to discharge patients to
37
such facilities and further exacerbate the demand on our resources, supplies and staffing. The COVID-19
pandemic has also resulted in an increased number of early retirements in our workforce. The combined impact
of these factors, despite our efforts to mitigate their effect, could result in reduced employee morale and
increased exposure to labor unrest, work stoppages or other workforce disruptions, which effects may last beyond
the duration of the pandemic.
Actions taken by governmental authorities in response to the COVID-19 pandemic, including restrictions on
elective procedures, and other restrictive measures, have reduced, and may in the future reduce, the volume of
procedures performed at our facilities, as well as the volume of emergency room and physician office visits
unrelated to COVID-19. We may be required to cancel elective procedures and close or reduce operating hours at
our facilities in the future. Some state and local governments have issued orders or imposed rules affecting
hospital capacity in order to prepare for and manage surges in COVID-19 patients. Although social contact
restrictions have eased across the U.S. and most states have lifted moratoriums on non-emergent procedures,
some restrictions remain in place. Further closings and restrictions on hours and services may be imposed or
re-imposed for an unpredictable amount of time in connection with increasing or fluctuating COVID-19 cases.
We have also selectively suspended elective procedures at certain facilities based upon local COVID-19 volume
trends, bed capacity and staffing levels. It is unclear whether certain markets, such as Florida and Texas, will
continue to experience periods of increases or spikes in the number of COVID-19 cases. Beginning in 2020 and
continuing through 2021, we experienced increased patient acuity as a result of COVID-19 cases at our hospitals,
which led to increased reimbursements. However, the impacts of COVID-19, including patient acuity levels, in
future periods may vary, and could exert unpredictable and potentially negative effects on clinical performance
metrics that impact reimbursement levels and could adversely affect our results of operations.
Even as government or industry-adopted restrictions are lifted, some individuals may choose to postpone
medical care (including long-term care) for an undetermined period of time. While patient volumes began
rebounding in the second quarter of 2021 as the effects of the pandemic moderated and pandemic-related
restrictions and policies were eased, we experienced a resurgence in COVID-19 cases in the latter half of 2021,
further impacting the return to pre-pandemic levels. As such, we cannot provide assurances as to the continued
recovery and stability of pre-pandemic patient volumes or the ultimate impact on demand. Further, our patient
volumes may be adversely impacted by the expanded use of telehealth services from other providers as a result of
reduced regulatory barriers on the use and reimbursement of telehealth services and individuals becoming more
comfortable with receiving remote care. The Company may not be able to timely innovate its strategies and
technologies to meet changing consumer demands as a result of the COVID-19 pandemic. It is possible that the
COVID-19 pandemic could impact patient behavior beyond the duration of the pandemic.
Broad economic factors resulting from the current COVID-19 pandemic, including inflationary pressures,
supply chain disruptions, labor shortages, increased unemployment and underemployment rates and reduced
consumer spending and confidence, also affect our service mix, revenue mix, payer mix and patient volumes, as
well as our ability to collect outstanding receivables. Business closings and layoffs in the areas where we operate
may lead to increases in the uninsured and underinsured populations and adversely affect demand for our
services, as well as the ability of patients and other payers to pay for services rendered. Any increase in the
amount or deterioration in the collectability of patient accounts receivable will adversely affect our cash flows
and results of operations, requiring an increased level of working capital. In addition, our results and financial
condition may be adversely affected by federal, state or local laws, regulations, orders, or other governmental or
regulatory actions addressing the current COVID-19 pandemic or otherwise affecting the U.S. health care system
in connection with the pandemic, which could result in direct or indirect restrictions to our business, financial
condition, results of operations and cash flow. We may also be subject to claims from patients, employees and
others exposed to COVID-19 at our facilities. Such actions may involve large demands, as well as substantial
defense costs, though there is no certainty at this time whether any such claims will be filed or the outcome of
such claims if filed. Our professional and general liability insurance, a portion of which is provided through our
insurance subsidiary, may not cover all claims against us.
38
If general economic conditions, including inflation, deteriorate or remain volatile or uncertain for an
extended period of time, our liquidity and ability to repay our outstanding debt may be harmed and the trading
price of our common stock could decline. These factors may affect the availability, terms or timing on which we
may obtain any additional funding and our ability to access our cash. There can be no assurance that we will be
able to raise additional funds on terms acceptable to us, if at all.
The foregoing and other continued disruptions to our business as a result of the COVID-19 pandemic could
heighten the risks in certain of the other risk factors described in this annual report on Form 10-K, any of which
could have a material, adverse effect on our results of operations and financial position.
We are unable to predict the ultimate impact of the CARES Act and other existing or future stimulus and relief
legislation, if any, or the effect that such legislation and other governmental responses intended to assist
providers in responding to COVID-19 may have on our business, financial condition, results of operations or
cash flows. There can be no assurance as to the total amount of financial assistance or types of assistance we
will receive, that we will be able to comply with the applicable terms and conditions to retain such assistance,
or that we will be able to benefit from provisions intended to increase access to resources and ease regulatory
burdens for health care providers.
In response to the COVID-19 pandemic, federal and state governments have passed legislation, promulgated
regulations and taken other administrative actions intended to assist health care providers in providing care to
COVID-19 and other patients and to provide financial relief to health care providers. Together, the CARES Act,
the Paycheck Protection Program and Health Care Enhancement (“PPPHCE”) Act, the CAA, and the ARPA
authorize over $186 billion in funding to be distributed to hospitals and other health care providers through the
Public Health and Social Services Emergency Fund (“PHSSEF”), also known as the Provider Relief Fund. These
funds are intended to reimburse eligible providers and suppliers for health care-related expenses or lost revenues
attributable to the COVID-19 pandemic. HHS made some general distributions of provider relief funding to
Medicare providers impacted by COVID-19, and also made targeted distributions to specific provider types and
industry segments, including providers in areas particularly impacted by COVID-19, rural providers, providers of
services with lower shares of Medicare reimbursement or who predominantly serve the Medicaid population and
providers requesting reimbursement for treatment of uninsured Americans, among others. A portion of the
available funding is being distributed to reimburse health care providers that submit claims requests for
COVID-19-related treatment, testing, and vaccine administration for uninsured patients at Medicare rates.
Recipients of these claims reimbursements must attest to and comply with certain terms and conditions, including
confirming that patients are uninsured, limitations on balance billings and not using funds to reimburse expenses
or losses that other sources are obligated to reimburse.
The CARES Act and related legislation also make other forms of financial assistance available to health
care providers. For example, CMS has increased payment under the hospital inpatient PPS by 20% for discharges
of individuals diagnosed with COVID-19 and provides an add-on payment for eligible inpatient cases that use
certain new products to treat COVID-19. The CARES Act also expanded the Medicare Accelerated and Advance
Payment Program, which makes available advance payments of Medicare funds in order to increase cash flow to
providers.
During 2020, we received approximately $4.4 billion of accelerated Medicare payments and approximately
$1.8 billion in general and targeted distributions from the Provider Relief Fund. During October 2020, we
announced our decision to return, or repay early, all of our share of the Provider Relief Fund general and targeted
distributions and all of the Medicare accelerated payments. During the fourth quarter of 2020, we returned, or
repaid early, approximately $6.1 billion of these funds.
The CARES Act and related legislation suspended the Medicare sequestration payment adjustment from
May 1, 2020, through December 31, 2021, which would have otherwise reduced payments to Medicare providers
by 2% as required by the BCA, but extended sequestration through 2030. Congress further delayed these
sequestration cuts through March 31, 2022, and reduced the sequestration adjustment to 1% from April 1 through
39
June 30, 2022, but increased the reductions set for 2030. The APRA, in addition to providing funding for health
care providers, increases the federal budget deficit in a manner that triggers an additional statutorily mandated
sequestration under the PAYGO Act. As a result, an additional Medicare payment reduction of up to 4% was
required to take effect in January 2022. However, Congress has delayed implementation of this payment
reduction until 2023.
Beyond financial assistance, federal and state governments have enacted legislation, established regulations
and issued waivers intended to expand access to and payment for telehealth services, increase access to medical
supplies and equipment, prioritize review of drug applications to help with shortages of emergency drugs, and
ease various legal and regulatory burdens on health care providers. HHS and CMS have announced other
flexibilities for health care providers in response to COVID-19, such as relief from data submission requirements
and measure suppression policies for providers participating in certain quality reporting programs. It is unclear
how changes to these and other value-based programs will affect our financial condition.
There is still a high degree of uncertainty surrounding the ongoing impact of the CARES Act and related
legislation passed and other efforts taken in response to the COVID-19 pandemic, and the pandemic continues to
evolve. Some of the measures allowing for flexibility in delivery of care and various financial supports for health
care providers are available only until funds expire or for the duration of the PHE, and it is unclear whether or for
how long the PHE declaration will be extended. The current PHE determination expires April 16, 2022. The HHS
Secretary may choose to renew the PHE declaration for successive 90-day periods for as long as the emergency
continues to exist and may terminate the declaration whenever he determines that the PHE no longer exists. The
federal government may consider additional stimulus and relief efforts, but we are unable to predict whether
additional measures will be enacted or their impact. There can be no assurance as to the total amount of financial
and other types of assistance we will receive under the CARES Act, PPPHCE Act, the CAA or future legislation,
if any, or whether we shall retain, return or repay any future assistance, and it is difficult to predict the impact of
such legislation on our operations. Further, there can be no assurance that the terms and conditions of provider
relief funding or other relief programs will not change or be interpreted in ways that affect our ability to comply
with such terms and conditions in the future (which could affect our ability or willingness to retain assistance),
the amount of total stimulus funding we may receive or our eligibility to participate in such stimulus funding. For
time periods prior to returning Provider Relief Funds, with respect to future assistance, if any, we do not return,
and in those cases where our partners retain such assistance, we will continue to monitor our compliance with the
terms and conditions of the Provider Relief Fund, including demonstrating that the distributions received have
been used for health care-related expenses or lost revenue attributable to COVID-19. If we are unable to attest to
or comply with current or future terms and conditions with respect to any assistance not voluntarily returned for
our less-than-wholly owned partnerships, our ability to retain some or all of the distributions received may be
impacted. We will continue to assess the potential impact of COVID-19 and government responses to the
pandemic on our business, results of operations, financial condition and cash flows.
The emergence and effects related to a potential future pandemic, epidemic or outbreak of an infectious
disease could adversely affect our operations.
If a pandemic, epidemic, outbreak of an infectious disease or other public health crisis were to occur in an
area in which we operate, our operations could be adversely affected. Such a crisis could diminish the public trust
in health care facilities, especially hospitals that fail to accurately or timely diagnose, or are treating (or have
treated) patients affected by infectious diseases. If any of our facilities were involved, or perceived as being
involved, in treating patients from such an infectious disease, patients might cancel elective procedures or fail to
seek needed care at our facilities, and our reputation may be negatively affected. Patient volumes may decline or
volumes of uninsured and underinsured patients may increase, depending on the economic circumstances
surrounding the pandemic, epidemic or outbreak. Further, a pandemic, epidemic or outbreak might adversely
affect our operations by causing a temporary shutdown or diversion of patients, disrupting or delaying production
and delivery of materials and products in the supply chain or causing staffing shortages in our facilities. We have
disaster plans in place and operate pursuant to infectious disease protocols, but the potential emergence of a
pandemic, epidemic or outbreak, as well as the public’s and the government’s response to the pandemic,
epidemic or outbreak, is difficult to predict and could adversely affect our operations.
40
Risks related to our indebtedness:
Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations,
limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent
of our variable rate debt and prevent us from meeting our obligations.
We are highly leveraged. As of December 31, 2021, our total indebtedness was $34.579 billion. As of
December 31, 2021, we had availability of $1.920 billion under our senior secured cash flow credit facility and
$1.720 billion under our senior secured asset-based revolving credit facility, after giving effect to letters of credit
and borrowing base limitations. Our high degree of leverage could have important consequences, some of which
may be exacerbated by the impact of the COVID-19 pandemic, including:
•
•
•
•
•
•
increasing our vulnerability to downturns or adverse changes in general economic,
competitive conditions and adverse changes in government regulations;
industry or
requiring a substantial portion of cash flows from operations to be dedicated to the payment of
principal and interest on our indebtedness, therefore reducing our ability to use our cash flows to fund
our operations, capital expenditures and future business opportunities;
exposing us to the risk of increased interest rates to the extent that our existing unhedged borrowings
are at variable rates of interest or we seek to refinance our debt in a rising rate environment;
limiting our ability to make strategic acquisitions or causing us to make nonstrategic divestitures;
limiting our ability to obtain additional financing for working capital, capital expenditures, share
repurchases, dividends, product or service line development, debt service requirements, acquisitions
and general corporate or other purposes; and
limiting our ability to adjust
disadvantage compared to our competitors who are less highly leveraged.
to changing market conditions and placing us at a competitive
We and our subsidiaries have the ability to incur additional indebtedness in the future, subject to the
restrictions contained in our senior secured credit facilities and the indentures governing our outstanding notes. If
new indebtedness is added to our current debt levels, interest rates and the related risks that we now face could
intensify.
We may not be able to generate sufficient cash to service all of our indebtedness and may not be able to
refinance our indebtedness on favorable terms. If we are unable to do so, we may be forced to take other
actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial
condition and operating performance, which are subject to prevailing economic and competitive conditions,
including the impact of the COVID-19 pandemic, and to certain financial, business and other factors beyond our
control. We cannot assure you we will maintain a level of cash flows from operating activities sufficient to
permit us to pay the principal, premium, if any, and interest on our indebtedness.
In addition, we conduct our operations through our subsidiaries. Accordingly,
repayment of our
indebtedness is dependent on the generation of cash flows by our subsidiaries and their ability to make such cash
available to us by dividend, debt repayment or otherwise. Our subsidiaries may not be able to, or may not be
permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is
a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to
obtain cash from our subsidiaries.
We may find it necessary or prudent to refinance our outstanding indebtedness, the terms of which may not
be favorable to us. Our ability to refinance our indebtedness on favorable terms, or at all, is directly affected by
the then current global economic and financial conditions which affect the availability of debt financing and the
41
rates at which such financing is available. In addition, our ability to incur secured indebtedness (which would
generally enable us to achieve better pricing than the incurrence of unsecured indebtedness) depends in part on
the value of our assets, which depends, in turn, on the strength of our cash flows and results of operations, and on
economic and market conditions and other factors.
If our cash flows and capital resources are insufficient to fund our debt service obligations or we are unable
to refinance our indebtedness, we may be forced to reduce or delay investments and capital expenditures, or to
sell assets, seek additional capital or restructure our indebtedness. These alternative measures may not be
successful and may not permit us to meet our scheduled debt service obligations. If our operating results and
available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems
and might be required to dispose of material assets or operations to meet our debt service and other obligations.
We may not be able to consummate those dispositions, or the proceeds from the dispositions may not be
adequate to meet any debt service obligations then due.
Our debt agreements contain restrictions that limit our flexibility in operating our business.
Our senior secured credit facilities and, to a lesser extent, the indentures governing our outstanding notes
contain various covenants that limit our ability to engage in specified types of transactions. These covenants limit
our and certain of our subsidiaries’ ability to, among other things:
•
•
incur additional indebtedness or issue certain preferred shares;
pay dividends on, repurchase or make distributions in respect of our capital stock or make other
restricted payments;
• make certain investments;
•
•
•
•
sell or transfer assets;
create liens;
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and
enter into certain transactions with our affiliates.
Under our asset-based revolving credit facility, borrowing availability is subject to a borrowing base of 85%
of eligible accounts receivable less customary reserves, with any reduction in the borrowing base
commensurately reducing our ability to access this facility as a source of liquidity. In addition, under the asset-
based revolving credit facility, when (and for as long as) the combined availability under our asset-based
revolving credit facility and the revolving facility under our senior secured cash flow credit facility is less than a
specified amount for a certain period of time or, if a payment or bankruptcy event of default has occurred and is
continuing, funds deposited into any of our depository accounts will be transferred on a daily basis into a blocked
account with the administrative agent and applied to prepay loans under the asset-based revolving credit facility
and to collateralize letters of credit issued thereunder.
Under our senior secured credit facilities, we are required to satisfy and maintain specified financial ratios.
Our ability to meet those financial ratios may be affected by events beyond our control, and there can be no
assurance we will continue to meet those ratios. A breach of any of these covenants could result in a default
under both the cash flow credit facility and the asset-based revolving credit facility. Upon the occurrence of an
event of default under these senior secured credit facilities, the lenders thereunder could elect to declare all
amounts outstanding under the senior secured credit facilities to be immediately due and payable and terminate
all commitments to extend further credit, which would also result in an event of default under a significant
portion of our other outstanding indebtedness. If we were unable to repay those amounts, the lenders under the
senior secured credit facilities could proceed against the collateral granted to them to secure such indebtedness.
We have pledged a significant portion of our assets under our senior secured credit facilities and that collateral is
42
also pledged as collateral under our first lien notes. If any of the lenders under the senior secured credit facilities
accelerate the repayment of borrowings, there can be no assurance there will be sufficient assets to repay the
senior secured credit facilities, the first lien notes and our other indebtedness.
Discontinuation, reform or replacement of LIBOR may adversely affect our borrowing costs.
As of December 31, 2021, we had $4.740 billion of borrowings under our senior secured credit facilities that
bore interest at a floating rate based on LIBOR and $3.640 billion of unfunded commitments under those
facilities. The U.K. Financial Conduct Authority announced in 2017 that it intends to phase out LIBOR by the
end of 2021 and will not compel panel banks to continue to contribute to LIBOR after the end of 2021. However,
the ICE Benchmark Administration, in its capacity as administrator of LIBOR, has published a consultation
regarding its intention to continue publication of certain LIBOR tenors and subsequently confirmed it expects to
cease publication of all remaining LIBOR tenors in June 2023. However, the Federal Reserve Board, the Office
of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have encouraged banks to
cease entering into new contracts that use U.S. dollar LIBOR as a reference rate no later than December 31,
2021. The Federal Reserve Board, together with the Alternative Reference Rates Committee, has chosen the
Secured Overnight Financing Rate (“SOFR”) as the recommended risk-free reference rate. At this time, it is not
possible to predict the effect any discontinuance, modification or other reforms to LIBOR, or the establishment
of alternative reference rates such as SOFR, or any other reference rate, will have on us or our borrowing costs.
As of December 31, 2021, we also had a $500 million interest rate swap agreement based on LIBOR that is
scheduled to expire on December 30, 2022. If LIBOR becomes unavailable, it is unclear how payments under
this agreement would be calculated. The International Swaps and Derivatives Association has published a
standard protocol addressing the expected discontinuation of LIBOR, but there can be no assurance that such a
protocol will be implemented with respect to our swap agreements.
Risks related to human capital:
Our operations may be adversely affected by competition for staffing, the shortage of experienced nurses and
other health care professionals, vaccine mandates and labor union activity.
Our operations are dependent on the efforts, abilities and experience of our management and medical
support personnel, such as nurses, pharmacists and lab technicians, as well as our physicians. We compete with
other health care providers in recruiting and retaining qualified management and personnel responsible for the
daily operations of each of our hospitals, including nurses and other nonphysician health care professionals. In
some markets, the availability of nurses and other medical support personnel has been a significant operating
issue to health care providers, including at certain of our facilities. The COVID-19 pandemic has exacerbated
workforce competition and shortages, and may continue to exacerbate workforce competition and shortages
beyond the duration of the pandemic. We may be required to continue to enhance wages and benefits to recruit
and retain nurses and other medical support personnel or to hire more expensive temporary or contract personnel.
As a result, our labor costs could continue to increase and/or our capacity could be negatively impacted. We also
depend on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we
operate. If there is continued competition for these employees or additional union organizing activity or a
significant portion of our employee base unionizes,
is possible our labor costs could increase. When
it
negotiating collective bargaining agreements with unions, whether such agreements are renewals or first
contracts, there is the possibility that strikes could occur during the negotiation process, and our continued
operation during any strikes could increase our labor costs.
In addition, federal and state laws and regulations may increase our costs of maintaining qualified nurses
and other medical support personnel. We operate in several states that have adopted mandatory nurse-staffing
ratios. If these states reduce mandatory nurse-staffing ratios or additional states in which we operate adopt
mandatory nurse-staffing ratios, such changes could significantly affect labor costs and have an adverse impact
43
on revenues if we are required to limit admissions in order to meet the required ratios. If our labor costs continue
to increase, we may not be able to offset these increased costs as a significant percentage of our revenues consists
of fixed, prospective payments.
Additionally, on November 5, 2021, CMS and the U.S. Occupational Safety and Health Administration
(“OSHA”) published regulations and standards setting forth vaccination requirements for certain U.S. employees.
CMS issued a health and safety regulation (“CMS Mandate”) requiring certain covered facilities (including
hospitals, ambulatory surgery centers, home health agencies, hospices, providers of outpatient physical therapy
and long-term care facilities, in each case, that are Medicare and Medicaid-certified providers) to ensure all staff
who work in the covered facility and who provide care, treatment or other services for the facility and/or its
patients are fully vaccinated against COVID-19. The CMS Mandate does not provide a testing option for covered
staff. OSHA issued an Emergency Temporary Standard (“ETS”) mandating that employers with 100 or more
employees design, implement, and enforce a mandatory COVID-19 vaccination policy or adopt a policy
requiring employees to either receive a COVID-19 vaccination or undergo regular COVID-19 testing and wear a
face covering at work. Both the OSHA ETS and the CMS Mandate were the subject of multiple legal challenges
and injunction proceedings regarding whether the agencies exceeded their authority in implementing these
regulations and standards, with the U.S. Supreme Court ultimately determining whether the ETS and/or CMS
Mandate should be stayed pending resolution. On January 13, 2022, the U.S. Supreme Court lifted two
injunctions previously staying the CMS Mandate in 24 states. The impact of the Supreme Court’s decision
renders the CMS Mandate applicable on a nationwide basis pending further litigation on CMS’s authority. While
CMS has extended the compliance deadlines for some states to mid-March 2022, the application of the CMS
Mandate could adversely impact the availability of staff to provide services at covered facilities the Company
owns, manages or operates. On January 13, 2022, the Supreme Court issued a nationwide injunction staying the
implementation of the ETS pending further decision by the U.S. Court of Appeals for the Sixth Circuit regarding
whether OSHA’s ETS exceeds Congressional authority. In response, on January 25, 2022, OSHA announced its
withdrawal of the ETS. Additional vaccine and testing mandates may also be announced by state-run OSHA
programs or state and local officials in jurisdictions in which we operate our business and which could adversely
impact the availability of staff to provide services at covered facilities the Company owns, manages or operates.
The unavailability of such staff, or the inability of the Company to control labor costs, could have a material,
adverse effect on our capacity, growth prospects and results of operations.
We may be unable to attract, hire, and retain a highly qualified and diverse workforce, including key
management.
The talents and efforts of our employees, particularly our key management, are vital to our success. Our
management team has significant industry experience and would be difficult to replace. In addition, institutional
knowledge may be lost in any potential managerial transition. We may be unable to retain them or to attract other
highly qualified employees, particularly if we do not offer employment terms that are competitive with the rest of
the labor market. Our management is focused on mitigating the impact of the COVID-19 pandemic, which has
required and will continue to require a substantial investment of time and resources across our enterprise. Failure
to attract, hire, develop, motivate, and retain highly qualified and diverse employee talent, or failure to develop
and implement an adequate succession plan for the management team, could disrupt our operations and adversely
affect our business and our future success.
Our performance depends on our ability to recruit and retain quality physicians.
The success of our hospitals depends in part on the number and quality of the physicians on the medical
staffs of our hospitals, the admitting and utilization practices of those physicians, maintaining good relations with
those physicians and controlling costs related to the employment of physicians. Although we employ some
physicians, physicians are often not employees of the hospitals at which they practice, and, in many of the
markets we serve, most physicians have admitting privileges at other hospitals in addition to our hospitals. We
continue to face increasing competition to recruit and retain quality physicians. Such physicians may terminate
44
their affiliation with our hospitals at any time. We anticipate facing increased challenges in this area as the
physician population reaches retirement age, especially if there is a shortage of physicians willing and able to
provide comparable services. If we are unable to recruit and retain quality physicians to affiliate with our
hospitals, our admissions may decrease, our operating performance may decline, and our capacity and growth
prospects may be materially adversely affected. If we are unable to provide adequate support personnel or
technologically advanced equipment and hospital facilities that meet the needs of those physicians and their
patients, they may be discouraged from referring patients to our facilities, admissions may decrease and our
operating performance may decline.
Risks related to technology, data privacy and cybersecurity:
A cybersecurity incident could result in the compromise of our facilities, confidential data or critical data
systems. A cybersecurity incident could also give rise to potential harm to patients; remediation and other
expenses; and exposure to liability under HIPAA, consumer protection laws, common law theories or other
laws. Such incidents could subject us to litigation and foreign, federal and state governmental inquiries,
damage our reputation, and otherwise be disruptive to our business.
We, directly and through our vendors and other third parties, collect and store on our networks and devices
and third-party technology platforms sensitive information, including intellectual property, proprietary business
information and personally identifiable information of our patients and employees. We have made significant
investments in technology to adopt and meaningfully use EHR and in the use of medical devices that store
sensitive data and are integral to the provision of patient care and to protect our systems, software, equipment,
devices, and data from cybersecurity risks. In addition, medical devices manufactured by third parties that are
used within our facilities are increasingly connected to the internet, hospital networks and other medical devices.
The secure maintenance of this information and technology is critical to our business operations. We have
implemented multiple layers of security measures to protect the confidentiality, integrity and availability of this
data and the systems and devices that store and transmit such data. We embed security measures into software
and system development processes, utilize current security technologies, and our defenses are monitored and
routinely tested internally and by external parties. We vet the security and integrity of third-party technology
platforms hosting infrastructure, applications, and data supporting our operations, and set contractual terms
holding them to our security standards.
Despite these efforts, threats from malicious persons and groups, new vulnerabilities and advanced new
attacks against information systems and devices against us or our vendors and other third parties create risk of
cybersecurity incidents, including ransomware, malware and phishing incidents. We have seen, and believe we
will continue to see, widely spread vulnerabilities, such as the Apache Log4j 2 vulnerability reported in
December 2021, which could affect our or other parties’ systems. Mitigation and remediation recommendations
continue to evolve, and addressing this and other critical vulnerabilities is a priority for us. The volume and
intensity of cyberattacks on hospitals and health systems continues to increase. We are regularly the target of
attempted cybersecurity and other threats that could have a security impact, including those by third parties to
access, misappropriate or manipulate our information or disrupt our operations, and we expect to continue to
experience an increase in cybersecurity threats in the future. Moreover, hardware, software or applications we
use may have inherent vulnerabilities or defects of design, manufacture or operations or could be inadvertently or
intentionally implemented or used in a manner that could compromise information security. There can be no
assurance that we or our vendors and other third parties will not be subject to cybersecurity threats and incidents
that bypass our or their security measures, impact the integrity, availability or privacy of personal health
information or other data subject to privacy laws or disrupt our or their information systems, devices or business,
including our ability to provide various health care services. Further, consumer confidence in the integrity and
security of personal information and critical operations data in the health care industry generally could be shaken
to the extent there are successful cyberattacks at other health care services companies, which could have a
material, adverse effect on our business, financial position or results of operations.
As a result, cybersecurity, privacy, physical security and the continued development and enhancement of
our controls, processes and practices designed to protect our facilities, information systems and data from attack,
45
damage or unauthorized access remain a priority for us. Our Audit and Compliance Committee includes the topic
of cybersecurity risk and information security as one of its standing agenda items, and is frequently updated on
management’s ongoing actions to monitor,
identify, assess and mitigate significant cybersecurity matters.
Committee meetings regularly include a report from our Chief Security Officer to provide an update on (i)
activities within our internal cybersecurity defense center to monitor and respond to both internal and third-party
cyber events, (ii) ongoing threats that are being monitored and (iii) the current threat level assessment for the
Company. As cyber threats continue to evolve, along with their increased volume and sophistication, we may be
required to expend significant additional resources to continue to modify or enhance our protective measures or
to investigate and remediate any cybersecurity vulnerabilities or incidents. Although to date no cyberattack or
other information or security breach, whether experienced by us or a third party, has resulted in material losses or
other material consequences to us, there can be no assurance that our controls and procedures in place to monitor
and mitigate the risks of cyber threats, including the remediation of critical information security and software
vulnerabilities, will be sufficient and/or timely and that we will not suffer material losses or consequences in the
future. Additionally, while we have in place insurance coverage designed to address certain aspects of cyber
risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise. The
occurrence of any of these events could result in (i) harm to patients; (ii) business interruptions and delays;
(iii) the loss, misappropriation, corruption or unauthorized access of data; (iv) litigation and potential liability
under privacy, security, breach notification and consumer protection laws, common law theories or other
applicable laws; (v) reputational damage; and (vi) foreign, federal and state governmental inquiries, any of which
could have a material, adverse effect on our financial position and results of operations and harm our business
reputation.
Our operations could be impaired by a failure of our information systems.
The performance of our information systems is critical to our business operations. In addition to our shared
services initiatives, our information systems are essential to a number of critical areas of our operations,
including:
•
•
•
•
accounting and financial reporting;
billing and collecting accounts;
coding and compliance;
clinical systems and medical devices;
• medical records and document storage;
•
•
inventory management;
negotiating, pricing and administering managed care contracts and supply contracts; and
• monitoring quality of care and collecting data on quality measures necessary for full Medicare payment
updates.
Information systems may be vulnerable to damage from a variety of sources, including telecommunications
or network failures, human acts such as inadvertent misuse by employees and cyberattacks,
including
ransomware and data theft, and natural disasters. Moreover, we rely on various third-party technology platforms,
which are increasingly important to our business and continue to grow in complexity and scope. Failure to
adequately manage implementations of new technology, updates or enhancements of such platforms or interfaces
between platforms could place us at a competitive disadvantage, disrupt our operations, and have a material,
adverse impact on our business and results of operations.
We have taken precautionary measures to prevent unanticipated problems that could affect our information
systems. Nevertheless, we or our vendors and other third parties that we rely upon may experience system
46
failures and disruptions. The occurrence of any system failure could result in interruptions, delays, the loss or
corruption of data and cessations or interruptions in the availability of systems, all of which could have a
material, adverse effect on our financial position and results of operations and harm our business reputation.
Health care technology initiatives, particularly those related to patient data and interoperability, may
adversely affect our operations.
The federal government is working to promote the adoption of health information technology and the
promotion of nationwide health information exchange to improve health care. For example, HHS incentivizes the
adoption and meaningful use of certified EHR technology through its Promoting Interoperability Programs.
Eligible hospitals and eligible professionals, including our hospitals and employed professionals, are subject to
reduced payments from Medicare if they fail to demonstrate meaningful use of certified EHR technology. As
these technologies have become widespread, the focus has shifted to increasing patient access to health care data
and interoperability. The 21st Century Cures Act prohibits information blocking by health care providers and
certain other entities, which is defined as engaging in activities likely to interfere with the access, exchange or
use of electronic health information, except as required by law or specified by HHS as a reasonable and
necessary activity. Current and future initiatives related to health care technology and interoperability may
require changes to our operations, impose new and complex compliance obligations and require investments in
infrastructure. We may be subject to financial penalties or other disincentives or experience reputational damage
for failure to comply. It is difficult to predict how these initiatives will affect our relationships with providers and
vendors, participation in health care information exchanges or networks, the exchange of patient data, and patient
engagement.
We may not be reimbursed for the cost of expensive, new technology.
As health care technology continues to advance,
the price of purchasing such new technology has
significantly increased for providers. Some payers have not adapted their payment systems to adequately cover
the cost of these technologies for providers and patients. If payers do not adequately reimburse us for these new
technologies, we may be unable to acquire such technologies or we may nevertheless determine to acquire or
utilize these technologies in order to treat our patients. In either case, our results of operations and financial
position could be adversely affected.
Risks related to governmental regulation and other legal matters:
Our results of operations may be adversely affected by health care reform efforts, including efforts to
significantly change the Affordable Care Act. We are unable to predict what, if any, and when additional
health reform measures will be adopted or implemented, and the effects and ultimate impact of any such
measures are uncertain.
In recent years, Congress and certain state legislatures have passed a large number of laws and regulations
intended to effect major change within the U.S. health care system, including the Affordable Care Act. The
Affordable Care Act affects how health care services are covered, delivered and reimbursed through expanded
health insurance coverage, reduced growth in Medicare program spending, reductions in Medicare and Medicaid
DSH payments, and the establishment of programs that tie reimbursement to quality and integration. However,
the Affordable Care Act has been subject to legislative and regulatory changes and court challenges. For
example, effective January 1, 2019, the penalty associated with the individual mandate to maintain health
insurance was eliminated. This change resulted in legal challenges to the constitutionality of the individual
mandate and the validity of the Affordable Care Act as a whole. However, in June 2021, the U.S. Supreme Court
determined that the plaintiffs lacked standing, allowing the law to remain in place.
There is uncertainty regarding whether, when and how the Affordable Care Act may be further changed, and
how the law will be interpreted and implemented. Changes by Congress or government agencies could eliminate
47
or alter provisions beneficial to us, while leaving in place provisions reducing our reimbursement or otherwise
negatively impacting our business. However, President Biden has indicated that his administration generally
intends to protect and strengthen the Affordable Care Act and Medicaid programs.
There is also uncertainty regarding whether, when, and what other health reform initiatives will be adopted
and the impact of such efforts on providers and other health care industry participants. Some members of
Congress have proposed measures that would expand government-sponsored coverage, including proposals to
expand coverage of federally-funded insurance programs as an alternative to private insurance or establish a
single-payer system (such reforms often referred to as “Medicare for All”), and some states are considering or
have implemented public health insurance options. CMS administrators may grant states additional flexibility in
the administration of state Medicaid programs and make changes to Medicaid payment models. Other health
reform initiatives and proposals, such as price transparency requirements and the requirements of the No
Surprises Act, may impact prices, our relationships with patients, payers or ancillary providers (such as
anesthesiologists, radiologists, and pathologists), and our competitive position. Other industry participants, such
as private payers and large employer groups and their affiliates, may also introduce financial or delivery system
reforms. We are unable to predict the nature and success of such initiatives. Health care reform initiatives,
including changes to the Affordable Care Act, may have an adverse effect on our business, results of operations,
cash flow, capital resources, and liquidity.
Changes in government health care programs may adversely affect our revenues.
A significant portion of our patient volume is derived from government health care programs, principally
Medicare and Medicaid. Specifically, we derived 41.3% of our revenues from the Medicare and Medicaid
programs in 2021. Changes in government health care programs, including Medicaid waiver programs, may
reduce the reimbursement we receive and could adversely affect our business and results of operations. The
Affordable Care Act made significant changes to Medicare and Medicaid, and future health reform efforts or
further efforts to significantly change the Affordable Care Act may impact these programs.
In recent years, legislative and regulatory changes have resulted in limitations on and, in some cases,
reductions in levels of payments to health care providers for certain services under the Medicare program.
Congress has established automatic spending reductions that extend through 2030. However, the percentage
reduction for Medicare may not be more than 2% for a fiscal year, with a uniform percentage reduction across all
Medicare programs. While this reduction has been suspended by the CARES Act and related legislation, it is
scheduled to be reinstated April 1, 2022, when it will resume as a 1% reduction. The full 2% reduction will begin
July 1, 2022, and the reductions set for 2030 were increased to up to 3%. As a result of the ARPA, an additional
Medicare payment reduction of up to 4% was required to take effect in January 2022; however, Congress has
delayed implementation of this reduction until 2023. We are unable to predict what other deficit reduction
initiatives may be proposed by Congress. These reductions are in addition to reductions mandated by the
Affordable Care Act and other laws. Further, from time to time, CMS revises the reimbursement systems used to
reimburse health care providers, including changes to the inpatient hospital MS-DRG system and other payment
systems, which may result in reduced Medicare payments. Further, under a site neutrality policy, clinic visit
services provided by off-campus provider-based departments that were formerly paid under the outpatient PPS
are now paid under the Physician Fee Schedule. The IMPACT Act requires HHS, in conjunction with the
Medicare Payment Advisory Commission, to propose a unified post-acute care payment model by 2023. A
unified post-acute care payment system would pay post-acute care providers, including home health agencies,
under a single framework according to a patient’s characteristics, rather than based on the post-acute care setting
where the patient receives treatment. CMS has issued final rules reducing Medicare payment rates under the
outpatient PPS for drugs obtained under the 340B Drug Pricing Program, although this payment policy has been
heavily litigated and is currently before the U.S. Supreme Court. In September 2021, HHS released a
Comprehensive Plan for Addressing High Drug Prices, a report outlining principles for drug pricing reform. The
report set forth a variety of potential legislative policies that Congress could pursue and summarized actions
underway or under consideration by HHS to advance these principles. CMS may implement further changes to
how items or services are reimbursed that result in payment reductions for other services.
48
Because most states must operate with balanced budgets and the Medicaid program is often a state’s largest
program, some states have enacted or may consider enacting legislation designed to reduce their Medicaid
expenditures. Further, many states have also adopted, or are considering, legislation designed to reduce coverage,
enroll Medicaid recipients in managed care programs, and/or impose additional taxes on hospitals to help finance
or expand the states’ Medicaid systems. Periods of economic weakness may increase the budgetary pressures on
many states, and these budgetary pressures may result in decreased spending, or decreased spending growth, for
Medicaid programs and the Children’s Health Insurance Program in many states. Some states that provide
Medicaid supplemental payments are reviewing these programs or have filed waiver requests with CMS to
replace these programs, and CMS has performed and continues to perform compliance reviews of some states’
programs and is considering changes to the requirements for such programs, which could result in Medicaid
supplemental payments being reduced or eliminated. Further, legislation and administrative actions at the federal
level may significantly alter the funding for, or structure of, the Medicaid program. For example, from time to
time, Congress considers proposals to restructure the Medicaid program to involve block grants that would be
administered by the states. The prior presidential administration increased state flexibility in the administration of
Medicaid programs,
including by allowing states to condition enrollment on work or other community
engagement or to use a block grant funding structure. However, the current presidential administration issued an
executive order directing agencies to re-examine measures that reduce health insurance coverage or undermine
Medicaid programs, and the administration has rescinded approvals of waivers involving certain eligibility and
enrollment restrictions, including those allowing for work and community engagement requirements.
In some cases, private third-party payers rely on all or portions of Medicare payment systems to determine
payment rates. Changes to government health care programs that reduce payments under these programs may
negatively impact payments from private third-party payers.
Current or future health care reform and deficit reduction efforts, changes in laws or regulations regarding
government health care programs, other changes in the administration of government health care programs and
changes by private third-party payers in response to health care reform and other changes to government health
care programs could have a material, adverse effect on our financial position and results of operations.
If we fail to comply with extensive laws and government regulations, we could suffer penalties or be required
to make significant changes to our operations.
The health care industry is required to comply with extensive and complex laws and regulations at the
federal, state and local government levels relating to, among other things:
•
•
•
•
•
•
•
•
•
•
•
billing and coding for services and properly handling overpayments;
appropriateness and classification of level of care provided, including proper classification of inpatient
admissions, observation services and outpatient care;
relationships with physicians and other referral sources and referral recipients;
necessity and adequacy of medical care;
quality of medical equipment and services;
qualifications of medical and support personnel;
the confidentiality, maintenance, interoperability, exchange, data breach, identity theft and security of
health-related and personal information and medical records;
screening, stabilization and transfer of individuals who have emergency medical conditions;
licensure, certification and enrollment with government programs;
the distribution, maintenance and dispensing of pharmaceuticals and controlled substances;
debt collection, limits or prohibitions on balance billing and billing for out of network services;
49
•
•
•
•
•
•
communications with patients and consumers;
preparing and filing of cost reports;
operating policies and procedures;
activities regarding competitors;
addition of facilities and services; and
environmental protection.
Among these laws are the federal Anti-kickback Statute, EKRA, the federal Stark Law, the FCA and similar
state laws. We have a variety of financial relationships with physicians and others who either refer or influence
the referral of patients to our hospitals, other health care facilities, laboratories and employed physicians or who
are the recipients of referrals, and these laws govern those relationships. The OIG has enacted safe harbor
regulations that outline practices deemed protected from prosecution under the Anti-kickback Statute. While we
endeavor to comply with the applicable safe harbors, certain of our current arrangements, including joint
ventures and financial relationships with physicians and other referral sources and persons and entities to which
we refer patients, do not qualify for safe harbor protection. Failure to qualify for a safe harbor does not mean the
arrangement necessarily violates the Anti-kickback Statute but may subject the arrangement to greater scrutiny.
However, we cannot offer assurance that practices outside of a safe harbor will not be found to violate the Anti-
kickback Statute. Allegations of violations of the Anti-kickback Statute may be brought under the federal Civil
Monetary Penalty Law, which requires a lower burden of proof than other fraud and abuse laws, including the
Anti-kickback Statute.
Our financial relationships with referring physicians and their immediate family members must comply with
the Stark Law by meeting an exception. We attempt to structure our relationships to meet an exception to the
Stark Law, but the regulations implementing the exceptions are detailed and complex and are subject to
continuing legal and regulatory change. Thus, we cannot provide assurance that every relationship complies fully
with the Stark Law. Unlike the Anti-kickback Statute, failure to meet an exception under the Stark Law results in
a violation of the Stark Law, even if such violation is technical in nature.
Additionally, if we violate the Anti-kickback Statute or Stark Law, or if we improperly bill for our services,
we may be found to violate the FCA, either under a suit brought by the government or by a private person under
a qui tam, or “whistleblower,” suit. See Item 1, “Business — Regulation and Other Factors.”
We also operate health care facilities in the United Kingdom and have operations and commercial
relationships with companies in other foreign jurisdictions and, as a result, are subject to certain U.S. and foreign
laws applicable to businesses generally, including anti-corruption and anti-bribery laws. The Foreign Corrupt
Practices Act regulates U.S. companies in their dealings with foreign officials, prohibiting bribes and similar
practices, and requires that they maintain records that fairly and accurately reflect transactions and appropriate
internal accounting controls. In addition, the United Kingdom Bribery Act has wide jurisdiction over certain
activities that affect the United Kingdom.
A variety of state, national, foreign and international laws and regulations apply to the collection, use,
retention, protection, security, disclosure, transfer and other processing of personal data. For example, the CCPA,
which affords consumers expanded privacy protections such as the right to know what personal information is
collected and how it is used, went into effect on January 1, 2020, and was recently significantly amended by the
CPRA. California residents also have the right to request that a business delete their personal information unless
it is necessary for the business to maintain for certain purposes, to direct a business to correct errors in their
personal information, and to restrict the use and disclosure of sensitive information. They have the right to know
if their personal information is being sold or shared and the right to opt out of the sale or disclosure. Beginning in
2023, under the CPRA’s amendments, as well as comprehensive privacy legislation passed in Virginia and
50
Colorado, residents of those states will have additional rights with respect to their personal information, such as a
right to opt out of certain processing activities for sensitive data and a right to a portable copy of their personal
information. The CPRA creates a new regulator responsible for enforcement of the CPRA, and enforcement
priorities of this new regulatory body have yet to be determined. The CCPA and CPRA also provide for civil
penalties for violations, as well as a private right of action for data breaches that may increase data breach
litigation. Failure to comply with these and any other comprehensive privacy laws passed at the state or federal
level may result in regulatory enforcement action and damage to our reputation. The potential effects of such
legislation are far-reaching and may require us to modify our data processing practices and policies and to incur
substantial costs and expenses to comply. With Brexit, our United Kingdom operations are no longer subject to
the European Union’s General Data Protection Regulation (“GDPR”) but are subject to the UK Data Protection
Legislation, which has been amended in connection with Brexit to be functionally similar to the GDPR and
which contains stricter privacy restrictions than laws and regulations in the United States and provides for
significant fines in the event of violations. These administrative fines are based on a multi-factored approach.
Moreover, rules for data transfers outside of the United Kingdom and European Economic Area have changed
significantly with Brexit and a recent Court of European Justice decision, and are subject to further revision and
updated regulator guidance, making necessary compliance measures challenging to ascertain and implement with
respect to our United Kingdom operations. We expect that there will continue to be new laws, regulations,
regulatory guidance, and industry standards concerning privacy, data protection and information security
proposed and enacted in various jurisdictions, which could impact our operations and cause us to incur
substantial costs.
We send short message service, or SMS, text messages to patients. While we obtain consent from these
individuals to send text messages, federal or state regulatory authorities or private litigants may claim that the
notices and disclosures we provide, form of consents we obtain, or our SMS texting practices are not adequate or
violate applicable law. In addition, we must ensure that our SMS texting practices comply with regulations and
agency guidance under the Telephone Consumer Protection Act (the “TCPA”), a federal statute that protects
consumers from unwanted telephone calls, faxes and text messages. While we strive to adhere to strict policies
and procedures that comply with the TCPA, the Federal Communications Commission, as the agency that
implements and enforces the TCPA, may disagree with our interpretation of the TCPA and subject us to penalties
and other consequences for noncompliance. Determination by a court or regulatory agency that our SMS texting
practices violate the TCPA could subject us to civil penalties and could require us to change some portions of our
business. Even an unsuccessful challenge by patients or regulatory authorities of our activities could result in
adverse publicity and could require a costly response from and defense by us. Moreover, if wireless carriers or
their trade associations, which issue guidelines for texting programs, determine that we have violated their
guidelines, our ability to engage in texting programs may be curtailed or revoked, which could impact our
operations and cause us to incur costs related to implementing a workaround solution.
We engage in consumer debt collection for HCA-affiliated hospitals and certain non-affiliated hospitals. We
also engage in credit reporting for certain non-affiliated hospitals. The federal Fair Debt Collection Practices Act,
the Fair Credit Reporting Act and the TCPA restrict the methods that companies may use to contact and seek
payment from consumer debtors regarding past due accounts and to report to consumer reporting agencies on the
status of those accounts. Many states impose additional requirements on debt collection and credit reporting
practices, and some of those requirements may be more stringent than the federal requirements.
Finally, we are subject to various federal, state and local statutes and ordinances regulating the discharge of
materials into the environment. For example, our health care operations generate medical waste, such as
that must be handled, stored,
pharmaceuticals, biological materials and disposable medical
transported,
laws and
treated and disposed of in compliance with federal, state and local environmental
regulations. Environmental regulations also may apply when we build new facilities or renovate existing
facilities. If we are found not to be in compliance with such laws and regulations, we may be liable for significant
investigation and clean-up costs or be subject to enforcement actions by governmental authorities or lawsuits by
instruments,
51
private plaintiffs. Moreover, any changes in the environmental regulatory framework (including legislative or
regulatory efforts designed to address climate change) could have a material, adverse effect on our business.
If we fail to comply with these or other applicable laws and regulations, which are subject to change, we
could be subject to liabilities, including civil penalties, money damages, lapses in reimbursement, the loss of our
licenses to operate one or more facilities, exclusion of one or more facilities from participation in the Medicare,
Medicaid and other federal and state health care programs, civil lawsuits and criminal penalties. In addition,
different interpretations or enforcement of, or amendments to, these and other laws and regulations in the future
could subject our current or past practices to allegations of impropriety or illegality or could require us to make
changes in our facilities, equipment, personnel, services, capital expenditure programs and operating expenses.
The costs of compliance with, and the other burdens imposed by, these and other laws or regulatory actions may
increase our operational costs, result in interruptions or delays in the availability of systems and/or result in a
patient volume decline. We may also face audits or investigations by one or more domestic or foreign
government agencies relating to our compliance with these regulations. An adverse outcome under any such
investigation or audit, a determination that we have violated these or other laws or a public announcement that
we are being investigated for possible violations could result in liability, result in adverse publicity, and
adversely affect our business, financial condition, results of operations or prospects.
State efforts to regulate the construction or expansion of health care facilities could impair our ability to
operate and expand our operations.
Some states, particularly in the eastern part of the country, require health care providers to obtain prior
approval, often known as a CON, for the purchase, construction or expansion of health care facilities, to make
certain capital expenditures or to make changes in services or bed capacity. In giving approval, these states
consider the need for additional or expanded health care facilities or services. We currently operate health care
facilities in a number of states with CON laws or that require other types of approvals for the establishment or
expansion of certain facility types or services. The failure to obtain any required CON or other required approval
could impair our ability to operate or expand operations. Any such failure could, in turn, adversely affect our
ability to attract patients and physicians to our facilities and grow our revenues, which would have an adverse
effect on our results of operations.
We may incur additional tax liabilities.
We are subject to tax in the United States as well as those states and foreign jurisdictions in which we do
business. Changes in tax laws, including increases in tax rates, or interpretations of tax laws by taxing authorities
or other standard setting bodies could increase our tax obligations and have a material, adverse impact on our
results of operations.
We are also subject to examination by federal, state and foreign taxing authorities. Management believes
HCA Healthcare, Inc., its predecessors, subsidiaries and affiliates properly reported taxable income and paid
taxes in accordance with applicable laws and agreements established with the Internal Revenue Service (“IRS”),
state and foreign taxing authorities and final resolution of any disputes will not have a material, adverse effect on
our results of operations or financial position. However, if payments due upon final resolution of any issues
exceed our recorded estimates, such resolutions could have a material, adverse effect on our results of operations
or financial position.
We have been and could become the subject of government investigations, claims and litigation.
Health care companies are subject to numerous investigations by various government agencies. Further,
under the FCA, private parties have the right to bring qui tam, or “whistleblower,” suits against companies that
submit false claims for payments to, or improperly retain overpayments from, the government. Some states have
adopted similar state whistleblower and false claims provisions. Certain of our individual facilities and/or
52
affiliates have received, and other facilities and/or affiliates may receive, government inquiries from, and may be
subject to investigation by, federal and state agencies. Depending on whether the underlying conduct in these or
future inquiries or investigations could be considered systemic, their resolution could have a material, adverse
effect on our financial position, results of operations and liquidity.
Government agencies and their agents, such as the MACs, fiscal intermediaries and carriers, as well as the
OIG, CMS and state Medicaid programs, conduct audits of our health care operations. CMS and state Medicaid
agencies contract with RACs and other contractors on a contingency fee basis to conduct post-payment reviews
to detect and correct improper payments in the Medicare program, including managed Medicare plans, and the
Medicaid programs. RAC denials are appealable; however, there are currently significant delays in the Medicare
appeals process, which negatively impacts our ability to appeal RAC payment denials. Private third-party payers
may conduct similar post-payment audits, and we also perform internal audits and monitoring. Depending on the
nature of the conduct found in such audits and whether the underlying conduct could be considered systemic, the
resolution of these audits could have a material, adverse effect on our financial position, results of operations and
liquidity.
Should we be found out of compliance with applicable laws, regulations or programs, depending on the
nature of the findings, our business, our financial position and our results of operations could be negatively
impacted.
We may be subject to liabilities from claims brought against our facilities, which are costly to defend and may
require us to pay significant damages if not covered by insurance.
We are subject to litigation relating to our business practices, including claims and legal actions by patients
and others in the ordinary course of business alleging malpractice, product liability or other legal theories. Many
of these actions seek large sums of money as damages and involve significant defense costs. We insure a portion
of our professional liability risks through our insurance subsidiary. Management believes our reserves for self-
insured retentions and insurance coverage are sufficient to cover insured claims arising out of the operation of
our facilities, although some claims may exceed the scope or amount of the coverage limits of our insurance
policies. Our insurance subsidiary has entered into certain reinsurance contracts; however, the subsidiary remains
liable to the extent that the reinsurers do not meet their obligations under the reinsurance contracts. If payments
for claims exceed actuarially determined estimates, are not covered by insurance, or reinsurers, if any, fail to
meet their obligations, our results of operations and financial position could be adversely affected.
Risks related to operations, strategy, demand and competition:
Our hospitals face competition for patients from other hospitals and health care providers.
The health care business is highly competitive, and competition among hospitals and other health care
providers for patients has intensified in recent years. Generally, other hospitals in the communities we serve
provide services similar to those offered by our hospitals. CMS publicizes on its Care Compare website
performance data related to quality measures and data on patient satisfaction surveys that hospitals submit in
connection with their Medicare reimbursement. The Care Compare website provides an overall rating that
synthesizes various quality measures into a single star rating for each hospital. Federal law provides for the future
expansion of the number of quality measures that must be reported. If any of our hospitals achieve poor results
(or results that are lower than our competitors) on quality measures or on patient satisfaction surveys, our
competitive position could be negatively affected. Further, hospitals are currently required by law to publish
online a list of their standard charges for all items and services, including discounted cash prices and payer-
specific and de-identified negotiated charges. The No Surprises Act imposes additional price transparency
requirements beginning January 1, 2022, including requiring providers to send health plans of insured patients
and uninsured patients a good faith estimate of the expected charges and diagnostic codes prior to the scheduled
date of the service or item. HHS is deferring enforcement of certain requirements of the No Surprises Act
53
applicable to providing estimates for insured individuals. It
is not entirely clear how price transparency
requirements will affect consumer behavior, our relationships with payers, or our ability to set and negotiate
prices, but our competitive position could be negatively affected if our standard charges are higher or are
perceived to be higher than the charges of our competitors.
The number of freestanding specialty hospitals, surgery centers, emergency departments, urgent care centers
and diagnostic and imaging centers in the geographic areas in which we operate has increased. Many individuals
are seeking a broader range of services at outpatient facilities as a result of the growing availability of stand-
alone outpatient health care facilities, the increase in payer reimbursement policies that restrict inpatient coverage
and the increase in the services that can be provided on an outpatient basis, including high margin services.
Consequently, most of our hospitals operate in a highly competitive environment, which may put pressure on our
pricing, ability to contract with third-party payers and strategy for volume growth. Some of the facilities that
compete with our hospitals are physician-owned or are owned by governmental agencies or not-for-profit
corporations supported by endowments, charitable contributions and/or tax revenues and can finance capital
expenditures and operations on a tax-exempt basis. Recent consolidations of not-for-profit hospital entities may
intensify this competitive pressure. There is also increasing consolidation in the third-party payer industry,
including vertical integration efforts among third-party payers and health care providers, and increasing efforts
by payers to influence or direct the patient’s choice of provider by the use of narrow networks or other strategies.
Health care industry participants are increasingly implementing physician alignment strategies, such as
employing physicians, acquiring physician practice groups and participating in ACOs or other clinical integration
models. Other industry participants, such as large employer groups and their affiliates, may intensify competitive
pressure and affect the industry in ways that are difficult to predict.
Our hospitals compete with specialty hospitals and with both our own and unaffiliated freestanding ASCs
and other outpatient providers for market share in certain high margin services and for quality physicians and
personnel. If ASCs and other outpatient providers are better able to compete in this environment than our
hospitals, our hospitals may experience a decline in patient volume, and we may experience a decrease in margin,
even if those patients use our providers. In states that do not require a CON or other type of approval for the
purchase, construction or expansion of health care facilities or services, competition in the form of new services,
facilities and capital spending is more prevalent. Some states that have historically imposed CON or similar prior
approval requirements have removed or are considering removing these requirements, which may reduce barriers
to entry and increase competition in our service areas. Changes in licensure or other regulations and recognition
of new provider types or payment models could also impact our competitive position. If our competitors are
better able to attract patients, make capital expenditures and maintain modern and technologically upgraded
facilities and equipment, recruit physicians, expand services or obtain favorable third-party payer contracts at
their facilities than our hospitals and other providers, we may experience an overall decline in patient volume.
See Item 1, “Business — Competition.”
A deterioration in the collectability of uninsured and patient due accounts could adversely affect our results of
operations.
responsibility amounts (exclusions, deductibles and copayments)
The primary collection risks for our accounts receivable relate to the uninsured patient accounts and patient
accounts for which the primary third-party payer has paid the amounts covered by the applicable agreement, but
patient
remain outstanding. Medicare
reimburses hospitals for 65% of eligible Medicare bad debts. To be eligible for reimbursement, the amounts
claimed must meet certain criteria, including that the debt is related to unpaid deductible or coinsurance amounts
and that the hospital first attempted to collect the fees from the Medicare beneficiary.
The estimates for implicit price concessions are based upon management’s assessment of historical write-
offs and expected net collections, business and economic conditions, trends in federal and state governmental and
private employer health care coverage, the rate of growth in uninsured patient admissions and other collection
indicators. At December 31, 2021, estimated implicit price concessions of $6.784 billion had been recorded to
54
adjust our revenues and accounts receivable to the estimated amounts we expect to collect. The estimated cost of
total uncompensated care was $3.350 billion for 2021, $3.483 billion for 2020 and $3.733 billion for 2019.
Any increase in the amount or deterioration in the collectability of uninsured accounts receivable will
adversely affect our cash flows and results of operations. Our facilities may experience growth in total
uncompensated care as a result of a number of factors, including conditions impacting the overall economy and
unemployment levels, both of which have been, and may in the future be, negatively impacted by the COVID-19
pandemic. Effective January 2019, Congress eliminated the financial penalty associated with the Affordable Care
Act’s individual mandate. Further, final rules issued in 2018 expand the availability of association health plans
and allow the sale of short-term, limited-duration health plans, neither of which are required to cover all of the
essential health benefits mandated by the Affordable Care Act. These changes may impact the number of
individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased. We
are unable to predict what, if any, and when such changes will be made in the future.
We provide uninsured discounts and charity care for individuals, including for those residing in states that
choose not to implement the Medicaid expansion or that modify the terms of the program, for undocumented
aliens who are not permitted to enroll in an Exchange or government health care programs and for certain others
who may not have insurance. Some patients may choose to enroll in lower cost Medicaid plans or other health
insurance plans with lower reimbursement levels. We may also be adversely affected by the growth in patient
responsibility accounts as a result of increases in the adoption of health plan structures that shift greater payment
responsibility for care to individuals through greater exclusions and copayment and deductible amounts.
If our volume of patients with private health insurance coverage declines or we are unable to retain and
negotiate favorable contracts with private third-party payers, including managed care plans, our revenues
may be reduced.
Broad economic factors resulting from the COVID-19 pandemic, including inflationary pressures, supply
chain disruptions, labor shortages, increased unemployment and underemployment rates and reduced consumer
spending and confidence, the continued shift to an outpatient setting and the aging population may impact our
revenue mix. Private third-party payers, including HMOs, PPOs and other managed care plans, typically
reimburse health care providers at a higher rate than Medicare, Medicaid or other government health care
programs. Reimbursement rates are set forth by contract when our facilities are in-network, and payers utilize
plan structures to encourage or require the use of in-network providers. Revenues derived from private third-
party payers (domestic only) accounted for 51.6%, 51.5% and 51.6% of our revenues for 2021, 2020 and 2019,
respectively. As a result, our ability to maintain or increase patient volumes covered by private third-party payers
and to maintain and obtain favorable contracts with private third-party payers significantly affects the revenues
and operating results of our facilities.
Private third-party payers, including managed care plans, continue to demand discounted fee structures, and
the ongoing trend toward consolidation among payers tends to increase their bargaining power over fee
structures. Payers may utilize plan structures such as narrow networks and tiered networks that limit beneficiary
provider choices, impose significantly higher cost sharing obligations when care is obtained from providers in a
disfavored tier or otherwise shift greater financial responsibility for care to individuals.
Other health care providers may impact our ability to enter into managed care contracts or negotiate
increases in our reimbursement and other favorable terms and conditions. For example, some of our competitors
may negotiate exclusivity provisions with managed care plans or otherwise restrict the ability of managed care
plans to contract with us. In addition to increasing negotiating leverage of private third-party payers, alignment
efforts between third-party payers and health care providers may result in other competitive advantages, such as
greater access to performance and pricing data. Our future success will depend, in part, on our ability to retain
and renew our third-party payer contracts and enter into new contracts on terms favorable to us, which may be
impacted by price transparency initiatives. Cost-reduction strategies by large employer groups and their affiliates,
55
such as directly contracting with a limited number of providers, may also limit our ability to negotiate favorable
terms in our contracts and otherwise intensify competitive pressure. It is not clear what impact, if any, future
health reform efforts or further changes to the Affordable Care Act will have on our ability to negotiate
reimbursement increases and participate in third-party payer networks on favorable terms. If we are unable to
retain and negotiate favorable contracts with third-party payers or experience reductions in payment increases or
amounts received from third-party payers, our revenues may be reduced.
In addition, our revenues may be reduced if we experience growth in self-pay volume. In recent years,
federal and state legislatures have considered or passed various proposals potentially impacting the size of the
uninsured population. The number and identity of states that choose to expand or otherwise modify Medicaid
programs and the terms of expansion and other program modifications continue to evolve. These variables,
among others, make it difficult to predict the number of uninsured individuals and what percentage of our total
revenue will be comprised of self-pay revenues.
Changes to physician utilization practices and treatment methodologies, third-party payer controls designed to
reduce inpatient services or surgical procedures and other factors outside our control that impact demand for
medical services may reduce our revenues.
Controls imposed by Medicare, managed Medicare, Medicaid, managed Medicaid and private third-party
payers designed to reduce admissions, intensity of services, surgical volumes and lengths of stay, in some
instances referred to as “utilization review,” have affected and are expected to increasingly affect our facilities.
Utilization review entails the review of the admission and course of treatment of a patient by third-party payers,
and may involve prior authorization requirements. The Medicare program also issues national or local coverage
determinations that restrict
the circumstances under which Medicare pays for certain services. Inpatient
utilization, average lengths of stay and occupancy rates continue to be negatively affected by third-party payers’
preadmission authorization requirements, coverage restrictions, utilization review and by pressure to maximize
outpatient and alternative health care delivery services for less acutely ill patients. Efforts to impose more
stringent cost controls are expected to continue. Additionally, trends in physician treatment protocols and health
plan design, such as health plans that shift increased costs and accountability for care to patients, could reduce
our surgical volumes and admissions in favor of lower intensity and lower cost treatment methodologies or result
in patients seeking care from other providers.
Volume, admission and case-mix trends may be impacted by other factors beyond our control, such as
changes in volume of certain high acuity services, variations in the prevalence and severity of outbreaks of
influenza and other illnesses, such as COVID-19, and medical conditions, seasonal and severe weather
conditions, changes in treatment regimens and medical technology and other advances. Further, our inpatient
volumes may decline if various inpatient hospital procedures become eligible for reimbursement by Medicare
when performed in outpatient settings. These factors may reduce the demand for services we offer and decrease
the reimbursement that we receive. Significant limits on the scope of services reimbursed, cost controls, changes
to physician utilization practices, treatment methodologies, reimbursement rates and fees and other factors
beyond our control could have a material, adverse effect on our business, financial position and results of
operations.
We may encounter difficulty acquiring hospitals and other health care businesses and challenges integrating
the operations of acquired hospitals and other health care businesses and become liable for unknown or
contingent liabilities as a result of acquisitions.
A component of our business strategy is acquiring hospitals and other health care businesses. We may
encounter difficulty acquiring new facilities or other businesses as a result of competition from other purchasers
that may be willing to pay purchase prices that are higher than we believe are reasonable. Antitrust enforcement
in the health care industry is currently a priority of the Federal Trade Commission and the DOJ, including with
respect to hospital and physician practice acquisitions. Some states require CONs in order to acquire a hospital or
56
regulators and community involvement. Attorneys general
other facility, or to expand facilities or services. In addition, the acquisition of health care facilities often involves
licensure approvals or reviews and complex change of ownership processes for Medicare and other payers.
Further, many states have laws that restrict the conversion or sale of not-for-profit hospitals to for-profit entities.
These laws may require prior approval from the state attorney general, advance notification of the attorney
general or other
in states without specific
requirements may exercise broad discretionary authority over transactions involving the sale of not-for-profits
under their general obligations to protect the use of charitable assets. These legislative and administrative efforts
often focus on the appropriate valuation of the assets divested and the use of the proceeds of the sale by the
non-profit seller and may include consideration of commitments for capital improvements and charity care by the
purchaser. Also, the increasingly challenging regulatory and enforcement environment may negatively impact
our ability to acquire health care businesses if they are found to have material unresolved compliance issues, such
as repayment obligations. Resolving compliance issues as well as completion of oversight, review or approval
processes could seriously delay or even prevent our ability to acquire hospitals or other businesses and increase
our acquisition costs.
We may be unable to timely and effectively integrate hospitals and other businesses that we acquire with
our ongoing operations, or we may experience delays implementing operating procedures and systems. Hospitals
and other health care businesses that we acquire may have unknown or contingent liabilities, including liabilities
for failure to comply with health care and other laws and regulations, medical and general professional liabilities,
workers’ compensation liabilities and tax liabilities. Although we typically exclude significant liabilities from
our acquisition transactions and seek indemnification from the sellers for these matters, we could experience
difficulty enforcing those obligations, experience liability in excess of any indemnification obtained or otherwise
incur material liabilities for the pre-acquisition conduct of acquired businesses. Such liabilities and related legal
or other costs could harm our business and results of operations.
Our facilities are heavily concentrated in Florida and Texas, which makes us sensitive to regulatory,
economic, public health, environmental and competitive conditions and changes in those states.
We operated 182 hospitals at December 31, 2021, and 91 of those hospitals are located in Florida and Texas.
Our Florida and Texas facilities’ combined revenues represented 49% of our consolidated revenues for the year
ended December 31, 2021. This geographic concentration makes us particularly sensitive to regulatory,
economic, public health, environmental and competitive conditions in those states. Any material change in the
current payment programs or regulatory, economic, public health, environmental or competitive conditions in
those states could have a disproportionate effect on our overall business results.
In addition, our hospitals in Florida, Texas and other coastal states are located in hurricane-prone areas. In
the past, hurricanes have had a disruptive effect on the operations of our hospitals in Florida, Texas and other
coastal states and the patient populations in those states. Global climate change could also increase the intensity
or frequency of hurricanes in those regions. Our business activities could be harmed by a particularly active
hurricane season or even a single storm, and the property insurance we obtain may not be adequate to cover
losses from future hurricanes or other natural disasters.
Our business and operations are subject to risks related to climate change.
Global climate change presents both immediate and long-term physical risks (such as extreme weather
conditions) and risks associated with the transition to a low-carbon economy (such as regulatory or technology
changes). These changes could result in, for example, temporary declines in the number of patients seeking our
services, closures of our hospitals and related facilities, and supply chain disruptions, as well as increased costs
of products, commodities and energy (including utilities), and disruptions in our information systems, which in
turn could negatively impact our business and results of operations. In addition, certain of our operations and
facilities are located in regions that may be disproportionately impacted by the physical risks of climate change
(including hurricanes and flooding), and we face the risk of losses incurred as a result of physical damage to our
57
hospitals and related facilities and business interruptions caused by such events. We maintain property insurance
coverage to address the impact of physical damage to our facilities and for business interruption losses. However,
such insurance coverage may be insufficient to cover all losses and we may experience a material, adverse effect
on our results of operations that is not recoverable through our insurance policies. Additionally, if we experience
a significant increase in climate-related events that result in material losses we may be unable to obtain similar
levels of property insurance coverage in the future. In addition, changes in consumer preferences and additional
legislation and regulatory requirements, including those associated with the transition to a low-carbon economy,
may increase costs associated with compliance, the operation of our facilities and supplies. Regulations limiting
greenhouse gas emissions and energy inputs may also increase in coming years, which may adversely impact us
through increased compliance costs for us and our suppliers and vendors.
The industry trend toward value-based purchasing may negatively impact our revenues.
There is a trend in the health care industry toward value-based purchasing of health care services. These value-
based purchasing programs include both public reporting of quality data and preventable adverse events tied to the
quality and efficiency of care provided by facilities. Governmental programs including Medicare currently require
hospitals to report certain quality data to receive full reimbursement updates. In addition, Medicare does not
reimburse for care related to certain preventable adverse events (also called “never events”), and federal law
prohibits the use of federal funds under the Medicaid program to reimburse providers for medical assistance
provided to treat HACs. The 25% of hospitals with the worst risk-adjusted HAC scores in the designated
performance period receive a 1% reduction in their inpatient PPS Medicare payments the following year.
Hospitals with excess readmission rates for conditions designated by CMS receive a reduction in their
inpatient PPS operating Medicare payments for all Medicare inpatient discharges, not just discharges relating to
the conditions subject to the excess readmission standard. The reduction in payments to hospitals with excess
readmissions can be up to 3% of a hospital’s base payments.
CMS has implemented a value-based purchasing program for inpatient hospital services that reduces
inpatient hospital payments for all discharges by 2% in each federal fiscal year. CMS pools the amount collected
from these reductions to fund payments to reward hospitals that meet or exceed certain quality performance
standards established by CMS. CMS scores each hospital based on achievement (relative to other hospitals) and
improvement (relative to the hospital’s own past performance). Hospitals that meet or exceed the quality
performance standards will receive greater reimbursement under the value-based purchasing program than they
would have otherwise. In response to the COVID-19 pandemic, CMS is applying a measure suppression policy
to certain hospital quality measurement and value-based purchasing programs. The policy is intended to ensure
that these programs neither reward nor penalize hospitals based on circumstances caused by the PHE that the
measures were not designed to accommodate.
CMS has developed several alternative payment models that are intended to reduce costs and improve
quality of care for Medicare beneficiaries and has signaled its intent to have states apply similar strategies in the
Medicaid context. Examples of alternative payment models include bundled payment models in which,
depending on whether overall CMS spending per episode exceeds or falls below a target specified by CMS and
whether quality standards are met, hospitals may receive supplemental Medicare payments or owe repayments to
CMS. Generally, participation in bundled payment programs is voluntary, but CMS currently requires hospitals
in selected markets to participate in a bundled payment initiative for specified orthopedic procedures and in a
model for end-stage renal disease treatment. In addition, CMS will require certain hospitals to participate in a
radiation oncology model beginning as early as January 1, 2023. CMS has indicated that it is developing more
voluntary and mandatory bundled payment models. Participation in mandatory or voluntary demonstration
projects, particularly demonstrations with the potential to affect payment, may negatively impact our results of
operations.
In October 2021, the CMS Innovation Center released an outline of its strategy for the next decade, noting
the need to accelerate the movement to value-based care and drive broader system transformation. By 2030, the
58
CMS Innovation Center aims to have all fee-for-service Medicare beneficiaries and the vast majority of Medicaid
beneficiaries in an accountable care relationship with providers who are responsible for quality and total medical
costs. The CMS Innovation Center signaled its intent to streamline its payment models and to increase provider
participation through implementation of more mandatory models.
There are also several state-driven value-based care initiatives. For example, some states have aligned
quality metrics across payers through legislation or regulation. Some private third-party payers are also
transitioning toward alternative payment models or implementing other value-based care strategies. For example,
many large private third-party payers currently require hospitals to report quality data, and several private third-
party payers do not reimburse hospitals for certain preventable adverse events. Further, we have implemented a
policy pursuant to which we do not bill patients or third-party payers for fees or expenses incurred due to certain
preventable adverse events.
We expect value-based purchasing programs, including programs that condition reimbursement on patient
outcome measures, to become more common and to involve a higher percentage of reimbursement amounts. It is
unclear whether these and other alternative payment models will successfully coordinate care and reduce costs or
whether they will decrease aggregate reimbursement. We are unable at this time to predict our future payments or
whether we will be subject to payment reductions under these programs or how this trend will affect our results
of operations. If we are unable to meet or exceed the quality performance standards under any applicable value-
based purchasing program, perform at a level below the outcomes demonstrated by our competitors, or otherwise
fail to effectively provide or coordinate the efficient delivery of quality health care services, our reputation in the
industry may be negatively impacted, we may receive reduced reimbursement amounts and we may owe
repayments to payers, causing our revenues to decline.
Risks related to macroeconomic conditions:
Our overall business results may suffer during periods of general economic weakness.
The COVID-19 pandemic has adversely impacted, and may in the future adversely impact, economic
conditions in the United States. Budget deficits at federal, state and local government entities have had a negative
impact on spending, and may continue to negatively impact spending for health and human service programs,
including Medicare, Medicaid and similar programs, which represent significant third-party payer sources for our
hospitals. We anticipate that the federal deficit, the growing magnitude of Medicare and Medicaid expenditures
and the aging of the U.S. population will continue to place pressure on government health care programs. Other
risks we face during periods of economic weakness and high unemployment include potential declines in the
population covered under managed care agreements, increased patient decisions to postpone or cancel elective
and nonemergency health care procedures (including delaying surgical procedures), which may lead to poorer
health and higher acuity interventions, potential increases in the uninsured and underinsured populations,
increased adoption of health plan structures that shift financial responsibility to patients and further difficulties in
collecting patient receivables for copayment and deductible receivables.
We are exposed to market risk related to changes in the market values of securities and interest rates.
We are exposed to market risk related to changes in market values of securities. The COVID-19 pandemic
has increased volatility of the capital and credit markets and has adversely impacted economic conditions. The
investment securities held by our insurance subsidiaries were $541 million at December 31, 2021. These
investments are carried at fair value, with changes in unrealized gains and losses being recorded as adjustments
to other comprehensive income. At December 31, 2021, we had a net unrealized gain of $16 million on the
insurance subsidiaries’ investment securities.
We are exposed to market risk related to market
illiquidity. Investment securities of our insurance
subsidiaries could be impaired by the inability to access the capital markets. Should the insurance subsidiaries
59
require significant amounts of cash in excess of normal cash requirements to pay claims and other expenses on
short notice, we may have difficulty selling these investments in a timely manner or be forced to sell them at a
price less than what we might otherwise have been able to in a normal market environment. We may be required
to recognize credit-related impairments on long-term investments in future periods should issuers default on
interest payments or should the fair market valuations of the securities deteriorate due to ratings downgrades or
other issue specific factors.
We are also exposed to market risk related to changes in interest rates that impact the amount of the interest
expense we incur with respect to our floating rate obligations as well as the value of certain investments. We
periodically enter into interest rate swap agreements to manage our exposure to these fluctuations. Our interest
rate swap agreements involve the exchange of fixed and variable rate interest payments between two parties,
based on common notional principal amounts and maturity dates.
Risks related to ownership of our common stock:
There can be no assurance that we will continue to pay dividends.
In January 2018, the Board of Directors initiated a cash dividend program under which the Company
commenced a regular quarterly cash dividend. However, in response to the COVID-19 pandemic, the Company
took the precautionary step to enhance its financial flexibility by suspending its quarterly dividend program in the
second quarter of 2020. In February 2021, the Board of Directors approved the resumption of the Company’s
quarterly cash dividend program following evaluation of the Company’s financial position. During 2021, the
Board of Directors declared four quarterly dividends of $0.48 per share, or $1.92 per share in the aggregate, on
our common stock. On January 26, 2022, our Board of Directors declared a quarterly dividend of $0.56 per share
on our common stock payable on March 31, 2022 to stockholders of record at the close of business on March 17,
2022.
The declaration, amount and timing of such dividends are subject to capital availability and determinations
by our Board of Directors that cash dividends are in the best interest of our stockholders and are in compliance
with all respective laws and our agreements applicable to the declaration and payment of cash dividends. Our
ability to pay dividends will depend upon, among other factors, our cash flows from operations, our available
capital and potential future capital requirements for strategic transactions, including acquisitions, debt service
requirements, share repurchases and investing in our existing markets as well as our results of operations,
financial condition and other factors beyond our control that our Board of Directors may deem relevant. A
reduction in or suspension or elimination of our dividend payments could have a negative effect on our stock
price.
Certain of our investors may continue to have influence over us.
On November 17, 2006, HCA Inc. was acquired by a private investor group, including affiliates of HCA
founder, Dr. Thomas F. Frist, Jr. and certain other investors. Through their investment in Hercules Holding II and
other holdings, certain of the Frist-affiliated investors continue to hold a significant interest in our outstanding
common stock (approximately 23% as of January 31, 2022). In addition, pursuant to a shareholders agreement
we entered into with Hercules Holding II and the Frist-affiliated investors, certain representatives of these
investors have the continued right to nominate certain of the members of our Board of Directors. As a result,
certain of these investors potentially have the ability to influence our decisions to enter into corporate
transactions (and the terms thereof) and prevent changes in the composition of our Board of Directors or any
transaction that requires stockholder approval.
Item 1B. Unresolved Staff Comments
None.
60
Item 2.
Properties
The following table lists, by state,
the number of hospitals (general, acute care, psychiatric and
rehabilitation) directly or indirectly owned and operated by us as of December 31, 2021:
State
Hospitals
Beds
Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Missouri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nevada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Hampshire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International
England . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
5
7
46
5
2
1
4
2
3
5
3
3
7
3
14
45
8
11
250
1,856
2,471
12,740
1,477
454
278
1,400
384
923
1,058
1,452
418
1,181
983
2,742
13,517
1,031
3,300
7
182
888
48,803
In addition to the hospitals listed in the above table, we directly or indirectly operate 125 freestanding
surgery centers and 21 freestanding endoscopy centers. We also operate medical office buildings in conjunction
with some of our hospitals. These office buildings are primarily occupied by physicians who practice at our
hospitals. Fourteen of our general, acute care hospitals and four of our other properties have been mortgaged to
support our obligations under our senior secured cash flow credit facility and first lien secured notes.
We maintain our headquarters in approximately 2,045,000 square feet of space in the Nashville, Tennessee
area. In addition to the headquarters in Nashville, we maintain regional service centers related to our shared
services initiatives. These service centers are located in markets in which we operate hospitals.
We believe our headquarters, hospitals and other facilities are suitable for their respective uses and are, in
general, adequate for our present needs. Our properties are subject to various federal, state and local statutes and
ordinances regulating their operation. Management does not believe that compliance with such statutes and
ordinances will materially affect our financial position or results of operations.
Item 3.
Legal Proceedings
The information set forth in Note 11 – Contingencies in the notes to the consolidated financial statements is
incorporated herein by reference.
Item 4. Mine Safety Disclosures
None.
61
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
During January 2020 and 2019, our Board of Directors authorized share repurchase programs for up to
$4 billion ($2 billion for each authorization) of our outstanding common stock. During February 2021, our Board
of Directors authorized an additional $6 billion for share repurchases of the Company’s outstanding common
stock. The January 2020 and 2019 authorizations were completed during 2021, and at December 31, 2021, there
was $586 million of share repurchase authorization that remained available under the February 2021
authorization. During January 2022, our Board of Directors authorized an additional $8 billion for share
repurchases of the Company’s outstanding common stock.
All repurchases made during the fourth quarter of 2021, as detailed below, were made pursuant to the
February 2021 share repurchase authorization and were made in the open market.
The following table provides certain information with respect to our repurchases of common stock from
October 1, 2021 through December 31, 2021 (dollars in millions, except per share amounts).
Period
Total Number
of Shares
Purchased
Average Price
Paid per Share
October 1, 2021 through October 31, 2021 . . . . . . . .
November 1, 2021 through November 30, 2021 . . . .
December 1, 2021 through December 31, 2021 . . . .
3,124,638
2,677,717
2,667,173
Total for Fourth Quarter 2021 . . . . . . . . . . . . . . . . . .
8,469,528
$245.17
$245.44
$243.16
$244.62
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
3,124,638
2,677,717
2,667,173
8,469,528
Approximate
Dollar Value of
Shares That
May Yet Be
Purchased
Under Publicly
Announced
Plans or
Programs
$1,892
$1,235
$ 586
$ 586
Our common stock is traded on the New York Stock Exchange (“NYSE”) (symbol “HCA”). During 2021,
our Board of Directors declared four quarterly dividends of $0.48 per share, or $1.92 per share in the aggregate,
on our common stock. On January 26, 2022, our Board of Directors declared a quarterly dividend of $0.56 per
share on our common stock payable on March 31, 2022 to stockholders of record at the close of business on
March 17, 2022. Future declarations of quarterly dividends and the establishment of future record and payment
dates are subject to the final determination of our Board of Directors. Our ability to declare future dividends may
also from time to time be limited by the terms of our debt agreements. At the close of business on February 7,
2022, there were approximately 400 holders of record of our common stock.
62
STOCK PERFORMANCE GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among HCA Healthcare, Inc., the S&P 500 Index and the S&P Health Care Index
$400
$350
$300
$250
$200
$150
$100
$50
$0
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
12/31/2021
HCA Healthcare, Inc.
S&P 500
S&P Health Care
HCA Healthcare, Inc.
. . . . . . . . . . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P Health Care . . . . . . . . . . . . . . . . . . . .
$100.00
100.00
100.00
$118.67
121.83
122.08
$170.15
116.49
129.97
$204.61
153.17
157.04
$228.42
181.35
178.15
$359.96
233.41
224.70
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
12/31/2021
The graph shows the cumulative total
return to our stockholders for the five-year period ended
December 31, 2021, in comparison to the cumulative returns of the S&P 500 Index and the S&P Health Care
Index. The graph assumes $100 invested on December 31, 2016 in our common stock and in each index with the
subsequent reinvestment of dividends. The stock performance shown on the graph represents historical stock
performance and is not necessarily indicative of future stock price performance.
Item 6.
[Reserved]
63
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The accompanying consolidated financial statements present certain information with respect
to the
financial position, results of operations and cash flows of HCA Healthcare, Inc. which should be read in
conjunction with the following discussion and analysis. The terms “HCA,” “Company,” “we,” “our,” or “us,” as
used herein, refer to HCA Healthcare, Inc. and its affiliates. The term “affiliates” means direct and indirect
subsidiaries of HCA Healthcare, Inc. and partnerships and joint ventures in which such subsidiaries are partners.
Forward-Looking Statements
This annual report on Form 10-K includes certain disclosures that contain “forward-looking statements,”
within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking
statements include statements regarding expected share-based compensation expense, expected capital
expenditures, expected dividends, expected share repurchases, expected net claim payments and all other
statements that do not relate solely to historical or current facts, and can be identified by the use of words like
“may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “initiative” or “continue.” These
forward-looking statements are based on our current plans and expectations and are subject to a number of
known and unknown uncertainties and risks, many of which are beyond our control, which could significantly
affect current plans and expectations and our future financial position and results of operations. These factors
include, but are not limited to, (1) developments related to COVID-19, including, without limitation, the length
and severity of the pandemic and the spread of virus strains with new epidemiological characteristics; the volume
of canceled or rescheduled procedures and the volume of COVID-19 patients cared for across our health systems;
measures we are taking to respond to the COVID-19 pandemic; the impact and terms of government and
administrative regulation and stimulus and relief measures (including the Families First Coronavirus Response
Act, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the Paycheck Protection Program and
Health Care Enhancement Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of
2021 (“ARPA”) and other enacted and potential future legislation) and whether various stimulus and relief
programs continue or new similar programs are enacted in the future; changes in revenues due to declining
patient volumes, changes in payer mix and deteriorating macroeconomic conditions (including increases in
uninsured and underinsured patients); potential increased expenses related to labor, supply chain or other
expenditures; workforce disruptions, including the impact of any current or future vaccine mandates; supply
shortages and disruptions; and the timing, availability and adoption of effective medical treatments and vaccines
(including boosters), (2) the impact of our substantial indebtedness and the ability to refinance such indebtedness
on acceptable terms, as well as risks associated with disruptions in the financial markets and the business of
financial
institutions as the result of the COVID-19 pandemic, which could impact us from a financial
perspective, (3) the impact of current and future federal and state health reform initiatives and possible changes
to other federal, state or local laws and regulations affecting the health care industry, including, but not limited
to, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation
Act of 2010 (collectively, the “Affordable Care Act”), and the effects of additional changes to the Affordable
Care Act, its implementation, or interpretation (including through executive orders and court challenges), and
proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or
establish a single-payer system (such reforms often referred to as “Medicare for All”), and also including any
such laws or governmental regulations which are adopted in response to the COVID-19 pandemic, (4) the effects
related to the implementation of sequestration spending reductions required under the Budget Control Act of
2011, related legislation extending these reductions, and those required under the Pay-As-You-Go Act of 2010
(“PAYGO Act”) as a result of the federal budget deficit impact of the ARPA, and the potential for future deficit
reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or
64
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Forward-Looking Statements (continued)
create additional spending reductions, (5) increases in the amount and risk of collectability of uninsured accounts
and deductibles and copayment amounts for insured accounts, (6) the ability to achieve operating and financial
targets, and attain expected levels of patient volumes and control the costs of providing services, (7) possible
changes in Medicare, Medicaid and other state programs, including Medicaid supplemental payment programs or
Medicaid waiver programs, that may impact reimbursements to health care providers and insurers and the size of
the uninsured or underinsured population, (8) increases in wages and the ability to attract and retain qualified
management and personnel, including affiliated physicians, nurses and medical and technical support personnel,
(9) the highly competitive nature of the health care business, (10) changes in service mix, revenue mix and
surgical volumes, including potential declines in the population covered under third-party payer agreements, the
ability to enter into and renew third-party payer provider agreements on acceptable terms and the impact of
consumer-driven health plans and physician utilization trends and practices, (11) the efforts of health insurers,
health care providers, large employer groups and others to contain health care costs, (12) the outcome of our
continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures,
(13) the availability and terms of capital to fund the expansion of our business and improvements to our existing
facilities, (14) changes in accounting practices, (15) changes in general economic conditions nationally and
regionally in our markets, including inflation and economic and business conditions (and the impact thereof on
the economy, financial markets and banking industry) resulting from the COVID-19 pandemic, (16) the
emergence of and effects related to other pandemics, epidemics and infectious diseases, (17) future divestitures
which may result in charges and possible impairments of long-lived assets, (18) changes in business strategy or
development plans, (19) delays in receiving payments for services provided, (20) the outcome of pending and
any future tax audits, disputes and litigation associated with our tax positions, (21) potential adverse impact of
known and unknown government investigations, litigation and other claims that may be made against us, (22) the
impact of potential cybersecurity incidents or security breaches, (23) our ongoing ability to demonstrate
meaningful use of certified electronic health record (“EHR”) technology and the impact of interoperability
requirements, (24) the impact of natural disasters, such as hurricanes and floods, or similar events beyond our
control, (25) changes in U.S. federal, state, or foreign tax laws including interpretive guidance that may be issued
by taxing authorities or other standard setting bodies, and (26) other risk factors described in this annual report
on Form 10-K. As a consequence, current plans, anticipated actions and future financial position and results of
operations may differ from those expressed in any forward-looking statements made by or on behalf of HCA.
You are cautioned not to unduly rely on such forward-looking statements when evaluating the information
presented in this report, which forward-looking statements reflect management’s views only as of the date of this
report. We undertake no obligation to revise or update any forward-looking statements, whether as a result of
new information, future events or otherwise.
COVID-19 Pandemic
On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Patient
volumes and the related revenues for most of our services were significantly impacted during the latter portion of
the first quarter and the first half of the second quarter of 2020 and have continued to be impacted as various
policies were implemented by federal, state and local governments in response to the COVID-19 pandemic.
During the second quarter of 2021, our patient volumes improved as the effects of the pandemic moderated and
certain pandemic-related restrictions and policies were eased. For the remainder of 2021, our patient volumes
exhibited consistent growth over the prior year, with the exception of inpatient surgeries, and included a
resurgence of COVID-19 admissions and the re-imposition of pandemic-related restrictions in certain markets.
We believe the extent of the COVID-19 pandemic’s impact on our operating results and financial condition has
65
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
COVID-19 Pandemic (continued)
been and will continue to be driven by many factors, most of which are beyond our control and ability to
forecast. Because of these uncertainties, we cannot estimate how long or to what extent the pandemic will impact
our operations.
2021 Operations Summary
Net income attributable to HCA Healthcare, Inc. totaled $6.956 billion, or $21.16 per diluted share, for
2021, compared to $3.754 billion, or $10.93 per diluted share, for 2020. The 2021 results include gains on sales
of facilities of $1.620 billion, or $3.69 per diluted share, and losses on retirement of debt of $12 million, or $0.03
per diluted share. The 2020 results include losses on sales of facilities of $7 million, or $0.02 per diluted share,
and losses on retirement of debt of $295 million, or $0.66 per diluted share. The 2020 results also include
$60 million, or $0.13 per diluted share, of employee retention payroll tax credits, as provided for by the CARES
Act. Revenues for 2021 and 2020, respectively, include $33 million, or $0.07 per diluted share, and $55 million,
or $0.12 per diluted share, related to the settlement of Medicare outlier calculations for prior periods. Revenues
for 2020 also include $69 million, or $0.15 per diluted share, related to the resolution of transaction price
differences regarding certain services performed in prior periods. During 2021 and 2020, we recorded reductions
to the provision for professional liability risks of $87 million, or $0.20 per diluted share, and $112 million, or
$0.25 per diluted share, respectively. Our provisions for income taxes for 2021 and 2020 include tax benefits of
$119 million, or $0.36 per diluted share, and $92 million, or $0.27 per diluted share, respectively, related to
employee equity award settlements. All “per diluted share” disclosures are based upon amounts net of the
applicable income taxes. Shares used for diluted earnings per share were 328.752 million shares and
343.605 million shares for the years ended December 31, 2021 and 2020, respectively. During 2021, we
repurchased 37.812 million shares of our common stock.
Revenues increased to $58.752 billion for 2021 from $51.533 billion for 2020. Revenues increased 14.0%
and 14.4%, respectively, on a consolidated basis and on a same facility basis for 2021, compared to 2020. The
consolidated revenues increase can be primarily attributed to the combined impact of a 6.8% increase in revenue
per equivalent admission and a 6.8% increase in equivalent admissions. The same facility revenues increase
resulted primarily from the combined impact of a 6.3% increase in revenue per equivalent admission and a 7.6%
increase in equivalent admissions.
During 2021, consolidated admissions increased 4.0% and same facility admissions increased 4.8%,
compared to 2020. Inpatient surgical volumes declined 0.1% on a consolidated basis and increased 0.4% on a
same facility basis during 2021, compared to 2020. Outpatient surgical volumes increased 14.2% on a
consolidated basis and increased 14.1% on a same facility basis during 2021, compared to 2020. Emergency
room visits increased 13.8% on a consolidated basis and increased 15.1% on a same facility basis during 2021,
compared to 2020.
The estimated cost of total uncompensated care declined $133 million for 2021, compared to 2020.
Consolidated and same facility uninsured admissions declined 4.4% and 3.5%, respectively, and consolidated and
same facility uninsured emergency room visits declined 7.8% and 6.3%, respectively, for 2021, compared to
2020.
Interest expense totaled $1.566 billion for 2021, compared to $1.584 billion for 2020. The $18 million
decline in interest expense for 2021 was due to a decline in the average effective interest rate.
66
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
2021 Operations Summary (continued)
Cash flows from operating activities declined $273 million, from $9.232 billion for 2020 to $8.959 billion
for 2021. The decline in cash flows from operating activities was related to a negative change in working capital
items of $1.781 billion, primarily from an increase in accounts receivable, offset by the increase in net income,
excluding the non-cash impact of losses and gains on sales of facilities, losses on retirement of debt and
depreciation and amortization.
Business Strategy
We are committed to providing the communities we serve with high quality, cost-effective health care while
growing our business and creating long-term value for our stockholders. We strive to be the provider system of
choice in the communities we serve and to support our operations with unique enterprise capabilities and
best-in-class economies of scale. To achieve these objectives, we align our efforts around the following growth
agenda:
Grow Our Presence in Existing Markets. We believe we are well positioned in a number of large and
growing markets that will allow us the opportunity to generate long-term, attractive growth through the
expansion of our presence in these markets. We plan to continue recruiting and strategically collaborating with
the physician community and developing comprehensive service lines such as cardiology, neurology, oncology,
orthopedics and women’s services. Additional components of our growth strategy include providing access and
convenience through developing various outpatient facilities, including, but not limited to surgery centers, urgent
care clinics, freestanding emergency care facilities, imaging centers and home health and hospice services, as
well as seeking to improve coordination of care and patient retention across our markets.
Achieve Industry-Leading Performance in Clinical, Operational and Satisfaction Measures. Achieving high
levels of patient safety, patient satisfaction and clinical quality are central goals of our business. To achieve these
goals, we have implemented a number of initiatives including infection reduction initiatives, hospitalist
programs, advanced health information technology and evidence-based medicine programs. We routinely analyze
operational practices from our best-performing hospitals to identify ways to implement organization-wide
performance improvements and reduce clinical variation. We believe these initiatives will continue to improve
patient care, help us achieve cost efficiencies and favorably position us in an environment where our constituents
are increasingly focused on quality, efficacy and efficiency.
Recruit and Employ Physicians to Meet the Need for High Quality Health Services. We depend on the
quality and dedication of the health care providers and other team members who serve at our facilities. We
believe a critical component of our growth strategy is our ability to successfully recruit and strategically
collaborate with physicians and other professionals to provide high quality care. We attract and retain physicians
by providing high quality, convenient facilities with advanced technology, by expanding our specialty services
and by building our outpatient operations. We believe our continued investment in the employment, recruitment
and retention of physicians will improve the quality of care at our facilities.
Continue to Leverage Our Scale and Market Positions to Grow the Company. We believe there is
significant opportunity to continue to grow our company by fully leveraging the scale and scope of our
organization. We continue to invest in initiatives such as care navigators, clinical data exchange and centralized
patient transfer operations, which will enable us to improve coordination of care and patient retention across our
markets. We believe our centrally managed business processes and ability to leverage cost-saving practices
67
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Business Strategy (continued)
across our extensive network will enable us to continue to manage costs effectively. We continue to invest in our
Parallon subsidiary group to leverage key components of our support infrastructure, including revenue cycle
management, health care group purchasing, supply chain management and staffing functions.
Pursue a Disciplined Development Strategy. We continue to believe there are significant growth
opportunities in our markets. We will continue to provide financial and operational resources to analyze and
develop our in-market opportunities. To complement our in-market growth agenda, we intend to focus on
selectively developing and acquiring new hospitals, outpatient facilities and other health care service providers.
We believe the challenges faced by the hospital industry may continue to spur consolidation, and we believe our
size, scale, national presence and access to capital will position us well to participate in any such consolidation.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and
the reported amounts of revenues and expenses. Our estimates are based on historical experience and various
other assumptions we believe are reasonable under the circumstances. We evaluate our estimates on an ongoing
basis and make changes to the estimates and related disclosures as experience develops or new information
becomes known. Actual results may differ from these estimates.
We believe the following critical accounting policies affect our more significant judgments and estimates
used in the preparation of our consolidated financial statements.
Revenues
Revenues are recorded during the period the health care services are provided, based upon the estimated
amounts due from payers. Estimates of contractual allowances under managed care health plans are based upon
the payment terms specified in the related contractual agreements. Laws and regulations governing the Medicare
and Medicaid programs are complex and subject to interpretation. The estimated reimbursement amounts are
made on a payer-specific basis and are recorded based on the best information available regarding management’s
interpretation of the applicable laws, regulations and contract terms. Management continually reviews the
contractual estimation process to consider and incorporate updates to laws and regulations and the frequent
changes in managed care contractual terms resulting from contract renegotiations and renewals. We have
invested significant resources to refine and improve our billing systems and the information system data used to
make contractual allowance estimates. We have developed standardized calculation processes and related
employee training programs to improve the utility of our patient accounting systems.
Patients treated at hospitals for non-elective care, who have income at or below 400% of the federal poverty
level, are eligible for charity care, and we limit the patient responsibility amounts for these patients to a
percentage of their annual household income, computed on a sliding scale based upon their annual income and
the applicable percentage of the federal poverty level. Patients treated at hospitals for non-elective care, who
have income above 400% of the federal poverty level, are eligible for certain other discounts which limit the
patient responsibility amounts for these patients to a percentage of their annual household income, computed on a
sliding scale based upon their annual income and the applicable percentage of the federal poverty level. We apply
additional discounts to limit patient responsibility for certain emergency services. The federal poverty level is
68
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Critical Accounting Policies and Estimates (continued)
Revenues (continued)
established by the federal government and is based on income and family size. Because we do not pursue
collection of amounts determined to qualify as charity care, they are not reported in revenues. We provide
discounts to uninsured patients who do not qualify for Medicaid or charity care. We may attempt to provide
assistance to uninsured patients to help determine whether they may qualify for Medicaid, other federal or state
assistance, or charity care. If an uninsured patient does not qualify for these programs, the uninsured discount is
applied.
Implicit price concessions relate primarily to amounts due directly from patients. Estimated implicit price
concessions are recorded for all uninsured accounts, regardless of the age of those accounts. Accounts are written
off when all reasonable collection efforts have been performed. The estimates for implicit price concessions are
based upon management’s assessment of historical writeoffs and expected net collections, business and economic
conditions, trends in federal, state and private employer health care coverage and other collection indicators.
Management relies on the results of detailed reviews of historical writeoffs and collections at facilities that
represent a majority of our revenues and accounts receivable (the “hindsight analysis”) as a primary source of
information in estimating the collectability of our accounts receivable. We perform the hindsight analysis
quarterly, utilizing rolling twelve-months accounts receivable collection and writeoff data. We believe our
quarterly updates to the estimated implicit price concession amounts at each of our hospital facilities provide
reasonable estimates of our revenues and valuations of our accounts receivable. These routine, quarterly changes
in estimates have not resulted in material adjustments to the valuations of our accounts receivable or
period-to-period comparisons of our revenues.
To quantify the total impact of and trends related to uninsured patient accounts, we believe it is beneficial to
view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price
concessions. A summary of the estimated cost of total uncompensated care for the years ended December 31,
follows (dollars in millions):
Patient care costs (salaries and benefits, supplies, other operating expenses and
depreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$49,074
$44,271
$44,118
Cost-to-charges ratio (patient care costs as percentage of gross patient
charges)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.3% 12.0%
12.0%
Total uncompensated care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Multiply by the cost-to-charges ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$29,642
$29,029
$31,105
11.3% 12.0%
12.0%
Estimated cost of total uncompensated care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,350
$ 3,483
$ 3,733
2021
2020
2019
Management expects a continuation of the challenges related to the collection of the patient due accounts.
Adverse changes in the percentage of our patients having adequate health care coverage, increases in patient
responsibility amounts under certain health care coverages, general economic conditions, patient accounting
service center operations, payer mix, or trends in federal, state, and private employer health care coverage could
affect the collection of accounts receivable, cash flows and results of operations.
69
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Critical Accounting Policies and Estimates (continued)
Professional Liability Claims
We, along with virtually all health care providers, operate in an environment with professional liability
risks. Our facilities are insured by our insurance subsidiary for losses up to $75 million per occurrence, subject,
in most cases, to a $15 million per occurrence self-insured retention. The insurance subsidiary has obtained
reinsurance for professional liability risks generally above a retention level of either $25 million or $35 million
per occurrence, depending on the jurisdiction for the related claim. We purchase excess insurance on an
occurrence reported basis for losses in excess of amounts insured by our insurance subsidiary. Provisions for
losses related to professional liability risks were $453 million, $435 million and $497 million for the years ended
December 31, 2021, 2020 and 2019, respectively. During 2021, 2020 and 2019, we recorded reductions to the
provision for professional liability risks of $87 million, $112 million and $50 million, respectively, due to the
receipt of updated actuarial information.
Reserves for professional liability risks represent the estimated ultimate cost of all reported and unreported
losses incurred through the respective consolidated balance sheet dates. The estimated ultimate cost includes
estimates of direct expenses and fees paid to outside counsel and experts, but does not include the general
overhead costs of our insurance subsidiary or corporate office. Individual case reserves are established based
upon the particular circumstances of each reported claim and represent our estimates of the future costs that will
be paid on reported claims. Case reserves are reduced as claim payments are made and are adjusted upward or
downward as our estimates regarding the amounts of future losses are revised. Once the case reserves for known
claims are determined, information is stratified by loss layers and retentions, accident years, reported years, and
geographic location of our hospitals. Several actuarial methods are employed to utilize this data to produce
estimates of ultimate losses and reserves for incurred but not reported claims, including: paid and incurred
extrapolation methods utilizing paid and incurred loss development to estimate ultimate losses; frequency and
severity methods utilizing paid and incurred claims development to estimate ultimate average frequency (number
of claims) and ultimate average severity (cost per claim); and Bornhuetter-Ferguson methods which add expected
development to actual paid or incurred experience to estimate ultimate losses. These methods use our company-
specific historical claims data and other information. Company-specific claim reporting and payment data
collected over an approximate 20-year period is used in our reserve estimation process. This company-specific
data includes information regarding our business, including historical paid losses and loss adjustment expenses,
historical and current case loss reserves, actual and projected hospital statistical data, professional liability
retentions for each policy year, geographic information and other data.
Reserves and provisions for professional liability risks are based upon actuarially determined estimates. The
estimated reserve ranges, net of amounts receivable under reinsurance contracts, were $1.752 billion to
$2.098 billion at December 31, 2021 and $1.710 billion to $2.050 billion at December 31, 2020. Our estimated
reserves for professional liability claims may change significantly if future claims differ from expected trends.
We perform sensitivity analyses which model the volatility of key actuarial assumptions and monitor our
reserves for adequacy relative to all our assumptions in the aggregate. Based on our analysis, we believe the
estimated professional liability reserve ranges represent the reasonably likely outcomes for ultimate losses. We
consider the number and severity of claims to be the most significant assumptions in estimating reserves for
professional liabilities. A 2.5% change in the expected frequency trend could be reasonably likely and would
increase the reserve estimate by $22 million or reduce the reserve estimate by $21 million. A 2.5% change in the
expected claim severity trend could be reasonably likely and would increase the reserve estimate by $107 million
or reduce the reserve estimate by $98 million. We believe adequate reserves have been recorded for our
professional liability claims; however, due to the complexity of the claims, the extended period of time to resolve
70
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Critical Accounting Policies and Estimates (continued)
Professional Liability Claims (continued)
the claims and the wide range of potential outcomes, our ultimate liability for professional liability claims could
change by more than the estimated sensitivity amounts and could change materially from our current estimates.
The reserves for professional liability risks cover approximately 2,100 and 2,300 individual claims at
December 31, 2021 and 2020, respectively, and estimates for unreported potential claims. The time period
required to resolve these claims can vary depending upon the jurisdiction and whether the claim is settled or
litigated. The average time period between the occurrence and final resolution for our professional liability
claims is approximately four years, although the facts and circumstances of each individual claim can result in an
occurrence-to-resolution timeframe that varies from this average. The estimation of the timing of payments
beyond a year can vary significantly.
Reserves for professional liability risks were $2.022 billion and $1.963 billion at December 31, 2021 and
2020, respectively. The current portion of these reserves, $508 million and $477 million at December 31, 2021
and 2020, respectively, is included in “other accrued expenses.” Obligations covered by reinsurance and excess
insurance contracts are included in the reserves for professional liability risks, as we remain liable to the extent
reinsurers and excess insurance carriers do not meet their obligations. Reserves for professional liability risks
(net of $55 million and $39 million receivable under reinsurance and excess insurance contracts at December 31,
2021 and 2020, respectively) were $1.967 billion and $1.924 billion at December 31, 2021 and 2020,
respectively. The estimated total net reserves for professional liability risks at December 31, 2021 and 2020 are
comprised of $874 million and $833 million, respectively, of case reserves for known claims and $1.093 billion
and $1.091 billion, respectively, of reserves for incurred but not reported claims.
Changes in our professional
liability reserves, net of reinsurance recoverable, for the years ended
December 31, are summarized in the following table (dollars in millions):
2021
2020
2019
Net reserves for professional liability claims, January 1 . . . . .
Provision for current year claims . . . . . . . . . . . . . . . . . . .
Favorable development related to prior years’ claims . . .
$1,924
530
(77)
$1,781
519
(84)
$1,692
499
(2)
Total provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for current year claims . . . . . . . . . . . . . . . . . . .
Payments for prior years’ claims . . . . . . . . . . . . . . . . . . .
Total claim payments . . . . . . . . . . . . . . . . . . . . . . . .
Effect of new retroactive reinsurance contracts . . . . . . . .
453
5
379
384
(26)
435
5
287
292
—
497
8
400
408
—
Net reserves for professional liability claims,
December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,967
$1,924
$1,781
Income Taxes
We calculate our provision for income taxes using the asset and liability method, under which deferred tax
assets and liabilities are recognized by identifying the temporary differences that arise from the recognition of
items in different periods for tax and accounting purposes. Deferred tax assets generally represent the tax effects
of amounts expensed in our income statement for which tax deductions will be claimed in future periods. Interest
71
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Critical Accounting Policies and Estimates (continued)
Income Taxes (continued)
and penalties payable to taxing authorities are included as a component of our provision for income taxes. We
have elected to treat taxes incurred on global intangible low-taxed income as a period expense.
Although we believe we have properly reported taxable income and paid taxes in accordance with
applicable laws, federal, state or foreign taxing authorities may challenge our tax positions upon audit.
Significant judgment is required in determining and assessing the impact of uncertain tax positions. We report a
liability for unrecognized tax benefits from uncertain tax positions taken or expected to be taken in our income
tax returns. During each reporting period, we assess the facts and circumstances related to uncertain tax
positions. If the realization of unrecognized tax benefits is deemed probable based upon new facts and
circumstances, the estimated liability and the provision for income taxes are reduced in the current period. Final
audit results may vary from our estimates.
Results of Operations
Revenue/Volume Trends
Our revenues depend upon inpatient occupancy levels, the ancillary services and therapy programs ordered
by physicians and provided to patients, the volume of outpatient procedures and the charge and negotiated
payment rates for such services. Gross charges typically do not reflect what our facilities are actually paid. Our
facilities have entered into agreements with third-party payers, including government programs and managed
care health plans, under which the facilities are paid based upon the cost of providing services, predetermined
rates per diagnosis, fixed per diem rates or discounts from gross charges. We do not pursue collection of amounts
related to patients who meet our guidelines to qualify for charity care; therefore, they are not reported in
revenues. We provide discounts to uninsured patients who do not qualify for Medicaid or charity care.
Revenues increased 14.0% to $58.752 billion for 2021 from $51.533 billion for 2020 and increased 0.4% for
2020 from $51.336 billion for 2019. The increase in revenues in 2021 can be primarily attributed to the combined
impact of a 6.8% increase in revenue per equivalent admission and a 6.8% increase in equivalent admissions
compared to the prior year. The increase in revenues in 2020 can be primarily attributed to the net impact of a
10.5% increase in revenue per equivalent admission offset by a 9.2% decline in equivalent admissions compared
to the prior year.
Same facility revenues increased 14.4% for the year ended December 31, 2021 compared to the year ended
December 31, 2020 and declined 0.1% for the year ended December 31, 2020 compared to the year ended
December 31, 2019. The 14.4% increase for 2021 can be primarily attributed to the combined impact of a 6.3%
increase in revenue per equivalent admission and a 7.6% increase in equivalent admissions. The 0.1% decline for
2020 can be primarily attributed to the net impact of a 9.3% decline in same facility equivalent admissions offset
by a 10.1% increase in same facility revenue per equivalent admission.
Consolidated admissions increased 4.0% during 2021 compared to 2020 and declined 4.7% during 2020
compared to 2019. Consolidated surgeries increased 8.9% during 2021 compared to 2020 and declined 10.9%
during 2020 compared to 2019. Consolidated emergency room visits increased 13.8% during 2021 compared to
2020 and declined 18.7% during 2020 compared to 2019.
Same facility admissions increased 4.8% during 2021 compared to 2020 and declined 4.8% during 2020
compared to 2019. Same facility surgeries increased 9.0% during 2021 compared to 2020 and declined 10.7%
72
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Revenue/Volume Trends (continued)
during 2020 compared to 2019, primarily driven by the pandemic-related impact on outpatient surgeries. Same
facility emergency room visits increased 15.1% during 2021 compared to 2020 and declined 18.8% during 2020
compared to 2019. During the second quarter of 2021, our patient volumes improved as the effects of the
pandemic moderated and certain pandemic-related restrictions and policies were eased. For the remainder of
2021, our patient volumes exhibited consistent growth over the prior year, with the exception of inpatient
surgeries, and included a resurgence of COVID-19 admissions.
Same facility uninsured emergency room visits declined 6.3% and same facility uninsured admissions
declined 3.5% during 2021 compared to 2020. Same facility uninsured emergency room visits declined 21.0%
and same facility uninsured admissions declined 7.0% during 2020 compared to 2019. The decline in uninsured
admissions in 2021, compared to 2020, was primarily due to the reimbursement received, as provided for under
the Families First Coronavirus Response Act and subsequent legislation, for uninsured patients diagnosed with
COVID-19 and the resulting classification of those patients as an insured admission, as well as general declines
in patient volumes resulting from the pandemic’s impact on our operations. The decline in uninsured admissions
in 2020, compared to 2019, was primarily due to general declines in patient volumes resulting from the
pandemic’s impact on our operations.
The approximate percentages of our admissions related to Medicare, managed Medicare, Medicaid,
managed Medicaid, managed care and insurers and the uninsured for the years ended December 31, 2021, 2020
and 2019 are set forth below.
Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed care and insurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uninsured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2021
2020
2019
23% 26%
21
5
13
31
7
20
5
12
29
8
29%
18
5
12
28
8
100% 100% 100%
The approximate percentages of our inpatient revenues related to Medicare, managed Medicare, Medicaid,
managed Medicaid, and managed care and insurers for the years ended December 31, 2021, 2020 and 2019 are
set forth below.
Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managed care and insurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73
Years Ended December 31,
2021
2020
2019
23% 27%
16
6
6
49
15
5
6
47
28%
15
5
5
47
100% 100% 100%
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Revenue/Volume Trends (continued)
At December 31, 2021, we owned and operated 46 hospitals and 30 surgery centers in the state of Florida.
Our Florida facilities’ revenues totaled $13.670 billion, $11.442 billion and $11.494 billion for the years ended
December 31, 2021, 2020 and 2019, respectively. At December 31, 2021, we owned and operated 45 hospitals
and 35 surgery centers in the state of Texas. Our Texas facilities’
revenues totaled $15.344 billion,
$13.528 billion and $13.101 billion for the years ended December 31, 2021, 2020 and 2019, respectively. During
2021, 2020 and 2019, 56% of our admissions for each year and 49%, 49% and 48%, respectively, of our
revenues were generated by our Florida and Texas facilities. Uninsured admissions in Florida and Texas
represented 72% of our uninsured admissions each year during 2021, 2020 and 2019.
We receive a significant portion of our revenues from government health programs, principally Medicare
and Medicaid, which are highly regulated and subject to frequent and substantial changes. In December 2017, the
Centers for Medicare & Medicaid Services (“CMS”) announced that it would phase out federal matching funds
for Designated State Health Programs under waivers granted under Section 1115 of the Social Security Act. The
Texas Healthcare Transformation and Quality Improvement Program (“Texas Waiver Program”) currently
operates pursuant to a Medicaid waiver. Without an extension, the waiver would expire September 30, 2022.
While the lawsuit is pending, the Texas Health and Human Services Commission (“Texas HHSC”) has re-
submitted its application to extend the Texas Waiver Program. Our Texas Medicaid revenues included Medicaid
supplemental waiver payments of $534 million, $599 million and $416 million during 2021, 2020 and 2019,
respectively. Additionally, the Texas HHSC’s proposed directed payment program has not yet been renewed for
the current program year that began September 1, 2021. Our supplemental Medicaid revenues from the directed
payment program have been, and will continue to be, negatively impacted until the Texas HHSC and CMS
finalize certain components of the program.
In addition, we receive supplemental payments in several other states. We are aware these supplemental
payment programs are currently being reviewed by CMS and certain state agencies, and that some states have
made waiver requests to CMS to replace their existing supplemental payment programs. It is possible these
reviews and waiver requests will result in the restructuring of such supplemental payment programs and could
result in the payment programs being reduced or eliminated. Because deliberations about these programs are
ongoing, we are unable to estimate the financial impact the program structure modifications, if any, may have on
our results of operations.
74
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Operating Results Summary
The following are comparative summaries of operating results and certain operating data for the years ended
December 31, 2021, 2020 and 2019 (dollars in millions):
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$58,752
100.0
$51,533
100.0
$51,336
100.0
2021
2020
2019
Amount
Ratio
Amount
Ratio
Amount
Ratio
Salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses (gains) on sales of facilities . . . . . . . . . . . . . . . . . .
Losses on retirement of debt . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . .
26,779
9,481
9,961
(113)
2,853
1,566
(1,620)
12
48,919
9,833
2,112
7,721
765
Net income attributable to HCA Healthcare, Inc. . . . . . . .
$ 6,956
% changes from prior year:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . .
Net income attributable to HCA Healthcare, Inc. . . .
Admissions(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equivalent admissions(b) . . . . . . . . . . . . . . . . . . . . .
Revenue per equivalent admission . . . . . . . . . . . . . .
Same facility % changes from prior year(c):
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Admissions(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equivalent admissions(b) . . . . . . . . . . . . . . . . . . . . .
Revenue per equivalent admission . . . . . . . . . . . . . .
14.0%
81.1
85.3
4.0
6.8
6.8
14.4
4.8
7.6
6.3
45.6
16.1
17.0
(0.2)
4.9
2.7
(2.8)
—
83.3
16.7
3.6
13.1
1.3
11.8
23,874
8,369
9,307
(54)
2,721
1,584
7
295
46,103
5,430
1,043
4,387
633
$ 3,754
46.3
16.2
18.1
(0.1)
5.3
3.1
—
0.6
89.5
10.5
2.0
8.5
1.2
7.3
23,560
8,481
9,481
(43)
2,596
1,824
45.9
16.5
18.5
(0.1)
5.0
3.6
(18) —
0.4
211
46,092
5,244
1,099
4,145
640
$ 3,505
89.8
10.2
2.1
8.1
1.3
6.8
0.4%
3.6
7.1
(4.7)
(9.2)
10.5
(0.1)
(4.8)
(9.3)
10.1
10.0%
(1.7)
(7.4)
5.2
6.6
3.2
5.9
2.8
3.5
2.3
(a) Represents the total number of patients admitted to our hospitals and is used by management and certain
investors as a general measure of inpatient volume.
(b) Equivalent admissions are used by management and certain investors as a general measure of combined
inpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatient
volume) by the sum of gross inpatient revenue and gross outpatient revenue and then dividing the resulting
amount by gross inpatient revenue. The equivalent admissions computation “equates” outpatient revenue to
the volume measure (admissions) used to measure inpatient volume, resulting in a general measure of
combined inpatient and outpatient volume.
(c) Same facility information excludes the operations of hospitals and their related facilities that were either
acquired, divested or removed from service during the current and prior year.
75
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Operating Results Summary (continued)
Operating Data:
Number of hospitals at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of freestanding outpatient surgical centers at end of period(a) . .
Number of licensed beds at end of period(b) . . . . . . . . . . . . . . . . . . . . . .
Weighted average beds in service(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Admissions(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equivalent admissions(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average length of stay (days)(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average daily census(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Emergency room visits(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient surgeries(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inpatient surgeries(k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Days revenues in accounts receivable(l) . . . . . . . . . . . . . . . . . . . . . . . . . .
Outpatient revenues as a % of patient revenues(m) . . . . . . . . . . . . . . . . .
2021
2020
2019
182
125
48,803
42,148
2,089,975
3,536,238
5.2
29,752
185
121
49,265
42,246
2,009,909
3,312,330
5.1
27,734
184
123
49,035
41,510
2,108,927
3,646,335
4.9
28,134
71%
66%
68%
8,475,345
1,008,236
522,069
49
37%
7,450,307
882,483
522,385
45
35%
9,161,129
1,009,947
566,635
50
39%
(a) Excludes freestanding endoscopy centers (21 at December 31, 2021 and 2020, and 20 at December 31,
2019).
(b) Licensed beds are those beds for which a facility has been granted approval to operate from the applicable
state licensing agency.
(c) Represents the average number of beds in service, weighted based on periods owned.
(d) Represents the total number of patients admitted to our hospitals and is used by management and certain
investors as a general measure of inpatient volume.
(e) Equivalent admissions are used by management and certain investors as a general measure of combined
inpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatient
volume) by the sum of gross inpatient revenue and gross outpatient revenue and then dividing the resulting
amount by gross inpatient revenue. The equivalent admissions computation “equates” outpatient revenue to
the volume measure (admissions) used to measure inpatient volume, resulting in a general measure of
combined inpatient and outpatient volume.
(f) Represents the average number of days admitted patients stay in our hospitals.
(g) Represents the average number of patients in our hospital beds each day.
(h) Represents the percentage of hospital beds in service that are occupied by patients. Both average daily
census and occupancy rate provide measures of the utilization of inpatient rooms.
(i) Represents the number of patients treated in our emergency rooms.
(j) Represents the number of surgeries performed on patients who were not admitted to our hospitals. Pain
management and endoscopy procedures are not included in outpatient surgeries.
(k) Represents the number of surgeries performed on patients who have been admitted to our hospitals. Pain
management and endoscopy procedures are not included in inpatient surgeries.
(l) Revenues per day is calculated by dividing the revenues for the fourth quarter of each year by the days in
the quarter. Days revenues in accounts receivable is then calculated as accounts receivable at the end of the
period divided by revenues per day.
(m) Represents the percentage of patient revenues related to patients who are not admitted to our hospitals.
76
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Key Performance Indicators
We present certain metrics and statistical information that management uses when assessing our results of
operations. We believe this information is useful to investors as it provides insight to how management evaluates
operational performance and trends between reporting periods. Information on how these metrics and statistical
information are defined is provided in the previous tables summarizing operating results and operating data.
Years Ended December 31, 2021 and 2020
Net income attributable to HCA Healthcare, Inc. totaled $6.956 billion, or $21.16 per diluted share, for
2021, compared to $3.754 billion, or $10.93 per diluted share, for 2020. The 2021 results include gains on sales
of facilities of $1.620 billion, or $3.69 per diluted share, and losses on retirement of debt of $12 million, or $0.03
per diluted share. The 2020 results include losses on sales of facilities of $7 million, or $0.02 per diluted share,
and losses on retirement of debt of $295 million, or $0.66 per diluted share. The 2020 results also include
$60 million, or $0.13 per diluted share, of employee retention payroll tax credits, as provided for by the CARES
Act. Revenues for 2021 and 2020, respectively, include $33 million, or $0.07 per diluted share, and $55 million,
or $0.12 per diluted share, related to the settlement of Medicare outlier calculations for prior periods. Revenues
for 2020 also include $69 million, or $0.15 per diluted share, related to the resolution of transaction price
differences regarding certain services performed in prior periods. During 2021 and 2020, we recorded reductions
to the provision for professional liability risks of $87 million, or $0.20 per diluted share, and $112 million, or
$0.25 per diluted share, respectively. Our provisions for income taxes for 2021 and 2020 include tax benefits of
$119 million, or $0.36 per diluted share, and $92 million, or $0.27 per diluted share, respectively, related to
employee equity award settlements. All “per diluted share” disclosures are based upon amounts net of the
applicable income taxes. Shares used for diluted earnings per share were 328.752 million shares and
343.605 million shares for the years ended December 31, 2021 and 2020, respectively. During 2021, we
repurchased 37.812 million shares of our common stock.
During 2021, consolidated admissions increased 4.0% and same facility admissions increased 4.8%
compared to 2020. Consolidated inpatient surgeries declined 0.1% and same facility inpatient surgeries increased
0.4% during 2021 compared to 2020. Emergency room visits increased 13.8% on a consolidated basis and
increased 15.1% on a same facility basis during 2021 compared to 2020.
Revenues increased 14.0% to $58.752 billion for 2021 from $51.533 billion for 2020. The increase in
revenues was primarily due to the combined impact of a 6.8% increase in revenue per equivalent admission and a
6.8% increase in equivalent admissions compared to 2020. Same facility revenues increased 14.4% due primarily
to the combined impact of a 6.3% increase in revenue per equivalent admission and a 7.6% increase in equivalent
admissions compared to 2020.
Salaries and benefits, as a percentage of revenues, were 45.6% in 2021 and 46.3% in 2020. Salaries and
benefits per equivalent admission increased 5.1% in 2021 compared to 2020. Same facility labor rate increases
averaged 7.5% for 2021 compared to 2020 primarily due to an increased utilization of contract, overtime and
other premium rate labor costs during 2021 to support our clinical staff and address the surges of COVID-19
cases during 2021. Share-based compensation expense was $440 million in 2021 and $362 million in 2020.
Supplies, as a percentage of revenues, were 16.1% in 2021 and 16.2% in 2020. Supply costs per equivalent
admission increased 6.1% in 2021 compared to 2020. Supply costs per equivalent admission increased 3.4% for
77
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Years Ended December 31, 2021 and 2020 (continued)
medical devices, 6.6% for pharmacy supplies and 8.4% for general medical and surgical items in 2021 compared
to 2020. The increase in pharmacy supplies is primarily related to COVID-19 therapies used in the surges of
COVID-19 cases during 2021, and the increase in general medical and surgical items is primarily related to
increased utilization of PPE and COVID-19 testing supplies.
Other operating expenses, as a percentage of revenues, were 17.0% in 2021 and 18.1% in 2020. Other
operating expenses are primarily comprised of contract services, professional fees, repairs and maintenance, rents
and leases, utilities, insurance (including professional liability insurance) and nonincome taxes. Provisions for
losses related to professional liability risks were $453 million and $435 million for 2021 and 2020, respectively.
During 2021 and 2020, we recorded reductions of $87 million, or $0.20 per diluted share, and $112 million, or
$0.25 per diluted share, respectively, to our provision for professional liability risks related to the receipt of
updated actuarial information.
Equity in earnings of affiliates was $113 million for 2021 and $54 million for 2020. The $59 million
increase relates primarily to improved operating results of three equity method investments (two physician
practices and a freestanding surgery center).
Depreciation and amortization, as a percentage of revenues, were 4.9% in 2021 and 5.3% in 2020.
Depreciation expense was $2.826 billion for 2021 and $2.693 billion for 2020. The increase of $133 million in
depreciation expense relates primarily to capital expenditures at our existing facilities (same facility depreciation
expense increased $128 million).
Interest expense declined to $1.566 billion for 2021 from $1.584 billion for 2020. The $18 million decline in
interest expense was due to a decline in the average effective interest rate. Our average debt balance was
$32.109 billion for 2021 compared to $31.940 billion for 2020. The average interest rate for our long-term debt
was 4.9% for 2021 and 5.0% for 2020.
Gains on sales of facilities were $1.620 billion for 2021, and losses on sales of facilities were $7 million for
2020. The gains on sales of facilities for 2021 are primarily related to the sales of five hospitals in Georgia and
other health care entity investments.
During June 2021, we issued $2.350 billion aggregate principal amount of senior secured notes comprised
of $850 million aggregate principal amount of 2 3/8% notes due 2031 and $1.500 billion aggregate principal
amount of 3 1/2% notes due 2051 (the “June 2021 Notes”). We also amended and restated our senior secured
revolving credit facility and our senior secured asset-based revolving credit facility,
including increasing
availability under the asset-based revolving credit facility to $4.500 billion, extending the maturity date on both
facilities to June 30, 2026 and entering into $2.000 billion of new term loan facilities (the “Credit Agreement
Transactions”). We used the net proceeds from the June 2021 Notes and the Credit Agreement Transactions to
retire $3.657 billion of term loan facilities. The pretax loss on retirement of debt was $12 million. During
February 2020, we issued $2.700 billion aggregate principal amount of 3.50% senior unsecured notes due 2030.
During March 2020, we used the net proceeds for the redemption of all $1.000 billion outstanding aggregate
principal amount of HCA Healthcare, Inc.’s 6.25% senior notes due 2021 and, together with available funds, for
the redemption of all $2.000 billion outstanding aggregate principal amount of HCA Inc.’s 7.50% senior notes
due 2022. The pretax loss on retirement of debt was $295 million.
78
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Years Ended December 31, 2021 and 2020 (continued)
The effective tax rates were 23.3% and 21.7% for 2021 and 2020, respectively. The effective tax rate
computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships.
Our provisions for income taxes for 2021 and 2020 include tax benefits of $119 million and $92 million,
respectively, related to employee equity award settlements. Excluding the effect of these adjustments, the
effective tax rates for 2021 and 2020 would have been 24.6% and 23.7%, respectively.
Net income attributable to noncontrolling interests increased from $633 million for 2020 to $765 million for
2021. The increase in net income attributable to noncontrolling interests related primarily to the partnership
operations of two of our Texas markets and our surgery center partnerships.
For results of operations comparisons relating to years ending December 31, 2020 and 2019, refer to our
annual report on Form 10-K, Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations for the year ended December 31, 2020, filed with the Securities and Exchange Commission on
February 19, 2021.
Liquidity and Capital Resources
Our primary cash requirements are paying our operating expenses, servicing our debt, capital expenditures
on our existing properties, acquisitions of hospitals and health care entities, repurchases of our common stock,
dividends to stockholders and distributions to noncontrolling interests. Our primary cash sources are cash flows
from operating activities, issuances of debt and equity securities and sales of hospitals and health care entities.
Cash provided by operating activities totaled $8.959 billion in 2021 compared to $9.232 billion in 2020 and
$7.602 billion in 2019. The $273 million decline in cash provided by operating activities for 2021, compared to
2020, was related to a negative change in working capital items of $1.781 billion, primarily from an increase in
accounts receivable, offset by the increase in net income, excluding the non-cash impact of losses and gains on
sales of facilities, losses on retirement of debt and depreciation and amortization. The $1.630 billion increase in
cash provided by operating activities for 2020, compared to 2019, was primarily related to the increase in net
income, excluding losses and gains on sales of facilities and losses on retirement of debt, of $330 million and
positive changes in working capital items of $1.366 billion, primarily from the increase in accounts payable and
accrued expenses and the collection of accounts receivable. During 2020, we deferred $688 million of Social
Security taxes as allowed for under the CARES Act. Half of these taxes were paid in January 2022 and the
remainder will be paid in 2023. Working capital totaled $3.960 billion at December 31, 2021 and $3.629 billion
at December 31, 2020. Cash payments for interest and income taxes increased $1.075 billion for 2021 compared
to 2020 and declined $154 million for 2020 compared to 2019.
Cash used in investing activities was $2.643 billion, $3.393 billion and $5.720 billion in 2021, 2020 and
2019, respectively. Excluding acquisitions, capital expenditures were $3.577 billion in 2021, $2.835 billion in
2020 and $4.158 billion in 2019. We expended $1.105 billion, $568 million and $1.682 billion for acquisitions of
hospitals and health care entities during 2021, 2020 and 2019, respectively. In response to the risks the
COVID-19 pandemic presents to our business, we reduced certain planned projects and capital expenditures
during 2020. Planned capital expenditures are expected to approximate $4.2 billion in 2022. At December 31,
2021, there were projects under construction which had an estimated additional cost to complete and equip over
79
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
the next five years of approximately $4.239 billion. We expect to finance capital expenditures with internally
generated and borrowed funds. Sales of hospitals and health care entities increased $2.092 billion for 2021,
compared to 2020, primarily related to the proceeds from our sales of five hospitals in Georgia and other health
care entity investments.
Cash used in financing activities totaled $6.655 billion in 2021, $4.677 billion in 2020 and $1.771 billion in
2019. During 2021, we had a net increase of $3.255 billion in our indebtedness, paid dividends of $624 million
and paid $8.215 billion for repurchases of common stock. During 2020, we made net payments of $3.217 billion
related to our indebtedness, paid dividends of $153 million and paid $441 million for repurchases of our common
stock. During 2019, we had a net increase of $567 million in our indebtedness, paid dividends of $550 million
and paid $1.031 billion for repurchases of our common stock. During 2021, 2020 and 2019, we made
distributions to noncontrolling interests of $749 million, $626 million and $542 million, respectively.
We, or our affiliates, may in the future repurchase portions of our debt or equity securities, subject to certain
in
limitations, from time to time in either the open market or through privately negotiated transactions,
accordance with applicable SEC and other legal requirements. The timing, prices, and sizes of purchases depend
upon prevailing trading prices, general economic and market conditions, and other factors, including applicable
securities laws.
During January 2020 and 2019, our Board of Directors authorized share repurchase programs for up to
$4 billion ($2 billion for each authorization) of our outstanding common stock. During February 2021, our Board
of Directors authorized an additional $6 billion for share repurchases of the Company’s outstanding common
stock. The January 2020 and 2019 authorizations were completed during 2021, and at December 31, 2021, there
was $586 million of share repurchase authorization that remained available under the February 2021
authorization. During January 2022, our Board of Directors authorized an additional $8 billion for share
repurchases of the Company’s outstanding common stock. Funds for the repurchase of debt or equity securities
have, and are expected to, come primarily from cash generated from operations and borrowed funds.
During 2021, our Board of Directors declared four quarterly dividends of $0.48 per share, or $1.92 per share
in the aggregate, on our common stock. On January 26, 2022, our Board of Directors declared a quarterly
dividend of $0.56 per share on our common stock payable on March 31, 2022 to stockholders of record at the
close of business on March 17, 2022. The timing and amount of future cash dividends will vary based on a
number of factors,
including future capital requirements for strategic transactions, share repurchases and
investing in our existing markets, the availability of financing on acceptable terms, debt service requirements,
changes to applicable tax laws or corporate laws, changes to our business model and periodic determinations by
our Board of Directors that cash dividends are in the best interest of stockholders and are in compliance with all
applicable laws and agreements of the Company.
In addition to cash flows from operations, available sources of capital include amounts available under our
senior secured credit facilities ($3.640 billion as of December 31, 2021 and $3.258 billion as of January 31,
2022) and anticipated access to public and private debt and equity markets.
Investments of our insurance subsidiaries, held to maintain statutory equity levels and to provide liquidity to
pay claims, totaled $541 million and $504 million at December 31, 2021 and 2020, respectively. The insurance
liability risks of $154 million and $188 million at
subsidiary maintained net reserves for professional
80
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
December 31, 2021 and 2020, respectively. Our facilities are insured by our insurance subsidiary for losses up to
$75 million per occurrence; however, this coverage is subject, in most cases, to a $15 million per occurrence self-
insured retention. Net reserves for the self-insured professional liability risks retained were $1.813 billion and
$1.736 billion at December 31, 2021 and 2020, respectively. Claims payments, net of reinsurance recoveries,
during the next 12 months are expected to approximate $497 million. We estimate that approximately
$448 million of the expected net claim payments during the next 12 months will relate to claims subject to the
self-insured retention.
Financing Activities
We are a highly leveraged company with significant debt service requirements. Our debt
totaled
$34.579 billion and $31.004 billion at December 31, 2021 and 2020, respectively. Our interest expense was
$1.566 billion for 2021 and $1.584 billion for 2020.
During June 2021, we issued $2.350 billion aggregate principal amount of senior secured notes comprised
of $850 million aggregate principal amount of 2 3/8% notes due 2031 and $1.500 billion aggregate principal
amount of 3 1/2% notes due 2051 (the “June 2021 Notes”). We also amended and restated our senior secured
revolving credit facility and our senior secured asset-based revolving credit facility,
including increasing
availability under the asset-based revolving credit facility to $4.500 billion, extending the maturity date on both
facilities to June 30, 2026 and entering into $2.000 billion of new term loan facilities (the “Credit Agreement
Transactions”). We used the net proceeds from the June 2021 Notes and the Credit Agreement Transactions to
retire $3.657 billion of term loan facilities.
Management believes that cash flows from operations, amounts available under our senior secured credit
facilities and our anticipated access to public and private debt markets will be sufficient to meet expected
liquidity needs for the foreseeable future.
Summarized Financial Information
HCA Inc., a direct wholly-owned subsidiary of HCA Healthcare, Inc., is the primary obligor under a
substantial portion of our indebtedness, including our senior secured credit facilities, senior secured notes and
senior unsecured notes. The senior secured notes and senior unsecured notes issued by HCA Inc. are fully and
unconditionally guaranteed on an unsecured basis by HCA Healthcare, Inc. The senior secured credit facilities
and senior secured notes are fully and unconditionally guaranteed on a senior secured basis by substantially all
existing and future, direct and indirect, 100% owned material domestic subsidiaries that are “Unrestricted
Subsidiaries” under our Indenture dated December 16, 1993 (except for certain special purpose subsidiaries that
only guarantee and pledge their assets under our senior secured asset-based revolving credit facility). For a list of
subsidiary guarantors, see Exhibit 22 to this annual report on Form 10-K.
The subsidiary guarantees rank senior in right of payment to all subordinated indebtedness of each
subsidiary guarantor, equally in right of payment with all senior indebtedness of the subsidiary guarantor and are
structurally subordinated in right of payment to all indebtedness and other liabilities of any non-guarantor
subsidiaries of the subsidiary guarantors (other than indebtedness and liabilities owed to one of the subsidiary
guarantors). The subsidiary guarantees are secured by first-priority liens on the subsidiary guarantors’ assets,
subject to certain exceptions, that secure our senior secured cash flow credit facility on a first-priority basis. The
81
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Summarized Financial Information (continued)
subsidiary guarantees are secured by second-priority liens on the subsidiary guarantors’ assets that secure our
senior secured asset-based revolving credit facility on a first-priority basis and our senior secured cash flow
credit facility on a second-priority basis.
The subsidiary guarantees may be automatically and unconditionally released and discharged upon certain
customary events, including in the event such guarantee is released under our senior secured credit facilities. The
indentures governing the senior secured notes include a “savings clause” intended to limit each subsidiary
guarantor’s obligations as necessary to prevent the guarantee from constituting a fraudulent conveyance under
applicable law, which could reduce a subsidiary guarantor’s liability on its guarantee to zero. For further
information regarding the guarantees, refer to the applicable indentures that are filed as exhibits to this annual
report on Form 10-K.
Summarized financial information is presented on a combined basis and transactions between the combining
entities have been eliminated. Financial
information for nonguarantor entities has been excluded. The
summarized operating results information for the year ended December 31, 2021 and the summarized balance
sheet information at December 31, 2021, for HCA Healthcare, Inc., HCA Inc. and the subsidiary guarantors (the
Parent, Subsidiary Issuer and Subsidiary Guarantors) follow (dollars in millions):
Year Ended December 31, 2021:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Parent, Subsidiary Issuer and Subsidiary
Year Ended
December 31, 2021
$ 34,889
6,061
4,666
Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,564
At December 31, 2021:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intercompany balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ deficit attributable to Parent, Subsidiary Issuer and
Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2021
$ 8,268
15,559
5,694
22,370
30,638
5,697
33,904
3,423
1,053
38,912
(14,124)
153
82
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Summarized Financial Information (continued)
The first-priority liens securing the subsidiary guarantees discussed above include liens on (i) substantially
all of the capital stock of substantially all wholly owned first-tier subsidiaries of HCA Inc. or of subsidiary
guarantors (but limited to 65% of the stock of any such wholly owned first-tier subsidiary that is a foreign
subsidiary), subject to certain limited exceptions, and (ii) substantially all indebtedness owing to HCA Inc. or to
the subsidiary guarantors, including any and all intercompany indebtedness owed by HCA Healthcare, Inc. or
any subsidiary thereof to HCA Inc., or any subsidiary guarantor. For a list of affiliates whose securities are
pledged as collateral for the senior secured notes, see Exhibit 22 to this annual report on Form 10-K.
Under the first lien intercreditor agreement, the administrative agent for the lenders under the cash flow
credit facility, subject to the occurrence of certain events, has the exclusive right to direct foreclosures and take
other actions with respect to these liens, and the trustee for the senior secured notes has no right to take any such
actions. In certain circumstances, including upon certain events of default under the senior secured credit
facilities and the senior secured notes, the collateral agent in respect of the cash flow credit facility and the senior
secured notes could proceed against the collateral granted to it to secure such indebtedness, including the
aforementioned pledged capital stock and pledged indebtedness, and require such collateral to be delivered to the
collateral agent to the extent not already in its possession for purposes of perfecting the lien on such assets. For
further information regarding the collateral, including events or circumstances that may require delivery of the
collateral, refer to the applicable indentures, the first lien intercreditor agreement, the cash flow credit agreement
and the pledge agreement that are filed as exhibits to this annual report on Form 10-K.
There is no trading market for any of HCA Healthcare, Inc.’s affiliates whose securities are pledged as
collateral for the senior secured notes.
Rule 13-02 of Regulation S-X requires the presentation of summarized financial
information of the
combined affiliates whose securities are pledged as collateral for the senior secured notes unless such
information is not material. The rule provides that such information is not material if the assets, liabilities and
results of operations of the combined affiliates whose securities are pledged as collateral are not materially
different than the corresponding amounts presented in the consolidated financial statements of the Registrant.
Healthtrust, Inc. — The Hospital Company (“Healthtrust”) is the first-tier subsidiary of HCA Inc., and the
common stock of Healthtrust is pledged as collateral for the senior secured notes. Due to the corporate structure
relationship of HCA Healthcare, Inc. and Healthtrust, all of HCA Healthcare, Inc.’s operating subsidiaries,
including all other affiliates whose securities are pledged as collateral for the senior secured notes, are also
subsidiaries of Healthtrust. The corporate structure relationship, combined with the application of push-down
accounting in Healthtrust’s consolidated financial statements related to HCA Healthcare Inc.’s debt and financial
instruments, mean that the assets, liabilities and results of operations of Healthtrust (and, therefore, of the
combined affiliates whose securities are pledged as collateral for the senior secured notes) are not materially
different than the corresponding amounts presented in the financial statements of HCA Healthcare, Inc. As a
result, summarized financial information of affiliates whose securities are pledged as collateral for the senior
secured notes is not required to be presented under Rule 13-02.
83
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Market Risk
We are exposed to market risk related to changes in market values of securities. Our insurance subsidiaries
held $541 million of investment securities at December 31, 2021. These investments are carried at fair value,
with changes in unrealized gains and losses being recorded as adjustments to other comprehensive income. At
December 31, 2021, we had a net unrealized gain of $16 million on the insurance subsidiaries’ investment
securities.
We are exposed to market risk related to market illiquidity. Investments in debt and equity securities of our
insurance subsidiaries could be impaired by the inability to access the capital markets. Should the insurance
subsidiaries require significant amounts of cash in excess of normal cash requirements to pay claims and other
expenses on short notice, we may have difficulty selling these investments in a timely manner or be forced to sell
them at a price less than what we might otherwise have been able to in a normal market environment. We may be
required to recognize credit-related impairments on our investment securities in future periods should issuers
default on interest payments or should the fair market valuations of the securities deteriorate due to ratings
downgrades or other issue-specific factors.
We are also exposed to market risk related to changes in interest rates, and we periodically enter into
interest rate swap agreements to manage our exposure to these fluctuations. Our interest rate swap agreements
involve the exchange of fixed and variable rate interest payments between two parties, based on common
notional principal amounts and maturity dates. The notional amounts of the swap agreements represent balances
used to calculate the exchange of cash flows and are not our assets or liabilities. Our credit risk related to these
agreements is considered low because the swap agreements are with creditworthy financial institutions. The
interest payments under these agreements are settled on a net basis. These derivatives have been recognized in
the financial statements at their respective fair values. Changes in the fair value of these derivatives, which are
designated as cash flow hedges, are included in other comprehensive income.
to our
With respect
interest-bearing liabilities, approximately $4.240 billion of long-term debt at
December 31, 2021 was subject to variable rates of interest, while the remaining balance in long-term debt of
$30.339 billion at December 31, 2021 was subject to fixed rates of interest. Both the general level of interest
rates and, for the senior secured credit facilities, our leverage affect our variable interest rates. Our variable debt
is comprised primarily of amounts outstanding under the senior secured credit facilities. Borrowings under the
senior secured credit facilities bear interest at a rate equal to an applicable margin plus, at our option, either (a) a
base rate determined by reference to the higher of (1) the federal funds rate plus 0.50% and (2) the prime rate of
Bank of America or (b) a LIBOR rate for the currency of such borrowing for the relevant interest period. The
applicable margin for borrowings under the senior secured credit facilities may fluctuate according to a leverage
ratio. The average effective interest rate for our long-term debt was 4.9% for 2021 and 5.0% for 2020.
The estimated fair value of our total long-term debt was $38.541 billion at December 31, 2021. The
estimates of fair value are based upon the quoted market prices for the same or similar issues of long-term debt
with the same maturities. Based on a hypothetical 1% increase in interest rates, the potential annualized reduction
to future pretax earnings would be approximately $42 million. To mitigate the impact of fluctuations in interest
rates, we generally target a majority of our debt portfolio to be maintained at fixed rates.
We are exposed to currency translation risk related to our foreign operations. We currently do not consider
the market risk related to foreign currency translation to be material to our consolidated financial statements or
our liquidity.
84
HCA HEALTHCARE, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Market Risk (continued)
Financial Instruments
Derivative financial instruments are employed to manage risks, including interest rate exposures, and are not
used for trading or speculative purposes. We recognize derivative instruments, such as interest rate swap
agreements, in the consolidated balance sheets at fair value. Changes in the fair value of derivatives are
recognized periodically either in earnings or in stockholders’ equity, as a component of other comprehensive
income, depending on whether the derivative financial instrument qualifies for hedge accounting, and if so,
whether it qualifies as a fair value hedge or a cash flow hedge. Gains and losses on derivatives designated as cash
flow hedges, to the extent they are effective, are recorded in other comprehensive income, and subsequently
reclassified to earnings to offset the impact of the hedged items when they occur.
The net interest paid or received on interest rate swaps is recognized as interest expense. Gains and losses
resulting from the early termination of interest rate swap agreements are deferred and amortized as adjustments
to expense over the remaining period of the debt originally covered by the terminated swap.
Tax Examinations
The Internal Revenue Service (“IRS”) was conducting an examination of the Company’s 2016, 2017 and
2018 federal income tax returns and the 2019 return for one affiliated partnership at December 31, 2021. We are
also subject to examination by state and foreign taxing authorities. Management believes HCA Healthcare, Inc.,
its predecessors, subsidiaries and affiliates properly reported taxable income and paid taxes in accordance with
applicable laws and agreements established with the IRS, state and foreign taxing authorities, and final resolution
of any disputes will not have a material, adverse effect on our results of operations or financial position.
However, if payments due upon final resolution of any issues exceed our recorded estimates, such resolutions
could have a material, adverse effect on our results of operations or financial position.
85
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Information with respect
to this Item is provided under the caption “Market Risk” under Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Item 8.
Financial Statements and Supplementary Data
Information with respect to this Item is contained in our consolidated financial statements indicated in the
Index to Consolidated Financial Statements on Page F-1 of this annual report on Form 10-K.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
1. Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive
officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Based on this evaluation, our principal executive officer and our principal financial officer
concluded that our disclosure controls and procedures were effective as of the end of the period covered by this
annual report.
2. Internal Control Over Financial Reporting
(a) Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Therefore, even those systems
determined to be effective, can provide only reasonable assurance with respect to financial statement preparation
and presentation.
Under the supervision and with the participation of our management, including our principal executive
officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control
over financial reporting based on the framework in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our
assessment under the framework in Internal Control — Integrated Framework, our management concluded that
our internal control over financial reporting was effective as of December 31, 2021.
Ernst & Young LLP, the independent registered public accounting firm that audited our consolidated
financial statements included in this Form 10-K, has issued a report on our internal control over financial
reporting, which is included herein.
86
(b) Attestation Report of the Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
HCA Healthcare, Inc.
Opinion on Internal Control over Financial Reporting
We have audited HCA Healthcare, Inc.’s internal control over financial reporting as of December 31, 2021,
based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, HCA
Healthcare, Inc. (the Company) maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of HCA Healthcare, Inc. as of December 31, 2021 and
2020, and the related consolidated statements of income, comprehensive income, stockholders’ equity (deficit),
and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our
report dated February 18, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management
is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in the
accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
87
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Nashville, Tennessee
February 18, 2022
(c) Changes in Internal Control Over Financial Reporting
During the fourth quarter of 2021, there were no changes in our internal control over financial reporting that
materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item regarding the identity and business experience of our directors and
executive officers is set forth under the heading “Nominees for Election” and “Election of Directors” in the
definitive proxy materials of HCA to be filed in connection with our 2022 Annual Meeting of Stockholders with
respect to our directors and is set forth in Item 1 of Part I of this annual report on Form 10-K with respect to our
executive officers. The information required by this Item contained in such definitive proxy materials is
incorporated herein by reference.
Information on the beneficial ownership reporting for our directors and executive officers required by this
Item is contained under the caption “Delinquent Section 16(a) Reports” in the definitive proxy materials to be
filed in connection with our 2022 Annual Meeting of Stockholders and is incorporated herein by reference.
Information on our Audit and Compliance Committee and Audit Committee Financial Experts required by
this Item is contained under the caption “Corporate Governance” in the definitive proxy materials to be filed in
connection with our 2022 Annual Meeting of Stockholders and is incorporated herein by reference.
We have a Code of Conduct which is applicable to all our directors, officers and employees (the “Code of
Conduct”). The Code of Conduct is available on the Ethics and Compliance and Corporate Governance pages of
our website at www.hcahealthcare.com. To the extent required pursuant to applicable SEC regulations, we intend
to post amendments to or waivers from our Code of Conduct (to the extent applicable to our chief executive
officer, principal financial officer or principal accounting officer) at this location on our website or report the
same on a Current Report on Form 8-K. Our Code of Conduct is available free of charge upon request to our
Investor Relations Department, HCA Healthcare, Inc., One Park Plaza, Nashville, TN 37203.
88
Item 11. Executive Compensation
The information required by this Item is set forth under the headings “Executive Compensation” and
“Compensation Committee Interlocks and Insider Participation” in the definitive proxy materials to be filed in
connection with our 2022 Annual Meeting of Stockholders, which information is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Information about security ownership of certain beneficial owners required by this Item is set forth under
the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters” in the definitive proxy materials to be filed in connection with our 2022 Annual Meeting of
Stockholders, which information is incorporated herein by reference.
This table provides certain information as of December 31, 2021 with respect to our equity compensation
plans:
EQUITY COMPENSATION PLAN INFORMATION
(Share and share unit amounts in millions)
(a)
(b)
(c)
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding
options,
warrants and rights
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column(a))
10.722(1)
$113.15(1)
21.463(2)
Equity compensation plans approved by
security holders . . . . . . . . . . . . . . . . . . . .
Equity compensation plans not approved by
security holders . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.722
—
—
$113.15
—
21.463
(1)
(2)
*
Includes 2.191 million restricted share units which vest solely based upon continued employment over a
specific period of time and 2.083 million performance share units which vest based upon continued
employment over a specific period of time and the achievement of predetermined financial targets over
time. The performance share units reported reflect the number of performance share units that would vest
upon achievement of target performance; the number of performance share units that vest can vary from
zero (for actual performance less than 90% of target) to two times the units granted (for actual performance
of 110% or more of target). The weighted average exercise price does not take these restricted share units
and performance share units into account.
Includes 16.290 million shares available for future grants under the 2020 Stock Incentive Plan for Key
Employees of HCA Healthcare, Inc. and its Affiliates and 5.173 million shares of common stock reserved
for future issuance under the HCA Holdings, Inc. Employee Stock Purchase Plan.
For additional information concerning our equity compensation plans, see the discussion in Note 2 —
Share-Based Compensation in the notes to the consolidated financial statements.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is set forth under the headings “Certain Relationships and Related
Party Transactions” and “Corporate Governance” in the definitive proxy materials to be filed in connection with
our 2022 Annual Meeting of Stockholders, which information is incorporated herein by reference.
89
Item 14. Principal Accountant Fees and Services
The information required by this Item is set forth under the heading “Ratification of Appointment of
Independent Registered Public Accounting Firm” in the definitive proxy materials to be filed in connection with
our 2022 Annual Meeting of Stockholders, which information is incorporated herein by reference.
90
Item 15. Exhibits and Financial Statement Schedules
(a) Documents filed as part of the report:
PART IV
1. Financial Statements. The accompanying Index to Consolidated Financial Statements on page F-1 of this
annual report on Form 10-K is provided in response to this item.
2. List of Financial Statement Schedules. All schedules are omitted because the required information is
either not present, not present in material amounts or presented within the consolidated financial statements.
3. List of Exhibits
2.1
2.2
3.1
3.2
4.1
4.2
4.3
4.4
4.5(a)
— Agreement and Plan of Merger, dated July 24, 2006, by and among HCA Inc., Hercules Holding
II, LLC and Hercules Acquisition Corporation (filed as Exhibit 2.1 to the Company’s Current
Report on Form 8-K filed July 25, 2006, and incorporated herein by reference).
— Merger Agreement, dated November 22, 2010, by and among HCA Inc., HCA Holdings, Inc.,
and HCA Merger Sub LLC (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K
filed November 24, 2010, and incorporated herein by reference).
— Amended and Restated Certificate of Incorporation of the Company (restated for SEC filing
purposes only) (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2020, and incorporated herein by reference).
— Second Amended and Restated Bylaws of the Company (restated for SEC filing purposes only)
(filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2020, and incorporated herein by reference).
— Description of Registered Securities (filed as Exhibit 4.1 to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2020, and incorporated herein by reference).
— Specimen Certificate for shares of Common Stock, par value $0.01 per share, of the Company
(filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2017, and incorporated herein by reference).
— Security Agreement, dated as of November 17, 2006, by and among HCA Inc., the subsidiary
grantors party thereto and The Bank of New York, as collateral agent (filed as Exhibit 4.2 to the
Company’s Current Report on Form 8-K filed November 24, 2006, and incorporated herein by
reference).
— Pledge Agreement, dated as of November 17, 2006, by and among HCA Inc., the subsidiary
pledgors party thereto and The Bank of New York, as collateral agent (filed as Exhibit 4.3 to the
Company’s Current Report on Form 8-K filed November 24, 2006, and incorporated herein by
reference).
— $13,550,000,000 — €1,000,000,000 Credit Agreement, dated as of November 17, 2006, by and
among HCA Inc., HCA UK Capital Limited, the lending institutions from time to time parties
thereto, Banc of America Securities LLC, J.P. Morgan Securities Inc., Citigroup Global Markets
Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arrangers and joint
bookrunners, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A. and
Citicorp North America, Inc., as co-syndication agents and Merrill Lynch Capital Corporation, as
documentation agent (filed as Exhibit 4.8 to the Company’s Current Report on Form 8-K filed
November 24, 2006, and incorporated herein by reference).
91
4.5(b)
4.5(c)
4.5(d)
4.5(e)
4.5(f)
4.5(g)
4.5(h)
— Amendment No. 1 to the Credit Agreement, dated as of February 16, 2007, by and among HCA
Inc., HCA UK Capital Limited, the lending institutions from time to time parties thereto, Bank of
America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., and Citicorp North
America, Inc., as Co-Syndication Agents, Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint lead arrangers and bookrunners, Deutsche Bank Securities and Wachovia
Capital Markets LLC, as joint bookrunners and Merrill Lynch Capital Corporation, as
documentation agent (filed as Exhibit 4.7(b) to the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2006, and incorporated herein by reference).
— Amendment No. 2 to the Credit Agreement, dated as of March 2, 2009, by and among HCA Inc.,
HCA UK Capital Limited, the lending institutions from time to time parties thereto, Bank of
America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., and Citicorp North
America, Inc., as Co-Syndication Agents, Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint lead arrangers and bookrunners, Deutsche Bank Securities and Wachovia
Capital Markets LLC, as joint bookrunners and Merrill Lynch Capital Corporation, as
documentation agent (filed as Exhibit 4.8(c) to the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2008, and incorporated herein by reference).
— Amendment No. 3 to the Credit Agreement, dated as of June 18, 2009, by and among HCA Inc.,
HCA UK Capital Limited, the lending institutions from time to time parties thereto, Bank of
America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., and Citicorp North
America, Inc., as Co-Syndication Agents, Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint lead arrangers and bookrunners, Deutsche Bank Securities and Wachovia
Capital Markets LLC, as joint bookrunners and Merrill Lynch Capital Corporation, as
documentation agent (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed
June 22, 2009, and incorporated herein by reference).
— Extension Amendment No. 1 to the Credit Agreement, dated as of April 6, 2010, by and among
HCA Inc., HCA UK Capital Limited, the lending institutions from time to time parties thereto,
Bank of America, N.A., as administrative agent and collateral agent (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed April 8, 2010, and incorporated herein by
reference).
— Amended and Restated Joinder Agreement No. 1, dated as of November 8, 2010, by and among
each of the financial institutions listed as a “Replacement-1 Revolving Credit Lender” on
Schedule A thereto, HCA Inc., Bank of America, N.A., as Administrative Agent and as Collateral
Agent, and the other parties listed on the signature pages thereto (filed as Exhibit 4.1 to the
Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, and
incorporated herein by reference).
— Restatement Agreement, dated as of May 4, 2011, by and among HCA Inc., HCA UK Capital
Limited, the lenders party thereto and Bank of America, N.A., as administrative agent and
collateral agent to the Credit Agreement, dated as of November 17, 2006, as amended on
February 16, 2007, March 2, 2009, June 18, 2009, April 6, 2010 and November 8, 2010 (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 9, 2011, and incorporated
herein by reference).
— Extension Amendment No. 1, dated as of April 25, 2012, by and among HCA Inc., HCA UK
Capital Limited, each of the U.S. Guarantors, each of the European Guarantors, the lenders party
thereto and Bank of America, N.A., as administrative agent, swingline lender and letter of credit
issuer (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 26, 2012,
and incorporated herein by reference).
92
4.5(i)
4.5(j)
4.5(k)
4.5(l)
— Restatement Agreement, dated as of February 26, 2014, to (i) the Credit Agreement, dated as of
November 17, 2006 and as amended and restated as of May 4, 2011, by and among the HCA
Inc., HCA UK Capital Limited, the lenders party thereto and Bank of America, N.A., as
administrative agent and collateral agent and (ii) the U.S. Guarantee, dated as of November 17,
2006, by and among the guarantors party thereto and Bank of America, N.A., as administrative
agent (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed February 28,
2014, and incorporated herein by reference).
— Supplement No. 14, dated as of November 9, 2015,
to the U.S. Guarantee, dated as of
November 17, 2006 and amended and restated on February 26, 2014, by and among the
guarantors party thereto and Bank of America, N.A., as administrative agent
(filed as
Exhibit 4.4(j) to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, and incorporated herein by reference).
— Schedule of Omitted Supplements to the U.S. Guarantee, dated as of November 17, 2006 and
amended and restated on February 26, 2014, filed pursuant to Instruction 2 to Item 601 of
Regulation S-K.
— Restatement Agreement, dated as of June 28, 2017, to the Credit Agreement, dated as of
November 17, 2006, by and among HCA Inc., as borrower, the guarantors party thereto, Bank of
America, N.A., as administrative agent and collateral agent, and the lenders party thereto (filed as
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed June 30, 2017, and incorporated
herein by reference).
4.5(m) — Joinder Agreement No. 8, dated as of July 16, 2019, by and among HCA Inc., as borrower, the
guarantors party thereto, Bank of America, N.A., as administrative agent and collateral agent,
and the lenders party thereto (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K
filed July 22, 2019, and incorporated herein by reference).
4.5(n)
4.5(o)
4.5(p)
4.6(a)
4.6(b)
— Joinder Agreement No. 9, dated as of October 8, 2019, by and among HCA Inc., as borrower, the
guarantors party thereto, Bank of America, N.A., as administrative agent and collateral agent,
and the lenders party thereto (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K
filed October 10, 2019, and incorporated herein by reference).
— Joinder Agreement No. 10, dated as of November 20, 2019, by and among HCA Inc., as
borrower, the guarantors party thereto, Bank of America, N.A., as administrative agent and
collateral agent, and the lenders party thereto (filed as Exhibit 4.1 to the Company’s Current
Report on Form 8-K filed November 21, 2019, and incorporated herein by reference).
— Restatement Agreement, dated as of June 30, 2021, to the Credit Agreement, dated as of
November 17, 2006, by and among HCA Inc., as borrower, the guarantors party thereto, Bank of
America, N.A., as administrative agent and collateral agent, and the lenders party thereto (filed as
Exhibit 4.10 to the Company’s Current Report on Form 8-K filed July 1, 2021, and incorporated
herein by reference).
— Security Agreement, dated as November 17, 2006, and amended and restated as of March 2,
2009, by and among the Company, the Subsidiary Grantors named therein and Bank of America,
N.A., as Collateral Agent (filed as Exhibit 4.10 to the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2008, and incorporated herein by reference).
— Supplement No. 2, dated as of October 27, 2011, to the Amended and Restated Security
Agreement, dated as of March 2, 2009, as supplemented, by and among the subsidiary grantor
named therein and Bank of America, N.A., as collateral agent (filed as Exhibit 4.5(b) to the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and
incorporated herein by reference).
93
4.6(c)
4.7(a)
4.7(b)
4.7(c)
4.8(a)
4.8(b)
4.8(c)
4.8(d)
4.8(e)
4.8(f)
— Schedule of Omitted Supplements to the Security Agreement, dated as of November 17, 2006
and amended and restated as of March 2, 2009, filed pursuant to Instruction 2 to Item 601 of
Regulation S-K.
— Pledge Agreement, dated as of November 17, 2006, and amended and restated as of March 2,
2009, by and among the Company, the Subsidiary Pledgors named therein and Bank of America,
N.A., as Collateral Agent (filed as Exhibit 4.11 to the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2008, and incorporated herein by reference).
— Supplement No. 1 dated as of October 27, 2011 to the Amended and Restated Pledge Agreement,
dated as of March 2, 2009, by and among the subsidiary pledgors named therein and Bank of
America, N.A., as collateral agent (filed as Exhibit 4.6(b) to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2018, and incorporated herein by reference).
— Schedule of Omitted Supplements to the Pledge Agreement, dated as of November 6, 2006 and
amended and restated as of March 2, 2009, filed pursuant to Instruction 2 to Item 601 of
Regulation S-K.
— $2,500,000,000 Credit Agreement, dated as of September 30, 2011, by and among HCA Inc., the
subsidiary borrowers party thereto, the lenders from time to time party thereto and Bank of
America, N.A., as administrative agent (filed as Exhibit 4.4 to the Company’s Current Report on
Form 8-K filed October 3, 2011, and incorporated herein by reference).
— Restatement Agreement, dated as of March 7, 2014, to the Credit Agreement, dated as of
September 30, 2011, by and among HCA Inc., the subsidiary borrowers party thereto, the lenders
party thereto and Bank of America, N.A. as administrative agent and collateral agent (filed as
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed March 11, 2014, and
incorporated herein by reference).
— Joinder Agreement and Amendment No. 1, dated as of October 30, 2014,
to the Credit
Agreement, dated as of September 30, 2011 and amended and restated as of March 7, 2014, by
and among HCA Inc., the subsidiary borrowers party thereto, the lenders party thereto and Bank
of America, N.A. as administrative agent and collateral agent (filed as Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed October 31, 2014, and incorporated herein by
reference).
— Restatement Agreement, dated as of June 28, 2017, to the Credit Agreement, dated as of
September 30, 2011, by and among HCA Inc., as borrower, the subsidiary borrowers party
thereto, Bank of America, N.A., as administrative agent and collateral agent, and the lenders
party thereto (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed June 30,
2017, and incorporated herein by reference).
— Joinder Agreement, dated as of January 3, 2018,
to the Credit Agreement, dated as of
September 30, 2011 (as amended and restated on March 7, 2014, as further amended on
October 30, 2014, and as further amended and restated on June 28, 2017), by and among the
subsidiary borrowers party thereto and Bank of America, N.A., as administrative agent (filed as
Exhibit 4.7(e) to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, and incorporated herein by reference).
— Restatement Agreement, dated as of June 30, 2021, to the Credit Agreement, dated as of
September 30, 2011, by and among HCA Inc., as parent borrower, the subsidiary borrowers party
thereto, Bank of America, N.A., as administrative agent and collateral agent, and the lenders
party thereto (filed as Exhibit 4.11 to the Company’s Current Report on Form 8-K filed July 1,
2021, and incorporated herein by reference).
94
4.9(a)
4.9(b)
— Security Agreement, dated as of September 30, 2011, by and among HCA Inc., the subsidiary
borrowers party thereto and Bank of America, N.A., as collateral agent (filed as Exhibit 4.5 to the
Company’s Current Report on Form 8-K filed October 3, 2011, and incorporated herein by
reference).
— Supplement No. 1, dated as of October 27, 2011, to the Security Agreement dated as of
September 30, 2011, by and among the subsidiary borrower party thereto and Bank of America,
N.A., as collateral agent (filed as Exhibit 4.8(b) to the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018, and incorporated herein by reference).
4.9(c)
— Schedule of Omitted Supplements to the Security Agreement dated as of September 30, 2011,
filed pursuant to Instruction 2 to Item 601 of Regulation S-K.
4.10(a) — General Intercreditor Agreement, dated as of November 17, 2006, by and between Bank of
America, N.A., as First Lien Collateral Agent, and The Bank of New York, as Junior Lien
Collateral Agent (filed as Exhibit 4.13(a) to the Company’s Registration Statement on Form S-4
(File No. 333-145054), and incorporated herein by reference).
4.10(b) — Receivables Intercreditor Agreement, dated as of November 17, 2006, by and among Bank of
America, N.A., as ABL Collateral Agent, Bank of America, N.A., as CF Collateral Agent and
The Bank of New York, as Bonds Collateral Agent (filed as Exhibit 4.13(b) to the Company’s
Registration Statement on Form S-4 (File No. 333-145054), and incorporated herein by
reference).
4.10(c) — First Lien Intercreditor Agreement, dated as of April 22, 2009, by and among Bank of America,
N.A. as Collateral Agent, Bank of America, N.A. as Authorized Representative under the Credit
Agreement and Law Debenture Trust Company of New York as the Initial Additional Authorized
Representative (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K filed
April 28, 2009, and incorporated herein by reference).
4.10(d) — Additional General Intercreditor Agreement, dated as of August 1, 2011, by and among Bank of
America, N.A., in its capacity as First Lien Collateral Agent, The Bank of New York Mellon, in
its capacity as Junior Lien Collateral Agent and in its capacity as trustee for the Second Lien
Notes issued on November 17, 2006, and The Bank of New York Mellon Trust Company, N.A.,
in its capacity as trustee for the Second Lien Notes issued on February 19, 2009 (filed as
Exhibit 4.9 to the Company’s Current Report on Form 8-K filed August 1, 2011, and
incorporated herein by reference).
4.10(e) — Additional Receivables Intercreditor Agreement, dated as of August 1, 2011, by and between
Bank of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as New First Lien
Collateral Agent (filed as Exhibit 4.10 to the Company’s Current Report on Form 8-K filed
August 1, 2011, and incorporated herein by reference).
4.10(f) — Additional General Intercreditor Agreement, dated as of February 16, 2012, by and among Bank
of America, N.A., in its capacity as First Lien Collateral Agent, The Bank of New York Mellon,
in its capacity as Junior Lien Collateral Agent and in its capacity as trustee for the Second Lien
Notes issued on November 17, 2006, and The Bank of New York Mellon Trust Company, N.A.,
in its capacity as trustee for the Second Lien Notes issued on February 19, 2009 (filed as
Exhibit 4.9 to the Company’s Current Report on Form 8-K filed February 16, 2012, and
incorporated herein by reference).
4.10(g) — Additional Receivables Intercreditor Agreement, dated as of February 16, 2012, by and between
Bank of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as New First Lien
Collateral Agent (filed as Exhibit 4.10 to the Company’s Current Report on Form 8-K filed
February 16, 2012, and incorporated herein by reference).
95
4.10(h) — Additional General Intercreditor Agreement, dated as of October 23, 2012, by and among Bank
of America, N.A., in its capacity as First Lien Collateral Agent, The Bank of New York Mellon,
in its capacity as Junior Lien Collateral Agent and in its capacity as trustee for the Second Lien
Notes issued on November 17, 2006, and The Bank of New York Mellon Trust Company, N.A.,
in its capacity as trustee for the Second Lien Notes issued on February 19, 2009 (filed as
Exhibit 4.10 to the Company’s Current Report on Form 8-K filed October 23, 2012, and
incorporated herein by reference).
4.10(i) — Additional Receivables Intercreditor Agreement, dated as of October 23, 2012, by and between
Bank of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as New First Lien
Collateral Agent (filed as Exhibit 4.11 to the Company’s Current Report on Form 8-K filed
October 23, 2012, and incorporated herein by reference).
4.11
4.12
4.13
— Registration Rights Agreement, dated as of November 22, 2010, by and among HCA Holdings,
Inc., Hercules Holding II, LLC and certain other parties thereto (filed as Exhibit 4.4 to the
Company’s Current Report on Form 8-K filed November 24, 2010, and incorporated herein by
reference).
— Registration Rights Agreement, dated as of March 16, 1989, by and among HCA-Hospital
Corporation of America and the persons listed on the signature pages thereto (filed as
Exhibit 4.14 to the Company’s Registration Statement on Form S-4 (File No. 333-145054), and
incorporated herein by reference).
— Assignment and Assumption Agreement, dated as of February 10, 1994, by and between
HCA-Hospital Corporation of America and Columbia Healthcare Corporation relating to the
Registration Rights Agreement, as amended (filed as Exhibit 4.15 to the Company’s Registration
Statement on Form S-4 (File No. 333-145054), and incorporated herein by reference).
4.14(a) — Indenture, dated as of December 16, 1993, by and between the Company and The First National
Bank of Chicago, as Trustee (filed as Exhibit 4.16(a) to the Company’s Registration Statement
on Form S-4 (File No. 333-145054), and incorporated herein by reference).
4.14(b) — First Supplemental Indenture, dated as of May 25, 2000, by and between the Company and Bank
One Trust Company, N.A., as Trustee (filed as Exhibit 4.16(b) to the Company’s Registration
Statement on Form S-4 (File No. 333-145054), and incorporated herein by reference).
4.14(c) — Second Supplemental Indenture, dated as of July 1, 2001, by and between the Company and
Bank One Trust Company, N.A., as Trustee (filed as Exhibit 4.16(c) to the Company’s
Registration Statement on Form S-4 (File No. 333-145054), and incorporated herein by
reference).
4.14(d) — Third Supplemental Indenture, dated as of December 5, 2001, by and between the Company and
The Bank of New York, as Trustee (filed as Exhibit 4.16(d) to the Company’s Registration
Statement on Form S-4 (File No. 333-145054), and incorporated herein by reference).
4.14(e) — Fourth Supplemental Indenture, dated as of November 14, 2006, by and between the Company
and The Bank of New York, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on
Form 8-K filed November 16, 2006, and incorporated herein by reference).
4.15
— Form of 7.5% Debenture due 2023 (filed as Exhibit 4.17 to the Company’s Registration
Statement on Form S-4 (File No. 333-145054), and incorporated herein by reference).
4.16
— Form of 8.36% Debenture due 2024 (filed as Exhibit 4.18 to the Company’s Registration
Statement on Form S-4 (File No. 333-145054), and incorporated herein by reference).
4.17
— Form of Fixed Rate Global Medium-Term Note (filed as Exhibit 4.19 to the Company’s
Registration Statement on Form S-4 (File No. 333-145054), and incorporated herein by
reference).
96
4.18
— Form of Floating Rate Global Medium-Term Note (filed as Exhibit 4.20 to the Company’s
Registration Statement on Form S-4 (File No. 333-145054), and incorporated herein by
reference).
4.19
— Form of 7.69% Note due 2025 (filed as Exhibit 4.10 to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2004, and incorporated herein by reference).
4.20
— Form of 7.50% Debenture due 2095 (filed as Exhibit 4.23 to the Company’s Registration
Statement on Form S-4 (File No. 333-145054), and incorporated herein by reference).
4.21
— Form of 7.05% Debenture due 2027 (filed as Exhibit 4.24 to the Company’s Registration
Statement on Form S-4 (File No. 333-145054), and incorporated herein by reference).
4.22
— 7.50% Note due 2033 in the principal amount of $250,000,000 (filed as Exhibit 4.2 to the
Company’s Current Report on Form 8-K filed November 6, 2003, and incorporated herein by
reference).
4.23
— Form of Indenture of HCA Inc. (filed as Exhibit 4.2 to the Registrant’s Registration Statement on
Form S-3 (File No. 333-175791), and incorporated herein by reference).
4.24
4.25
— Indenture dated as of August 1, 2011, by and among HCA Inc., the guarantors named on
Schedule I thereto, Delaware Trust Company (as successor to Law Debenture Trust Company of
New York), as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar
and transfer agent (filed as Exhibit 4.5 to the Company’s Registration Statement on Form S-3
(File No. 333-226709), and incorporated herein by reference).
— Supplemental Indenture No. 5, dated as of October 23, 2012, by and among HCA Inc., HCA
Holdings, Inc., Law Debenture Trust Company of New York, as trustee, and Deutsche Bank
Trust Company Americas, as paying agent, registrar and transfer agent (Unsecured Notes) (filed
as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed October 23, 2012, and
incorporated herein by reference).
4.26(a) — Supplemental Indenture No. 6, dated as of October 23, 2012, by and among HCA Inc., HCA
Holdings, Inc., the subsidiary guarantors named therein, Law Debenture Trust Company of New
York, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and
transfer agent (Secured Notes) (filed as Exhibit 4.4 to the Company’s Current Report on Form
8-K filed October 23, 2012, and incorporated herein by reference).
4.26(b) — Supplemental Indenture, dated as of March 31, 2020, by and among the subsidiary guarantors
named therein, Delaware Trust Company, as trustee, and Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.13(a) to the Company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and incorporated herein
by reference).
4.26(c) — Schedule of Omitted Supplemental Indentures to Supplemental Indentures, filed pursuant to
Instruction 2 to Item 601 of Regulation S-K.
4.27
4.28
4.29
— Form of 5.875% Senior Notes due 2023 (included in Exhibit 4.25).
— Form of 4.75% Senior Secured Notes due 2023 (included in Exhibit 4.26(a)).
— Indenture, dated as of December 6, 2012, by and among HCA Holdings, Inc., Law Debenture
Trust Company of New York, as trustee, and Deutsche Bank Trust Company Americas, as
registrar, paying agent and transfer agent (filed as Exhibit 4.1 to the Company’s Current Report
on Form 8-K filed December 6, 2012, and incorporated herein by reference).
97
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
— Supplemental Indenture No. 8, dated as of March 17, 2014, by and among HCA Inc., HCA
Holdings, Inc., the subsidiary guarantors named therein, Law Debenture Trust Company of New
York, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and
transfer agent (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed
March 21, 2014, and incorporated herein by reference).
— Form of 5.00% Senior Secured Notes due 2024 (included in Exhibit 4.30).
— Additional Receivables Intercreditor Agreement, dated as of March 17, 2014, by and between
Bank of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as New First Lien
Collateral Agent (filed as Exhibit 4.9 to the Company’s Current Report on Form 8-K filed
March 21, 2014, and incorporated herein by reference).
— Supplemental Indenture No. 10, dated as of October 17, 2014, by and among HCA Inc., HCA
Holdings, Inc., the subsidiary guarantors named therein, Law Debenture Trust Company of New
York, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and
transfer agent (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed
October 17, 2014, and incorporated herein by reference).
— Form of 5.25% Senior Secured Notes due 2025 (included in Exhibit 4.33).
— Additional Receivables Intercreditor Agreement, dated as of October 17, 2014, by and between
Bank of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as New First Lien
Collateral Agent (filed as Exhibit 4.9 to the Company’s Current Report on Form 8-K filed
October 17, 2014, and incorporated herein by reference).
— Supplemental Indenture No. 11, dated as of January 16, 2015, by and among HCA Inc., HCA
Holdings, Inc., Law Debenture Trust Company of New York, as trustee, and Deutsche Bank
Trust Company Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.2 to the
Company’s Current Report on Form 8-K filed January 16, 2015, and incorporated herein by
reference).
— Form of 5.375% Senior Notes due 2025 (included in Exhibit 4.36).
— Supplemental Indenture No. 12, dated as of May 20, 2015, by and among HCA Inc., HCA
Holdings, Inc., Law Debenture Trust Company of New York, as trustee, and Deutsche Bank
Trust Company Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.4 to the
Company’s Current Report on Form 8-K filed May 20, 2015, and incorporated herein by
reference).
— Supplemental Indenture No. 13, dated as of November 13, 2015, by and among HCA Inc., HCA
Holdings, Inc., Law Debenture Trust Company of New York, as trustee, and Deutsche Bank
Trust Company Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.2 to the
Company’s Current Report on Form 8-K filed November 13, 2015, and incorporated herein by
reference).
— Form of 5.875% Senior Notes due 2026 (included in Exhibit 4.39).
— Supplemental Indenture No. 14, dated as of December 8, 2015, by and among HCA Inc., HCA
Holdings, Inc., Law Debenture Trust Company of New York, as trustee, and Deutsche Bank
Trust Company Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.4 to the
Company’s Current Report on Form 8-K filed December 8, 2015, and incorporated herein by
reference).
— Supplemental Indenture No. 15, dated as of March 15, 2016, by and among HCA Inc., HCA
Holdings, Inc., the subsidiary guarantors named therein, Law Debenture Trust Company of New
York, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and
transfer agent (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed
March 15, 2016, and incorporated herein by reference).
98
4.43
4.44
4.45
4.46
4.47
4.48
4.49
4.50
4.51
4.52
4.53
4.54
4.55
4.56
— Form of 5.250% Senior Secured Notes due 2026 (included in Exhibit 4.42).
— Additional Receivables Intercreditor Agreement, dated as of March 15, 2016, by and between
Bank of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as First Lien
Collateral Agent (filed as Exhibit 4.7 to the Company’s Current Report on Form 8-K filed
March 15, 2016, and incorporated herein by reference).
— Supplemental Indenture No. 16, dated as of August 15, 2016, by and among HCA Inc., HCA
Holdings, Inc., the subsidiary guarantors named therein, Law Debenture Trust Company of New
York, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and
transfer agent (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed
August 15, 2016, and incorporated herein by reference).
— Form of 4.500% Senior Secured Notes due 2027 (included in Exhibit 4.45).
— Additional Receivables Intercreditor Agreement, dated as of August 15, 2016, by and between
Bank of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as First Lien
Collateral Agent (filed as Exhibit 4.8 to the Company’s Current Report on Form 8-K filed
August 15, 2016, and incorporated herein by reference).
— Supplemental Indenture No. 17, dated as of December 9, 2016, by and among HCA Inc., HCA
Holdings, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee,
and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed
as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed December 9, 2016, and
incorporated herein by reference).
— Supplemental Indenture No. 18, dated as of June 22, 2017, by and among HCA Inc., HCA
Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee,
and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed
as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed June 22, 2017, and
incorporated herein by reference).
— Form of 5.500% Senior Secured Notes due 2047 (included in Exhibit 4.49).
— Additional Receivables Intercreditor Agreement, dated as of June 22, 2017, by and between Bank
of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as First Lien Collateral
Agent (filed as Exhibit 4.7 to the Company’s Current Report on Form 8-K filed June 22, 2017,
and incorporated herein by reference).
— Supplemental Indenture No. 19, dated as of August 23, 2018, by and among HCA Inc., HCA
Healthcare, Inc., Delaware Trust Company, as trustee, and Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.2 to the Company’s
Current Report on Form 8-K filed August 23, 2018, and incorporated herein by reference).
— Form of 5.375% Senior Notes Due 2026 (included in Exhibit 4.52).
— Supplemental Indenture No. 20, dated as of August 23, 2018, by and among HCA Inc., HCA
Healthcare, Inc., Delaware Trust Company, as trustee, and Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.3 to the Company’s
Current Report on Form 8-K filed August 23, 2018, and incorporated herein by reference).
— Form of 5.625% Senior Notes Due 2028 (included in Exhibit 4.54).
— Supplemental Indenture No. 21, dated as of January 22, 2019, by and among HCA Inc., HCA
Healthcare, Inc., Delaware Trust Company, as trustee, and Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.4 to the Company’s
Current Report on Form 8-K filed January 22, 2019, and incorporated herein by reference).
99
4.57
4.58
4.59
4.60
4.61
4.62
4.63
4.64
4.65
4.66
4.67
4.68
4.69
4.70
4.71
— Supplemental Indenture No. 22, dated as of January 30, 2019, by and among HCA Inc., HCA
Healthcare, Inc., Delaware Trust Company, as trustee, and Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.2 to the Company’s
Current Report on Form 8-K filed January 30, 2019, and incorporated herein by reference).
— Form of 5.875% Senior Notes Due 2029 (included in Exhibit 4.57).
— Supplemental Indenture No. 23, dated as of June 12, 2019, by and among HCA Inc., HCA
Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee,
and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed
as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed June 12, 2019, and
incorporated herein by reference).
— Supplemental Indenture No. 24, dated as of June 12, 2019, by and among HCA Inc., HCA
Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee,
and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed
as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed June 12, 2019, and
incorporated herein by reference).
— Supplemental Indenture No. 25, dated as of June 12, 2019, by and among HCA Inc., HCA
Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee,
and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed
as Exhibit 4.4 to the Company’s Current Report on Form 8-K filed June 12, 2019, and
incorporated herein by reference).
— Form of 4 1/8% Senior Secured Notes due 2029 (included in Exhibit 4.59).
— Form of 5 1/8% Senior Secured Notes due 2039 (included in Exhibit 4.60).
— Form of 5 1/4% Senior Secured Notes due 2049 (included in Exhibit 4.61).
— Additional Receivables Intercreditor Agreement, dated as of June 12, 2019, by and between Bank
of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as First Lien Collateral
Agent (filed as Exhibit 4.11 to the Company’s Current Report on Form 8-K filed June 12, 2019,
and incorporated herein by reference).
— Supplemental Indenture No. 26, dated as of February 26, 2020, by and among HCA Inc., HCA
Healthcare, Inc., Delaware Trust Company, as trustee, and Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.2 to the Company’s
Current Report on Form 8-K filed February 26, 2020, and incorporated herein by reference).
— Form of 3.500% Senior Notes Due 2030 (included in Exhibit 4.66).
— Supplemental Indenture No. 27, dated as of June 30, 2021, by and among HCA Inc., HCA
Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee,
and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed
as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed July 1, 2021, and
incorporated herein by reference).
— Supplemental Indenture No. 28, dated as of June 30, 2021, by and among HCA Inc., HCA
Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee,
and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed
as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed July 1, 2021, and
incorporated herein by reference).
— Form of 2 3/8% Senior Secured Notes Due 2031 (included in Exhibit 4.68).
— Form of 3 1/2% Senior Secured Notes Due 2051 (included in Exhibit 4.69).
100
4.72
10.1
— Additional Receivables Intercreditor Agreement, dated as of June 30, 2021, by and between Bank
of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as First Lien Collateral
Agent (filed as Exhibit 4.9 to the Company’s Current Report on Form 8-K filed July 1, 2021, and
incorporated herein by reference).
— Form of Indemnity Agreement with certain officers and directors (filed as Exhibit 10.3 to the
Company’s Registration Statement on Form S-4 (File No. 333-145054) and incorporated herein
by reference).
10.2(a) — 2006 Stock Incentive Plan for Key Employees of HCA Holdings, Inc. and its Affiliates as
Amended and Restated (filed as Exhibit 10.11(b) to the Company’s Registration Statement on
Form S-1 (File No. 333-171369), and incorporated herein by reference).*
10.2(b) — First Amendment to 2006 Stock Incentive Plan for Key Employees of HCA Holdings, Inc. and its
Affiliates, as Amended and Restated (filed as Exhibit 10.1 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2011, and incorporated herein by reference).*
10.2(c) — Second Amendment to the 2006 Stock Incentive Plan for Key Employees of HCA Holdings, Inc.
and its Affiliates, as Amended and Restated (filed as Exhibit 10.1 to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2013, and incorporated herein by
reference).*
10.3(a) — Management Stockholder’s Agreement, dated November 17, 2006 (filed as Exhibit 10.12 to the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10.3(b) — Form of Omnibus Amendment
Inc.’s Management Stockholder’s
to HCA Holdings,
Agreements (filed as Exhibit 10.39 to the Company’s Registration Statement on Form S-1
(File No. 333-171369), and incorporated herein by reference).
10.4
10.5
10.6
— Form of Stock Appreciation Right Award Agreement Under the 2006 Stock Incentive Plan for
Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 14, 2012, and
incorporated herein by reference).*
— Form of 2014 Stock Appreciation Right Award Agreement Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.17(b) to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2013, and incorporated herein by reference).*
— Retirement Agreement, dated as of January 1, 2002, by and between the Company and Thomas
F. Frist, Jr., M.D. (filed as Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, and incorporated herein by reference).*
10.7(a) — Amended and Restated HCA Supplemental Executive Retirement Plan, effective December 22,
2010, except as provided therein (filed as Exhibit 10.26 to the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2010, and incorporated herein by reference).*
10.7(b) — Amendment, dated December 22, 2020, to Amended and Restated HCA Supplemental Executive
Retirement Plan (filed as Exhibit 10.7(b) to the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2020, and incorporated herein by reference).*
10.8(a) — Amended and Restated HCA Restoration Plan, effective December 22, 2010 (filed as
Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2010, and incorporated herein by reference).*
101
10.8(b) — Amendment to the Amended and Restated HCA Restoration Plan, effective June 5, 2020 (filed as
Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2020, and incorporated herein by reference).*
10.9(a) — Employment Agreement dated November 16, 2006 (Samuel N. Hazen) (filed as Exhibit 10.27(d)
to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 ,
and incorporated herein by reference).*
10.9(b) — Employment Agreement dated November 16, 2006 (Charles J. Hall) (filed as Exhibit 10.28(d) to
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and
incorporated herein by reference).*
10.9(c) — Amendment to Employment Agreement effective February 9, 2011 (Samuel N. Hazen) (filed as
Exhibit 10.29(j) to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2010, and incorporated herein by reference).*
10.9(d) — Second Amendment to Employment Agreement effective January 29, 2015 (Samuel N. Hazen)
(filed as Exhibit 10.23(i) to the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2014 (File No. 001-11239), and incorporated herein by reference).*
10.9(e) — Third Amendment to Employment Agreement effective January 27, 2016 (Samuel N. Hazen)
(filed as Exhibit 10.23(j) to the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2015, and incorporated herein by reference).*
10.9(f) — Amendment to Employment Agreement effective January 27, 2016 (Charles J. Hall) (filed as
Exhibit 10.23(k) to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2015, and incorporated herein by reference).*
10.9(g) — Fourth Amendment to Employment Agreement effective November 14, 2016 (Samuel N. Hazen)
(filed as Exhibit 10.16(l) to the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2016, and incorporated herein by reference).*
10.9(h) — Fifth Amendment to Employment Agreement effective January 1, 2019 (Samuel N. Hazen) (filed
as Exhibit 10.14(i) to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, and incorporated herein by reference).*
10.10
10.11
10.12
10.13
10.14
— Indemnification Priority and Information Sharing Agreement, dated as of November 1, 2009, by
and between HCA Inc. and certain other parties thereto (filed as Exhibit 10.35 to the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2009 , and incorporated
herein by reference).
— Assignment and Assumption Agreement, dated November 22, 2010, by and among HCA Inc.,
HCA Holdings, Inc. and HCA Merger Sub LLC (filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed November 24, 2010, and incorporated herein by reference).
— Omnibus Amendment to Various Stock and Option Plans and the Management Stockholders’
Agreement, dated November 22, 2010 (filed as Exhibit 10.2 to the Company’s Current Report on
Form 8-K filed November 24, 2010, and incorporated herein by reference).*
— Omnibus Amendment to Stock Option Agreements Issued Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as amended, effective February 16,
2011 (filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2010, and incorporated herein by reference).*
— Stockholders’ Agreement, dated as of March 9, 2011, by and among the Company, Hercules
Holding II, LLC and the other signatories thereto (filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed March 16, 2011, and incorporated herein by reference).
102
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
— Amendment, dated as of September 21, 2011, to the Stockholders’ Agreement, dated as of
March 9, 2011 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed
September 21, 2011, and incorporated herein by reference).
— Form of Director Restricted Share Unit Agreement Under the 2006 Stock Incentive Plan for Key
Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as Exhibit
10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011,
and incorporated herein by reference).*
— Executive Severance Policy (filed as Exhibit 10.46 to the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2013, and incorporated herein by reference).*
— HCA Holdings, Inc. Employee Stock Purchase Plan (filed as Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed April 25, 2014 (File No. 001-11239), and incorporated herein
by reference).*
— Form of 2015 Stock Appreciation Right Award Agreement Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 4, 2015, and
incorporated herein by reference).*
— Form of 2016 Stock Appreciation Right Award Agreement Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.50 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2015, and incorporated herein by reference).*
— Form of Director Restricted Share Unit Agreement (Annual Award) Under the 2006 Stock
Incentive Plan for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and
Restated (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2016, and incorporated herein by reference).*
— Form of 2017 Stock Appreciation Right Award Agreement Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.42 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2016, and incorporated herein by reference).*
— Form of 2018 Stock Appreciation Right Award Agreement Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2017, and incorporated herein by reference).*
— Form of 2019 Stock Appreciation Right Award Agreement Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.41 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, and incorporated herein by reference).*
— Form of 2019 Performance Share Unit Award Agreement Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.42 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, and incorporated herein by reference).*
— HCA Healthcare, Inc. 2019 Senior Officer Performance Excellence Program (filed as Exhibit
10.1 to the Company’s Current Report on Form 8-K filed April 2, 2019, and incorporated herein
by reference).*
103
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
— Form of 2020 Stock Appreciation Right Award Agreement Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, and incorporated herein by reference).*
— Form of 2020 Performance Share Unit Award Agreement Under the 2006 Stock Incentive Plan
for Key Employees of HCA Holdings, Inc. and its Affiliates, as Amended and Restated (filed as
Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, and incorporated herein by reference).*
— 2020 Stock Incentive Plan for Key Employees of HCA Healthcare, Inc., and its Affiliates (filed
as Exhibit 4.4 to the Company’s Registration Statement on Form S-8, and incorporated herein by
reference).*
— Form of Stock Appreciation Right Award Agreement Under the 2020 Stock Incentive Plan for
Key Employees of HCA Healthcare, Inc. and its Affiliates (filed as Exhibit 4.5 to the Company’s
Registration Statement on Form S-8 (File No. 333-237967), and incorporated herein by
reference).*
— Form of Employee Restricted Share Unit Award Agreement Under the 2020 Stock Incentive Plan
for Key Employees of HCA Healthcare, Inc. and its Affiliates (filed as Exhibit 4.6 to the
Company’s Registration Statement on Form S-8 (File No. 333-237967), and incorporated herein
by reference).*
— Form of Performance Share Unit Award Agreement Under the 2020 Stock Incentive Plan for
Key Employees of HCA Healthcare, Inc. and its Affiliates (filed as Exhibit 4.7 to the Company’s
Registration Statement on Form S-8 (File No. 333-237967), and incorporated herein by
reference).*
— HCA Healthcare,
Inc. 2020 Senior Officer Performance Excellence Program (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 2, 2020, and incorporated
herein by reference).*
— Form of Director Restricted Share Unit Agreement Under the 2020 Stock Incentive Plan for Key
Employees of HCA Healthcare, Inc. and its Affiliates (filed as Exhibit 10.2 to the Company
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and incorporated herein
by reference).*
— Form of 2021 Stock Appreciation Right Award Agreement Under the 2020 Stock Incentive Plan
for Key Employees of HCA Healthcare, Inc. and its Affiliates (filed as Exhibit 10.37 to the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and
incorporated herein by reference).*
— Form of 2021 Performance Share Unit Award Agreement Under the 2020 Stock Incentive Plan
for Key Employees of HCA Healthcare, Inc. and its Affiliates (filed as Exhibit 10.38 to the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and
incorporated herein by reference).*
— HCA Healthcare, Inc. 2021 Senior Officer Performance Excellence Program (filed as Exhibit
10.1 to the Company’s Current Report on Form 8-K filed April 9, 2021, and incorporated herein
by reference).*
10.38
— Form of 2022 Stock Appreciation Right Award Agreement Under the 2020 Stock Incentive Plan
for Key Employees of HCA Healthcare, Inc. and its Affiliates.*
104
10.39
— Form of 2022 Performance Share Unit Award Agreement Under the 2020 Stock Incentive Plan
for Key Employees of HCA Healthcare, Inc. and its Affiliates.*
21
22
23
— List of Subsidiaries.
— List of Subsidiary Guarantors and Pledged Securities.
— Consent of Ernst & Young LLP.
31.1
— Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2
— Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32
— Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
101
— The following financial information from our annual report on Form 10-K for the year ended
December 31, 2021, filed with the SEC on February 18, 2022, formatted in Extensible Business
Reporting Language (XBRL): (i) the consolidated balance sheets at December 31, 2021 and
2020, (ii) the consolidated income statements for the years ended December 31, 2021, 2020 and
2019, (iii) the consolidated comprehensive income statements for the years ended December 31,
2021, 2020 and 2019, (iv) the consolidated statements of stockholders’ equity (deficit) for the
years ended December 31, 2021, 2020 and 2019, (v) the consolidated statements of cash flows
for the years ended December 31, 2021, 2020 and 2019, and (vi) the notes to consolidated
financial statements.
104
— The cover page from the Company’s Annual Report on Form 10-K for the year ended
December 31, 2021, formatted in Inline XBRL (included in Exhibit 101).
* Management compensatory plan or arrangement.
Item 16. Form 10-K Summary
None.
105
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
HCA HEALTHCARE, INC.
By:
/S/ SAMUEL N. HAZEN
Samuel N. Hazen
Chief Executive Officer
Dated: February 18, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
/S/ SAMUEL N. HAZEN
Samuel N. Hazen
/S/ WILLIAM B. RUTHERFORD
William B. Rutherford
/S/ THOMAS F. FRIST III
Thomas F. Frist III
/S/ MEG G. CROFTON
Meg G. Crofton
/S/ ROBERT J. DENNIS
Robert J. Dennis
/S/ NANCY-ANN DEPARLE
Nancy-Ann DeParle
/S/ WILLIAM R. FRIST
William R. Frist
Title
Date
Chief Executive Officer and Director
(Principal Executive Officer)
February 18, 2022
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
February 18, 2022
Chairman and Director
February 18, 2022
Director
February 18, 2022
Director
February 18, 2022
Director
February 18, 2022
Director
February 18, 2022
/S/ CHARLES O. HOLLIDAY, JR.
Director
February 18, 2022
Charles O. Holliday, Jr.
/S/ HUGH F. JOHNSTON
Hugh F. Johnston
Director
February 18, 2022
/S/ MICHAEL W. MICHELSON
Director
February 18, 2022
Michael W. Michelson
/S/ WAYNE J. RILEY
Wayne J. Riley
/S/ ANDREA B. SMITH
Andrea B. Smith
106
Director
February 18, 2022
Director
February 18, 2022
HCA HEALTHCARE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Financial Statements:
Consolidated Income Statements for the years ended December 31, 2021, 2020 and 2019 . . . . . . . . . .
Consolidated Comprehensive Income Statements for the years ended December 31, 2021, 2020 and
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets, December 31, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2021,
Page
F-2
F-5
F-6
F-7
F-8
2020 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 . . . .
F-9
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10
F-1
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
HCA Healthcare, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of HCA Healthcare, Inc. (the Company) as of
income, comprehensive income,
the related consolidated statements of
December 31, 2021 and 2020,
stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021,
and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company at
December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), and our report dated February 18, 2022
expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
F-2
Description of the Matter
How We Addressed the
Matter in Our Audit
Revenue Recognition
the year ended December 31, 2021,
For
the Company’s revenues were
$58.752 billion. As discussed in Note 1 to the consolidated financial statements,
revenues are based upon the estimated amounts the Company expects to be entitled
to receive from patients and third-party payers. Estimates of contractual
allowances under managed care, commercial, and governmental insurance plans
are based upon the payment terms specified in the related contractual agreements
or as mandated under government payer programs. Management continually
reviews the contractual allowances estimation process to consider and incorporate
updates to laws and regulations and the frequent changes in managed care
contractual terms resulting from contract renegotiations and renewals. Revenues
related to uninsured patients and uninsured copayment and deductible amounts for
patients who have health care insurance coverage may have discounts applied
(uninsured discounts and contractual discounts). The Company also records
estimated implicit price concessions (based primarily on historical collection
experience) related to uninsured accounts to record these revenues and accounts
receivable at the estimated amounts the Company expects to collect. The primary
collection risks relate to uninsured patient accounts, including amounts owed from
patients after insurance has paid the amounts covered by the applicable agreement.
Implicit price concessions relate primarily to amounts due directly from patients
and are based upon management’s assessment of historical write-offs and expected
net collections, business and economic conditions, trends in federal, state and
private employer health care coverage and other collection indicators.
Auditing management’s estimates of contractual allowances and implicit price
concessions was complex and judgmental due to the significant data inputs and
subjective assumptions utilized in determining related amounts.
We tested internal controls that address the risks of material misstatement related
to the measurement and valuation of revenues, including estimation of contractual
allowances and implicit price concessions. For example, we tested management’s
internal controls over the key data inputs to the contractual allowance and implicit
price concession models, significant assumptions underlying management’s
models, and management’s internal controls over retrospective hindsight reviews
of historical reserve accuracy.
To test the estimated contractual allowances and implicit price concessions, we
performed audit procedures that included, among others, assessing methodologies
and evaluating the significant assumptions discussed above and testing the
completeness and accuracy of the underlying data used by the Company in its
estimates. We compared the significant assumptions used by management to
current industry and economic trends and considered changes, if any, to the
Company’s business and other relevant factors. We also assessed the historical
accuracy of management’s estimates as a source of potential corroborative or
contrary evidence.
F-3
Description of the Matter
How We Addressed the
Matter in Our Audit
Professional Liability Claims
At December 31, 2021, the Company’s reserves for professional liability risks
were $2.022 billion and the Company’s related provision for losses for the year
ended December 31, 2021 was $453 million. As discussed in Note 1 to the
consolidated financial statements, reserves for professional liability risks represent
the estimated ultimate cost of all reported and unreported losses incurred and
unpaid as of
the consolidated balance sheet date. Management determines
professional liability reserves and provisions for losses using individual case-basis
valuations and actuarial analyses. Trends in the average frequency (number of
claims) and ultimate average severity (cost per claim) of claims are significant
assumptions in estimating the reserves.
Auditing management’s professional liability claims reserves was complex and
judgmental due to the significant estimations required in determining the reserves,
particularly the actuarial methodology and assumptions related to the severity and
frequency of claims.
We tested management’s internal controls that address the risks of material
misstatement over the Company’s professional liability claims reserve estimation
process. For example, we tested internal controls over management’s review of the
actuarial methodology and significant assumptions, and the completeness and
accuracy of claims data supporting the recorded reserves.
To test
liability
the Company’s determination of the estimated professional
expense and reserves, we performed audit procedures that included, among others,
testing the completeness and accuracy of underlying claims data used by the
Company and its actuaries in its determination of reserves and reviewing the
Company’s insurance contracts to assess self-insured limits, deductibles and
coverage limits. Additionally, with the involvement of our actuarial specialists, we
performed audit procedures that included, among others, assessing the actuarial
valuation methodologies utilized by management and its actuaries, testing the
significant assumptions,
including consideration of Company-specific claim
reporting and payment data, assessing the accuracy of management’s historical
reserve estimates, and developing an independent range of reserves for comparison
to the Company’s recorded amounts.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1994.
Nashville, Tennessee
February 18, 2022
F-4
HCA HEALTHCARE, INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019
(Dollars in millions, except per share amounts)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 58,752
$ 51,533
$ 51,336
2021
2020
2019
Salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses (gains) on sales of facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses on retirement of debt
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . .
26,779
9,481
9,961
(113)
2,853
1,566
(1,620)
12
23,874
8,369
9,307
(54)
2,721
1,584
7
295
23,560
8,481
9,481
(43)
2,596
1,824
(18)
211
48,919
46,103
46,092
9,833
2,112
7,721
765
5,430
1,043
4,387
633
5,244
1,099
4,145
640
Net income attributable to HCA Healthcare, Inc.
. . . . . . . . . . . . . . . . . . .
$
6,956
$
3,754
$
3,505
Per share data:
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
21.52
21.16
$
$
11.10
10.93
$
$
10.27
10.07
Shares used in earnings per share calculations (in millions):
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
323.315
328.752
338.274
343.605
341.210
348.226
The accompanying notes are an integral part of the consolidated financial statements.
F-5
HCA HEALTHCARE, INC.
CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019
(Dollars in millions)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before taxes:
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (losses) gains on available-for-sale securities . . . . . . . . . . . . . . . . . . .
Defined benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension costs included in salaries and benefits . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of derivative financial instruments . . . . . . . . . . . . . . . . . . . .
Interest costs (benefits) included in interest expense . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes (benefits) related to other comprehensive income items . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
$7,721
$4,387
$4,145
(9)
(16)
87
28
115
1
37
38
128
30
98
18
14
(71)
28
(43)
(66)
24
(42)
(53)
(11)
(42)
5
15
(63)
13
(50)
(50)
(17)
(67)
(97)
(18)
(79)
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . .
7,819
765
4,345
633
4,066
640
Comprehensive income attributable to HCA Healthcare, Inc. . . . . . . . . . . . . . . . . . . . .
$7,054
$3,712
$3,426
The accompanying notes are an integral part of the consolidated financial statements.
F-6
HCA HEALTHCARE, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2021 AND 2020
(Dollars in millions)
Current assets:
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments of insurance subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in and advances to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt due within one year
Long-term debt, less debt issuance costs and discounts of $248 and $236 . . . . . . . . . . . . . .
Professional liability risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use operating lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity:
Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 305,476,800
shares — 2021 and 339,425,600 shares — 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings (deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .
Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc.
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
$ 1,451
8,095
1,986
2,010
13,542
$ 1,793
7,051
2,025
1,464
12,333
2,496
19,211
28,256
1,387
51,350
(27,287)
24,063
2,269
18,471
27,082
1,495
49,317
(26,118)
23,199
438
448
9,540
2,113
598
$ 50,742
388
422
8,578
2,024
546
$ 47,490
$ 4,111
1,912
3,322
237
9,582
34,342
1,514
1,755
2,060
$ 3,535
1,720
3,240
209
8,704
30,795
1,486
1,673
1,940
3
—
(404)
(532)
(933)
2,422
1,489
$ 50,742
3
294
(502)
777
572
2,320
2,892
$ 47,490
The accompanying notes are an integral part of the consolidated financial statements.
F-7
HCA HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019
(Dollars in millions)
Equity (Deficit) Attributable to HCA Healthcare, Inc.
Common Stock
Shares
(in millions)
Par
Value
Capital in
Excess of
Par
Value
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
(Deficit)
Equity
Attributable to
Noncontrolling
Interests
Total
342.895
$3
$ —
$(381)
$(4,572)
$2,032
$(2,918)
Balances, December 31, 2018 . . . .
Comprehensive income
(loss) . . . . . . . . . . . . . . . . . .
Repurchase of common
stock . . . . . . . . . . . . . . . . . .
Share-based benefit plans . . .
Cash dividends declared
($1.60 share)
. . . . . . . . . . .
Distributions . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Other
(7.949)
3.500
Balances, December 31, 2019 . . . .
Comprehensive income
338.446
3
(loss) . . . . . . . . . . . . . . . . . .
Repurchase of common
stock . . . . . . . . . . . . . . . . . .
Share-based benefit plans . . .
Cash dividends declared
($0.43 share)
. . . . . . . . . . .
Distributions . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Other
Balances, December 31, 2020 . . . .
Comprehensive income . . . . .
Repurchase of common
stock . . . . . . . . . . . . . . . . . .
Share-based benefit plans . . .
Cash dividends declared
($1.92 share)
. . . . . . . . . . .
Distributions . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Other
(3.287)
4.267
339.426
3
(37.812)
3.863
(79)
3,505
640
4,066
(729)
(555)
(542)
113
(460)
(2,351)
2,243
(1,031)
313
(555)
(542)
102
(565)
(42)
3,754
633
4,345
(502)
98
(441)
(35)
(150)
777
6,956
(7,637)
(628)
(441)
265
(150)
(626)
64
2,892
7,819
(8,215)
280
(628)
(749)
90
(626)
70
2,320
765
(749)
86
(302)
313
(11)
—
300
(6)
294
(578)
280
4
Balances, December 31, 2021 . . . .
305.477
$3
$ —
$(404)
$ (532)
$2,422
$ 1,489
The accompanying notes are an integral part of the consolidated financial statements.
F-8
HCA HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019
(Dollars in millions)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating
$ 7,721
$ 4,387
$ 4,145
activities:
2021
2020
2019
Increase (decrease) in cash from operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses (gains) on sales of facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses on retirement of debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(962)
(540)
999
2,853
(70)
(1,620)
12
27
440
99
327
(304)
1,255
2,721
41
7
295
30
362
111
(326)
(158)
396
2,596
250
(18)
211
30
347
129
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . .
8,959
9,232
7,602
Cash flows from investing activities:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of property and equipment
Acquisition of hospitals and health care entities . . . . . . . . . . . . . . . . . . . . . . . .
Sales of hospitals and health care entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,577)
(1,105)
2,160
(117)
(4)
(2,835)
(568)
68
(20)
(38)
(4,158)
(1,682)
61
25
34
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . .
(2,643)
(3,393)
(5,720)
Cash flows from financing activities:
Issuances of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change in revolving credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,344
2,780
(3,869)
(749)
(38)
(624)
(8,215)
(284)
2,700
(2,480)
(3,437)
(626)
(35)
(153)
(441)
(205)
6,451
(560)
(5,324)
(542)
(73)
(550)
(1,031)
(142)
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . .
(6,655)
(4,677)
(1,771)
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . .
Change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
(342)
1,793
10
1,172
621
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,451
$ 1,793
$
8
119
502
621
Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax payments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,502
$ 2,182
$ 1,607
$ 1,002
$ 1,914
849
$
The accompanying notes are an integral part of the consolidated financial statements.
F-9
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ACCOUNTING POLICIES
Reporting Entity
HCA Healthcare, Inc. is a holding company whose affiliates own and operate hospitals and related health
care entities. The term “affiliates” includes direct and indirect subsidiaries of HCA Healthcare, Inc. and
partnerships and joint ventures in which such subsidiaries are partners. At December 31, 2021 these affiliates
owned and operated 182 hospitals, 125 freestanding surgery centers, 21 freestanding endoscopy centers and
provided extensive outpatient and ancillary services. HCA Healthcare, Inc.’s facilities are located in 20 states and
England. The terms “Company,” “HCA,” “we,” “our” or “us,” as used herein and unless otherwise stated or
indicated by context, refer to HCA Healthcare, Inc. and its affiliates. The terms “facilities” or “hospitals” refer to
entities owned and operated by affiliates of HCA and the term “employees” refers to employees of affiliates of
HCA.
Basis of Presentation
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those estimates.
The consolidated financial statements include all subsidiaries and entities controlled by HCA. We generally
define “control” as ownership of a majority of the voting interest of an entity. The consolidated financial
statements include entities in which we absorb a majority of the entity’s expected losses, receive a majority of the
entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the
entity. The accounts of acquired entities are included in our consolidated financial statements for periods
intercompany transactions have been
subsequent
eliminated. Investments in entities we do not control, but in which we have a substantial ownership interest and
can exercise significant influence, are accounted for using the equity method.
to our acquisition of controlling interests. Significant
The majority of our expenses are “cost of revenue” items. Costs that could be classified as general and
administrative include our corporate office costs, which were $400 million, $416 million and $370 million for the
years ended December 31, 2021, 2020 and 2019, respectively.
COVID-19 Pandemic
On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Patient
volumes and the related revenues for most of our services were significantly impacted during the latter portion of
the first quarter and the first half of the second quarter of 2020 and have continued to be impacted as various
policies were implemented by federal, state and local governments in response to the COVID-19 pandemic.
During the second quarter of 2021, our patient volumes improved as the effects of the pandemic moderated and
certain pandemic-related restrictions and policies were eased. For the remainder of 2021, our patient volumes
exhibited consistent growth over the prior year, with the exception of inpatient surgeries, and included a
resurgence of COVID-19 admissions and the re-imposition of pandemic-related restrictions in certain markets.
We believe the extent of the COVID-19 pandemic’s impact on our operating results and financial condition has
been and will continue to be driven by many factors, most of which are beyond our control and ability to
forecast. Because of these uncertainties, we cannot estimate how long or to what extent the pandemic will impact
our operations.
F-10
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Revenues
Our revenues generally relate to contracts with patients in which our performance obligations are to provide
health care services to the patients. Revenues are recorded during the period our obligations to provide health
care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods
that average approximately five days, and revenues are recognized based on charges incurred in relation to total
expected charges. Our performance obligations for outpatient services are generally satisfied over a period of less
than one day. The contractual relationships with patients, in most cases, also involve a third-party payer
(Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered
through the health insurance exchanges) and the transaction prices for the services provided are dependent upon
the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial
insurance companies) the third-party payers. The payment arrangements with third-party payers for the services
we provide to the related patients typically specify payments at amounts less than our standard charges. Medicare
generally pays for inpatient and outpatient services at prospectively determined rates based on clinical, diagnostic
and other factors. Services provided to patients having Medicaid coverage are generally paid at prospectively
determined rates per discharge, per identified service or per covered member. Agreements with commercial
insurance carriers, managed care and preferred provider organizations generally provide for payments based
upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates. Management
continually reviews the contractual estimation process to consider and incorporate updates to laws and
regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations
and renewals.
Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and
third-party payers. Estimates of contractual adjustments under managed care and commercial insurance plans are
based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured
patients and uninsured copayment and deductible amounts for patients who have health care coverage may have
discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price
concessions (based primarily on historical collection experience) related to uninsured accounts to record these
revenues at the estimated amounts we expect to collect. Our revenues by primary third-party payer classification
and other (including uninsured patients) for the years ended December 31, are summarized in the following table
(dollars in millions):
Years Ended December 31,
2021
Ratio
2020
Ratio
2019
Ratio
Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,447
8,424
Managed Medicare . . . . . . . . . . . . . . . . . . . . . . . . .
2,290
Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,124
Managed Medicaid . . . . . . . . . . . . . . . . . . . . . . . . .
30,295
Managed care and other insurers . . . . . . . . . . . . . . .
1,336
International (managed care and other insurers) . . .
2,836
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
17.8% $10,420
14.3
6,997
3.9
1,965
5.3
2,621
51.6
26,535
2.3
1,120
4.8
1,875
20.2% $10,798
6,452
13.6
1,572
3.8
2,450
5.1
26,544
51.5
1,162
2.2
2,358
3.6
21.0%
12.6
3.1
4.8
51.6
2.3
4.6
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $58,752
100.0% $51,533
100.0% $51,336
100.0%
to
Laws and regulations governing the Medicare and Medicaid programs are complex and subject
interpretation. Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared
and filed and as final settlements are determined (in relation to certain government programs, primarily
F-11
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Revenues (continued)
Medicare, this is generally referred to as the “cost report” filing and settlement process). The adjustments to
estimated Medicare and Medicaid reimbursement amounts and disproportionate-share funds related primarily to
cost reports filed during the respective year resulted in net increases to revenues of $53 million, $70 million and
$51 million in 2021, 2020 and 2019, respectively. The adjustments to estimated reimbursement amounts related
primarily to cost reports filed during previous years resulted in a net increase to revenues of $19 million in 2021,
a net reduction to revenues of $5 million in 2020 and a net increase to revenues of $13 million in 2019.
The Emergency Medical Treatment and Labor Act (“EMTALA”) requires any hospital participating in the
Medicare program to conduct an appropriate medical screening examination of every person who presents to the
hospital’s emergency room for treatment and, if the individual is suffering from an emergency medical condition,
to either stabilize the condition or make an appropriate transfer of the individual to a facility able to handle the
condition. The obligation to screen and stabilize emergency medical conditions exists regardless of an
individual’s ability to pay for treatment. Federal and state laws and regulations require, and our commitment to
providing quality patient care encourages, us to provide services to patients who are financially unable to pay for
the health care services they receive.
Patients treated at hospitals for non-elective care, who have income at or below 400% of the federal poverty
level, are eligible for charity care, and we limit the patient responsibility amounts for these patients to a
percentage of their annual household income, computed on a sliding scale based upon their annual income and
the applicable percentage of the federal poverty level. Patients treated at hospitals for non-elective care, who
have income above 400% of the federal poverty level, are eligible for certain other discounts which limit the
patient responsibility amounts for these patients to a percentage of their annual household income, computed on a
sliding scale based upon their annual income and the applicable percentage of the federal poverty level. We apply
additional discounts to limit patient responsibility for certain emergency services. The federal poverty level is
established by the federal government and is based on income and family size. Because we do not pursue
collection of amounts determined to qualify as charity care, they are not reported in revenues. We provide
discounts to uninsured patients who do not qualify for Medicaid or charity care. We may attempt to provide
assistance to uninsured patients to help determine whether they may qualify for Medicaid, other federal or state
assistance, or charity care. If an uninsured patient does not qualify for these programs, the uninsured discount is
applied.
The collection of outstanding receivables from Medicare, Medicaid, managed care payers, other third-party
payers and patients is our primary source of cash and is critical to our operating performance. The primary
collection risks relate to uninsured patient accounts, including patient accounts for which the primary insurance
carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles
and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from
patients. Estimated implicit price concessions are recorded for all uninsured accounts, regardless of the age of
those accounts. Accounts are written off when all reasonable collection efforts have been performed.
The estimates for implicit price concessions are based upon management’s assessment of historical
writeoffs and expected net collections, business and economic conditions, trends in federal, state and private
employer health care coverage and other collection indicators. Management relies on the results of detailed
reviews of historical writeoffs and collections at facilities that represent a majority of our revenues and accounts
receivable (the “hindsight analysis”) as a primary source of information in estimating the collectability of our
accounts receivable. We perform the hindsight analysis quarterly, utilizing rolling twelve-months accounts
F-12
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Revenues (continued)
receivable collection and writeoff data. We believe our quarterly updates to the estimated implicit price
concession amounts at each of our hospital facilities provide reasonable estimates of our revenues and valuations
of our accounts receivable. These routine, quarterly changes in estimates have not resulted in material
adjustments to the valuations of our accounts receivable or period-to-period comparisons of our revenues. At
December 31, 2021 and 2020, estimated implicit price concessions of $6.784 billion and $6.108 billion,
respectively, had been recorded to adjust our revenues and accounts receivable to the estimated amounts we
expect to collect.
To quantify the total impact of the trends related to uninsured patient accounts, we believe it is beneficial to
view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price
concessions. A summary of the estimated cost of total uncompensated care for the years ended December 31,
follows (dollars in millions):
2021
2020
2019
Patient care costs (salaries and benefits, supplies, other operating
expenses and depreciation and amortization)
. . . . . . . . . . . . . . . . . . . . .
$49,074
$44,271
$44,118
Cost-to-charges ratio (patient care costs as percentage of gross patient
charges)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.3%
12.0%
12.0%
Total uncompensated care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Multiply by the cost-to-charges ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$29,642
$29,029
$31,105
11.3%
12.0%
12.0%
Estimated cost of total uncompensated care . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,350
$ 3,483
$ 3,733
The total uncompensated care amounts include charity care of $13.644 billion, $13.763 billion and
$13.260 billion for the years ended December 31, 2021, 2020 and 2019, respectively. The estimated cost of
charity care was $1.542 billion, $1.652 billion and $1.591 billion for the years ended December 31, 2021, 2020
and 2019, respectively.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with a maturity of three months or less when
purchased. Our insurance subsidiaries’ cash equivalent investments in excess of the amounts required to pay
estimated professional
liability claims during the next twelve months are not included in cash and cash
equivalents as these funds are not available for general corporate purposes. Carrying values of cash and cash
equivalents approximate fair value due to the short-term nature of these instruments.
Our cash management system provides for daily investment of available balances and the funding of
outstanding checks when presented for payment. Outstanding, but unpresented, checks totaling $536 million and
$495 million at December 31, 2021 and 2020, respectively, have been included in “accounts payable” in the
consolidated balance sheets. Upon presentation for payment, these checks are funded through available cash
balances or our credit facility.
F-13
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Accounts Receivable
We receive payments for services rendered from federal and state agencies (under the Medicare and
Medicaid programs), managed care health plans, commercial insurance companies, employers and patients. We
recognize that revenues and receivables from government agencies are significant to our operations, but do not
believe there are significant credit risks associated with these government agencies. We do not believe there are
any other significant concentrations of revenues from any particular payer that would subject us to any
significant credit risks in the collection of our accounts receivable. Days revenues in accounts receivable were 49
days, 45 days and 50 days at December 31, 2021, 2020 and 2019, respectively. The five-day decline during 2020
was primarily related to the COVID-19 impacts of continuing to collect our accounts receivable from the
pre-COVID-19 period, while experiencing lower revenues (primarily during the first and second quarters of
2020) that slowed the return of our accounts receivable balances back to pre-COVID-19 levels in 2021. Changes
in general economic conditions, patient accounting service center operations, payer mix, or federal or state
governmental health care coverage could affect our collection of accounts receivable, cash flows and results of
operations.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market.
Property and Equipment
Depreciation expense, computed using the straight-line method, was $2.826 billion in 2021, $2.693 billion
in 2020 and $2.579 billion in 2019. Buildings and improvements are depreciated over estimated useful lives
ranging generally from 10 to 40 years. Estimated useful lives of equipment vary generally from four to 10 years.
When events, circumstances or operating results indicate the carrying values of certain long-lived assets
expected to be held and used might be impaired, we prepare projections of the undiscounted future cash flows
expected to result from the use of the assets and their eventual disposition. If the projections indicate the recorded
amounts are not expected to be recoverable, such amounts are reduced to estimated fair value. Fair value may be
estimated based upon internal evaluations that include quantitative analyses of revenues and cash flows, reviews
of recent sales of similar assets and independent appraisals.
Long-lived assets to be disposed of are reported at the lower of their carrying amounts or fair value less
costs to sell or close. The estimates of fair value are usually based upon recent sales of similar assets and market
responses based upon discussions with and offers received from potential buyers.
Investments of Insurance Subsidiaries
At December 31, 2021 and 2020, the investment securities held by our insurance subsidiaries were classified
as “available-for-sale” as defined in Accounting Standards Codification (“ASC”) No. 320, Investments — Debt
Securities and are recorded at fair value. The investment securities are held for the purpose of providing a
funding source to pay liability claims covered by the insurance subsidiaries. We perform quarterly assessments of
individual investment securities to determine whether declines in fair value are due to credit-related or noncredit-
related factors. Our investment securities evaluation process involves subjective judgments, often involves
estimating the outcome of future events, and requires a significant level of professional judgment in determining
whether a credit-related impairment has occurred. We evaluate, among other things, the financial position and
F-14
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Investments of Insurance Subsidiaries (continued)
near term prospects of the issuer, conditions in the issuer’s industry, liquidity of the investment, changes in the
amount or timing of expected future cash flows from the investment, and recent downgrades of the issuer by a
rating agency, to determine if, and when, a decline in the fair value of an investment below amortized cost is
considered to be a credit-related impairment. The extent to which the fair value of the investment is less than
amortized cost and our ability and intent to retain the investment, to allow for any anticipated recovery of the
investment’s fair value, are important components of our investment securities evaluation process.
Goodwill and Intangible Assets
Goodwill is not amortized but is subject to annual impairment tests. In addition to the annual impairment
review, impairment reviews are performed whenever circumstances indicate a possible impairment may exist.
Impairment testing for goodwill is done at the reporting unit level. Reporting units are one level below the
business segment level, and our impairment testing is performed at the operating division level. We compare the
fair value of the reporting unit assets to the carrying amount, on at least an annual basis, to determine if there is
potential impairment. If the fair value of the reporting unit assets is less than their carrying value, an impairment
loss is recognized. Fair value is estimated based upon internal evaluations of each reporting unit that include
quantitative analyses of market multiples, revenues and cash flows and reviews of recent sales of similar
facilities. No goodwill impairments were recognized during 2021, 2020 or 2019.
During 2021, goodwill increased by $1.002 billion related to acquisitions and declined by $75 million
related to foreign currency translation and other adjustments. During 2020, goodwill increased by $279 million
related to acquisitions, including the finalization of the accounting for certain prior year acquisitions, and
declined by $9 million related to foreign currency translation and other adjustments.
During 2021, identifiable intangible assets increased by $60 million related to acquisitions and declined by
$25 million due to amortization and other adjustments. During 2020, identifiable intangible assets increased by
$65 million related to acquisitions, including the finalization of the accounting for certain prior year acquisitions,
and declined by $26 million due to amortization and other adjustments. Identifiable intangible assets with finite
lives are amortized over estimated lives ranging generally from three to 10 years. The gross carrying amounts of
amortizable identifiable intangible assets at December 31, 2021 and 2020 were $274 million and $249 million,
respectively, and accumulated amortization was $175 million and $149 million, respectively. The gross carrying
amounts of indefinite-lived identifiable intangible assets at December 31, 2021 and 2020 were $304 million and
$269 million, respectively. Indefinite-lived identifiable intangible assets are not amortized but are subject to
annual impairment tests, and impairment reviews are performed whenever circumstances indicate a possible
impairment may exist.
Debt Issuance Costs and Discounts
Debt issuance costs and discounts are amortized based upon the terms of the respective debt obligations.
The gross carrying amount of debt
issuance costs and discounts at December 31, 2021 and 2020 was
$446 million and $411 million, respectively, and accumulated amortization was $198 million and $175 million,
respectively. Amortization of debt
issuance costs and discounts is included in interest expense and was
$27 million, $30 million and $30 million for 2021, 2020 and 2019, respectively.
F-15
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Professional Liability Claims
Reserves for professional liability risks were $2.022 billion and $1.963 billion at December 31, 2021 and
2020, respectively. The current portion of the reserves, $508 million and $477 million at December 31, 2021 and
2020, respectively, is included in “other accrued expenses” in the consolidated balance sheets. Provisions for
losses related to professional liability risks were $453 million, $435 million and $497 million for 2021, 2020 and
2019, respectively, and are included in “other operating expenses” in our consolidated income statements.
Provisions for losses related to professional liability risks are based upon actuarially determined estimates.
During 2021, 2020 and 2019, we recorded reductions to the provision for professional
liability risks of
$87 million, $112 million and $50 million, respectively, due to the receipt of updated actuarial information. Loss
and loss expense reserves represent the estimated ultimate net cost of all reported and unreported losses incurred
through the respective consolidated balance sheet dates. The reserves for unpaid losses and loss expenses are
estimated using individual case-basis valuations and actuarial analyses. Those estimates are subject to the effects
of trends in loss severity and frequency. The estimates are continually reviewed and adjustments are recorded as
experience develops or new information becomes known. Adjustments to the estimated reserve amounts are
included in current operating results. The reserves for professional liability risks cover approximately 2,100 and
2,300 individual claims at December 31, 2021 and 2020, respectively, and estimates for unreported potential
claims. The time period required to resolve these claims can vary depending upon the jurisdiction and whether
the claim is settled or litigated. During 2021 and 2020, $384 million and $292 million, respectively, of net
payments were made for professional and general liability claims. The estimation of the timing of payments
beyond a year can vary significantly. Although considerable variability is inherent in professional liability
reserve estimates, we believe the reserves for losses and loss expenses are adequate; however, there can be no
assurance the ultimate liability will not exceed our estimates.
A portion of our professional liability risks is insured through our insurance subsidiary. Subject, in most
cases, to a $15 million per occurrence self-insured retention, our facilities are insured by our insurance subsidiary
for losses up to $75 million per occurrence. The insurance subsidiary has obtained reinsurance for professional
liability risks generally above a retention level of either $25 million or $35 million per occurrence, depending on
the jurisdiction for the related claim. We also maintain professional liability insurance with unrelated commercial
carriers for losses in excess of amounts insured by our insurance subsidiary.
The obligations covered by reinsurance and excess insurance contracts are included in the reserves for
professional liability risks, as we remain liable to the extent the reinsurers and excess insurance carriers do not
meet their obligations under the reinsurance and excess insurance contracts. The amounts receivable under the
reinsurance contracts include $44 million and $31 million at December 31, 2021 and 2020, respectively, recorded
in “other assets,” and $11 million and $8 million at December 31, 2021 and 2020, respectively, recorded in
“other current assets.”
Financial Instruments
Derivative financial instruments are employed to manage interest rate risks, and are not used for trading or
speculative purposes. We recognize our interest rate swap derivative instruments in the consolidated balance
sheets at fair value. Changes in the fair value of derivatives are recognized periodically in stockholders’ equity,
as a component of other comprehensive income (loss), provided the derivative financial instrument qualifies for
hedge accounting. Gains and losses on derivatives designated as cash flow hedges, to the extent they are
effective, are recorded in other comprehensive income (loss), and subsequently reclassified to earnings to offset
F-16
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Financial Instruments (continued)
the impact of the forecasted transactions when they occur. In the event the forecasted transaction to which a cash
flow hedge relates is no longer likely, the amount in other comprehensive income is recognized in earnings and
generally the derivative is terminated.
The net interest paid or received on interest rate swaps is recognized as an adjustment to interest expense.
Gains and losses resulting from the early termination of interest rate swap agreements are deferred and amortized
as adjustments to interest expense over the remaining term of the debt originally associated with the terminated
swap.
Noncontrolling Interests in Consolidated Entities
The consolidated financial statements include all assets, liabilities, revenues and expenses of less than 100%
owned entities that we control. Accordingly, we have recorded noncontrolling interests in the earnings and equity
of such entities.
NOTE 2 — SHARE-BASED COMPENSATION
Stock Incentive Plans
Our stock incentive plans are designed to promote the long-term financial interests and growth of the
Company by attracting and retaining management and other personnel, motivating them to achieve long range
goals and aligning their interests with those of our stockholders through opportunities for stock-based
compensation and stock ownership in the Company. Stock option, stock appreciation right (“SARs”) and
restricted share unit (“RSUs”) grants vest solely based upon continued employment over a specific period of
time, and performance share unit (“PSUs”) grants vest based upon both continued employment over a specific
period of time and the achievement of predetermined financial targets over a specific period of time. At
December 31, 2021 there were 16.290 million shares available for future grants.
Employee Stock Purchase Plan
Our employee stock purchase plan (“ESPP”) provides our participating employees an opportunity to obtain
shares of our common stock at a discount (through payroll deductions over three-month periods). At
December 31, 2021, 5.173 million shares of common stock were reserved for ESPP issuances. During 2021,
2020 and 2019, the Company recognized $15 million, $13 million and $12 million, respectively, of compensation
expense related to the ESPP.
Stock Option, SAR, RSU and PSU Activity
The fair value of each stock option and SAR award is estimated on the grant date, using valuation models
and the weighted average assumptions indicated in the following table. Awards under our stock incentive plans
generally vest based on continued employment (“Time Stock Options and SARs” and “RSUs”) or based upon
continued employment and the achievement of certain financial targets (“Performance Stock Options and SARs”
and “PSUs”). PSUs have a three-year cumulative earnings per share target, and the number of PSUs earned can
vary from zero (for actual performance of less than 90% of target for 2021, 2020 and 2019 grants) to two times
the original PSU grant (for actual performance of 110% or more of target for 2021, 2020 and 2019 grants). Each
F-17
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 — SHARE-BASED COMPENSATION (continued)
Stock Option, SAR, RSU and PSU Activity (continued)
grant is valued as a single award with an expected term equal to the average expected term of the component
vesting tranches. The expected term of the share-based award is limited by the contractual term. We use
historical exercise behavior data and other factors to estimate the expected term of the options and SARs.
Compensation cost is recognized on the straight-line attribution method. The straight-line attribution method
requires that total compensation expense recognized must at least equal the vested portion of the grant-date fair
value. The expected volatility is derived using historical stock price information for our common stock and the
volatility implied by the trading of options to purchase our stock on open-market exchanges. The risk-free
interest rate is the approximate yield on United States Treasury Strips having a life equal to the expected share-
based award life on the date of grant. The expected life is an estimate of the number of years a share-based award
will be held before it is exercised. The expected dividend yield is estimated based on the assumption that the
dividend yield at date of grant will be maintained over the expected life of the grant.
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life, in years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
0.68% 1.44% 2.50%
36% 27% 27%
6.17
6.15
1.10% 1.19% 1.16%
6.18
Information regarding Time Stock Options and SARs and Performance Stock Options and SARs activity
during 2021, 2020 and 2019 is summarized below (share amounts in thousands):
Options and SARs outstanding,
December 31, 2018 . . . . . . .
Granted . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . .
Options and SARs outstanding,
December 31, 2019 . . . . . . .
Granted . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . .
Options and SARs outstanding,
December 31, 2020 . . . . . . .
Granted . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . .
Options and SARs outstanding,
December 31, 2021 . . . . . . .
Options and SARs exercisable,
December 31, 2021 . . . . . . .
Time
Stock
Options
and
SARs
9,360
1,349
(1,137)
(522)
9,050
1,120
(2,159)
(175)
7,836
877
(2,443)
(108)
Performance
Stock
Options and
SARs
Total
Stock
Options
and
SARs
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual Term
Aggregate
Intrinsic Value
(dollars in millions)
2,667
—
(523)
—
2,144
—
(1,325)
—
819
—
(533)
—
12,027
1,349
(1,660)
(522)
$ 61.49
138.31
44.45
93.26
11,194
1,120
(3,484)
(175)
8,655
877
(2,976)
(108)
71.79
144.47
44.07
111.69
91.53
174.98
67.57
138.32
6,162
286
6,448
$113.15
6.2 years
3,486
286
3,772
$ 89.70
5.0 years
$927
$631
F-18
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 — SHARE-BASED COMPENSATION (continued)
Stock Option, SAR, RSU and PSU Activity (continued)
The weighted average fair values of stock options and SARs granted during 2021, 2020 and 2019 were
$54.57, $35.98 and $38.21 per share, respectively. The total intrinsic value of stock options and SARs exercised
during 2021, 2020 and 2019 was $404 million, $328 million and $153 million, respectively. As of December 31,
2021, the unrecognized compensation cost related to nonvested stock options and SARs was $46 million.
Information regarding RSUs and PSUs activity during 2021, 2020 and 2019 is summarized below (share
amounts in thousands):
RSUs
PSUs
Total RSUs
and PSUs
RSUs and PSUs outstanding, December 31, 2018 . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance adjustment . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RSUs and PSUs outstanding, December 31, 2019 . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance adjustment . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RSUs and PSUs outstanding, December 31, 2020 . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance adjustment . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,123
973
—
(1,216)
(260)
2,620
1,048
—
(1,030)
(162)
2,476
899
—
(992)
(192)
3,422
796
227
(1,251)
(159)
3,035
808
206
(1,364)
(93)
2,592
689
684
(1,772)
(110)
6,545
1,769
227
(2,467)
(419)
5,655
1,856
206
(2,394)
(255)
5,068
1,588
684
(2,764)
(302)
Weighted
Average
Grant
Date Fair
Value
$ 86.32
138.45
69.94
75.97
103.27
105.23
144.17
81.89
88.63
124.50
125.40
174.34
102.02
106.62
149.07
RSUs and PSUs outstanding, December 31, 2021 . . . . . .
2,191
2,083
4,274
$150.32
The total fair value of RSUs and PSUs that vested during 2021, 2020 and 2019 was $475 million,
$349 million and $346 million, respectively. As of December 31, 2021, the unrecognized compensation cost
related to RSUs and PSUs was $420 million.
NOTE 3 — ACQUISITIONS AND DISPOSITIONS
During 2021, we paid $67 million to acquire two hospital facilities, one in southern Georgia and one in
Tennessee, $594 million to acquire a network of urgent care centers in Florida and $114 million to acquire other
nonhospital health care entities (noncontrolling interests of $117 million were recorded). The acquisition of the
network of urgent care centers occurred during December 2021. At December 31, 2021, our purchase accounting
procedures were not complete, and completion of these procedures will include an analysis of the leases assumed
and our review for possible identifiable intangible assets acquired. We also paid $330 million and assumed
certain liabilities to acquire an 80% interest (noncontrolling interests of $100 million were recorded) in a venture
providing post-acute care services (home health and hospice). During 2020, we paid $568 million to acquire a
hospital in New Hampshire and other nonhospital health care entities. During 2019, we paid $1.384 billion to
F-19
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 — ACQUISITIONS AND DISPOSITIONS (continued)
acquire a seven-hospital health system in North Carolina and $298 million to acquire nonhospital health care
entities. Purchase price amounts have been allocated to the related assets acquired and liabilities assumed based
upon their respective fair values. The purchase price paid in excess of the fair value of identifiable net assets of
these acquired entities aggregated $1.002 billion, $279 million and $332 million in 2021, 2020 and 2019,
respectively. The consolidated financial statements include the accounts and operations of the acquired entities
subsequent to the respective acquisition dates. The pro forma effects of these acquired entities on our results of
operations for periods prior to the respective acquisition dates were not significant.
During 2021, we received proceeds of $1.502 billion and recognized a pretax gain of $1.226 billion
($920 million after tax) related to the sale of five hospital facilities in Georgia, comprised of three facilities from
our American Group (northern Georgia market) and two facilities from our National Group (southern Georgia
market). We also received proceeds of $658 million and recognized a pretax gain of $394 million ($294 million
after tax) related to sales of other health care entity investments and real estate. During 2020, we received
proceeds of $68 million and recognized a pretax loss of $7 million ($9 million after tax) related to the sale of a
hospital facility from our American Group (Mississippi market) and sales of real estate and other investments.
During 2019, we received proceeds of $61 million and recognized a pretax gain of $18 million ($13 million after
tax) related to the sale of a hospital facility from our American Group (a Louisiana market) and sales of real
estate and other investments.
NOTE 4 — INCOME TAXES
The provision for income taxes consists of the following (dollars in millions):
2021
2020
2019
Current:
Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,769
311
15
$1,021
126
5
$ 670
134
17
Deferred:
Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
(18)
11
(73)
(39)
3
254
29
(5)
$2,112
$1,043
$1,099
Our provision for income taxes for the years ended December 31, 2021, 2020 and 2019 included tax benefits
of $119 million, $92 million and $65 million, respectively, related to the settlement of employee equity awards.
Our foreign pretax income was $64 million, $9 million and $50 million for the years ended December 31, 2021,
2020 and 2019, respectively.
F-20
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4 — INCOME TAXES (continued)
A reconciliation of the federal statutory rate to the effective income tax rate follows:
Federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income taxes, net of federal tax benefit . . . . . . . . . . . . . . . .
Change in liability for uncertain tax positions . . . . . . . . . . . . . . .
Tax benefit from settlements of employee equity awards . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other items, net
Effective income tax rate on income attributable to HCA
2021
2020
2019
21.0% 21.0% 21.0%
2.0
1.9
0.7
(0.2)
(1.2)
(1.8)
0.8
0.8
2.7
0.4
(1.3)
1.1
Healthcare, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23.3
21.7
23.9
Income attributable to noncontrolling interests from
consolidated partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.8)
(2.5)
(2.9)
Effective income tax rate on income before income taxes . . . . . .
21.5% 19.2% 21.0%
A summary of the items comprising the deferred tax assets and liabilities at December 31 follows (dollars in
millions):
2021
2020
Assets
Liabilities
Assets
Liabilities
Depreciation and fixed asset basis differences . . . . . . . . . . . . . . . . . . . . .
Allowances for professional liability and other risks . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use lease assets and obligations . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ — $ 737
—
—
—
419
652
426
348
502
428
499
$ — $ 678
—
—
—
409
606
407
283
487
416
485
$2,203
$1,808
$2,078
$1,693
At December 31, 2021, federal and state net operating loss carryforwards (expiring in years 2024 through
2040) available to offset future taxable income approximated $31 million and $99 million, respectively.
Utilization of net operating loss carryforwards in any one year may be limited.
The following table summarizes the activity related to our unrecognized tax benefits (dollars in millions):
Balance at January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions based on tax positions related to the current year
. . . . .
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . .
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of applicable statutes of limitations . . . . . . . . . . . . . . . . . . .
2021
2020
$469
57
66
(6)
(3)
(7)
$522
(3)
13
(30)
(22)
(11)
Balance at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$576
$469
F-21
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4 — INCOME TAXES (continued)
Our liability for unrecognized tax benefits was $642 million, including accrued interest of $99 million and
excluding $33 million that was recorded as reductions of the related deferred tax assets, as of December 31, 2021
($508 million, $73 million and $34 million, respectively, as of December 31, 2020). Unrecognized tax benefits of
$217 million as of December 31, 2021 ($157 million as of December 31, 2020) would affect the effective rate, if
recognized.
The Internal Revenue Service (“IRS”) was conducting an examination of the Company’s 2016, 2017 and
2018 federal income tax returns and the 2019 return for one affiliated partnership at December 31, 2021. We are
also subject to examination by state and foreign taxing authorities. Depending on the resolution of any federal,
state and foreign tax disputes, the completion of examinations by federal, state or foreign taxing authorities, or
the expiration of statutes of limitation for specific taxing jurisdictions, we believe it is reasonably possible that
our liability for unrecognized tax benefits may significantly increase or decrease within the next 12 months.
However, we are currently unable to estimate the range of any possible change.
NOTE 5 — EARNINGS PER SHARE
We compute basic earnings per share using the weighted average number of common shares outstanding.
We compute diluted earnings per share using the weighted average number of common shares outstanding plus
the dilutive effect of outstanding stock options, SARs, RSUs and PSUs, computed using the treasury stock
method. During 2021, 2020 and 2019, we repurchased 37.812 million shares, 3.287 million shares and
7.949 million shares, respectively, of our common stock. The following table sets forth the computations of basic
and diluted earnings per share for the years ended December 31, 2021, 2020 and 2019 (dollars and shares in
millions, except per share amounts):
2021
2020
2019
Net income attributable to HCA Healthcare, Inc.
. . . .
$
6,956
$
3,754
$
3,505
Weighted average common shares outstanding . . . . . .
Effect of dilutive incremental shares . . . . . . . . . . . . . .
Shares used for diluted earnings per share . . . . . . . . . .
323.315
5.437
328.752
338.274
5.331
343.605
341.210
7.016
348.226
Earnings per share:
Basic earnings per share . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . .
$
$
21.52
21.16
$
$
11.10
10.93
$
$
10.27
10.07
F-22
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6 — INVESTMENTS OF INSURANCE SUBSIDIARIES
A summary of the insurance subsidiaries’ investments at December 31 follows (dollars in millions):
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds and other . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts classified as current assets . . . . . . . . . . . . . . . . . . . . .
Investment carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds and other . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts classified as current assets . . . . . . . . . . . . . . . . . . . . .
Investment carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
Unrealized
Amounts
Gains
Losses
$18
—
$18
$ (2)
—
$ (2)
Amortized
Cost
$400
125
$525
Fair
Value
$ 416
125
541
(103)
$ 438
Amortized
Cost
$384
88
$472
2020
Unrealized
Amounts
Gains
Losses
Fair
Value
$32
—
$32
$— $ 416
88
—
$—
504
(116)
$ 388
At December 31, 2021 and 2020, the investments in debt securities of our insurance subsidiaries were
classified as “available-for-sale.” Changes in unrealized gains and losses are recorded as adjustments to other
comprehensive income (loss).
Scheduled maturities of investments in debt securities at December 31, 2021 were as follows (dollars in
millions):
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after one year through five years . . . . . . . . . . . . . . . . . . .
Due after five years through ten years . . . . . . . . . . . . . . . . . . .
Due after ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortized
Cost
$
3
128
176
93
$400
Fair
Value
$
3
135
183
95
$416
The average expected maturity of the investments in debt securities at December 31, 2021 was 6.1 years,
compared to the average scheduled maturity of 9.5 years. Expected and scheduled maturities may differ because
the issuers of certain securities have the right to call, prepay or otherwise redeem such obligations prior to their
scheduled maturity date.
F-23
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7 — FINANCIAL INSTRUMENTS
Interest Rate Swap Agreements
We have entered into interest rate swap agreements to manage our exposure to fluctuations in interest rates.
These swap agreements involve the exchange of fixed and variable rate interest payments between us and our
counterparties based on common notional principal amounts and maturity dates. Pay-fixed interest rate swaps
effectively convert variable rate obligations to fixed interest rate obligations. The interest payments under these
agreements are settled on a net basis. The net interest payments, based on the notional amounts in these
agreements, generally match the timing of the related liabilities for the interest rate swap agreements which have
been designated as cash flow hedges. The notional amounts of the swap agreements represent amounts used to
calculate the exchange of cash flows and are not our assets or liabilities. Our credit risk related to these
agreements is considered low because the swap agreements are with creditworthy financial institutions.
The following table sets forth our interest rate swap agreement, which has been designated as a cash flow
hedge, at December 31, 2021 (dollars in millions):
Pay-fixed interest rate swap . . . . . . . . . . . . . . . . . . . .
$500
December 2022
Notional
Amount
Maturity Date
Fair
Value
$(8)
During the next 12 months, we estimate $8 million will be reclassified from accumulated other
comprehensive income (“OCI”) and will be included in interest expense.
Derivatives — Results of Operations
The following table presents the effect of our interest rate swaps on our results of operations for the year
ended December 31, 2021 (dollars in millions):
Derivatives in Cash Flow Hedging
Relationships
Amount of Gain
Recognized in OCI on
Derivatives, Net of Tax
Location of Loss
Reclassified from
Accumulated OCI
into Operations
Amount of Loss
Reclassified from
Accumulated OCI
into Operations
Interest rate swaps . . . . . . . . .
$1
Interest expense
$37
Credit-risk-related Contingent Features
We have an agreement with our derivative counterparty that contains a provision where we could be
declared in default on our derivative obligation if repayment of the underlying indebtedness is accelerated by the
lender due to our default on the indebtedness. As of December 31, 2021, we have not been required to post any
collateral related to this agreement. If we had breached this provision at December 31, 2021, we would have been
required to settle our obligation under the agreement at the estimated termination value of $8 million.
F-24
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
Accounting Standards Codification 820, Fair Value Measurements and Disclosures (“ASC 820”)
emphasizes fair value is a market-based measurement, and fair value measurements should be determined based
on the assumptions market participants would use in pricing assets or liabilities. ASC 820 utilizes a fair value
hierarchy that distinguishes between market participant assumptions based on market data obtained from sources
independent of the reporting entity (observable inputs classified within Levels 1 and 2 of the hierarchy) and the
reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within
Level 3 of the hierarchy).
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2
inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets,
as well as inputs observable for the asset or liability (other than quoted prices), such as interest rates, foreign
exchange rates, and yield curves observable at commonly quoted intervals. Level 3 inputs are unobservable
inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any,
related market activity. In instances where the determination of the fair value measurement is based on inputs
from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair
value measurement falls is based on the lowest level input significant to the fair value measurement in its
entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety
requires judgment.
Investment Securities
The investments of our insurance subsidiaries are generally classified within Level 1 or Level 2 of the fair
value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative
pricing sources with reasonable levels of price transparency.
Derivative Financial Instruments
We have entered into interest rate swap agreements to manage our exposure to fluctuations in interest rates.
The valuation of these instruments is determined using widely accepted valuation techniques,
including
discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual
terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including
interest rate curves and implied volatilities. We incorporate credit valuation adjustments to reflect both our own
nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements of
these instruments.
F-25
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (continued)
The following tables summarize our assets and liabilities measured at fair value on a recurring basis as of
in the fair value hierarchy within which those
December 31, 2021 and 2020, aggregated by the level
measurements fall (dollars in millions):
December 31, 2021
Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
Assets:
Investments of insurance subsidiaries:
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds and other . . . . . . . . . . . . . . .
$ 416
125
Investments of insurance subsidiaries . . . . . . . . . .
Less amounts classified as current assets . . . . . . .
541
(103)
$ 438
$ —
125
125
(103)
22
$416
—
416
—
$416
Liabilities:
Interest rate swap (Other accrued expenses) . . . . . . . . .
$
8
$ —
$
8
$—
—
—
—
$—
$—
December 31, 2020
Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
Assets:
Investments of insurance subsidiaries:
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds and other . . . . . . . . . . . . . . .
$ 416
88
Investments of insurance subsidiaries . . . . . . . . . .
Less amounts classified as current assets . . . . . . .
504
(116)
$ 388
$ —
88
88
(87)
1
$416
—
416
(29)
$387
Liabilities:
Interest rate swaps (Income taxes and other liabilities) . .
$ 46
$ —
$ 46
$—
—
—
—
$—
$—
The estimated fair value of our
long-term debt was $38.541 billion and $35.814 billion at
December 31, 2021 and 2020, respectively, compared to carrying amounts, excluding debt issuance costs and
discounts, aggregating $34.827 billion and $31.240 billion, respectively. The estimates of fair value are generally
based upon the quoted market prices or quoted market prices for similar issues of long-term debt with the same
maturities.
F-26
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9 — LONG-TERM DEBT
A summary of long-term debt at December 31, including related interest rates at December 31, 2021,
follows (dollars in millions):
Senior secured asset-based revolving credit facility (effective interest rate of 1.4%) . . . . . . .
Senior secured revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior secured term loan facilities (effective interest rate of 2.1%) . . . . . . . . . . . . . . . . . . . . .
Senior secured notes (effective interest rate of 4.8%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other senior secured debt (effective interest rate of 4.3%) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior secured debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior unsecured notes (effective interest rate of 5.5%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt (average life of 8.9 years, rates averaging 4.6%) . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less amounts due within one year
2021
2020
$ 2,780
—
1,960
16,200
935
$ —
—
3,671
13,850
767
21,875
12,952
(248)
34,579
237
18,288
12,952
(236)
31,004
209
$34,342
$30,795
During June 2021, we issued $2.350 billion aggregate principal amount of senior secured notes comprised
of $850 million aggregate principal amount of 2 3/8% notes due 2031 and $1.500 billion aggregate principal
amount of 3 1/2% notes due 2051 (the “June 2021 Notes”). We also amended and restated our senior secured
revolving credit facility and our senior secured asset-based revolving credit facility,
including increasing
availability under the asset-based revolving credit facility to $4.500 billion, extending the maturity date on both
facilities to June 30, 2026 and entering into a new $1.500 billion term loan A facility and a new $500 million
term loan B facility (the “Credit Agreement Transactions”). We used the net proceeds from the June 2021 Notes
and the Credit Agreement Transactions to retire $3.657 billion of term loan facilities. The pretax loss on
retirement of debt was $12 million.
Senior Secured Credit Facilities And Other Senior Secured Debt
We have entered into the following senior secured credit facilities: (i) a $4.500 billion asset-based revolving
credit facility maturing on June 30, 2026 with a borrowing base of 85% of eligible accounts receivable, subject to
customary reserves and eligibility criteria ($2.780 billion outstanding at December 31, 2021) (the “ABL credit
facility”); (ii) a $2.000 billion senior secured revolving credit facility maturing on June 30, 2026 (none
outstanding at December 31, 2021 without giving effect
to certain outstanding letters of credit); (iii) a
$1.462 billion senior secured term loan A facility maturing on June 30, 2026; and (iv) a $498 million senior
secured term loan B facility maturing on June 30, 2028. We refer to the facilities described under (ii) through
(iv) above, collectively, as the “cash flow credit facility” and, together with the ABL credit facility, the “senior
secured credit facilities.”
Borrowings under the senior secured credit facilities bear interest at a rate equal to, at our option, either (a) a
base rate determined by reference to the higher of (1) the federal funds rate plus 0.50% or (2) the prime rate of
Bank of America or (b) a LIBOR rate for the currency of such borrowing for the relevant interest period, plus, in
each case, an applicable margin. The applicable margin for borrowings under the senior secured credit facilities
may be reduced subject to attaining certain leverage ratios.
F-27
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9 — LONG-TERM DEBT (continued)
Senior Secured Credit Facilities And Other Senior Secured Debt (continued)
The senior secured credit facilities contain a number of covenants that restrict, subject to certain exceptions,
indebtedness, repay subordinated
our (and some or all of our subsidiaries’) ability to incur additional
indebtedness, create liens on assets, sell assets, make investments,
loans or advances, engage in certain
transactions with affiliates, pay dividends and distributions, and enter into sale and leaseback transactions. In
addition, we are required to satisfy and maintain a maximum total leverage ratio covenant under the cash flow
credit facility and, in certain situations under the ABL credit facility, a minimum interest coverage ratio
covenant.
Senior secured notes consist of (i) $1.250 billion aggregate principal amount of 4.75% first lien notes due
2023; (ii) $2.000 billion aggregate principal amount of 5.00% first lien notes due 2024; (iii) $1.400 billion
aggregate principal amount of 5.25% first lien notes due 2025; (iv) $1.500 billion aggregate principal amount of
5.25% first lien notes due 2026; (v) $1.200 billion aggregate principal amount of 4.50% first lien notes due 2027;
(vi) $2.000 billion aggregate principal amount of 4 1/8% first lien notes due 2029; (vii) $850 million aggregate
principal amount of 2 3/8% first lien notes due 2031; (viii) $1.000 billion aggregate principal amount of 5 1/8%
first lien notes due 2039; (ix) $1.500 billion aggregate principal amount of 5.50% first lien notes due 2047; (x)
$2.000 billion aggregate principal amount of 5 1/4% first lien notes due 2049; and (xi) $1.500 billion aggregate
principal amount of 3 1/2% first lien notes due 2051. Finance leases and other secured debt totaled $935 million
at December 31, 2021.
We use interest rate swap agreements to manage the variable rate exposure of our debt portfolio. At
December 31, 2021, we had entered into an effective interest rate swap agreement, in a notional amount of
$500 million, in order to hedge a portion of our exposure to variable rate interest payments associated with the
senior secured credit facilities. The effect of the interest rate swap is reflected in the effective interest rates for
the senior secured credit facilities.
Senior Unsecured Notes
Senior unsecured notes consist of (i) $12.091 billion aggregate principal amount of senior notes with
maturities ranging from 2023 to 2033; (ii) an aggregate principal amount of $125 million medium-term notes
maturing 2025; and (iii) an aggregate principal amount of $736 million debentures with maturities ranging from
2023 to 2095.
General Debt Information
The senior secured credit facilities and senior secured notes are fully and unconditionally guaranteed by
substantially all existing and future, direct and indirect, 100% owned material domestic subsidiaries that are
“Unrestricted Subsidiaries” under our Indenture (the “1993 Indenture”) dated December 16, 1993 (except for
certain special purpose subsidiaries that only guarantee and pledge their assets under our ABL credit facility).
All obligations under the ABL credit facility, and the guarantees of those obligations, are secured, subject to
permitted liens and other exceptions, by a first-priority lien on substantially all of the receivables of the
borrowers and each guarantor under such ABL credit facility (the “Receivables Collateral”).
F-28
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9 — LONG-TERM DEBT (continued)
General Debt Information (continued)
All obligations under the cash flow credit facility and the guarantees of such obligations are secured, subject
to permitted liens and other exceptions, by:
•
•
a first-priority lien on the capital stock owned by HCA Inc., or by any guarantor, in each of their
respective first-tier subsidiaries;
a first-priority lien on substantially all present and future assets of HCA Inc. and of each guarantor
other than (i) “Principal Properties” (as defined in the 1993 Indenture), (ii) certain other real properties
and (iii) deposit accounts, other bank or securities accounts, cash, leaseholds, motor-vehicles and
certain other exceptions; and
•
a second-priority lien on certain of the Receivables Collateral.
Our senior secured notes and the related guarantees are secured by first-priority liens, subject to permitted
liens, on our and our subsidiary guarantors’ assets, subject to certain exceptions, that secure our cash flow credit
facility on a first-priority basis and are secured by second-priority liens, subject to permitted liens, on our and our
subsidiary guarantors’ assets that secure our ABL credit facility on a first-priority basis and our other cash flow
credit facility on a second-priority basis.
Maturities of long-term debt in years 2023 through 2026 are $2.857 billion, $2.353 billion, $4.607 billion
and $5.279 billion, respectively.
NOTE 10 — LEASES
We lease property and equipment under finance and operating leases. For leases with terms greater than 12
months, we record the related assets and obligations at the present value of lease payments over the term. Many
of our leases include rental escalation clauses and renewal options that are factored into our determination of
lease payments, when appropriate. We do not separate lease and nonlease components of contracts. Generally,
we use our estimated incremental borrowing rate to discount the lease payments, as most of our leases do not
provide a readily determinable implicit interest rate.
F-29
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10 — LEASES (continued)
The following table presents our lease-related assets and liabilities at December 31, 2021 and 2020 (dollars
in millions):
Assets:
Balance Sheet Classification
2021
2020
Operating leases . . . . . . . . . . . . Right-of-use operating lease assets
Finance leases . . . . . . . . . . . . . . Property and equipment
Total lease assets . . . . . . . .
Liabilities:
Current:
Operating leases . . . . . . . . . . . . Other accrued expenses
Finance leases . . . . . . . . . . . . . . Long-term debt due within one year
Noncurrent:
Operating leases . . . . . . . . . . . . Right-of-use operating lease obligations
Finance leases . . . . . . . . . . . . . . Long-term debt
Total lease liabilities . . . . .
Weighted-average remaining term:
Operating leases . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . .
Weighted-average discount rate:
Operating leases . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . .
$
$
$
$
$
$
2,113
637
2,750
392
143
1,755
577
$
2,867
$
2,024
553
2,577
379
128
1,673
494
2,674
10.2 years
10.4 years
10.4 years
11.5 years
4.4%
4.4%
4.8%
5.4%
The following table presents certain information related to lease expense for finance and operating leases for
the years ended December 31, 2021, 2020 and 2019 (dollars in millions):
Finance lease expense:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term lease expense(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease expense(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
2019
$ 135
29
478
354
157
$ 106
31
447
322
154
$1,153
$1,060
$ 93
32
389
316
150
$980
(1) Expenses are included in “other operating expenses” in our consolidated income statements.
The following table presents supplemental cash flow information for the years ended December 31, 2021,
2020 and 2019 (dollars in millions):
Cash paid for amounts included in the measurement of lease
liabilities:
Operating cash flows for operating leases . . . . . . . . . . . . . . . .
Operating cash flows for finance leases . . . . . . . . . . . . . . . . . .
Financing cash flows for finance leases . . . . . . . . . . . . . . . . . .
$474
29
123
$445
31
86
$404
32
79
2021
2020
2019
F-30
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10 — LEASES (continued)
Maturities of Lease Liabilities
The following table reconciles the undiscounted minimum lease payment amounts to the operating and
finance lease liabilities recorded on the balance sheet at December 31, 2021 and 2020 (dollars in millions):
Year 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter
Total minimum lease payments . . . . . . . . . . . . . . . . . . . . .
. . .
Less: amount of lease payments representing interest
Present value of future minimum lease payments . . . . . . .
Less: current lease obligations . . . . . . . . . . . . . . . . . . . . . .
2021
2020
Operating
Leases
Finance
Leases
Operating
Leases
Finance
Leases
$ 438
378
320
267
219
1,148
2,770
(623)
2,147
(392)
$ 165
126
132
98
70
350
941
(221)
720
(143)
$ 431
366
307
255
207
1,136
2,702
(650)
2,052
(379)
$ 155
125
81
82
51
353
847
(225)
622
(128)
Long-term lease obligations . . . . . . . . . . . . . . . . . . . . . . .
$1,755
$ 577
$1,673
$ 494
NOTE 11 — CONTINGENCIES
We operate in a highly regulated and litigious industry. As a result, various lawsuits, claims and legal and
regulatory proceedings have been and can be expected to be instituted or asserted against us. We are also subject
to claims and suits arising in the ordinary course of business, including claims for personal injuries or wrongful
restriction of, or interference with, physicians’ staff privileges. In certain of these actions the claimants may seek
punitive damages against us, which may not be covered by insurance. We are also subject to claims by various
taxing authorities for additional taxes and related interest and penalties. The resolution of any such lawsuits,
claims or legal and regulatory proceedings could have a material, adverse effect on our results of operations,
financial position or liquidity.
Government Investigations, Claims and Litigation
Health care companies are subject to numerous investigations by various governmental agencies. Under the
federal False Claims Act (“FCA”), private parties have the right to bring qui tam, or “whistleblower,” suits
against companies that submit false claims for payments to, or improperly retain overpayments from, the
government. Some states have adopted similar state whistleblower and false claims provisions. Certain of our
individual facilities have received, and from time to time, other facilities may receive, government inquiries
from, and may be subject to investigation by, federal and state agencies. Depending on whether the underlying
conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a
material, adverse effect on our results of operations, financial position or liquidity.
F-31
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11 — CONTINGENCIES (continued)
Government Investigations, Claims and Litigation (continued)
Texas operates a state Medicaid program pursuant to a waiver from the Centers for Medicare & Medicaid
Services under Section 1115 of the Social Security Act (“Program”). The Program includes uncompensated-care
pools; payments from these pools are intended to defray the uncompensated costs of services provided by our and
other hospitals to Medicaid eligible or uninsured individuals. Separately, we and other hospitals provide charity
care services in several communities in the state. In 2018, the Civil Division of the U.S. Department of Justice
and the U.S. Attorney’s Office for the Southern District of Texas requested information about whether the
Program, as operated in Harris County, complied with the laws and regulations applicable to provider related
donations, and the Company cooperated with that request. On May 21, 2019, a qui tam lawsuit asserting
violations of the FCA and the Texas Medicaid Fraud Prevention Act related to the Program, as operated in Harris
County, was unsealed by the U.S. District Court for the Southern District of Texas. Both the federal and state
governments declined to intervene in the qui tam lawsuit. The Company believes that our participation is and has
been consistent with the requirements of the Program and is vigorously defending against the lawsuit being
pursued by the relator. We cannot predict what effect, if any, the qui tam lawsuit could have on the Company.
NOTE 12 — CAPITAL STOCK
The amended and restated certificate of incorporation authorizes the Company to issue up to 1,800,000,000
shares of common stock, and our amended and restated by-laws set the number of directors constituting the board
of directors of the Company at not less than three members, the exact number to be determined from time to time
by resolution adopted by the affirmative vote of a majority of the total number of directors then in office.
Share Repurchase Transactions
During January 2022 and February 2021, our Board of Directors authorized share repurchase programs for
up to $8 billion and $6 billion, respectively, of the Company’s outstanding common stock. During January 2020,
January 2019 and October 2017, our Board of Directors authorized share repurchase programs for up to
$6 billion ($2 billion for each authorization) of our outstanding common stock.
During 2021, we repurchased 37.812 million shares of our common stock at an average price of $217.25 per
share through market purchases pursuant to the $2 billion share repurchase program authorized during January
2019 (which was completed during 2021), the $2 billion share repurchase program authorized during January
2020 (which was completed during 2021) and the $6 billion share repurchase program authorized during
February 2021. At December 31, 2021, we had $586 million of repurchase authorization available under the
February 2021 authorization. During 2020, we repurchased 3.287 million shares of our common stock at an
average price of $134.18 per share through market purchases pursuant to the $2 billion share repurchase program
authorized during January 2019. During 2019, we repurchased 7.949 million shares of our common stock at an
average price of $129.71 per share through market purchases pursuant to the October 2017 authorization (which
was completed during 2019) and the January 2019 authorization.
F-32
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13 — EMPLOYEE BENEFIT PLANS
We maintain defined contribution benefit plans that are available to employees who meet certain minimum
requirements. Certain of the plans require that we match specified percentages of participant contributions up to
certain maximum levels (generally, 100% of the first 3% to 9%, depending upon years of vesting service, of
compensation deferred by participants). Benefits expense under these plans totaled $560 million for 2021,
$552 million for 2020 and $532 million for 2019. Our matching contributions are funded during the year
following the participant contributions.
We maintain the noncontributory, nonqualified Restoration Plan to provide certain retirement benefits for
eligible employees. Eligibility for the Restoration Plan is based upon earning eligible compensation in excess of
a base amount and attaining 1,000 or more hours of service during the plan year. Company credits to
participants’ hypothetical account balances (the Restoration Plan is not funded) depend upon participants’
compensation, years of vesting service, hypothetical investment returns (gains or losses) and certain IRS
limitations. Benefits expense under this plan was $38 million for 2021, $35 million for 2020 and $44 million for
2019. Accrued benefits liabilities under this plan totaled $258 million at December 31, 2021 and $242 million at
December 31, 2020.
We maintain a Supplemental Executive Retirement Plan (“SERP”) for certain executives (the SERP is not
funded). The plan is designed to ensure that upon retirement the participant receives the value of a prescribed life
annuity from the combination of the SERP and our other benefit plans. Benefits expense under the plan was
$22 million for 2021, $24 million for 2020 and $19 million for 2019. Accrued benefits liabilities under this plan
totaled $201 million at December 31, 2021 and $204 million at December 31, 2020.
We maintain defined benefit pension plans which resulted from certain hospital acquisitions in prior years.
Benefits expense under these plans was $4 million for 2021, $8 million for 2020, and $11 million for 2019.
Accrued benefits liabilities under these plans totaled $9 million at December 31, 2021 and $96 million at
December 31, 2020.
NOTE 14 — SEGMENT AND GEOGRAPHIC INFORMATION
We operate in one line of business, which is operating hospitals and related health care entities. We operate
in two geographically organized groups: the National and American Groups. At December 31, 2021, the National
Group included 96 hospitals located in Alaska, California, Florida, Georgia, Idaho, Indiana, northern Kentucky,
Nevada, New Hampshire, North Carolina, South Carolina, Utah and Virginia, and the American Group included
79 hospitals located in Colorado, Kansas, southern Kentucky, Louisiana, Missouri, Tennessee and Texas. We
also operate seven hospitals in England, and these facilities are included in the Corporate and other group.
F-33
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 14 — SEGMENT AND GEOGRAPHIC INFORMATION (continued)
Adjusted segment EBITDA is defined as income before depreciation and amortization, interest expense,
losses and gains on sales of facilities, losses on retirement of debt, income taxes and net income attributable to
indicator for purposes of
noncontrolling interests. We use adjusted segment EBITDA as an analytical
allocating resources to geographic areas and assessing their performance. Adjusted segment EBITDA is
commonly used as an analytical indicator within the health care industry, and also serves as a measure of
leverage capacity and debt service ability. Adjusted segment EBITDA should not be considered as a measure
of financial performance under generally accepted accounting principles, and the items excluded from
adjusted segment EBITDA are significant components in understanding and assessing financial performance.
Because adjusted segment EBITDA is not a measurement determined in accordance with generally accepted
accounting principles and is thus susceptible to varying calculations, adjusted segment EBITDA, as presented,
may not be comparable to other similarly titled measures of other companies. The geographic distributions of
our revenues, equity in earnings of affiliates, adjusted segment EBITDA, depreciation and amortization, assets
and goodwill and other intangible assets are summarized in the following table (dollars in millions):
Revenues:
National Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
American Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . .
$29,826
26,152
2,774
$25,694
23,593
2,246
$25,913
23,173
2,250
For the Years Ended December 31,
2021
2020
2019
Equity in earnings of affiliates:
National Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
American Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . .
$58,752
$51,533
$51,336
$
$
(33)
(53)
(27)
$ (113)
$
(28)
(42)
16
(54)
$
$
(2)
(44)
3
(43)
Adjusted segment EBITDA:
National Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
American Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 7,200
6,156
(712)
$ 5,532
5,333
(828)
$ 5,634
4,904
(681)
$12,644
$10,037
$ 9,857
Depreciation and amortization:
National Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
American Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,359
1,183
311
$ 1,216
1,164
341
$ 1,161
1,117
318
$ 2,853
$ 2,721
$ 2,596
F-34
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 14 — SEGMENT AND GEOGRAPHIC INFORMATION (continued)
For the Years Ended December 31,
2021
2020
2019
Adjusted segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses (gains) on sales of facilities . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Losses on retirement of debt
$12,644
2,853
1,566
(1,620)
12
$10,037
2,721
1,584
7
295
$ 9,857
2,596
1,824
(18)
211
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . .
$ 9,833
$ 5,430
$ 5,244
December 31,
2021
2020
2019
Assets:
National Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
American Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and other . . . . . . . . . . . . . . . . . . . . . . . . . .
$21,205
21,428
8,109
$18,913
20,760
7,817
$18,290
20,608
6,160
$50,742
$47,490
$45,058
Goodwill and other intangible assets:
Balance at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation, amortization and other . . . . . . . . . . .
Balance at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation, amortization and other . . . . . . . . . . .
Balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation, amortization and other . . . . . . . . . . .
National
Group
American
Group
Corporate
and Other
Total
$1,597
155
(13)
$5,729
39
(3)
$ 627
138
—
$7,953
332
(16)
1,739
38
(2)
1,775
735
(18)
5,765
27
(17)
5,775
67
(10)
765
279
(16)
1,028
260
(72)
8,269
344
(35)
8,578
1,062
(100)
Balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,492
$5,832
$1,216
$9,540
F-35
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 15 — OTHER COMPREHENSIVE LOSS
The components of accumulated other comprehensive loss are as follows (dollars in millions):
Balances at December 31, 2018 . . . . . . . . . . . . . . . . . . . . .
Unrealized gains on available-for-sale securities, net
of $4 of income taxes . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments, net of $5
of income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Defined benefit plans, net of $14 income tax
benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of derivative instruments, net of
$13 income tax benefit . . . . . . . . . . . . . . . . . . . . . .
Expense (income) reclassified into operations from
other comprehensive income, net of $3 income tax
benefit and $3 of income taxes, respectively . . . . .
Balances at December 31, 2019 . . . . . . . . . . . . . . . . . . . . .
Unrealized gains on available-for-sale securities, net
of $3 of income taxes . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments, net of $6
of income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Defined benefit plans, net of $16 income tax
benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of derivative instruments, net of
$15 income tax benefit . . . . . . . . . . . . . . . . . . . . . .
Expense reclassified into operations from other
comprehensive income, net of $6 and $5 of
income tax benefits, respectively . . . . . . . . . . . . . .
Balances at December 31, 2020 . . . . . . . . . . . . . . . . . . . . .
Unrealized losses on available-for-sale securities, net
of $3 income tax benefit . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments, net of $2
income tax benefit
. . . . . . . . . . . . . . . . . . . . . . . . .
Defined benefit plans, net of $20 of income taxes . . .
Change in fair value of derivative instruments . . . . .
Expense reclassified into operations from other
comprehensive income, net of $7 and $8 income
tax benefits, respectively . . . . . . . . . . . . . . . . . . . .
Balances at December 31, 2021 . . . . . . . . . . . . . . . . . . . . .
Unrealized
Gains on
Available-
for-Sale
Securities
Foreign
Currency
Translation
Adjustments
Defined
Benefit
Plans
Change
in Fair
Value of
Derivative
Instruments
Total
$ 3
$(283)
$(148)
$ 47
$(381)
11
—
—
—
—
14
11
—
—
—
—
25
(13)
—
—
—
—
$ 12
—
—
—
—
—
—
—
(49)
—
10
(283)
(187)
—
12
—
—
—
—
—
(55)
—
22
(271)
(220)
—
(7)
—
—
—
—
—
67
—
21
—
—
—
(37)
(14)
(4)
—
—
—
(51)
19
(36)
—
—
—
1
29
11
—
(49)
(37)
(4)
(460)
11
12
(55)
(51)
41
(502)
(13)
(7)
67
1
50
$(278)
$(132)
$ (6)
$(404)
F-36
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 16 — ACCRUED EXPENSES
A summary of other accrued expenses at December 31 follows (dollars in millions):
Professional liability risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Defined contribution benefit plans . . . . . . . . . . . . . . . . . . . . . .
Right-of-use operating leases . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes other than income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Government stimulus refund liability . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
$ 508
549
392
361
353
79
1,080
$ 477
547
379
343
315
83
1,096
$3,322
$3,240
F-37
[THIS PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT 31.1
CERTIFICATIONS
I, Samuel N. Hazen, certify that:
1. I have reviewed this annual report on Form 10-K of HCA Healthcare, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this report;
4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
Registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that
occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s
internal control over financial reporting; and
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Registrant’s auditors and the audit and compliance committee of
the Registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the Registrant’s internal control over financial reporting.
Date: February 18, 2022
By: /S/ SAMUEL N. HAZEN
Samuel N. Hazen
Chief Executive Officer
[THIS PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT 31.2
CERTIFICATIONS
I, William B. Rutherford, certify that:
1. I have reviewed this annual report on Form 10-K of HCA Healthcare, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this report;
4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
Registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that
occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s
internal control over financial reporting; and
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Registrant’s auditors and the audit and compliance committee of
the Registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the Registrant’s internal control over financial reporting.
By: /S/ WILLIAM B. RUTHERFORD
William B. Rutherford
Executive Vice President and Chief Financial
Officer
Date: February 18, 2022
[THIS PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of HCA Healthcare, Inc. (the “Company”) on Form 10-K for the year
ended December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), each of the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
February 18, 2022
February 18, 2022
By: /S/ SAMUEL N. HAZEN
Samuel N. Hazen
Chief Executive Officer
By: /S/ WILLIAM B. RUTHERFORD
William B. Rutherford
Executive Vice President and Chief Financial
Officer
[THIS PAGE INTENTIONALLY LEFT BLANK]
This document contains forward-looking statements within the meaning of federal securities laws.
These forward-looking statements are based on our current plans and expectations and are subject
to a number of known and unknown uncertainties and risks, including those set forth in our earnings
releases and reports filed with the Securities and Exchange Commission.
All references to “Company,” “HCA,” “HCA Healthcare,” “we,” and “us” as used herein refer to
HCA Healthcare, Inc. and its affiliates.
*MAGENTA IS DIE-CUT & FOLDLINES - DO NOT PRINT
8.5”
.25”
OUTSIDE
27.5”
One Park Plaza
Nashville, Tennessee 37203
www.HCAhealthcare.com
Corporate Information
Transfer Agent and Registrar
EQ Shareowner Services
P.O. Box 64874
St. Paul, Minnesota 55164-0874
Toll free: 800-468-9716
Certified/Overnight Mail
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, Minnesota 55120
Independent Registered
Public Accounting Firm
Ernst & Young LLP
Nashville, Tennessee
Corporate Headquarters
One Park Plaza
Nashville, Tennessee 37203
615-344-9551
Form 10-K
The Company has filed an annual report on Form 10-K for the year ended
December 31, 2021 with the United States Securities and Exchange Commission
(SEC). Shareholders may obtain a copy of this report, without charge, by writing:
Investor Relations, HCA Healthcare, Inc., One Park Plaza, Nashville, TN 37203
or by visiting the Company’s website at www.hcahealthcare.com.
Common Stock and Dividend Information
The Common Stock of HCA Healthcare, Inc. is listed on the New York Stock
Exchange (NYSE) under the symbol “HCA”. On February 25, 2022, the Company
had approximately 400 shareholders of record. On January 26, 2022, the
Company’s Board of Directors declared a quarterly dividend of $0.56 per share
on our common stock payable on March 31, 2022 to shareholders of record on
March 17, 2022. Future declarations of quarterly dividends and the establishment
of future record and payment dates are subject to the final determination of the
Company’s Board of Directors.
Annual Meeting of Shareholders
The annual meeting of shareholders will be held on April 21, 2022,
at 2:00 pm local time in a virtual meeting format only, via live webcast at
www.virtualshareholdermeeting.com/HCA2022. Shareholders of record as
of February 25, 2022 are invited to attend the virtual meeting.
Directors
Thomas F. Frist Ill
Chairman
HCA Healthcare
Founder and
Managing Principal
Frist Capital
Samuel N. Hazen
Chief Executive Offi cer
HCA Healthcare
Meg G. Croft on
Retired President
Parks and Resorts Operations
The Walt Disney Company
Executive Offi cers
Samuel N. Hazen
Chief Executive Offi cer
and Director
Jennifer L. Berres
Senior Vice President and
Chief Human Resources Offi cer
Phillip G. Billington
Senior Vice President –
Internal Audit Services
Jeff E. Cohen
Senior Vice President –
Government Relations
Michael S. Cuff e, M.D.
Executive Vice President and
Chief Clinical Offi cer
Jon M. Foster
President – American Group
Robert J. Dennis
Retired Chairman and
Chief Executive Offi cer
Genesco Inc.
Nancy-Ann DeParle
Co-founder and
Managing Partner
Consonance Capital
Partners
William R. Frist
Principal
Frist Capital
Charles O. Holliday, Jr.
Retired Chairman and
Chief Executive Offi cer
DuPont
Charles J. Hall
President – National Group
Michael R. McAlevey
Senior Vice President and
Chief Legal Offi cer
A. Bruce Moore, Jr.
President – Service Line
and Operations Integration
Sammie S. Mosier
Senior Vice President and
Chief Nurse Executive
P. Martin Paslick
Senior Vice President and
Chief Information Offi cer
Deborah M. Reiner
Senior Vice President –
Marketing and
Communications
Hugh F. Johnston
Vice Chairman and
Chief Financial Offi cer
PepsiCo, Inc.
Michael W. Michelson
Retired Member
KKR Management LLC
Wayne J. Riley, M.D., M.B.A.
President of SUNY
Downstate Health
Sciences University
Andrea B. Smith
Retired Chief
Administrative Offi cer
Bank of America Corporation
William B. Rutherford
Executive Vice President
and Chief Financial Offi cer
Joseph A. Sowell, III
Senior Vice President and
Chief Development Offi cer
Kathryn A. Torres
Senior Vice President –
Payer Contracting
and Alignment
Kathleen M. Whalen
Senior Vice President and
Chief Ethics and
Compliance Offi cer
Christopher F. Wyatt
Senior Vice President
and Controller
12”
.25
2021
Annual Report
to Shareholders
12”
17.25”
5.25”
*MAGENTA IS DIE-CUT & FOLDLINES - DO NOT PRINT
8.5”
.25”
OUTSIDE
27.5”
One Park Plaza
Nashville, Tennessee 37203
www.HCAhealthcare.com
Corporate Information
Transfer Agent and Registrar
EQ Shareowner Services
P.O. Box 64874
St. Paul, Minnesota 55164-0874
Toll free: 800-468-9716
Certified/Overnight Mail
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, Minnesota 55120
Independent Registered
Public Accounting Firm
Ernst & Young LLP
Nashville, Tennessee
Corporate Headquarters
One Park Plaza
Nashville, Tennessee 37203
615-344-9551
Form 10-K
The Company has filed an annual report on Form 10-K for the year ended
December 31, 2021 with the United States Securities and Exchange Commission
(SEC). Shareholders may obtain a copy of this report, without charge, by writing:
Investor Relations, HCA Healthcare, Inc., One Park Plaza, Nashville, TN 37203
or by visiting the Company’s website at www.hcahealthcare.com.
Common Stock and Dividend Information
The Common Stock of HCA Healthcare, Inc. is listed on the New York Stock
Exchange (NYSE) under the symbol “HCA”. On February 25, 2022, the Company
had approximately 400 shareholders of record. On January 26, 2022, the
Company’s Board of Directors declared a quarterly dividend of $0.56 per share
on our common stock payable on March 31, 2022 to shareholders of record on
March 17, 2022. Future declarations of quarterly dividends and the establishment
of future record and payment dates are subject to the final determination of the
Company’s Board of Directors.
Annual Meeting of Shareholders
The annual meeting of shareholders will be held on April 21, 2022,
at 2:00 pm local time in a virtual meeting format only, via live webcast at
www.virtualshareholdermeeting.com/HCA2022. Shareholders of record as
of February 25, 2022 are invited to attend the virtual meeting.
Directors
Thomas F. Frist Ill
Chairman
HCA Healthcare
Founder and
Managing Principal
Frist Capital
Samuel N. Hazen
Chief Executive Offi cer
HCA Healthcare
Meg G. Croft on
Retired President
Parks and Resorts Operations
The Walt Disney Company
Executive Offi cers
Samuel N. Hazen
Chief Executive Offi cer
and Director
Jennifer L. Berres
Senior Vice President and
Chief Human Resources Offi cer
Phillip G. Billington
Senior Vice President –
Internal Audit Services
Jeff E. Cohen
Senior Vice President –
Government Relations
Michael S. Cuff e, M.D.
Executive Vice President and
Chief Clinical Offi cer
Jon M. Foster
President – American Group
Robert J. Dennis
Retired Chairman and
Chief Executive Offi cer
Genesco Inc.
Nancy-Ann DeParle
Co-founder and
Managing Partner
Consonance Capital
Partners
William R. Frist
Principal
Frist Capital
Charles O. Holliday, Jr.
Retired Chairman and
Chief Executive Offi cer
DuPont
Charles J. Hall
President – National Group
Michael R. McAlevey
Senior Vice President and
Chief Legal Offi cer
A. Bruce Moore, Jr.
President – Service Line
and Operations Integration
Sammie S. Mosier
Senior Vice President and
Chief Nurse Executive
P. Martin Paslick
Senior Vice President and
Chief Information Offi cer
Deborah M. Reiner
Senior Vice President –
Marketing and
Communications
Hugh F. Johnston
Vice Chairman and
Chief Financial Offi cer
PepsiCo, Inc.
Michael W. Michelson
Retired Member
KKR Management LLC
Wayne J. Riley, M.D., M.B.A.
President of SUNY
Downstate Health
Sciences University
Andrea B. Smith
Retired Chief
Administrative Offi cer
Bank of America Corporation
William B. Rutherford
Executive Vice President
and Chief Financial Offi cer
Joseph A. Sowell, III
Senior Vice President and
Chief Development Offi cer
Kathryn A. Torres
Senior Vice President –
Payer Contracting
and Alignment
Kathleen M. Whalen
Senior Vice President and
Chief Ethics and
Compliance Offi cer
Christopher F. Wyatt
Senior Vice President
and Controller
12”
.25
2021
Annual Report
to Shareholders
12”
17.25”
5.25”