2022
Annual
Report to
Shareholders
2022 by the numbers
294K people employed
$27.7B in payroll and benefits
$5.6B federal, state and
local taxes incurred
$4.4B in capital investment
2.0M+ admissions
37M+ patient encounters
9.0M emergency room visits
$3.5B estimated cost
of uncompensated
care provided
$44.2M enterprise giving to
community organizations
$17M colleague giving with
HCA Healthcare matching
143,878 volunteer hours
6,741 charitable organizations
supported
through donations
and volunteering
$8.8M in student loan assistance
$30.4M
tuition reimbursement
benefits
$12M in assistance distributed
by the HCA Healthcare
Hope Fund in 2022
through 4,427 grants
for HCA Healthcare
colleagues and families
To our valued shareholders,
2022 was another positive year for HCA Healthcare. Our 182
hospitals and approximately 2,300 ambulatory sites of care cared
for more than 37 million patients. Our people, nearly 294,000
colleagues and 45,000 physicians on our medical staff, fulfilled
our core mission by continuing to show up and deliver high-
quality healthcare services to our communities.
The impact of COVID-19 continued to significantly influence the
healthcare industry; however, HCA Healthcare performed well
by balancing local needs while also developing more enterprise
capabilities to support our local networks. As leaders, our actions
were informed by lessons learned during the pandemic: the
importance of setting clear priorities; the power of teamwork
and partnerships; the significance of timely decision-making
and execution; and communicating timely and transparently to
our stakeholders.
The aftermath of the pandemic created a number of industry-
wide challenges. There has been a clear disruption in the
labor market; inflationary pressures have driven up costs; and
capacity constraints have affected the ability to meet patient
demand. To address these matters, our teams continued to
incorporate financial resiliency measures while focusing on four
key areas: recruitment, retention, new care models, and capacity
management. These initiatives will carry us into 2023.
Financially, we ended the year in a solid position. Our revenues
for the year totaled $60.2 billion, a 2.5% increase from 2021.
We generated $8.5 billion in cash flows from operations,
providing us with the capacity to execute a balanced approach to
capital allocation.
• As you see later in this letter, we invested substantial
amounts of capital into our facilities.
Above all else, we are
committed to the care and
improvement of human life.
HCA Healthcare’s
182 hospitals are supported
by approximately 2,300
ambulatory sites of care in 20
states and the U.K., including:
126
surgery centers
130
freestanding
emergency rooms
1,616
physician practices
270
urgent care clinics
43
home health and
hospice agencies
61
behavioral health
sites of care
Learn more about our collective impact
at HCAhealthcareImpact.com.
• We repurchased $7 billion, or over 30 million shares, of
*As of Dec. 31, 2022
common stock.
• We increased our quarterly dividend by 17% over 2021.
Additionally, we generated over $1.2 billion of pre-tax proceeds
from divestitures. And, as a taxpaying healthcare provider, we
incurred approximately $5.6 billion of federal, state, and local
taxes, including $2.3 billion of income, property, and sales and
use taxes.
1
In 2022, HCA Healthcare invested more than
$135 million in our clinical education programs,
including centers for clinical advancement. These
investments enhance the learning environment
for our people so we can advance nursing care for
our patients. Workforce development remains a
top priority. We anticipate more investments in
these areas in the future.
As part of our workforce development initiatives
and to help with the country’s issue of physician
shortages, HCA Healthcare has become a
significant provider of medical education. We
have 320 Accreditation Council for Graduate
Medical Education (ACGME) programs, more
than 5,300 residents and fellows, and 66 teaching
hospitals across 16 states.
In addition to growing the pipeline of physicians
and nurses, it's important that we continue
to upgrade our facilities to meet the growing
demand for healthcare. In 2022, HCA Healthcare
invested $4.4 billion in our existing facilities.
That’s the most HCA Healthcare has ever
invested in our capital spending in a single year.
These investments provide us with expanded
capacity, advanced clinical technology, and better
facilities for our patients.
As part of our capital spending, we continued
to expand our outpatient network in key markets.
For example, in 2022, HCA Healthcare purchased
MD Now Urgent Care, a network of 59 urgent
care centers in Florida, which was one of
the largest urgent care acquisitions in the
healthcare industry.
Adding MD Now Urgent Care in Florida enhances
our already strong capabilities in a rapidly
growing state by providing convenient outpatient
care options for our patients. It also connects
MD Now patients to a comprehensive statewide
network of care, including acute care and
specialty services, should they be needed.
Most importantly, we stayed true to our
mission and values – caring for our patients,
people, and communities.
• We cared for over 2 million inpatient
admissions, almost 9 million emergency room
visits, over 1.5 million surgical procedures and
over 200,000 deliveries.
• 25% of our admissions and 48% of our
emergency room visits were for the treatment
of patients who were either uninsured or
covered under Medicaid.
• We provided uncompensated care at an
estimated cost of $3.5 billion.
We believe HCA Healthcare is poised to meet
today's challenges and take advantage of the
opportunities before us.
On the workforce front, HCA Healthcare made
investments in our people this past year. Overall,
we believe our workforce initiatives are starting
to take hold. This past year, we increased
our investment in recruitment to help hire
approximately 105,000 colleagues.
To further bolster our nursing development
programs, HCA Healthcare opened seven more
Galen College of Nursing schools. We expect
to open more schools in 2023. HCA Healthcare
has more than 93,000 registered nurses holding
positions from bedside caregivers to leadership
roles in various healthcare settings and at every
level throughout the organization. Bringing Galen
into the HCA Healthcare family was designed
to combine two leading nursing organizations
to increase access to nursing education
and to provide nursing career development
opportunities for HCA Healthcare colleagues.
2
We also announced plans to build new full-service
hospitals in Texas and Florida to help meet both
states’ growing needs for healthcare services.
These facilities and hospitals would provide more
resources for the communities we serve and help
us deliver the quality care and easier access our
patients deserve.
And while we continued to educate our clinicians,
update our facilities, and grow our networks,
HCA Healthcare continued to remain a leader in
operational and clinical excellence.
We are proud to say that in 2022 Ethisphere
recognized HCA Healthcare as one of the World's
Most Ethical Companies for the 12th time. We
were also recognized for the second consecutive
year on the 2022 LinkedIn Top Companies
ranking, an annual list that helps professionals
identify the top workplaces to grow their careers.
Additionally, we were named by Military Times as
one of the country's best employers based on the
company's efforts to recruit, retain, and support
current and former service members, military
spouses, and military caregivers.
As an organization, we have programs and
initiatives that underscore our strong sense of
purpose to do what is right for our patients,
colleagues, and the communities we serve, and
these awards reflect that culture. As a result,
and thanks to our clinical staff's hard work and
dedication this past year, in the fall 2022,
more than 80% of our hospitals rated by The
Leapfrog Group received an "A" or "B" Leapfrog
Safety Score.
On the innovation front, HCA Healthcare’s
Care Transformation and Innovation (CT&I)
department is working to deliver the healthcare
of the future and support our care teams. For
example, this past year, we launched a pilot in
the Labor and Delivery (L&D) space – "Staff
Scheduler." The Staff Scheduler system predicts
staffing needs based on a machine-learning
algorithm, measures the difficulty of procedures,
and improves staffing according to proficiencies
and preferences. Since the pilot launched, we
have saved time, improved staffing to meet our
patients' needs, and increased nurse satisfaction.
CT&I’s work to identify, build, and roll out new
technology solutions and innovative processes
should create better outcomes and experiences
for our care teams and patients. We look forward
to sharing more of their work.
To further enhance our technology, we decided
to update our clinical systems. This updated
clinical system is designed to provide
HCA Healthcare clinicians with an intuitive,
mobile user interface, personalized to our
workflows. In addition, we expect it will allow us
to standardize our data sets more effectively and
utilize cloud-based analytics to support better
clinical decisions, improve efficiencies, and create
a safer environment for our patients.
And as we continue to innovate and integrate
technology into patient care, we are partnering
with organizations that share our common goal.
For example, we recently partnered with
McKesson Corporation to form an oncology
research joint venture combining McKesson's
U.S. Oncology Research (USOR) and
HCA Healthcare's Sarah Cannon Research
Institute (SCRI). Together, USOR and SCRI
create a fully integrated oncology research
organization with goals to expand clinical
research, accelerate drug development, and
increase availability and access to clinical trials for
community oncology providers and patients. In
addition, this joint venture with McKesson, which
unifies our oncology research experts, is intended
to promote the development of individualized
therapies and provide more opportunities for
cancer patients to receive new treatments.
3
$1.2 million being provided to colleagues
impacted by the hurricane. We are incredibly
proud of how our Florida colleagues responded
before, during, and in the wake of Hurricane Ian.
Furthermore, HCA Healthcare and the
HCA Healthcare Foundation showed up
and supported several organizations in our
communities throughout the year. For example,
the Foundation committed approximately $1.38
million over three years to the Girl Scouts of the
USA to provide mental wellness workshops to
girls in grades 4-12 nationwide, over $350,000
to Kentucky flood relief efforts, $600,000
to Volunteers of America over two years to
promote mental wellbeing and resiliency for first
responders and front-line caregivers, $250,000
to the American Red Cross to support disaster
relief and preparedness nationwide, and more.
Through the HCA Healthcare Foundation’s
Healthier Tomorrow Fund, we are also
aligning with strategic partners who share our
goal of creating a more diverse pipeline of
healthcare leaders.
The HCA Healthcare Foundation also committed
to donating $1.35 million over the next three
years to Educate Texas, an initiative of the
Communities Foundation of Texas. This grant
aims to increase access to student programs
that enable healthcare careers, including
high schools in Texas that offer Pathways in
Technology Early College High School (P-TECH)
healthcare career tracks.
We also continued our commitment to support
Historically Black Colleges and Universities
(HBCUs) and Hispanic-Serving Institutions
(HSIs) in communities near our hospitals. As
part of this commitment, we are investing $1.5
million to Florida International University's
Nicole Wertheim College of Nursing & Health
Sciences (NWCNHS) to address the national
nursing shortage. Additionally, we announced
an investment of $750,000 to The University of
Texas at El Paso to advance diversity in healthcare
HCA Healthcare is collaborating with Johnson &
Johnson to address key issues in the healthcare
industry, including improving health outcomes
through early-stage lung cancer detection for
the Black community, providing more resources
for our nurses on health equity issues, and
collaborating on cardiovascular health initiatives.
HCA Healthcare and Johnson & Johnson have
had a long and productive relationship, and both
companies have worked hard to address many
of our country’s healthcare challenges. We are
excited to collaborate to advance health equity,
enhance patient care and provide even greater
support to our nurses.
And in conjunction with the HCA Healthcare
Foundation and the American Heart Association,
we have started a new initiative, Getting to
the Heart of Stroke, to help prevent initial and
recurrent strokes and improve overall stroke care.
This initiative will launch in 15 select
HCA Healthcare markets to empower consumers
to know and better manage stroke risk, deepen
collaboration between healthcare professionals,
and improve the overall health of communities.
Through this collaboration, we hope to have a
significant impact in improving heart and brain
health outcomes in order to beat stroke.
Additionally, we continue to show up for our
colleagues and the communities we serve in their
time of need.
In the aftermath of Hurricane Ian,
HCA Healthcare showed up and supported our
Florida communities. Our human resources and
supply chain teams deployed on-site mini-marts,
fuel stations, showers, and laundry services in
Florida to assist facilities, colleagues, and nearby
health systems in need. In addition, the
HCA Healthcare Hope Fund received 776
applications from colleagues, with more than
4
leadership. HCA Healthcare is also investing $1.55 million to Tennessee State University to fund scholarships
for students pursuing healthcare and computer science careers, and $1.5 million to Fisk University to
support students pursuing the accelerated dual-degree program with Galen College of Nursing.
HCA Healthcare has announced approximately $6.75 million in gifts since 2021 to multiple colleges and
universities as part of our three-year $10 million pledge to HBCUs/HSIs. These partnerships will help
support students pursuing a career in healthcare and, in turn, create a more diverse talent pipeline of
healthcare leaders.
Our dedication to showing up for the communities we serve also includes understanding how the
environment impacts overall health. To help ensure our current and future environmental strategies, like
reducing our carbon emissions, are carried out, HCA Healthcare has robust governance in place to prepare
and execute our sustainability plans.
We look forward to continuing to show up for our colleagues and communities in 2023 and beyond.
As we push forward on our journey to be the provider system of choice, HCA Healthcare announced
organizational changes which, we believe, can be a catalyst for unlocking even more value for our
stakeholders. As of January 1, 2023, we have a new operating model that includes a chief operating
officer, an additional senior vice president-finance, and three operating groups with five domestic
divisions each. The new organizational design reflects a structure that is intended to align better with our
strategy, streamline areas that can improve long-term performance, and provide greater focus and better
coordination in supporting our business. As mentioned previously, the COVID-19 pandemic taught us that
we need to be well-positioned to make timely decisions and act quickly. We believe that’s exactly what this
structural change will do.
All in all, we are coming out of this pandemic with momentum. We believe HCA Healthcare is well-
positioned culturally, competitively, and financially. We are grateful for the hard work and dedication our
colleagues showed this past year in carrying out HCA Healthcare’s mission, and we want to thank them in
advance for what they’re going to accomplish in the year ahead.
Thomas F. Frist III
Chairman of the Board
Samuel N. Hazen
Chief Executive Officer
5
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
Or
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)
Title of Each Class
Common Stock, $0.01 Par Value
Registrant’s telephone number, including area code: (615) 344-9551
Securities Registered Pursuant to Section 12(b) of the Act:
Trading
Symbol(s)
HCA
Securities Registered Pursuant to Section 12(g) of the Act: None
Name of Each Exchange
on Which Registered
New York Stock Exchange
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☒ 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 ☒ 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 ☒
☐
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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
Auditor PCAOB ID Number: 42 Auditor Name: Ernst & Young LLP Auditor Location: Nashville, Tennessee, United States of America
As of January 31, 2023, there were 276,966,400 outstanding shares of the Registrant’s common stock. As of June 30, 2022, the aggregate market
value of the common stock held by nonaffiliates was approximately $36.171 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.
Portions of the Registrant’s definitive proxy materials for its 2023 Annual Meeting of Stockholders are incorporated by reference into Part III hereof.
DOCUMENTS INCORPORATED BY REFERENCE
INDEX
Page
Reference
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 ......
Quantitative and Qualitative Disclosures about Market Risk ......................................................
Financial Statements and Supplementary Data............................................................................
Changes in and Disagreements with Accountants on Accounting and Financial 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 ......................................................................................
Exhibits and Financial Statement Schedules ...............................................................................
Form 10-K Summary ..................................................................................................................
Signatures.....................................................................................................................................
3
33
52
53
53
53
54
55
56
70
71
71
71
73
73
74
74
74
75
75
76
88
89
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
Item 16.
Item 1.
General
Business
PART I
HCA Healthcare, Inc. is one of the leading health care services companies in the United States. At December 31,
2022, we operated 182 hospitals, comprised of 175 general, acute care hospitals; five psychiatric hospitals; and two
rehabilitation hospitals. In addition, we operated 126 freestanding surgery centers and 21 freestanding endoscopy centers.
Our facilities are located in 20 states and England.
The terms “Company,” “HCA,” “HCA Healthcare,” “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.
Business Strategy
We are committed to providing the communities we serve with high quality, convenient and cost-effective health
care while growing our business and creating long-term value for our stockholders. We strive to be the health care system
of choice in the communities we serve by developing comprehensive networks locally and supporting these networks
with enterprise expertise and economies of scale. Our strategy is organized around a framework that seeks to drive
sustained growth by delivering operational excellence, attracting exceptional physicians and other health care
professionals, developing comprehensive services; creating greater access, and coordinating higher quality care for
patients.
3
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 retain physicians and other health care professionals to meet the need for high quality health
services;
continue to utilize economies of scale to grow the Company; and
pursue a disciplined development strategy.
•
•
Our strategy also emphasizes investments that advance our clinical systems and digital capabilities, transform care
models with innovative care solutions, expand our workforce development programs and enhance our health care
networks and partnerships.
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, 2022, we owned and operated 175 general, acute care hospitals with 48,508 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 comprised of members of the local community.
At December 31, 2022, 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, financial and clinical systems, governmental reimbursement assistance, construction planning and
coordination, information technology systems and solutions, legal counsel, human resources services and internal audit
services.
COVID-19
We believe the extent of COVID-19’s impact on our operating results and financial condition has been and could
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 COVID-19 will impact our operations.
4
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 COVID-19 and other potential pandemics:
• COVID-19 has affected, and may continue to affect, our operations. Further, COVID-19 could negatively
impact our business, financial condition, and cash flows, particularly if it causes public health conditions
and/or economic conditions to deteriorate.
• We are unable to predict the ultimate impact of the CARES Act (as defined below) and other stimulus and
relief legislation 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.
• 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.
Risks related to human capital:
• Our results of operations may be adversely affected by competition for staffing, the shortage of experienced
nurses and other health care professionals 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.
Risks related to technology, data privacy and cybersecurity:
• A cybersecurity incident or other form of data breach could result in the compromise of our facilities,
confidential data or critical data systems. A cybersecurity incident or other form of data breach 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 sharing 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 business and results of operations may be adversely affected by health care reform efforts. We are
unable to predict whether, what, and when additional health reform measures will be adopted or
implemented, and the effects and ultimate impact of any such measures are uncertain and may adversely
affect our business and results of operations.
5
• 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 and other facilities face competition for patients from other hospitals and health care providers.
• Any increase in the volume of uninsured patients or 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 adversely affected.
•
• 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, encounter challenges
integrating the operations of acquired hospitals and other health care businesses and/or 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.
• We may be adversely affected if we are not able to achieve our environmental, social and governance
(“ESG”) goals or otherwise meet the expectations of our stakeholders with respect to ESG matters.
• The industry trend toward value-based purchasing may negatively impact our revenues.
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.
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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, 2022,
2021 and 2020 are summarized in the following table (dollars in millions):
Medicare
Managed Medicare
Medicaid
Managed Medicaid
Managed care and other insurers
International (managed care and other insurers)
Other
Revenues
.............................................................
.............................................
.............................................................
.............................................
........................
..
...................................................................
.............................................................
2022
$ 10,447
9,201
2,636
3,998
29,120
1,317
3,514
$ 60,233
Years Ended December 31,
Ratio
2021
17.3% $ 10,447
8,424
15.3
2,290
4.4
3,124
6.6
30,295
48.3
1,336
2.2
2,836
5.9
100.0% $ 58,752
Ratio
2020
17.8% $ 10,420
6,997
14.3
1,965
3.9
2,621
5.3
26,535
51.6
1,120
2.3
1,875
4.8
100.0% $ 51,533
Ratio
20.2%
13.6
3.8
5.1
51.5
2.2
3.6
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 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, resulting in a uniform percentage reduction
across all Medicare programs of 2% per fiscal year. 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 resumed on July 1, 2022. The BCA
sequestration has been extended through the first six months of 2032. 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 2025. We
anticipate that the federal deficit will continue to place pressure on government health care programs, and it is possible
that future deficit reduction legislation will impose additional spending reductions.
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
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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 targets 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 2022, the Centers for Medicare & Medicaid Services (“CMS”) increased the MS-DRG rate
by approximately 2.5%. This increase reflected a market basket update of 2.7%, reduced by a negative 0.7 percentage
point productivity adjustment and increased by 0.5 percentage points in accordance with the Medicare Access and CHIP
Reauthorization Act of 2015 (“MACRA”). For federal fiscal year 2023, CMS increased the MS-DRG rate by
approximately 4.3%. This increase reflects a market basket update of 4.1%, reduced by a negative 0.3 percentage point
productivity adjustment and increased by 0.5 percentage points as 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 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.
Further, 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.
8
As a result of the national public health emergency (“PHE”) declared in response to COVID-19, CMS has paused
or refined several measures across various hospital quality measurement and value-based purchasing programs. These
policies are intended to ensure that the 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
2023, 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.
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 2022, CMS increased APC
payment rates by 2.0%. This increase reflected a market basket increase of 2.7% with a negative 0.7 percentage point
productivity adjustment. For calendar year 2023, CMS increased payment rates under the outpatient PPS by an estimated
3.8%. This increase reflects a market basket increase of 4.1% with a negative 0.3 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.
The Medicare reimbursement we receive may also be affected by broad shifts in payment policy. For example, in
June 2022, the U.S. Supreme Court invalidated past payment cuts for hospitals participating in the 340B Drug Pricing
Program. Although our hospitals do not participate in the 340B program, the decision has implications for all hospitals
reimbursed under the outpatient PPS and could affect our Medicare reimbursement for both past and future periods. 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 that
are applied to non-340B hospitals. The past payment cuts, which CMS implemented in 2018, resulted in increased
payments for non-340B hospitals, and it has not yet been determined whether the increased payments to non-340B
hospitals may be recouped due to budget neutrality principles. Further, depending on future Medicare payment policies,
non-340B hospitals may receive decreased reimbursement going forward for outpatient drugs and services. For calendar
year 2023, CMS finalized the payment rate for drugs acquired through the 340B program in light of the Supreme Court
decision and, as a result of the payment rate change, is implementing a 3.09% reduction to payment rates for non-drug
services under the outpatient PPS for calendar year 2023 to achieve budget neutrality. In addition, CMS has, in recent
years, phased in an expanded site-neutral payment policy for clinic visit services provided at all off-campus provider-
based departments. Under the policy, clinic visit services provided at all off-campus provider-based departments are
generally not covered as outpatient department services under the outpatient PPS, but rather are reimbursed at the
Medicare Physician Fee Schedule (“Physician Fee Schedule”) rate, which is generally lower than the outpatient PPS rate.
Before the expanded policy, the Physician Fee Schedule equivalent rate did not apply to “excepted” provider-based
departments. The Physician Fee Schedule equivalent rate for calendar year 2023 is substantially less than the outpatient
PPS rate.
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 2022, CMS increased IRF payment rates by an estimated 1.9%,
reflecting an IRF market basket update of 2.6% reduced by a negative 0.7 percentage point productivity adjustment. For
federal fiscal year 2023, CMS increased IRF payment rates by an estimated 3.9%, reflecting an IRF market basket update
of 4.2% with a negative 0.3 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.
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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, 2022, we had two rehabilitation hospitals and 66 hospital rehabilitation units.
The Improving Medicare Post-Acute Care Transformation Act of 2014 (“IMPACT Act”) requires the U.S.
Department of Health and Human Services (“HHS”), together with the Medicare Payment Advisory Commission, to work
toward a unified payment system for post-acute care services provided by IRFs, home health agencies, skilled nursing
facilities, and long-term care hospitals. A unified post-acute care payment system would pay post-acute care providers
under a single framework according to a patient’s characteristics, rather than based on the post-acute care setting where
the patient receives treatment. As required under the statute, CMS issued a report presenting a prototype for a unified
post-acute care payment model in July 2022. CMS noted in its report the need for additional analyses and acknowledged
that the universal implementation of a unified post-acute care payment system would require congressional action. The
Medicare Payment Advisory Commission is required to submit a report to Congress by June 2023.
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 2022, CMS increased IPF payment rates by an estimated 2.0%, reflecting a 2.7% IPF market basket update
reduced by a negative 0.7 percentage point productivity adjustment. For federal fiscal year 2023, CMS increased IPF
payment rates by an estimated 3.8%, which reflects a 4.1% IPF market basket increase with a negative 0.3 percentage
point productivity adjustment. Together with other policy changes, total payments to IPFs are anticipated to increase by
2.5% in federal fiscal year 2023. 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, 2022, we had five psychiatric
hospitals and 45 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 2022, CMS increased ASC payment rates by 2.0%, which reflected a
market basket increase of 2.7% and a negative 0.7 percentage point productivity adjustment. For calendar year 2023,
CMS increased ASC payment rates by 3.8%, which reflects a market basket increase of 4.1% and a negative 0.3
percentage point productivity adjustment. In addition, CMS has established a quality reporting program for ASCs under
which ASCs that fail to report on specified quality measures receive a 2.0 percentage point reduction to the market basket
update.
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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
3.2%, based on a home health payment update percentage of 2.6%, which reflected a 3.1% market basket increase reduced
by a 0.5 percentage point productivity adjustment, among other changes. For calendar year 2023, CMS increased home
health payment rates by 0.7%, based on a home health payment update percentage of 4.0%, which reflects a 4.1% market
basket increase reduced by a 0.1 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, 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 five
calendar days from the start of care results 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.
CMS began implementing a nationwide expansion of the Home Health Value-Based Purchasing (“HHVBP”) Model
in January 2022. 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.
As noted above, the IMPACT Act requires HHS, in conjunction with the Medicare Payment Advisory Commission,
to propose a unified post-acute care payment model by 2023. The unified post-acute care payment system would include
home health agencies.
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 changes in specified economy-wide productivity. For federal
fiscal year 2022, CMS increased hospice payment rates by 2.0%, which reflected a 2.7% market basket update and a
negative 0.7 percentage point productivity adjustment. For federal fiscal year 2023, CMS increased hospice payment rates
by 3.8%, which reflects a 4.1% market basket update and a negative 0.3 percentage point productivity adjustment.
Hospices that fail to satisfy quality reporting requirements receive a 2.0 percentage point reduction to the market basket
update. Beginning in 2024, the payment reduction for failure to report quality data will increase to 4.0 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 2023, the aggregate cap is $32,486.92. If a hospice’s
Medicare payments exceed its inpatient or aggregate caps, it must repay Medicare for the excess amount.
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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 2023, CMS reduced the conversion factor by approximately 4.48%.
However, Congress approved a partial offset to this reduction, increasing payment amounts by 2.5%, which will result in
a payment reduction of approximately 2% for calendar year 2023.
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, which are paid two years after the relevant
performance period, if a provider has sufficient participation (based on percentage of payments or patients) in an
Advanced APM. Providers were able to earn a 5.0% Medicare incentive payment for performance year 2022 (to be paid
in 2024), may earn a 3.5% incentive payment for performance year 2023 (to be paid in 2025), and may receive higher
Medicare Physician Fee Schedule payment rate updates based on performance in 2025 and beyond. In addition, providers
are exempt from the reporting requirements and payment adjustments imposed under the Merit-Based Incentive Payment
System (“MIPS”). Alternatively, providers may participate in the MIPS track. 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 2023 will result in payment adjustments of up to 9% in 2025; positive
adjustments are subject to a scaling factor to meet budget neutrality requirements. 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.
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.
Under the various PPS structures, 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 2023. CMS recently finalized a permanent, budget-neutral cap on year-to-year wage index changes
to smooth variations and decrease volatility.
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. Home health and hospice providers are serviced across four
MAC jurisdictions. 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
12
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. In
recent years, there have been 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 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, nearly half 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. 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. Among these states, the maximum income level required for individuals and families to qualify for Medicaid
varies widely.
Medicaid enrollment has increased as a result of COVID-19. Through COVID-19 relief legislation, Congress
authorized a temporary increase in federal funds for certain Medicaid expenditures. The enhanced funding is available to
states that maintain continuous Medicaid enrollment and meet certain other conditions. The continuous coverage
requirement will expire as of April 1, 2023, and the increase in federal funding will be phased out through calendar year
2023. The resumption of redeterminations for Medicaid enrollees and end of the other conditions of funding may lead to
coverage disruptions and dis-enrollments of current Medicaid enrollees.
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 COVID-19, 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. Most
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
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from federal standards. For example, the Texas Healthcare Transformation and Quality Improvement Program, which is
operated under a Medicaid waiver, expands Medicaid managed care programs in the state, provides funding for
uncompensated care and supports several delivery system reform initiatives. Although this Texas waiver has been
extended through 2030, certain delivery system reform initiatives operate under different approval periods. For example,
a directed payment program for hospitals in Texas expires August 31, 2023. If Texas is unable to obtain future extensions
of this program or similar programs, our revenues could be negatively impacted. In recent years, aspects of existing or
proposed Medicaid waiver programs have been subject to legal challenge, resulting in uncertainty. Additionally, federal
policies that shape administration of the Medicaid programs at the state level are subject to change, including as a result
of changes in the presidential administration. Where states had previously been permitted to condition Medicaid
enrollment on work or other community engagement, the approvals of waivers permitting these conditions have been
rescinded, and the federal government is also reexamining block grant funding structures. However, a federal court is
permitting Georgia to impose work and community engagement requirements under a Medicaid demonstration program
that is expected to launch in mid-2023.
Many state Medicaid programs incorporate value-based purchasing models and related payment and delivery
system reform initiatives that incentivize improvements in quality of care and cost-effectiveness. For example, 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” that are paid by states under
managed Medicaid plan contracts 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 2025. Participation in bundled payment programs is generally
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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, a mandatory
radiation oncology model was expected to begin on January 1, 2023, but CMS has indefinitely delayed its implementation.
CMS has indicated that it will provide six months’ notice before starting the model.
In a strategic report issued in 2021 and updated in 2022, the CMS Innovation Center highlighted the need to
accelerate the movement to value-based care and drive broader system transformation. By 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. In the 2022
updated report, the CMS Innovation Center indicated that it plans to focus on increased care coordination between primary
care physicians and specialists. 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. Pending litigation challenging the payment formula for prior years and any future policies
implemented by CMS may affect how CMS calculates DSH payments and may increase or decrease our payments in the
future. CMS has previously proposed making changes to the calculation of Section 1115 Demonstrations in the Medicaid
fraction of the DSH formula in a manner that would effectively lower DSH payments for many hospitals, and has indicated
that the agency will return to the issue in future rulemaking. These changes could adversely impact our results of
operations. 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.
Some states make additional payments to providers through the Medicaid program that are separate from base
payments and not specifically tied to an individual’s care. These supplemental payments may be in the form of Medicaid
DSH payments, which are intended to offset hospital uncompensated care costs. 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 until 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. Supplemental payments may also be in the form of non-DSH payments, such as upper payment limit payments,
which are intended to address the difference between Medicaid fee-for-service payments and Medicare reimbursement
rates, or payments under other programs that vary by state under Section 1115 waivers. These supplemental
reimbursement programs are designed with input from CMS. The programs are generally authorized for a specified period
of time and require CMS’s approval to be extended. CMS is considering changes to both DSH and non-DSH types of
programs.
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, home health agencies, hospice providers and other institutional providers 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 provider type
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.
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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 managed care
and other insurers were 30%, 31% and 29% of our total admissions for the years ended December 31, 2022, 2021 and
2020, respectively. Managed care contracts are typically negotiated for terms between one and three years. While we
generally have received contracted annual increases to payment rates from managed care payers, there can be no assurance
that we will continue to receive increases in the future. Price transparency initiatives may impact our relationships with
payers and ability to obtain or maintain favorable contract terms. For example, hospitals are required to publish a list of
their standard charges for all items and services, including gross charges, discounted cash prices and payer-specific and
de-identified negotiated charges, in a publicly accessible online file. Further, CMS requires health insurers to publish
online charges negotiated with providers for health care services. In addition, the No Surprises Act 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 insured patients until it issues additional regulations. 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. The No Surprises Act requires providers to provide uninsured and self-pay patients, in
advance of the scheduled date for the item or service or upon request of the individual, a good faith estimate of the
expected charges for furnishing scheduled items or services, including billing and diagnostic codes. 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. HHS is delaying enforcement with regard to good faith
estimates that do not include expected charges for co-providers or co-facilities until the agency issues additional
regulations. If the actual charges to the uninsured or self-pay patient are substantially higher than the estimate or the
provider furnishes an item or service that was not included in the good faith estimate, the patient can invoke a patient-
provider 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, 2022, 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.
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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 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)
......
...
...........................................
........................................................
..........................................................................................
.........................................................................
...............................................................
...........................................................................
....................................................................................
.........................................................................
..............................................................................
...............................................................................
..................................................
.................................
2022
182
126
49,281
41,982
2,075,459
3,611,299
5.1
28,778
72%
8,971,951
1,023,239
522,151
53
38%
2021
182
125
48,803
42,148
2,089,975
3,536,238
5.2
29,752
74%
8,475,345
1,008,236
522,069
49
37%
2020
185
121
49,265
42,246
2,009,909
3,312,330
5.1
27,734
69%
7,450,307
882,483
522,385
45
35%
(a) Excludes freestanding endoscopy centers (21 at December 31, 2022, 2021 and 2020).
(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 admitted patients in our hospital beds each day.
(h) Represents the percentage of hospital beds in service that are occupied by patients (admitted and observations).
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 and facilities in the communities we serve provide services similar to those we offer.
Additionally, the number of freestanding specialty hospitals, surgery centers, emergency departments, urgent care centers,
diagnostic and imaging centers and other medical facilities in the geographic areas in which we operate continues to
increase. As a result, most of our hospitals and other facilities operate in a highly competitive environment. In some cases,
17
competing facilities are more established than we are. 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 facilities 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, ability to obtain or maintain
favorable contract terms and patient volumes in ways that may be difficult to predict. For example, hospitals are currently
required to publish 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. Further, CMS requires health
insurers to publish online charges negotiated with providers for health care services. Starting January 1, 2023, health
insurers must also provide online price comparison tools to help individuals get personalized cost estimates for covered
items and services. In addition, the No Surprises Act imposes additional price transparency requirements, including the
requirement that providers send uninsured and self-pay patients (in advance of the scheduled date for the item or service
or upon request) and health plans of insured patients a good faith estimate of the expected charges and diagnostic codes.
Until HHS issues additional regulations, the agency is deferring enforcement of certain requirements regarding providing
good faith estimates for insured patients and for good faith estimates sent to uninsured or self-pay patients that do not
include expected charges for co-providers or co-facilities.
Our strategies are designed to ensure our hospitals and other facilities are competitive. We believe our hospitals and
other facilities 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, equipment and employees. Accordingly, we strive to
maintain and provide quality facilities, technology, 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 and other facilities 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 health care services and obtain discounts from providers’ established gross charges. Similarly, employers and
traditional health insurers continue to attempt to contain costs through negotiations with providers 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 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.
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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, certification, 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. 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 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 result in the inability to complete an acquisition or
change of ownership, loss of licensure, lapses in reimbursement or other penalties.
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Certificates of Need
In some states where we operate hospitals and other health care providers, the construction or expansion of health
care facilities, the acquisition of existing 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, 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.
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 incentive arrangements that constitute
suspect practices, 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.
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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.
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, radiology and certain other imaging services, radiation therapy services and
home health 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.
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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 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 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
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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
each provider to 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 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.
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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”), the Colorado Privacy Act, the Utah Privacy Act and the Virginia Consumer
Data Protection Act each afford consumers expanded privacy protections. These provide for civil penalties for violations,
and the CCPA and CPRA provide for a private right of action for data breaches. Additionally, 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.
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, 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 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 adjusted annually based on updates to the consumer price index. In addition,
an injured individual, the 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.
Hospitals may face conflicting interpretations of EMTALA’s requirements with respect to state laws that limit access to
abortion or other reproductive health services. For example, HHS has provided guidance regarding EMTALA obligations
specific to patients who are pregnant or are experiencing pregnancy loss and the preemption of state law. This guidance
is the subject of legal challenges, and a federal district court issued a preliminary injunction prohibiting enforcement of
the guidance in Texas and against members of certain professional groups involved in the litigation.
Corporate Practice of Medicine/Fee Splitting
Some of the states in which we operate have laws prohibiting corporations and other entities not owned by
physicians or other permitted health professionals from employing physicians or certain other health professionals,
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
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the physician or other health professional 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.
However, 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 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 initiatives
that 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.
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, the U.S. health care industry has undergone
significant changes at the federal and state levels, many of which have been aimed at reducing costs and government
spending and increasing access to health insurance. The most prominent of these efforts, the Affordable Care Act, affects
how health care services are covered, delivered and reimbursed. The Affordable Care Act increased health insurance
coverage through a combination of private sector health insurance requirements, public program expansion and other
reforms.
There is uncertainty regarding the ongoing net effect of the Affordable Care Act, particularly as it has been, and
continues to be, 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 effectively eliminated.
However, some states have imposed individual health insurance mandates, and other states have explored or offer public
health insurance options. To increase access to health insurance during COVID-19, the ARPA enhanced subsidies for
individuals eligible to purchase coverage through Affordable Care Act marketplaces. The Inflation Reduction Act, enacted
in August 2022, extends these enhanced subsidies through 2025. In addition, in a final rule published in September 2021,
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HHS extended the annual open enrollment period for coverage through federal marketplaces and granted state exchanges
flexibility to lengthen their open enrollment periods. These changes and initiatives may impact the number of individuals
that elect to obtain public or private health insurance or the scope of such coverage, if purchased.
The expansion in public program coverage under the Affordable Care Act 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.
Some states use, or have applied to use, waivers granted by CMS to implement expansion, impose different eligibility or
enrollment conditions, or otherwise implement programs that vary from federal standards. The Medicaid landscape is
constantly evolving as the federal and state governments consider and test various models of delivery and payment system
reform.
In addition, there is uncertainty regarding the potential impact of other reform efforts at the federal and state levels.
For example, 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”). Other recent initiatives and
proposals include those aimed at price transparency and out-of-network charges, which may impact prices and the
relationships between health care providers, insurers and patients. For example, the No Surprises Act imposes various
requirements on providers and health plans intended to prevent “surprise” medical bills, and several states have
implemented similar laws intended to protect consumers. The No Surprises Act prohibits providers from charging patients
an amount beyond the in-network cost sharing amount for items and services rendered by out-of-network providers (i.e.,
prohibits balance billing), subject to limited exceptions. The No Surprises Act also impacts the payment received by an
out-of-network provider from a health plan for items and services to which the prohibitions on balance billing apply. For
items and services for which balance billing is prohibited (even when no balance billing occurs), the No Surprises Act
establishes an independent dispute resolution (“IDR”) process for providers and payers to handle payment disputes that
cannot be resolved through direct negotiations. Regulations implementing the IDR provisions of the No Surprises Act
provide that, when making a payment determination, the IDR must consider the qualifying payment amount, or QPA
(which is generally the payer’s median contracted rate for the same or similar service in an area), and all additional
permissible information submitted by each party. The IDR entity must select the offer that best represents the value of the
item or service under dispute. However, the final rule establishing the IDR process is currently the subject of legal
challenges. On February 6, 2023, a federal judge vacated parts of the rule, including provisions related to consideration
of the QPA. The No Surprises Act also 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. The No Surprises Act also
requires providers to provide a good faith estimate of expected charges to uninsured or self-pay individuals in connection
with scheduled items or services, in advance of the date of the scheduled item or service or upon request of the individual.
HHS is delaying enforcement with regard to good faith estimates that do not include expected charges for co-providers
or co-facilities until the agency issues additional regulations. If the actual charges to an uninsured or self-pay patient are
substantially higher than the estimate or the provider furnishes an item or service that was not included in the good faith
estimate, the patient may invoke a patient-provider dispute resolution process established by regulation to challenge the
higher amount.
Other trends toward transparency and value-based purchasing may impact the competitive position and patient
volumes of providers. For example, the CMS Care Compare website makes available to the public certain data that
hospitals, home health agencies, hospices, and other Medicare-certified providers submit in connection with Medicare
reimbursement claims, including performance data on quality measures and patient satisfaction. Medicare reimbursement
may be adjusted based on quality and efficiency measures and/or compliance with quality reporting requirements. In
addition, hospitals are required by federal regulation to publish online payer-specific negotiated charges and de-identified
minimum and maximum charges. Some price transparency obligations apply only to payers. For example, CMS requires
health insurers to publish online charges negotiated with providers for health care services. Starting January 1, 2023,
health insurers must provide online price comparison tools to help individuals get personalized cost estimates for covered
items and services. Other industry participants, such as private payers and large employer groups and their affiliates, may
also introduce financial or delivery system reforms. For example, in recent years, there have been trends influenced by
private and/or public payers toward enrollment in managed care programs, favoring outpatient care over inpatient care,
and provider consolidation. These issues are further discussed in Item 1A, “Risk Factors.”
General Economic and Demographic Factors
The health care industry is impacted by changes in or uncertainty regarding the overall U.S. economy. COVID-19
has adversely impacted, and may in the future adversely impact, economic conditions in the United States. In addition,
outside of COVID-19-related stimulus and relief measures, budget deficits at the federal level and within some state and
local government entities have had a negative impact on spending for many health and human service programs, including
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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 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
• Managing the environmental impact of our capital programs.
We are pursuing a plan to reduce our scope 1 and scope 2 greenhouse gas emissions by 2030 in line with the Paris
Agreement 1.5℃ emissions reduction goal. Our initiatives contemplate operational changes intended to reduce energy
consumption, including by accelerating related capital investments, new technology pilots, renewable energy contracting
and investments, and medical gas initiatives. We have baselined our scope 1 and scope 2 greenhouse gas emissions for
2021, and we are updating those calculations for 2022 activity to measure trends in our greenhouse gas emissions. We are
exploring a process to measure scope 3 greenhouse gas emissions in the future.
In 2022, we released our inaugural Task Force on Climate-related Financial Disclosure (“TCFD”) report to provide
additional insight into our commitment to improving our environmental impact and strengthening our climate resilience
to support the communities we serve. The report follows TCFD guidance and outlines the ways we are integrating climate-
related risks and opportunities into our governance structure, our risk management and strategy development processes,
and how we establish and track climate-related metrics and targets. We plan to continue following established guidelines
to assess and better understand the physical and transition risks from climate change that we believe most significantly
impact our operations. We have also integrated climate-related risk assessment into our established enterprise risk
management function.
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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 $80 million per occurrence (effective January 1, 2023). 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 reasonable and subject to terms of coverage we believe to be
reasonable.
Human Capital Resources
Our workforce is comprised of approximately 294,000 employees (as of December 31, 2022), including
approximately 87,000 part-time and PRN 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 44% 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.
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. Our Chief Diversity Officer leads a team that is responsible for advancing
diversity, equity and inclusion (“DEI”) and cultural competence initiatives across the Company. Our Executive Diversity
Council, sponsored by our Chief Executive Officer and comprised of executive leaders from the Company, champions
DEI across the Company and informs strategic decisions towards DEI goals and objectives. In addition to the Executive
Diversity Council, we have implemented DEI Councils comprised of diversity leaders and facility representatives and
added division-based DEI leaders to support local deployment of DEI strategies and programs across the enterprise.
In the beginning of 2020, we launched a DEI strategy based on internal and external research to support the
advancement of people of color and women into leadership roles. We have since established nine employee resource
groups to provide colleagues opportunities to convene around shared experiences, including groups for Black colleagues,
women, young professionals, LGBTQ+, Hispanic/Latinx, and Asian colleagues, veterans, colleagues with disabilities,
and a group focused on mental health and wellness – each with a senior leader serving as executive sponsor. In addition,
the Company launched a sponsorship program in 2022 for a cohort of Black colleagues to support leadership and
advancement, which has since expanded to include a broader focus on Black, Asian, and Hispanic leaders.
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, which includes our
EEO-1 data, as well as our 2022 Impact Report (available at www.hcahealthcareimpact.com) for more detailed
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information regarding our DEI and pay equity programs and initiatives. Nothing on our website, including our 2022
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 attract, retain, recognize and reward the performance of our employees. These programs (which vary by
location) include an Employee Stock Purchase Plan, a 401(k) Plan, health care and insurance benefits, flexible spending
accounts, paid time off, family leave, family care resources, flexible work schedules, employee assistance and wellbeing
programs, tuition and student loan payment assistance and on-site services, such as cafeterias and fitness centers, among
many others.
Recruitment and Workforce Development
We continue to invest in numerous initiatives to attract and acquire the talent needed to deliver on our mission and
business objectives. We are working within our communities to expand access to health care programs and careers,
including our expansion of Galen College of Nursing, to specifically address the growing nursing shortage. We are
broadening our access to talent through early outreach programs, internships, career paths, and college and diversity
recruitment efforts.
Serving the Community
We strive to provide not only the quality health care that our patients deserve, but also to address needs in the
communities we serve. We provide opportunities for our colleagues to get involved and be a part of something bigger
than our organization. By joining forces with other leading organizations, we believe our collective talents and work has
an impact that is only possible when we work together. Through research, partnerships, leadership and investments, we
are tackling problems in our communities and throughout the health care industry, from disaster relief to environmental
sustainability to new innovations. We also support the HCA Healthcare Foundation, whose mission is to promote health
and wellbeing 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, and nurture that culture through inclusion,
compassion and respect. To assess and improve employee retention and engagement, we connect with our colleagues in
several ways to listen to and respond to their concerns, including employee rounding, employee advisory groups and
governance councils, and colleague surveys throughout the year. During 2022, we expanded our efforts to improve our
colleagues’ engagement by focusing on the vital behavior of personal connection through care, support and growth to
better respond to the needs of our colleagues. By providing education, training and opportunities to grow as clinicians and
leaders, we seek to support our colleagues throughout their career journey. We also support our colleagues’ development
through programs such as tuition assistance, student loan payment assistance, clinical training and certification.
We are highly committed to developing leaders who support our culture, grow our business and lead the industry.
We invest in award winning programs offered through the HCA Healthcare Leadership Institute where we develop the
capabilities of our current leaders and build our pipeline for the future. These programs are designed to assess, develop
and advance leaders at all levels from supervisory to executive. Our commitment to leadership development and
succession planning creates the platform for which we continue to deliver on our mission and grow our business.
Health, Safety and Wellness
We focus on supporting employees in ways that have a positive impact on their physical, mental and financial health
so they can take care of themselves, their families, their patients and each other. We provide our employees and their
families with access to a variety of health and wellness programs that can help with burnout, stress, depression, anxiety,
and other health concerns as well as relationship issues, career development, work challenges, retirement planning and
financial support. For 2022, this included the following touchpoints:
Approximately 40,000 visits to the online Wellbeing Hub website;
•
• More than 17,000 calls to the Nurse Care help line; and
•
Approximately 14,000 interactions with Optum Wellbeing Services.
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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, 2022, certain employees at 37 of our domestic hospitals are represented by
various labor unions. No union elections occurred at any of our domestic facilities in 2022. While no elections are
scheduled in 2023, 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 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 set 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 for health care
providers, including the Company. These challenges have been exacerbated by the effects that COVID-19 has had on
health care personnel. Nurse and medical support shortages have resulted 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 and to utilize more expensive temporary or contract personnel. As a result, our labor costs could continue to
increase at rates in excess of historical levels. We also depend on the available labor pool of employees in each of the
markets in which we operate to fill other necessary positions. 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, mandate staffing committees to develop staffing plans or require public reporting
of nurse staffing levels. If these states reduce mandatory nurse to patient ratios or additional states in which we operate
adopt mandatory nurse to patient 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, retain and utilize sufficient, quality clinical and non-clinical personnel could impair our
capacity, ability to grow and our results of operations.
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Information about our Executive Officers
As of February 1, 2023, our executive officers were as follows:
Name
Samuel N. Hazen
Erol R. Akdamar
Jennifer L. Berres
Phillip G. Billington
Jeff E. Cohen
Michael S. Cuffe, M.D.
Jon M. Foster
Richard A. Hammett
Michael A. Marks
Michael R. McAlevey
Timothy M. McManus.
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
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Age Position(s)
62 Chief Executive Officer and Director
55 President — American Group
52 Senior Vice President and Chief Human Resources Officer
55 Senior Vice President — Internal Audit Services
51 Senior Vice President — Government Relations
57 Executive Vice President and Chief Clinical Officer
61 Executive Vice President and Chief Operating Officer
53 President — Atlantic Group
53 Senior Vice President — Finance
59 Senior Vice President and Chief Legal Officer
51 President — National Group
48 Senior Vice President and Chief Nurse Executive
63 Senior Vice President and Chief Information Officer
61 Senior Vice President — Marketing and Communications
59 Executive Vice President and Chief Financial Officer
66 Senior Vice President and Chief Development Officer
59 Senior Vice President — Payer Contracting and Alignment
59 Senior Vice President and Chief Ethics and Compliance Officer
45 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.
Erol R. Akdamar was appointed President – American Group effective January 1, 2023. Mr. Akdamar previously
served as President of the North Texas Division from October 2013 to December 2022. Prior to that, he served as CEO
of Medical City Dallas Hospital in Dallas, Texas from 2010 to 2013 and CEO of St. David’s South Austin Medical Center
in Austin, Texas from 2004 to 2010. Mr. Akdamar began his career with HCA in 1993 with Rapides Regional Medical
Center.
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.
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.
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Jon M. Foster was appointed Executive Vice President and Chief Operating Officer effective January 1, 2023. Prior
to that time, he served as President — American Group from January 2013 to December 2022, President — Southwest
Group from February 2011 to January 2013 and 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.
Richard A. Hammett was appointed President — Atlantic Group effective January 1, 2023. Mr. Hammett previously
served as President of the North Florida Division from June 2020 to December 2022. Prior to that, he served as President
and CEO of Swedish Medical Center in Englewood, Colorado from 2015 to 2020. Prior to that time, Mr. Hammett held
numerous leadership positions within HCA Healthcare, including serving as president and chief executive officer of The
Medical Center of Aurora in Aurora, Colorado and chief operating officer and interim CEO of St. David's Medical Center
in Austin, Texas.
Michael A. Marks was appointed Senior Vice President — Finance effective January 1, 2023. Mr. Marks previously
served as Vice President — Financial Operations Support from March 2021 to December 2022. Prior to that time, he
served as CFO of the National Group from December 2008 to February 2021 and CFO of the West Florida Division from
January 2006 to November 2008. Mr. Marks joined HCA Healthcare in 1996.
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.
Timothy M. McManus was appointed President — National Group effective January 1, 2023. Mr. McManus
previously served as President of the Capital Division from August 2016 to December 2022. Mr. McManus joined HCA
Healthcare in 2007 and served as CEO of Chippenham and Johnston-Willis Medical Center in Richmond, Virginia from
June 2012 to July 2016, CEO of Reston Medical Center in Reston, Virginia from June 2010 to June 2012 and CEO of
Garden Park Medical Center in Gulfport, Mississippi from September 2007 to May 2010.
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.
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
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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. COVID-19 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.
Risks related to COVID-19 and other potential pandemics:
COVID-19 has affected, and may continue to affect, our operations. Further, COVID-19 could negatively impact our
business, financial condition, and cash flows, particularly if it causes public health conditions and/or economic
conditions to deteriorate.
As a front-line provider of health care services, we have been and continue to be affected by the health and economic
effects of COVID-19. Although vaccines and booster shots for the virus causing COVID-19 are widely available in the
United States, COVID-19 has continued to result in a significant number of hospitalizations. COVID-19 continues to
evolve, including as a result of mutations of the virus. Due to the concentration of our hospitals in Florida and Texas, we
may be particularly sensitive to increases in COVID-19 cases in those states, where COVID-19 could have a
disproportionate effect on our business. The extent to which COVID-19 will continue to 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 impacts related to COVID-19, including direct
or indirect impacts on macroeconomic conditions.
We continue to work 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. We expect to continue to incur additional costs, which may be significant, as a result of operational
changes in response to COVID-19. Further, our response to COVID-19 has required and may continue to require a
substantial investment of management’s time and resources across our enterprise, which may affect our ability to properly
prioritize and successfully execute on the Company’s strategic initiatives.
We have implemented considerable safety measures within our hospitals and other facilities in response to COVID-
19. Nonetheless, treatment of COVID-19 patients has associated risks, which may include the manner in which patients
and our physicians and clinical staff perceive and respond to such risks. These risks may result in reduced operating
capacity, impaired employee morale and increased exposure to workforce disruptions. Furthermore, 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. Continued constraints on staffing and equipment, laboratory
resources and pharmaceutical and medical supplies shortages may impact our ability to schedule, admit and treat patients.
In addition, we may 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. Our insurance, a portion of which is provided
through our insurance subsidiaries, may not cover all claims against us.
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Our operations and financial performance have been, and may continue to be, affected by actions taken by
governmental authorities in response to COVID-19. Some of these measures, such as restrictions on elective procedures,
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. Moreover, we believe that some individuals have
elected to postpone medical care for an undetermined period of time as a result of COVID-19, impacting patient volumes
in comparison to pre-pandemic levels. While patient volumes began rebounding in the second quarter of 2021 as the
effects of COVID-19 moderated and pandemic-related restrictions and policies were eased, we experienced a resurgence
in COVID-19 cases in the latter half of 2021 and early 2022, further impacting the return to pre-pandemic levels. 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 COVID-19. It is possible that COVID-19
could continue to impact patient behavior in future periods.
Beginning in 2020 and continuing through 2022, 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.
Developments related to COVID-19, including broad economic factors related to COVID-19 and public health
conditions, may have a material, adverse effect on our business, results of operations, financial position and cash flows.
The ongoing impact of COVID-19 on our business will depend on, among other factors, the duration and severity of any
severe or widespread outbreaks of COVID-19; the impact of COVID-19 on economic conditions; the volume of canceled
or rescheduled procedures at our facilities; the volume of COVID-19 patients cared for across our health systems; the
availability, acceptance of, and need for effective vaccines and medical treatments; the spread of potentially more
contagious and/or virulent forms of the virus; and the impact of government actions on the health care industry and broader
economy. COVID-19 continues to evolve, and we may not be able to predict or effectively respond to future
developments.
The foregoing and other continued disruptions to our business as a result of COVID-19 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 stimulus and relief legislation 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.
In response to COVID-19, 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 Consolidated Appropriations Act, 2021 (“CAA”) and the
ARPA authorized 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, and expanded
the Medicare Accelerated and Advance Payment Program. Funds from the Provider Relief Fund are intended to reimburse
eligible providers and suppliers for health care-related expenses or lost revenues attributable to COVID-19 and are not
required to be repaid, provided that recipients attest to and comply with certain terms and conditions. In addition, a portion
of the available funding was distributed to reimburse health care providers that submitted 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. We received general and targeted distributions from the Provider Relief Fund in 2020, but during
the fourth quarter of 2020, we returned or repaid early approximately $6.1 billion of our share of the Provider Relief Fund
distributions and all Medicare accelerated payments.
The CARES Act and related legislation have also made 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 and related legislation temporarily suspended the Medicare sequestration payment adjustment,
which would have otherwise reduced payments to Medicare providers by 2% as required by the BCA. The sequestration
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adjustment was phased back in with a 1% reduction beginning April 1, 2022, and returned to 2% on July 1, 2022. The
BCA sequestration has been extended through the first six months of 2032. The APRA, in addition to providing funding
for health care providers, increased 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 2025.
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 temporary modifications of certain value-based care programs, implementing special
scoring and payment policies intended to mitigate negative effects of the PHE on providers participating in some of these
programs. It is unclear how these changes will affect our financial condition.
COVID-19 continues to evolve, and there is uncertainty regarding the ultimate impact to our business of
governmental efforts to assist health care providers responding to and otherwise affected by COVID-19. As the United
States has experienced a moderation of infection and related hospitalization rates in comparison to earlier periods, federal
and state governments have shifted to reducing or terminating certain temporary measures that were implemented earlier
in the COVID-19 PHE. Many 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. The current PHE declared
by HHS expires May 11, 2023. The presidential administration has indicated that the public health emergency will not be
extended. Termination of the PHE may impact our operations and financial results. Further, there can be no assurance
that the terms and conditions of relief programs will not change or be interpreted in ways that affect our ability to comply
with such terms and conditions, including in cases where our partners have retained such assistance. We continue to assess
the potential impact of COVID-19 and government responses to COVID-19 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.
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, 2022, our total indebtedness was $38.084 billion. As of December
31, 2022, we had availability of $1.935 billion under our senior secured cash flow credit facility and $1.600 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 COVID-19, including:
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increasing our vulnerability to downturns or adverse changes in general economic, industry or competitive
conditions and adverse changes in government regulations;
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;
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exposing us to the risk of increased interest rates on our existing borrowings that are at variable rates of
interest or refinancing 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 to changing market conditions and placing us at a competitive disadvantage
compared to our competitors who are less highly leveraged.
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 COVID-19, 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 rates at which
such financing is available. In addition, our ability to incur secured 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:
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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;
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sell or transfer assets;
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create liens;
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consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and
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enter into certain transactions with our affiliates.
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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.
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 and our other indebtedness.
Risks related to human capital:
Our results of operations may be adversely affected by competition for staffing, the shortage of experienced nurses
and other health care professionals 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 and other facilities, 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 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 such facilities and further exacerbate the demand on our resources, supplies and staffing.
COVID-19 has exacerbated workforce competition, shortages and capacity restraints, including due to the impact
of vaccine mandates on our workforce, and may continue to exacerbate workforce competition, shortages and capacity
constraints beyond the duration of COVID-19. We may be required to continue to enhance wages and benefits to recruit
and retain nurses and other medical support personnel and to hire more expensive temporary or contract personnel. As a
result of shortages, competition and inflationary pressures, our labor costs could continue to increase and/or our capacity
could be negatively impacted. We also depend on the available labor pool of employees in each of the markets in which
we operate to fill other necessary positions. If there is continued competition for these employees or additional union
organizing activity or a significant portion of our employee base unionizes, it is possible our labor costs could increase.
When 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. The unavailability of 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.
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, mandate
staffing committees to develop staffing plans, or require public reporting of nurse staffing levels. If these states reduce,
or if additional states in which we operate adopt, mandatory nurse-staffing ratios or related measures, such changes could
significantly affect labor costs and have an adverse impact 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.
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 COVID-19, which has required and will continue to
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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, physicians may have
admitting privileges at other hospitals in addition to our hospitals. We continue to face increasing competition to recruit
and retain quality physicians, as well as increasing cost to contract with hospital-based physicians. Such physicians may
terminate 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 or adequately
contract with hospital-based physicians, 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 or other form of data breach could result in the compromise of our facilities, confidential
data or critical data systems. A cybersecurity incident or other form of data breach 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 and 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, even the most advanced internal control environment is vulnerable to compromise. 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 that
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,
health systems and other health care entities continue 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. While we are periodically exposed to such threats and expect them to continue, we have not experienced any
material losses or other material consequences relating to technology failure, cyberattacks or other information or security
incidents, whether directed at us or third parties. Internal access management failures could result in the compromise or
unauthorized exposure of confidential data. 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. In such an
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event, we may incur substantial costs, including but not limited to, costs associated with remediating the effects of the
cybersecurity incident, costs for security measures to guard against similar future incidents and costs to recover data.
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, 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;
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billing and collecting accounts;
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coding and compliance;
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admissions, provision of care and care coordination;
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clinical systems and medical devices;
• medical records and document storage;
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• monitoring quality of care and collecting data on quality measures necessary for full Medicare payment
inventory management;
negotiating, pricing and administering managed care contracts and supply contracts; and
updates.
Information systems may be vulnerable to damage from a variety of sources, including telecommunications or
network failures, human acts such as inadvertent or intentional 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 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, any of which could have a material, adverse effect on our financial position
and results of operations and harm our business reputation.
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Health care technology initiatives, particularly those related to sharing 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 and its implementing regulations promote information sharing by prohibiting information blocking by health
care providers and certain other entities. Information blocking 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, data sharing 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 business and results of operations may be adversely affected by health care reform efforts. We are unable to
predict whether, what, and when additional health reform measures will be adopted or implemented, and the effects
and ultimate impact of any such measures are uncertain and may adversely affect our business and results of
operations.
In recent years, the U.S. health care industry has undergone significant changes at the federal and state levels, many
of which have been aimed at reducing costs and government spending and increasing access to health insurance. The most
prominent of these legislative reform efforts is the Affordable Care Act, which affects how health care services are
covered, delivered and reimbursed, and expanded health insurance coverage through a combination of public program
expansion and private sector health insurance reforms. The Affordable Care Act has been, and continues to be, 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 effectively eliminated. However, some states have imposed
individual health insurance mandates, and other states have explored or offer public health insurance options. To increase
access to health insurance during COVID-19, the ARPA enhanced subsidies for individuals eligible to purchase coverage
through Affordable Care Act marketplaces as part of the APRA. The Inflation Reduction Act, enacted in August 2022,
extends these enhanced subsidies through 2025. These changes and initiatives may impact the number of individuals that
elect to obtain public or private health insurance or the scope of such coverage, if purchased.
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 or alter
provisions beneficial to us, while leaving in place provisions reducing our reimbursement or otherwise negatively
impacting our business.
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”). CMS administrators may grant states additional flexibility in the administration of state
Medicaid programs and make changes to Medicaid payment models. Other recent health reform initiatives and proposals
at the federal and state levels include those focused on price transparency and out-of-network charges, which may impact
prices, our relationships with patients, payers or ancillary providers (such as anesthesiologists, radiologists and
pathologists) and our competitive position. For example, among other consumer protections, the No Surprises Act imposes
various requirements on providers and health plans intended to prevent “surprise” medical bills. It also establishes an IDR
process for providers and payers to handle payment disputes that cannot be resolved through direct negotiations. Trends
toward transparency and value-based pricing may impact our competitive position and patient volumes. For example, the
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CMS Care Compare website makes publicly available certain data on performance of hospitals and other Medicare-
certified providers on quality measures and patient satisfaction, and our patient volumes could decline if any of our
facilities achieve poor results. Further, Medicare reimbursement for hospitals is adjusted based on quality and efficiency
measures. 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 43.6% of our revenues from the Medicare and Medicaid programs in 2022.
Changes in government health care programs, including as a result of health reform efforts, may reduce the reimbursement
we receive and could adversely affect our business and results of operations. In addition, 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.
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. For example, Congress
established automatic spending reductions under the BCA, resulting in a 2% reduction in Medicare payments beginning
in 2013. The 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 resumed
on July 1, 2022. The BCA sequestration has been extended through the first six months of 2032. In addition, 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 2025. These reductions are in addition to reductions mandated
by the Affordable Care Act and other laws. It is difficult to predict whether, when or what other deficit reduction initiatives
may be proposed by Congress, but future legislation may include additional Medicare spending reductions.
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. For example, 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. Further,
due to changes to the 340B Drug Pricing Program in prior years and resulting litigation, hospitals that do not participate
in the 340B program (including our hospitals) will receive decreased reimbursement going forward for outpatient drugs
and services, and may be required to repay previously received payments. As another example, CMS has previously
implemented and proposed changes to DSH payment formulas, some of which are the subject of court challenges, and
has indicated that the agency will return to DSH payment formulas in future rulemaking. Future changes to these payment
policies may adversely impact our results of operations, and any potential legal challenges to changes may take years to
resolve. Additionally, as required under the IMPACT Act, HHS and the Medicare Payment Advisory Commission are
working toward a unified post-acute care payment model that would include home health agencies and IRFs. A unified
post-acute care payment system would pay post-acute care providers under a single framework according to a patient’s
characteristics, rather than based on the post-acute care setting where the patient receives treatment. In a July 2022 report,
CMS acknowledged that universal implementation of such a system would require congressional approval. Under the
IMPACT Act, the Medicare Payment Advisory Commission must submit a report to Congress by June 2023. Payment
policies for different types of providers and for various items and services continue to evolve. Congress and/or CMS may
implement further changes to reimbursement for items or services that result in payment reductions for other items or
services or that otherwise affect our business and operations.
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 impact the funding for, or structure of, the Medicaid
program, and may shape the administration of the Medicaid program at the state level. Federal Medicaid policies are
subject to change, including as a result of changes in the presidential administration. For example, where states had
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previously been permitted to condition Medicaid enrollment on work or other community engagement, the approvals of
waivers permitting these conditions have been rescinded. However, a federal court is permitting Georgia to impose work
and community engagement requirements under a Medicaid demonstration program that is expected to launch in mid-
2023. The federal government is also reexamining block grant funding structures.
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:
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billing and coding for services and properly handling overpayments;
appropriateness and classification of level and setting of care provided, including proper classification of
inpatient admissions, observation services and outpatient care;
certifications of patient eligibility for home health and hospice services;
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;
restrictions on the provision of medical care, including reproductive care;
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;
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, the No Surprises
Act 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
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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 develop software programs utilizing machine learning/artificial intelligence for use within our network to
improve care. In some cases, software can be considered a medical device under the federal Food, Drug, and Cosmetic
Act (“FDCA”). Medical devices are subject to extensive regulation by the Food and Drug Administration (“FDA”) under
the FDCA. In September 2022, FDA issued non-binding final guidance that describes the types of clinical decision support
software that FDA will regulate as a medical device, potentially including software programs that were not previously
treated as medical devices. Application of the new guidance may result in our current and/or future software programs
providing clinical decision support being subject to FDA regulation. If FDA determines that any of our software programs
are medical devices under the FDCA, the distribution and/or use of those software programs may require premarket
approval or clearance, and we may be required to cease distribution and/or use of such programs until we obtain any
required premarket approval or clearance, which could adversely affect our operations. Failure to seek FDA approval or
clearance or noncompliance with other applicable FDA requirements could adversely affect our business, financial
condition or results of operations.
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 other states, including Colorado, Utah and Virginia, 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 the regulatory bodies responsible for enforcing new state privacy
laws have yet to be determined or may change in the future. These new state privacy laws provide for civil penalties for
violations, and the CCPA and CPRA provide 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. Moreover, several privacy bills have been proposed both at the federal and state level that may result
in additional legal requirements that impact our business. With the United Kingdom’s departure from the European Union
(“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
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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 pharmaceuticals,
biological materials and disposable medical instruments, that must be handled, stored, transported, treated and disposed
of in compliance with federal, state and local environmental laws and 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 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.
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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 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, in recent years, there have been significant delays in the Medicare appeals process.
HHS has taken steps to streamline the process and improve efficiency, and has significantly reduced a years-long backlog.
Nevertheless, we may experience delays in appealing 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 and other facilities 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 and health care facilities in the communities we
serve provide services similar to those we offer. Trends toward transparency and value-based purchasing may have an
impact on our competitive position, ability to obtain and maintain favorable contract terms, and patient volumes in ways
that are difficult to predict. CMS publicizes on its Care Compare website performance data related to quality measures
and data on patient satisfaction surveys that hospitals, home health agencies, hospices and various other types of Medicare-
certified facilities submit in connection with their Medicare reimbursement. The Care Compare website provides an
overall rating that synthesizes various quality measures into a star rating for each hospital, home health agency and
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hospice. If any of our hospitals or other provider types 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 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, and must also publish a consumer-friendly list of
standard charges for certain “shoppable” services or, alternatively, maintain an online price estimator tool for the
shoppable services. HHS also requires health insurers to publish online charges negotiated with providers for health care
services, and starting January 1, 2023, health insurers must provide online price comparison tools to help individuals get
personalized cost estimates for covered items and services. The No Surprises Act imposes additional price transparency
requirements, including requiring providers to send uninsured or self-pay patients (in advance of the date of the scheduled
item or service or upon request) and health plans (prior to the scheduled date of the item or service) of insured patients a
good faith estimate of the expected charges and diagnostic codes. HHS is deferring enforcement of certain requirements
of the No Surprises Act applicable to providing estimates for insured individuals, and is also deferring enforcement with
regard to good faith estimates sent to uninsured or self-pay patients that do not include expected charges for co-providers
or co-facilities. 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 and large retail chains, 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.”
Any increase in the volume of uninsured patients or deterioration in the collectability of uninsured and patient due
accounts could adversely affect our results of operations.
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
responsibility amounts (exclusions, deductibles and copayments) remain outstanding. At December 31, 2022, estimated
implicit price concessions of $6.780 billion had been recorded to adjust our revenues and accounts receivable to the
estimated amounts we expect to collect. The estimated cost of total uncompensated care was $3.491 billion for 2022,
$3.350 billion for 2021 and $3.483 billion for 2020.
Any increase in the volume of uninsured patients or deterioration in the collectability of uninsured accounts
receivable could 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
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unemployment levels. In addition, legislative and regulatory changes, such as the effective elimination of the financial
penalty associated with the Affordable Care Act’s individual mandate, 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. Further, our ability to collect patient responsibility accounts
may be limited by statutory, regulatory and investigatory initiatives, including private lawsuits directed at hospital charges
and collection practices for uninsured and underinsured patients. For example, the No Surprises Act requires providers to
send uninsured and self-pay patients a good faith estimate of expected charges for items and services. The estimate must
cover items and services that are reasonably expected to be provided together with the primary item or services, including
those that may be provided by other providers. If the uninsured or self-pay patient receives a bill that is substantially
greater than the expected charges in the good faith estimate or the provider furnishes an item or service that was not
included in the good faith estimate, they may initiate a patient-provider dispute resolution process established by
regulation.
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 adversely
affected.
Broad economic factors, including inflationary pressures, supply chain disruptions, labor shortages, increased
unemployment and underemployment rates and reduced consumer spending and confidence, the continued shift of care
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 48.3%, 51.6% and 51.5% of our revenues for 2022, 2021
and 2020, 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. For example, the
No Surprises Act requires providers to send health plans of insured patients a good faith estimate of the expected charges
and diagnostic codes prior to the scheduled date of the service or item. Further, hospitals are required to publish online
payer-specific negotiated charges and de-identified minimum and maximum charges. In addition, starting January 1, 2023,
health insurers must provide online price comparison tools to help individuals get personalized cost estimates for covered
items and services. Cost-reduction strategies by large employer groups and their affiliates, 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, these and future health reform efforts 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.
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Under early COVID-related legislation, states that maintain continuous Medicaid enrollment until the end of the
month in which the PHE ends are eligible for a temporary increase in federal funds for state Medicaid expenditures. Under
recent legislation, the continuous coverage requirement was decoupled from the PHE timeline and will now expire as of
April 1, 2023, and the increase in federal funding will be phased out through calendar year 2023. The resumption of
redeterminations for Medicaid enrollees may lead to coverage disruptions and dis-enrollments of current Medicaid
enrollees. Furthermore, 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. Some states have imposed individual
health insurance mandates with financial penalties for noncompliance. Other states have explored or offer public health
insurance options. These variables, among others, make it difficult to predict the number of uninsured individuals.
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 operations may be impacted by expansion of in-home
acute care models, and 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, encounter challenges integrating
the operations of acquired hospitals and other health care businesses and/or 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 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 regulators and community involvement. Attorneys general
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.
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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, 2022, and 91 of those hospitals are located in Florida and Texas. Our
Florida and Texas facilities’ combined revenues represented 50% of our consolidated revenues for the year ended
December 31, 2022. 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 and other facilities 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 and other facilities 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 or other natural disasters. 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 potential increases in the
intensity or frequency of hurricanes, extreme weather conditions or other natural disasters) 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 (resulting in potential increases in the intensity or frequency of hurricanes, extreme
weather conditions or other natural disasters), and we face the risk of losses incurred as a result of physical damage to our
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. Our response to climate change, our climate change strategies, policies, goals, commitments and
disclosure, and/or our ability to achieve our climate-related goals and commitments (which are subject to risks and
uncertainties, many of which are outside of our control) could result in reputational harm as a result of negative public
sentiment, regulatory scrutiny, litigation and reduced investor and stakeholder confidence.
We may be adversely affected if we are not able to achieve our environmental, social and governance (“ESG”) goals
or otherwise meet the expectations of our stakeholders with respect to ESG matters.
We strive to deliver shared value through our business, and our diverse stakeholders expect us to make significant
progress with respect to certain ESG-related matters. From time to time, we announce certain aspirations and goals
relevant to our priority ESG matters. We periodically publish information about our ESG priorities, strategies, goals,
targets and progress on our corporate website and update our ESG reporting from time to time. Achievement of these
aspirations, targets, plans and goals is subject to risks and uncertainties, many of which are outside of our control, and it
is possible that we may not achieve, or be perceived to have not achieved, our ESG goals or certain of our stakeholders
49
might not be satisfied with our efforts, which could result in reputational harm as a result of negative public sentiment,
regulatory scrutiny, litigation and reduced investor and stakeholder confidence. Certain challenges we face in the
achievement of our ESG objectives are also captured within our ESG reporting, which is not incorporated by reference
into and does not form any part of this Annual Report on Form 10-K or our other filings with the SEC. Standards for
tracking and reporting ESG matters continue to evolve. Our selection of voluntary disclosure frameworks and standards,
and the interpretation or application of those frameworks and standards, may change from time to time or differ from
those of others. This may result in a lack of consistent or meaningful comparative data from period to period or between
us and other companies in the same industry. In addition, our processes and controls may not always comply with evolving
standards for identifying, measuring and reporting ESG metrics, including ESG-related disclosures that may be required
of public companies by the SEC, and such standards may change over time, which could result in significant revisions to
our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future. A delay or
inability to meet our goals and aspirations, comply with federal, state or international environmental, social and
governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could adversely
affect public perception of our business, employee morale or patient or shareholder support, expend corporate resources,
result in substantial costs and expenses, result in legal or regulatory proceedings against the Company and negatively
impact our financial condition and results of operations.
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,
ASCs, home health agencies, hospices and other providers 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 COVID-19,
CMS has paused or refined several measures across various hospital quality measurement and value-based purchasing
programs. These policies are 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.
In January 2022, CMS began implementing a nationwide expansion of the 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. Calendar year
2023 is the first performance year under the expanded HHVBP Model, and data collected in 2023 will impact payments
in calendar year 2025.
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, a
mandatory radiation oncology model was expected to begin January 1, 2023, but CMS has indefinitely delayed its
implementation. 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.
50
In a strategic report issued in 2021 and updated in 2022, the CMS Innovation Center highlighted the need to
accelerate the movement to value-based care and drive broader system transformation. By 2030, the 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 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.
COVID-19 has adversely impacted, and may in the future adversely impact, economic conditions in the United
States. Outside of the governmental response to COVID-19, budget deficits at the federal level and within some 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, and it is possible that future deficit reduction legislation will mandate additional Medicare spending reductions.
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. Further, inflationary pressures may increase operating expenses faster than
reflected in updates to the reimbursement systems of governmental and private payers. If general economic conditions,
including inflation, deteriorate or remain volatile or uncertain for an extended period of time, our results of operations,
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.
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. COVID-19 has increased volatility
of the capital and credit markets and has adversely impacted economic conditions. The investment securities held by our
insurance subsidiaries were $473 million at December 31, 2022. These investments are carried at fair value, with changes
in unrealized gains and losses related to factors other than credit loss allowances being recorded as adjustments to other
comprehensive income. At December 31, 2022, we had unrealized losses of $38 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 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
51
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. These 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 2018, the Board of Directors initiated a cash dividend program under which the Company commenced a regular
quarterly cash dividend. During 2022, the Board of Directors declared four quarterly dividends of $0.56 per share, or
$2.24 per share in the aggregate, on our common stock. On January 26, 2023, our Board of Directors declared a quarterly
dividend of $0.60 per share on our common stock payable on March 31, 2023 to stockholders of record at the close of
business on March 17, 2023.
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 25% as of January 31, 2023). 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.
None.
Unresolved Staff Comments
52
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, 2022:
State
Alaska...............................
California
.........................
Colorado
...........................
..............................
Florida
.............................
Georgia
.................................
Idaho
..............................
Indiana
..............................
Kansas
..........................
Kentucky
Louisiana
..........................
Missouri
...........................
Nevada
.............................
New Hampshire
................
North Carolina
..................
South Carolina
..................
Tennessee
.........................
Texas
................................
Utah
..................................
Virginia
............................
International
England
............................
Hospitals
1
5
7
46
5
2
1
4
2
3
5
3
3
7
3
14
45
8
11
Beds
250
1,883
2,471
12,988
1,487
442
278
1,400
384
923
1,072
1,524
432
1,181
989
2,742
13,609
1,038
3,300
7
182
888
49,281
In addition to the hospitals listed in the above table, we directly or indirectly operate 126 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. Twelve of our
general, acute care hospitals and five of our other properties have been mortgaged to support our obligations under our
senior secured cash flow credit facility.
We maintain our headquarters in approximately 2,031,000 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 10 – Contingencies in the notes to the consolidated financial statements is
incorporated herein by reference.
Item 4.
Mine Safety Disclosures
None.
53
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
During February 2021, January 2022 and January 2023, our Board of Directors authorized $6 billion, $8 billion and
$3 billion, respectively, for share repurchases of the Company’s outstanding common stock. The February 2021
authorization was completed during 2022, and at December 31, 2022, there was $1.586 billion of share repurchase
authorization that remained available under the January 2022 authorization. All repurchases made during the fourth
quarter of 2022, as detailed below, were made pursuant to the January 2022 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,
2022 through December 31, 2022 (dollars in billions, except per share amounts).
Period
October 2022 ...........................
.......................
November 2022
........................
December 2022
..
Total for Fourth Quarter 2022
Total Number
of Shares
Purchased
Average Price
Paid per Share
205.58
222.84
239.71
224.09
1,753,666 $
2,733,018 $
2,294,497 $
6,781,181 $
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
Approximate
Dollar Value of
Shares That
May Yet Be
Purchased
Under Publicly
Announced
Plans or
Programs
1,753,666 $
2,733,018 $
2,294,497 $
6,781,181 $
2.745
2.136
1.586
1.586
Our common stock is traded on the New York Stock Exchange (“NYSE”) (symbol “HCA”). During 2022, our
Board of Directors declared four quarterly dividends of $0.56 per share, or $2.24 per share in the aggregate, on our
common stock. On January 26, 2023, our Board of Directors declared a quarterly dividend of $0.60 per share on our
common stock payable on March 31, 2023 to stockholders of record at the close of business on March 17, 2023. 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 1, 2023, there were approximately 400 holders of
record of our common stock.
54
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
HCA Healthcare, Inc.
S&P 500
S&P Health Care
.............
....................................
.....................
12/31/2017
$
100.00 $
100.00
100.00
12/31/2018
12/31/2019
12/31/2020
12/31/2021
143.38 $
95.62
106.47
172.41 $
125.72
128.64
192.49 $
148.85
145.93
303.33 $
191.58
184.07
12/31/2022
286.20
156.89
180.47
The graph shows the cumulative total return to our stockholders for the five-year period ended December 31, 2022,
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, 2017 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]
55
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, expected inflationary pressures 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 its impact and the spread of virus strains with new epidemiological characteristics; the volume of canceled or
rescheduled procedures and the volume and acuity of COVID-19 patients cared for across our health systems; measures we are
taking to respond to COVID-19; the impact and terms (including the termination or expiration) 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, deteriorating macroeconomic conditions (including
increases in uninsured and underinsured patients) and capacity constraints; potential increased expenses related to inflation or
labor, supply chain or other expenditures; 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, (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”), 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”), (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 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) personnel related capacity constraints; increases in wages
and the ability to attract, utilize and retain qualified management and other personnel, including affiliated physicians, nurses
and medical and technical support personnel; and workforce disruptions, (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 and financial markets), (16) the emergence of and
effects related to 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
56
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Forward-Looking Statements (continued)
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, physical risks from climate change 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
We believe the extent of COVID-19’s impact on our operating results and financial condition has been and could
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 COVID-19 will impact our operations.
2022 Operations Summary
Net income attributable to HCA Healthcare, Inc. totaled $5.643 billion, or $19.15 per diluted share, for 2022,
compared to $6.956 billion, or $21.16 per diluted share, for 2021. The 2022 results include gains on sales of facilities of
$1.301 billion, or $2.46 per diluted share, and losses on retirement of debt of $78 million, or $0.20 per diluted share. 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. Our provisions for income taxes for 2022 and 2021 include tax benefits of
$77 million, or $0.26 per diluted share, and $119 million, or $0.36 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 294.666 million shares and 328.752 million shares for the years ended
December 31, 2022 and 2021, respectively. During 2022 and 2021, we repurchased 30.747 million and 37.812 million
shares, respectively, of our common stock.
Revenues increased to $60.233 billion for 2022 from $58.752 billion for 2021. Revenues increased 2.5% and 3.2%,
respectively, on a consolidated basis and on a same facility basis for 2022, compared to 2021. The consolidated revenues
increase can be attributed to the combined impact of a 0.4% increase in revenue per equivalent admission and a 2.1%
increase in equivalent admissions. The same facility revenues increase resulted from the net impact of a 3.3% increase in
equivalent admissions and a 0.1% decline in revenue per equivalent admission.
During 2022, consolidated admissions declined 0.7% and same facility admissions increased 0.5%, compared to
2021. Inpatient surgical volumes were flat on a consolidated basis and increased 0.9% on a same facility basis during
2022, compared to 2021. Outpatient surgical volumes increased 1.5% on a consolidated basis and increased 1.8% on a
same facility basis during 2022, compared to 2021. Emergency room visits increased 5.9% on a consolidated basis and
increased 7.6% on a same facility basis during 2022, compared to 2021.
The estimated cost of total uncompensated care increased $141 million for 2022, compared to 2021. Consolidated
and same facility uninsured admissions declined 6.0% and 4.6%, respectively, and consolidated and same facility
uninsured emergency room visits increased 4.4% and 6.6%, respectively, for 2022, compared to 2021.
Interest expense totaled $1.741 billion for 2022, compared to $1.566 billion for 2021. The $175 million increase in
interest expense for 2022 was primarily due to an increase in the average debt balance, which was partially offset by a
decline in the average effective interest rate.
Cash flows from operating activities declined $437 million, from $8.959 billion for 2021 to $8.522 billion for 2022.
The decline in cash flows from operating activities was related primarily to a negative change in working capital items of
$649 million, mainly from a decline in accounts payable and accrued expenses, and a decline in net income of $687
million, excluding gains on sales of facilities and losses on retirement of debt, offset by a decline in cash payments for
interest and income taxes of $847 million for 2022 compared to 2021.
57
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Business Strategy
We are committed to providing the communities we serve with high quality, convenient and cost-effective health
care while growing our business and creating long-term value for our stockholders. We strive to be the health care system
of choice in the communities we serve by developing comprehensive networks locally and supporting these networks
with enterprise expertise and economies of scale. Our strategy is organized around a framework that seeks to drive
sustained growth by delivering operational excellence, attracting exceptional physicians and other health care
professionals, developing comprehensive services, creating greater access, and coordinating higher quality care for
patients. 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 Retain Physicians and Other Health Care Professionals 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 health care professionals to provide high quality care. We attract and retain
physicians and other health care professionals 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 and other health care professionals will improve the quality of
care at our facilities.
Continue to Utilize Economies of Scale to Grow the Company. We believe there is significant opportunity to
continue to grow our company by fully utilizing 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 across our extensive network will enable us to continue to manage
costs effectively. We continue to invest in our Parallon subsidiary group to deploy 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 and achieve cost savings and other benefits for the patients
and communities we serve, we intend to focus on selectively developing and acquiring new hospitals, outpatient facilities
and other health care service providers.
Our strategy also emphasizes investments that advance our clinical systems and digital capabilities, transform care
models with innovative care solutions, expand our workforce development programs and enhance our health care
networks and partnerships.
58
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
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 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.
59
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Critical Accounting Policies and Estimates (Continued)
Revenues (continued)
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) .......................................... $
Cost-to-charges ratio (patient care costs as percentage of gross
patient charges) ........................................................................................
Total uncompensated care........................................................................... $
Multiply by the cost-to-charges ratio ..........................................................
Estimated cost of total uncompensated care ............................................... $
2022
2021
2020
51,180
$
49,074
$
44,271
11.0%
31,734
11.0%
3,491
11.3%
29,642
11.3%
3,350
$
$
$
$
12.0%
29,029
12.0%
3,483
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.
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 $517 million,
$453 million and $435 million for the years ended December 31, 2022, 2021 and 2020, respectively. During 2022, 2021
and 2020, we recorded reductions to the provision for professional liability risks of $55 million, $87 million and $112
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.
60
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)
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 $1.802 billion to $2.159 billion at
December 31, 2022 and $1.752 billion to $2.098 billion at December 31, 2021. 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 $29 million or reduce the reserve estimate by
$28 million. A 2.5% change in the expected claim severity trend could be reasonably likely and would increase the reserve
estimate by $135 million or reduce the reserve estimate by $123 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
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 2,000 and 2,100 individual claims at December
31, 2022 and 2021, 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 five 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 $2.043 billion and $2.022 billion at December 31, 2022 and 2021,
respectively. The current portion of these reserves, $515 million and $508 million at December 31, 2022 and 2021,
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 $60 million and $55 million
receivable under reinsurance and excess insurance contracts at December 31, 2022 and 2021, respectively) were $1.983
billion and $1.967 billion at December 31, 2022 and 2021, respectively. The estimated total net reserves for professional
liability risks at December 31, 2022 and 2021 are comprised of $793 million and $874 million, respectively, of case
reserves for known claims and $1.190 billion and $1.093 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):
Net reserves for professional liability claims, January 1
............
$
Provision for current year claims
Favorable development related to prior years’ claims
............................................
............
....................................................................
Total provision
Payments for current year claims
Payments for prior years’ claims
............................................
.............................................
..........................................................
Total claim payments
2022
2021
1,967 $ 1,924
538
(21)
517
4
493
497
530
(77)
453
5
379
384
2020
$ 1,781
519
(84)
435
5
287
292
Effect of new retroactive reinsurance contracts
Net reserves for professional liability claims, December 31
......................
......
(4)
(26)
1,983 $ 1,967
—
$ 1,924
$
61
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Critical Accounting Policies and Estimates (Continued)
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 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. Patient volumes and the related revenues were negatively impacted by COVID-19 beginning in the first
half of 2020, and subsequent periods through the first half of 2022 have experienced fluctuations in COVID-19 volumes
and revenues through the various surges, impacting comparisons for most of our patient volume and revenues operating
statistics. 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 2.5% to $60.233 billion for 2022 from $58.752 billion for 2021 and increased 14.0% for 2021
from $51.533 billion for 2020. The increase in revenues in 2022 can be attributed to the combined impact of a 0.4%
increase in revenue per equivalent admission and a 2.1% increase in equivalent admissions compared to the prior year.
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.
Same facility revenues increased 3.2% for the year ended December 31, 2022 compared to the year ended December
31, 2021 and increased 14.4% for the year ended December 31, 2021 compared to the year ended December 31, 2020.
The 3.2% increase for 2022 can be attributed to the net impact of a 3.3% increase in equivalent admissions and a 0.1%
decline in revenue per equivalent admission. 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.
Consolidated admissions declined 0.7% during 2022 compared to 2021 and increased 4.0% during 2021 compared
to 2020. Consolidated surgeries increased 1.0% during 2022 compared to 2021 and increased 8.9% during 2021 compared
to 2020. Consolidated emergency room visits increased 5.9% during 2022 compared to 2021 and increased 13.8% during
2021 compared to 2020.
Same facility admissions increased 0.5% during 2022 compared to 2021 and increased 4.8% during 2021 compared
to 2020. Same facility surgeries increased 1.5% during 2022 compared to 2021 and increased 9.0% during 2021 compared
to 2020. Same facility emergency room visits increased 7.6% during 2022 compared to 2021 and increased 15.1% during
2021 compared to 2020.
62
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Revenue/Volume Trends (continued)
Same facility uninsured emergency room visits increased 6.6% and same facility uninsured admissions declined
4.6% during 2022 compared to 2021. Same facility uninsured emergency room visits declined 6.3% and same facility
uninsured admissions declined 3.5% during 2021 compared to 2020.
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, 2022, 2021 and 2020 are set
forth below.
Medicare .........................................................
Managed Medicare
.........................................
Medicaid
.........................................................
Managed Medicaid
.........................................
Managed care and insurers
.............................
Uninsured
........................................................
Years Ended December 31,
2020
2021
2022
22%
23
4
14
30
7
100%
23%
21
5
13
31
7
100%
26%
20
5
12
29
8
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, 2022, 2021 and 2020 are set forth below.
Medicare
Managed Medicare
Medicaid
Managed Medicaid
Managed care and insurers
.........................................................
.........................................
.........................................................
.........................................
.............................
Years Ended December 31,
2020
2021
2022
23%
17
7
8
45
100%
23%
16
6
6
49
100%
27%
15
5
6
47
100%
At December 31, 2022, we owned and operated 46 hospitals and 30 surgery centers in the state of Florida. Our
Florida facilities’ revenues totaled $13.812 billion, $13.670 billion and $11.442 billion for the years ended December 31,
2022, 2021 and 2020, respectively. At December 31, 2022, we owned and operated 45 hospitals and 37 surgery centers
in the state of Texas. Our Texas facilities’ revenues totaled $16.450 billion, $15.344 billion and $13.528 billion for the
years ended December 31, 2022, 2021 and 2020, respectively. During 2022, 2021 and 2020, 58%, 56% and 56%,
respectively, of our admissions and 50%, 49% and 49%, respectively, of our revenues were generated by our Florida and
Texas facilities. Uninsured admissions in Florida and Texas represented 74%, 72% and 72%, respectively, of our
uninsured admissions each year during 2022, 2021 and 2020.
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. Some state Medicaid programs 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. We receive supplemental
payments in several states. We are aware these supplemental payment programs are currently being reviewed by certain
state agencies and some states have made requests to CMS to replace their existing supplemental payment programs. It is
possible these reviews and 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.
63
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 following tables summarizing operating results and operating data.
Operating Results Summary
The following are comparative summaries of operating results and certain operating data for the years ended
December 31, 2022, 2021 and 2020 (dollars in millions):
Revenues
...........................................................
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
Net income attributable to HCA Healthcare, Inc. $
.............................................................
% 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
.......................................................
................................................
...............................
..................
2022
Amount
60,233
$
Ratio
100.0
2021
Amount
58,752
$
Ratio
100.0
2020
Amount
51,533
$
Ratio
100.0
27,685
9,371
11,155
(45)
2,969
1,741
(1,301)
78
51,653
8,580
1,746
6,834
1,191
5,643
2.5%
(12.7)
(18.9)
(0.7)
2.1
0.4
3.2
0.5
3.3
(0.1)
46.0
15.6
18.5
(0.1)
5.0
2.9
(2.2)
0.1
85.8
14.2
2.9
11.3
26,779
9,481
9,961
(113)
2,853
1,566
(1,620)
12
48,919
9,833
2,112
7,721
1.9
9.4
$
765
6,956
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
14.0%
81.1
85.3
4.0
6.8
6.8
14.4
4.8
7.6
6.3
0.4%
3.6
7.1
(4.7)
(9.2)
10.5
(0.1)
(4.8)
(9.3)
10.1
(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.
64
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)
..................................
2022
182
126
49,281
41,982
2,075,459
3,611,299
5.1
28,778
72%
8,971,951
1,023,239
522,151
53
38%
2021
182
125
48,803
42,148
2,089,975
3,536,238
5.2
29,752
74%
8,475,345
1,008,236
522,069
49
37%
2020
185
121
49,265
42,246
2,009,909
3,312,330
5.1
27,734
69%
7,450,307
882,483
522,385
45
35%
(a) Excludes freestanding endoscopy centers (21 at December 31, 2022, 2021 and 2020).
(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 admitted patients in our hospital beds each day.
(h) Represents the percentage of hospital beds in service that are occupied by patients (admitted and observations).
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.
65
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Years Ended December 31, 2022 and 2021
Net income attributable to HCA Healthcare, Inc. totaled $5.643 billion, or $19.15 per diluted share, for 2022,
compared to $6.956 billion, or $21.16 per diluted share, for 2021. The 2022 results include gains on sales of facilities of
$1.301 billion, or $2.46 per diluted share, and losses on retirement of debt of $78 million, or $0.20 per diluted share. The
2022 results include additional expenses and lost revenues estimated at approximately $85 million associated with the
impact of Hurricane Ian primarily on our Florida facilities. This amount is prior to any insurance recoveries. Revenues
for 2022 include $244 million and other operating expenses include $90 million from provider tax assessments related to
the period September through December 2021 for the Texas directed payment program that was approved by CMS in
March 2022 for the program year that began September 1, 2021. 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. Our
provisions for income taxes for 2022 and 2021 include tax benefits of $77 million, or $0.26 per diluted share, and $119
million, or $0.36 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
294.666 million shares and 328.752 million shares for the years ended December 31, 2022 and 2021, respectively. During
2022 and 2021, we repurchased 30.747 million and 37.812 million shares, respectively, of our common stock.
During 2022, consolidated admissions declined 0.7% and same facility admissions increased 0.5% compared to
2021. Consolidated inpatient surgeries were flat and same facility inpatient surgeries increased 0.9% during 2022
compared to 2021. Emergency room visits increased 5.9% on a consolidated basis and increased 7.6% on a same facility
basis during 2022 compared to 2021.
Revenues increased 2.5% to $60.233 billion for 2022 from $58.752 billion for 2021. The increase in revenues was
due to the combined impact of a 0.4% increase in revenue per equivalent admission and a 2.1% increase in equivalent
admissions compared to 2021. Same facility revenues increased 3.2% due primarily to the net impact of a 3.3% increase
in equivalent admissions and a 0.1% decline in revenue per equivalent admission compared to 2021.
Salaries and benefits, as a percentage of revenues, were 46.0% in 2022 and 45.6% in 2021. Salaries and benefits
per equivalent admission increased 1.2% in 2022 compared to 2021. Same facility salaries and benefits per full time
equivalent increased 3.3% for 2022 compared to 2021 as inflation has impacted our labor costs and as we continue to
utilize certain contract, overtime and other premium rate labor costs to support our clinical staff and patients. We expect
inflationary pressures will continue to impact our labor costs in the future. We intend to continue reducing our utilization
of and rates paid for premium rate labor, but our ability to mitigate labor cost challenges may be affected by labor market
conditions and other factors. Share-based compensation expense was $341 million in 2022 and $440 million in 2021.
Supplies, as a percentage of revenues, were 15.6% in 2022 and 16.1% in 2021. Supply costs per equivalent
admission declined 3.2% in 2022 compared to 2021. Supply costs per equivalent admission increased 2.4% for medical
devices, but declined 18.8% for pharmacy supplies and 1.6% for general medical and surgical items in 2022 compared to
2021. The decline in pharmacy supplies is primarily related to higher utilization of certain COVID-19 therapies during
2021.
Other operating expenses, as a percentage of revenues, were 18.5% in 2022 and 17.0% in 2021. 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. The 1.5% increase in other operating
expenses, as a percentage of revenues for 2022 compared to 2021, was primarily related to increased costs for
supplemental payment programs in certain states, as well as increased professional fees, utilities and insurance premiums.
We have seen inflation have a negative impact on certain of these expenses and expect inflationary pressures will continue
to impact operating expenses in 2023. Provisions for losses related to professional liability risks were $517 million and
$453 million for 2022 and 2021, respectively. During 2022 and 2021, we recorded reductions of $55 million, or $0.14
per diluted share, and $87 million, or $0.20 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 $45 million for 2022 and $113 million for 2021. The decline of $68 million is
primarily related to the sale of an equity investment during 2021.
66
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Years Ended December 31, 2022 and 2021 (continued)
Depreciation and amortization, as a percentage of revenues, were 5.0% in 2022 and 4.9% in 2021. Depreciation
expense was $2.941 billion for 2022 and $2.826 billion for 2021. The increase of $115 million in depreciation expense
relates primarily to capital expenditures at our existing facilities (same facility depreciation expense increased $134
million).
Interest expense increased to $1.741 billion for 2022 from $1.566 billion for 2021. The $175 million increase in
interest expense was due to an increase in the average debt balance, which was partially offset by a decline in the average
effective interest rate. Our average debt balance was $37.363 billion for 2022 compared to $32.109 billion for 2021. The
average effective interest rate for our long-term debt was 4.7% for 2022 and 4.9% for 2021.
Gains on sales of facilities were $1.301 billion and $1.620 billion for 2022 and 2021, respectively. The gains on
sales of facilities for 2022 are primarily related to the sales of controlling interests in a subsidiary of our group purchasing
organization and subsidiaries of our research entities. 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 2022, we issued $6.000 billion aggregate principal amount of senior notes. We used a portion of the net
proceeds to pay down our revolving credit facilities, and we redeemed all $1.250 billion outstanding aggregate principal
amount of our 4.75% senior notes due 2023 and all $1.250 billion outstanding aggregate principal amount of our 5.875%
senior notes due 2023. The pretax loss on retirement of debt for these two redemptions was $78 million. During 2021, we
issued $2.350 billion aggregate principal amount of senior 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 senior notes issuance and the Credit Agreement
Transactions to retire $3.657 billion of term loan facilities. The pretax loss on retirement of debt was $12 million.
The effective income tax rates were 23.6% and 23.3% for 2022 and 2021, respectively. The effective tax rate
computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships.
Net income attributable to noncontrolling interests increased from $765 million for 2021 to $1.191 billion for 2022.
The increase in net income attributable to noncontrolling interests related primarily to the gain on the sale of a controlling
interest in a subsidiary of our group purchasing organization and the partnership operations of two of our Texas markets.
For results of operations comparisons relating to years ending December 31, 2021 and 2020, 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, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 18,
2022.
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 $8.522 billion in 2022 compared to $8.959 billion in 2021 and $9.232
billion in 2020. The $437 million decline in cash provided by operating activities for 2022, compared to 2021, was related
primarily to a negative change in working capital items of $649 million, mainly from a decline in accounts payable and
accrued expenses, and a decline in net income of $687 million, excluding gains on sales of facilities and losses on
retirement of debt, offset by a decline in cash payments for interest and income taxes of $847 million for 2022 compared
to 2021. 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. Cash payments for interest and income taxes increased $1.075 billion for 2021
compared to 2020. 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 was paid in January 2023. Working capital totaled $3.741
billion at December 31, 2022 and $3.960 billion at December 31, 2021.
67
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Cash used in investing activities was $3.389 billion, $2.643 billion and $3.393 billion in 2022, 2021 and 2020,
respectively. Excluding acquisitions, capital expenditures were $4.395 billion in 2022, $3.577 billion in 2021 and $2.835
billion in 2020. In response to the risks COVID-19 presented to our business, we reduced certain planned projects and
capital expenditures during 2020. Planned capital expenditures are expected to approximate $4.3 billion in 2023. At
December 31, 2022, there were projects under construction which had an estimated additional cost to complete and equip
over the next five years of approximately $4.707 billion. We expect to finance capital expenditures with internally
generated and borrowed funds. We expended $224 million, $1.105 billion and $568 million for acquisitions of hospitals
and health care entities during 2022, 2021 and 2020, respectively. Cash flows from sales of hospitals and health care
entities declined from $2.160 billion for 2021 (primarily related to the proceeds from our sales of five hospitals in Georgia
and other health care entity investments) to $1.237 billion of net proceeds for 2022 (primarily related to proceeds from
our sales of other health care entities).
Cash used in financing activities totaled $5.656 billion in 2022, $6.655 billion in 2021 and $4.677 billion in 2020.
During 2022, we had a net increase of $3.287 billion in our indebtedness, paid dividends of $653 million and paid $7.000
billion for repurchases of common stock. 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 2022, 2021 and 2020, we made distributions to noncontrolling interests of $1.025 billion, $749
million and $626 million, respectively. The increase in distributions in 2022 is related to the sale of a controlling interest
in a subsidiary of our group purchasing organization.
We, or our affiliates, may in the future repurchase portions of our debt or equity securities, subject to certain
limitations, from time to time in either the open market or through privately negotiated transactions, in 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 February 2021, January 2022 and January 2023, our Board of Directors authorized $6 billion, $8 billion and
$3 billion, respectively, for share repurchases of the Company’s outstanding common stock. The February 2021
authorization was completed during 2022, and at December 31, 2022, there was $1.586 billion of share repurchase
authorization that remained available under the January 2022 authorization. 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 2022, our Board of Directors declared four quarterly dividends of $0.56 per share, or $2.24 per share in the
aggregate, on our common stock. On January 26, 2023, our Board of Directors declared a quarterly dividend of $0.60 per
share on our common stock payable on March 31, 2023 to stockholders of record at the close of business on March 17,
2023. 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 ($3.535 billion as of December 31, 2022 and $4.445 billion as of January 31, 2023) and anticipated
access to public and private debt and equity markets. Effective in January 2023, availability under our senior secured
revolving credit facility was increased by $1.500 billion to total $3.500 billion.
Investments of our insurance subsidiaries, held to maintain statutory equity levels and to provide liquidity to pay
claims, totaled $473 million and $541 million at December 31, 2022 and 2021, respectively. The insurance subsidiary
maintained net reserves for professional liability risks of $147 million and $154 million at December 31, 2022 and 2021,
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 $1.836 billion and $1.813 billion at December 31, 2022 and 2021,
respectively. Claims payments, net of reinsurance recoveries, during the next 12 months are expected to approximate
$503 million. We estimate that approximately $459 million of the expected net claim payments during the next 12 months
will relate to claims subject to the self-insured retention.
68
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Financing Activities
We are a highly leveraged company with significant debt service requirements. Our debt totaled $38.084 billion
and $34.579 billion at December 31, 2022 and 2021, respectively. Our interest expense was $1.741 billion for 2022 and
$1.566 billion for 2021.
During 2022, we issued $6.000 billion aggregate principal amount of senior notes comprised of (i) $1.000 billion
aggregate principal amount of 3 1/8% senior notes due 2027, (ii) $500 million aggregate principal amount of 3 3/8%
senior notes due 2029, (iii) $2.000 billion aggregate principal amount of 3 5/8% senior notes due 2032, (iv) $500 million
aggregate principal amount of 4 3/8% senior notes due 2042 and (v) $2.000 billion aggregate principal amount of 4 5/8%
senior notes due 2052. We used a portion of the net proceeds to pay down our revolving credit facilities, and we redeemed
all $1.250 billion outstanding aggregate principal amount of our 4.75% senior notes due 2023 and all $1.250 billion
outstanding aggregate principal amount of our 5.875% senior notes due 2023.
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.
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 and senior notes. The senior secured credit
facilities 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). On May 25, 2022, Standard & Poor’s Rating Services (“S&P”)
announced it had issued an investment grade rating with respect to the issuer credit rating of HCA Healthcare, Inc. and
its subsidiaries. S&P’s announcement, in conjunction with previously disclosed events, constituted an “Investment Grade
Rating Event” or a “Ratings Event,” as applicable, under the terms of the indentures governing HCA Inc.’s outstanding
senior secured notes and, as a result, the conditions in the senior secured indentures to permit the permanent release of
the subsidiary guarantees and all collateral securing the senior secured notes were met. The subsidiary guarantees and
collateral securing our senior secured credit facilities are not affected. Following this release of the subsidiary guarantees
and collateral securing the senior secured notes, the subsidiary guarantors deregistered with the SEC. As a result,
summarized financial information for HCA Healthcare, Inc., HCA Inc. and the subsidiary guarantors, and information
about the subsidiary guarantees and affiliates whose securities were pledged as collateral will no longer be presented.
All of the senior notes issued by HCA Inc. in 2014 or later continue to be fully and unconditionally guaranteed on
an unsecured basis by HCA Healthcare, Inc. The combined assets, liabilities, and results of operations of HCA Healthcare,
Inc. and HCA Inc. are not materially different than the corresponding amounts presented in the consolidated financial
statements of HCA Healthcare, Inc. As a result, summarized financial information of HCA Healthcare, Inc. and HCA Inc.
is not required to be presented under Rule 13-01 of Regulation S-X.
Market Risk
We are exposed to market risk related to changes in market values of securities. Our insurance subsidiaries held
$473 million of investment securities at December 31, 2022. 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, 2022, we
had unrealized losses of $38 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.
69
HCA HEALTHCARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Market Risk (continued)
We are also exposed to market risk related to changes in interest rates. With respect to our interest-bearing liabilities,
approximately $4.780 billion of long-term debt at December 31, 2022 was subject to variable rates of interest, while the
remaining balance in long-term debt of $33.304 billion at December 31, 2022 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. The average
effective interest rate for our long-term debt was 4.7% for 2022 and 4.9% for 2021.
The estimated fair value of our total long-term debt was $35.555 billion at December 31, 2022. 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 $48 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.
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, 2022. 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.
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.”
70
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, 2022.
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.
71
(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, 2022, 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, 2022,
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, 2022 and 2021, 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, 2022, and the related notes and our report dated February 17, 2023
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 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 17, 2023
72
(c) Changes in Internal Control Over Financial Reporting
During the fourth quarter of 2022, 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.
None.
Item 9C.
None.
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
73
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 2023 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 2023 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 2023 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.
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 2023 Annual Meeting of Stockholders, which information is incorporated herein by reference, except as to
information required pursuant to Item 402(v) of SEC Regulation S-K, relating to pay versus performance.
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 2023 Annual Meeting of Stockholders, which information is
incorporated herein by reference.
74
This table provides certain information as of December 31, 2022 with respect to our equity compensation plans:
EQUITY COMPENSATION PLAN INFORMATION
(Share and share unit amounts in millions)
(a)
(b)
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding
options,
warrants and rights
(c)
Number of securities
remaining
available for future
issuance
under equity
compensation
plans (excluding securities
reflected in column(a))
Equity compensation plans approved by
security holders
................................................
Equity compensation plans not approved by
security holders
................................................
..................................................................
Total
9.586(1)
$126.38(1)
—
9.586
—
$126.38
18.262(2)
—
18.262
(1)
(2)
Includes 1.784 million restricted share units which vest solely based upon continued employment over a specific
period of time and 1.715 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 13.826 million shares available for future grants under the 2020 Stock Incentive Plan for Key Employees
of HCA Healthcare, Inc. and its Affiliates and 4.436 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 2023
Annual Meeting of Stockholders, which information is incorporated herein by reference.
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 2023 Annual
Meeting of Stockholders, which information is incorporated herein by reference.
75
PART IV
Item 15.
Exhibits and Financial Statement Schedules
(a) Documents filed as part of the report:
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
— 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).
— Third Amended and Restated Bylaws of the Company (filed as Exhibit 3.1 to the Company’s Current
Report on Form 8-K filed December 19, 2022, and incorporated herein by reference).
— Description of Registered Securities.
— 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).
4.5(a) — $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).
4.5(b) — 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).
76
4.5(c) — 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).
4.5(d) — 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).
4.5(e) — 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).
4.5(f) — 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).
4.5(g) — 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).
4.5(h) — 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).
4.5(i) — 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).
4.5(j) — 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).
4.5(k) — 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.
4.5(l) — 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
77
4.5(m) —
4.5(n) —
4.5(o) —
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).
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).
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).
4.5(p) — 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).
4.5(q) — Restatement Agreement dated as of January 4, 2023, 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 January
4, 2023, and incorporated herein by reference).
4.6(a) — 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).
4.6(b) — 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).
4.6(c) — 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.
4.7(a) — 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).
4.7(b) — 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).
4.7(c) — 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.
4.8(a) — $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).
4.8(b) — 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
78
4.8(c) —
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).
4.8(e) —
4.8(d) — 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).
4.8(f) — 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).
4.8(g) — Amendment No. 1 to Credit Agreement dated as of January 4, 2023, 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 4.2 to the Company’s Current Report on
Form 8-K filed January 4, 2023, and incorporated herein by reference).
4.9(a) — 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).
4.9(b) — 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
79
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).
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).
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(a) —
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).
80
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
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
—
4.25
—
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
— 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).
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).
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).
4.26
4.27
4.28
4.29
4.30
4.31
— 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 4.26).
— 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 4.29).
— 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
81
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
4.45
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 4.32).
— 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 4.35).
— 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).
— Form of 5.250% Senior Secured Notes due 2026 (included in Exhibit 4.38).
— 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 4.41).
— 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).
82
4.46
4.47
4.48
4.49
4.50
4.51
4.52
4.53
4.54
4.55
4.56
4.57
4.58
4.59
4.60
4.61
4.62
— Form of 5.500% Senior Secured Notes due 2047 (included in Exhibit 4.45).
— 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 4.48).
— 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 4.50).
— 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).
— 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 4.53).
— 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 4.55).
— Form of 5 1/8% Senior Secured Notes due 2039 (included in Exhibit 4.56).
— Form of 5 1/4% Senior Secured Notes due 2049 (included in Exhibit 4.57).
— 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).
4.63
— Form of 3.500% Senior Notes Due 2030 (included in Exhibit 4.62).
83
4.64
4.65
4.66
4.67
4.68
4.69
4.70
4.71
4.72
4.73
4.74
4.75
4.76
4.77
4.78
4.79
4.80
10.1
— 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 4.64).
— Form of 3 1/2% Senior Secured Notes Due 2051 (included in Exhibit 4.65).
— 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).
—
—
—
— Supplemental Indenture No. 29, dated as of March 9, 2022, 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 March 10, 2022, and incorporated herein by reference).
Supplemental Indenture No. 30, dated as of March 9, 2022, 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 March 10, 2022, and incorporated herein by reference).
Supplemental Indenture No. 31, dated as of March 9, 2022, 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 March 10, 2022, and incorporated herein by reference).
Supplemental Indenture No. 32, dated as of March 9, 2022, 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 4.5 to the
Company’s Current Report on Form 8-K filed March 10, 2022, and incorporated herein by reference).
Supplemental Indenture No. 33, dated as of March 9, 2022, 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 4.6 to the
Company’s Current Report on Form 8-K filed March 10, 2022, and incorporated herein by reference).
Form of 3 1/8% Senior Secured Notes due 2027 (included in Exhibit 4.69).
Form of 3 3/8% Senior Secured Notes due 2029 (included in Exhibit 4.70).
Form of 3 5/8% Senior Secured Notes due 2032 (included in Exhibit 4.71).
Form of 4 3/8% Senior Secured Notes due 2042 (included in Exhibit 4.72).
Form of 4 5/8% Senior Secured Notes due 2052 (included in Exhibit 4.73).
—
—
—
—
—
— Additional Receivables Intercreditor Agreement, dated as of March 9, 2022, 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 4.15 to the Company’s Current Report on Form 8-K filed March 10, 2022, and
incorporated herein by reference).
—
— Registration Rights Agreement, dated as of March 9, 2022, among HCA Inc., HCA Healthcare, Inc.,
the subsidiary guarantors named therein and Citigroup Global Markets Inc., BofA Securities, Inc., J.P.
Morgan Securities LLC and Morgan Stanley & Co. LLC as representatives of the other several initial
purchasers named therein (filed as Exhibit 4.16 to the Company’s Current Report on Form 8-K filed
March 10, 2022, 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).
84
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 to HCA Holdings, Inc.’s Management Stockholder’s 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).*
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).*
85
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).*
10.9(i) — Signing Bonus Agreement, dated as of January 24, 2022, by and between HCA Healthcare, Inc. and
10.10 —
Michael R. McAlevey.*
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).
10.11 — 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).
10.12 — 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).*
10.13 — 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).*
10.14 — 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).
10.15 — 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).
10.16 — 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).*
10.17 — 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).*
10.18 — 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).*
10.19 — 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).*
86
10.20 — 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).*
10.21 — 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).*
10.22 — 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).*
10.23 — 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).*
10.24 — 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).*
10.25 — 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).*
10.26 — 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).*
10.27 — 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).*
10.28 — 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).*
10.29 — 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).*
10.30 — 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).*
10.31 — 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).*
10.32 — 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).*
10.33 — 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).*
87
10.34 — 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).*
10.35 — 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).*
10.36 — 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).*
10.37 — Form of 2022 Stock Appreciation Right Award Agreement Under the 2020 Stock Incentive Plan for
Key Employees of HCA Healthcare, Inc. and its Affiliates (filed as Exhibit 10.38 to the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and incorporated herein by
reference).*
10.38 — Form of 2022 Performance Share Unit Award Agreement Under the 2020 Stock Incentive Plan for Key
Employees of HCA Healthcare, Inc. and its Affiliates (filed as Exhibit 10.39 to the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2021, and incorporated herein by
reference).*
10.39 — HCA Healthcare, Inc. 2022 Senior Officer Performance Excellence Program (filed as Exhibit 10.1 to
the Company’s Current Report on Form 8-K filed on April 11, 2022, and incorporated herein by
reference).*
10.40 — Form of 2023 Stock Appreciation Right Award Agreement Under the 2020 Stock Incentive Plan for
Key Employees of HCA Healthcare, Inc. and its Affiliates.*
10.41 — Form of 2023 Performance Share Unit Award Agreement Under the 2020 Stock Incentive Plan for
Key Employees of HCA Healthcare, Inc. and its Affiliates.*
21
22
23
31.1
31.2
32
101
104
— List of Subsidiaries.
— List of Subsidiary Guarantors and Pledged Securities.
— Consent of Ernst & Young LLP.
— Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
— Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
— Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
— The following financial information from our annual report on Form 10-K for the year ended December
31, 2022, filed with the SEC on February 17, 2023, formatted in Extensible Business Reporting
Language (XBRL): (i) the consolidated balance sheets at December 31, 2022 and 2021, (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, 2022, 2021 and 2020,
(iv) the consolidated statements of stockholders’ equity (deficit) for the years ended December 31, 2022,
2021 and 2020, (v) the consolidated statements of cash flows for the years ended December 31, 2022,
2021 and 2020, and (vi) the notes to consolidated financial statements.
— The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31,
2022, formatted in Inline XBRL (included in Exhibit 101).
__________
* Management compensatory plan or arrangement.
Item 16.
Form 10-K Summary
None.
88
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 17, 2023
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
/S/ CHARLES O. HOLLIDAY, JR.
Charles O. Holliday, Jr.
/S/ HUGH F. JOHNSTON
Hugh F. Johnston
/S/ MICHAEL W. MICHELSON
Michael W. Michelson
/S/ WAYNE J. RILEY
Wayne J. Riley
/S/ ANDREA B. SMITH
Andrea B. Smith
Date
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
Title
Chief Executive Officer and Director
(Principal Executive Officer)
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Chairman and Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
89
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, 2022, 2021 and 2020...........................
Consolidated Comprehensive Income Statements for the years ended December 31, 2022, 2021 and 2020
Consolidated Balance Sheets, December 31, 2022 and 2021 ........................................................................
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2022, 2021
and 2020 ..........................................................................................................................................................
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 ...............
Notes to Consolidated Financial Statements ...................................................................................................
Page
F-2
F-5
F-6
F-7
F-8
F-9
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 December
31, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2022, 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, 2022, 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 17, 2023 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
Revenue Recognition
Description of the Matter
For the year ended December 31, 2022, the Company’s revenues were $60.233 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 and commercial
insurance plans are based upon the payment terms specified in the related contractual
agreements. 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 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.
How We Addressed the
Matter in Our Audit
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 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.
Professional Liability Claims
Description of the Matter At December 31, 2022, the Company’s reserves for professional liability risks were $2.043
billion and the Company’s related provision for losses for the year ended December 31, 2022
was $517 million. As discussed in Note 1 to the consolidated financial statements, reserves
for professional liability risks represent the estimated ultimate net cost of all reported and
unreported losses incurred and unpaid through the consolidated balance sheet date.
Management estimates 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.
F-3
How We Addressed the
Matter in Our Audit
We tested management’s internal controls that address the risks of material misstatement over
the Company’s professional liability claims reserves 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 the Company’s determination of the estimated professional liability 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 by policy
year to validate 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 17, 2023
F-4
HCA HEALTHCARE, INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020
(Dollars in millions, except per share amounts)
Revenues
...........................................................................................
$
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
...........................................................
.............................................................
........................................................................................
....................
.................
Net income attributable to HCA Healthcare, Inc.
Per share data:
Basic earnings per share
Diluted earnings per share
............................................................
.........................................................
Shares used in earnings per share calculations (in millions):
Basic
Diluted
.............................................................................................
..........................................................................................
$
$
$
2022
60,233 $
2021
58,752 $
2020
51,533
27,685
9,371
11,155
(45)
2,969
1,741
(1,301)
78
51,653
8,580
1,746
6,834
1,191
5,643 $
26,779
9,481
9,961
(113)
2,853
1,566
(1,620)
12
48,919
9,833
2,112
7,721
765
6,956 $
23,874
8,369
9,307
(54)
2,721
1,584
7
295
46,103
5,430
1,043
4,387
633
3,754
19.43 $
19.15 $
21.52 $
21.16 $
11.10
10.93
290.348
294.666
323.315
328.752
338.274
343.605
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, 2022, 2021 AND 2020
(Dollars in millions)
Net income
Other comprehensive income (loss) before taxes:
...............................................................................................................
Foreign currency translation
............................................................................
Unrealized gains (losses) on available-for-sale securities
Losses included in other operating expenses
...........................
...........................................
Defined benefit plans
Pension costs included in salaries and benefits
........................................................................................
.......................................
Change in fair value of derivative financial instruments
Interest costs included in interest expense
.............................
...............................................
Other comprehensive income (loss) before taxes
Income taxes (benefits) related to other comprehensive income items
Other comprehensive income (loss)
Comprehensive income
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to HCA Healthcare, Inc.
...............................................
..........
.....................................................................
..........................................................................................
......................
.........................
2022
2021
$ 6,834 $ 7,721 $ 4,387
2020
(111)
(55)
1
(54)
49
9
58
(9)
(16)
—
(16)
87
28
115
18
14
—
14
(71)
28
(43)
6
2
8
(99)
(13)
(86)
6,748
1,191
(66)
24
(42)
(53)
(11)
(42)
4,345
633
$ 5,557 $ 7,054 $ 3,712
1
37
38
128
30
98
7,819
765
The accompanying notes are an integral part of the consolidated financial statements.
F-6
HCA HEALTHCARE, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2022 AND 2021
(Dollars in millions)
ASSETS
2022
2021
Current 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
.....................................................................
...............................................................
......................................................................
.........................................................................
.......................................................................................................................
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable
Accrued salaries
Other accrued expenses
Long-term debt due within one year
................................................................................................
..................................................................................................
......................................................................................
...................................................................
Long-term debt, less debt issuance costs and discounts of $301 and $248
Professional liability risks
Right-of-use operating lease obligations
Income taxes and other liabilities
............
.......................................................................................
................................................................
...........................................................................
Stockholders’ equity (deficit):
Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding
277,378,300 shares — 2022 and 305,476,800 shares — 2021
Accumulated other comprehensive loss
Retained deficit
Stockholders’ deficit attributable to HCA Healthcare, Inc.
Noncontrolling interests
........................
.............................................................
...................................................................................................
................................
......................................................................................
$
$
908
8,891
2,068
1,776
13,643
2,799
20,221
29,981
1,756
54,757
(29,182)
25,575
381
823
9,653
2,065
298
52,438
4,239
1,712
3,581
370
9,902
37,714
1,528
1,752
1,615
$
$
3
(490)
(2,280)
(2,767)
2,694
(73)
52,438
$
$
$
$
1,451
8,095
1,986
2,010
13,542
2,496
19,211
28,256
1,387
51,350
27,287
)
24,063
(
438
448
9,540
2,113
598
50,742
4,111
1,912
3,322
237
9,582
34,342
1,514
1,755
2,060
3
(404)
(532)
(933)
2,422
1,489
50,742
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, 2022, 2021 AND 2020
(Dollars in millions, except per share amounts)
Equity (Deficit) Attributable to HCA Healthcare, Inc.
Capital
in Excess
of Par
Value
3 $ — $
Par
Value
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
(Deficit)
Equity
Attributable to
Noncontrolling
Interests
(460) $ (2,351) $
(42)
2,243 $
633
Common Stock
Shares
(in millions)
338.446 $
(3.287)
4.267
Balances, December 31, 2019
...
Comprehensive income (loss)
Repurchase of common stock
......
Share-based benefit plans
Cash dividends declared
($0.43 per share)
Distributions
Other
.................
..........................
......................................
...
Balances, December 31, 2020
.........
Comprehensive income
Repurchase of common stock
......
Share-based benefit plans
Cash dividends declared
Balances, December 31, 2021
($1.92 per share)
Distributions
Other
.................
..........................
......................................
...
Comprehensive income (loss)
Repurchase of common stock
......
Share-based benefit plans
Cash dividends declared
($2.24 per share)
Distributions
Other
.................
..........................
......................................
...
Balances, December 31, 2022
339.426
3
(37.812)
3.863
305.477
3
(30.747)
2.648
300
(6)
294
(578)
280
4
-
(264)
282
(18)
3,754
(441)
(35)
(150)
(502)
98
777
6,956
(7,637)
(628)
(404)
(86)
(532)
5,643
(6,736)
(655)
Total
(565)
4,345
(441)
265
(150)
(626)
64
2,892
7,819
(8,215)
280
(628)
(749)
90
1,489
6,748
(7,000)
282
(655)
(1,025)
88
(73)
(626)
70
2,320
765
(749)
86
2,422
1,191
(1,025)
106
2,694 $
277.378 $
3 $ — $
(490) $ (2,280) $
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, 2022, 2021 AND 2020
(Dollars in millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by
..................................................................................................
Accounts receivable
Inventories and other assets
Accounts payable and accrued expenses
operating activities:
Increase (decrease) in cash from operating assets and liabilities:
........................................................................
...........................................................
.....................................
............................................................
..........................................................................................
....................................................
...............................................................
..................................................
..................................................................
.......................................................................................................
...................................
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
Net cash provided by operating activities
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
.......................................................
...................................
..............................................
...............................................................................
.............................................................................................................
Net cash used in investing activities
............................................
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
......................................................................
.................................................
...................................................................
................................................
................................................................
................................................................................
...................................................................
.............................................................................................................
Net cash used in financing activities
............................................
................
............................................................
......................................
.................................................
.............................................................................................
...............................................................................
Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Interest payments
Income tax payments, net
2022
2021
2020
$
6,834
$
7,721 $
4,387
(797)
(59)
(296)
2,969
571
(1,301)
78
29
341
153
8,522
(4,395)
(224)
1,237
14
(21)
(3,389)
(962)
(540)
999
2,853
(70)
(1,620)
12
27
440
99
8,959
(3,577)
(1,105)
2,160
(117)
(4)
(2,643)
5,997
120
(2,830)
(1,025)
(53)
(653)
(7,000)
(212)
(5,656)
(20)
(543)
1,451
908 $
1,662 $
1,175 $
4,344
2,780
(3,869)
(749)
(38)
(624)
(8,215)
(284)
(6,655)
(3)
(342)
1,793
1,451 $
1,502
$
2,182
$
$
$
$
327
(304)
1,255
2,721
41
7
295
30
362
111
9,232
(2,835)
(568)
68
(20)
(38)
(3,393)
2,700
(2,480)
(3,437)
(626)
(35)
(153)
(441)
(205)
(4,677)
10
1,172
621
1,793
1,607
1,002
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, 2022 these affiliates owned and operated 182 hospitals,
126 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 subsequent to our acquisition of controlling
interests. Significant intercompany transactions have been 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.
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 $378 million, $400 million and $416 million for the years
ended December 31, 2022, 2021 and 2020, respectively.
COVID-19
We believe the extent of COVID-19’s impact on our operating results and financial condition has been and could
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 COVID-19 will impact our operations.
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.
10
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Revenues (continued)
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):
Medicare
Managed Medicare
Medicaid
Managed Medicaid
Managed care and other insurers
International (managed care and other insurers)
Other
Revenues
..............................................................
..............................................
..............................................................
..............................................
.........................
..
....................................................................
.............................................................
2022
$ 10,447
9,201
2,636
3,998
29,120
1,317
3,514
$ 60,233
Years Ended December 31,
Ratio
2021
Ratio
2020
17.3% $ 10,447
8,424
15.3
2,290
4.4
3,124
6.6
30,295
48.3
1,336
2.2
2,836
5.9
100.0% $ 58,752
17.8% $ 10,420
6,997
14.3
1,965
3.9
2,621
5.3
26,535
51.6
1,120
2.3
1,875
4.8
100.0% $ 51,533
Ratio
20.2%
13.6
3.8
5.1
51.5
2.2
3.6
100.0%
Laws and regulations governing the Medicare and Medicaid programs are complex and subject to 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 Medicare, this is generally referred to
as the “cost report” filing and settlement process). The adjustments to estimated Medicare and Medicaid reimbursement
and disproportionate-share amounts, related primarily to cost reports filed during the respective year, resulted in net
increases to revenues of $56 million, $53 million and $70 million in 2022, 2021 and 2020, respectively. The adjustments
to estimated reimbursement amounts related primarily to cost reports filed during previous years resulted in a net increase
to revenues of $42 million in 2022, a net increase to revenues of $19 million in 2021 and a net reduction to revenues of
$5 million in 2020.
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.
F-11
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Revenues (continued)
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 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, 2022 and 2021, estimated implicit price concessions of $6.780 billion and $6.784 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):
Patient care costs (salaries and benefits, supplies, other
operating
expenses and depreciation and amortization)
............................
Cost-to-charges ratio (patient care costs as percentage of gross
patient charges)
Total uncompensated care
Multiply by the cost-to-charges ratio
Estimated cost of total uncompensated care
..........................................................................
............................................................
............................................
.................................
$
2022
2021
2020
$
51,180
$
49,074
$
44,271
$
31,734
11.0%
11.0%
3,491
11.3%
29,642
11.3%
3,350
12.0%
29,029
12.0%
3,483
$
$
$
$
The total uncompensated care amounts include charity care of $13.615 billion, $13.644 billion and $13.763 billion
for the years ended December 31, 2022, 2021 and 2020, respectively. The estimated cost of charity care was $1.498
billion, $1.542 billion and $1.652 billion for the years ended December 31, 2022, 2021 and 2020, 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 $656 million and $536 million at
December 31, 2022 and 2021, 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-12
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 53 days, 49 days and 45 days at December 31,
2022, 2021 and 2020, respectively. Changes in general economic conditions, patient accounting service center operations,
payer mix, payer claim processing, 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 $2.941 billion in 2022, $2.826 billion in 2021
and $2.693 billion in 2020. 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 property and equipment
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.
Property and equipment 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, 2022 and 2021, 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 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.
F-13
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
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 2022, 2021 or 2020.
During 2022, goodwill increased by $262 million related to acquisitions and declined by $105 million related to
foreign currency translation and other adjustments. 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 2022, identifiable intangible assets declined by $44 million due to amortization 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. 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
both December 31, 2022 and 2021 were $274 million and accumulated amortization was $208 million and $175 million,
respectively. The gross carrying amounts of indefinite-lived identifiable intangible assets at December 31, 2022 and 2021
were $293 million and $304 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 amounts of debt issuance costs and discounts at December 31, 2022 and 2021 were $496 million and $446
million, respectively, and accumulated amortization was $195 million and $198 million, respectively. Amortization of
debt issuance costs and discounts is included in interest expense and was $29 million, $27 million and $30 million for
2022, 2021 and 2020, respectively.
Professional Liability Claims
Reserves for professional liability risks were $2.043 billion and $2.022 billion at December 31, 2022 and 2021,
respectively. The current portion of the reserves, $515 million and $508 million at December 31, 2022 and 2021,
respectively, is included in “other accrued expenses” in the consolidated balance sheets. Provisions for losses related to
professional liability risks were $517 million, $453 million and $435 million for 2022, 2021 and 2020, 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 2022, 2021 and 2020, we recorded
reductions to the provision for professional liability risks of $55 million, $87 million and $112 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
2,000 and 2,100 individual claims at December 31, 2022 and 2021, 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 2022 and 2021, $497 million and $384 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.
F-14
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Professional Liability Claims (continued)
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 were $48
million and $44 million at December 31, 2022 and 2021, respectively, recorded in “other assets,” and $12 million and
$11 million at December 31, 2022 and 2021, respectively, recorded in “other current assets.”
Financial Instruments
Derivative financial instruments have been employed to manage risks, including interest rate exposures, and have
not been used for trading or speculative purposes. 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.
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. 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, 2022 there were 13.826 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, 2022, 4.436
million shares of common stock were reserved for ESPP issuances. During 2022, 2021 and 2020, the Company recognized
$16 million, $15 million and $13 million, respectively, of compensation expense related to the ESPP.
F-15
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 — SHARE-BASED COMPENSATION (continued)
SAR, RSU and PSU Activity
The fair value of each 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 SARs” and “RSUs”) or based upon continued employment and the achievement of certain financial
targets (“Performance 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) to two times the original PSU grant
(for actual performance of 110% or more of target). Each 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
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
.............................................
2022
1.64%
34%
5.11
0.95%
2021
0.68%
36%
6.17
1.10%
2020
1.44%
27%
6.15
1.19%
Information regarding Time SARs and Performance SARs activity during 2022, 2021 and 2020 is summarized
below (share amounts in thousands):
SARs outstanding, December 31,2020
SARs outstanding, December 31,2019
Granted
Exercised
Cancelled
Granted
Exercised
Cancelled
Granted
Exercised
Cancelled
....
.................................................
..............................................
..............................................
. ...
.................................................
..............................................
..............................................
....
.................................................
..............................................
..............................................
. ...
....
SARs outstanding, December 31,2022
SARs exercisable, December 31, 2022
SARs outstanding, December 31,2021
Time
SARs
9,050
1,120
(2,159)
(175)
7,836
877
(2,443)
(108)
6,162
570
(660)
(112)
5,960
4,022
Performance
SARs
2,144
—
(1,325)
—
819
—
(533)
—
286
—
(159)
—
127
127
Weighted
Average
Exercise
Price
Total
SARs
71.79
11,194 $
144.47
1,120
44.07
(3,484)
111.69
(175)
91.53
8,655
174.98
877
67.57
(2,976)
138.32
(108)
113.15
6,448
236.00
570
90.84
(819)
(112)
182.87
6,087 $ 126.38
4,149 $ 102.20
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
(dollars in
millions)
5.7 years $
4.7 years $
691
572
F-16
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 — SHARE-BASED COMPENSATION (continued)
The weighted average fair values of SARs granted during 2022, 2021 and 2020 were $69.55, $54.57 and $35.98
per share, respectively. The intrinsic values of SARs exercised during 2022, 2021 and 2020 were $115 million, $404
million and $328 million, respectively. As of December 31, 2022, the unrecognized compensation cost related to
nonvested SARs was $40 million.
SAR, RSU and PSU Activity (continued)
Information regarding RSUs and PSUs activity during 2022, 2021 and 2020 is summarized below (share amounts
in thousands):
RSUs and PSUs outstanding, December 31, 2020
RSUs and PSUs outstanding, December 31, 2019.......
Granted .....................................................................
Performance adjustment
...........................................
Vested
.......................................................................
Cancelled
..................................................................
.......
.....................................................................
...........................................
.......................................................................
..................................................................
.......
....................................................................
...........................................
.......................................................................
..................................................................
.......
Granted .
Performance adjustment
Vested
Cancelled
Granted
Performance adjustment
Vested
Cancelled
RSUs and PSUs outstanding, December 31, 2021
RSUs and PSUs outstanding, December 31, 2022
RSUs
2,620
1,048
—
(1,030)
(162)
2,476
899
—
(992)
(192)
2,191
611
—
(878)
(140)
1,784
PSUs
3,035
808
206
(1,364)
(93)
2,592
689
684
(1,772)
(110)
2,083
455
699
(1,399)
(123)
1,715
Weighted
Average
Grant
Date Fair
Value
Total RSUs
and PSUs
5,655 $
1,856
206
(2,394)
(255)
5,068
1,588
684
(2,764)
(302)
4,274
1,066
699
(2,277)
(263)
3,499 $
105.23
144.17
81.89
88.63
124.50
125.40
174.34
102.02
106.62
149.07
150.32
235.71
138.45
138.41
183.86
179.18
The fair values of RSUs and PSUs that vested during 2022, 2021 and 2020 were $550 million, $475 million and
$349 million, respectively. As of December 31, 2022, the unrecognized compensation cost related to RSUs and PSUs was
$324 million.
NOTE 3 — ACQUISITIONS AND DISPOSITIONS
During 2022, we paid $224 million to acquire nonhospital health care entities (noncontrolling interests of $72
million were recorded). 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). 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. 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 $262 million, $1.002 billion and $279 million in
2022, 2021 and 2020, 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.
F-17
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 — ACQUISITIONS AND DISPOSITIONS (continued)
During 2022, we received proceeds of $326 million and recognized a pretax gain of $274 million ($200 million
after tax) related to sales of real estate and other health care entity investments. We also received proceeds of $911 million
and recognized a pretax gain of $1.027 billion ($527 million after tax and amounts attributable to noncontrolling interests)
related to the sale of a controlling interest in a subsidiary of our group purchasing organization. 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 sales 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.
NOTE 4 — INCOME TAXES
The provision for income taxes consists of the following (dollars in millions):
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
...............................
...................................
...............................
...............................
...................................
...............................
$
$
2022
2021
2020
1,222 $ 1,769 $
206
18
261
27
12
311
15
24
(18)
11
1,746 $ 2,112 $
1,021
126
5
(73)
(39)
3
1,043
Our provision for income taxes for the years ended December 31, 2022, 2021 and 2020 included tax benefits of $77
million, $119 million and $92 million, respectively, related to the settlement of employee equity awards. Our foreign
pretax income was $66 million, $64 million and $9 million for the years ended December 31, 2022, 2021 and 2020,
respectively.
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 Healthcare, Inc.
Income attributable to noncontrolling interests from consolidated
partnerships
Effective income tax rate on income before income taxes
........................................................................................................
................................
2022
21.0%
2.3
0.7
(0.9)
0.5
23.6
2021
21.0%
2.0
0.7
(1.2)
0.8
23.3
2020
21.0%
1.9
(0.2)
(1.8)
0.8
21.7
(3.3)
20.3%
(1.8)
21.5%
(2.5)
19.2%
F-18
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4 — INCOME TAXES (continued)
A summary of the items comprising our deferred tax assets and liabilities at December 31 follows (dollars in
millions):
Depreciation and fixed asset basis differences
Allowances for professional liability and other risks
Accounts receivable
Compensation
Right-of-use lease assets and obligations
Other
..............
....
.......................................................
................................................................
......................
..............................................................................
$
$
Assets
Liabilities
Assets
938 $ — $
2022
— $
430
368
402
451
536
2,187
$
2021
Liabilities
737
—
—
—
419
652
1,808
$
426
348
502
428
499
$ 2,203
438
698
2,074
At December 31, 2022, federal and state net operating loss carryforwards (expiring in years 2025 through 2039)
available to offset future taxable income approximated $28 million and $193 million, respectively. Utilization of net
operating loss carryforwards in any one year may be limited.
The following table summarizes the activity related to our gross unrecognized tax benefits, excluding accrued
interest of $129 million and $99 million as of December 31, 2022 and 2021, respectively (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
Balance at December 31
.................................................................
....
.................................
..............................
...............................................................................
...............................
........................................................... $
$
2022
576
25
50
(4)
(1)
(7)
639
2021
469
57
66
(6)
(3)
(7)
576
$
$
Unrecognized tax benefits of $278 million as of December 31, 2022 ($217 million as of December 31, 2021) 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, 2022. 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.
F-19
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 SARs, RSUs and PSUs, computed using the treasury stock method. During 2022, 2021 and 2020,
we repurchased 30.747 million shares, 37.812 million shares and 3.287 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,
2022, 2021 and 2020 (dollars and shares in millions, except per share amounts):
Net income attributable to HCA Healthcare, Inc
. ....
$
Weighted average common shares outstanding
Effect of dilutive incremental shares
Shares used for diluted earnings per share
Earnings per share:
.......
........................
...............
2022
5,643 $
2021
6,956 $
2020
3,754
290.348
4.318
294.666
323.315
5.437
328.752
338.274
5.331
343.605
Basic earnings per share
Diluted earnings per share
.......................................
....................................
$
$
19.43 $
$
19.15
21.52
$
21.16 $
11.10
10.93
NOTE 6 — INVESTMENTS OF INSURANCE SUBSIDIARIES
A summary of the insurance subsidiaries’ investments at December 31 follows (dollars in millions):
2022
Unrealized
Amounts
Gains
Losses
Fair
Value
Amortized
Cost
Debt securities
Money market funds and other
.........................................................
................................
$
$
415 $
96
511
$
— $
—
—
$
Amounts classified as current assets
Investment carrying value
........................
........................................
(38)
—
(38)
$
$
377
96
473
(92)
381
Debt securities
Money market funds and other
.........................................................
................................
Amounts classified as current assets
Investment carrying value
.......................
.......................................
$
$
Amortized
Cost
400 $
125
525 $
2021
Unrealized
Amounts
Gains
18 $
—
18 $
Losses
(2) $
—
(2)
$
Fair
Value
416
125
541
(103)
438
At December 31, 2022 and 2021, 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).
F-20
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6 — INVESTMENTS OF INSURANCE SUBSIDIARIES (continued)
Scheduled maturities of investments in debt securities at December 31, 2022 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
31 $
121
185
78
415 $
Fair
Value
31
116
161
69
377
The average expected maturity of the investments in debt securities at December 31, 2022 was 5.3 years, compared
to the average scheduled maturity of 8.6 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.
NOTE 7 — 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.
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.
The following tables summarize our assets and liabilities measured at fair value on a recurring basis as of December
31, 2022 and 2021, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in
millions):
Assets:
Investments of insurance subsidiaries:
Debt securities............................................. $
Money market funds and other ...................
Investments of insurance subsidiaries.........
Less amounts classified as current assets ...
$
2022
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
—
96
96
(92)
4
$
$
377
—
377
—
377
$
$
—
—
—
—
—
377 $
96
473
(92)
381 $
F-21
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (continued)
2021
Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)
Fair Value Measurements Using
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
Investments of insurance subsidiaries
Less amounts classified as current assets
.............................................
....................
.........
....
$
$
416 $
125
541
(103)
438 $
Liabilities:
Interest rate swap (Other accrued expenses)
...
$
8 $
— $
125
125
(103)
22 $
— $
416 $
—
416
—
416 $
8 $
—
—
—
—
—
—
The estimated fair value of our long-term debt was $35.555 billion and $38.541 billion at December 31, 2022 and
2021, respectively, compared to carrying amounts, excluding debt issuance costs and discounts, aggregating $38.385
billion and $34.827 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.
NOTE 8 — LONG-TERM DEBT
A summary of long-term debt at December 31, including related interest rates at December 31, 2022, follows
(dollars in millions):
Senior secured asset-based revolving credit facility (effective interest rate of 5.6%)
Senior secured revolving credit facility
Senior secured term loan facilities (effective interest rate of 5.9%)
Senior secured notes
Other senior secured debt (effective interest rate of 3.9%)
Senior secured debt
Senior unsecured notes (effective interest rate of 4.9%)
Debt issuance costs and discounts
Total debt (average life of 9.6 years, rates averaging 5.0%)
Less amounts due within one year
..
........................................................................
.............................
......................................................................................................
...........................................
.......................................................................................................
...............................................
.................................................................................
.........................................
................................................................................
2022
2,900
—
1,880
—
953
5,733
32,652
)
(301
38,084
370
37,714
$
$
2021
2,780
—
1,960
16,200
935
21,875
12,952
(248)
34,579
237
34,342
$
$
During 2022, we issued $6.000 billion aggregate principal amount of senior notes comprised of (i) $1.000 billion
aggregate principal amount of 3 1/8% senior notes due 2027, (ii) $500 million aggregate principal amount of 3 3/8%
senior notes due 2029, (iii) $2.000 billion aggregate principal amount of 3 5/8% senior notes due 2032, (iv) $500 million
aggregate principal amount of 4 3/8% senior notes due 2042 and (v) $2.000 billion aggregate principal amount of 4 5/8%
senior notes due 2052. We used a portion of the net proceeds to pay down our revolving credit facilities, and we redeemed
all $1.250 billion outstanding aggregate principal amount of our 4.75% senior notes due 2023 and all $1.250 billion
outstanding aggregate principal amount of our 5.875% senior notes due 2023. The pretax loss on retirement of debt for
these two redemptions was $78 million.
Also during 2022, Standard & Poor's Rating Services (“S&P”) announced it had issued an investment grade rating
with respect to the issuer credit rating of HCA Healthcare, Inc. and its subsidiaries. S&P's announcement, in conjunction
with the Moody's Investors Service, Inc. upgrade in 2021, permitted the permanent release of the subsidiary guarantees
and all collateral securing our senior secured notes. As a result of these releases, our senior secured notes are now classified
as senior unsecured notes. The subsidiary guarantees and collateral securing our senior secured credit facilities are not
affected.
F-22
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8 — LONG-TERM DEBT (continued)
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 ($2.900 billion outstanding at December 31, 2022) (the “ABL credit facility”); (ii) a $2.000
billion senior secured revolving credit facility maturing on June 30, 2026 (none outstanding at December 31, 2022 without
giving effect to certain outstanding letters of credit); (iii) a $1.388 billion senior secured term loan A facility maturing on
June 30, 2026; and (iv) a $492 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.” Finance leases and other secured debt totaled $953 million at
December 31, 2022. Effective in January 2023, availability under our senior secured revolving credit facility was
increased by $1.500 billion to total $3.500 billion, the senior secured term loan B facility was fully retired and certain
administrative updates were made to our credit agreements.
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 reference rate (LIBOR historically and the Secured Overnight Financing Rate (SOFR) beginning January 4, 2023)
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.
The senior secured credit facilities contain a number of covenants that restrict, subject to certain exceptions, our
(and some or all of our subsidiaries’) ability to incur additional indebtedness, repay subordinated 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 Unsecured Notes
Senior unsecured notes consist of (i) $31.791 billion aggregate principal amount of senior notes with maturities
ranging from 2024 to 2052; (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 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”).
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.
Maturities of long-term debt in years 2024 through 2027 are $2.382 billion, $4.656 billion, $5.316 billion and
$2.396 billion, respectively.
F-23
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9 — 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.
The following table presents our lease-related assets and liabilities at December 31, 2022 and 2021 (dollars in
millions):
Assets:
Operating leases
Finance leases.
Total lease assets
..................
.....................
.............
Liabilities:
Current:
Operating leases
Finance leases
..................
......................
Noncurrent:
Operating leases
Finance leases
.....
.............
......................
.......
Total lease liabilities
Weighted-average remaining
term:
Operating leases
Finance leases
..................
......................
Weighted-average discount rate:
..................
......................
Operating leases
Finance leases
Balance Sheet Classification
2022
2021
Right-of-use operating lease assets
Property and equipment
Other accrued expenses
Long-term debt due within one year
Right-of-use operating lease obligations
Long-term debt
$
$
$
$
2,065
587
2,652
364
131
1,752
579
2,826
$
$
$
$
2,113
637
2,750
392
143
1,755
577
2,867
10.1 years
9.5 years
10.2 years
10.4 years
4.4%
4.5%
4.4%
4.4%
The following table presents certain information related to expenses for finance and operating leases for the years
ended December 31, 2022, 2021 and 2020 (dollars in millions):
Finance lease expense:
Depreciation and amortization
Interest
..................................
.......................................................................
........................................................
..........................................
..............................................
Operating leases(1)
Short-term lease expense(1)
Variable lease expense(1)
2022
2021
2020
$
$
163 $
29
484
329
163
1,168 $
135 $
29
478
354
157
106
31
447
322
154
1,153 $ 1,060
(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, 2022, 2021 and
2020 (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
..............................
.................................
.................................
2022
2021
2020
$ 473 $
29
124
474 $
29
123
445
31
86
F-24
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9 — 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, 2022 and 2021 (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
........................................
Long-term lease obligations
$
Operating
Leases
$
2022
436 $
380
320
269
222
1,122
2,749
(633)
2,116
(364)
1,752 $
Finance
Leases
156
164
125
89
39
359
932
(222)
710
(131)
579
$
$
2021
Operating
Leases
Finance
Leases
438 $
378
320
267
219
1,148
2,770
(623)
2,147
(392)
1,755 $
165
126
132
98
70
350
941
(221)
720
(143)
577
NOTE 10 — 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.
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.
F-25
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11 — 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 2023, January 2022 and February 2021, our Board of Directors authorized share repurchase
programs for up to $3 billion, $8 billion and $6 billion, respectively, of the Company’s outstanding common stock. During
January 2020 and January 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 2022, we repurchased 30.747 million shares of our common stock at an average price of $227.67 per share
through market purchases pursuant to the February 2021 authorization (which was completed during 2022) and the
January 2022 authorization. At December 31, 2022, we had $1.586 billion of repurchase authorization available under
the January 2022 authorization. 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 each of the $2 billion share repurchase programs
authorized during January 2019 and January 2020 (which were completed during 2021) and the $6 billion share repurchase
program authorized during February 2021. 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.
NOTE 12 — EMPLOYEE BENEFIT PLANS
We maintain defined contribution benefit plans that are available to employees who meet certain minimum
requirements. 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 $606 million for 2022, $560 million for 2021 and $552 million
for 2020. Our matching contributions are funded during the year following the participant contributions.
We maintain the noncontributory, nonqualified Restoration Plan to provide 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 a $27
million credit for 2022, $38 million expense for 2021 and $35 million expense for 2020. Accrued benefits liabilities under
this plan totaled $210 million at December 31, 2022 and $258 million at December 31, 2021.
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 2022, $22
million for 2021 and $24 million for 2020. Accrued benefits liabilities under this plan totaled $137 million at December
31, 2022 and $201 million at December 31, 2021.
We maintain defined benefit pension plans which resulted from certain hospital acquisitions in prior years. Benefits
expense under these plans was an $11 million credit for 2022, $4 million expense for 2021, and $8 million expense for
2020. Accrued benefits under these plans totaled $9 million of assets at December 31, 2022 and $9 million of liabilities
at December 31, 2021.
F-26
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13 — 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, 2022, 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.
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 noncontrolling
interests. We use adjusted segment EBITDA as an analytical indicator for purposes of 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) and represent the operating segments at
December 31, 2022:
Revenues:
National Group
American Group
Corporate and other
....................................
..................................
.............................
Equity in earnings of affiliates:
National Group
American Group
Corporate and other
....................................
..................................
.............................
Adjusted segment EBITDA:
National Group
American Group
Corporate and other
....................................
..................................
.............................
Depreciation and amortization:
National Group
American Group
Corporate and other
....................................
..................................
.............................
Adjusted segment EBITDA
Depreciation and amortization
Interest expense
Losses (gains) on sales of facilities
Losses on retirement of debt
....................
............
...................................
.....
...............
...................
Income before income taxes
For the Year Ended December 31,
2021
2020
2022
$
$
$
$
$
$
$
$
30,350 $
26,865
3,018
60,233 $
29,826 $
26,152
2,774
58,752 $
25,694
23,593
2,246
51,533
(4) $
(43)
2
(45) $
(33) $
(53)
(27)
(113) $
(28)
(42)
16
(54)
6,379 $
6,055
(367)
12,067 $
7,200 $
6,156
(712)
12,644 $
5,532
5,333
(828)
10,037
1,464 $
1,219
286
2,969 $
1,359 $
1,183
311
2,853 $
1,216
1,164
341
2,721
For the Year Ended December 31,
2021
2022
12,067 $
2,969
1,741
(1,301)
78
8,580 $
$
$
12,644 $
2,853
1,566
(1,620)
12
9,833 $
2020
10,037
2,721
1,584
7
295
5,430
F-27
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13 — SEGMENT AND GEOGRAPHIC INFORMATION (continued)
Assets:
National Group
American Group
Corporate and other
.................................
...............................
..........................
2022
December 31,
2021
2020
$
$
22,863 $
22,216
7,359
52,438 $
21,205 $
21,428
8,109
50,742 $
18,913
20,760
7,817
47,490
Goodwill and other intangible assets:
Balance at December 31, 2019
Balance at December 31, 2020
Acquisitions
Foreign currency translation, amortization and other
Acquisitions
Foreign currency translation, amortization and other
............................................
.....................................................................
.....
............................................
.....................................................................
.....
............................................
.....................................................................
.....
............................................
Acquisitions
Foreign currency translation, amortization and other
Balance at December 31, 2022
Balance at December 31, 2021
National
Group
American
Group
Corporate
and Other
Total
$
$
1,739 $
38
(2)
1,775
735
(18)
2,492
165
(5)
2,652 $
5,765 $
27
(17)
5,775
67
(10)
5,832
91
(62)
5,861 $
765 $ 8,269
344
279
(35)
(16)
8,578
1,028
1,062
260
(100)
(72)
9,540
1,216
262
6
(149)
(82)
1,140 $ 9,653
Effective January 1, 2023, we reorganized our operations into three geographically organized groups: the National,
American and Atlantic Groups. The National Group includes 57 hospitals located in Alaska, California, Idaho, Indiana,
Kentucky, Nevada, New Hampshire, North Carolina, Tennessee, Utah and Virginia, the American Group includes 57
hospitals located in Colorado, Central Kansas, Louisiana and Texas, and the Atlantic Group includes 61 hospitals located
in Florida, Georgia, Northern Kansas, Missouri and South Carolina. The seven hospitals we operate in England will
remain in the Corporate and other group. Operating segment reporting with this reorganized group structure will be
provided in periodic filings starting with the first quarter of 2023, with retrospective presentation of all periods presented.
F-28
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 14 — OTHER COMPREHENSIVE LOSS
The components of accumulated other comprehensive loss are as follows (dollars in millions):
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 losses on available-for-sale securities, net
of $12 income tax benefit
........................................
Foreign currency translation adjustments, net of $16
income tax benefit
..................................................
........
Defined benefit plans, net of $11 of income taxes
Change in fair value of derivative instruments, net of
...............................................
$1 of income taxes
.
Expense reclassified into operations from other
comprehensive income, net of none, $2 and $1
income tax benefits, respectively
.............................
......................................
Balances at December 31, 2022
Unrealized
Gains
(Losses) on
Available-
for-Sale
Securities
Foreign
Currency
Translation
Adjustments
Defined
Benefit
Plans
14 $
(283) $
(187) $
Change
in Fair
Value of
Derivative
Instruments
Total
(4) $ (460)
11
25
(13)
12
(43)
12
(55)
(271)
22
(220)
(7)
(278)
(95)
67
21
(132)
38
11
12
(55)
(51)
41
(502)
(13)
(7)
67
1
(51)
19
(36)
1
29
(6)
50
(404)
(43)
(95)
38
5
5
$
1
(30) $
(373) $
7
(87) $
9
1
— $ (490)
F-29
HCA HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 15 — ACCRUED EXPENSES
A summary of other accrued expenses at December 31 follows (dollars in millions):
2022
2021
$
515 $
612
364
371
402
81
1,236
508
549
392
361
353
79
1,080
$ 3,581 $ 3,322
Professional liability risks
Defined contribution benefit plans
Right-of-use operating leases
Taxes other than income
Interest
Government stimulus refund liability
Other
..............................
.................
.........................
................................
............................................................
............
..............................................................
F-30
EXHIBIT 31.1
I, Samuel N. Hazen, certify that:
1. I have reviewed this annual report on Form 10-K of HCA Healthcare, Inc.;
CERTIFICATIONS
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 17, 2023
By: /S/ SAMUEL N. HAZEN
Samuel N. Hazen
Chief Executive Officer
EXHIBIT 31.2
I, William B. Rutherford, certify that:
1. I have reviewed this annual report on Form 10-K of HCA Healthcare, Inc.;
CERTIFICATIONS
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 17, 2023
By: /S/ WILLIAM B. RUTHERFORD
William B. Rutherford
Executive Vice President and Chief Financial
Officer
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, 2022, 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 17, 2023
February 17, 2023
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 document contains forward-looking statements within the meaning of the 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.
Thomas F. Frist Ill
Chairman
HCA Healthcare
Founder and
Managing Principal
Frist Capital
Samuel N. Hazen
Chief Executive Officer
HCA Healthcare
Meg G. Crofton
Retired President
Parks and Resorts Operations
The Walt Disney Company
Robert J. Dennis
Retired Chairman and
Chief Executive Officer
Genesco Inc.
Nancy-Ann DeParle
Co-founder and
Managing Partner
Consonance Capital
Partners
William R. Frist
Principal
Frist Capital
Charles O. Holliday, Jr
(Not standing for re-election)
Retired Chairman and
Chief Executive Officer
DuPont
Directors
Hugh F. Johnston
Vice Chairman and
Chief Financial Officer
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 Officer
Bank of America Corporation
Executive Officers
Samuel N. Hazen
Chief Executive Officer
and Director
Erol R. Akdamar
President - American Group
Jennifer L. Berres
Senior Vice President and
Chief Human Resources Officer
Phillip G. Billington
Senior Vice President –
Internal Audit Services
Jeff E. Cohen
Senior Vice President –
Government Relations
Michael S. Cuffe, M.D.
Executive Vice President and
Chief Clinical Officer
Jon M. Foster
Executive Vice President and
Chief Operating Officer
Richard A. Hammett
President – Atlantic Group
Michael A. Marks
Senior Vice President - Finance
Michael R. McAlevey
Senior Vice President and
Chief Legal Officer
Timothy M. McManus
President – National Group
Sammie S. Mosier
Senior Vice President and
Chief Nurse Executive
P. Martin Paslick
Senior Vice President and
Chief Information Officer
Deborah M. Reiner
Senior Vice President –
Marketing and
Communications
William B. Rutherford
Executive Vice President
and Chief Financial Officer
Joseph A. Sowell, III
Senior Vice President and
Chief Development Officer
Kathryn A. Torres
Senior Vice President –
Payer Contracting
and Alignment
Kathleen M. Whalen
Senior Vice President and
Chief Ethics and
Compliance Officer
Christopher F. Wyatt
Senior Vice President
and Controller
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, 2022 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 24, 2023, the Company
had approximately 400 shareholders of record. On January 26, 2023, the
Company’s Board of Directors declared a quarterly dividend of $0.60 per share
on our common stock payable on March 31, 2023 to shareholders of record on
March 17, 2023. 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 19, 2023,
at 2:00 pm local time in a virtual meeting format only, via live webcast at
www.virtualshareholdermeeting.com/HCA2023. Shareholders of record as
of February 24, 2023 are invited to attend the virtual meeting.
HCA Healthcare
One Park Plaza
Nashville, Tennessee 37203
www.HCAhealthcare.com