Tenet Healthcare
Annual Report 2014

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KTENET HEALTHCARE CORP - THCFiled: February 23, 2015 (period: December 31, 2014)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549 Form 10-K ☒☒Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2014 OR ☐☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to Commission File Number 1-7293 TENET HEALTHCARE CORPORATION(Exact name of Registrant as specified in its charter) Nevada 95-2557091(State of Incorporation) (IRS Employer Identification No.) 1445 Ross Avenue, Suite 1400Dallas, TX 75202(Address of principal executive offices, including zip code) (469) 893-2200(Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon stock, $0.05 par value New York Stock Exchange678% Senior Notes due 2031 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 Exchange 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 Exchange Act during the preceding12 months, 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 and posted on its corporate website every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to thebest of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. ☐ Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (asdefined in Exchange Act Rule 12b-2). Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☐ Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No ☒ As of June 30, 2014, the aggregate market value of the shares of common stock held by non-affiliates of the Registrant (treating directors, executive officerswho were SEC reporting persons, and holders of 10% or more of the common stock outstanding as of that date, for this purpose, as affiliates) was approximately$3.9 billion based on the closing price of the Registrant’s shares on the New York Stock Exchange on that day. As of January 30, 2015, there were 98,494,212shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant’s definitive proxy statement for the 2015 annual meeting of shareholders are incorporated by reference into Part III of thisForm 10-K. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsTABLE OF CONTENTS Page PART I Item 1. Business 1 Item 1A. Risk Factors 26 Item 1B. Unresolved Staff Comments 36 Item 2. Properties 36 Item 3. Legal Proceedings 36 Item 4. Mine Safety Disclosures 36 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and IssuerPurchases of Equity Securities 37 Item 6. Selected Financial Data 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results ofOperations 41 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 99 Item 8. Financial Statements and Supplementary Data 100 Consolidated Financial Statements 103 Notes to Consolidated Financial Statements 108 Supplemental Financial Information 146 Item 9. Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure 147 Item 9A. Controls and Procedures 147 Item 9B. Other Information 147 PART III Item 10. Directors, Executive Officers and Corporate Governance 148 Item 11. Executive Compensation 148 Item 12. Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters 148 Item 13. Certain Relationships and Related Transactions, and Director Independence 148 Item 14. Principal Accounting Fees and Services 148 PART IV Item 15. Exhibits and Financial Statement Schedules 149 i Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPART I. ITEM 1. BUSINESS OVERVIEW Tenet Healthcare Corporation (together with our subsidiaries, referred to herein as “Tenet,” “we” or “us”) is anational, diversified healthcare services company. We operate regionally focused, integrated healthcare delivery networks inlarge urban and suburban markets. At the core of our networks are acute care and specialty hospitals that, together with ourstrategically aligned outpatient facilities and related businesses, allow us to provide a comprehensive range of healthcareservices in the communities we serve. As of December 31, 2014, we operated 80 hospitals, 210 outpatient centers, six healthplans and Conifer Health Solutions, LLC (“Conifer”), which provides healthcare business process services in the areas ofrevenue cycle management, value-based care and patient communications. On October 1, 2013, we acquired Vanguard HealthSystems, Inc. (“Vanguard”), an investor-owned hospital company whose operations complemented our existing business.Through this acquisition, we significantly increased our scale, became more geographically diverse and expanded the serviceswe offer. With respect to our hospitals and outpatient business, we seek to offer superior quality and patient services to meetcommunity needs, to make capital and other investments in our facilities and technology to remain competitive, to recruit andretain physicians, to increase the number of outpatient centers we own, and to negotiate favorable contracts with managed careand other private payers. With respect to business process services, we provide comprehensive operational management forrevenue cycle functions, including patient access, health information management, revenue integrity and patient financialservices. We also offer communications and engagement solutions to optimize the relationship between providers andpatients. In addition, Conifer operates a management services business that supports value-based performance through clinicalintegration, financial risk management and population health management. For financial reporting purposes, our business isclassified into two separate reportable operating segments — Hospital Operations and other, and Conifer. Financial andstatistical information about our business segments can be found in Item 7, Management’s Discussion and Analysis ofFinancial Condition and Results of Operations, of Part II of this report. We are committed to providing the communities our hospitals, outpatient centers and other healthcare facilities servewith high quality, cost-effective healthcare while growing our business, increasing our profitability and creating long-termvalue for our shareholders. We believe that our success in increasing our profitability depends in part on our success inexecuting the strategies and managing the trends discussed in detail in Item 7, Management’s Discussion and Analysis ofFinancial Condition and Results of Operations, of Part II of this report. In general, we anticipate the continued acceleration ofmajor industry trends we have seen emerge over the last several years, and our strategies reflect the belief that: (1) consumerswill increasingly select services and providers based on quality and cost; (2) physicians will seek strategic partners with whomthey can align clinically; (3) more procedures will shift from the inpatient to the outpatient setting; (4) demand will grow as aresult of a strengthening economy, shifting demographics and the expansion of coverage under the Patient Protection andAffordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act” or“ACA”); and (5) payer reimbursements will be constrained and further shift to being more closely tied to performance onquality and service metrics. We believe that our strategies and the acceleration of these trends will allow us to achieve ouroperational and financial targets; however, our ability to execute on these strategies and manage these trends is subject to anumber of risks and uncertainties that may cause actual results to be materially different from expectations. Information aboutrisks and uncertainties that could affect our results of operations can be found in “Forward-Looking Statements” below and inItem 1A, Risk Factors, of Part I of this report. OPERATIONS HOSPITAL OPERATIONS AND OTHER Hospitals, Outpatient Centers and Related Businesses—At December 31, 2014, our subsidiaries operated80 hospitals, including four academic medical centers, two children’s hospitals, three specialty hospitals (one of which istemporarily closed for repairs) and a critical access hospital, with a total of 20,814 licensed beds, serving primarily urban andsuburban communities in 14 states. Of those hospitals, 74 were owned by our subsidiaries, and six were owned by third partiesand leased by our subsidiaries. In addition, at December 31, 2014, our subsidiaries operated a long-term acute care hospitaland owned or leased and operated a number of medical office buildings, all of which were located on, or nearby, Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsour hospital campuses. Furthermore, our subsidiaries operated 210 free-standing and provider-based outpatient centers in16 states at December 31, 2014, including diagnostic imaging centers, ambulatory surgery centers, urgent care centers andsatellite emergency departments. We also owned over 550 physician practices at December 31, 2014. We seek to operate our hospitals, outpatient centers and related businesses in a manner that positions them tocompete effectively in an evolving healthcare environment. From time to time, we build new hospitals and outpatient centers,and make strategic acquisitions of hospitals, outpatient businesses, physician practices, and other healthcare assets andcompanies — in each case in markets where we believe our operating strategies can improve performance and createshareholder value. Moreover, we continually evaluate collaboration opportunities with other healthcare providers in ourmarkets to maximize effectiveness, reduce costs and build clinically integrated networks that provide quality services acrossthe care continuum. We believe that growth by strategic acquisitions and partnerships, when and if opportunities areavailable, can supplement the growth we believe we can generate organically in our existing markets. In furtherance of theforegoing, during the year ended December 31, 2014: ·We opened the newly constructed Resolute Health Hospital in New Braunfels, Texas, which is located northeastof San Antonio. The hospital has 128 beds in all-private rooms, as well as an emergency department, and offers abroad range of specialty care. Resolute Health’s 56-acre wellness campus is designed to draw communitymembers for needs beyond acute healthcare, with services such as a fitness center, health-oriented restaurants,walking trails and an integrative medicine center. ·We acquired a majority interest in Texas Regional Medical Center at Sunnyvale, a 70-bed hospital in a suburbancommunity east of Dallas, and we purchased Emanuel Medical Center, a 209-bed hospital located in NorthernCalifornia. These comprehensive community hospitals provide services that include emergency, critical care,labor and delivery, cardiology and surgery. ·We opened 27 new outpatient facilities (four diagnostic imaging centers, one ambulatory surgery center,19 urgent care centers and three stand-alone emergency departments), and we acquired nine other outpatientbusinesses (one diagnostic imaging center, five ambulatory surgery centers and three urgent care centers), as wellas various physician practice entities. Also in 2014, we launched a national brand for our urgent care centerscalled MedPost Urgent Care. ·We announced a joint venture with Texas Tech University Health Sciences Center at El Paso to develop andbuild a new 140-bed teaching hospital and a medical office building in west El Paso. Construction on thehospital is expected to be completed in the fall of 2016. We also sometimes decide to sell, consolidate or close certain facilities to eliminate duplicate services or excess capacity orbecause of changing market conditions or other factors. Our hospitals classified in continuing operations for financial reporting purposes generated in excess of 88% of ournet operating revenues before provision for doubtful accounts for all periods presented in our Consolidated FinancialStatements. Factors that affect patient volumes and, thereby, the results of operations at our hospitals and related healthcarefacilities include, but are not limited to: (1) the business environment, economic conditions and demographics of localcommunities in which we operate; (2) the number of uninsured and underinsured individuals in local communities treated atour hospitals; (3) seasonal cycles of illness; (4) climate and weather conditions; (5) physician recruitment, retention andattrition; (6) advances in technology and treatments that reduce length of stay; (7) local healthcare competitors; (8) managedcare contract negotiations or terminations; (9) the number of patients with high-deductible health insurance plans; (10) anyunfavorable publicity about us, which impacts our relationships with physicians and patients; (11) changes in healthcareregulations and the participation of individual states in federal programs; and (12) the timing of elective procedures. Each of our general hospitals offers acute care services, operating and recovery rooms, radiology services, respiratorytherapy services, clinical laboratories and pharmacies; in addition, most offer intensive care, critical care and/or coronary careunits, physical therapy, and orthopedic, oncology and outpatient services. Many of our hospitals also offer tertiary careservices such as open-heart surgery, neonatal intensive care and neurosciences. Five of our2 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentshospitals — Good Samaritan Medical Center, Hahnemann University Hospital, Harper University Hospital, North ShoreMedical Center and St. Louis University Hospital — offer quaternary care in areas such as heart, liver, kidney and bonemarrow transplants. Children’s Hospital of Michigan and St. Christopher’s Hospital for Children provide tertiary andquaternary pediatric services, including bone marrow and kidney transplants, as well as burn services. A number of ourhospitals also offer advanced treatment options for patients — Good Samaritan Medical Center, North Shore Medical Center,Sierra Medical Center and Sierra Providence East Medical Center offer gamma-knife brain surgery; and Brookwood MedicalCenter, North Shore Medical Center, Saint Vincent Hospital at Worcester Medical Center and St. Louis University Hospitaloffer cyberknife radiation therapy for tumors and lesions in the brain, lung, neck, spine and elsewhere that may previouslyhave been considered inoperable or inaccessible by traditional radiation therapy. In addition, our hospitals will continue theirefforts to develop and deliver those outpatient services that can be provided on a quality, cost-effective basis and that webelieve will meet the needs of the communities served by the facilities. Many of our hospitals and physician practices also offer a wide range of clinical research studies, giving patientsaccess to innovative care. We are dedicated to helping our hospitals and physicians participate in medical research that isconsistent with state and federal regulations and complies with clinical practice guidelines. Clinical research programs relateto a wide array of ailments, including cardiovascular disease, pulmonary disease, musculoskeletal disorders, neurologicaldisorders, genitourinary disease and various cancers, as well as experimental drug and medical device studies. By supportingclinical research, our hospitals are actively involved in medical advancements that can lead to improvements in patient safetyand clinical care. Except as set forth in the table below, each of our acute care hospitals is accredited by The Joint Commission. Withsuch accreditation, our hospitals are deemed to meet the Medicare Conditions of Participation and are eligible to participatein government-sponsored provider programs, such as the Medicare and Medicaid programs. The following table lists, by state, the hospitals owned or leased and operated by our subsidiaries as ofDecember 31, 2014: Licensed Hospital Location Beds Status Alabama Brookwood Medical Center Birmingham 645 Owned Arizona Arizona Heart Hospital Phoenix 59 Owned Arrowhead Hospital Glendale 217 Owned Maryvale Hospital Phoenix 232 Owned Paradise Valley Hospital Phoenix 136 Owned Phoenix Baptist Hospital Phoenix 221 Owned West Valley Hospital Goodyear 188 Owned California Desert Regional Medical Center Palm Springs 385 Leased Doctors Hospital of Manteca Manteca 73 Owned Doctors Medical Center of Modesto Modesto 461 Owned Emanuel Medical Center Turlock 209 Owned Fountain Valley Regional Hospital & Medical Center Fountain Valley 400 Owned John F. Kennedy Memorial Hospital Indio 156 Owned Lakewood Regional Medical Center Lakewood 172 Owned Los Alamitos Medical Center Los Alamitos 167 Owned Placentia Linda Hospital Placentia 114 Owned San Ramon Regional Medical Center San Ramon 123 Owned Sierra Vista Regional Medical Center San Luis Obispo 164 Owned Twin Cities Community Hospital Templeton 122 Owned 3 (1)(2)(3)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Licensed Hospital Location Beds Status Florida Coral Gables Hospital Coral Gables 245 Owned Delray Medical Center Delray Beach 493 Owned Good Samaritan Medical Center West Palm Beach 333 Owned Hialeah Hospital Hialeah 378 Owned North Shore Medical Center Miami 357 Owned North Shore Medical Center — FMC Campus Lauderdale Lakes 459 Owned Palm Beach Gardens Medical Center Palm Beach Gardens 199 Leased Palmetto General Hospital Hialeah 360 Owned Saint Mary’s Medical Center West Palm Beach 464 Owned West Boca Medical Center Boca Raton 195 Owned Georgia Atlanta Medical Center Atlanta 762 Owned Atlanta Medical Center — South Campus East Point — Owned North Fulton Hospital Roswell 202 Leased Spalding Regional Hospital Griffin 160 Owned Sylvan Grove Hospital Jackson 25 Leased Illinois Louis A. Weiss Memorial Hospital Chicago 236 Owned MacNeal Hospital Berwyn 373 Owned West Suburban Medical Center Oak Park 234 Owned Westlake Hospital Melrose Park 242 Owned Massachusetts MetroWest Medical Center — Framingham Union Hospital Framingham 147 Owned MetroWest Medical Center — Leonard Morse Hospital Natick 138 Owned Saint Vincent Hospital at Worcester Medical Center Worcester 283 Owned Michigan Children’s Hospital of Michigan Detroit 228 Owned Detroit Receiving Hospital Detroit 298 Owned DMC Surgery Hospital Madison Heights 67 Owned Harper University Hospital Detroit 567 Owned Huron Valley-Sinai Hospital Commerce Township 153 Owned Hutzel Women’s Hospital Detroit — Owned Rehabilitation Institute of Michigan Detroit 94 Owned Sinai-Grace Hospital Detroit 404 Owned Missouri Des Peres Hospital St. Louis 143 Owned St. Louis University Hospital St. Louis 356 Owned North Carolina Central Carolina Hospital Sanford 137 Owned Frye Regional Medical Center Hickory 355 Leased Pennsylvania Hahnemann University Hospital Philadelphia 496 Owned St. Christopher’s Hospital for Children Philadelphia 189 Owned (4)(5)(6)(7)(8)(1)(9)(10)(1)(11)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.4 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Licensed Hospital Location Beds Status South Carolina Coastal Carolina Hospital Hardeeville 41 Owned East Cooper Medical Center Mount Pleasant 140 Owned Hilton Head Hospital Hilton Head 93 Owned Piedmont Medical Center Rock Hill 288 Owned Tennessee Saint Francis Hospital Memphis 519 Owned Saint Francis Hospital — Bartlett Bartlett 196 Owned Texas Baptist Medical Center San Antonio 623 Owned Centennial Medical Center Frisco 118 Owned Cypress Fairbanks Medical Center Houston 181 Owned Doctors Hospital at White Rock Lake Dallas 218 Owned Houston Northwest Medical Center Houston 423 Owned Lake Pointe Medical Center Rowlett 112 Owned Mission Trail Baptist Hospital San Antonio 110 Owned Nacogdoches Medical Center Nacogdoches 153 Owned North Central Baptist Hospital San Antonio 387 Owned Northeast Baptist Hospital San Antonio 379 Owned Park Plaza Hospital Houston 444 Owned Providence Memorial Hospital El Paso 508 Owned Resolute Health Hospital New Braunfels 128 Owned Sierra Medical Center El Paso 349 Owned Sierra Providence East Medical Center El Paso 170 Owned St. Luke’s Baptist Hospital San Antonio 282 Owned Texas Regional Medical Center at Sunnyvale Sunnyvale 70 Leased Valley Baptist Medical Center Harlingen 586 Owned Valley Baptist Medical Center — Brownsville Brownsville 280 Owned Total Licensed Beds 20,814 (1)Specialty hospital.(2)Lease expires in May 2027.(3)Owned by a limited liability company formed as part of a joint venture with John Muir Health, a not-for-profit integrated system of doctors,hospitals and other healthcare services in the San Francisco Bay area; a Tenet subsidiary owned a 51% interest in the limited liabilitycompany at December 31, 2014, and John Muir Health owned a 49% interest.(4)Lease expires in February 2017, but may be renewed through at least February 2037, subject to certain conditions contained in the lease.(5)Licensed beds for Atlanta Medical Center — South Campus are presented on a combined basis with Atlanta Medical Center.(6)Lease expires in February 2020, but may be renewed through at least February 2040, subject to certain conditions contained in the lease.(7)Designated by the Centers for Medicare and Medicaid Services (“CMS”) as a critical access hospital. Although it has not sought to beaccredited, the hospital participates in the Medicare and Medicaid programs by otherwise meeting the Medicare Conditions of Participation.The current lease term for this facility expires in December 2016, but may be renewed through December 2046, subject to certain conditionscontained in the lease.(8)Accredited by the American Osteopathic Association.(9)Temporarily closed for repairs.(10)Licensed beds for Hutzel Women’s Hospital are presented on a combined basis with Harper University Hospital.(11)Lease expires in February 2022, but may be renewed through at least February 2042, subject to certain conditions contained in the lease.(12)Owned by a limited liability company in which a Tenet subsidiary owned an 87.48% interest at December 31, 2014 and is the managingmember.(13)Owned by a limited liability company in which a Tenet subsidiary owned a 94.67% interest at December 31, 2014 and is the managingmember.(14)Leased by a limited liability company in which a Tenet subsidiary owned a 55% interest at December 31, 2014 and is the managingmember. The current lease term for this hospital expires in November 2029, but may be renewed through at least November 2049, subject tocertain conditions contained in the lease.(15)At December 31, 2014, Valley Baptist Medical Center and Valley Baptist Medical Center — Brownsville were indirectly owned by a limitedliability company formed as part of a joint venture with VB Medical Holdings, a Texas non-profit corporation (“VBMH”); a Tenet subsidiaryowned a 51% interest in the limited liability company and was the managing member, and VBMH owned a 49% interest. We subsequentlyacquired VBMH’s 49% interest in the limited liability company pursuant to the terms of the operating agreement governing the joint venture.As a result, we now own 100% of both hospitals as of February 11, 2015.5(12)(13)(14)(15)(15)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe following table presents the number of hospitals operated by our subsidiaries, as well as the total number oflicensed beds at those facilities, at December 31, 2014, 2013 and 2012: December 31, 2014 2013 2012 Total number of hospitals 80 77 49 Total number of licensed beds 20,814 20,293 13,216 (1)Information regarding utilization of licensed beds and other operating statistics can be found in Item 7, Management’s Discussion and Analysisof Financial Condition and Results of Operations, of Part II of this report. As of December 31, 2014, we also owned 210 free-standing and provider-based outpatient centers in 16 states —typically at locations complementary to our hospitals — including 89 diagnostic imaging centers, 54 ambulatory surgerycenters, 52 urgent care centers and 15 satellite emergency departments. Most of these outpatient centers are in leased facilities,and a number of outpatient facilities are owned and operated by joint ventures in which we hold a majority equity interest.The largest concentrations of our outpatient centers were in those states where we had the largest concentrations of licensedhospital beds, as of December 31, 2014, as shown in the table below: % of Outpatient Centers % of Licensed BedsTexas 33.8 % 26.5 % California 18.6 % 12.2 % Florida 12.9 % 16.7 % Strong concentrations of hospital beds and outpatient centers within market areas help us contract more successfully withmanaged care payers, reduce management, marketing and other expenses, and more efficiently utilize resources. However,these concentrations increase the risk that, should any adverse economic, regulatory, environmental or other condition occurin these areas, our overall business, financial condition, results of operations or cash flows could be materially adverselyaffected. Health Plans and Accountable Care Networks—During the year ended December 31, 2014, we operated six healthplans with approximately 100,000 members: ·VHS Phoenix Health Plan, LLC, a Medicaid-managed health plan operating as Phoenix Health Plan (“PHP”) inArizona; ·Phoenix Health Plans, Inc. (formerly known as Abrazo Advantage Health Plan, Inc.), a Medicare and Medicaiddual-eligible managed health plan operating in Arizona; ·Chicago Health System, Inc. (“CHS”), a contracting entity for inpatient and outpatient services provided byMacNeal Hospital, Louis A. Weiss Memorial Hospital and participating physicians in the Chicago area; ·Harbor Health Plan, Inc. (formerly known as ProCare Health Plan, Inc.), a Medicaid-managed health planoperating in Michigan; ·Allegian Insurance Company (formerly known as Valley Baptist Insurance Company), doing business as AllegianHealth Plan, which offers health maintenance organization (“HMO”), preferred provider organization (“PPO”),and self-funded products to its members in the form of large group, small group and individual product offeringsin south Texas, as well as a Medicare Advantage health plan; and ·Golden State Medicare Health Plan, which is an HMO that specializes in the care of seniors inSouthern California who are eligible for benefits under the Medicare Advantage program. In addition, starting on January 1, 2015, Phoenix Health Plans, Inc., Harbor Health Plan, Inc. and Allegian Insurance Companyoffer products for individuals on public health insurance exchanges in their respective states.6 (1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents We believe these health plans complement and enhance our market position and provide us with expertise that weexpect will be increasingly important as the healthcare industry evolves. Specifically, PHP provides us with insights into stateinitiatives to manage the Arizona Medicaid population, which is valuable in light of the expansion of health coverage topreviously uninsured individuals in the state pursuant to the Affordable Care Act and various other healthcare reform laws. Inaddition, through CHS, our Chicago-based preferred provider network, we manage capitated contracts covering inpatient,outpatient and physician services. We believe our ownership of CHS allows us to gain additional experience with risk-bearingcontracts and delivery of care in low-cost settings, including our network of health centers. We also own or control 11 accountable care networks — in Florida, California, Georgia, Illinois, Michigan,Pennsylvania and Texas — and participate in three additional accountable care networks through collaborations with otherhealthcare providers in our markets in Arizona, California and Massachusetts. These networks operate using a range ofpayment and delivery models that seek to align provider reimbursement in a way that encourages improved quality metricsand efficiencies in the total cost of care for an assigned population of patients through cooperation of the providers. Webelieve that our experience operating health plans and accountable care networks gives us a solid framework upon which tobuild and expand our population health strategies. CONIFER Our Conifer subsidiary provides a number of services primarily to healthcare providers to assist them in generatingsustainable improvements in their operating margins, while also enhancing patient, physician and employee satisfaction. AtDecember 31, 2014, Conifer provided one or more of the business process services described below from 25 service centers toapproximately 800 Tenet and non-Tenet hospital and other clients in over 40 states. Revenue Cycle Management—Conifer provides comprehensive operational management for patient access, healthinformation management, revenue integrity and patient financial services, including: ·centralized insurance and benefit verification, financial clearance, pre-certification, registration and check-inservices; ·financial counseling services, including reviews of eligibility for government healthcare programs, for bothinsured and uninsured patients; ·productivity and quality improvement programs, revenue cycle assessments and optimization recommendations,and The Joint Commission and other preparedness services; ·coding and compliance support, billing assistance, auditing, training, and data management services at every stepin the revenue cycle process; ·accounts receivable management, third-party billing and collections; and ·ongoing measurement and monitoring of key revenue cycle metrics. These revenue cycle management solutions assist hospitals and other healthcare organizations in improving cash flow,increasing revenue, and advancing physician and patient satisfaction. Patient Communications and Engagement Services—Conifer offers customized communications and engagementsolutions to optimize the relationship between providers and patients. Conifer’s trained customer service representativesprovide direct, 24-hour, multilingual support for (1) physician referrals, calls regarding maternity services and other patientinquiries, (2) community education and outreach, (3) scheduling and appointment reminders, and (4) employee recruitment.Conifer also coordinates and implements mail-based marketing programs to keep patients informed of screenings, seminarsand other events and services, as well as conducts patient quality and satisfaction7 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentssurveys to provide valuable feedback to its clients. In addition, Conifer provides clinical admission reviews that are intendedto provide evidence-based support for physician decisions on patient status and reduce staffing costs. Management Services—Conifer also supports value-based performance through clinical integration, financial riskmanagement and population health management, all of which assist hospitals, physicians, accountable care organizations(“ACOs”), health plans, self-insured employers and government agencies in improving the cost and quality of healthcaredelivery, as well as patient outcomes. Conifer helps clients build clinically integrated networks that provide predictiveanalytics and quality measures across the care continuum. In addition, Conifer assists clients in improving both the cost andquality of care by aligning and managing financial incentives among healthcare stakeholders through risk modeling andmanagement for various payment models. Furthermore, Conifer offers clients tools and analytics to improve quality of careand provide care management support for patients with chronic diseases by identifying high-risk patients and monitoringclinical outcomes. We intend to continue to market and expand Conifer’s revenue cycle management, patient communications andengagement services, and management services businesses. In May 2012, Conifer entered into a 10-year agreement withCatholic Health Initiatives (“CHI”) to provide revenue cycle services for 56 of CHI’s hospitals. As part of this initialrelationship, CHI received a minority ownership interest in Conifer. In January 2015, Conifer announced a 10-year extensionand expansion of its agreement with CHI to provide patient access, revenue integrity and patient financial services to 92 CHIhospitals through 2032. As further described in Note 22 to our Consolidated Financial Statements, at that time and as a resultof CHI’s relationship with Tenet, CHI received an increase in its minority ownership position in Conifer. In October 2014,Conifer acquired SPi Healthcare, a provider of revenue cycle management, health information management and softwaresolutions for independent and provider-owned physician practices. We believe the combined organization will driveincremental growth for Conifer in the physician revenue cycle marketplace. We began reporting Conifer as a separate operating segment for financial reporting purposes in the three monthsended June 30, 2012. The loss of Conifer’s key customers, primarily Tenet and CHI, in the future could have a materialadverse impact on the segment; however, CHI is not a key customer to Tenet on a consolidated basis. Financial and otherinformation about our Conifer operating segment is provided in the Consolidated Financial Statements included in this report. REAL PROPERTY The locations of our hospitals and the number of licensed beds at each hospital at December 31, 2014 are set forth inthe table beginning on page 3. Our subsidiaries also operate a number of medical office buildings, all of which are located on,or nearby, our hospital campuses. We own nearly all of our medical office buildings; the remainder are owned by third partiesand leased by our subsidiaries. Our corporate headquarters are located in Dallas, Texas. In addition, we maintain administrative and regional officesin markets where we operate hospitals and other businesses, including Conifer. We typically lease our office space underoperating lease agreements. We believe that all of our properties are suitable for their respective uses and are, in general,adequate for our present needs. INTELLECTUAL PROPERTY We rely on a combination of trademark, copyright, patent and trade secret laws, as well as contractual terms andconditions, to protect our rights in our intellectual property assets. However, third parties may develop intellectual propertythat is similar or superior to ours. Conversely, although we do not believe the intellectual property we utilize infringes anyintellectual property right held by a third party, we could be prevented from utilizing such property and could be subject tosignificant damage awards if it is found to do so. We control access to and the use of our application capabilities through a combination of internal and externalcontrols. We also license some of our software through agreements that impose specific restrictions on customers’ ability touse the software, such as prohibiting reverse engineering and limiting the use of copies. 8 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe incorporate third-party commercial and, on occasion, open source software products into our technologyplatform. We employ third-party licensed software in order to simplify our development and maintenance efforts, support ourown technology infrastructure or test a new capability. MEDICAL STAFF AND EMPLOYEES Medical Staff—Our operations depend in significant part on the number, quality and specialties of the licensedphysicians who have been admitted to the medical staffs of our hospitals, the admitting practices of those physicians andmaintaining good relations with those physicians. Under state laws and other licensing standards, hospital medical staffs aregenerally self-governing organizations subject to ultimate oversight by the hospital’s local governing board. Members of themedical staffs of our hospitals also often serve on the medical staffs of hospitals we do not operate, and they are free toterminate their association with our hospitals or admit their patients to competing hospitals at any time. As ofDecember 31, 2014, we owned over 550 physician practices, and we employed (where permitted by state law) or otherwiseaffiliated with approximately 2,000 physicians; however, we have no contractual relationship with the overwhelming majorityof the physicians who practice at our hospitals. It is essential to our ongoing business that we attract and retain on our medicalstaffs an appropriate number of quality physicians in the specialties required to support our services. In some of our markets,physician recruitment and retention are affected by a shortage of physicians in certain specialties and the difficulties thatphysicians can experience in obtaining affordable malpractice insurance or finding insurers willing to provide such insurance. Employees—As of December 31, 2014, we employed over 108,000 people (of which 23% were part-time employees)in the following categories: Hospital operations 95,050 Conifer 12,099 Administrative offices 1,840 Total 108,989 (1)Includes employees at our general hospitals, specialty hospitals, critical access hospital, long-term acute care hospital, outpatient centers,physician practices, health plans, accountable care networks and other healthcare operations. We are subject to federal minimum wage and hour laws and various state labor laws, and maintain a number of differentemployee benefit plans. In addition to physicians, the operations of our facilities are dependent on the efforts, abilities and experience of ourfacilities management and medical support employees, including nurses, therapists, pharmacists and lab technicians. Wecompete with other healthcare providers in recruiting and retaining qualified personnel responsible for the day-to-dayoperations of our facilities. In some markets, there is a limited availability of experienced medical support personnel, whichdrives up the local wages and benefits required to recruit and retain employees. In particular, like others in the healthcareindustry, we continue to experience a shortage of critical-care nurses in certain disciplines and geographic areas. Moreover, wehire many newly licensed nurses in addition to experienced nurses, requiring us to invest in their training. Union Activity and Labor Relations—As of December 31, 2014, approximately 20% of our employees wererepresented by labor unions. These employees — primarily registered nurses and service and maintenance workers — arelocated at 38 of our hospitals, the majority of which are in California, Florida and Michigan. We currently have six expiredcontracts and are negotiating renewals under extension agreements. We are also negotiating first contracts at two of ourhospitals where employees selected union representation. At this time, we are unable to predict the outcome of thenegotiations, but increases in salaries, wages and benefits could result from these agreements. Furthermore, there is apossibility that strikes could occur during the negotiation process, which could increase our labor costs and have an adverseeffect on our patient admissions and net operating revenues. Future organizing activities by labor unions could increase ourlevel of union representation. 9 (1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsMandatory Nurse-Staffing Ratios—At this time, California is the only state in which we operate that requiresminimum nurse-to-patient staffing ratios to be maintained at all times in acute care hospitals. If other states in which weoperate adopt mandatory nurse-staffing ratios or if California reduces its minimum nurse-staffing ratios already in place, itcould have a significant effect on our labor costs and have an adverse impact on our net operating revenues if we are requiredto limit patient admissions in order to meet the required ratios. COMPETITION HEALTHCARE SERVICES Our hospitals, outpatient centers and other healthcare businesses operate in competitive environments, primarily atthe local level. Generally, other hospitals and outpatient centers in the local communities we serve provide services similar tothose we offer, and, in some cases, competing facilities are more established or newer than ours. Furthermore, competingfacilities (1) may offer a broader array of services to patients and physicians than ours, (2) may have larger or more specializedmedical staffs to admit and refer patients, (3) may have a better reputation in the community, or (4) may be more centrallylocated with better parking or closer proximity to public transportation. In the future, we expect to encounter increasedcompetition from system-affiliated hospitals and healthcare companies in specific geographic markets. We also face competition from specialty hospitals (some of which are physician-owned) and unaffiliated freestandingoutpatient centers for market share in high-margin services and for quality physicians and personnel. Furthermore, some of thehospitals that compete with our hospitals are owned by government agencies or not-for-profit organizations. These tax-exemptcompetitors may have certain financial advantages not available to our facilities, such as endowments, charitablecontributions, tax-exempt financing, and exemptions from sales, property and income taxes. In addition, in certain markets inwhich we operate, large teaching hospitals provide highly specialized facilities, equipment and services that may not beavailable at our hospitals. Another major factor in the competitive position of a hospital or outpatient facility is the ability to negotiatecontracts with managed care plans. HMOs, PPOs, third-party administrators, and other third-party payers use managed carecontracts to encourage patients to use certain hospitals in exchange for discounts from the hospitals’ established charges. Ourfuture success depends, in part, on our ability to retain and renew our managed care contracts and enter into new managed carecontracts on terms favorable to us. Other healthcare providers may affect our ability to enter into acceptable managed carecontractual arrangements 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 ofmanaged care companies to contract with us. Furthermore, the trend toward consolidation among non-government payerstends to increase their bargaining power over fee structures. State laws that require findings of need for construction and expansion of healthcare facilities or services (asdescribed in “Healthcare Regulation and Licensing — Certificate of Need Requirements” below) may also have the effect ofrestricting competition. In addition, in those states that do not have certificate of need requirements or that do not requirereview of healthcare capital expenditure amounts below a relatively high threshold, competition in the form of new services,facilities and capital spending is more prevalent. Our strategies are designed to help our hospitals and outpatient facilities remain competitive. We have targetedcapital spending on critical growth opportunities, with an emphasis on higher-demand clinical service lines, which isexpected to have a positive impact on volumes. We have also sought to include all of our hospitals and other healthcarebusinesses in the related geographic area or nationally when negotiating new managed care contracts, which may result inadditional volumes at facilities that were not previously a part of such managed care networks. Moreover, we have continuedto expand our outpatient business, and we have increased our focus on operating our outpatient centers with improvedaccessibility and more convenient service for patients, as well as increased predictability and efficiency for physicians. We have also made significant investments in the last decade in equipment, technology, education and operationalstrategies designed to improve clinical quality at our hospitals and outpatient centers. As a result of our10 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsefforts, our CMS Hospital Compare Core Measures scores have consistently exceeded the national average since the end of2005, and major national private payers have also recognized our achievements relative to quality. These designations areexpected to become increasingly important as governmental and private payers move to pay-for-performance models, and thecommercial market moves to more narrow networks and other methods designed to encourage covered individuals to usecertain facilities over others. We continually collaborate with physicians to implement the most current evidence-basedmedicine techniques to improve the way we provide care, while using labor management tools and supply chain initiatives toreduce variable costs. We believe the use of these practices will promote the most effective and efficient utilization ofresources and result in shorter lengths of stay, as well as reductions in readmissions for hospitalized patients. In general, webelieve that quality of care improvements may have the effect of reducing costs, increasing payments from Medicare andcertain managed care payers for our services, and increasing physician and patient satisfaction, which may improve ourvolumes. We continue to pursue integrated contracting models that maximize our system-wide skills and capabilities inconjunction with our strong market positions to accommodate new payment models. In several markets, we have formedclinical integration organizations, which are collaborations with independent physicians and hospitals to develop ongoingclinical initiatives designed to control costs and improve the quality of care delivered to patients. Arrangements like theseprovide a foundation for negotiating with plans under an ACO structure or other risk-sharing model. Further, each hospital has a local governing board, consisting primarily of community members and physicians, thatdevelops short-term and long-term plans for the hospital to foster a desirable medical environment. Each local governingboard also reviews and approves, as appropriate, actions of the medical staff, including staff appointments, credentialing, peerreview and quality assurance. While physicians may terminate their association with our hospitals at any time, we believe thatby striving to maintain and improve the quality of care at our hospitals and by maintaining ethical and professional standards,we will attract and retain qualified physicians with a variety of specialties. REVENUE CYCLE MANAGEMENT SOLUTIONS Our Conifer subsidiary faces competition from existing participants and new entrants to the revenue cyclemanagement market. In addition, the internal revenue cycle management staff of hospitals and other healthcare providers, whohave historically performed many of the functions addressed by our services, in effect compete with us. Moreover, providerswho have previously made investments in internally developed solutions sometimes choose to continue to rely on their ownresources. We also currently compete with several categories of external participants in the revenue cycle market, most ofwhich focus on small components of the hospital revenue cycle, including: ·software vendors and other technology-supported revenue cycle management business process outsourcingcompanies; ·traditional consultants, either specialized healthcare consulting firms or healthcare divisions of large accountingfirms; and ·large, non-healthcare focused business process and information technology outsourcing firms. We believe that competition for the revenue cycle management and other services Conifer provides is basedprimarily on: (1) knowledge and understanding of the complex public and private healthcare payment and reimbursementsystems; (2) a track record of delivering revenue improvements and efficiency gains for hospitals and other healthcareproviders; (3) the ability to deliver solutions that are fully integrated along each step of the revenue cycle; (4) cost-effectiveness, including the breakdown between up-front costs and pay-for-performance incentive compensation;(5) reliability, simplicity and flexibility of the technology platform; (6) understanding of the healthcare industry’s regulatoryenvironment; (7) sufficient infrastructure; and (8) financial stability. To be successful, Conifer must respond more quickly and effectively than its competitors to new or changingopportunities, technologies, standards, regulations and customer requirements. Existing or new competitors may introducetechnologies or services that render Conifer’s technologies or services obsolete or less marketable. Even if Conifer’stechnologies and services are more effective than the offerings of its competitors, current or potential11 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentscustomers might prefer competitive technologies or services to Conifer’s technologies and services. Furthermore, increasedcompetition may result in pricing pressures, which could negatively impact Conifer’s margins, growth rate or market share. HEALTHCARE REGULATION AND LICENSING AFFORDABLE CARE ACT The Affordable Care Act is changing how healthcare services in the United States are covered, delivered andreimbursed. The primary goal of this comprehensive legislation is to extend health coverage to millions of uninsured legalU.S. residents through a combination of private sector health insurance reforms and public program expansion. To fund theexpansion of insurance coverage, the legislation contains measures designed to promote quality and cost efficiency inhealthcare delivery and to generate budgetary savings in the Medicare and Medicaid programs. In addition, the ACA containsprovisions intended to strengthen fraud and abuse enforcement. Health Insurance Market Reforms—One key provision of the Affordable Care Act is the individual mandate, whichrequires most Americans to maintain “minimum essential” health insurance coverage. Those who do not comply with theindividual mandate must make a “shared responsibility payment” to the federal government in the form of a tax penalty. Thepenalty percentage increases through 2016 and is adjusted for inflation beginning in 2017. For individuals who are notexempt from the individual mandate, and who do not receive health insurance through an employer or government program,the means of satisfying the requirement is to purchase insurance from a private company or a health insurance exchange.Health insurance exchanges are government-regulated organizations that provide competitive markets for buying healthinsurance by offering individuals and small employers a choice of different health plans, certifying plans that participate, andproviding information to help consumers better understand their options. Some states operate their own exchanges; in moststates, however, individuals must utilize the federal government’s health insurance exchange found online at HealthCare.gov.Under the Affordable Care Act, individuals who are enrolled in a health benefits plan purchased through an exchange may beeligible for a premium credit or cost-sharing subsidy. In 2014, two federal appeals court panels issued conflicting rulings onwhether U.S. Internal Revenue Service (“IRS”) regulations extending such subsidies to individuals who purchase coveragethrough the federal government’s health insurance exchange (rather than a state-based exchange) are permissible. TheU.S. Supreme Court will now consider the matter, and a ruling is expected in mid-2015. Pending the Supreme Court’s decisionon the issue, the government has stated that it will continue paying the subsidies to insurance companies on behalf ofconsumers in the 34 states that use the federal exchange. As of December 31, 2014, we operated hospitals in two states that runtheir own health insurance exchanges and 12 states that rely on the federal exchange. The “employer mandate” provision of the ACA requires the imposition of penalties on employers having 50 or moreemployees who do not offer affordable health insurance coverage to those working 30 or more hours per week. In July 2013,the U.S. Treasury Department announced a one-year delay (to January 1, 2015) in the imposition of penalties and the reportingrequirements of the employer mandate. In February 2014, the requirements of the employer mandate were further delayed untilJanuary 1, 2016. Based on the U.S. Congressional Budget Office’s most recent estimates, we do not believe that the delays inenforcement of the employer mandate will have a discernible effect on insurance coverage. The Affordable Care Act also establishes a number of health insurance market reforms, including bans on lifetimelimits and pre-existing condition exclusions, new benefit mandates, and increased dependent coverage. Specifically, grouphealth plans and health insurance issuers offering group or individual coverage: ·may not establish lifetime or annual limits on the dollar value of benefits; ·may not rescind coverage of an enrollee, except in instances where the individual has performed an act or practicethat constitutes fraud or makes an intentional misrepresentation of material fact; ·must reimburse hospitals for emergency services provided to enrollees without prior authorization and withoutregard to whether a participating provider contract is in place; and12 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents ·must continue to make dependent coverage available to unmarried dependents until age 26 (coverage for thedependents of unmarried adult children is not required) effective for health plan policy years beginning on orafter September 23, 2010 (for plans that offer dependent coverage). Public Program Reforms—Another key provision of the Affordable Care Act is the expansion of Medicaid coverage.Prior to the passage of the ACA, the Medicaid program offered federal funding to states to assist only limited categories oflow-income individuals (including children, pregnant women, the blind and the disabled) in obtaining medical care. The ACAexpanded eligibility under existing Medicaid programs to virtually all individuals under 65 years old with incomes up to138% of the federal poverty level beginning in 2014. Under the Affordable Care Act, the federal government will pay 100% ofthe costs of Medicaid expansion in 2014, 2015 and 2016; federal funding will be reduced to 90% over the course of the four-year period from 2017 through 2020, and it will remain at 90% for 2021 and beyond. The expansion of the Medicaid programin each state requires state legislative or regulatory action and the approval by CMS of a state Medicaid plan amendment.There is no deadline for a state to undertake expansion and qualify for the enhanced federal funding available under theAffordable Care Act. As of December 31, 2014, we operated hospitals in five of the states (Arizona, California, Illinois,Massachusetts and Michigan) that expanded their Medicaid programs in 2014 and one of the states (Pennsylvania) that isexpanding in 2015. We cannot provide any assurances as to whether or when the other states in which we operate mightchoose to expand their Medicaid programs or whether those states that do expand their Medicaid programs will continue tooffer expanded eligibility in the future. The Affordable Care Act also provides that the federal government will subsidize states that create non-Medicaidplans called “Basic Health Programs” for residents whose incomes are greater than 133% but less than 200% of the federalpoverty level. Approved state plans will be eligible to receive federal funding, however, CMS announced in February 2013that Basic Health Programs would not be operational until 2015.Even though the Affordable Care Act expanded Medicaid eligibility, the law also contains a number of provisionsdesigned to significantly reduce Medicare and Medicaid program spending, including: ·negative adjustments to the annual input price index, or “market basket,” updates for Medicare’s inpatient,outpatient, long-term acute and inpatient rehabilitation prospective payment systems, which began in 2010, aswell as additional “productivity adjustments” that began in 2011; and ·reductions to Medicare and Medicaid disproportionate share hospital (“DSH”) payments, which began forMedicare payments in federal fiscal year (“FFY”) 2014 and will begin for Medicaid payments in FFY 2017, asthe number of uninsured individuals declines. The Affordable Care Act also contains a number of provisions intended to improve the quality and efficiency ofmedical care provided to Medicare and Medicaid beneficiaries. For example, the legislation expands payment penalties basedon a hospital’s rates of certain Medicare-designated hospital-acquired conditions (“HACs”). These HACs, which wouldnormally result in a higher payment for an inpatient hospital discharge, will instead be paid as though the HAC is not present.The ACA likewise prohibits the use of federal funds under the Medicaid program to reimburse providers for medical assistanceprovided to treat HACs. Currently, hospitals with excessive readmissions for certain conditions receive reduced Medicarepayments for all inpatient admissions. Beginning in FFY 2015, hospitals that fall into the top 25% of national risk-adjustedHAC rates for all hospitals in the previous year also receive a 1% reduction in Medicare payment rates. Separately, under aMedicare value-based purchasing program that was launched in FFY 2013, hospitals that satisfy certain performance standardsreceive increased payments for discharges during the following fiscal year. These payments are funded by decreases inpayments to all hospitals for inpatient services. For discharges occurring during FFY 2014 and after, the performancestandards must assess hospital efficiency, including Medicare spending per beneficiary. In addition, the Affordable Care Actdirected CMS to launch a national pilot program to study the use of bundled payments to hospitals, physicians and post-acutecare providers relating to a single admission to promote collaboration and alignment on quality and efficiency improvement;the pilot program is currently ongoing through the Center for Medicare and Medicaid Innovation within CMS, which has theauthority to develop and test new payment methodologies designed to improve quality of care and lower costs. 13 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsFurthermore, the Affordable Care Act contains provisions relating to recovery audit contractors (“RACs”), which arethird-party organizations under contract with CMS that identify underpayments and overpayments under the Medicareprogram and recoup any overpayments on behalf of the government. The Affordable Care Act expanded the RAC program’sscope to include Medicaid claims and required all states to enter into contracts with RACs. Other Provisions—The Affordable Care Act contains a number of other additional provisions, including provisionsrelating to the Medicare and Medicaid anti-kickback and anti-fraud and abuse amendments, Section 1877 of the SocialSecurity Act (commonly referred to as the “Stark” law), and qui tam or “whistleblower” actions, each of which is described indetail below, as well as provisions regarding: ·the creation of an Independent Payment Advisory Board that will make recommendations to Congress regardingadditional changes to provider payments and other aspects of the nation’s healthcare system; and ·new taxes on manufacturers and distributors of pharmaceuticals and medical devices used by our hospitals, aswell as a requirement that manufacturers file annual reports of payments made to physicians. The Impact of Health Reform on Us—As further discussed in Item 7, Management’s Discussion and Analysis ofFinancial Condition and Results of Operations, of Part II of this report, the expansion of health insurance coverage under theAffordable Care Act has resulted in a material increase in the number of patients using our facilities who have either private orpublic program coverage and a material decrease in uninsured and charity care admissions. Further, the ACA provides for avalue-based purchasing program, the establishment of ACOs and bundled payment pilot programs, which created possibleadditional sources of revenue for our company. However, it remains difficult to predict the full impact of the Affordable CareAct on our future revenues and operations at this time due to uncertainty regarding a number of material factors, including: ·how many states will ultimately implement the Medicaid expansion provisions and under what terms (a numberof states in which we operate, including Florida and Texas, have chosen not to expand their Medicaid programsat this time);·how many currently uninsured individuals will ultimately obtain coverage (either private health insurance orMedicaid) as a result of the Affordable Care Act; ·what percentage of our newly insured patients will be covered under the Medicaid program and what percentagewill be covered by private health insurers; ·the extent to which states will enroll new Medicaid participants in managed care programs; ·the pace at which insurance coverage expands, including the pace of different types of coverage expansion; ·future changes in the rates paid to hospitals by private payers for newly covered individuals, including thosecovered through health insurance exchanges and those who might be covered under the Medicaid program undercontracts with a state; ·future changes in the rates paid by state governments under the Medicaid program for newly covered individuals; ·the percentage of individuals in the exchanges who select the high-deductible plans, considering that healthinsurers offering those kinds of products have traditionally sought to pay lower rates to hospitals; and ·the extent to which the provisions of the Affordable Care Act will put pressure on the profitability of healthinsurers, which in turn might cause them to seek to reduce payments to hospitals with respect to both newlyinsured individuals and their existing business. In addition, the Affordable Care Act continues to be subject to possible delays, revisions and even elimination as a result ofcourt challenges and actions by Congress. Any ruling or other action that negatively impacts the number of14 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsindividuals who have health insurance coverage could have a material adverse effect on our results of operations and cashflows. Furthermore, the Affordable Care Act provides for significant reductions in the growth of Medicare spending,reductions in Medicare and Medicaid DSH payments, and the establishment of programs where reimbursement is tied toquality and integration. Any reductions to our reimbursement under the Medicare and Medicaid programs pursuant to theACA could adversely affect our business and results of operations to the extent such reductions are not offset by increasedrevenues from providing care to previously uninsured individuals. It is difficult to predict the future effect on our revenuesresulting from reductions to Medicare and Medicaid spending because of uncertainty regarding a number of material factors,including the following: ·the amount of overall revenues we will generate from the Medicare and Medicaid programs when the reductionsare fully implemented; ·whether future reductions required by the Affordable Care Act will be changed by statute prior to becomingeffective; ·the size of the annual productivity adjustment to the market basket; ·the reductions to Medicaid DSH payments commencing in FFY 2017; ·what the losses in revenues, if any, will be from the ACA’s quality initiatives; ·how successful accountable care networks in which we participate will be at coordinating care and reducing costsor whether they will decrease reimbursement; ·the scope and nature of potential changes to Medicare reimbursement methods, such as an emphasis on bundlingpayments or coordination of care programs; and ·reductions to Medicare payments CMS may impose for “excessive readmissions.”In addition, we may continue to experience a high level of bad debt expense and have to provide uninsured discounts andcharity care for persons living in the country illegally who are not permitted to enroll in a health insurance exchange orgovernment healthcare insurance program. We are unable to predict the net effect of the ACA on our future revenues and operations at this time due touncertainty regarding the ultimate number of uninsured individuals who will obtain and retain insurance coverage,uncertainty regarding future negotiations with payers, uncertainty regarding Medicaid expansion, and gradual and, in somecases, delayed implementation. Furthermore, we are unable to predict the outcome of legal challenges to certain provisions(including the provisions regarding subsidies) of the ACA, what action, if any, Congress might take with respect to the ACA orthe actions individual states might take with respect to expanding Medicaid coverage. ANTI-KICKBACK AND SELF-REFERRAL REGULATIONS Anti-Kickback Statute—Medicare and Medicaid anti-kickback and anti-fraud and abuse amendments codified underSection 1128B(b) of the Social Security Act (the “Anti-kickback Statute”) prohibit certain business practices and relationshipsthat might affect the provision and cost of healthcare services payable under the Medicare and Medicaid programs and othergovernment programs, including the payment or receipt of remuneration for the referral of patients whose care will be paid forby such programs. Specifically, the law prohibits any person or entity from offering, paying, soliciting or receiving anythingof value, directly or indirectly, for the referral of patients covered by Medicare, Medicaid and other federal healthcareprograms or the leasing, purchasing, ordering or arranging for or recommending the lease, purchase or order of any item, good,facility or service covered by these programs. In addition to addressing other matters, as discussed below, the Health InsurancePortability and Accountability Act of 1996 (“HIPAA”) also amended Title XI (42 U.S.C. Section 1301 et seq.) to broaden thescope of fraud and abuse laws to include all health plans, whether or not payments under such health plans are made pursuantto a federal program. Moreover, the Affordable Care15 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAct amended the Anti-kickback Statute to provide that knowledge of the law or the intent to violate the law is not required. Sanctions for violating the Anti-kickback Statute include criminal and civil penalties, as well as fines and possibleexclusion from government programs, such as Medicare and Medicaid. In addition, under the Affordable Care Act, submissionof a claim for services or items generated in violation of the Anti-kickback Statute constitutes a false or fraudulent claim andmay be subject to additional penalties under the federal False Claims Act (“FCA”). Furthermore, it is a violation of the federalCivil Monetary Penalties Law to offer or transfer anything of value to Medicare or Medicaid beneficiaries that is likely toinfluence their decision to obtain covered goods or services from one provider or service over another. Many states havestatutes similar to the federal Anti-kickback Statute, except that the state statutes usually apply to referrals for servicesreimbursed by all third-party payers, not just federal programs. The federal government has also issued regulations that describe some of the conduct and business relationships thatare permissible under the Anti-kickback Statute. These regulations are often referred to as the “Safe Harbor” regulations.Currently, there are safe harbors for various activities, including the following: investment interests; space rental; equipmentrental; practitioner recruitment; personal services and management contracts; sales of practices; referral services; warranties;discounts; employees; group purchasing organizations; waivers of beneficiary coinsurance and deductible amounts; managedcare arrangements; obstetrical malpractice insurance subsidies; investments in group practices; ambulatory surgery centers;and referral agreements for specialty services. The fact that certain conduct or a given business arrangement does not meet aSafe Harbor does not necessarily render the conduct or business arrangement illegal under the Anti-kickback Statute. Rather,such conduct and business arrangements may be subject to increased scrutiny by government enforcement authorities andshould be reviewed on a case-by-case basis. Stark Law—The Stark law generally restricts referrals by physicians of Medicare or Medicaid patients to entities withwhich the physician or an immediate family member has a financial relationship, unless one of several exceptions applies. Thereferral prohibition applies to a number of statutorily defined “designated health services,” such as clinical laboratory,physical therapy, radiology, and inpatient and outpatient hospital services. The exceptions to the referral prohibition cover abroad range of common financial relationships. These statutory and the subsequent regulatory exceptions are available toprotect certain permitted employment relationships, relocation arrangements, leases, group practice arrangements, medicaldirectorships, and other common relationships between physicians and providers of designated health services, such ashospitals. A violation of the Stark law may result in a denial of payment, required refunds to patients and the Medicareprogram, civil monetary penalties of up to $15,000 for each violation, civil monetary penalties of up to $100,000 for “sham”arrangements, civil monetary penalties of up to $10,000 for each day that an entity fails to report required information, andexclusion from participation in the Medicare and Medicaid programs and other federal programs. In addition, the submissionof a claim for services or items generated in violation of the Stark law may constitute a false or fraudulent claim, and thus besubject to additional penalties under the FCA. Many states have adopted self-referral statutes similar to the Stark Law, some ofwhich extend beyond the related state Medicaid program to prohibit the payment or receipt of remuneration for the referral ofpatients and physician self-referrals regardless of the source of the payment for the care. Our participation in and developmentof joint ventures and other financial relationships with physicians could be adversely affected by the Stark law and similarstate enactments. The Affordable Care Act also made changes to the “whole hospital” exception in the Stark law, effectivelypreventing new physician-owned hospitals after March 23, 2010 and limiting the capacity and amount of physicianownership in existing physician-owned hospitals. As revised, the Stark law prohibits physicians from referring Medicarepatients to a hospital in which they have an ownership or investment interest unless the hospital had physician ownership anda Medicare provider agreement as of March 23, 2010 (or, for those hospitals under development at the time of the ACA’senactment, as of December 31, 2010). A physician-owned hospital that meets these requirements is still subject to restrictionsthat limit the hospital’s aggregate physician ownership percentage and, with certain narrow exceptions for hospitals with ahigh percentage of Medicaid patients, prohibit expansion of the number of operating rooms, procedure rooms or beds. Thelegislation also subjects a physician-owned hospital to reporting requirements and extensive disclosure requirements on thehospital’s website and in any public advertisements. As of December 31, 2014, three of our hospitals are owned by jointventures that include some physician owners and are subject to the limitations and requirements in the Affordable Care Act onphysician-owned hospitals. 16 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsImplications of Fraud and Abuse Laws—Our operations could be adversely affected by the failure of ourarrangements to comply with the Anti-Kickback Statute, the Stark Law, billing laws and regulations, current state laws, orother legislation or regulations in these areas adopted in the future. We are unable to predict whether other legislation orregulations at the federal or state level in any of these areas will be adopted, what form such legislation or regulations maytake or how they may impact our operations. We are continuing to enter into new financial arrangements with physicians andother providers in a manner structured to comply in all material respects with these laws. We cannot assure you, however, thatgovernmental officials responsible for enforcing these laws will not assert that we are in violation of them or that such statutesor regulations ultimately will be interpreted by the courts in a manner consistent with our interpretation. We have a variety of financial relationships with physicians who refer patients to our hospitals, and we may sellownership interests in certain of our other facilities to physicians and other qualified investors in the future. We also havecontracts with physicians providing for a variety of financial arrangements, including employment contracts, leases andprofessional service agreements. We have provided financial incentives to recruit physicians to relocate to communitiesserved by our hospitals, including income and collection guarantees and reimbursement of relocation costs, and will continueto provide recruitment packages in the future. Furthermore, new payment structures, such as ACOs and other arrangementsinvolving combinations of hospitals, physicians and other providers who share payment savings, could potentially be seen asimplicating anti-kickback and self-referral provisions. In accordance with our ethics and compliance program, which is described in detail under “Compliance and Ethics”below, we have policies and procedures in place concerning compliance with the Anti-kickback Statute and the Stark law,among others. In addition, our ethics and compliance, law and audit services departments systematically review a substantialnumber of our arrangements with referral sources to determine the extent to which they comply with our policies andprocedures and with the Anti-kickback Statute, the Stark law and similar state statutes. On the one hand, we may be lesswilling than some of our competitors to take actions or enter into business arrangements that do not clearly satisfy the safeharbors and exceptions to the fraud and abuse laws described above; as a result, this unwillingness may put us at a competitivedisadvantage. On the other hand, we cannot assure you that the regulatory authorities that enforce these laws will notdetermine that some of our arrangements violate the Anti-Kickback Statute, the Stark law or other applicable regulations. Anadverse determination could subject us to liabilities under the Social Security Act, including criminal penalties, civilmonetary penalties and exclusion from participation in Medicare, Medicaid or other federal healthcare programs, any of whichcould have a material adverse effect on our business, financial condition or results of operations. In addition, anydetermination by a federal or state agency or court that we have violated any of these laws could give Conifer’s customers theright to terminate our services agreements with them. Moreover, any violations by and resulting penalties or exclusionsimposed upon Conifer’s customers could adversely affect their financial condition and, in turn, have a material adverse effecton Conifer’s business and results of operations. HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT Title II, Subtitle F of the Health Insurance Portability and Accountability Act mandates the adoption of specificstandards for electronic transactions and code sets that are used to transmit certain types of health information. HIPAA’sobjective is to encourage efficiency and reduce the cost of operations within the healthcare industry. To protect theinformation transmitted using the mandated standards and the patient information used in the daily operations of a coveredentity, HIPAA also sets forth federal rules protecting the privacy and security of protected health information (“PHI”). Theprivacy and security regulations address the use and disclosure of individually identifiable health information and the rightsof patients to understand and control how their information is used and disclosed. The law provides both criminal and civilfines and penalties for covered entities that fail to comply with HIPAA. To receive reimbursement from CMS for electronic claims, healthcare providers and health plans must use HIPAA’selectronic data transmission (transaction and code set) standards when transmitting certain healthcare informationelectronically. Our electronic data transmissions are compliant with current standards. In January 2009, CMS published a finalrule changing the formats used for certain electronic transactions and requiring the use of updated standard code sets forcertain diagnoses and procedures known as ICD-10 code sets. At this time, use of the ICD-10 code sets is not mandatory untilOctober 1, 2015. We are continuing to modify our payment systems and processes to prepare17 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsfor ICD-10 implementation. Although use of the ICD-10 code sets will require significant administrative changes, we believethat the cost of compliance with these regulations has not had and is not expected to have a material adverse effect on ourbusiness, financial condition, results of operations or revenues. However, we may experience a short-term adverse impact onour cash flows due to claims processing delays related to implementation of the new code sets by payers and us. Furthermore,the Affordable Care Act required the U.S. Department of Health and Human Services (“HHS”) to adopt standards for additionalelectronic transactions and to establish operating rules to promote uniformity in the implementation of each standardizedelectronic transaction. Under HIPAA, covered entities must establish administrative, physical and technical safeguards to protect theconfidentiality, integrity and availability of electronic PHI maintained or transmitted by them or by others on their behalf. Thecovered entities we operate are in material compliance with the privacy, security and National Provider Identifier requirementsof HIPAA. In addition, most of Conifer’s customers are covered entities, and Conifer is a business associate to many of thosecustomers under HIPAA as a result of its contractual obligations to perform certain functions on behalf of and provide certainservices to those customers. As a business associate, Conifer’s use and disclosure of PHI is restricted by HIPAA and thebusiness associate agreements Conifer is required to enter into with its covered entity customers. In 2009, HIPAA was amended by the Health Information Technology for Economic and Clinical Health (“HITECH”)Act to impose certain of the HIPAA privacy and security requirements directly upon business associates of covered entitiesand significantly increase the monetary penalties for violations of HIPAA. Regulations that took effect in late 2009 alsorequire business associates such as Conifer to notify covered entities, who in turn must notify affected individuals andgovernment authorities, of data security breaches involving unsecured PHI. Since the passage of the HITECH Act,enforcement of HIPAA violations has increased. A knowing breach of the HIPAA privacy and security requirements madeapplicable to business associates by the HITECH Act could expose Conifer to criminal liability, and a breach of safeguardsand processes that is not due to reasonable cause or involves willful neglect could expose Conifer to significant civil penaltiesand the possibility of civil litigation under HIPAA and applicable state law. In May 2011, the Office for Civil Rights of HHS proposed new regulations to implement changes to the HIPAArequirements set forth in the HITECH Act that state that covered entities and business associates must account for disclosuresof PHI to carry out treatment, payment and healthcare operations if such disclosures are through an electronic health record.The proposed regulations seek to expand the scope of the requirements under the HITECH Act and create a new patient rightto an “access report,” which would be required to list every person who has accessed, for any reason, PHI about the individualcontained in any electronic designated record set. Because our hospitals currently utilize multiple, independent modules thatmay meet the definition of “electronic designated record set,” our ability to produce an access report that satisfies theproposed regulatory requirements would likely require new technology solutions to map across those multiple record sets. It isour understanding that many providers have expressed significant concerns to CMS regarding the access report requirementcreated by the proposed rule. In January 2013, HHS issued final regulations modifying the requirements set forth in theHITECH Act. While we were in material compliance with the new regulations as of the compliance date ofSeptember 23, 2013, the new regulations did not address the proposed “access report” requirement. Because we cannot predictthe requirements of any future final rule regarding access reports, we are unable to estimate the costs of compliance, if any, atthis time. We have developed a comprehensive set of policies and procedures in our efforts to comply with HIPAA, and similarstate privacy laws, under the guidance of our ethics and compliance department. Our compliance officers and informationsecurity officers are responsible for implementing and monitoring compliance with our HIPAA privacy and security policiesand procedures throughout our company. We have also created an internal web-based HIPAA training program, which ismandatory for all employees. Based on existing regulations and our experience with HIPAA to this point, we continue tobelieve that the ongoing costs of complying with HIPAA will not have a material adverse effect on our business, financialcondition, results of operations or cash flows. HEALTH PLAN REGULATORY MATTERS Our health plans are subject to numerous federal and state laws and regulations related to their business operations,including, but not limited to: the form and content of member contracts, including certain mandated benefits;18 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentspremium rates and medical loss ratios; the content of agreements with participating providers; claims processing and appeals;underwriting practices; reinsurance arrangements; protecting the privacy and confidentiality of the information received frommembers; risk-sharing arrangements with providers; the quality of care provided to beneficiaries; reimbursement or paymentlevels for Medicare services; the provision of products or services to employer-sponsored health benefit plans; the expansioninto new service areas; participation on the health insurance exchanges; the award, administration and performance of federalcontracts; the administration of strategic alliances with competitors, including information sharing; and advertising,marketing and sales activities. Each of our health plans must also be licensed by one or more agencies in the states in which they conduct businessand must submit periodic filings to and respond to inquiries from such agencies. State insurance regulators may requireexpanded governance practices, periodic risk and solvency assessment reports, and the establishment of minimum capital orrestricted cash reserve requirements. Some state insurance holding company laws and regulations require prior regulatoryapproval of acquisitions and material intercompany transfers of assets, as well as transactions between the regulatedcompanies and their parent holding companies or affiliates. Furthermore, our health plan operations, accounts, and otherbooks and records are subject to examination at regular intervals by regulatory agencies, including CMS and state insuranceand health and welfare departments, to assess their compliance with applicable laws and regulations. Although we haveextensive policies and procedures in place to facilitate compliance in all material respects with the laws, rules and regulationsaffecting our health plans, if a determination is made that we were in violation of such laws, rules or regulations with respect toone or more of our health plans, that aspect of our business could be materially adversely affected. GOVERNMENT ENFORCEMENT EFFORTS AND QUI TAM LAWSUITS Both federal and state government agencies continue heightened and coordinated civil and criminal enforcementefforts against the healthcare industry. The operational mission of the Office of Inspector General (“OIG”) of HHS is to protectthe integrity of the Medicare and Medicaid programs and the well-being of program beneficiaries by: detecting andpreventing waste, fraud and abuse; identifying opportunities to improve program economy, efficiency and effectiveness; andholding accountable those who do not meet program requirements or who violate federal laws. The OIG carries out its missionby conducting audits, evaluations and investigations and, when appropriate, imposing civil monetary penalties, assessmentsand administrative sanctions. Although we have extensive policies and procedures in place to facilitate compliance in allmaterial respects with the laws, rules and regulations affecting the healthcare industry, if a determination is made that we werein violation of such laws, rules or regulations, our business, financial condition, results of operations or cash flows could bematerially adversely affected. Healthcare providers are also subject to qui tam or “whistleblower” lawsuits under the federal False Claims Act,which allows private individuals to bring actions on behalf of the government, alleging that a hospital or healthcare providerhas defrauded a government program, such as Medicare or Medicaid. If the government intervenes in the action and prevails,the defendant may be required to pay three times the actual damages sustained by the government, plus mandatory civilpenalties for each false claim submitted to the government. As part of the resolution of a qui tam case, the party filing theinitial complaint may share in a portion of any settlement or judgment. If the government does not intervene in the action, thequi tam plaintiff may continue to pursue the action independently. 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 FCAdefines the term “knowingly” broadly. Though simple negligence will not give rise to liability under the FCA, submitting aclaim with reckless disregard to its truth or falsity constitutes a “knowing” submission under the FCA and, therefore, willqualify for liability. The Fraud Enforcement and Recovery Act of 2009 expanded the scope of the FCA by, among otherthings, creating liability for knowingly and improperly avoiding repayment of an overpayment received from the governmentand broadening protections for whistleblowers. Under the Affordable Care Act, the knowing failure to report and return anoverpayment within 60 days of identifying the overpayment or by the date a corresponding cost report is due, whichever islater, constitutes a violation of the FCA. Further, the Affordable Care Act expands the scope of the FCA to cover payments inconnection with health insurance exchanges if those payments include any federal funds. Qui tam actions can also be filedunder certain state false claims laws if the fraud involves Medicaid funds or funding from state and local agencies. Like othercompanies in the healthcare industry, we are subject to qui tam actions from time to time. We are unable to predict the futureimpact of such actions on our business, financial condition, results of operations or cash flows.19 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents HEALTHCARE FACILITY LICENSING REQUIREMENTS The operation of healthcare facilities is subject to federal, state and local regulations relating to personnel, operatingpolicies and procedures, fire prevention, rate-setting, the adequacy of medical care, and compliance with building codes andenvironmental protection laws. Various licenses and permits also are required in order to dispense narcotics, operatepharmacies, handle radioactive materials and operate certain equipment. Our facilities are subject to periodic inspection bygovernmental and other authorities to assure continued compliance with the various standards necessary for licensing andaccreditation. We believe that all of our healthcare facilities hold all required governmental approvals, licenses and permitsmaterial to the operation of their business. UTILIZATION REVIEW COMPLIANCE AND HOSPITAL GOVERNANCE In addition to certain statutory coverage limits and exclusions, federal laws and regulations, specifically theMedicare Conditions of Participation, generally require healthcare providers, including hospitals that furnish or orderhealthcare services that may be paid for under the Medicare program or state healthcare programs, to ensure that claims forreimbursement are for services or items that are (1) provided economically and only when, and to the extent, they aremedically reasonable and necessary, (2) of a quality that meets professionally recognized standards of healthcare, and(3) supported by appropriate evidence of medical necessity and quality. The Social Security Act established the Utilizationand Quality Control Peer Review Organization program, now known as the Quality Improvement Organization (“QIO”)program, to promote the effectiveness, efficiency, economy and quality of services delivered to Medicare beneficiaries and toensure that those services are reasonable and necessary. CMS administers the program through a network of QIOs that workwith consumers, physicians, hospitals and other caregivers to refine care delivery systems to ensure patients receive theappropriate care at the appropriate time, particularly among underserved populations. The QIO program also safeguards theintegrity of the Medicare trust fund by reviewing Medicare patient admissions, treatments and discharges, and ensuringpayment is made only for medically necessary services, and investigates beneficiary complaints about quality of care. TheQIOs have the authority to deny payment for services provided and recommend to HHS that a provider that is in substantialnoncompliance with certain standards be excluded from participating in the Medicare program. There has been recent increased scrutiny of hospitals’ Medicare observation rates from outside auditors, governmentenforcement agencies and industry observers. The term “Medicare observation rate” is defined as total unique observationclaims divided by the sum of total unique observation claims and total inpatient short-stay acute care hospital claims. A lowrate may raise suspicions that a hospital is inappropriately admitting patients that could be cared for in an observation setting.In our affiliated hospitals, we use the independent, evidence-based clinical criteria developed by McKesson Corporation,commonly known as InterQual Criteria, to determine whether a patient qualifies for inpatient admission. The industryanticipates increased scrutiny and litigation risk, including government investigations and qui tam suits, related to inpatientadmission decisions and the Medicare observation rate. In addition, effective October 1, 2013, CMS established a newconcept, referred to as the “two-midnight rule,” to guide practitioners admitting patients and contractors conducting paymentreviews on when it is appropriate to admit individuals as hospital inpatients. Under the two-midnight rule, CMS has indicatedthat a Medicare patient should generally be admitted on an inpatient basis only when there is a reasonable expectation thatthe patient’s care will cross two midnights, and, if not, then the patient generally should be treated as an outpatient. Ourhospitals have undertaken extensive efforts to implement the two-midnight rule in light of existing guidance. CMS iscurrently conducting a “probe and educate” program regarding the two-midnight rule, the purpose of which is to assesshospitals’ compliance with the rule and also to provide follow-up education. The probe and educate period is currentlyscheduled to end March 31, 2015 and, unless extended, full implementation and enforcement of the two-midnight rule willbegin on April 1, 2015. Although the probe and educate program is still ongoing, we do not believe enforcement of the two-midnight rule will have a material impact on inpatient admission rates at our hospitals. Medical and surgical services and practices are extensively supervised by committees of staff doctors at each of ourhealthcare facilities, are overseen by each facility’s local governing board, the members of which primarily are communitymembers and physicians, and are reviewed by our clinical quality personnel. The local hospital governing board also helpsmaintain standards for quality care, develop short-term and long-range plans, and establish, review and20 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsenforce practices and procedures, as well as approves the credentials, disciplining and, if necessary, the termination ofprivileges of medical staff members. CERTIFICATE OF NEED REQUIREMENTS Some states require state approval for construction, acquisition and closure of healthcare facilities, including findingsof need for additional or expanded healthcare facilities or services. Certificates or determinations of need, which are issued bygovernmental agencies with jurisdiction over healthcare facilities, are at times required for capital expenditures exceeding aprescribed amount, changes in bed capacity or services, and certain other matters. As of December 31, 2014, we operatedhospitals in 10 states that require a form of state approval under certificate of need programs applicable to those hospitals.Failure to obtain necessary state approval can result in the inability to expand facilities, add services, acquire a facility orchange ownership. Further, violation of such laws may result in the imposition of civil sanctions or the revocation of afacility’s license. We are unable to predict whether we will be required or able to obtain any additional certificates of need inany jurisdiction where they are required, or if any jurisdiction will eliminate or alter its certificate of need requirements in amanner that will increase competition and, thereby, affect our competitive position. In those states that do not have certificateof need requirements or that do not require review of healthcare capital expenditure amounts below a relatively highthreshold, competition in the form of new services, facilities and capital spending is more prevalent. ENVIRONMENTAL MATTERS Our healthcare operations are subject to a number of federal, state and local environmental laws, rules and regulationsthat govern, among other things, our disposal of solid waste, as well as our use, storage, transportation and disposal ofhazardous and toxic materials (including radiological materials). Our operations also generate medical waste that must bedisposed of in compliance with laws and regulations that vary from state to state. In addition, although we are not engaged inmanufacturing or other activities that produce meaningful levels of greenhouse gas emissions, our operating expenses couldbe adversely affected if legal and regulatory developments related to climate change or other initiatives result in increasedenergy or other costs. We could also be affected by climate change and other environmental issues to the extent such issuesadversely affect the general economy or result in severe weather affecting the communities in which our facilities are located.At this time, based on current climate conditions and our assessment of existing and pending environmental rules andregulations, as well as treaties and international accords relating to climate change, we do not believe that the costs ofcomplying with environmental laws and regulations, including regulations relating to climate change issues, will have amaterial adverse effect on our future capital expenditures, results of operations or cash flows. Consistent with our commitment to meet the highest standards of corporate responsibility, we have formed asustainability committee consisting of corporate and hospital leaders to regularly evaluate our environmental outcomes andshare best practices among our hospitals and other facilities. In 2014, we published our fourth annual sustainability report,using the industry-standard Global Reporting Initiative framework. In addition, we are a sponsor of the Healthier HospitalsInitiative and continue to work with each of our hospitals in adopting components of the initiative’s agenda, which focuses onimprovements in (1) sustainability governance, (2) the provision of healthier foods, (3) energy consumption, (4) wastegeneration, (5) the use of safer chemicals and (6) purchasing decisions. We are committed to report the results of oursustainability efforts on an annual basis. ANTITRUST LAWS The federal government and most states have enacted antitrust laws that prohibit specific types of anti-competitiveconduct, including price fixing, wage fixing, concerted refusals to deal, price discrimination and tying arrangements, as wellas monopolization and acquisitions of competitors that have, or may have, a substantial 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 healthcare industry is currently a priority of the U.S. Federal Trade Commission (“FTC”).In recent years, the FTC has filed multiple administrative complaints challenging hospital transactions in21 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsseveral states. The FTC has focused its enforcement efforts on preventing hospital mergers that may, in the government’s view,leave insufficient local options for inpatient services. In addition to hospital merger enforcement, the FTC has given increasedattention to the effect of combinations involving other healthcare providers, including physician practices. The FTC has alsoentered into numerous consent decrees in the past several years settling allegations of price-fixing among providers. We believe we are in compliance with federal and state antitrust laws, but there can be no assurance that a review ofour practices by courts or regulatory authorities would not result in a determination that could adversely affect our operations. REGULATIONS AFFECTING CONIFER’S OPERATIONS As described below, Conifer and certain of its subsidiaries are subject to laws, rules and regulations regarding theirconsumer finance, debt collection and credit reporting activities. DEBT COLLECTION ACTIVITIES The federal Fair Debt Collection Practices Act (“FDCPA”) regulates persons who regularly collect or attempt tocollect, directly or indirectly, consumer debts owed or asserted to be owed to another person. Certain of the accountsreceivable handled by Conifer’s debt collection agency subsidiary, Syndicated Office Systems, LLC (“SOS”), are subject tothe FDCPA, which establishes specific guidelines and procedures that debt collectors must follow in communicating withconsumer debtors, including the time, place and manner of such communications. Further, the FDCPA prohibits harassment orabuse by debt collectors, including the threat of violence or criminal prosecution, obscene language or repeated telephonecalls made with the intent to abuse or harass. The FDCPA also places restrictions on communications with individuals otherthan consumer debtors in connection with the collection of any consumer debt and sets forth specific procedures to befollowed when communicating with such third parties for purposes of obtaining location information about the consumer. Inaddition, the FDCPA contains various notice and disclosure requirements and prohibits unfair or misleading representationsby debt collectors. Finally, the FDCPA imposes certain limitations on lawsuits to collect debts against consumers. Debtcollection activities are also regulated at the state level. Most states have laws regulating debt collection activities in waysthat are similar to, and in some cases more stringent than, the FDCPA. Many states also regulate the collection practices of creditors who collect their own debt. These state regulations areoften the same or similar to state regulations applicable to third-party collectors. Certain of the accounts receivable Coniferhandles are subject to these state regulations. In certain situations, the activities of SOS are also subject to the Fair Credit Reporting Act (“FCRA”). The FCRAregulates the collection, dissemination and use of consumer information, including consumer credit information. In addition,the FCRA requires Conifer to promptly update any credit information it has reported to a credit reporting agency about aconsumer and to allow a process by which consumers may inquire about such information. The FCRA may impose liability onus to the extent that adverse credit information reported on a consumer to a credit bureau is false or inaccurate. State law, tothe extent it is not preempted by the FCRA, may also impose restrictions or liability on SOS with respect to reporting adversecredit information that is false or inaccurate. The federal Fair and Accurate Credit Transaction Act (“FACTA”) requires Conifer to adopt (1) written guidance andprocedures for detecting, preventing and responding appropriately to mitigate identity theft, and (2) coworker policies andprocedures (including training) that address the importance of protecting non-public personal information and aid Conifer indetecting and responding to suspicious activity, including suspicious activity that may suggest a possible identity theft redflag, as appropriate. Furthermore, Conifer is subject to regulation by the Federal Trade Commission. The FTC’s Bureau ofConsumer Protection works to protect consumers against unfair, deceptive or fraudulent practices in the marketplace. Infurtherance of consumer protection, the FTC provides guidance and enforces federal laws concerning truthful advertising andmarketing practices, fair financial practices and debt collection, and protection of sensitive consumer information. 22 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe U.S. Consumer Financial Protection Bureau (“CFPB”) and the FTC have the authority to investigate consumercomplaints relating to the FDCPA, FCRA and FACTA, and to initiate enforcement actions, including actions to seekrestitution and monetary penalties. State officials typically have authority to enforce corresponding state laws. In addition,affected consumers may bring suits, including class action suits, to seek monetary remedies (including statutory damages) forviolations of the federal and state provisions discussed above. The CFPB was formed within the U.S. Federal Reserve pursuant to the Dodd-Frank Wall Street Reform and ConsumerProtection Act (the “Dodd-Frank Act”) to promote transparency, simplicity, fairness, accountability and equal access in themarket for consumer financial products or services, including debt collection services. The Dodd-Frank Act gives significantdiscretion to the CFPB in establishing regulatory requirements and enforcement priorities. In 2013, the CFPB issuedexamination procedures for, and began conducting examinations of, a number of companies with respect to their debtcollection practices. The CFPB’s examination and overall enforcement authority permits agency examiners to inspect thebooks and records of companies engaged in debt collection activities, such as SOS, and ask questions about their paymentprocessing activities, collections, accounts in default, consumer reporting and third-party relationships, as well as complianceprograms. We believe that the potential exists that non-bank providers of consumer credit that are examined by the CFPBcould, depending upon the circumstances, be required, as a result of any CFPB examination, to change their practices orprocedures. In addition, if the CFPB determines that a violation of the federal consumer financial laws has occurred, it has theauthority to impose fines, require operational changes or take other corrective actions. In general, we believe that the CFPBregulatory and enforcement processes will have a significant impact on the operations of Conifer and its subsidiaries. PAYMENT ACTIVITY RISKS Conifer accepts payments from patients of the facilities for which it provides services using a variety of methods,including credit card, debit card, direct debit from a customer’s bank account, and physical bank check. For certain paymentmethods, including credit and debit cards, Conifer pays interchange and other fees, which may increase over time, therebyraising operating costs. Conifer relies on third parties to provide payment processing services, including the processing ofcredit cards, debit cards and electronic checks, and it could disrupt Conifer’s business if these companies become unwilling orunable to provide these services. Conifer is also subject to payment card association operating rules, including data securityrules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted tomake it difficult or impossible for Conifer to comply. If Conifer fails to comply with these rules or requirements, or if its datasecurity systems are breached or compromised, Conifer may be liable for card issuing banks’ costs, be subject to fines andhigher transaction fees, and lose its ability to accept credit and debit card payments from customers, process electronic fundstransfers, or facilitate other types of online payments. COMPLIANCE AND ETHICS General—Our ethics and compliance department maintains our multi-faceted, values-based ethics and complianceprogram, which is designed to (1) help staff in our corporate and Conifer offices, hospitals, outpatient centers, health planoffices and physician practices meet or exceed applicable standards established by federal and state laws and regulations, aswell as industry practice, and (2) monitor and raise awareness of ethical issues among employees and others, and stress theimportance of understanding and complying with our Standards of Conduct. The ethics and compliance department operateswith independence — it has its own operating budget; it has the authority to hire outside counsel, access any Tenet documentand interview any of our personnel; and our chief compliance officer reports directly to the quality, compliance and ethicscommittee of our board of directors. Program Charter—Our Quality, Compliance and Ethics Program Charter is the governing document for our ethics andcompliance program. Our adherence to the charter is intended to: ·support and maintain our present and future responsibilities with regard to participation in federal healthcareprograms; and 23 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents·further our goals of operating an organization that (1) fosters and maintains the highest ethical standards amongall employees, officers and directors, physicians practicing at Tenet facilities and contractors that furnishhealthcare items or services, (2) values compliance with all state and federal laws and regulations as a foundationof its corporate philosophy, and (3) aligns its behaviors and decisions with Tenet’s core values of quality,integrity, service, innovation and transparency. The primary focus of our quality, compliance and ethics program is compliance with the requirements of Medicare, Medicaidand other federally funded healthcare programs. Pursuant to the terms of the charter, our ethics and compliance department isresponsible for the following activities: (1) annually assessing, critiquing and (as appropriate) drafting and distributingcompany policies and procedures; (2) developing, providing and tracking ethics training for all employees, directors and, asapplicable, contractors and agents; (3) developing, providing and tracking job-specific training to those who work in clinicalquality, coding, billing, cost reporting and referral source arrangements; (4) developing, providing and tracking annualtraining on ethics and clinical quality oversight to the members of each hospital governing board; (5) creating anddisseminating the company’s Standards of Conduct and obtaining certifications of adherence to the Standards of Conduct asa condition of employment; (6) maintaining and promoting Tenet’s Ethics Action Line, which allows confidential reporting ofissues on an anonymous basis and emphasizes Tenet’s no retaliation policy; (7) responding to and resolving all compliance-related issues that arise from the Ethics Action Line and compliance reports received from our facilities, hospital complianceofficers or any other source; (8) ensuring that appropriate corrective and disciplinary actions are taken when non-compliantconduct or improper contractual relationships are identified; (9) monitoring and measuring adherence to all applicable Tenetpolicies and legal and regulatory requirements related to federal healthcare programs; (10) directing an annual screening ofindividuals for exclusion from federal healthcare program participation as required by federal regulations; (11) maintaining adatabase of all arrangements involving the payment of anything of value between Tenet and any physician or other actual orpotential source of healthcare business or referrals to or from Tenet; and (12) overseeing annual audits of clinical quality,referral source arrangements, outliers, charging, coding, billing and other compliance risk areas as may be identified from timeto time. Standards of Conduct—All of our employees, including our chief executive officer, chief financial officer andprincipal accounting officer, are required to abide by our Standards of Conduct to advance our mission that our business beconducted in a legal and ethical manner. The members of our board of directors and many of our contractors are also requiredto abide by our Standards of Conduct. The standards reflect our basic values and form the foundation of a comprehensiveprocess that includes compliance with all corporate policies, procedures and practices. Our standards cover such areas asquality patient care, compliance with all applicable laws and regulations, appropriate use of our assets, protection of patientinformation and avoidance of conflicts of interest. As part of the program, we provide annual training sessions to every employee, as well as our board of directors andcertain physicians and contractors. All employees are required to report incidents that they believe in good faith may be inviolation of the Standards of Conduct, and are encouraged to contact our 24-hour toll-free Ethics Action Line when they havequestions about the standards or any ethics concerns. All reports to the Ethics Action Line are kept confidential to the extentallowed by law, and employees have the option to remain anonymous. Incidents of alleged financial improprieties reported tothe Ethics Action Line or the ethics and compliance department are communicated to the audit committee of our board ofdirectors. Reported cases that involve a possible violation of the law or regulatory policies and procedures are referred to theethics and compliance department for investigation. Retaliation against employees in connection with reporting ethicalconcerns is considered a serious violation of our Standards of Conduct, and, if it occurs, it will result in discipline, up to andincluding termination of employment. Availability of Documents—The full text of our Quality, Compliance and Ethics Program Charter, our Standards ofConduct, and a number of our ethics and compliance policies and procedures are published on our website, atwww.tenethealth.com, under the “Ethics and Compliance” caption in the “About” section. A copy of our Standards ofConduct is also available upon written request to our corporate secretary. Information about how to contact our corporatesecretary is set forth under “Company Information” below. Amendments to the Standards of Conduct and any grant of awaiver from a provision of the Standards of Conduct requiring disclosure under applicable Securities and ExchangeCommission (“SEC”) rules will be disclosed at the same location as the Standards of Conduct on our website. 24 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsINSURANCE Property Insurance—We have property, business interruption and related insurance coverage to mitigate thefinancial impact of catastrophic events or perils that is subject to deductible provisions based on the terms of the policies.These policies are on an occurrence basis. Professional and General Liability Insurance—As is typical in the healthcare industry, we are subject to claims andlawsuits in the ordinary course of business. The healthcare industry has seen significant increases in the cost of professionalliability insurance due to increased litigation. In response, we maintain captive insurance companies to self-insure asubstantial portion of our professional and general liability risk. We also own two captive insurance companies that writeprofessional liability insurance for a small number of physicians, including employed physicians, who are on the medicalstaffs of certain of our hospitals. Claims in excess of our self-insurance retentions are insured with commercial insurance companies. If the aggregatelimit of any of our professional and general liability policies is exhausted, in whole or in part, it could deplete or reduce thelimits available to pay any other material claims applicable to that policy period. Any losses not covered by or in excess of theamounts maintained under insurance policies will be funded from our working capital. In addition to the reserves recorded by our captive insurance subsidiaries, we maintain reserves, including reserves forincurred but not reported claims, for our self-insured professional liability retentions and claims in excess of the policies’aggregate limits, based on modeled estimates of losses and related expenses. Also, we provide standby letters of credit tocertain of our insurers, which can be drawn upon under certain circumstances, to collateralize the deductible and self-insuredretentions under a selected number of our professional and general liability insurance programs. COMPANY INFORMATION Tenet Healthcare Corporation was incorporated in the State of Nevada in 1975. We file annual, quarterly and currentreports, proxy statements and other documents with the SEC under the Securities Exchange Act of 1934, as amended (the“Exchange Act”). Our reports, proxy statements and other documents filed electronically with the SEC are available at thewebsite maintained by the SEC at www.sec.gov. Our website, www.tenethealth.com, also offers, free of charge, access to our annual, quarterly and current reports (andamendments to such reports), and other filings made with, or furnished to, the SEC as soon as reasonably practicable after suchdocuments are submitted to the SEC. The information found on our website is not part of this or any other report we file withor furnish to the SEC. Inquiries directed to our corporate secretary may be sent to Corporate Secretary, Tenet Healthcare Corporation, P.O.Box 139003, Dallas, Texas 75313-9003 or by e-mail at CorporateSecretary@tenethealth.com. FORWARD-LOOKING STATEMENTS This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933and Section 21E of the Exchange Act, each as amended. All statements, other than statements of historical or present facts, thataddress activities, events, outcomes, business strategies and other matters that we plan, expect, intend, assume, believe,budget, predict, forecast, project, estimate or anticipate (and other similar expressions) will, should or may occur in the futureare forward-looking statements. These forward-looking statements represent management’s current belief, based on currentlyavailable information, as to the outcome and timing of future events. They involve known and unknown risks, uncertaintiesand other factors — many of which we are unable to predict or control — that may cause our actual results, performance orachievements, or healthcare industry results, to be materially different from those expressed or implied by forward-lookingstatements. Such factors include, but are not limited to, the following: ·The future impact of the Affordable Care Act on our business and the enactment of, or changes in, laws andregulations affecting the healthcare industry generally;25 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents ·The effect that adverse economic conditions have on our volumes and our ability to collect outstandingreceivables on a timely basis, among other things; ·Adverse litigation or regulatory developments; ·Our ability to enter into managed care provider arrangements on acceptable terms; ·Cuts to Medicare and Medicaid payment rates or changes in reimbursement practices; ·Competition; ·Our success in implementing our business development plans, including growing our outpatient business; ·Our ability to hire and retain qualified personnel, especially healthcare professionals; ·The availability and terms of capital to fund the expansion of our business, including the acquisition ofadditional facilities; ·Our success in marketing Conifer’s revenue cycle management, healthcare information management,management services, and patient communications and engagement services; ·Our ability to fully realize the anticipated benefits and synergies of our acquisitions and to successfully completethe integration of businesses we acquire, including Vanguard in particular; ·Our ability to identify and execute on measures designed to save or control costs or streamline operations; ·The impact of our significant indebtedness; ·Our success in operating our health plans and accountable care networks; and ·Other factors and risks referenced in this report and our other public filings. Also included among the foregoing factors are the positive and negative effects of health reform legislation on reimbursementand utilization, as well as the future design of provider networks and insurance plans, including pricing, providerparticipation, coverage, and co-pays and deductibles. When considering forward-looking statements, a reader should keep in mind the risk factors and other cautionarystatements in this report. Should one or more of the risks and uncertainties described in this report occur, or should underlyingassumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-lookingstatements. We specifically disclaim any obligation to update any information contained in a forward-looking statement orany forward-looking statement in its entirety and, therefore, disclaim any resulting liability for potentially related damages. All forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement. ITEM 1A. RISK FACTORS Our business is subject to a number of risks and uncertainties — many of which are beyond our control — that maycause our actual operating results or financial performance to be materially different from our expectations. If one or more ofthe events discussed in this report were to occur, actual outcomes could differ materially from those expressed in or implied byany forward-looking statements we make in this report or our other filings with the SEC, and26 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsour business, financial condition, results of operations or liquidity could be materially adversely affected; furthermore, thetrading price of our common stock could decline and our shareholders could lose all or part of their investment. We cannot predict with certainty the ultimate net effect that the Affordable Care Act may have on our business,financial condition, results of operations or cash flows. The Affordable Care Act is changing how healthcare services in the United States are covered, delivered andreimbursed. The expansion of health insurance coverage under the law has resulted in a material increase in the number ofpatients using our facilities who have either private or public program coverage and a material decrease in uninsured andcharity care admissions. However, it remains difficult to predict the full impact of the ACA on our future revenues andoperations at this time due to uncertainty regarding a number of material factors, including: ·how many states will ultimately implement the Medicaid expansion provisions and under what terms (a numberof states in which we operate, including Florida and Texas, have chosen not to expand their Medicaid programsat this time); ·how many currently uninsured individuals will ultimately obtain coverage (either private health insurance orMedicaid) as a result of the Affordable Care Act; ·what percentage of our newly insured patients will be covered under the Medicaid program and what percentagewill be covered by private health insurers; ·the extent to which states will enroll new Medicaid participants in managed care programs; ·the pace at which insurance coverage expands, including the pace of different types of coverage expansion; ·future changes in the rates paid to hospitals by private payers for newly covered individuals, including thosecovered through health insurance exchanges and those who might be covered under the Medicaid program undercontracts with a state; ·future changes in the rates paid by state governments under the Medicaid program for newly covered individuals; ·the percentage of individuals in the exchanges who select the high-deductible plans, considering that healthinsurers offering those kinds of products have traditionally sought to pay lower rates to hospitals; and ·the extent to which the provisions of the Affordable Care Act will put pressure on the profitability of healthinsurers, which in turn might cause them to seek to reduce payments to hospitals with respect to both newlyinsured individuals and their existing business. In addition, the Affordable Care Act continues to be subject to possible delays, revisions and even elimination as a result ofcourt challenges and actions by Congress. Any ruling or other action that negatively impacts the number of individuals whohave health insurance coverage could have a material adverse effect on our results of operations and cash flows. 27 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsFurthermore, the Affordable Care Act provides for significant reductions in the growth of Medicare spending,reductions in Medicare and Medicaid DSH payments, and the establishment of programs where reimbursement is tied toquality and integration. A substantial portion of both our patient volumes and, as result, our revenues is derived fromgovernment healthcare programs, principally Medicare and Medicaid. Any reductions to our reimbursement under theMedicare and Medicaid programs pursuant to the ACA could adversely affect our business and results of operations to theextent such reductions are not offset by increased revenues from providing care to previously uninsured individuals. It isdifficult to predict the future effect on our revenues resulting from reductions to Medicare and Medicaid spending because ofuncertainty regarding a number of material factors, including the following: ·the amount of overall revenues we will generate from the Medicare and Medicaid programs when the reductionsare fully implemented; ·whether future reductions required by the Affordable Care Act will be changed by statute prior to becomingeffective; ·the size of the annual productivity adjustment to the market basket; ·the reductions to Medicaid DSH payments commencing in FFY 2017; ·what the losses in revenues, if any, will be from the ACA’s quality initiatives; ·how successful accountable care networks in which we participate will be at coordinating care and reducing costsor whether they will decrease reimbursement; ·the scope and nature of potential changes to Medicare reimbursement methods, such as an emphasis on bundlingpayments or coordination of care programs; and ·reductions to Medicare payments CMS may impose for “excessive readmissions.” In addition, we may continue to experience a high level of bad debt expense and have to provide uninsured discounts andcharity care for persons living in the country illegally who are not permitted to enroll in a health insurance exchange orgovernment healthcare program. In general, there is still significant uncertainty with respect to the positive and negative effects the Affordable CareAct may have on reimbursement, utilization and the future design of provider networks and insurance plans (includingpricing, provider participation, coverage, co-pays and deductibles), and the multiple models that attempt to forecast thoseeffects may differ materially from our expectations. We are unable to predict the net effect of the ACA on our future revenuesand operations at this time due to uncertainty regarding the ultimate number of uninsured individuals who will obtain andretain insurance coverage, uncertainty regarding future negotiations with payers, uncertainty regarding Medicaid expansion,and gradual and, in some cases, delayed implementation. Furthermore, we are unable to predict the outcome of legalchallenges to certain provisions (including the provisions regarding subsidies) of the ACA, what action, if any, Congressmight take with respect to the ACA or the actions individual states might take with respect to expanding Medicaid coverage. If we are unable to enter into and maintain managed care contractual arrangements on acceptable terms, if weexperience material reductions in the contracted rates we receive from managed care payers or if we have difficultycollecting from managed care payers, our results of operations could be adversely affected. We currently have thousands of managed care contracts with various HMOs and PPOs. The amount of our managedcare net patient revenues during the year ended December 31, 2014 was $9.3 billion, which represented approximately 59% ofour total net patient revenues before provision for doubtful accounts. Approximately 62% of our managed care net patientrevenues for the year ended December 31, 2014 was derived from our top ten managed care payers. In the year endedDecember 31, 2014, our commercial managed care net inpatient revenue per admission from our acute care hospitals wasapproximately 71% higher than our aggregate yield on a per admission basis from28 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsgovernmental payers, including managed Medicare and Medicaid insurance plans. In addition, at December 31, 2014,approximately 60% of our net accounts receivable related to continuing operations were due from managed care payers. Our ability to negotiate favorable contracts with HMOs, insurers offering preferred provider arrangements and othermanaged care plans significantly affects the revenues and operating results of our hospitals. In addition, private payers areincreasingly attempting to control healthcare costs through direct contracting with hospitals to provide services on adiscounted basis, increased utilization reviews and greater enrollment in managed care programs, such as HMOs and PPOs.The trend toward consolidation among private managed care payers tends to increase their bargaining power over prices andfee structures. In most cases, we negotiate our managed care contracts annually as they come up for renewal at various timesduring the year. Our future success will depend, in part, on our ability to renew existing managed care contracts and enter intonew managed care contracts on terms favorable to us. Other healthcare companies, including some with greater financialresources, greater geographic coverage or a wider range of services, may compete with us for these opportunities. For example,some of our competitors may negotiate exclusivity provisions with managed care plans or otherwise restrict the ability ofmanaged care companies to contract with us. Any material reductions in the contracted rates we receive for our services,coupled with any difficulties in collecting receivables from managed care payers, could have a material adverse effect on ourfinancial condition, results of operations or cash flows. Any material adverse effects resulting from future reductions inpayments from private payers could be exacerbated if we are not able to manage our operating costs effectively. Further changes in the Medicare and Medicaid programs or other government healthcare programs could have anadverse effect on our business. For the year ended December 31, 2014, approximately 22% of our net patient revenues before provision for doubtfulaccounts for our general hospitals were related to the Medicare program, and approximately 9% of our net patient revenuesbefore provision for doubtful accounts for our general hospitals were related to various state Medicaid programs, in each caseexcluding Medicare and Medicaid managed care programs. In addition to the changes affected by the Affordable Care Act, theMedicare and Medicaid programs are subject to: other statutory and regulatory changes, administrative rulings, interpretationsand determinations concerning patient eligibility requirements, funding levels and the method of calculating payments orreimbursements, among other things; requirements for utilization review; and federal and state funding restrictions, all ofwhich could materially increase or decrease payments from these government programs in the future, as well as affect the costof providing services to our patients and the timing of payments to our facilities, which could in turn adversely affect ouroverall business, financial condition, results of operations or cash flows. Any material adverse effects resulting from futurereductions in payments from government programs could be exacerbated if we are not able to manage our operating costseffectively. Several states in which we operate continue to face budgetary challenges due to the slow economic recovery andother factors that have resulted, and likely will continue to result, in reduced Medicaid funding levels to hospitals and otherproviders. Because most states must operate with balanced budgets, and the Medicaid program is generally a significantportion of a state’s budget, states can be expected to adopt or consider adopting future legislation designed to reduce or notincrease their Medicaid expenditures. In addition, some states delay issuing Medicaid payments to providers to manage stateexpenditures. As an alternative means of funding provider payments, many of the states in which we operate have adoptedbroad-based provider taxes to fund the non-federal share of Medicaid programs. Continuing pressure on state budgets andother factors could result in future reductions to Medicaid payments, payment delays or additional taxes on hospitals. In general, we are unable to predict the effect of future government healthcare funding policy changes on ouroperations. If the rates paid by governmental payers are reduced, if the scope of services covered by governmental payers islimited, or if we or one or more of our subsidiaries’ hospitals are excluded from participation in the Medicare or Medicaidprogram or any other government healthcare program, there could be a material adverse effect on our business, financialcondition, results of operations or cash flows. 29 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe industry trend toward value-based purchasing may negatively impact our revenues. We believe that value-based purchasing initiatives of both governmental and private payers tying financialincentives to quality and efficiency of care will increasingly affect the results of operations of our hospitals and otherhealthcare facilities and may negatively impact our revenues if we are unable to meet expected quality standards. TheAffordable Care Act contains a number of provisions intended to promote value-based purchasing in federal healthcareprograms. Medicare now requires providers to report certain quality measures in order to receive full reimbursement increasesfor inpatient and outpatient procedures that were previously awarded automatically. In addition, hospitals that meet or exceedcertain quality performance standards will receive increased reimbursement payments, and hospitals that have “excessreadmissions” for specified conditions will receive reduced reimbursement. Furthermore, Medicare no longer pays hospitalsadditional amounts for the treatment of certain hospital-acquired conditions, also known as HACs, unless the conditions werepresent at admission. Beginning in FFY 2015, hospitals that rank in the worst 25% of all hospitals nationally for HACs in theprevious year will receive reduced Medicare reimbursements. The ACA also prohibits the use of federal funds under theMedicaid program to reimburse providers for treating certain provider-preventable conditions. There is a trend among private payers toward value-based purchasing of healthcare services, as well. Many largecommercial payers require hospitals to report quality data, and several of these payers will not reimburse hospitals for certainpreventable adverse events. We expect value-based purchasing programs, including programs that condition reimbursementon patient outcome measures, to become more common and to involve a higher percentage of reimbursement amounts. We areunable at this time to predict how this trend will affect our results of operations, but it could negatively impact our revenues ifwe are unable to meet quality standards established by both governmental and private payers. Our hospitals, outpatient centers and other healthcare businesses operate in competitive environments, andcompetition in our markets can adversely affect patient volumes. The healthcare business is highly competitive, and competition among hospitals and other healthcare providers forpatients has intensified in recent years. Generally, other hospitals and outpatient centers in the local communities we serveprovide services similar to those we offer, and, in some cases, competing facilities (1) are more established or newer than ours,(2) may offer a broader array of services to patients and physicians than ours, and (3) may have larger or more specializedmedical staffs to admit and refer patients, among other things. Furthermore, healthcare consumers are now able to accesshospital performance data on quality measures and patient satisfaction, as well as standard charges for services, to comparecompeting providers; if any of our hospitals achieve poor results (or results that are lower than our competitors) on qualitymeasures or patient satisfaction surveys, or if our standard charges are higher than our competitors, we may attract fewerpatients. Additional quality measures and future trends toward clinical transparency may have an unanticipated impact on ourcompetitive position and patient volumes. In the future, we expect to encounter increased competition from system-affiliated hospitals and healthcarecompanies in specific geographic markets. We also face competition from specialty hospitals (some of which are physician-owned) and unaffiliated freestanding outpatient centers for market share in high margin services and for quality physiciansand personnel. Furthermore, some of the hospitals that compete with our hospitals are owned by government agencies or not-for-profit organizations supported by endowments and charitable contributions and can finance capital expenditures andoperations on a tax-exempt basis. As is the case with our hospitals, some of our health plan competitors are owned bygovernmental agencies or non-profit corporations that have greater financial resources than we do. If our competitors are betterable to attract patients, recruit physicians, expand services or obtain favorable managed care contracts at their facilities thanwe are, we may experience an overall decline in patient volumes. We could be subject to substantial uninsured liabilities or increased insurance costs as a result of significant legalactions. We are subject to medical malpractice lawsuits, class action lawsuits and other legal actions in the ordinary course ofbusiness. Some of these actions may involve large demands, as well as substantial defense costs. Even in states that haveimposed caps on damages, litigants are seeking recoveries under new theories of liability that might not be30 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentssubject to such caps. Our professional and general liability insurance does not cover all claims against us, and it may notcontinue to be available at a reasonable cost for us to maintain at adequate levels, as the healthcare industry has seensignificant increases in the cost of such insurance due to increased litigation. We cannot predict the outcome of current orfuture legal actions against us or the effect that judgments or settlements in such matters may have on us or on our insurancecosts. Additionally, all professional and general liability insurance we purchase is subject to policy limitations. If theaggregate limit of any of our professional and general liability policies is exhausted, in whole or in part, it could deplete orreduce the limits available to pay any other material claims applicable to that policy period. Any losses not covered by or inexcess of the amounts maintained under insurance policies will be funded from our working capital. Furthermore, one or moreof our insurance carriers could become insolvent and unable to fulfill its or their obligations to defend, pay or reimburse uswhen those obligations become due. In that case or if payments of claims exceed our estimates or are not covered by ourinsurance, it could have a material adverse effect on our business, financial condition, results of operations or cash flows. If we are unable to recruit and retain an appropriate number of quality physicians on the medical staffs of ourhospitals, our business may suffer. The success of our business depends in significant part on the number, quality and specialties of the physicians onthe medical staffs of our hospitals, the admitting practices of those physicians and maintaining good relations with thosephysicians. Although we operate physician practices and, where permitted by law, employ physicians, physicians are often notemployees of the hospitals at which they practice and, in many of the markets we serve, most physicians have admittingprivileges at other hospitals in addition to our hospitals. Such physicians may terminate their association with our hospitals oradmit their patients to competing hospitals at any time. In some of our markets, physician recruitment and retention areaffected by a shortage of physicians in certain specialties and the difficulties that physicians can experience in obtainingaffordable malpractice insurance or finding insurers willing to provide such insurance. If we are unable to attract and retainsufficient numbers of quality physicians by providing adequate support personnel, technologically advanced equipment andhospital facilities that meet the needs of those physicians and their patients, physicians may be discouraged from referringpatients to our facilities, admissions may decrease and our operating performance may decline. Our labor costs could be adversely affected by competition for staffing, the shortage of experienced nurses andlabor union activity. The operations of our facilities are dependent on the efforts, abilities and experience of our management and medicalsupport personnel, including nurses, therapists, pharmacists and lab technicians, as well as our employed physicians. Wecompete with other healthcare providers in recruiting and retaining employees, and, like others in the healthcare industry, wecontinue to experience a shortage of critical-care nurses in certain disciplines and geographic areas. As a result, from time totime, we may be required to enhance wages and benefits to recruit and retain experienced employees, make greaterinvestments in education and training for newly licensed medical support personnel, or hire more expensive temporary orcontract employees. Furthermore, state-mandated nurse-staffing ratios in California affect not only our labor costs, but, if weare unable to hire the necessary number of experienced nurses to meet the required ratios, they may also cause us to limitpatient admissions with a corresponding adverse effect on our net operating revenues. In general, our failure to recruit andretain qualified management, experienced nurses and other medical support personnel, or to control labor costs, could have amaterial adverse effect on our business, financial condition, results of operations or cash flows. Increased labor union activity is another factor that could adversely affect our labor costs. As of December 31, 2014,approximately 20% of our employees were represented by labor unions. These employees — primarily registered nurses andservice and maintenance workers — are located at 38 of our hospitals, the majority of which are in California, Florida andMichigan. We currently have six expired contracts and are negotiating renewals under extension agreements. We are alsonegotiating first contracts at two of our hospitals where employees selected union representation. At this time, we are unableto predict the outcome of the negotiations, but increases in salaries, wages and benefits could result from these agreements.Furthermore, there is a possibility that strikes could occur during the negotiation process, which could increase our labor costsand have an adverse effect on our patient admissions and31 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsnet operating revenues. Future organizing activities by labor unions could increase our level of union representation; to theextent a greater portion of our employee base unionizes, it is possible our labor costs could increase materially. Conifer’s future success also depends in part on our ability to attract, hire, integrate and retain key personnel.Competition for the caliber and number of employees we require at Conifer is intense. We may face difficulty identifying andhiring qualified personnel at compensation levels consistent with our existing compensation and salary structure. In addition,we invest significant time and expense in training Conifer’s employees, which increases their value to competitors who mayseek to recruit them. If we fail to retain our Conifer employees, we could incur significant expenses in hiring, integrating andtraining their replacements, and the quality of Conifer’s services and its ability to serve its customers could diminish, resultingin a material adverse effect on that segment of our business. Our business and financial results could be harmed by violations of existing regulations or compliance with new orchanged regulations. Our hospitals, outpatient centers and related healthcare businesses are subject to extensive federal, state and localregulation relating to, among other things, licensure, conduct of operations, privacy of patient information, ownership offacilities, physician relationships, addition of facilities and services, and reimbursement rates for services. The laws, rules andregulations governing the healthcare industry are extremely complex and, in certain areas, the industry has little or noregulatory or judicial interpretation for guidance. If a determination is made that we were in violation of such laws, rules orregulations, we could be subject to penalties or liabilities or required to make significant changes to our operations. Even apublic announcement that we are being investigated for possible violations of law could have a material adverse effect on thevalue of our common stock and our business reputation could suffer. Furthermore, healthcare, as one of the largest industriesin the United States, continues to attract much legislative interest and public attention. We are unable to predict the futurecourse of federal, state and local healthcare regulation or legislation, including Medicare and Medicaid statutes andregulations. Further changes in the regulatory framework negatively affecting healthcare providers could have a materialadverse effect on our business, financial condition, results of operations or cash flows. We are also required to comply with various federal and state labor laws, rules and regulations governing a variety ofworkplace wage and hour issues. From time to time, we have been and expect to continue to be subject to regulatoryproceedings and private litigation concerning our application of such laws, rules and regulations. Our business and financial results could be harmed by a national or localized outbreak of a highly contagious orepidemic disease. If an outbreak of an infectious disease such as the Ebola virus were to occur nationally or in one of the regions ourhospitals serve, our business and financial results could be adversely effected. The treatment of a highly contagious disease atone of our facilities may result in a temporary shutdown or diversion of patients. In addition, unaffected individuals maydecide to defer elective procedures or otherwise avoid medical treatment, resulting in reduced patient volumes and operatingrevenues. Furthermore, we cannot predict the costs associated with the potential treatment of an infectious disease outbreak byour hospitals or preparation for such treatment. Conifer operates in a highly competitive industry, and its current or future competitors may be able to competemore effectively than Conifer does, which could have a material adverse effect on Conifer’s margins, growth rate andmarket share. We intend to continue to market and expand Conifer’s revenue cycle management, patient communications andengagement services, and management services businesses. However, the market for Conifer’s solutions is highly competitive,and we expect competition may intensify in the future. Conifer faces competition from existing participants and new entrantsto the revenue cycle management market (including software vendors and other technology-supported revenue cyclemanagement outsourcing companies, traditional consultants and information technology outsourcing firms), as well as fromthe staffs of hospitals and other healthcare providers who handle these processes internally. To be successful, Conifer mustrespond more quickly and effectively than its competitors to new or changing opportunities, technologies, standards,regulations and customer requirements. Moreover, existing or new competitors may introduce32 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentstechnologies or services that render Conifer’s technologies or services obsolete or less marketable. Even if Conifer’stechnologies and services are more effective than the offerings of its competitors, current or potential customers might prefercompetitive technologies or services to Conifer’s technologies and services. Furthermore, increased competition may result inpricing pressures, which could negatively impact Conifer’s margins, growth rate or market share. The failure to comply with consumer financial, debt collection and credit reporting laws and regulations couldsubject Conifer and its subsidiaries to fines and other liabilities, as well as harm Conifer’s business and reputation. Conifer and its subsidiaries are subject to numerous consumer financial, debt collection and credit reporting laws,rules and regulations. Moreover, regulations governing debt collection are subject to changing interpretations that may beinconsistent among different jurisdictions. Conifer’s failure to comply with such requirements could result in, among otherthings, the issuance of cease and desist orders (which can include orders for restitution or rescission of contracts, as well asother kinds of affirmative relief), the imposition of fines or refunds, and other civil and criminal penalties, some of whichcould be significant in the case of knowing or reckless violations. In addition, Conifer’s failure to comply with the laws andregulations applicable to it could result in reduced demand for its services, invalidate all or portions of some of Conifer’sservices agreements with its customers, or give customers the right to terminate Conifer’s services agreements with them,among other things, any of which could have an adverse effect on Conifer’s business. Furthermore, if Conifer or itssubsidiaries become subject to fines or other penalties, it could harm Conifer’s reputation, thereby making it more difficult forConifer to retain existing customers or attract new customers. Our business could be negatively affected by security threats, catastrophic events and other disruptions affectingour information technology and related systems. As a provider of healthcare services, information technology is a critical component of the day-to-day operation ofour business. We rely on our information technology to process, transmit and store sensitive or confidential data, includingelectronic health records, other protected health information, and financial, payment and other personal data of patients, aswell as to store our proprietary and confidential business performance data. We utilize a diversified data and voice network,along with technology systems for billing, supply chain, clinical information systems and labor management. Our systems, inturn, interface with and rely upon third-party systems. Although we have redundancies and other measures designed to protectthe security and availability of the data we process, transmit and store, our information technology and infrastructure havebeen, and will likely continue to be, subject to computer viruses, attacks by hackers, or breaches due to employee error ormalfeasance. While we are not aware of having experienced a material breach of cybersecurity, the preventive actions we taketo reduce the risk of such incidents and protect our information technology may not be sufficient in the future. Ascybersecurity threats continue to evolve, we may not be able to anticipate certain attack methods in order to implementeffective protective measures, and we may be required to expend significant additional resources to continue to modify andstrengthen our security measures, investigate and remediate any vulnerabilities in our information systems and infrastructure,or invest in new technology designed to mitigate security risks. Third parties to whom we outsource certain of our functions,or with whom our systems interface, are also subject to the risks outlined above and may not have or use appropriate controlsto protect confidential information. A breach or attack affecting one of our third-party service providers or partners could harmour business even if we do not control the service that is attacked. Further, successful cyber-attacks at other healthcare servicescompanies, whether or not we are impacted, could lead to a general loss of customer confidence in our industry that couldnegatively affect us, including harming the market perception of the effectiveness of our security measures or of the healthcareindustry in general, which could result in reduced use of our services. Though we have insurance against some cyber-risks andattacks, it may not be sufficient to offset the impact of a material loss event. Furthermore, our networks and technologysystems are subject to disruption due to events such as a major earthquake, fire, telecommunications failure, terrorist attack orother catastrophic event. Any such breach or system interruption could result in the unauthorized disclosure, misuse or loss ofconfidential, sensitive or proprietary information, could negatively impact our ability to conduct normal business operations(including the collection of revenues), and could result in potential liability, regulatory penalties, negative publicity anddamage to our reputation, any of which could have a material adverse effect on our business, financial position, results ofoperations or cash flows. 33 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe cannot provide any assurances that acquisitions, joint ventures and strategic alliances will achieve theirbusiness goals or the cost and service synergies we expect. We have completed a number of acquisitions, joint ventures and strategic alliances as part of our business strategy,and we expect to enter into similar transactions in the future. We cannot provide any assurances that these acquisitions, jointventures or strategic alliances will achieve their business goals or the cost and service synergies we expect. Furthermore, thenature of a joint venture requires us to consult with and share certain decision-making powers with unaffiliated third parties,some of which may be not-for-profit healthcare systems. If our joint venture partners do not fulfill their obligations, theaffected joint venture may not be able to operate according to its business or strategic plans. In that case, our results could beadversely affected or we may be required to increase our level of financial commitment to the joint venture. Moreover,differences in economic or business interests or goals among joint venture participants could result in delayed decisions,failures to agree on major issues and even litigation. If these differences cause the joint ventures to deviate from their businessor strategic plans, or if our joint venture partners take actions contrary to our policies, objectives or the best interests of thejoint venture, our results could be adversely affected. In addition, our relationships with not-for-profit healthcare systems andthe joint venture agreements that govern these relationships are intended to be structured to comply with current revenuerulings published by the IRS, as well as case law relevant to joint ventures between for-profit and not-for-profit healthcareentities. Material changes in these authorities could adversely affect our relationships with not-for-profit healthcare systemsand related joint venture arrangements. Economic factors have affected, and may continue to impact, our business, financial condition and results ofoperations. We believe broad economic factors — including higher levels of unemployment and instability in consumerspending — have affected our volumes and our ability to collect outstanding receivables. The United States economy remainsunpredictable. If industry trends (including reductions in commercial managed care enrollment and patient decisions topostpone or cancel elective and non-emergency healthcare procedures) or general economic conditions worsen, we may not beable to sustain future profitability, and our liquidity and ability to repay our outstanding debt may be harmed. Furthermore, the availability of liquidity and credit to fund the continuation and expansion of many businessoperations worldwide has been limited in recent years. Our ability to access the capital markets on acceptable terms may beseverely restricted at a time when we would like, or need, to access those markets, which could have a negative impact on ourgrowth plans, our flexibility to react to changing economic and business conditions, and our ability to refinance existing debt.An economic downturn or other economic conditions could also adversely affect the counterparties to our agreements,including the lenders under our credit facilities, causing them to fail to meet their obligations to us. Trends affecting our actual or anticipated results may require us to record charges that would negatively impactour results of operations. As a result of factors that have negatively affected our industry generally and our business specifically, we have beenrequired to record various charges in our results of operations. Our impairment tests presume stable, improving or, in somecases, declining operating results in our hospitals, which are based on programs and initiatives being implemented that aredesigned to achieve the hospitals’ most recent projections. If these projections are not met, or negative trends occur thatimpact our future outlook, future impairments of long-lived assets and goodwill may occur, and we may incur additionalrestructuring charges. Future restructuring of our operating structure that changes our goodwill reporting units could alsoresult in future impairments of our goodwill. Any such charges could negatively impact our results of operations. 34 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe amount and terms of our current and any future debt could, among other things, adversely affect our ability toraise additional capital to fund our operations and limit our ability to react to changes in the economy or our industry. As of December 31, 2014, we had approximately $11.7 billion of total long-term debt, as well as approximately $119million in standby letters of credit outstanding in the aggregate, under our senior secured revolving credit facility (“CreditAgreement”) and our letter of credit facility agreement (“LC Facility”). Our Credit Agreement is collateralized by patientaccounts receivable of all of our wholly owned acute care and specialty hospitals, and our LC Facility is guaranteed andsecured by a first priority pledge of the capital stock and other ownership interests of certain of our hospital subsidiaries on anequal ranking basis with our existing senior secured notes. From time to time, we expect to engage in additional capitalmarket, bank credit and other financing activities depending on our needs and financing alternatives available at that time. Our substantial indebtedness could have important consequences, including the following: ·Our Credit Agreement, LC Facility and indentures contain, and any future debt obligations may contain,covenants that, among other things, restrict our ability to pay dividends, incur additional debt and sell assets. OurCredit Agreement and LC Facility also require us to maintain a financial ratio relating to our ability to satisfycertain fixed expenses, including interest payments. The indentures contain covenants that, among other things,restrict our ability and the ability of our subsidiaries to incur liens, consummate asset sales, enter into sale andlease-back transactions, or consolidate, merge or sell all or substantially all assets. If we do not comply with theseobligations, it may cause an event of default, which, if not cured or waived, could require us to repay theindebtedness immediately. Under these conditions, we are not certain whether we would have, or be able toobtain, sufficient funds to make accelerated payments. ·We may be more vulnerable in the event of a deterioration in our business, in the healthcare industry or in theeconomy generally, or if federal or state governments substantially limit or reduce reimbursement under theMedicare or Medicaid programs. ·We are required to dedicate a substantial portion of our cash flow to the payment of principal and interest on ourindebtedness, which reduces the amount of funds available for our operations, capital expenditures andacquisitions. ·Our substantial indebtedness could limit our ability to obtain additional financing to fund future capitalexpenditures, working capital, acquisitions or other needs. We have the ability to incur additional indebtedness in the future, subject to the restrictions contained in our CreditAgreement, LC Facility and the indentures governing our outstanding senior notes and senior secured notes. If newindebtedness is added to our current debt levels, the related risks that we now face could intensify. The utilization of our tax losses could be substantially limited if we experience an ownership change as defined inthe Internal Revenue Code. At December 31, 2014, we had federal net operating loss (“NOL”) carryforwards of approximately $1.6 billion pretaxavailable to offset future taxable income. These NOL carryforwards will expire in the years 2024 to 2033. Section 382 of theInternal Revenue Code imposes an annual limitation on the amount of a company’s taxable income if it experiences an“ownership change” as defined in Section 382 of the Code. An ownership change occurs when a company’s “five-percentshareholders” (as defined in Section 382 of the Code) collectively increase their ownership in the company by more than 50percentage points (by value) over a rolling three-year period. (This is different from a change in beneficial ownership underapplicable securities laws.) These ownership changes include purchases of common stock under share repurchase programs, acompany’s offering of its stock, the purchase or sale of company stock by five-percent shareholders, or the issuance or exerciseof rights to acquire company stock. While we expect to be able to realize our total NOL carryforwards prior to their expiration,if an ownership change occurs, our ability to use the NOL carryforwards to offset future taxable income will be subject to anannual limitation and will depend on the amount35 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsof taxable income we generate in future periods. There is no assurance that we will be able to fully utilize the NOLcarryforwards. Furthermore, we could be required to record a valuation allowance related to the amount of the NOLcarryforwards that may not be realized, which could adversely impact our results of operations. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES The disclosure required under this Item is included in Item 1, Business, of this report. ITEM 3. LEGAL PROCEEDINGS Because we provide healthcare services in a highly regulated industry, we have been and expect to continue to beparty to various lawsuits, claims and regulatory investigations from time to time. For information regarding material pendinglegal proceedings in which we are involved, see Note 15 to our Consolidated Financial Statements, which is incorporated byreference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable.36 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents PART II. ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES Common Stock. Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “THC.”The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock on theNYSE: High Low Year Ended December 31, 2014 First Quarter $48.70 $38.40 Second Quarter 50.25 37.95 Third Quarter 63.61 44.20 Fourth Quarter 59.65 46.01 Year Ended December 31, 2013 First Quarter $48.25 $33.00 Second Quarter 49.47 38.17 Third Quarter 47.08 36.87 Fourth Quarter 48.48 38.71 On February 13, 2015, the last reported sales price of our common stock on the NYSE composite tape was $44.30 pershare. As of that date, there were 4,405 holders of record of our common stock. Our transfer agent and registrar isComputershare. Shareholders with questions regarding their stock certificates, including inquiries related to exchanging orreplacing certificates or changing an address, should contact the transfer agent at (866) 229-8416. Cash Dividends on Common Stock. We have not paid cash dividends on our common stock since the first quarter offiscal 1994. We currently intend to retain future earnings, if any, for the operation and development of our business and,accordingly, do not currently intend to pay any cash dividends on our common stock. Our board of directors will evaluate ourfuture earnings, results of operations, financial condition and capital requirements in determining whether to pay any cashdividends in the future. Our senior secured revolving credit agreement and our letter of credit facility agreement containprovisions that limit the payment of cash dividends on our common stock if we do not meet certain financial ratios. Equity Compensation. Refer to Item 12, Security Ownership of Certain Beneficial Owners and Management andRelated Stockholder Matters, of Part III of this report for information regarding securities authorized for issuance under ourequity compensation plans. Stock Performance Graph. The following graph shows the cumulative, five-year total return for our common stockcompared to three indices, each of which includes us. The Standard & Poor’s 500 Stock Index includes 500 companiesrepresenting all major industries. The Standard & Poor’s Health Care Composite Index is a group of 55 companies involved ina variety of healthcare-related businesses. Because the Standard & Poor’s Health Care Composite Index is heavily weighted bypharmaceutical and medical device companies, we believe that at times it may be less useful than the Hospital ManagementPeer Group Index included below. We compiled this Peer Group Index by selecting publicly traded companies that have astheir primary business the management of acute care hospitals and that have been in business for all five of the years shown.These companies are: Community Health Systems, Inc. (CYH), Tenet Healthcare Corporation (THC) and Universal HealthServices, Inc. (UHS). 37 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPerformance data assumes that $100.00 was invested on December 31, 2009 in our common stock and each of theindices. The data assumes the reinvestment of all cash dividends and the cash value of other distributions. Stock priceperformance shown in the graph is not necessarily indicative of future stock price performance. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN 12/09 12/10 12/11 12/12 12/13 12/14 Tenet Healthcare Corporation $100.00 $124.12 $95.18 $150.60 $195.36 $235.02 S&P 500 $100.00 $115.06 $117.49 $136.30 $180.44 $205.14 S&P Health Care $100.00 $102.90 $116.00 $136.75 $193.45 $242.46 Peer Group $100.00 $122.91 $88.22 $129.87 $189.43 $251.65 38 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsITEM 6. SELECTED FINANCIAL DATA OPERATING RESULTS The following tables present selected consolidated financial data for Tenet Healthcare Corporation and its whollyowned and majority-owned subsidiaries for the years ended December 31, 2010 through 2014. Because we acquired VanguardHealth Systems, Inc. (“Vanguard”) on October 1, 2013, the 2013 columns in the tables below include results of operations forVanguard and its consolidated subsidiaries for the three months ended December 31, 2013 only. All amounts related to shares,share prices and earnings per share for periods ending prior to October 11, 2012 have been restated to give retrospectivepresentation for the reverse stock split described in Note 2 to our Consolidated Financial Statements. The tables should beread in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations,and our Consolidated Financial Statements and notes thereto included in this report. Years Ended December 31, 2014 2013 2012 2011 2010 (In Millions, Except Per-Share Amounts) Net operating revenues: Net operating revenues before provision for doubtfulaccounts $17,920 $12,074 $9,904 $9,371 $8,992 Less: Provision for doubtful accounts 1,305 972 785 717 727 Net operating revenues 16,615 11,102 9,119 8,654 8,265 Operating expenses: Salaries, wages and benefits 8,023 5,371 4,257 4,015 3,830 Supplies 2,630 1,784 1,552 1,548 1,542 Other operating expenses, net 4,114 2,701 2,147 2,020 1,857 Electronic health record incentives (104) (96) (40) (55) — Depreciation and amortization 849 545 430 398 380 Impairment and restructuring charges, andacquisition-related costs 153 103 19 20 10 Litigation and investigation costs, net of insurancerecoveries 25 31 5 55 12 Operating income 925 663 749 653 634 Interest expense (754) (474) (412) (375) (424) Loss from early extinguishment of debt (24) (348) (4) (117) (57) Investment earnings — 1 1 3 5 Income (loss) from continuing operations, beforeincome taxes 147 (158) 334 164 158 Income tax benefit (expense) (49) 65 (125) (61) 977 Income (loss) from continuing operations, beforediscontinued operations and cumulative effect ofchange in accounting principle $98 $(93) $209 $103 $1,135 Basic earnings (loss) per share attributable to TenetHealthcare Corporation common shareholdersfrom continuing operations $0.35 $(1.21) $1.77 $0.58 $9.09 Diluted earnings (loss) per share attributable toTenet Healthcare Corporation commonshareholders from continuing operations $0.34 $(1.21) $1.70 $0.56 $8.03 39 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe operating results data presented above is not necessarily indicative of our future results of operations. Reasonsfor this include, but are not limited to: overall revenue and cost trends, particularly the timing and magnitude of pricechanges; fluctuations in contractual allowances and cost report settlements and valuation allowances; managed care contractnegotiations, settlements or terminations and payer consolidations; changes in Medicare and Medicaid regulations; Medicaidand other supplemental funding levels set by the states in which we operate; the timing of approval by the Centers forMedicare and Medicaid Services (“CMS”) of Medicaid provider fee revenue programs; trends in patient accounts receivablecollectability and associated provisions for doubtful accounts; fluctuations in interest rates; levels of malpractice insuranceexpense and settlement trends; the number of covered lives managed by our health plans and the plans’ ability to effectivelymanage medical costs; the timing of when we meet the criteria to recognize electronic health record incentives; impairment oflong-lived assets and goodwill; restructuring charges; losses, costs and insurance recoveries related to natural disasters;litigation and investigation costs; acquisitions and dispositions of facilities and other assets; income tax rates and deferred taxasset valuation allowance activity; changes in estimates of accruals for annual incentive compensation; the timing andamounts of stock option and restricted stock unit grants to employees and directors; gains or losses from early extinguishmentof debt; and changes in occupancy levels and patient volumes. Factors that affect patient volumes and, thereby, the results ofoperations at our hospitals and related healthcare facilities include, but are not limited to: the business environment,economic conditions and demographics of local communities in which we operate; the number of uninsured and underinsuredindividuals in local communities treated at our hospitals; seasonal cycles of illness; climate and weather conditions;physician recruitment, retention and attrition; advances in technology and treatments that reduce length of stay; localhealthcare competitors; managed care contract negotiations or terminations; the number of patients with high-deductiblehealth insurance plans; any unfavorable publicity about us, which impacts our relationships with physicians and patients;changes in healthcare regulations and the participation of individual states in federal programs; and the timing of electiveprocedures. BALANCE SHEET DATA December 31, 2014 2013 2012 2011 2010 (In Millions) Working capital (current assets minus currentliabilities) $1,140 $599 $918 $542 $586 Total assets 18,141 16,450 9,044 8,462 8,500 Long-term debt, net of current portion 11,695 10,696 5,158 4,294 3,997 Total equity 785 878 1,218 1,492 1,819 CASH FLOW DATA Years Ended December 31, 2014 2013 2012 2011 2010 (In Millions) Net cash provided by operating activities $687 $589 $593 $497 $472 Net cash used in investing activities (1,322) (2,164) (662) (503) (420) Net cash provided by (used in) financing activities 715 1,324 320 (286) (337) 40 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS INTRODUCTION TO MANAGEMENT’S DISCUSSION AND ANALYSIS The purpose of this section, Management’s Discussion and Analysis of Financial Condition and Results ofOperations (“MD&A”), is to provide a narrative explanation of our financial statements that enables investors to betterunderstand our business, to enhance our overall financial disclosures, to provide the context within which our financialinformation may be analyzed, and to provide information about the quality of, and potential variability of, our financialcondition, results of operations and cash flows. Our core business is Hospital Operations and other, which is focused onoperating acute care hospitals and outpatient facilities. We also operate revenue cycle management, patient communicationsand engagement services, and management services businesses through our Conifer Health Solutions, LLC (“Conifer”)subsidiary, which is a separate reportable business segment. MD&A, which should be read in conjunction with theaccompanying Consolidated Financial Statements, includes the following sections: ·Management Overview·Sources of Revenue·Results of Operations·Liquidity and Capital Resources·Off-Balance Sheet Arrangements·Recently Issued Accounting Standards·Critical Accounting Estimates Unless otherwise indicated, all financial and statistical information included in MD&A relates to our continuingoperations, with dollar amounts expressed in millions (except per share, per admission, per adjusted admission, per patientday, per adjusted patient day and per visit amounts). Continuing operations information includes the results of (i) our same 49hospitals operated throughout the years ended December 31, 2014, 2013 and 2012, (ii) Vanguard and its consolidatedsubsidiaries, which we acquired effective October 1, 2013, but only for the period from the date of acquisition throughDecember 31, 2014, (iii) Texas Regional Medical Center at Sunnyvale (“TRMC”), in which we acquired a majority interest onJune 3, 2014, but only for the period from the date of acquisition through December 31, 2014, (iv) Resolute Health Hospital,which we opened on June 24, 2014, and (v) Emanuel Medical Center, which we acquired on August 1, 2014, but only for theperiod from the date of acquisition through December 31, 2014. Continuing operations information excludes the results of ourhospitals and other businesses that have previously been classified as discontinued operations for accounting purposes.Certain prior-year amounts have been reclassified to conform to the current-year presentation. MANAGEMENT OVERVIEW RECENT DEVELOPMENTS Extension and Expansion of Conifer Agreement—In January 2015, Conifer announced a 10-year extension andexpansion of its agreement with Catholic Health Initiatives (“CHI”) to provide patient access, revenue integrity and patientfinancial services to 92 CHI hospitals through 2032. As further described in Note 22 to our Consolidated FinancialStatements, at that time and as a result of CHI’s relationship with Tenet, CHI received an increase in its minority ownershipposition in Conifer. Valley Baptist Joint Venture Put Option—As part of the acquisition of Vanguard, we obtained a 51% controllinginterest in a limited liability company that held the assets and liabilities of Valley Baptist Health System (“Valley Baptist”),which consists of our hospitals in Brownsville and Harlingen, Texas. The remaining 49% non-controlling interest in the jointventure was held by the former owner of Valley Baptist (the “seller”). The joint venture operating agreement included a putoption that would allow the seller to require us to purchase all or a portion of the seller’s remaining non-controlling interest inthe limited liability company at certain specified time periods. In November 2014, the seller provided notice of its intent toexercise the put option for its entire 49% non-controlling interest. In connection with the settlement of the put option, weacquired the remaining 49% non-controlling interest from the seller on February 11, 2015 in exchange for approximately$254 million in cash. The redemption value of the put option was calculated pursuant to the terms of the operating agreementbased on the operating results and the debt of the joint venture. As a result, we now own 100% of Valley Baptist as ofFebruary 11, 2015.41 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents STRATEGIES AND TRENDS We are committed to providing the communities our hospitals, outpatient centers and other healthcare facilities servewith high quality, cost-effective healthcare while growing our business, increasing our profitability and creating long-termvalue for our shareholders. We believe that our success in increasing our profitability depends in part on our success inexecuting the strategies and managing the trends discussed below. Core Business Strategy—We are focused on providing high quality care to patients through our hospitals andoutpatient centers, and offering an array of business process solutions primarily to healthcare providers through Conifer. Withrespect to our hospitals and outpatient business, we seek to offer superior quality and patient services to meet communityneeds, to make capital and other investments in our facilities and technology to remain competitive, to recruit and retainphysicians, to increase the number of outpatient centers we own, and to negotiate favorable contracts with managed care andother private payers. With respect to business process services, we provide comprehensive operational management forrevenue cycle functions, including patient access, health information management, revenue integrity and patient financialservices. We also offer communication and engagement solutions to optimize the relationship between providers and patients.In addition, Conifer operates a management services business that supports value-based performance through clinicalintegration, financial risk management and population health management. Commitment to Quality—We have made significant investments in the last decade in equipment, technology,education and operational strategies designed to improve clinical quality at our hospitals and outpatient centers. As a result ofour efforts, our Hospital Compare Core Measures scores from CMS have consistently exceeded the national average since theend of 2005, and major national private payers have also recognized our achievements relative to quality. These designationsare expected to become increasingly important as governmental and private payers move to pay-for-performance models, andthe commercial market moves to more narrow networks and other methods designed to encourage covered individuals to usecertain facilities over others. We continually collaborate with physicians to implement the most current evidence-basedmedicine techniques to improve the way we provide care, while using labor management tools and supply chain initiatives toreduce variable costs. We believe the use of these practices will promote the most effective and efficient utilization ofresources and result in shorter lengths of stay, as well as reductions in readmissions for hospitalized patients. In general, webelieve that quality of care improvements may have the effect of reducing costs, increasing payments from Medicare andcertain managed care payers for our services, and increasing physician and patient satisfaction, which may improve ourvolumes. Development Strategies—We remain focused on opportunities to increase our hospital and outpatient revenuesthrough organic growth, acquisitions and strategic partnerships, and to expand our Conifer services business. From time to time, we build new facilities, make acquisitions of healthcare assets and companies, and enter into jointventure arrangements or affiliations with healthcare businesses in markets where we believe our operating strategies canimprove performance and create shareholder value. In 2014, we purchased Emanuel Medical Center, a 209-bed hospitallocated in Northern California, we opened a newly constructed 128-bed hospital and wellness campus in New Braunfels,Texas, and we acquired a majority interest in a 70-bed regional medical center in a suburban community east of Dallas. Inaddition, in May 2014, we announced a joint venture with Texas Tech University Health Sciences Center at El Paso todevelop and build a new 140-bed teaching hospital and a medical office building in west El Paso. In the year endedDecember 31, 2014, we also opened 27 new outpatient facilities and acquired nine other outpatient businesses. Historically, our outpatient services have generated significantly higher margins for us than inpatient services.During the year ended December 31, 2014, we derived approximately 37% of our net patient revenues from outpatientservices. By expanding our outpatient business, we expect to increase our profitability over time. We believe that growth bystrategic acquisitions, when and if opportunities are available, can supplement the growth we believe we can generateorganically in our existing markets. In addition, we expect that our new national MedPost brand will assist us in growing oururgent care business as part of our broader strategy to offer more services to patients and to expand into faster-growing, lesscapital intensive, higher-margin businesses. Furthermore, we continually evaluate collaboration opportunities with otherhealthcare providers in our markets to maximize effectiveness, reduce costs and build clinically integrated networks thatprovide quality services across the care continuum.42 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents We intend to continue to market and expand Conifer’s revenue cycle management, patient communications andengagement services, and management services businesses. Conifer provides services to approximately 800 Tenet and non-Tenet hospital and other clients nationwide. We believe this business has the potential over time to generate high margins andimprove our results of operations. Conifer’s service offerings have also expanded to support value-based performance throughclinical integration, financial risk management and population health management, which are integral parts of the healthcareindustry’s movement toward accountable care organizations (“ACOs”) and similar risk-based or capitated contract models. Inaddition to hospitals, clients for these services include health plans, self-insured employers, government agencies and otherentities. In January 2015, Conifer announced a 10-year extension and expansion of its agreement with CHI to provide patientaccess, revenue integrity and patient financial services to 92 CHI hospitals through 2032. In October 2014, Conifer acquiredSPi Healthcare, which is expected to drive Conifer’s incremental growth in the areas of revenue cycle management, healthinformation management and software solutions services for independent and provider-owned physician practices. Realizing HIT Incentive Payments and Other Benefits—Beginning in the year ended December 31, 2011, we beganachieving compliance with certain of the health information technology (“HIT”) requirements under the American Recoveryand Reinvestment Act of 2009 (“ARRA”). During the year ended December 31, 2014, we recognized approximately$104 million of Medicare and Medicaid electronic health record (“EHR”) ARRA incentives. These incentives partially offsetthe operating expenses and capital costs we have incurred and continue to incur to invest in HIT systems. We expect torecognize additional incentives in the future. Furthermore, we believe that the operational benefits of HIT,including improved clinical outcomes and increased operating efficiencies, will contribute to our long-term ability to growour business. General Economic Conditions—We believe that high unemployment rates in some of the markets our hospitals serveand other adverse economic conditions are continuing to have a negative impact on our bad debt expense levels and payermix. However, as the economy recovers, we expect to experience improvements in these metrics relative to current levels. Webelieve our volumes were positively impacted in the year ended December 31, 2014 by incremental market share we generatedthrough improved physician alignment and service line expansion, insurance coverage for a greater number of individuals as aresult of the Affordable Care Act, and a strengthening economy. Improving Operating Leverage—We believe targeted capital spending on critical growth opportunities for ourhospitals, emphasis on higher-demand clinical service lines (including outpatient lines), focus on expanding our outpatientbusiness, implementation of new payer contracting strategies, and improved quality metrics at our hospitals will improve ourpatient volumes. We believe our patient volumes have been constrained by the slow pace of the current economic recovery,increased competition, utilization pressure by managed care organizations, the effects of higher patient co-pays anddeductibles, and demographic trends. We continue to pursue integrated contracting models that maximize our system-wideskills and capabilities in conjunction with our strong market positions to accommodate new payment models. In severalmarkets, we have formed clinical integration organizations, which are collaborations with independent physicians andhospitals to develop ongoing clinical initiatives designed to control costs and improve the quality of care delivered topatients. Arrangements like these provide a foundation for negotiating with plans under an ACO structure or other risk-sharingmodel. Impact of Affordable Care Act—We anticipate that we will benefit over time from the provisions of the PatientProtection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (“AffordableCare Act” or “ACA”) that have begun to extend insurance coverage through Medicaid or private insurance to a broadersegment of the U.S. population. Although we are unable to predict the ultimate net effect of the Affordable Care Act on ourfuture results of operations, and while there have been and will continue to be some reductions in reimbursement rates bygovernmental payers, we began to receive reimbursement for caring for previously uninsured and underinsured patients in2014. Through collaborative efforts with local community organizations, we launched a campaign under the banner “Path toHealth” to assist our hospitals in educating and enrolling uninsured patients in insurance plans. As of December 31, 2014, weoperated hospitals in five of the states (Arizona, California, Illinois, Massachusetts and Michigan) that expanded theirMedicaid programs in 2014 and one of the states (Pennsylvania) that is expanding in 2015. Our ability to execute on these strategies and manage these trends is subject to a number of risks and uncertaintiesthat may cause actual results to be materially different from expectations. In addition, it is critical that we continue to makesteady and measurable progress in successfully integrating Vanguard’s business and operations into43 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsour business processes. For information about risks and uncertainties that could affect our results of operations, see theForward-Looking Statements and Risk Factors sections in Part I of this report. RESULTS OF OPERATIONS—OVERVIEW We believe our results of operations for our most recent fiscal quarter best reflect recent trends we are experiencingwith respect to volumes, revenues and expenses; therefore, we have provided below information about these metrics for thethree months ended December 31, 2014 and 2013 on both a continuing operations and a same-hospital operations basis. Selected Operating Statistics for All Continuing Operations Hospitals—The following table shows certain selectedoperating statistics for our continuing operations on a total hospital basis, which includes the results of the 28 hospitals weacquired from Vanguard on October 1, 2013, TRMC, in which we acquired a majority interest on June 3, 2014, ResoluteHealth Hospital, which we opened on June 24, 2014, and Emanuel Medical Center, which we acquired on August 1, 2014 (inthe case of TRMC and Emanuel Medical Center, only for the period of time from acquisition to December 31, 2014). Webelieve this information is useful to investors because it reflects our current portfolio of hospitals and the recent trends we areexperiencing with respect to volumes, revenues and expenses. Total Hospital Continuing Operations Three Months Ended December 31, Increase 2014 2013 (Decrease) Total admissions 202,337 190,506 6.2 % Adjusted patient admissions 347,790 325,410 6.9 % Paying admissions (excludes charity and uninsured) 191,081 176,316 8.4 % Charity and uninsured admissions 11,256 14,190 (20.7)% Admissions through emergency department 127,361 116,592 9.2 % Emergency department visits 737,680 663,114 11.2 % Total emergency department admissions and visits 865,041 779,706 10.9 % Surgeries — inpatient 55,474 53,119 4.4 % Surgeries — outpatient 127,776 115,611 10.5 % Total surgeries 183,250 168,730 8.6 % Patient days — total 937,803 880,737 6.5 % Adjusted patient days 1,592,166 1,481,291 7.5 % Average length of stay (days) 4.63 4.62 0.2 % Average licensed beds 20,805 20,294 2.5 % Utilization of licensed beds 49.0 % 47.2 % 1.8 % Total visits 2,145,138 1,916,932 11.9 % Paying visits (excludes charity and uninsured) 1,976,854 1,733,345 14.0 % Charity and uninsured visits 168,284 183,587 (8.3)% Net inpatient revenues $2,719 $2,372 14.6 % Net outpatient revenues $1,539 $1,357 13.4 % Net inpatient revenue per admission $13,438 $12,451 7.9 % Net inpatient revenue per patient day $2,899 $2,693 7.6 % Net outpatient revenue per visit $717 $708 1.3 % Net patient revenue per adjusted patient admission $12,243 $11,459 6.8 % Net patient revenue per adjusted patient day $2,674 $2,517 6.2 % (1)Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services by multiplying actual patientadmissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.(2)Utilization of licensed beds represents patient days divided by number of days in the period divided by average licensed beds.(3)The change is the difference between the amounts shown for the three months ended December 31, 2014 compared to the three monthsended December 31, 2013. 44 (1)(1)(2)(3)(1)(1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOperating Statistics on a Same-Hospital Basis—The following tables show operating statistics of our continuingoperations hospitals on a same-hospital basis, which includes the results of hospitals we had been operating for at least oneyear as of the beginning of the fourth quarter on October 1, 2014. The 28 hospitals we acquired from Vanguard onOctober 1, 2013 are included in same-hospital continuing operations for the three months ended December 31, 2014 and2013, while the results of TRMC, in which we acquired a majority interest on June 3, 2014, Resolute Health Hospital, whichwe opened on June 24, 2014, and Emanuel Medical Center, which we acquired on August 1, 2014, are excluded. Same-Hospital Continuing Operations Three Months Ended December 31, Increase Admissions, Patient Days and Surgeries 2014 2013 (Decrease) Total admissions 198,219 190,506 4.0 % Adjusted patient admissions 340,125 325,410 4.5 % Paying admissions (excludes charity and uninsured) 187,115 176,316 6.1 % Charity and uninsured admissions 11,104 14,190 (21.7)% Admissions through emergency department 124,600 116,592 6.9 % Paying admissions as a percentage of total admissions 94.4 % 92.6 % 1.8 % Charity and uninsured admissions as a percentage of total admissions 5.6 % 7.4 % (1.8)% Emergency department admissions as a percentage of total admissions 62.9 % 61.2 % 1.7 % Surgeries — inpatient 54,518 53,119 2.6 % Surgeries — outpatient 126,818 115,611 9.7 % Total surgeries 181,336 168,730 7.5 % Patient days — total 921,926 880,737 4.7 % Adjusted patient days 1,562,581 1,481,291 5.5 % Average length of stay (days) 4.65 4.62 0.6 % Number of hospitals (at end of period) 77 77 — Licensed beds (at end of period) 20,407 20,293 0.6 % Average licensed beds 20,398 20,294 0.5 % Utilization of licensed beds 49.1 % 47.2 % 1.9 % (1)Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services by multiplying actual patientadmissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.(2)The change is the difference between the amounts shown for the three months ended December 31, 2014 compared to the three monthsended December 31, 2013.(3)Utilization of licensed beds represents patient days divided by number of days in the period divided by average licensed beds. Total same-hospital admissions increased by 7,713, or 4.0%, in the three months ended December 31, 2014 monthscompared to the three months ended December 31, 2013. Total same-hospital surgeries increased by 7.5% in the three monthsended December 31, 2014 compared to the same period in 2013, comprised of a 9.7% increase in outpatient surgeriesprimarily due to our outpatient development strategies and a 2.6% increase in inpatient surgeries. Our same-hospitalemergency department admissions increased 6.9% in the three months ended December 31, 2014 compared to the same periodin the prior year. We believe our volumes were positively impacted by incremental market share we generated throughimproved physician alignment and service line expansion, insurance coverage for a greater number of individuals as a resultof the ACA, and a strengthening economy. Charity and uninsured admissions decreased 21.7% in the three months endedDecember 31, 2014 compared to the three months ended December 31, 2013 on a45 (1)(2)(2)(2)(1)(3)(2)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentssame-hospital basis, primarily due to Medicaid expansion in five of the states in which we operate and health insuranceexchange coverage under the ACA. Same-Hospital Continuing Operations Three Months Ended December 31, Increase Outpatient Visits 2014 2013 (Decrease) Total visits 2,100,683 1,916,931 9.6 % Paying visits (excludes charity and uninsured) 1,935,937 1,733,344 11.7 % Charity and uninsured visits 164,746 183,587 (10.3)% Emergency department visits 711,351 663,114 7.3 % Surgery visits 126,818 115,611 9.7 % Paying visits as a percentage of total visits 92.2 % 90.4 % 1.8 % Charity and uninsured visits as a percentage of total visits 7.8 % 9.6 % (1.8)% (1)The change is the difference between the amounts shown for the three months ended December 31, 2014 compared to the three monthsended December 31, 2013. Total same-hospital outpatient visits increased 183,752, or 9.6%, in the three months ended December 31, 2014compared to the three months ended December 31, 2013, which included 11.7% growth for paying visits. Approximately 86%of the growth in outpatient visits was organic. Same-hospital outpatient surgery visits increased by 9.6% in the three months ended December 31, 2014 compared tothe same period in 2013. Charity and uninsured outpatient visits decreased by 10.3% in the three months endedDecember 31, 2014 compared to the three months ended December 31, 2013 on a same-hospital basis, primarily due toMedicaid expansion in five of the states in which we operate and health insurance exchange coverage under the ACA. Same-Hospital Continuing Operations Three Months Ended December 31, Increase Revenues 2014 2013 (Decrease) Net operating revenues $4,386 $3,885 12.9 % Revenues from charity and the uninsured $261 $288 (9.4)% Net inpatient revenues $2,669 $2,372 12.5 % Net outpatient revenues $1,495 $1,357 10.2 % (1)Net inpatient revenues and net outpatient revenues are components of net operating revenues. Net inpatient revenues include self-payrevenues of $100 million and $121 million for the three months ended December 31, 2014 and 2013, respectively. Net outpatient revenuesinclude self-pay revenues of $161 million and $167 million for the three months ended December 31, 2014 and 2013, respectively. Net operating revenues increased by $501 million, or 12.9%, on a same-hospital basis in the three months endedDecember 31, 2014 compared to the same period in 2013, primarily due to increases in inpatient and outpatient volumes,improved managed care pricing, increased net revenues related to the California provider fee program, and increased revenuesfrom services provided by our Conifer subsidiary to third parties. Net operating revenues in the three months endedDecember 31, 2014 included $150 million of net revenues from the California provider fee program compared to $19 millionduring the three months ended December 31, 2013 due to the timing of the approval of the 2014 program. Also, net patientrevenues increased by 11.7% in the three months ended December 31, 2014 compared to the same period in 2013. Revenuesfrom charity and the uninsured decreased 9.4% in the three months ended46 (1)(1)(1)(1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDecember 31, 2014 compared to the three months ended December 31, 2013 primarily due to Medicaid expansion in five ofthe states in which we operate and health insurance exchange coverage under the ACA. Same-Hospital Continuing Operations Three Months Ended December 31, Increase Revenues on a Per Admission, Per Patient Day and Per Visit Basis 2014 2013 (Decrease) Net inpatient revenue per admission $13,465 $12,451 8.1 % Net inpatient revenue per patient day $2,895 $2,693 7.5 % Net outpatient revenue per visit $712 $708 0.6 % Net patient revenue per adjusted patient admission $12,243 $11,459 6.8 % Net patient revenue per adjusted patient day $2,665 $2,517 5.9 % (1)Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services by multiplying actual patientadmissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues. Net inpatient revenue per admission and net outpatient revenue per visit increased 8.1% and 0.6%, respectively, on asame-hospital basis in the three months ended December 31, 2014 compared to the same period in 2013. Net inpatient revenueper admission reflects the favorable impact of $150 million of net revenues from the California provider fee program in thethree months ended December 31, 2014 compared to $19 million for the same period in 2013 due to the timing of theapproval of the 2014 program. Improved terms of our managed care contracts also favorably impacted both net inpatientrevenue per admission and net outpatient revenue per visit. Same-Hospital Continuing Operations Three Months Ended December 31, Increase Provision for Doubtful Accounts 2014 2013 (Decrease) Provision for doubtful accounts $344 $348 (1.1)% Provision for doubtful accounts as a percentage of net operating revenuesbefore provision for doubtful accounts 7.3 % 8.2 % (0.9)% (1)The change is the difference between the amounts shown for the three months ended December 31, 2014 compared to the three monthsended December 31, 2013. Provision for doubtful accounts decreased by $4 million, or 1.1%, in the three months ended December 31, 2014compared to the same period in 2013 on a same-hospital basis. The decrease in the provision for doubtful accounts related to adecline in uninsured revenues primarily due to the expansion of insurance coverage under the ACA, substantially offset by theimpact of a $501 million increase in net operating revenues and the 120 basis point decrease in our self-pay collection rate forour 49 hospitals operated throughout the years ended December 31, 2014 and 2013, as well as a greater amount of patientco‑pays and deductibles. Our self-pay collection rate, which is the blended collection rate for uninsured and balance afterinsurance accounts receivable, was approximately 27.5% at47 (1)(1)(1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDecember 31, 2014 and 28.7% at December 31, 2013 for our 49 hospitals operated throughout the years ended December 31,2014 and 2013. Same-Hospital Continuing Operations Three Months Ended December 31, IncreaseSelected Operating Expenses 2014 2013 (Decrease)Hospital Operations and other Salaries, wages and benefits $1,888 $1,703 10.9 % Supplies 675 626 7.8 % Other operating expenses 960 932 3.0 % Total $3,523 $3,261 8.0 % Conifer Salaries, wages and benefits $196 $169 16.0 % Other operating expenses 67 59 13.6 % Total $263 $228 15.4 % Total Salaries, wages and benefits $2,084 $1,872 11.3 % Supplies 675 626 7.8 % Other operating expenses 1,027 991 3.6 % Total $3,786 $3,489 8.5 % Rent/lease expense Hospital Operations and other $57 $54 5.6 %Conifer 3 4 (25.0)% Total $60 $58 3.4 %Hospital Operations and other Salaries, wages and benefits per adjusted patient day $1,206 $1,144 5.4 % Supplies per adjusted patient day 432 423 2.1 % Other operating expenses per adjusted patient day 533 545 (2.2)% Total per adjusted patient day $2,171 $2,112 2.8 % Salaries, wages and benefits per adjusted patient admission $5,539 $5,206 6.4 % Supplies per adjusted patient admission 1,985 1,924 3.2 % Other operating expenses per adjusted patient admission 2,449 2,482 (1.3)% Total per adjusted patient admission $9,973 $9,612 3.8 % (1)Included in other operating expenses.(2)Adjusted patient days/admissions represents actual patient days/admissions adjusted to include outpatient services by multiplying actual patientdays/admissions by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues. Thesemetrics exclude the expenses related to our health plans and our provider network based in Southern California that includes contractedindependent physicians, ancillary providers and hospitals. Total selected operating expenses, which is defined as salaries, wages and benefits, supplies and other operatingexpenses, increased by 2.8% and 3.8% on a per adjusted patient day and per adjusted patient admission same-hospital basis,respectively, in the three months ended December 31, 2014 compared to the three months ended December 31, 2013. Salaries, wages and benefits per adjusted patient admission increased by approximately 6.4% in the three monthsended December 31, 2014 compared to the same period in 2013 on a same-hospital basis. This change is primarily due to agreater number of employed physicians, annual merit increases for certain of our employees, increased overtime and contractlabor costs, increased incentive compensation expense, an increase in the 401(k) plan maximum matching percentage forcertain employee populations and increased health benefits costs in the three months ended December 31, 2014 compared tothe three months ended December 31, 2013. 48 (1)(2)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSupplies expense per adjusted patient admission on a same-hospital basis increased by 3.2% in the three monthsended December 31, 2014 compared to the three months ended December 31, 2013. The change in supplies expense wasprimarily attributable to higher costs for pharmaceuticals, as well as volume growth in our supply-intensive surgical services. Other operating expenses per adjusted patient admission decreased by 1.3% in the three months endedDecember 31, 2014 compared to the same period in 2013 on a same-hospital basis. This change is due to our higher patientvolumes in the 2014 period, which has a favorable impact on this cost metric due to the fixed nature of certain costs in otheroperating expenses, decreased costs associated with funding indigent care services by certain of our hospitals, which costswere substantially offset by reduced net patient revenues, and gains of $24 million from the sales of certain assets, partiallyoffset by higher medical fees primarily related to a greater number of employed and contracted physicians and increasedmalpractice expense. Malpractice expense in the 2014 period included an unfavorable adjustment of approximately $4million due to a 25 basis point decrease in the interest rate used to estimate the discounted present value of projected futuremalpractice liabilities compared to a favorable adjustment of approximately $8 million as a result of a 43 basis point increasein the interest rate in the 2013 period. Salaries, wages and benefits expense for Conifer increased by $27 million in the three months endedDecember 31, 2014 compared to the three months ended December 31, 2013 months due to an increase in employeeheadcount as a result of the growth in Conifer’s business primarily attributable to the integration of the Vanguard facilities’revenue cycle operations now managed by Conifer, Conifer’s acquisition of SPi Healthcare and growth in Conifer’s services toCHI. Other operating expenses for Conifer increased by $8 million in the three months ended December 31, 2014compared to the three months ended December 31, 2013 due to higher costs related to growth in Conifer’s business primarilyattributable to the integration of the Vanguard facilities’ revenue cycle operations now managed by Conifer, Conifer’sacquisition of SPi Healthcare and growth in Conifer’s services to CHI. The table below shows the pre-tax and after-tax impact on continuing operations for the three months and yearsended December 31, 2014 and 2013 of the following items: Three Months Ended Year Ended December 31, December 31, 2014 2013 2014 2013 (Expense) Income Impairment and restructuring charges, and acquisition-related costs $(63) $(58) $(153) $(103) Litigation and investigation costs (6) (28) (25) (31) Loss from early extinguishment of debt — — (24) (348) Pre-tax impact $(69) $(86) $(202) $(482) Total after-tax impact $(43) $(60) $(111) $(315) Diluted per-share impact of above items $(0.42) $(0.60) $(1.11) $(3.06) Diluted earnings per share, including above items $0.61 $(0.17) $0.34 $(1.21) LIQUIDITY AND CAPITAL RESOURCES OVERVIEW Cash and cash equivalents were $193 million at December 31, 2014 compared to $200 million atSeptember 30, 2014. Significant cash flow items in the three months ended December 31, 2014 included: ·Capital expenditures of $199 million; ·Purchases of businesses for $243 million, primarily from the acquisition by Conifer of SPi Healthcare, a physicianpractice revenue cycle company;49 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents ·Interest payments of $239 million; ·Payments on reserves for restructuring charges, acquisition-related costs, and litigation costs and settlements of$53 million; and ·$220 million of net proceeds from borrowings under our revolving credit facility. Net cash provided by operating activities was $687 million in the year ended December 31, 2014 compared to $589 million inthe year ended December 31, 2013. Key positive and negative factors contributing to the change between the 2014 and 2013periods include the following: ·Increased income from continuing operations before income taxes of $610 million, excluding net gain on sales ofinvestments, investment earnings (loss), gain (loss) from early extinguishment of debt, interest expense, litigationand investigation costs, impairment and restructuring charges, acquisition-related costs, and depreciation andamortization in the year ended December 31, 2014 compared to the year ended December 31, 2013; ·$8 million more cash used in operating activities from discontinued operations; ·An increase of $54 million in payments on reserves for restructuring charges, acquisition-related costs, andlitigation costs and settlements; ·Lower net cash receipts of approximately $114 million in 2014 from the California provider fee program due to thetiming of approval of the program; and ·Additional interest payments of $300 million. Cash flows during the three months ended December 31, 2014 were negatively impacted by a temporary buildup in accountsreceivable of certain hospitals acquired from Vanguard due to the implementation of a new billing system that is expected toenhance efficiency. SOURCES OF REVENUE We receive revenues for patient services from a variety of sources, primarily managed care payers and the federalMedicare program, as well as state Medicaid programs, indemnity-based health insurance companies and self-pay patients(that is, patients who do not have health insurance and are not covered by some other form of third-party arrangement). The table below shows the sources of net patient revenues before provision for doubtful accounts for our continuinggeneral hospitals, expressed as percentages of net patient revenues before provision for doubtful accounts from all sources: Year Ended December 31, Net Patient Revenues from: 2014 2013 2012 Medicare 21.9 % 21.8 % 23.4 % Medicaid 9.4 % 9.0 % 8.4 % Managed care 58.6 % 58.1 % 57.4 % Indemnity, self-pay and other 10.1 % 11.1 % 10.8 % Our payer mix on an admissions basis for our continuing general hospitals, expressed as a percentage of totaladmissions from all sources, is shown below: Year Ended December 31, 50 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsAdmissions from: 2014 2013 2012Medicare 27.5 % 28.0 % 28.9 % Medicaid 10.3 % 11.7 % 12.2 % Managed care 54.5 % 50.0 % 48.8 % Indemnity, self-pay and other 7.7 % 10.3 % 10.1 % GOVERNMENT PROGRAMS The Centers for Medicare and Medicaid Services is the single largest payer of healthcare services in the United States.Nearly one third of all Americans rely on healthcare benefits through Medicare, Medicaid and the Children’s Health InsuranceProgram (“CHIP”). These three major programs are authorized by federal law and directed by CMS, an agency of the U.S.Department of Health and Human Services (“HHS”). Medicare is a federally funded health insurance program primarily forindividuals 65 years of age and older, certain younger people with disabilities, and people with end-stage renal disease, and isprovided without regard to income or assets. Medicaid is administered by the states and is jointly funded by the federalgovernment and state governments. Medicaid is the nation’s main public health insurance program for people with lowincomes and is the largest source of health coverage in the United States. The CHIP is also administered by the states andjointly funded and provides health coverage to children in families with incomes too high to qualify for Medicaid, but toolow to afford private coverage. The Affordable Care Act The Affordable Care Act is changing how healthcare services in the United States are covered, delivered andreimbursed. One key provision of the ACA is the individual mandate, which requires most Americans to maintain “minimumessential” health insurance coverage. Those who do not comply with the individual mandate must make a “sharedresponsibility payment” to the federal government in the form of a tax penalty. The penalty percentage increases through2016, and is adjusted for inflation beginning in 2017. For individuals who are not exempt from the individual mandate, andwho do not receive health insurance through an employer or government program, the means of satisfying the requirement isto purchase insurance from a private company or a health insurance exchange. Beginning in 2014, individuals who areenrolled in a health benefits plan purchased through an exchange may be eligible for a premium credit or cost-sharingsubsidy. In 2014, two federal appeals court panels issued conflicting rulings on whether U.S. Internal Revenue Serviceregulations extending such subsidies to individuals who purchase coverage through the federal government’s healthinsurance exchange (rather than a state-based exchange) are permissible. The U.S. Supreme Court will now consider the matter,and a ruling is expected in mid-2015. Any ruling or other action that negatively impacts the number of individuals who havehealth insurance coverage could have a material adverse effect on our results of operations and cash flows. Pending theSupreme Court’s decision on this issue, the government has stated that it will continue paying the subsidies to insurancecompanies on behalf of consumers in the 34 states that use the federal exchange. As of December 31, 2014, we operatedhospitals in two states that run their own health insurance exchanges and 12 states that rely on the federal exchange. The “employer mandate” provision of the ACA requires the imposition of penalties on employers having 50 or moreemployees who do not offer affordable health insurance coverage to those working 30 or more hours per week. OnFebruary 10, 2014, the requirements of the employer mandate were delayed until January 1, 2016. Based on the CongressionalBudget Office’s most recent estimates, we do not believe that the delay in enforcement of the employer mandate will have adiscernible effect on insurance coverage. Another key provision of the ACA is the expansion of Medicaid coverage. Prior to the passage of the ACA, theMedicaid program offered federal funding to states to assist only limited categories of low-income individuals (includingchildren, pregnant women, the blind and the disabled) in obtaining medical care. The ACA expanded eligibility underexisting Medicaid programs to virtually all individuals under 65 years old with incomes up to 138% of the federal povertylevel beginning in 2014. Under the ACA, the federal government will pay 100% of the costs of Medicaid expansion in 2014,2015 and 2016; federal funding will be reduced to 90% over the course of the four-year period from 2017 through 2020, and itwill remain at 90% for 2021 and beyond. The expansion of the Medicaid program in each state requires state legislative orregulatory action and the approval by CMS of a state Medicaid plan amendment. As of December 31, 2014, 27 states and theDistrict of Columbia have taken action to expand Medicaid. We currently operate51 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentshospitals in five of the states (Arizona, California, Illinois, Massachusetts and Michigan) that expanded their Medicaidprograms in 2014 and one of the states (Pennsylvania) that is expanding in 2015. We cannot provide any assurances as towhether or when the other states in which we operate might choose to expand their Medicaid programs. Even though the ACAexpanded Medicaid eligibility, the law also contains a number of provisions designed to significantly reduce Medicare andMedicaid program spending, including: (1) negative adjustments to the annual market basket updates for Medicare inpatient,outpatient, long-term acute and inpatient rehabilitation prospective payment systems, which began in 2010, as well asadditional “productivity adjustments” that began in 2011; and (2) reductions to Medicare and Medicaid DSH payments,which began for Medicare payments in federal fiscal year (“FFY”) 2014 and will begin for Medicaid payments in FFY 2017, asthe number of uninsured individuals declines. We are unable to predict the net effect of the ACA on our future revenues and operations at this time due touncertainty regarding the ultimate number of uninsured individuals who will obtain and retain insurance coverage,uncertainty regarding future negotiations with payers, uncertainty regarding Medicaid expansion, and gradual and, in somecases, delayed implementation. Furthermore, we are unable to predict the outcome of legal challenges to certain provisions(including the provisions regarding subsidies) of the ACA, what action, if any, Congress might take with respect to the ACA orthe actions individual states might take with respect to expanding Medicaid coverage. For a discussion of the risks anduncertainties associated with the Affordable Care Act, including the future course of related legislation and regulations, seeItem 1A, Risk Factors, of Part I of this report. Medicare Medicare offers its beneficiaries different ways to obtain their medical benefits. One option, the Original MedicarePlan (which includes “Part A” and “Part B”), is a fee-for-service payment system. The other option, called Medicare Advantage(sometimes called “Part C” or “MA Plans”), includes health maintenance organizations (“HMOs”), preferred providerorganizations (“PPOs”), private fee-for-service Medicare special needs plans and Medicare medical savings account plans. Themajor components of our net patient revenues, including our general hospitals and other52 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsoperations, for services provided to patients enrolled in the Original Medicare Plan for the years endedDecember 31, 2014, 2013 and 2012 are set forth in the following table: Year Ended December 31, Revenue Descriptions 2014 2013 2012 Medicare severity-adjusted diagnosis-related group — operating $1,677 $1,201 $1,109 Medicare severity-adjusted diagnosis-related group — capital 154 107 98 Outliers 69 53 51 Outpatient 953 632 522 Disproportionate share 370 250 217 Direct Graduate and Indirect Medical Education 250 138 96 Other 98 42 66 Adjustments for prior-year cost reports and related valuation allowances 30 32 109 Total Medicare net patient revenues $3,601 $2,455 $2,268 (1)Includes revenues related to the 28 hospitals we acquired from Vanguard on October 1, 2013, as well as TRMC, Resolute Health Hospital andEmanuel Medical Center.(2)Includes Indirect Medical Education revenue earned by our children’s hospitals under the Children’s Hospitals Graduate Medical EducationPayment Program administered by the Health Resources and Services Administration of HHS.(3)The other revenue category includes inpatient psychiatric units, inpatient rehabilitation units, one long-term acute care hospital, other revenueadjustments, and adjustments related to the estimates for current-year cost reports and related valuation allowances. A general description of the types of payments we receive for services provided to patients enrolled in the OriginalMedicare Plan is provided below. Recent regulatory and legislative updates to the terms of these payment systems and theirestimated effect on our revenues can be found under “Regulatory and Legislative Changes” below. Acute Care Hospital Inpatient Prospective Payment System Medicare Severity-Adjusted Diagnosis-Related Group Payments—Sections 1886(d) and 1886(g) of the SocialSecurity Act (the “Act”) set forth a system of payments for the operating and capital costs of inpatient acute care hospitaladmissions based on a prospective payment system (“PPS”). Under the inpatient prospective payment systems (“IPPS”),Medicare payments for hospital inpatient operating services are made at predetermined rates for each hospital discharge.Discharges are classified according to a system of Medicare severity-adjusted diagnosis-related groups (“MS-DRGs”), whichcategorize patients with similar clinical characteristics that are expected to require similar amounts of hospital resources. CMSassigns to each MS-DRG a relative weight that represents the average resources required to treat cases in that particular MS-DRG, relative to the average resources used to treat cases in all MS-DRGs. The base payment amount for the operating component of the MS-DRG payment is comprised of an averagestandardized amount that is divided into a labor-related share and a nonlabor-related share. Both the labor-related share ofoperating base payments and the base payment amount for capital costs are adjusted for geographic variations in labor andcapital costs, respectively. Using diagnosis and procedure information submitted by the hospital, CMS assigns to eachdischarge an MS-DRG, and the base payments are multiplied by the relative weight of the MS-DRG assigned. The MS-DRGoperating and capital base rates, relative weights and geographic adjustment factors are updated annually, with considerationgiven to: the increased cost of goods and services purchased by hospitals; the relative costs associated with each MS-DRG;and changes in labor data by geographic area. Although these payments are adjusted for area labor and capital costdifferentials, the adjustments do not take into consideration an individual hospital’s operating and capital costs. Outlier Payments—Outlier payments are additional payments made to hospitals on individual claims for treatingMedicare patients whose medical conditions are costlier to treat than those of the average patient in the same MS-DRG. Toqualify for a cost outlier payment, a hospital’s billed charges, adjusted to cost, must exceed the payment rate for the MS-DRGby a fixed threshold established annually by CMS. A Medicare administrative contractor (“MAC”) calculates the cost of aclaim by multiplying the billed charges by a cost-to-charge ratio that is typically based on the hospital’s most recently filedcost report. Generally, if the computed cost exceeds the sum of the MS-DRG payment plus the fixed threshold, the hospitalreceives 80% of the difference as an outlier payment. 53 (1)(2)(3)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsUnder the Act, CMS must project aggregate annual outlier payments to all PPS hospitals to be not less than 5% ormore than 6% of total MS-DRG payments (“Outlier Percentage”). The Outlier Percentage is determined by dividing totaloutlier payments by the sum of MS-DRG and outlier payments. CMS annually adjusts the fixed threshold to bring projectedoutlier payments within the mandated limit. A change to the fixed threshold affects total outlier payments by changing: (1)the number of cases that qualify for outlier payments; and (2) the dollar amount hospitals receive for those cases that qualifyfor outlier payments. Disproportionate Share Hospital Payments—In addition to making payments for services provided directly tobeneficiaries, Medicare makes additional payments to hospitals that treat a disproportionately high share of low-incomepatients. Prior to October 1, 2013, DSH payments were determined annually based on certain statistical information defined byCMS and calculated as a percentage add-on to the MS-DRG payments. The ACA revised the Medicare DSH adjustmenteffective for discharges occurring on or after October 1, 2014. Under the revised methodology, hospitals will receive 25% ofthe amount they previously would have received under the pre-ACA formula. This amount is referred to as the “EmpiricallyJustified Amount.” Hospitals qualifying for the Empirically Justified Amount of DSH payments are also eligible to receive an additionalpayment for uncompensated care (the “UC DSH Amount”). The UC DSH Amount is a hospital’s share of a pool of funds thatequal 75% of what otherwise would have been paid as Medicare DSH, adjusted for changes in the percentage of individualsthat are uninsured. For FFY 2014, each Medicare DSH hospital’s share of the UC DSH Amount pool is based on its share ofinsured low income days reported by all Medicare DSH hospitals.During 2014, 64 of our acute care hospitals in continuing operations qualified for Medicare DSH payments. One ofthe variables used in the pre-ACA DSH formula is the number Medicare inpatient days attributable to patients receivingSupplemental Security Income (“SSI”) who are also eligible for Medicare Part A benefits divided by total Medicare inpatientdays (the “SSI Ratio”). In an earlier rulemaking, CMS established a policy of including not only days attributable to OriginalMedicare Plan patients, but also Medicare Advantage patients in the SSI ratio. The statutes and regulations that governMedicare DSH payments have been the subject of various administrative appeals and lawsuits, and our hospitals have beenparticipating in such appeals, including challenges to the inclusion of the Medicare Advantage days used in the DSHcalculation as set forth in the Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2005 Rates(“FFY 2005 Final Rule”). During the three months ended December 31, 2012, the federal district court in the District ofColumbia ruled in Allina Health Services v. Sebelius that the Secretary of HHS (“Secretary”) failed to follow theAdministrative Procedures Act when promulgating the regulation requiring the inclusion of the Medicare Advantage days inthe DSH calculation in the FFY 2005 Final Rule. The court vacated the regulation and remanded the matter to the Secretary torecalculate the DSH reimbursement without using the interpretation set forth in the FFY 2005 Final Rule. The Secretaryappealed the district court’s decision to the U.S. Court of Appeals for the D.C. Circuit (“Circuit Court”). On April 1, 2014, theCircuit Court: (1) affirmed the district court’s order to vacate the regulation; (2) reversed the district court’s order regarding themanner in which the reimbursement should be calculated; and (3) remanded the matter to HHS. During the three months endedJune 30, 2014, the Secretary announced that HHS would not seek a rehearing at the Circuit Court or petition the U.S. SupremeCourt to review the Circuit Court’s decision. We are not able to predict what action the Secretary might take with respect tothe DSH calculation in this regard; however, a favorable outcome of our DSH appeals could have a material impact on ourfuture revenues and cash flows.Direct Graduate and Indirect Medical Education Payments—The Medicare program provides additionalreimbursement to approved teaching hospitals for additional expenses incurred by such institutions. This additionalreimbursement, which is subject to certain limits, including intern and resident full-time equivalent (“FTE”) limits, is made inthe form of Direct Graduate Medical Education (“DGME”) and Indirect Medical Education (“IME”) payments. During 2014,28 of our hospitals in continuing operations were affiliated with academic institutions and were eligible to receive suchpayments. Hospital Outpatient Prospective Payment System Under the outpatient prospective payment system, hospital outpatient services, except for certain services that arereimbursed on a separate fee schedule, are classified into groups called ambulatory payment classifications54 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(“APCs”). Services in each APC are similar clinically and in terms of the resources they require, and a payment rate isestablished for each APC. Depending on the services provided, hospitals may be paid for more than one APC for an encounter.CMS periodically updates the APCs and annually adjusts the rates paid for each APC. Inpatient Psychiatric Facility Prospective Payment System The inpatient psychiatric facility prospective payment system (“IPF-PPS”) applies to psychiatric hospitals andpsychiatric units located within acute care hospitals that have been designated as exempt from the hospital inpatientprospective payment system. The IPF-PPS is based on prospectively determined per-diem rates and includes an outlier policythat authorizes additional payments for extraordinarily costly cases. Inpatient Rehabilitation Prospective Payment System Rehabilitation hospitals and rehabilitation units in acute care hospitals meeting certain criteria established by CMSare eligible to be paid as an inpatient rehabilitation facility (“IRF”) under the IRF prospective payment system (“IRF-PPS”).Payments under the IRF-PPS are made on a per-discharge basis. The IRF-PPS uses federal prospective payment rates acrossdistinct case-mix groups established by a patient classification system. To be paid under the IRF-PPS, each hospital or unit must demonstrate on an annual basis that at least 60% of its totalpopulation had either a principal or secondary diagnosis that fell within one of 13 diagnosis categories or have qualifyingconditions designated in the Medicare regulations governing IRFs. As of December 31, 2014, all of our rehabilitation unitswere in compliance with the required 60% threshold. Physician Services Payment System Medicare pays for physician and other professional services based on a list of services and their payment rates calledthe Medicare Physician Fee Schedule (“MPFS”). In determining payment rates for each service on the fee schedule, CMSconsiders the amount of work required to provide a service, expenses related to maintaining a practice, and liability insurancecosts. The values given to these three types of resources are adjusted by variations in the input prices in different markets, andthen a total is multiplied by a standard dollar amount, called the fee schedule’s conversion factor, to arrive at the paymentamount. Medicare’s payment rates may be adjusted based on provider characteristics, additional geographic designations andother factors. The conversion factor updates payments for physician services every year according to a formula called thesustainable growth rate (“SGR”) system in accordance with the Balanced Budget Act of 1997. This formula is intended tokeep spending growth (a function of service volume growth) consistent with growth in the national economy. However, in thelast several years, Congress has specified an update outside of the SGR formula. Because of budget neutrality requirements,these payment updates have largely been funded by payment reductions to other providers, including hospitals. Cost Reports The final determination of certain Medicare payments to our hospitals, such as DSH, DGME, IME and bad debtexpense, are retrospectively determined based on our hospitals’ cost reports. The final determination of these payments oftentakes many years to resolve because of audits by the program representatives, providers’ rights of appeal, and the applicationof numerous technical reimbursement provisions. For filed cost reports, we adjust the accrual for estimated cost report settlements based on those cost reports andsubsequent activity, and record a valuation allowance against those cost reports based on historical settlement trends. Theaccrual for estimated cost report settlements for periods for which a cost report is yet to be filed is recorded based on estimatesof what we expect to report on the filed cost reports and a corresponding valuation allowance is recorded as previouslydescribed. Cost reports must generally be filed within five months after the end of the annual cost report reporting period.After the cost report is filed, the accrual and corresponding valuation allowance may need to be adjusted. 55 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsMedicare Hospital Appeals Settlement During the year ended December 31, 2014, CMS offered hospitals an opportunity to settle certain Medicare inpatientclaims in the appeals process or within the timeframe to request an appeal. Generally, the one-time settlement offer applies topayment denials for inpatient services on the basis that the services were reasonable and necessary, but treatment as aninpatient was not. All of our hospitals with claims that are eligible for settlement have accepted the settlement offer. Theestimated cash value of the settlement for our hospitals’ claims is approximately $19 million. Medicaid Medicaid programs and the corresponding reimbursement methodologies are administered by the states and varyfrom state to state and from year to year. Estimated revenues under various state Medicaid programs, excluding state-fundedmanaged care Medicaid programs, constituted approximately 9.4%, 9.0% and 8.4% of net patient revenues before provisionfor doubtful accounts of our continuing general hospitals for the years ended December 31, 2014, 2013 and 2012,respectively. We also receive DSH payments under various state Medicaid programs. For the years endedDecember 31, 2014, 2013 and 2012, our revenues attributable to DSH payments and other state-funded subsidy paymentswere approximately $817 million, $428 million and $283 million, respectively. The 2013 amount includes only three monthsof revenues related to the 28 hospitals we acquired from Vanguard on October 1, 2013. Several states in which we operate continue to face budgetary challenges due to the slow economic recovery andother factors that have resulted, and likely will continue to result, in reduced Medicaid funding levels to hospitals and otherproviders. Because most states must operate with balanced budgets, and the Medicaid program is generally a significantportion of a state’s budget, states can be expected to adopt or consider adopting future legislation designed to reduce or notincrease their Medicaid expenditures. In addition, some states delay issuing Medicaid payments to providers to manage stateexpenditures. As an alternative means of funding provider payments, many of the states in which we operate have adoptedbroad-based provider taxes to fund the non-federal share of Medicaid programs. Continuing pressure on state budgets andother factors could result in future reductions to Medicaid payments, payment delays or additional taxes on hospitals. The Governor of California signed the Hospital Quality Assurance Fee (“HQAF”) renewal bill into law in October2013, extending California’s provider fee program for three years beginning January 2014 (with a framework to renew theprogram for at least three additional years beyond 2016). During the three months ended December 31, 2014, CMS approvedthe 36-month HQAF program, and we recorded net revenues of approximately $165 million. Based on the most recentestimates from the California Hospital Association, the extension of the HQAF program authorized by the legislation willresult in additional revenues for our hospitals, net of provider fees and other expenses, of approximately $530 million over thethree-year period ending December 31, 2016. During the three months ended December 31, 2012, certain of our Texas hospitals began to participate in the Texas1115 demonstration waiver approved by CMS in December 2011 to replace the state’s Upper Payment Limit program. Thewaiver term covers state fiscal years September 1, 2012 through August 31, 2016, is funded by intergovernmental transferpayments from local government entities, and includes two funding pools — Uncompensated Care and Delivery SystemReform Payment. In 2014, we recognized $187 million of revenues from the Texas 1115 waiver programs. Separately, duringthe same period, we incurred $87 million of expenses related to funding indigent care services by certain of our Texashospitals. We cannot provide any assurances as to the ultimate amount of revenues that our hospitals may receive from thisprogram in 2015 and 2016. Because we cannot predict what actions the federal government or the states may take under existing legislation andfuture legislation to address budget gaps, deficits, Medicaid expansion, provider fee programs or Medicaid section 1115waivers, we are unable to assess the effect that any such legislation might have on our business, but the impact on our futurefinancial position, results of operations or cash flows could be material.56 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsMedicaid-related patient revenues recognized by our continuing general hospitals from Medicaid-related programsin the states in which they are located, as well as from Medicaid programs in neighboring states, for the years endedDecember 31, 2014, 2013 and 2012 are set forth in the table below: Year Ended December 31, 2014 2013 2012 Managed Managed Managed Hospital Location Medicaid Medicaid Medicaid Medicaid Medicaid Medicaid Michigan $337 $269 $64 $96 $ — $ — California 311 261 242 164 198 148 Texas 281 229 151 151 67 123 Florida 160 111 178 65 178 61 Illinois 80 31 33 6 — — Georgia 73 37 77 35 85 38 Pennsylvania 73 194 74 200 72 209 Missouri 67 9 64 6 70 5 Massachusetts 39 46 9 8 — — North Carolina 29 8 34 5 40 — South Carolina 15 31 22 25 34 25 Alabama 12 — 13 — 31 — Tennessee 7 29 5 27 8 29 Arizona 1 115 9 21 — — $1,485 $1,370 $975 $809 $783 $638 (1)Includes revenues related to the 28 hospitals we acquired from Vanguard on October 1, 2013, as well as TRMC, Resolute Health Hospital andEmanuel Medical Center. Regulatory and Legislative Changes The Medicare and Medicaid programs are subject to statutory and regulatory changes, administrative and judicialrulings, interpretations and determinations, requirements for utilization review, and federal and state funding restrictions, allof which could materially increase or decrease payments from these government programs in the future, as well as affect thecost of providing services to our patients and the timing of payments to our facilities. We are unable to predict the effect offuture government healthcare funding policy changes on our operations. If the rates paid by governmental payers are reduced,if the scope of services covered by governmental payers is limited, or if we or one or more of our subsidiaries’ hospitals areexcluded from participation in the Medicare or Medicaid program or any other government healthcare program, there could bea material adverse effect on our business, financial condition, results of operations or cash flows. Recent regulatory andlegislative updates to the Medicare and Medicaid payment systems are provided below. Payment and Policy Changes to the Medicare Inpatient Prospective Payment Systems Under Medicare law, CMS is required to annually update certain rules governing the inpatient prospective paymentsystems. The updates generally become effective October 1, the beginning of the federal fiscal year. On August 4, 2014, CMSissued Changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2015 Rates,and, on October 3, 2014, CMS issued a Correction Notice to the August 4, 2014 rule (together, the “Final IPPS Rule”). TheFinal IPPS Rule includes the following payment and policy changes: ·A market basket increase of 2.9% for MS-DRG operating payments for hospitals reporting specified qualitymeasure data and that are meaningful users of EHR technology (hospitals that do not report specified qualitymeasure data and/or are not meaningful users of EHR technology would receive a reduced market basketincrease); CMS is also making certain adjustments to the estimated 2.9% market basket increase that result in anet market basket update of 1.4% (before budget neutrality adjustments), including:57 (1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents ·Market basket index and multifactor productivity reductions required by the ACA of 0.2% and 0.5%,respectively; and ·A documentation and coding recoupment reduction of 0.8% as required by the American Taxpayer ReliefAct of 2012; ·Updates to the factors used to determine the amount and distribution of Medicare uncompensated caredisproportionate share payments; ·Implementation of a 1% payment decrease for hospitals that rank in the top 25% of CMS’ measurement ofhospital acquired conditions; ·Updates to the Core Based Statistical Areas that affect the wage index used to adjust MS-DRG payments forgeographic differences; ·A 1.32% net increase in the capital federal MS-DRG rate; and ·An increase in the cost outlier threshold from $21,748 to $24,626. CMS projects that the combined impact of the payment and policy changes in the Final IPPS Rule will yield anaverage 0.6% decrease in payments for hospitals in large urban areas (populations over one million). Using the impactpercentages in the Final IPPS Rule as applied to our IPPS payments for the 12 months ended September 30, 2014, theestimated annual impact for all changes in the Final IPPS Rule on our hospitals is a decrease in our Medicare inpatientrevenues of approximately $13 million. Because of the uncertainty regarding factors that may influence our future IPPSpayments by individual hospital, including admission volumes, length of stay and case mix, we cannot provide anyassurances regarding our estimate. Payment Changes to the Medicare Inpatient Psychiatric Facility Prospective Payment System On July 31, 2014, CMS issued a final rule updating Medicare payment policies and rates for the Medicare inpatientpsychiatric facility (“IPF”) prospective payment system for FFY 2015 (“IPF-PPS Final Rule”). The IPF-PPS Final Rule includesthe following payment and policy change for IPFs: ·A net payment increase of 2.1%, which reflects a market basket increase of 2.9% reduced by market basket indexand multifactor productivity adjustments required by the ACA of 0.3% and 0.5%, respectively; and ·A decrease in the outlier fixed-dollar loss threshold from $10,245 to $8,755. At December 31, 2014, 22 of our general hospitals operated IPF units. CMS projects that the payment changes in theIPF-PPS Final Rule will result in an estimated total increase in aggregate IPF payments of 2.5%, which includes an average2.7% increase for IPF units in hospitals located in urban areas for FFY 2015. Using the urban IPF unit impact percentage asapplied to our Medicare IPF payments for the 12 months ended September 30, 2014, the annual impact of the payment andpolicy changes in the IPF-PPS Final Rule may result in an estimated increase in our Medicare revenues of approximately $1 million. Because of the uncertainty associated with various factors that may influence our future IPF payments, includinglegislative action, admission volumes, length of stay and case mix, we cannot provide any assurances regarding our estimateof the impact of these changes. 58 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPayment and Policy Changes to the Medicare Inpatient Rehabilitation Facility Prospective Payment System On July 31, 2014, CMS issued a final rule updating Medicare payment policies and rates for the Medicare inpatientrehabilitation facility prospective payment system for FFY 2015 (“IRF-PPS Final Rule”). The IRF-PPS Final Rule includes thefollowing payment and policy changes for IRFs: ·A net payment increase of 2.2%, which reflects a market basket increase of 2.9% reduced by market basket indexand multifactor productivity adjustments required by the ACA of 0.2% and 0.5%, respectively; and ·An additional 0.2% aggregate payment increase due to updated outlier threshold results. At December 31, 2014, we operated one freestanding IRF, and 14 of our general hospitals operated IRF units. CMSprojects that the payment changes in the IRF-PPS Final Rule will result in an estimated total increase in aggregate IRFpayments of 2.4%, which includes an average 2.2% increase for freestanding IRFs, and an average 2.6% increase for IRF unitsin hospitals located in urban areas for FFY 2015. Using the applicable freestanding and urban IRF unit impact percentages asapplied to our Medicare IRF payments for the 12 months ended September 30, 2014, the annual impact of the payment andpolicy changes in the IRF-PPS Final Rule may result in an estimated increase in our Medicare revenues of approximately $1million. Because of the uncertainty associated with various factors that may influence our future IRF payments, includinglegislative action, admission volumes, length of stay and case mix, as well as the related effects of compliance with admissioncriteria, we cannot provide any assurances regarding our estimate of the impact of these changes. Payment and Policy Changes to the Medicare Outpatient Prospective Payment System On October 31, 2014, CMS released the Hospital Outpatient Prospective Payment and Ambulatory Surgical CenterPayment Systems changes for calendar year 2015 (“OPPS Final Rule”). The OPPS Final Rule includes the following paymentand policy changes: ·An estimated market basket increase of 2.9%, minus market basket index and multifactor productivity reductionsrequired by the ACA of 0.2% and 0.5%, respectively; and·An expansion of the items and services that are packaged into the outpatient prospective payment system(“OPPS”) payments.CMS projects that the combined impact of the payment and policy changes in the OPPS Final Rule will yield anaverage 2.3% increase in OPPS payments for all hospitals and an average 2.5% increase in OPPS payments for hospitals inlarge urban areas (populations over one million). According to CMS’ estimates, the projected annual impact of the paymentand policy changes in the OPPS Final Rule on our hospitals is a $13 million increase in Medicare outpatient revenues.Because of the uncertainty associated with other factors that may influence our future OPPS payments by individual hospital,including legislative action, patient volumes and case mix, we cannot provide any assurances regarding this estimate. Payment and Policy Changes to the Medicare Physician Fee Schedule On October 31, 2014, CMS released the update to the Medicare Physician Fee Schedule. The Protecting Access toMedicare Act of 2014 (“PAMA”), described below, includes a zero percent update to the 2015 MPFS through March 31, 2015.However, the SGR takes effect on April 1, 2015 unless Congress intervenes. In March 2014 (prior to the enactment of thePAMA), CMS estimated that the MPFS SGR-based update for calendar year 2015 would be a reduction of 20.9%. In most prioryears, Congress has taken action to avert a large reduction in MPFS rates before it went into effect. These actions have oftenresulted in payment reductions to other healthcare providers (including hospitals) to maintain budget neutrality. Although thehistorical pattern suggests that Congress will override the SGR formula for the nine months commencing April 1, 2015, wecannot provide any assurances in that regard. In addition, we cannot predict the level or type of payment reductions affectingour hospitals that might be used to offset a temporary override or permanent replacement of the SGR formula.59 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe Protecting Access to Medicare Act of 2014 On April 1, 2014, President Obama signed into law the Protecting Access to Medicare Act of 2014. This new lawprevented a scheduled payment reduction for physicians and other practitioners who treat Medicare patients from taking effecton April 1, 2014. The law includes the following provisions: ·An extension of the 0.5% update for services reimbursed under the MPFS that applied from January 1, 2014through March 31, 2014 for the period April 1, 2014 through December 31, 2014; ·A zero percent update to the 2015 MPFS through March 31, 2015; ·A delay in the implementation of ICD-10 from October 1, 2014 until at least October 1, 2015; ·An additional one-year delay of the ACA Medicaid DSH reduction to October 1, 2016 (funding of this delay willbe achieved by a net increase in the FFY 2017 through 2023 ACA Medicaid DSH reductions); ·A one-year extension of the ACA Medicaid DSH reduction through FFY 2024; ·A six-month partial extension of the moratorium on enforcement of the “two-midnight rule” throughMarch 31, 2015; and ·Modification of the FFY 2024 Medicare sequestration consisting of a 4% increase to the sequestration reductionfor the first six months of FFY 2024, and then a decrease of the reduction to zero percent for the second sixmonths of that FFY. Medicare Claims Reviews HHS estimates that approximately 10.1% of all Medicare Fee-For-Service (“FFS”) claim payments in FFY 2013 wereimproper, and HHS projects that the FFS improper payment rate will remain above 9.5% through FFY 2016. The ImproperPayments Information Act of 2002, amended by the Improper Payments Elimination and Recovery Act of 2010, requires theheads of federal agencies, including HHS, to annually review programs it administers to: ·Identify programs that may be susceptible to significant improper payments; ·Estimate the amount of improper payments in those programs; ·Submit those estimates to Congress; and ·Describe the actions the agency is taking to reduce improper payments in those programs. CMS has identified the FFS program as a program at risk for significant erroneous payments. One of CMS’ stated keygoals is to pay claims properly the first time. This means paying the right amount, to legitimate providers, for covered,reasonable and necessary services provided to eligible beneficiaries. According to CMS, paying correctly the first time savesresources required to recover improper payments and ensures the proper expenditure of Medicare Trust Fund dollars. As aresult, in addition to the Recovery Audit Contractor (“RAC”) program, which currently performs post-payment claims reviews,CMS has recently established initiatives to prevent improper payments before a claim is processed. These initiatives include asignificant increase in the number of prepayment claims reviews performed by MACs. Claims selected for prepayment review are not subject to the normal Medicare FFS payment timeframe. Furthermore,prepayment claims denials are subject to administrative and judicial review. We have established robust protocols to respondto claims reviews and payment denials. Payment recoveries resulting from MAC reviews can be appealed throughadministrative and judicial processes, and we intend to pursue the reversal of adverse determinations where appropriate. Inaddition to overpayments that are not reversed on appeal, we will incur additional costs to respond60 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsto requests for records and pursue the reversal of payment denials. The degree to which our Medicare FFS claims are subjectedto prepayment reviews, the extent to which payments are denied, and our success in overturning denials could have a materialadverse effect on our cash flows and results of operations. The American Recovery and Reinvestment Act of 2009 ARRA was enacted to stimulate the U.S. economy. One provision of ARRA provides financial incentives to hospitalsand physicians to become “meaningful users” of electronic health records. The Medicare incentive payments to individualhospitals are made over a four-year, front-weighted transition period. The Medicaid incentive payments, which areadministered by the states, are subject to more flexible payment and compliance standards than Medicare incentive payments;hospitals that achieve compliance between 2014 and 2015 will receive reduced incentive payments during the transitionperiod. We anticipate recognizing approximately $68 million of Medicare and Medicaid EHR incentive payments in 2015.In addition to the expenditures we incur to qualify for these incentive payments, our operating expenses have increased andwe anticipate will increase in the future as a result of these information system investments. Eligible hospitals must continueto demonstrate meaningful use of EHR technology every year to avoid payment reductions in subsequent years. Thesereductions, which will be based on the market basket update, will be phased in over three years and will continue until ahospital achieves compliance. Should all of our hospitals fail to become meaningful users (or fail to continue to demonstratemeaningful use) of EHRs and fail to submit quality data, the penalties would result in reductions to our annual Medicaretraditional inpatient net revenues of up to $30 million in 2016 and up to $50 million in 2017 and subsequent years. During the year ended December 31, 2014, we recognized approximately $104 million of EHR incentives related tothe Medicare and Medicaid EHR incentive programs as a result of 54 of our hospitals and certain of our employed physiciansdemonstrating meaningful use of certified EHR technology. The final Medicare EHR incentive payments are determined whenthe cost report that begins in the federal fiscal year during which the hospital achieved meaningful use is settled. Medicareand Medicaid incentive payment amounts to which a provider is entitled are subject to post-payment audits. The complexity of the changes required to our hospitals’ systems and the time required to complete the changes willlikely result in some or all of our hospitals not being fully compliant in time to be eligible for the maximum HIT fundingpermitted under ARRA. Because of the uncertainties regarding the implementation of HIT, including CMS’ future EHRimplementation regulations, the ability of our hospitals to achieve compliance and the associated costs, we cannot provideany assurances regarding the aforementioned estimates of incentives in 2015. The American Taxpayer Relief Act of 2012 The American Taxpayer Relief Act of 2012 delayed by two months the effective date of the automatic reductions(referred to as “sequestration”) in federal spending, including a 2% reduction in Medicare payments, mandated by the BudgetControl Act of 2011 that was originally scheduled to take effect on February 1, 2013. On March 1, 2013, the President signedan order to begin the sequestration. Subsequent legislation extended the sequestration adjustment through 2024. EffectiveApril 1, 2013, all Medicare payments to providers began to be reduced by 2% and will continue to be paid at the reduced rateas long as the sequestration is in effect. As of December 31, 2014, Congress had not taken any action to reduce or eliminatethe sequestration adjustment. Any such action would likely require other payments reductions in order to maintain budgetneutrality. We cannot predict how long the sequestration will be in effect, nor can we predict what Medicare payment,eligibility and coverage changes, if any, will be enacted in lieu of the sequestration. 61 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsMedPAC FFY 2015 Recommendations Each year, the Medicare Payment Advisory Commission (“MedPAC”), an independent agency that advises Congresson issues affecting Medicare, makes payment policy recommendations to Congress for a variety of Medicare payment systems.Generally, the MedPAC opposes sequestration as a way to reduce payments, particularly below the base rate, because theMedPAC favors a more targeted approach to achieve savings. In January 2015, the MedPAC voted in favor of threerecommendations for hospital inpatient and outpatient services, two of which affect acute care hospitals. Specifically, theMedPAC voted that Congress should direct HHS to: ·Reduce or eliminate the differences in payment rates between outpatient departments and physicians’ offices forselected APCs; and ·Increase payment rates for the IPPS and OPPS in FFY 2015 by 3.25%. We expect these recommendations to be included in the forthcoming MedPAC Annual Report to Congress. Congressis not obligated to adopt the MedPAC recommendations and, based on outcomes in previous years, there can be no assuranceCongress will adopt such recommendations in a given year. We cannot predict what actions, if any, Congress, HHS or CMSwill take with respect to the MedPAC recommendations or the effect, if any, of such actions on our net revenues or cash flows. PRIVATE INSURANCE Managed Care We currently have thousands of managed care contracts with various HMOs and PPOs. HMOs generally maintain afull-service healthcare delivery network comprised of physician, hospital, pharmacy and ancillary service providers that HMOmembers must access through an assigned “primary care” physician. The member’s care is then managed by his or her primarycare physician and other network providers in accordance with the HMO’s quality assurance and utilization review guidelinesso that appropriate healthcare can be efficiently delivered in the most cost-effective manner. HMOs typically provide reducedbenefits or reimbursement (or none at all) to their members who use non-contracted healthcare providers for non-emergencycare. PPOs generally offer limited benefits to members who use non-contracted healthcare providers. PPO members whouse contracted healthcare providers receive a preferred benefit, typically in the form of lower co-pays, co-insurance ordeductibles. As employers and employees have demanded more choice, managed care plans have developed hybrid productsthat combine elements of both HMO and PPO plans, including high-deductible healthcare plans that may have limitedbenefits, but cost the employee less in premiums. The amount of our managed care net patient revenues during the years ended December 31, 2014, 2013 and 2012 was$9.3 billion, $6.3 billion and $5.4 billion, respectively. Approximately 62% of our managed care net patient revenues for theyear ended December 31, 2014 was derived from our top ten managed care payers. National payers generated approximately48% of our total net managed care revenues. The remainder comes from regional or local payers. At December 31, 2014 and2013 approximately 60% and 59%, respectively, of our net accounts receivable related to continuing operations were duefrom managed care payers. Revenues under managed care plans are based primarily on payment terms involving predetermined rates perdiagnosis, per-diem rates, discounted fee-for-service rates and other similar contractual arrangements. These revenues are alsosubject to review and possible audit by the payers, which can take several years before they are completely resolved. Thepayers are billed for patient services on an individual patient basis. An individual patient’s bill is subject to adjustment on apatient-by-patient basis in the ordinary course of business by the payers following their review and adjudication of eachparticular bill. We estimate the discounts for contractual allowances at the individual hospital level utilizing billing data onan individual patient basis. At the end of each month, on an individual hospital basis, we estimate our expectedreimbursement for patients of managed care plans based on the applicable contract terms. We believe it is reasonably likely forthere to be an approximately 3% increase or decrease in the estimated contractual allowances related to managed care62 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsplans. Based on reserves as of December 31, 2014, a 3% increase or decrease in the estimated contractual allowance wouldimpact the estimated reserves by approximately $15 million. Some of the factors that can contribute to changes in thecontractual allowance estimates include: (1) changes in reimbursement levels for procedures, supplies and drugs whenthreshold levels are triggered; (2) changes in reimbursement levels when stop-loss or outlier limits are reached; (3) changes inthe admission status of a patient due to physician orders subsequent to initial diagnosis or testing; (4) final coding of in-houseand discharged-not-final-billed patients that change reimbursement levels; (5) secondary benefits determined after primaryinsurance payments; and (6) reclassification of patients among insurance plans with different coverage levels. Contractualallowance estimates are periodically reviewed for accuracy by taking into consideration known contract terms, as well aspayment history. Although we do not separately accumulate and disclose the aggregate amount of adjustments to theestimated reimbursement for every patient bill, we believe our estimation and review process enables us to identify instanceson a timely basis where such estimates need to be revised. We do not believe there were any adjustments to estimates ofpatient bills that were material to our operating income. In addition, on a corporate-wide basis, we do not record any generalprovision for adjustments to estimated contractual allowances for managed care plans. We expect managed care governmental admissions to continue to increase as a percentage of total managed careadmissions over the near term. However, the managed Medicare and Medicaid insurance plans typically generate lower yieldsthan commercial managed care plans, which have been experiencing an improved pricing trend. Although we have hadimproved year-over-year managed care pricing, we expect some moderation in the pricing percentage increases in future years.In the year ended December 31, 2014, our commercial managed care net inpatient revenue per admission from our acute carehospitals was approximately 71% higher than our aggregate yield on a per admission basis from government payers, includingmanaged Medicare and Medicaid insurance plans. Indemnity An indemnity-based agreement generally requires the insurer to reimburse an insured patient for healthcare expensesafter those expenses have been incurred by the patient, subject to policy conditions and exclusions. Unlike an HMO member,a patient with indemnity insurance is free to control his or her utilization of healthcare and selection of healthcare providers. SELF-PAY PATIENTS Self-pay patients are patients who do not qualify for government programs payments, such as Medicare andMedicaid, do not have some form of private insurance and, therefore, are responsible for their own medical bills. A significantportion of our self-pay patients is admitted through our hospitals’ emergency departments and often requires high-acuitytreatment that is more costly to provide and, therefore, results in higher billings, which are the least collectible of all accounts.In the years prior to the implementation of the Affordable Care Act in 2014, we believe that our level of self-pay patients hadbeen higher than previous periods due to a combination of broad economic factors, including increased unemployment rates,reductions in state Medicaid budgets, increasing numbers of individuals and employers who chose not to purchase insurance,and an increased burden of co-pays and deductibles to be made by patients instead of insurers. Self-pay accounts pose significant collectability problems. At both December 31, 2014 and 2013, approximately 7%of our net accounts receivable related to continuing operations were due from self-pay patients. Further, a significant portionof our provision for doubtful accounts relates to self-pay patients, as well as co-pays and deductibles owed to us by patientswith insurance. We provide revenue cycle management services through our Conifer subsidiary. Under the Dodd-Frank WallStreet Reform and Consumer Protection Act (the “Dodd-Frank Act”), a new Consumer Financial Protection Bureau (“CFPB”)was formed within the U.S. Federal Reserve to promote transparency, simplicity, fairness, accountability and equal access inthe market for consumer financial products or services, including debt collection services. The Dodd-Frank Act givessignificant discretion to the CFPB in establishing regulatory requirements and enforcement priorities. We believe that theCFPB regulatory and enforcement processes will have a significant impact on Conifer’s operations. For additionalinformation, see Item 1, Business — Regulations Affecting Conifer’s Operations, of Part I of this report. Conifer has performed systematic analyses to focus our attention on the drivers of bad debt expense for each hospital.While emergency department use is the primary contributor to our provision for doubtful accounts in the aggregate, 63 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsthis is not the case at all hospitals. As a result, we have been increasing our focus on targeted initiatives that concentrate onnon-emergency department patients as well. These initiatives are intended to promote process efficiencies in collecting self-pay accounts, as well as co-pay and deductible amounts owed to us by patients with insurance, that we deem highlycollectible. We are dedicated to modifying and refining our processes as needed, enhancing our technology and improvingstaff training throughout the revenue cycle process in an effort to increase collections and reduce accounts receivable. Over the longer term, several other initiatives we have previously announced should also help address this challenge.For example, our Compact with Uninsured Patients (“Compact”) is designed to offer managed care-style discounts to certainuninsured patients, which enables us to offer lower rates to those patients who historically had been charged standard grosscharges. A significant portion of those charges had previously been written down in our provision for doubtful accounts.Under the Compact, the discount offered to uninsured patients is recognized as a contractual allowance, which reduces netoperating revenues at the time the self-pay accounts are recorded. The uninsured patient accounts, net of contractualallowances recorded, are further reduced to their net realizable value through provision for doubtful accounts based onhistorical collection trends for self-pay accounts and other factors that affect the estimation process. We also provide charity care to patients who are financially unable to pay for the healthcare services they receive.Most patients who qualify for charity care are charged a per-diem amount for services received, subject to a cap. Except for theper-diem amounts, our policy is not to pursue collection of amounts determined to qualify as charity care; therefore, we do notreport these amounts in net operating revenues. Most states include an estimate of the cost of charity care in the determinationof a hospital’s eligibility for Medicaid DSH payments. These payments are intended to mitigate our cost of uncompensatedcare, as well as reduced Medicaid funding levels. Generally, our method of measuring the estimated costs uses adjusted self-pay/charity patient days multiplied by selected operating expenses (which include salaries, wages and benefits, supplies andother operating expenses) per adjusted patient day. The adjusted self-pay/charity patient days represents actual self-pay/charity patient days adjusted to include self-pay/charity outpatient services by multiplying actual self-pay/charity patientdays by the sum of gross self-pay/charity inpatient revenues and gross self-pay/charity outpatient revenues and dividing theresults by gross self-pay/charity inpatient revenues. The following table shows our estimated costs (based on selectedoperating expenses) for caring for charity care patients and self-pay patients, as well as DSH payments we received, for theyears ended December 31, 2014, 2013 and 2012. Years Ended December 31, 2014 2013 2012Estimated costs for: Charity care patients $180 $158 $136 Self-pay patients $620 $545 $430 DSH payments received $817 $428 $283 The expansion of health insurance coverage under the Affordable Care Act has resulted in an increase in the numberof patients using our facilities who have either health insurance exchange or government healthcare insurance programcoverage. However, even with implementation of the ACA, we continue to have to provide uninsured discounts and charitycare due to the failure of states to expand Medicaid coverage under the ACA and for persons living in the country illegallywho are not permitted to enroll in a health insurance exchange or government healthcare insurance program. 64 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2014 COMPARED TO THE YEAR ENDEDDECEMBER 31, 2013 The following two tables summarize our net operating revenues, operating expenses and operating income fromcontinuing operations, both in dollar amounts and as percentages of net operating revenues, for the years endedDecember 31, 2014 and 2013: Years Ended December 31, Increase 2014 2013 (Decrease) Net operating revenues: General hospitals $15,843 $10,888 $4,955 Other operations 2,077 1,186 891 Net operating revenues before provision for doubtful accounts 17,920 12,074 5,846 Less provision for doubtful accounts 1,305 972 333 Net operating revenues 16,615 11,102 5,513 Operating expenses: Salaries, wages and benefits 8,023 5,371 2,652 Supplies 2,630 1,784 846 Other operating expenses, net 4,114 2,701 1,413 Electronic health record incentives (104) (96) (8) Depreciation and amortization 849 545 304 Impairment and restructuring charges, and acquisition-related costs 153 103 50 Litigation and investigation costs 25 31 (6) Operating income $925 $663 $262 Years Ended December 31, Increase 2014 2013 (Decrease) Net operating revenues 100.0 % 100.0 % 100.0 % Operating expenses: Salaries, wages and benefits 48.3 % 48.4 % (0.1)% Supplies 15.8 % 16.1 % (0.3)% Other operating expenses, net 24.8 % 24.3 % 0.5 % Electronic health record incentives (0.7)% (0.9)% 0.2 % Depreciation and amortization 5.1 % 4.9 % 0.2 % Impairment and restructuring charges, and acquisition-related costs 0.9 % 0.9 % —% Litigation and investigation costs 0.2 % 0.3 % (0.1)% Operating income 5.6 % 6.0 % (0.4)% Net operating revenues of our general hospitals include inpatient and outpatient revenues, as well as nonpatientrevenues (rental income, management fee revenue, and income from services such as cafeterias, gift shops and parking) andother miscellaneous revenue. Net operating revenues of other operations primarily consist of revenues from (1) physicianpractices, (2) a long-term acute care hospital, (3) services provided by our Conifer subsidiary to third parties and (4) our healthplans. Revenues from our general hospitals represented approximately 88% and 90% of our total net operating revenuesbefore provision for doubtful accounts for the years ended December 31, 2014 and 2013, respectively. Net operating revenues from our other operations were $2.077 billion and $1.186 billion in the years endedDecember 31, 2014 and 2013, respectively. The increase in net operating revenues from other operations during 2014primarily relates to revenue cycle services provided by our Conifer subsidiary, as well as revenues from our health plans65 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsacquired from Vanguard and additional physician practices. Equity earnings for unconsolidated affiliates included in our netoperating revenues from other operations were $12 million and $15 million for the years ended December 31, 2014 and 2013,respectively. Included in 2013 equity earnings of unconsolidated affiliates is $10 million of earnings associated with steppingup our basis in a previously held investment in an ambulatory surgery center in which we acquired a controlling interest andare now consolidating. Selected Operating Statistics for All Continuing Operations Hospitals—The tables below show certain selectedoperating statistics for our continuing operations on a total hospital basis, which includes the results of the 28 hospitals weacquired from Vanguard on October 1, 2013, TRMC, in which we acquired a majority interest on June 3, 2014, ResoluteHealth Hospital, which we opened on June 24, 2014, and Emanuel Medical Center, which we acquired on August 1, 2014 (inthe case of Vanguard, TRMC and Emanuel Medical Center, only for the period of time from acquisition to December 31,2014). We believe this information is useful to investors because it reflects our current portfolio of hospitals and thesignificant increase in the scale of our operations as a result of these investments. Total Hospital Continuing Operations Years Ended December 31, Increase Admissions, Patient Days and Surgeries 2014 2013 (Decrease) Total admissions 791,165 558,726 41.6 % Adjusted patient admissions 1,354,896 915,276 48.0 % Paying admissions (excludes charity and uninsured) 745,462 518,239 43.8 % Charity and uninsured admissions 45,703 40,487 12.9 % Admissions through emergency department 495,195 347,920 42.3 % Paying admissions as a percentage of total admissions 94.2 % 92.8 % 1.4 % Charity and uninsured admissions as a percentage of total admissions 5.8 % 7.2 % (1.4)% Emergency department admissions as a percentage of total admissions 62.6 % 62.3 % 0.3 % Surgeries — inpatient 215,660 155,634 38.6 % Surgeries — outpatient 481,975 334,233 44.2 % Total surgeries 697,635 489,867 42.4 % Patient days — total 3,695,288 2,621,245 41.0 % Adjusted patient days 6,255,572 4,243,334 47.4 % Average length of stay (days) 4.67 4.69 (0.4)% Number of hospitals (at end of period) 80 77 3 Licensed beds (at end of period) 20,814 20,293 2.6 % Average licensed beds 20,531 14,963 37.2 % Utilization of licensed beds 49.3 % 48.0 % 1.3 % (1)Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services by multiplying actual patientadmissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.(2)The change is the difference between the 2014 and 2013 amounts shown.(3)Utilization of licensed beds represents patient days divided by number of days in the period divided by average licensed beds. 66 (1)(2)(2)(2)(1)(3)(2)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Total Hospital Continuing Operations Years Ended December 31, Increase Outpatient Visits 2014 2013 (Decrease) Total visits 8,283,878 5,115,853 61.9 % Paying visits (excludes charity and uninsured) 7,610,558 4,593,072 65.7 % Charity and uninsured visits 673,320 522,781 28.8 % Emergency department visits 2,824,526 1,865,239 51.4 % Surgery visits 481,975 334,233 44.2 % Paying visits as a percentage of total visits 91.9 % 89.8 % 2.1 % Charity and uninsured visits as a percentage of total visits 8.1 % 10.2 % (2.1)% (1)The change is the difference between the 2014 and 2013 amounts shown. Total Hospital Continuing Operations Years Ended December 31, Increase Revenues 2014 2013 (Decrease) Net operating revenues $16,615 $11,102 49.7 % Revenues from charity and the uninsured $1,065 $778 36.9 % Net inpatient revenues $10,015 $6,952 44.1 % Net outpatient revenues $5,774 $3,859 49.6 % (1)Net inpatient revenues and net outpatient revenues are components of net operating revenues. Net inpatient revenues include self-payrevenues of $393 million and $324 million for the years ended December 31, 2014 and 2013, respectively. Net outpatient revenues includeself-pay revenues of $672 million and $454 million for the years ended December 31, 2014 and 2013, respectively. Total Hospital Continuing Operations Years Ended December 31, Increase Revenues on a Per Admission, Per Patient Day and Per Visit Basis 2014 2013 (Decrease) Net inpatient revenue per admission $12,659 $12,443 1.7 % Net inpatient revenue per patient day $2,710 $2,652 2.2 % Net outpatient revenue per visit $697 $754 (7.6)% Net patient revenue per adjusted patient admission $11,653 $11,812 (1.3)% Net patient revenue per adjusted patient day $2,524 $2,548 (0.9)% (1)Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services by multiplying actual patientadmissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues. Total Hospital Continuing Operations Years Ended December 31, Increase Provision for Doubtful Accounts 2014 2013 (Decrease) Provision for doubtful accounts $1,305 $972 34.3 % Provision for doubtful accounts as a percentage of net operating revenues beforeprovision for doubtful accounts 7.3 % 8.1 % (0.8)% (1)The change is the difference between the 2014 and 2013 amounts shown.67 (1)(1)(1)(1)(1)(1)(1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Total Hospital Continuing Operations Years Ended December 31, Increase Selected Operating Expenses 2014 2013 (Decrease) Hospital Operations and other Salaries, wages and benefits $7,296 $4,795 52.2 % Supplies 2,630 1,784 47.4 % Other operating expenses 3,851 2,490 54.7 % Total $13,777 $9,069 51.9 % Conifer Salaries, wages and benefits $727 $576 26.2 % Other operating expenses 263 211 24.6 % Total $990 $787 25.8 % Total Salaries, wages and benefits $8,023 $5,371 49.4 % Supplies 2,630 1,784 47.4 % Other operating expenses 4,114 2,701 52.3 % Total $14,767 $9,856 49.8 % Rent/lease expense Hospital Operations and other $221 $172 28.5 % Conifer 21 14 50.0 % Total $242 $186 30.1 % Hospital Operations and other Salaries, wages and benefits per adjusted patient day $1,162 $1,128 3.0 % Supplies per adjusted patient day 420 420 —% Other operating expenses per adjusted patient day 536 555 (3.4)% Total per adjusted patient day $2,118 $2,103 0.7 % Salaries, wages and benefits per adjusted patient admission $5,365 $5,228 2.6 % Supplies per adjusted patient admission 1,941 1,949 (0.4)% Other operating expenses per adjusted patient admission 2,473 2,574 (3.9)% Total per adjusted patient admission $9,779 $9,751 0.3 % (1)Included in other operating expenses.(2)Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services by multiplying actual patientadmissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues. Thesemetrics exclude the expenses related to our health plans and our provider network based in Southern California that includes contractedindependent physicians, ancillary providers and hospitals. REVENUES During the year ended December 31, 2014, our net operating revenues increased $5.513 billion, or 49.7%, comparedto the year ended December 31, 2013. Hospital acquisitions contributed approximately $4.501 billion to the increase in ournet operating revenues, while hospitals we operated throughout both periods contributed $1.012 billion, or additionalrevenues of 10.4%. The increase in total hospital net operating revenues is primarily due to higher inpatient and outpatientvolumes, improved terms of our managed care contracts, $50 million of incremental net revenues from the California providerfee program ($165 million in 2014 compared to $115 million in 2013) and an increase in our other operations revenues. Forthe years ended December 31, 2014 and 2013, our net operating revenues attributable to DSH payments and other state-funded subsidy payments were approximately $817 million and $428 million, respectively. During the year ended December 31, 2014, our net inpatient revenues increased $3.063 billion, or 44.1%, comparedto the same period in 2013. Net inpatient revenues from hospital acquisitions contributed approximately68 (1)(2)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents$2.651 billion to the increase in our net inpatient revenues, while hospitals we operated throughout both periods contributedapproximately $412 million, or 6.8% more revenues. Our total admissions increased 41.6% during the year ended December31, 2014 compared to the year ended December 31, 2013 primarily due to our hospital acquisitions in 2014 and 2013 andorganic growth. Admissions at hospitals we operated at the beginning of 2013 increased 3.0% in 2014 compared to 2013. Webelieve our volumes were positively impacted by incremental market share we generated through improved physicianalignment and service line expansion, insurance coverage for a greater number of individuals as a result of the Affordable CareAct, and a strengthening economy. We believe our inpatient volume levels continue to be constrained by an increase inpatients with high-deductible health insurance plans and industry trends reflecting the shift of certain clinical proceduresbeing performed in an outpatient setting rather than an inpatient setting. Net inpatient revenue per admission increased1.7% for all continuing operations and 3.7% for hospitals we operated throughout 2014 and 2013, primarily due to theimproved terms of our managed care contracts and incremental California provider fee program net revenues of our Californiahospitals operated at the beginning of 2013, which revenues were $150 million in 2014 compared to $115 million in 2013. During the year ended December 31, 2014, our net outpatient revenues increased $1.915 billion, or 49.6%, and ourtotal outpatient visits increased 61.9% compared to the same period in 2013. The growth in our outpatient revenues andvolumes was related to both acquisitions and organic growth. Net outpatient revenues from acquisitions contributedapproximately $1.599 billion to the increase in our net outpatient revenues, while facilities we operated throughout bothperiods contributed approximately $316 million, or 9.4% more revenues. The increase in total outpatient visits was primarilydue to our acquisitions in 2014 and 2013. Outpatient visits associated with facilities we operated at the beginning of 2013increased 6.6% in 2014 compared to 2013. Growth in outpatient revenues and volumes for facilities we operated throughoutboth periods was primarily driven by improved terms of our managed care contracts and increased outpatient volume levelsassociated with our outpatient development program. Net outpatient revenue per visit decreased 7.6% for all continuingoperations primarily due to the lower level of patient acuity at our recently opened or acquired facilities; however, netoutpatient revenue per visit for facilities we operated throughout 2014 and 2013 increased 2.7%, primarily due to theimproved terms of our managed care contracts. Our Conifer subsidiary generated net operating revenues of $1.193 billion and $919 million during the years endedDecember 31, 2014 and 2013, respectively, a portion of which was eliminated in consolidation as described in Note 20 to theConsolidated Financial Statements. The increase in the portion that was not eliminated in consolidation is primarily due tonew clients and expanded service offerings. 69 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsPROVISION FOR DOUBTFUL ACCOUNTS The provision for doubtful accounts as a percentage of net operating revenues before provision for doubtful accountswas 7.3% for the year ended December 31, 2014 compared to 8.1% for the year ended December 31, 2013. The decrease in theprovision for doubtful accounts as a percentage of net operating revenues before provision for doubtful accounts primarilyrelated to the decrease in uninsured patient revenues as a percentage of net operating revenues from 8.3% for the year endedDecember 31, 2013 to 6.5% for the year ended December 31, 2014 due to expansion of insurance coverage under the ACA, aswell as the impact of favorable experience related to our estimated future recoveries in the 2014 period, partially offset by theimpact of a greater amount of patient co-pays and deductibles and a 120 basis point decrease in our self-pay collection rate forthe hospitals we operated throughout both periods. The table below shows the net accounts receivable and allowance fordoubtful accounts by payer at December 31, 2014 and December 31, 2013: December 31, 2014 December 31, 2013 Accounts Accounts Receivable Receivable Before Before Allowance Allowance Allowance Allowance for Doubtful for Doubtful for Doubtful for Doubtful Accounts Accounts Net Accounts Accounts Net Medicare $323 $— $323 $301 $— $301 Medicaid 153 — 153 133 — 133 Net cost report settlements payable andvaluation allowances (51) — (51) (75) — (75) Managed care 1,528 99 1,429 1,179 69 1,110 Self-pay uninsured 578 482 96 344 290 54 Self-pay balance after insurance 210 133 77 224 141 83 Estimated future recoveries from accountsassigned to our Conifer subsidiary 125 — 125 92 — 92 Other payers 386 137 249 278 89 189 Total continuing operations 3,252 851 2,401 2,476 589 1,887 Total discontinued operations 4 1 3 3 — 3 $3,256 $852 $2,404 $2,479 $589 $1,890 The increase in our total accounts receivable net of allowance for doubtful accounts from December 31, 2013 toDecember 31, 2014 is primarily related to the growth in hospital patient volumes, our outpatient development initiatives, atemporary buildup in accounts receivable of certain hospitals we acquired from Vanguard due to the implementation of a newbilling system that is expected to enhance efficiency, growth in physician practices, the acquisition of TRMC and EmanuelMedical Center, and the opening of Resolute Health Hospital. The increase in the allowance for doubtful accounts as a percentage of patient accounts receivable related to theaccounts receivable acquired from Vanguard as of October 1, 2013. Under the purchase price allocation rules, allowance fordoubtful accounts as of the acquisition date are offset against the gross receivables. As of the acquisition date, the acquirerbegins to disclose the net receivable amount with no disclosure of the former allowance for doubtful accounts amount.Accounts receivable generated after the acquisition are disclosed before the allowance for doubtful accounts and theassociated allowance for doubtful accounts is also disclosed to arrive at net accounts receivable. The increase also related tothe 120 basis point decrease in our self-pay collection rate for the 49 hospitals we operated throughout the years endedDecember 31, 2014 and 2013, well as higher patient co-pays and deductibles, partially offset by a decline in uninsuredrevenues due to the expansion of insurance coverage under the Affordable Care Act. A significant portion of our provision for doubtful accounts relates to self-pay patients, as well as co-pays anddeductibles owed to us by patients with insurance. Collection of accounts receivable has been a key area of focus, particularlyover the past several years. At December 31, 2014, our collection rate on self-pay accounts for hospitals we operatedthroughout 2014 and 2013 was approximately 27.5%. Our recent self-pay collection rates for hospitals we operatedthroughout all periods were as follows: 28.8% at March 31, 2013; 28.7% at June 30, 2013; 28.8% at September 30, 2013;28.7% at December 31, 2013; 28.1% at March 31, 2014; 27.8% at June 30, 2014; and 27.5% at70 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSeptember 30, 2014. These self-pay collection rates include payments made by patients, including co-pays and deductiblespaid by patients with insurance. Based on our accounts receivable from self-pay patients and co-pays and deductibles owed tous by patients with insurance at December 31, 2014, a 10% decrease or increase in our self-pay collection rate, orapproximately 3%, which we believe could be a reasonably likely change, would result in an unfavorable or favorableadjustment to provision for doubtful accounts of approximately $12 million. Payment pressure from managed care payers also affects our provision for doubtful accounts. We typically experienceongoing managed care payment delays and disputes; however, we continue to work with these payers to obtain adequate andtimely reimbursement for our services. Our estimated collection rate from managed care payers for hospitals we operatedthroughout 2014 and 2013 was approximately 98.3% at both December 31, 2014 and December 31, 2013.Conifer continues to focus on revenue cycle initiatives to improve our cash flow. These initiatives are focused onstandardizing and improving patient access processes, including pre-registration, registration, verification of eligibility andbenefits, liability identification and collection at point-of-service, and financial counseling. These initiatives are focused onreducing denials, improving service levels to patients and increasing the quality of accounts that end up in accountsreceivable. Although we continue to focus on improving our methodology for evaluating the collectability of our accountsreceivable, we may incur future charges if there are unfavorable changes in the trends affecting the net realizable value of ouraccounts receivable. We manage our provision for doubtful accounts using hospital-specific goals and benchmarks such as (1) total cashcollections, (2) point-of-service cash collections, (3) accounts receivable days outstanding (“AR Days”), and (4) accountsreceivable by aging category. The following tables present the approximate aging by payer of our net accounts receivablefrom continuing operations of $2.452 billion and $1.962 billion at December 31, 2014 and 2013, respectively, excluding costreport settlements payable and valuation allowances of $51 million and $75 million at December 31, 2014 and 2013,respectively: December 31, 2014 Indemnity, Managed Self-Pay Medicare Medicaid Care and Other Total0-60 days 81 % 44 % 66 % 29 % 61 % 61-120 days 9 % 22 % 16 % 19 % 16 % 121-180 days 4 % 12 % 7 % 11 % 7 % Over 180 days 6 % 22 % 11 % 41 % 16 % Total 100 % 100 % 100 % 100 % 100 % December 31, 2013 Indemnity, Managed Self-Pay Medicare Medicaid Care and Other Total0-60 days 76 % 58 % 73 % 32 % 65 % 61-120 days 9 % 21 % 13 % 17 % 14 % 121-180 days 4 % 9 % 5 % 7 % 6 % Over 180 days 11 % 12 % 9 % 44 % 15 % Total 100 % 100 % 100 % 100 % 100 % Our AR Days from continuing operations were 49.5 days at December 31, 2014 and 44.7 days at December 31, 2013,within our target of less than 55 days. AR days at December 31, 2014 were negatively impacted by a temporary buildup inaccounts receivable of certain hospitals acquired from Vanguard due to the implementation of a new billing system that isexpected to enhance efficiency. AR Days are calculated as our accounts receivable from continuing operations on the last datein the quarter divided by our net operating revenues from continuing operations for the quarter ended on that date divided bythe number of days in the quarter.71 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents As of December 31, 2014, we had a cumulative total of patient account assignments to our Conifer subsidiary datingback at least three years or older of approximately $2.9 billion related to our continuing operations, but excluding ourrecently acquired hospitals. These accounts have already been written off and are not included in our receivables or in theallowance for doubtful accounts; however, an estimate of future recoveries from all the accounts assigned to our Conifersubsidiary is determined based on our historical experience and recorded in accounts receivable. Patient advocates from Conifer’s Medicaid Eligibility Program (“MEP”) screen patients in the hospital to determinewhether those patients meet eligibility requirements for financial assistance programs. They also expedite the process ofapplying for these government programs. Receivables from patients who are potentially eligible for Medicaid are classified asMedicaid pending, under the MEP, with appropriate contractual allowances recorded. At the present time, our newly acquiredfacilities are beginning to implement this program. Based on recent trends, approximately 91% of all accounts in the MEP areultimately approved for benefits under a government program, such as Medicaid, compared to 93% during the three monthsended December 31, 2013. The following table shows the approximate amount of accounts receivable in the MEP stillawaiting determination of eligibility under a government program at December 31, 2014 and December 31, 2013 by agingcategory: December 31, December 31, 2014 2013 0-60 days $85 $132 61-120 days 20 28 121-180 days 10 8 Over 180 days 16 18 Total $131 $186 SALARIES, WAGES AND BENEFITS Salaries, wages and benefits expense as a percentage of net operating revenues decreased 0.1% for the year endedDecember 31, 2014 compared to the year ended December 31, 2013. Salaries, wages and benefits per adjusted patientadmission for our Hospital Operations and other segment increased by approximately 2.6% in the year endedDecember 31, 2014 compared to the same period in 2013. This change is primarily due to a greater number of employedphysicians, annual merit increases for certain of our employees, increased overtime and contract labor costs, increasedincentive compensation expense, an increase in the 401(k) plan maximum matching percentage for certain employeepopulations and increased health benefits costs. Salaries, wages and benefits expense for the year ended December 31, 2014and 2013 included stock-based compensation expense of $51 million and $37 million, respectively. Salaries, wages and benefits expense for Conifer increased by $151 million in the year ended December 31, 2014compared to the year ended December 31, 2013 due to an increase in employee headcount as a result of the growth inConifer’s business primarily attributable to the integration of the Vanguard facilities’ revenue cycle operations now managedby Conifer, Conifer’s acquisition of SPi Healthcare and growth in Conifer’s services to CHI. As of December 31, 2014, approximately 20% of our employees were represented by labor unions. These employees— primarily registered nurses and service and maintenance workers — are located at 38 of our hospitals, the majority of whichare in California, Florida and Michigan. We currently have six expired contracts and are negotiating renewals under extensionagreements. We are also negotiating first contracts at two of our hospitals where employees selected union representation. Atthis time, we are unable to predict the outcome of the negotiations, but increases in salaries, wages and benefits could resultfrom these agreements. Furthermore, there is a possibility that strikes could occur during the negotiation process, which couldincrease our labor costs and have an adverse effect on our patient admissions and net operating revenues. Future organizingactivities by labor unions could increase our level of union representation. 72 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSUPPLIES Supplies expense as a percentage of net operating revenues decreased by 0.3% for the year ended December 31, 2014compared to the year ended December 31, 2013. Supplies expense per adjusted patient admission for our Hospital Operationsand other segment decreased by 0.4% in the year ended December 31, 2014 compared to the same period in 2013. The changein supplies expense per adjusted patient admission was favorably impacted by the supplies expense control measures we havein place, including rebate arrangements, partially offset by higher costs for pharmaceuticals and implants, as well as volumegrowth in our supply-intensive surgical services. In general, supplies expense changes are primarily attributable to changes inour patient volume levels and the mix of procedures performed. We strive to control supplies expense through product standardization, contract compliance, improved utilization,bulk purchases and operational improvements. The items of current cost reduction focus continue to be cardiac stents andpacemakers, orthopedics and implants, and high-cost pharmaceuticals. We also utilize group-purchasing strategies andsupplies-management services in an effort to reduce costs. OTHER OPERATING EXPENSES, NET Other operating expenses as a percentage of net operating revenues was 24.8% in the year ended December 31, 2014compared to 24.3% in the year ended December 31, 2013. Other operating expenses per adjusted patient admission for ourHospital Operations and other segment decreased by 3.9% in the year ended December 31, 2014 compared to the same periodin 2013, primarily due to the favorable impact of our higher patient volumes on this cost metric due to the fixed nature ofcertain costs in operating expenses. The approximately $1.361 billion, or 54.7%, increase in other operating expenses for ourHospital Operations and other segment in the year ended December 31, 2014 compared to the year ended December 31, 2013is primarily due to: ·increases due to hospital acquisitions of $1.116 billion; ·increased costs of contracted services for hospitals we operated throughout both periods of $51 million; ·higher medical fees primarily related to a greater number of employed and contracted physicians for hospitals weoperated throughout both periods of $50 million; ·increased costs associated with funding indigent care services by the Texas hospitals we operated throughoutboth periods of $25 million, which costs were substantially offset by additional net patient revenues; and ·increased malpractice expense for hospitals we operated throughout both periods of $57 million. Malpractice expense in the year ended December 31, 2014 included isolated unfavorable case reserve adjustments related to asmall number of claims, as well as an unfavorable adjustment of approximately $7 million due to a 48 basis point decrease inthe interest rate used to estimate the discounted present value of projected future malpractice liabilities compared to afavorable adjustment of approximately $17 million as a result of an 127 basis point increase in the interest rate in the 2013period. Other operating expenses for Conifer increased by $52 million in the year ended December 31, 2014 compared to theyear ended December 31, 2013 due to higher costs related to the growth in Conifer’s business primarily attributable to theintegration of the Vanguard facilities’ revenue cycle operations now managed by Conifer, Conifer’s acquisition of SPiHealthcare and growth in Conifer’s services to CHI. IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION-RELATED COSTS During the year ended December 31, 2014, we recorded impairment and restructuring charges and acquisition-relatedcosts of $153 million. This amount included a $20 million impairment charge for the write-down of buildings and equipmentof one of our previously impaired hospitals to their estimated fair values, primarily due to a decline in the fair value of realestate in the market in which the hospital operates and a decline in the estimated fair value of equipment. Material adversetrends in our most recent estimates of future undiscounted cash flows of the hospital, consistent with our previous estimates inprior years when impairment charges were recorded at this hospital, indicated the carrying value of73 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsthe hospital’s long-lived assets was not recoverable from the estimated future cash flows. We believe the most significantfactors contributing to the adverse financial trends include reductions in volumes of insured patients, shifts in payer mix fromcommercial to governmental payers combined with reductions in reimbursement rates from governmental payers, and highlevels of uninsured patients. As a result, we updated the estimate of the fair value of the hospital’s long-lived assets andcompared the fair value estimate to the carrying value of the hospital’s long-lived assets. Because the fair value estimate waslower than the carrying value of the hospital’s long-lived assets, an impairment charge was recorded for the difference in theamounts. Unless the anticipated future financial trends of this hospital improve to the extent that the estimated futureundiscounted cash flows exceed the carrying value of the long-lived assets, this hospital is at risk of future impairments,particularly if we spend significant amounts of capital at the hospital without generating a corresponding increase in thehospital’s fair value or if the fair value of the hospital’s real estate or equipment declines. The aggregate carrying value ofassets held and used of the hospital for which an impairment charge was recorded was $23 million as of December 31, 2014after recording the impairment charge. We also recorded $16 million of employee severance costs, $19 million of contract andlease termination fees, $3 million of restructuring costs, and $95 million in acquisition-related costs, which include$16 million of transaction costs and $79 million of acquisition integration charges. During the year ended December 31, 2013, we recorded impairment and restructuring charges and acquisition-relatedcosts of $103 million. This amount included a $12 million impairment charge for the write-down of buildings and equipmentand other long-lived assets, primarily capitalized software costs classified in other intangible assets, of one of our hospitals totheir estimated fair values, primarily due to a decline in the fair value of real estate in the market in which the hospital operatesand a decline in the estimated fair value of equipment. Material adverse trends in our estimates of future undiscounted cashflows of the hospital at that time indicated the carrying value of the hospital’s long-lived assets was not recoverable from theestimated future cash flows. We believed the most significant factors contributing to the adverse financial trends at that timeincluded reductions in volumes of insured patients, shifts in payer mix from commercial to governmental payers combinedwith reductions in reimbursement rates from governmental payers, and high levels of uninsured patients. As a result, weupdated the estimate of the fair value of the hospital’s long-lived assets and compared the fair value estimate to the carryingvalue of the hospital’s long-lived assets. Because the fair value estimate was lower than the carrying value of the hospital’slong-lived assets, an impairment charge was recorded for the difference in the amounts. We disclosed in our Annual Report onForm 10-K for the year ended December 31, 2013 that, unless the anticipated future financial trends of this hospital improvedto the extent that the estimated future undiscounted cash flows exceeded the carrying value of the long-lived assets, thishospital was at risk of future impairments, which impairments occurred in 2014 as described above, particularly if we spentsignificant amounts of capital at the hospital without generating a corresponding increase in the hospital’s fair value or if thefair value of the hospital’s real estate or equipment declined. The aggregate carrying value of assets held and used of thehospital for which an impairment charge was recorded was $44 million as of December 31, 2013 after recording theimpairment charge. We also recorded $16 million of restructuring costs, $14 million of employee severance costs, $2 millionof lease termination fees, and $59 million in acquisition-related costs, which included both transaction costs and acquisitionintegration charges. Our impairment tests presume stable, improving or, in some cases, declining operating results in our hospitals, whichare based on programs and initiatives being implemented that are designed to achieve the hospital’s most recent projections. Ifthese projections are not met, or if in the future negative trends occur that impact our future outlook, future impairments oflong-lived assets and goodwill may occur, and we may incur additional restructuring charges. LITIGATION AND INVESTIGATION COSTS Litigation and investigation costs for the year ended December 31, 2014 and 2013 were $25 million and $31 million,respectively, primarily related to costs associated with various legal proceedings and governmental reviews. INTEREST EXPENSE Interest expense for the year ended December 31, 2014 was $754 million compared to $474 million for the yearended December 31, 2013, primarily due to increased borrowings relating to our acquisitions in 2014 and 2013, and$400 million of share repurchases during 2013.74 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents LOSS FROM EARLY EXTINGUISHMENT OF DEBT During the year ended December 31, 2014, we recorded a loss from early extinguishment of debt of approximately$24 million, primarily related to the difference between the redemption price and the par value of the $474 million aggregateprincipal amount of our 9/4% senior notes due 2015 that we redeemed in the period, as well as the write-off of associatedunamortized note discounts and issuance costs. During the year ended December 31, 2013, we recorded a loss from early extinguishment of debt of $348 millionconsisting of $177 million related to the difference between the purchase prices and the par values of the $714 millionaggregate principal amount of our 10% senior secured notes due 2018 that we purchased and called during the period, as wellas the write-off of unamortized note discounts and issuance costs, and $171 million related to the difference between thepurchase prices and the par values of the $925 million aggregate principal amount of our 8/8% senior secured notes due 2019that we purchased and called during the period, as well as the write-off of unamortized note discounts and issuance costs. INCOME TAX EXPENSE During the year ended December 31, 2014, we recorded income tax expense of $49 million compared to $65 millionof income tax benefit during the year ended December 31, 2013, primarily related to the loss on early extinguishment of debtin 2013. ADDITIONAL SUPPLEMENTAL NON-GAAP DISCLOSURES The financial information provided throughout this report, including our Consolidated Financial Statements and thenotes thereto, has been prepared in conformity with accounting principles generally accepted in the United States of America(“GAAP”). However, we use certain non-GAAP financial measures defined below in communications with investors, analysts,rating agencies, banks and others to assist such parties in understanding the impact of various items on our financialstatements, some of which are recurring or involve cash payments. In addition, from time to time we use these measures todefine certain performance targets under our compensation programs. “Adjusted EBITDA” is a non-GAAP measure that we use in our analysis of the performance of our business, which wedefine as net income (loss) attributable to our common shareholders before: (1) the cumulative effect of changes in accountingprinciple, net of tax; (2) net loss (income) attributable to noncontrolling interests; (3) preferred stock dividends; (4) income(loss) from discontinued operations, net of tax; (5) income tax benefit (expense); (6) investment earnings (loss); (7) gain (loss)from early extinguishment of debt; (8) net gain (loss) on sales of investments; (9) interest expense; (10) litigation andinvestigation benefit (costs), net of insurance recoveries; (11) hurricane insurance recoveries, net of costs; (12) impairment andrestructuring charges and acquisition-related costs; and (13) depreciation and amortization. As is the case with all non-GAAPmeasures, investors should consider the limitations associated with this metric, including the potential lack of comparabilityof this measure from one company to another, and should recognize that Adjusted EBITDA does not provide a completemeasure of our operating performance because it excludes many items that are included in our financial statements.Accordingly, investors are encouraged to use GAAP measures when evaluating our financial performance. 75 17Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe following table shows the reconciliation of Adjusted EBITDA to net income attributable to our commonshareholders (the most comparable GAAP term) for the years ended December 31, 2014 and 2013: Years Ended December 31, 2014 2013 Net income (loss) attributable to Tenet Healthcare Corporation commonshareholders $12 $(134) Less: Net (income) attributable to noncontrolling interests (64) (30) Loss from discontinued operations, net of tax (22) (11) Income (loss) from continuing operations 98 (93) Income tax benefit (expense) (49) 65 Investment earnings — 1 Loss from early extinguishment of debt (24) (348) Interest expense (754) (474) Operating income 925 663 Litigation and investigation costs (25) (31) Impairment and restructuring charges, and acquisition-related costs (153) (103) Depreciation and amortization (849) (545) Adjusted EBITDA $1,952 $1,342 Net operating revenues $16,615 $11,102 Adjusted EBITDA as % of net operating revenues (AdjustedEBITDA margin) 11.7 % 12.1 % 76 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2013 COMPARED TO THE YEAR ENDEDDECEMBER 31, 2012 The following two tables summarize our net operating revenues, operating expenses and operating income fromcontinuing operations, both in dollar amounts and as percentages of net operating revenues, for the years endedDecember 31, 2013 and 2012: Years Ended December 31, Increase 2013 2012 (Decrease) Net operating revenues: General hospitals $10,888 $9,436 $1,452 Other operations 1,186 468 718 Net operating revenues before provision for doubtful accounts 12,074 9,904 2,170 Less provision for doubtful accounts 972 785 187 Net operating revenues 11,102 9,119 1,983 Operating expenses: Salaries, wages and benefits 5,371 4,257 1,114 Supplies 1,784 1,552 232 Other operating expenses, net 2,701 2,147 554 Electronic health record incentives (96) (40) (56) Depreciation and amortization 545 430 115 Impairment and restructuring charges, and acquisition-related costs 103 19 84 Litigation and investigation costs 31 5 26 Operating income $663 $749 $(86) Years Ended December 31, Increase 2013 2012 (Decrease) Net operating revenues 100.0 % 100.0 % —% Operating expenses: Salaries, wages and benefits 48.4 % 46.7 % 1.7 % Supplies 16.1 % 17.0 % (0.9)% Other operating expenses, net 24.3 % 23.5 % 0.8 % Electronic health record incentives (0.9)% (0.4)% (0.5)% Depreciation and amortization 4.9 % 4.7 % 0.2 % Impairment and restructuring charges, and acquisition-related costs 0.9 % 0.2 % 0.7 % Litigation and investigation costs 0.3 % 0.1 % 0.2 % Operating income 6.0 % 8.2 % (2.2)% Revenues from our general hospitals represented approximately 90% and 95% of our total net operating revenuesbefore provision for doubtful accounts for the years ended December 31, 2013 and 2012, respectively. Net operating revenuesfrom our other operations were $1.186 billion and $468 million in the years ended December 31, 2013 and 2012, respectively.The increase in net operating revenues from other operations during 2013 primarily relates to revenue cycle services providedby our Conifer subsidiary, as well as revenues from our health plans acquired from Vanguard and additional physicianpractices. Equity earnings for unconsolidated affiliates included in our net operating revenues from other operations were $15million and $8 million for each of the years ended December 31, 2013 and 2012, respectively. Included in 2013 equityearnings of unconsolidated affiliates is $10 million of earnings associated with stepping up our basis in a previously heldinvestment in an ambulatory surgery center in which we acquired a controlling interest and are now consolidating. 77 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSelected Operating Statistics for All Continuing Operations Hospitals—The following table shows certain selectedoperating statistics for our continuing operations on a total hospital basis, which includes the statistics from the 28 hospitalswe acquired from Vanguard on October 1, 2013, but only from the date of acquisition to December 31, 2013. Total Hospital Continuing Operations Years Ended December 31, Increase 2013 2012 (Decrease)Total admissions 558,726 506,485 10.3 % Adjusted patient admissions 915,276 796,520 14.9 % Paying admissions (excluding charity and uninsured) 518,239 470,756 10.1 % Charity and uninsured admissions 40,487 35,729 13.3 % Admissions through emergency department 347,920 312,902 11.2 % Emergency department visits 1,865,239 1,555,102 19.9 % Total emergency department admissions and visits 2,213,159 1,868,004 18.5 % Surgeries — inpatient 155,634 141,288 10.2 % Surgeries — outpatient 334,233 239,667 39.5 % Total surgeries 489,867 380,955 28.6 % Patient days — total 2,621,245 2,368,916 10.7 % Adjusted patient days 4,243,334 3,693,218 14.9 % Average length of stay (days) 4.69 4.68 0.2 % Average licensed beds 14,963 13,187 13.5 % Utilization of licensed beds 48.0 % 49.1 % (1.1)%Total visits 5,115,854 4,167,114 22.8 % Paying visits (excluding charity and uninsured) 4,593,073 3,728,402 23.2 % Charity and uninsured visits 522,781 438,712 19.2 % Net inpatient revenues $6,952 $6,200 12.1 % Net outpatient revenues $3,859 $3,167 21.9 % Net inpatient revenue per admission $12,443 $12,241 1.7 % Net inpatient revenue per patient day $2,652 $2,617 1.3 % Net outpatient revenue per visit $754 $760 (0.8)% Net patient revenue per adjusted admission $11,812 $11,760 0.4 % Net patient revenue per adjusted patient day $2,548 $2,536 0.5 % (1)Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services by multiplying actual patientadmissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.(2)Utilization of licensed beds represents patient days divided by number of days in the period divided by average licensed beds.(3)The change is the difference between the 2013 and 2012 amounts shown. 78 (1)(1)(2)(3) (1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSelected Operating Statistics on a Same-Hospital Basis—The following tables show operating statistics of ourcontinuing hospitals on a same-hospital basis at the end of 2013 and 2012. As a result, the tables exclude statistics related tohospitals we acquired from Vanguard on October 1, 2013 because we did not own those hospitals during both of those years. Same-Hospital Continuing Operations Years Ended December 31, Increase Admissions, Patient Days and Surgeries 2013 2012 (Decrease) Total admissions 490,624 506,485 (3.1)% Adjusted patient admissions 787,995 796,520 (1.1)% Paying admissions (excludes charity and uninsured) 455,550 470,756 (3.2)% Charity and uninsured admissions 35,074 35,729 (1.8)% Admissions through emergency department 308,200 312,902 (1.5)% Paying admissions as a percentage of total admissions 92.9 % 92.9 % —% Charity and uninsured admissions as a percentage of total admissions 7.1 % 7.1 % —% Emergency department admissions as a percentage of total admissions 62.8 % 61.8 % 1.0 % Surgeries — inpatient 136,713 141,288 (3.2)% Surgeries — outpatient 303,500 239,667 26.6 % Total surgeries 440,213 380,955 15.6 % Patient days — total 2,315,304 2,368,916 (2.3)% Adjusted patient days 3,683,018 3,693,218 (0.3)% Average length of stay (days) 4.72 4.68 0.9 % Number of hospitals (at end of period) 49 49 — Licensed beds (at end of period) 13,178 13,216 (0.3)% Average licensed beds 13,180 13,187 (0.1)% Utilization of licensed beds 48.1 % 49.1 % (1.0)% (1)Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services by multiplying actual patientadmissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues.(2)The change is the difference between the 2013 and 2012 amounts shown.(3)Utilization of licensed beds represents patient days divided by number of days in the period divided by average licensed beds. Same-Hospital Continuing Operations Years Ended December 31, Increase Outpatient Visits 2013 2012 (Decrease) Total visits 4,287,116 4,167,114 2.9 % Paying visits (excludes charity and uninsured) 3,834,195 3,728,402 2.8 % Charity and uninsured visits 452,921 438,712 3.2 % Emergency department visits 1,607,075 1,555,102 3.3 % Surgery visits 303,500 239,667 26.6 % Paying visits as a percentage of total visits 89.4 % 89.5 % (0.1)% Charity and uninsured visits as a percentage of total visits 10.6 % 10.5 % 0.1 % (1)The change is the difference between the 2013 and 2012 amounts shown. 79 (1)(2)(2)(2)(1)(2)(3)(2)(1)(1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Same-Hospital Continuing Operations Years Ended December 31, Increase Revenues 2013 2012 (Decrease) Net operating revenues $9,688 $9,119 6.2 % Revenues from the uninsured $671 $636 5.5 % Net inpatient revenues $6,101 $6,200 (1.6)% Net outpatient revenues $3,366 $3,167 6.3 % (1)Net inpatient revenues and net outpatient revenues are components of net operating revenues. Net inpatient revenues include self-pay revenuesof $279 million and $269 million for the years ended December 31, 2013 and 2012, respectively. Net outpatient revenues include self-payrevenues of $392 million and $367 million for the years ended December 31, 2013 and 2012, respectively. Same-Hospital Continuing Operations Years Ended December 31, Increase Revenues on a Per Admission, Per Patient Day and Per Visit Basis 2013 2012 (Decrease) Net inpatient revenue per admission $12,435 $12,241 1.6 % Net inpatient revenue per patient day $2,635 $2,617 0.7 % Net outpatient revenue per visit $785 $760 3.3 % Net patient revenue per adjusted patient admission $12,014 $11,760 2.2 % Net patient revenue per adjusted patient day $2,570 $2,536 1.3 % (1)Adjusted patient admissions/days represents actual patient admissions/days adjusted to include outpatient services by multiplying actual patientadmissions/days by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues. Same-Hospital Continuing Operations Years Ended December 31, Increase Provision for Doubtful Accounts 2013 2012 (Decrease) Provision for doubtful accounts $829 $785 5.6 % Provision for doubtful accounts as a percentage of net operating revenues beforeprovision for doubtful accounts 7.9 % 7.9 % —% Collection rate on self-pay accounts 28.7 % 28.9 % (0.2)% Collection rate on commercial managed care accounts 98.3 % 98.0 % 0.3 % (1)The change is the difference between the 2013 and 2012 amounts shown.(2)Self-pay accounts receivable are comprised of both uninsured and balance after insurance receivables. 80 (1)(1)(1)(1)(1)(2)(1)(1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Same-Hospital Continuing Operations Years Ended December 31, Increase Selected Operating Expenses 2013 2012 (Decrease) Hospital Operations and other Salaries, wages and benefits $4,142 $3,983 4.0 % Supplies 1,555 1,552 0.2 % Other operating expenses 2,093 2,040 2.6 % Total $7,790 $7,575 2.8 % Conifer Salaries, wages and benefits $576 $274 110.2 % Other operating expenses 211 107 97.2 % Total $787 $381 106.6 % Total Salaries, wages and benefits $4,718 $4,257 10.8 % Supplies 1,555 1,552 0.2 % Other operating expenses 2,304 2,147 7.3 % Total $8,577 $7,956 7.8 % Rent/lease expense Hospital Operations and other $153 $144 6.3 % Conifer 14 12 16.7 % Total $167 $156 7.1 % Hospital Operations and other Salaries, wages and benefits per adjusted patient day $1,124 $1,078 4.3 % Supplies per adjusted patient day 422 420 0.5 % Other operating expenses per adjusted patient day 561 553 1.4 % Total per adjusted patient day $2,107 $2,051 2.7 % Salaries, wages and benefits per adjusted patient admission $5,253 $5,001 5.0 % Supplies per adjusted patient admission 1,973 1,948 1.3 % Other operating expenses per adjusted patient admission 2,622 2,561 2.4 % Total per adjusted patient admission $9,848 $9,510 3.6 % (1)Included in other operating expenses.(2)Adjusted patient days/admissions represents actual patient days/admissions adjusted to include outpatient services by multiplying actual patientdays/admissions by the sum of gross inpatient revenues and outpatient revenues and dividing the results by gross inpatient revenues. Thesemetrics exclude the expenses related to the provider network based in Southern California that includes contracted independent physicians,ancillary providers and hospitals. REVENUES During the year ended December 31, 2013, same-hospital net operating revenues before provision for doubtfulaccounts increased 6.2%, compared to the year ended December 31, 2012, primarily due to improved terms of our managedcare contracts, an increase in outpatient volumes and an increase in our other operations revenues, partially offset by adecrease in inpatient volumes and the impact of a $81 million favorable adjustment in the 2012 period from the industry-widesettlement (the “Medicare Budget Neutrality settlement”) that corrected Medicare payments made to providers for inpatienthospital services for a number of prior periods. Our same-hospital net outpatient revenues and total outpatient visits increased 6.3% and 2.9%, respectively, duringthe year ended December, 31 2013 compared to the year ended December 31, 2012. Outpatient revenues and volume growthwas primarily driven by improved terms of our managed care contracts, increased outpatient volume levels and our outpatientacquisition program. Net outpatient revenue per visit increased 3.3% primarily due to the improved terms of our managed carecontracts. 81 (1)(2)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOur Conifer subsidiary generated net operating revenues of $919 million and $488 million for the year endedDecember 31, 2013 and 2012, respectively, a portion of which was eliminated in consolidation as described in Note 20 to theConsolidated Financial Statements. The increase in the portion that was not eliminated in consolidation is primarily due tothe 10-year CHI agreement entered into in May 2012, expanded service offerings and two acquisitions in the three monthsended December 31, 2012. Same-hospital patient days decreased by 2.3% during the year ended December 31, 2013 compared to the year endedDecember 31, 2012. We believe the following factors contributed to the changes in our inpatient volume levels: (1) weakeconomic conditions, which we believe adversely impacted the level of elective procedures performed at our hospitals;(2) loss of patients to competing healthcare providers; (3) an increase in patients with high-deductible health insurance plans;and (4) industry trends reflecting the shift of certain clinical procedures being performed in an outpatient setting rather than inan inpatient setting. PROVISION FOR DOUBTFUL ACCOUNTS The provision for doubtful accounts as a percentage of net operating revenues before provision for doubtful accountswas 8.1% for the year ended December 31, 2013 compared to 7.9% for the year ended December 31, 2012. The 5.6% increasein the absolute amount of provision for doubtful accounts in the 2013 period compared to the 2012 period was primarily dueto a 5.5% increase in uninsured patient revenues, as well as higher patient co-pays and deductibles for our same-hospitals. Thetable below shows the net accounts receivable and allowance for doubtful accounts by payer at December 31, 2013 andDecember 31, 2012: December 31, 2013 December 31, 2012 Accounts Accounts Receivable Receivable Before Before Allowance Allowance Allowance Allowance for Doubtful for Doubtful for Doubtful for Doubtful Accounts Accounts Net Accounts Accounts Net Medicare $301 $— $301 $172 $ — $172 Medicaid 133 — 133 116 — 116 Net cost report settlements payable andvaluation allowances (75) — (75) (24) — (24) Managed care 1,179 69 1,110 769 72 697 Self-pay uninsured 344 290 54 204 178 26 Self-pay balance after insurance 224 141 83 143 78 65 Estimated future recoveries from accountsassigned to our Conifer subsidiary 92 — 92 88 — 88 Other payers 278 89 189 264 68 196 Total continuing operations 2,476 589 1,887 1,732 396 1,336 Total discontinued operations 3 — 3 14 5 9 $2,479 $589 $1,890 $1,746 $401 $1,345 Our same‑hospital self-pay collection rates during 2012 and 2013 were as follows: 27.9% at March 31, 2012; 28.5%at June 30, 2012; 28.8% at September 30, 2012; 28.9% at December 31, 2012; 28.8% at March 31, 2013; 28.7% at June 30,2013; 28.8% at September 30, 2013 and 28.7% at December 31, 2013. These self‑pay collection rates include payments madeby patients, including co-pays and deductibles paid by patients with insurance. Based on our accounts receivable from self-pay patients and co-pays and deductibles owed to us by patients with insurance at December 31, 2013, a 10% decrease orincrease in our self-pay collection rate, or approximately 3%, which we believe could be a reasonably likely change, wouldresult in an unfavorable or favorable adjustment to provision for doubtful accounts of approximately $9 million. Ourestimated same-hospital collection rate from managed care payers was approximately 98.3% at December 31, 2013 and 98.0%at December 31, 2012.82 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents The following tables present the approximate aging by payer of our net accounts receivable from continuingoperations of $1.962 billion and $1.360 billion at December 31, 2013 and 2012, respectively, excluding cost reportsettlements payable and valuation allowances of $75 million and $24 million at December 31, 2013 and 2012, respectively: December 31, 2013 Indemnity, Managed Self-Pay Medicare Medicaid Care and Other Total0-60 days 76 % 58 % 73 % 32 % 65 % 61-120 days 9 % 21 % 13 % 17 % 14 % 121-180 days 4 % 9 % 5 % 7 % 6 % Over 180 days 11 % 12 % 9 % 44 % 15 % Total 100 % 100 % 100 % 100 % 100 % December 31, 2012 Indemnity, Managed Self-Pay Medicare Medicaid Care and Other Total0-60 days 92 % 62 % 78 % 29 % 67 % 61-120 days 2 % 19 % 11 % 17 % 12 % 121-180 days 1 % 8 % 4 % 9 % 5 % Over 180 days 5 % 11 % 7 % 45 % 16 % Total 100 % 100 % 100 % 100 % 100 % Our AR Days from continuing operations were 44.7 days at December 31, 2013 and 52.7 days at December 31, 2012,respectively, within our target of less than 55 days. AR Days are calculated as our accounts receivable from continuingoperations on the last date in the quarter divided by our net operating revenues from continuing operations for the quarterended on that date divided by the number of days in the quarter. As of December 31, 2013, we had a cumulative total of patient account assignments to our Conifer subsidiary datingback at least three years or older of approximately $3.3 billion related to our continuing operations, but excluding our newlyacquired hospitals. These accounts have already been written off and are not included in our receivables or in the allowancefor doubtful accounts; however, an estimate of future recoveries from all the accounts assigned to our Conifer subsidiary isdetermined based on our historical experience and recorded in accounts receivable. The following table shows the approximate amount of accounts receivable in the MEP still awaiting determination ofeligibility under a government program at December 31, 2013 and 2012 by aging category: December 31, December 31, 2013 2012 0-60 days $132 $99 61-120 days 28 22 121-180 days 8 5 Over 180 days 18 16 Total $186 $142 83 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSALARIES, WAGES AND BENEFITS Salaries, wages and benefits expense as a percentage of net operating revenues increased 1.7% for the year endedDecember 31, 2013 compared to the year ended December 31, 2012. Same-hospital salaries, wages and benefits per adjustedpatient admission for our Hospital Operations and other segment increased by approximately 5.0% in the year endedDecember 31, 2013 compared to the same period in 2012. This increase is primarily due to an increase in the number ofphysicians we employ, annual merit increases for certain of our employees, increased health benefits costs and increasedcontract labor, partially offset by a decrease in incentive compensation expense. Salaries, wages and benefits expense for theyear ended December 31, 2013 and 2012 included stock-based compensation expense of $37 million and $32 million,respectively. Salaries, wages and benefits expense for Conifer increased by $302 million in the year ended December 31, 2013compared to the year ended December 31, 2012 due to an increase in employee headcount as a result of the growth inConifer’s business primarily attributable to the new CHI partnership, the Vanguard acquisition and Conifer’s two acquisitionsin the three months ended December 31, 2012. SUPPLIES Supplies expense as a percentage of net operating revenues decreased 0.9% for the year ended December 31, 2013compared to the year ended December 31, 2012. Same-hospital supplies expense per adjusted patient admission for ourHospital Operations and other segment increased by 1.3% in the year ended December 31, 2013 compared to the same periodin 2012. Supplies expense was favorably impacted by lower implant costs, orthopedic supply costs and cardiology supplycosts due to renegotiated prices, partially offset by increased costs of pharmaceuticals and increased surgical supply costs as aresult of higher surgical volumes. OTHER OPERATING EXPENSES, NET Other operating expenses as a percentage of net operating revenues was 24.3% in the year ended December 31, 2013compared to 23.5% in the year ended December 31, 2012. Same-hospital other operating expenses per adjusted patientadmission for our Hospital Operations and other segment increased by 2.4% in the year ended December 31, 2013 comparedto the same period in 2012. The 2.6% increase in same-hospital other operating expenses in the year endedDecember 31, 2013 compared to the year ended December 31, 2012 is primarily due to: ·increased costs of contracted services ($92 million) primarily related to Conifer’s new clients and businessacquisitions;·increased medical fees primarily related to employed physicians ($42 million);·increased rent and lease expenses ($6 million); and·increased malpractice expense ($6 million).These increases were partially offset by lower consulting and legal expenses ($25 million) in part due to the aforementionedMedicare Budget Neutrality settlement in 2012. Malpractice expense in the year ended December 31, 2013 on a same-hospital basis included favorable adjustmentstotaling approximately $11 million due to a 127 basis point increase in the interest rate used to estimate the discountedpresent value of projected future malpractice liabilities compared to an unfavorable adjustment of $2 million due to a 17 basispoint decrease in the interest rate in the 2012 period. IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISTION RELATED-COSTS During the year ended December 31, 2013, we recorded impairment and restructuring charges and acquisition-relatedcosts of $103 million. This amount included a $12 million impairment charge for the write-down of buildings and equipmentand other long-lived assets, primarily capitalized software costs classified in other intangible assets, of one of our hospitals totheir estimated fair values, primarily due to a decline in the fair value of real estate in the market in84 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentswhich the hospital operates and a decline in the estimated fair value of equipment. Material adverse trends in our estimates offuture undiscounted cash flows of the hospital at that time indicated the carrying value of the hospital’s long-lived assets wasnot recoverable from the estimated future cash flows. We believed the most significant factors contributing to the adversefinancial trends at that time included reductions in volumes of insured patients, shifts in payer mix from commercial togovernmental payers combined with reductions in reimbursement rates from governmental payers, and high levels ofuninsured patients. As a result, we updated the estimate of the fair value of the hospital’s long-lived assets and compared thefair value estimate to the carrying value of the hospital’s long-lived assets. Because the fair value estimate was lower than thecarrying value of the hospital’s long-lived assets, an impairment charge was recorded for the difference in the amounts. Wedisclosed in our Annual Report on Form 10-K for the year ended December 31, 2013 that, unless the anticipated futurefinancial trends of this hospital improved to the extent that the estimated future undiscounted cash flows exceeded thecarrying value of the long-lived assets, this hospital was at risk of future impairments, which impairments occurred in 2014 asdescribed above, particularly if we spent significant amounts of capital at the hospital without generating a correspondingincrease in the hospital’s fair value or if the fair value of the hospital’s real estate or equipment declined. The aggregatecarrying value of assets held and used of the hospital for which an impairment charge was recorded was $44 million as ofDecember 31, 2013 after recording the impairment charge. We also recorded $16 million of restructuring costs, $14 million ofemployee severance costs, $2 million of lease termination fees, and $59 million in acquisition-related costs, which includedboth transaction costs and acquisition integration charges. During the year ended December 31, 2012, we recorded net impairment and restructuring charges of $19 million,consisting of $3 million relating to the impairment of obsolete assets, $2 million relating to other impairment charges,$8 million of employee severance costs and $6 million of other related costs. LITIGATION AND INVESTIGATION COSTS Litigation and investigation costs for the year ended December 31, 2013 and 2012 were $31 million and $5 million,respectively, primarily related to costs associated with various legal proceedings and governmental reviews. INTEREST EXPENSE Interest expense for the year ended December 31, 2013 was $474 million compared to $412 million for the yearended December 31, 2012, primarily due to increased borrowings partially offset by a lower average interest rate on ouroutstanding debt. LOSS FROM EARLY EXTINGUISHMENT OF DEBT During the year ended December 31, 2013, we recorded a loss from early extinguishment of debt of $348 millionconsisting of $177 million related to the difference between the purchase prices and the par values of the $714 millionaggregate principal amount of our 10% senior secured notes due 2018 that we purchased and called during the period, as wellas the write‑off of unamortized note discounts and issuance costs, and $171 million related to the difference between thepurchase prices and the par values of the $925 million aggregate principal amount of our 8/8% senior secured notes due 2019that we purchased and called during the period, as well as the write-off of unamortized note discounts and issuance costs. INCOME TAX EXPENSE During the year ended December 31, 2013, we recorded an income tax benefit of $65 million, primarily related to theloss from early extinguishment of debt, compared to an expense of $125 million during the year ended December 31, 2012. 85 7Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDISCONTINUED OPERATIONS: IMPAIRMENT OF LONG-LIVED ASSETS AND GOODWILL, ANDRESTRUCTURING CHARGES During the year ended December 31, 2012, we recorded an impairment charge in discontinued operations of$100 million related to the sale of Creighton University Medical Center, consisting of $98 million for the write-down of long-lived assets to their estimated fair values and a $2 million charge for the write-down of goodwill. LIQUIDITY AND CAPITAL RESOURCES CASH REQUIREMENTS Our obligations to make future cash payments under contracts, such as debt and lease agreements, and undercontingent commitments, such as standby letters of credit and minimum revenue guarantees, are summarized in the tablebelow, all as of December 31, 2014: Years Ended December 31, Later Total 2015 2016 2017 2018 2019 Years (In Millions) Long-term debt $16,002 $699 $921 $701 $1,742 $2,194 $9,745 Capital lease obligations 487 111 39 53 62 11 211 Long-term non-cancelable operating leases 907 156 140 120 96 79 316 Standby letters of credit 119 119 — — — — — Guarantees 101 65 26 9 1 — — Asset retirement obligations 145 — — — — — 145 Academic affiliation agreements 189 49 30 30 18 18 44 Tax liabilities 27 — — — — — 27 Defined benefit plan obligations 668 28 20 20 20 21 559 Construction and capital improvements 211 111 50 50 — — — Information technology contract services 1,636 306 240 224 228 231 407 Purchase orders 359 359 — — — — — Total $20,851 $2,003 $1,466 $1,207 $2,167 $2,554 $11,454 (1)Includes interest through maturity date/lease termination.(2)Includes minimum revenue guarantees, primarily related to physicians under relocation agreements and physician groups that provideservices at our hospitals, and operating lease guarantees.(3)These agreements contain various rights and termination provisions.(4)Professional liability and workers’ compensation reserves have been excluded from the table. At December 31, 2014, the current and long-term professional and general liability reserves included in our Consolidated Balance Sheet were approximately $189 million and $492million, respectively, and the current and long-term workers’ compensation reserves included in our Consolidated Balance Sheet wereapproximately $60 million and $193 million, respectively. Standby letters of credit are required principally by our insurers and various states to collateralize our workers’compensation programs pursuant to statutory requirements and as security to collateralize the deductible and self-insuredretentions under certain of our professional and general liability insurance programs. The amount of collateral required isprimarily dependent upon the level of claims activity and our creditworthiness. The insurers require the collateral in case weare unable to meet our obligations to claimants within the deductible or self-insured retention layers. On March 7, 2014, weentered into a new letter of credit facility agreement (“LC Facility”) that provides for the issuance of standby and documentaryletters of credit (including certain letters of credit originally issued under our senior secured revolving credit facility, whichwe transferred to the LC Facility), from time to time, in an aggregate principal amount of up to $180 million (subject toincrease to up to $200 million). The LC Facility has a scheduled maturity date of March 7, 2017, and obligations thereunderare guaranteed by and secured by a first priority pledge of the capital stock and other ownership interests of certain of ourhospital subsidiaries on an equal ranking basis with our existing senior secured notes.86 (1)(1)(2)(3)(4)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe consummated the following transactions affecting our long-term commitments in the year endedDecember 31, 2014: ·In September 2014, we sold $500 million aggregate principal amount of 5/2% senior notes, which will mature onMarch 1, 2019. We will pay interest on the notes semi-annually in arrears on March 1 and September 1 of each year,commencing on March 1, 2015. The proceeds from the sale of the notes were used for general corporate purposes,including the repayment of indebtedness and drawings under our revolving credit facility, related transaction feesand expenses, and acquisitions. ·In June and March 2014, we sold $500 million and $600 million aggregate principal amount, respectively, of5% senior notes, which will mature on March 1, 2019. We will pay interest on the notes semi-annually in arrears onMarch 1 and September 1 of each year, which payments commenced on September 1, 2014. The net proceeds fromthe sale of the notes in June 2014 were used to redeem our 91/4% senior notes due 2015 in July 2014. The netproceeds from the sale of the notes in March 2014 were used for general corporate purposes, including therepayment of borrowings under our revolving credit facility. As part of our long-term objective to manage our capital structure, we may from time to time seek to retire, purchase,redeem or refinance some of our outstanding debt or equity securities subject to prevailing market conditions, our liquidityrequirements, contractual restrictions and other factors. These actions are part of our strategy to manage our leverage andcapital structure over time, which is dependent on our total amount of debt, our cash and our operating results. AtDecember 31, 2014, using the last 12 months of Adjusted EBITDA, our ratio of total long-term debt, net of cash and cashequivalent balances, to Adjusted EBITDA was 5.95x. We anticipate this ratio will fluctuate from quarter to quarter based onearnings performance and other factors, including acquisitions that involve the assumption of long-term debt. We intend tomanage this ratio by following our business plan, managing our cost structure, possible assets divestitures and through otherchanges in our capital structure, including, if appropriate, the issuance of equity or convertible securities. Our ability toachieve our leverage and capital structure objectives is subject to numerous risks and uncertainties, many of which aredescribed in the Forward-Looking Statements and Risk Factors sections of Part I of this report. Our capital expenditures primarily relate to the expansion and renovation of existing facilities (including amounts tocomply with applicable laws and regulations), equipment and information systems additions and replacements (includingthose required to achieve compliance with the HIT requirements under ARRA), introduction of new medical technologies,design and construction of new buildings, and various other capital improvements. Capital expenditures were $933 million,$691 million and $508 million in the years ended December 31, 2014, 2013 and 2012, respectively. We anticipate that ourcapital expenditures for continuing operations for the year ending December 31, 2015 will total approximately $900 millionto $1 billion, including $150 million that was accrued as a liability at December 31, 2014. Our budgeted 2015 capitalexpenditures include approximately $17 million to improve disability access at certain of our facilities pursuant to the termsof a negotiated consent decree. During the year ended December 31, 2014, we acquired a majority interest in TRMC, a 70-bed hospital in a suburbancommunity east of Dallas, and completed our acquisition of Emanuel Medical Center, a 209-bed hospital located in NorthernCalifornia. We also acquired five ambulatory surgery centers, three urgent care centers, one diagnostic imaging center andvarious physician practice entities in the same period. Additionally, in October 2014, Conifer acquired SPi Healthcare, aprovider of revenue cycle management, health information management and software solutions for independent and provider-owned physician practices. The fair value of the consideration conveyed in the acquisitions was $428 million. Interest payments, net of capitalized interest, were $726 million, $426 million and $376 million in the years endedDecember 31, 2014, 2013 and 2012, respectively. Income tax payments, net of tax refunds, were approximately $8 million in the year ended December 31, 2014compared to approximately $6 million in the year ended December 31, 2013. At December 31, 2014, our carryforwardsavailable to offset future taxable income consisted of (1) federal net operating loss (“NOL”) carryforwards of approximately$1.6 billion pretax expiring in 2024 to 2033, (2) approximately $28 million in alternative minimum tax87 1Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentscredits with no expiration, (3) general business credit carryforwards of approximately $19 million expiring in 2023 to 2034,and (4) state NOL carryforwards of $3.3 billion expiring in 2015 to 2033 for which the associated deferred tax benefit, net ofvaluation allowance and federal tax impact, is $18 million. Our ability to utilize NOL carryforwards to reduce future taxableincome may be limited under Section 382 of the Internal Revenue Code if our “five-percent shareholders” (as defined inSection 382 of the Code) collectively increase their ownership by more than 50 percentage points (by value) over a rollingthree-year period. These ownership changes include purchases of common stock under share repurchase programs, our offeringof stock, the purchase or sale of our stock by five-percent shareholders, or the issuance or exercise of rights to acquire ourstock. While we expect to be able to realize our total NOL carryforwards prior to their expiration, if an ownership changeoccurs, our ability to use the NOL carryforwards to offset future taxable income will be subject to an annual limitation and willdepend on the amount of taxable income we generate in future periods. Periodic examinations of our tax returns by the Internal Revenue Service (“IRS”) or other taxing authorities couldresult in the payment of additional taxes. The IRS has completed audits of our tax returns for all tax years ended on or beforeDecember 31, 2007, and of Vanguard’s tax returns for fiscal years ending on or before June 30, 2004. All disputed issues withrespect to these audits have been resolved, and all related tax assessments (including interest) have been paid. Our tax returnsfor years ended after December 31, 2007 and Vanguard’s tax returns for fiscal years ended after June 30, 2004 remain subjectto examination by the IRS. SOURCES AND USES OF CASH Our liquidity for the year ended December 31, 2014 was primarily derived from net cash provided by operatingactivities, cash on hand, issuance of long-term debt and borrowings under our revolving credit facility. We had approximately$193 million of cash and cash equivalents on hand at December 31, 2014 to fund our operations and capital expenditures, andour borrowing availability under our credit facility was $776 million based on our borrowing base calculation as ofDecember 31, 2014. Our primary source of operating cash is the collection of accounts receivable. As such, our operating cash flow isimpacted by levels of cash collections and levels of bad debt due to shifts in payer mix and other factors. Net cash provided by operating activities was $687 million in the year ended December 31, 2014 compared to $589million in the year ended December 31, 2013. Key positive and negative factors contributing to the change between the 2014and 2013 periods include the following: ·Increased income from continuing operations before income taxes of $610 million, excluding net gain on sales ofinvestments, investment earnings (loss), gain (loss) from early extinguishment of debt, interest expense, litigationand investigation costs, impairment and restructuring charges, acquisition-related costs, and depreciation andamortization in the year ended December 31, 2014 compared to the year ended December 31, 2013; ·$8 million more cash used in operating activities from discontinued operations; ·An increase of $54 million in payments on reserves for restructuring charges, acquisition-related costs, andlitigation costs and settlements; ·Lower net cash receipts of approximately $114 million in 2014 from the California provider fee program due to thetiming of approval of the program; and ·Additional interest payments of $300 million. Cash flows during the three months ended December 31, 2014 were negatively impacted by a temporary buildup in accountsreceivable of certain hospitals acquired from Vanguard due to the implementation of a new billing system that is expected toenhance efficiency. 88 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe continue to seek further initiatives to increase the efficiency of our balance sheet by generating incremental cash.These initiatives may include the sale of underutilized or inefficient assets. Capital expenditures were $933 million and $691 million in the years ended December 31, 2014 and 2013,respectively. In October 2012, we announced that our board of directors had authorized the repurchase of up to $500 million of ourcommon stock through a share repurchase program that expired in December 2013. Under the program, shares could bepurchased in the open market or through privately negotiated transactions in a manner consistent with applicable securitieslaws and regulations, including pursuant to a Rule 10b5-1 plan we maintained. Shares were repurchased at times and inamounts based on market conditions and other factors. Pursuant to the share repurchase program, we paid approximately $100million to repurchase a total of 3,406,324 shares during the period from the commencement of the program through December31, 2012, and we paid approximately $400 million to repurchase a total of 9,484,974 shares during the period from January 1,2013 to December 31, 2013. We record our investments that are available-for-sale at fair market value. As shown in Note 18 to the ConsolidatedFinancial Statements, the majority of our investments are valued based on quoted market prices or other observable inputs. Wehave no investments that we expect will be negatively affected by the current economic conditions such that they willmaterially impact our financial condition, results of operations or cash flows. DEBT INSTRUMENTS, GUARANTEES AND RELATED COVENANTS We have a senior secured revolving credit facility (as amended, “Credit Agreement”) that provides, subject toborrowing availability, for revolving loans in an aggregate principal amount of up to $1 billion, with a $300 millionsubfacility for standby letters of credit. The Credit Agreement has a scheduled maturity date of November 29, 2016. We are incompliance with all covenants and conditions in our Credit Agreement. At December 31, 2014, we had $220 million of cashborrowings outstanding under the revolving credit facility, and we had approximately $4 million of standby letters of creditoutstanding. Based on our eligible receivables, approximately $776 million was available for borrowing under the revolvingcredit facility at December 31, 2014. On March 7, 2014, we entered into a new letter of credit facility agreement that provides for the issuance of standbyand documentary letters of credit (including certain letters of credit originally issued under our Credit Agreement, which wetransferred to the LC Facility), from time to time, in an aggregate principal amount of up to $180 million (subject to increaseto up to $200 million). The LC Facility has a scheduled maturity date of March 7, 2017, and obligations thereunder areguaranteed by and secured by a first priority pledge of the capital stock and other ownership interests of certain of our hospitalsubsidiaries on an equal ranking basis with our existing senior secured notes. At December 31, 2014, we had approximately$115 million of standby letters of credit outstanding under the LC Facility. In September 2014, we sold $500 million aggregate principal amount of 5/2% senior notes, which will mature onMarch 1, 2019. We will pay interest on the notes semi-annually in arrears on March 1 and September 1 of each year,commencing on March 1, 2015. The proceeds from the sale of the notes were used for general corporate purposes, includingthe repayment of indebtedness and drawings under our Credit Agreement, related transaction fees and expenses, andacquisitions. In June and March 2014, we sold $500 million and $600 million aggregate principal amount, respectively, of5% senior notes, which will mature on March 1, 2019. We will pay interest on the notes semi-annually in arrears on March 1and September 1 of each year, which payments commenced on September 1, 2014. The net proceeds from the sale of the notesin June 2014 were used to redeem our 91/4% senior notes due 2015 in July 2014. The net proceeds from the sale of the notes inMarch 2014 were used for general corporate purposes, including the repayment of borrowings under our Credit Agreement. In October 2013, we sold $2.8 billion aggregate principal amount of 81/8% senior notes, which will mature on April1, 2022, and $1.8 billion aggregate principal amount of 6% senior secured notes, which will mature on89 1Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsOctober 1, 2020. We will pay interest on the 81/8% senior notes and 6% senior secured notes semi-annually in arrears on April1 and October 1 of each year, which payments commenced on April 1, 2014. The proceeds from the sale of the notes were usedto finance the acquisition of Vanguard. In May 2013, we sold $1.050 billion aggregate principal amount of 438% senior secured notes, which will mature onOctober 1, 2021. We will pay interest on the 43/8% senior secured notes semi-annually in arrears on January 1 and July 1 ofeach year, which payments commenced on January 1, 2014. We used a portion of the proceeds from the sale of the notes topurchase approximately $767 million aggregate principal amount outstanding of our 87/8% senior secured notes due 2019 ina tender offer and to call approximately $158 million of the remaining aggregate principal amount outstanding of those notes.In connection with the purchase, we recorded a loss from early extinguishment of debt of $171 million, primarily related to thedifference between the purchase prices and the par values of the purchased notes, as well as the write-off of unamortized notediscounts and issuance costs. In February 2013, we sold $850 million aggregate principal amount of 412% senior secured notes, which will matureon April 1, 2021. We will pay interest on the 412% senior secured notes semi-annually in arrears on April 1 and October 1 ofeach year, which payments commenced on October 1, 2013. We used a portion of the proceeds from the sale of the notes topurchase approximately $645 million aggregate principal amount outstanding of our 10% senior secured notes due 2018 in atender offer and to call approximately $69 million of the remaining aggregate principal amount outstanding of those notes. Inconnection with the purchase, we recorded a loss from early extinguishment of debt of $177 million, primarily related to thedifference between the purchase prices and the par values of the purchased notes, as well as the write-off of unamortized notediscounts and issuance costs. For additional information regarding our long-term debt, see Note 6 to the accompanying Consolidated FinancialStatements. LIQUIDITY From time to time, we expect to engage in additional capital markets, bank credit and other financing activitiesdepending on our needs and financing alternatives available at that time. We believe our existing debt agreements providesignificant flexibility for future secured or unsecured borrowings. Our cash on hand fluctuates day-to-day throughout the year based on the timing and levels of routine cash receiptsand disbursements, including our book overdrafts, and required cash disbursements, such as interest and income tax payments.These fluctuations result in material intra-quarter net operating and investing uses of cash that has caused, and in the futurecould cause, us to use our senior secured revolving credit facility as a source of liquidity. We believe that existing cash andcash equivalents on hand, availability under our revolving credit facility, anticipated future cash provided by operatingactivities, and our investments in marketable securities of our captive insurance companies classified as noncurrentinvestments on our balance sheet should be adequate to meet our current cash needs. These sources of liquidity should also beadequate to finance planned capital expenditures, payments on the current portion of our long-term debt and other presentlyknown operating needs. Long-term liquidity for debt service will be dependent on improved cash provided by operating activities and, givenfavorable market conditions, future borrowings or refinancings. However, our cash requirements could be materially affectedby the use of cash in acquisitions of businesses and repurchases of securities, and also by a deterioration in our results ofoperations, as well as the various uncertainties discussed in this and other sections of this report, which could require us topursue any number of financing options, including, but not limited to, additional borrowings, debt refinancings, asset sales orother financing alternatives. The level, if any, of these financing sources cannot be assured. We do not rely on commercial paper or other short-term financing arrangements nor do we enter into repurchaseagreements or other short-term financing arrangements not otherwise reported in our period-end balance sheets. We do nothave any significant European sovereign debt exposure. We continue to aggressively identify and implement further actions to control costs and enhance our operatingperformance, including cash flow. Among the areas being addressed are volume growth, including the acquisition of90 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsoutpatient businesses, physician recruitment and alignment strategies, expansion of our services businesses within Conifer,managed care payer contracting, procurement efficiencies, cost standardization, bad debt expense reduction initiatives,underperforming hospitals, and certain hospital and overhead costs not related to patient care. Although these initiatives mayresult in improved performance, our performance may remain somewhat below our hospital management peers because ofgeographic and other differences in hospital portfolios. OFF-BALANCE SHEET ARRANGEMENTS Our consolidated operating results for the years ended December 31, 2014, 2013 and 2012 include $49 million, $392million and $953 million, respectively, of net operating revenues and ($1) million, $72 million and $132 million,respectively, of operating income (loss) generated from hospitals operated by us under operating lease arrangements (twohospitals as of December 31, 2014, one hospital as of December 31, 2013 and four hospitals as of December 31, 2012). Inaccordance with GAAP, the applicable buildings and the future lease obligations under these arrangements are not recordedon our consolidated balance sheet. The two remaining operating leases are currently scheduled to expire in 2016 and 2029,respectively. If we are unable to extend the leases or purchase the two hospitals, we would no longer generate revenues orexpenses from such hospitals. We have no other off-balance sheet arrangements that may have a current or future material effect on our financialcondition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, except for $220million of standby letters of credit outstanding and guarantees as of December 31, 2014.RECENTLY ISSUED ACCOUNTING STANDARDS See Note 21 to our Consolidated Financial Statements included in this report for a discussion of recently issuedaccounting standards. CRITICAL ACCOUNTING ESTIMATES In preparing our Consolidated Financial Statements in conformity with GAAP, we must use estimates andassumptions that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. We regularlyevaluate the accounting policies and estimates we use. In general, we base the estimates on historical experience and onassumptions that we believe to be reasonable, given the particular circumstances in which we operate. Actual results may varyfrom those estimates. We consider our critical accounting estimates to be those that (1) involve significant judgments and uncertainties, (2)require estimates that are more difficult for management to determine, and (3) may produce materially different outcomesunder different conditions or when using different assumptions. Our critical accounting estimates cover the following areas: ·Recognition of net operating revenues, including contractual allowances and provision for doubtful accounts; ·Electronic health record incentives; ·Accruals for general and professional liability risks; ·Accruals for defined benefit plans; ·Impairment of long-lived assets; ·Impairment of goodwill; and ·Accounting for income taxes.91 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsREVENUE RECOGNITION We recognize net operating revenues before provision for doubtful accounts in the period in which our services areperformed. Net operating revenues before provision for doubtful accounts primarily consist of net patient service revenues thatare recorded based on established billing rates (i.e., gross charges), less estimated discounts for contractual and otherallowances, principally for patients covered by Medicare, Medicaid, and managed care and other health plans, as well ascertain uninsured patients under the Compact. Revenues under the traditional fee-for-service Medicare and Medicaid programs are based primarily on prospectivepayment systems. Retrospectively determined cost-based revenues under these programs, which were more prevalent in earlierperiods, and certain other payments, such as DSH, DGME, IME and bad debt expense, which are based on our hospitals’ costreports, are estimated using historical trends and current factors. Cost report settlements under these programs are subject toaudit by Medicare and Medicaid auditors and administrative and judicial review, and it can take several years until finalsettlement of such matters is determined and completely resolved. Because the laws, regulations, instructions and ruleinterpretations governing Medicare and Medicaid reimbursement are complex and change frequently, the estimates recordedby us could change by material amounts. We have a system and estimation process for recording Medicare net patient revenue and estimated cost reportsettlements. This results in us recording accruals to reflect the expected final settlements on our cost reports. For filed costreports, we record the accrual based on those cost reports and subsequent activity, and record a valuation allowance againstthose cost reports based on historical settlement trends. The accrual for periods for which a cost report is yet to be filed isrecorded based on estimates of what we expect to report on the filed cost reports, and a corresponding valuation allowance isrecorded as previously described. Cost reports must generally be filed within five months after the end of the annual costreport reporting period. After the cost report is filed, the accrual and corresponding valuation allowance may need to beadjusted. Revenues under managed care plans are based primarily on payment terms involving predetermined rates perdiagnosis, per-diem rates, discounted fee-for-service rates and other similar contractual arrangements. These revenues are alsosubject to review and possible audit by the payers, which can take several years before they are completely resolved. Thepayers are billed for patient services on an individual patient basis. An individual patient’s bill is subject to adjustment on apatient-by-patient basis in the ordinary course of business by the payers following their review and adjudication of eachparticular bill. We estimate the discounts for contractual allowances at the individual hospital level utilizing billing data onan individual patient basis. At the end of each month, on an individual hospital basis, we estimate our expectedreimbursement for patients of managed care plans based on the applicable contract terms. We believe it is reasonably likely forthere to be an approximately 3% increase or decrease in the estimated contractual allowances related to managed care plans.Based on reserves as of December 31, 2014, a 3% increase or decrease in the estimated contractual allowance would impactthe estimated reserves by approximately $15 million. Some of the factors that can contribute to changes in the contractualallowance estimates include: (1) changes in reimbursement levels for procedures, supplies and drugs when threshold levels aretriggered; (2) changes in reimbursement levels when stop-loss or outlier limits are reached; (3) changes in the admission statusof a patient due to physician orders subsequent to initial diagnosis or testing; (4) final coding of in-house and discharged-not-final-billed patients that change reimbursement levels; (5) secondary benefits determined after primary insurance payments;and (6) reclassification of patients among insurance plans with different coverage levels. Contractual allowance estimates areperiodically reviewed for accuracy by taking into consideration known contract terms, as well as payment history. Althoughwe do not separately accumulate and disclose the aggregate amount of adjustments to the estimated reimbursement for everypatient bill, we believe our estimation and review process enables us to identify instances on a timely basis where suchestimates need to be revised. We do not believe there were any adjustments to estimates of patient bills that were material toour revenues. In addition, on a corporate-wide basis, we do not record any general provision for adjustments to estimatedcontractual allowances for managed care plans. Revenues related to self-pay patients may qualify for a discount under the Compact, whereby the gross charges basedon established billing rates would be reduced by an estimated discount for contractual allowance. 92 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsWe believe that adequate provision has been made for any adjustments that may result from final determination ofamounts earned under all the above arrangements. We know of no material claims, disputes or unsettled matters with anypayers that would affect our revenues for which we have not adequately provided for in our Consolidated FinancialStatements. Although outcomes vary, our policy is to attempt to collect amounts due from patients, including co-pays anddeductibles due from patients with insurance, at the time of service while complying with all federal and state laws andregulations, including, but not limited to, the Emergency Medical Treatment and Active Labor Act (“EMTALA”). Generally,as required by EMTALA, patients may not be denied emergency treatment due to inability to pay. Therefore, services,including the legally required medical screening examination and stabilization of the patient, are performed without delayingto obtain insurance information. In non-emergency circumstances or for elective procedures and services, it is our policy toverify insurance prior to a patient being treated; however, there are various exceptions that can occur. Such exceptions caninclude, for example, instances where (1) we are unable to obtain verification because the patient’s insurance company wasunable to be reached or contacted, (2) a determination is made that a patient may be eligible for benefits under variousgovernment programs, such as Medicaid or Victims of Crime, and it takes several days or weeks before qualification for suchbenefits is confirmed or denied, and (3) under physician orders we provide services to patients that require immediatetreatment. We provide for an allowance against accounts receivable that could become uncollectible by establishing anallowance to reduce the carrying value of such receivables to their estimated net realizable value. Generally, we estimate thisallowance based on the aging of our accounts receivable by hospital, our historical collection experience by hospital and foreach type of payer over a look-back period, and other relevant factors. Based on our accounts receivable from self-pay patientsand co-pays and deductibles owed to us by patients with insurance at December 31, 2014, a 10% decrease or increase in ourself-pay collection rate, or approximately 3%, which we believe could be a reasonable likely change, would result in anunfavorable or favorable adjustment to provision for doubtful accounts of approximately $12 million. There are variousfactors that can impact collection trends, such as changes in the economy, which in turn have an impact on unemploymentrates and the number of uninsured and underinsured patients, the volume of patients through our emergency departments, theincreased burden of co-pays and deductibles to be made by patients with insurance, and business practices related tocollection efforts. These factors continuously change and can have an impact on collection trends and our estimation process. Our practice is to reduce the net carrying value of self-pay accounts receivable, including accounts related to the co-pays and deductibles due from patients with insurance, to their estimated net realizable value at the time of billing. Generally,uncollected balances are assigned to Conifer between 90 to 180 days, once patient responsibility has been identified. Whenaccounts are assigned to Conifer by the hospital, the accounts are completely written off the hospital’s books through theprovision for doubtful accounts, and an estimated future recovery amount is calculated and recorded as a receivable on thehospital’s books at the same time. The estimated future recovery amount is adjusted based on the aging of the accounts andchanges to actual recovery rates. The estimated future recovery amount for self-pay accounts is written down whereby it isfully reserved if the amount is not paid within two years after the account is assigned to Conifer. At the present time, our newacquisitions have not yet been fully integrated into our Conifer collections processes. Managed care accounts are collected through the regional business offices of Conifer, whereby the account balancesremain in the related hospital’s patient accounting system and on the hospital’s books, and are adjusted based on an analysisof the net realizable value as they age. Generally, managed care accounts collected by Conifer are gradually written downwhereby they are fully reserved if the accounts are not paid within two years. Changes in the collectability of aged managed care accounts receivable are ongoing and impact our provision fordoubtful accounts. We continue to experience payment pressure from managed care companies concerning amounts of pastbillings. We aggressively pursue collection of these accounts receivable using all means at our disposal, including arbitrationand litigation, but we may not be successful. ELECTRONIC HEALTH RECORD INCENTIVES Under certain provisions of ARRA, federal incentive payments are available to hospitals, physicians and certain otherprofessionals when they adopt, implement or upgrade (“AIU”) certified EHR technology or become “meaningful93 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsusers,” as defined under ARRA, of EHR technology in ways that demonstrate improved quality, safety and effectiveness ofcare. Providers can become eligible for annual Medicare incentive payments by demonstrating meaningful use of EHRtechnology in each period over four periods. Medicaid providers can receive their initial incentive payment by satisfying AIUcriteria, but must demonstrate meaningful use of EHR technology in subsequent years in order to qualify for additionalpayments. Hospitals may be eligible for both Medicare and Medicaid EHR incentive payments; however, physicians andother professionals may be eligible for either Medicare or Medicaid incentive payments, but not both. Hospitals that aremeaningful users under the Medicare EHR incentive payment program are deemed meaningful users under the Medicaid EHRincentive payment program and do not need to meet additional criteria imposed by a state. Medicaid EHR incentive paymentsto providers are 100% federally funded and administered by the states. CMS established calendar year 2011 as the first yearstates could offer EHR incentive payments. Before a state may offer EHR incentive payments, the state must submit and CMSmust approve the state’s incentive plan. We recognize Medicaid EHR incentive payments in our consolidated statements of operations for the first paymentyear when: (1) CMS approves a state’s EHR incentive plan; and (2) our hospital or employed physician acquires certified EHRtechnology (i.e., when AIU criteria are met). Medicaid EHR incentive payments for subsequent payment years are recognizedin the period during which the specified meaningful use criteria are met. We recognize Medicare EHR incentive paymentswhen: (1) the specified meaningful use criteria are met; and (2) contingencies in estimating the amount of the incentivepayments to be received are resolved. The meaningful use information submitted to CMS and the states is subject to review, verification and audit.Estimated Medicare EHR revenue is based on historical financial and statistical data, and is recognized at the completion ofthe cost reporting period that begins in the federal fiscal year during which the hospital demonstrates meaningful use of EHR.Final Medicare EHR incentive payments are determined upon settlement of that cost report. Estimated Medicaid EHRincentive revenue is based on historical financial and statistical data, and is recognized when the hospital completes thedemonstration of meaningful use of EHR for the payment year. We have acquired, developed and implemented systems toaccumulate the information necessary to demonstrate meaningful use of EHR technology. We also have a system andestimation process for recording the financial and statistical data utilized as part of the cost reporting process. Cost reportsmust generally be filed within five months after the end of the annual cost report reporting period. Cost report settlements aresubject to audit by Medicare and Medicaid auditors and administrative and judicial review, and it can take several years untilfinal settlement of such matters is determined and completely resolved. Because the laws, regulations, instructions and ruleinterpretations governing Medicare and Medicaid reimbursement are complex and change frequently, the estimates recordedby us could change by material amounts. Final settlement of cost reports, which could impact the financial and statistical dataon which EHR incentives are based, or a determination that meaningful use was not attained could result in adjustment topreviously recognized EHR incentive payments or retrospective recoupment of incentive payments. ACCRUALS FOR GENERAL AND PROFESSIONAL LIABILITY RISKS We accrue for estimated professional and general liability claims, to the extent not covered by insurance, when theyare probable and can be reasonably estimated. We maintain reserves, which are based on modeled estimates for the portion ofour professional liability risks, including incurred but not reported claims, to the extent we do not have insurance coverage.Our liability consists of estimates established based upon discounted calculations using several factors, including the numberof expected claims, estimates of losses for these claims based on recent and historical settlement amounts, estimates ofincurred but not reported claims based on historical experience, the timing of historical payments, and risk free discount ratesused to determine the present value of projected payments. We consider the number of expected claims, average cost per claimand discount rate to be the most significant assumptions in estimating accruals for general and professional liabilities. Ourliabilities are adjusted for new claims information in the period such information becomes known. Malpractice expense isrecorded within other operating expenses in the accompanying Consolidated Statements of Operations. Our estimated reserves for professional and general liability claims will change significantly if future claims differfrom expected trends. We believe it is reasonably likely for there to be a 5% increase or decrease in the number of expectedclaims or average cost per claim. Based on our reserves and other information as of December 31, 2014, a 5% increase in thenumber of expected claims would increase the estimated reserves by $31 million, and a 5% decrease in the number of94 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsexpected claims would decrease the estimated reserves by $27 million. A 5% increase in the average cost per claim wouldincrease the estimated reserves by $47 million, and a 5% decrease in the average cost per claim would decrease the estimatedreserves by $32 million. Because our estimated reserves for future claim payments are discounted to present value, a change inour discount rate assumption could also have a significant impact on our estimated reserves. Our discount rate was 1.97%,2.45% and 1.18% at December 31, 2014, 2013 and 2012, respectively. A 100 basis point increase or decrease in the discountrate would change the estimated reserves by $18 million. In addition, because of the complexity of the claims, the extendedperiod of time to settle the claims and the wide range of potential outcomes, our ultimate liability for professional and generalliability claims could change materially from our current estimates. The table below shows the case reserves and incurred but not reported and loss development reserves as ofDecember 31, 2014, 2013 and 2012: December 31, 2014 2013 2012 Case reserves $253 $188 $97 Incurred but not reported and loss development reserves 472 575 272 Total undiscounted reserves $725 $763 $369 Several actuarial methods, including the incurred, paid loss development and Bornhuetter-Ferguson methods, areapplied to our historical loss data to produce estimates of ultimate expected losses and the resulting incurred but not reportedand loss development reserves. These methods use our specific historical claims data related to paid losses and loss adjustmentexpenses, historical and current case reserves, reported and closed claim counts, and a variety of hospital census information.These analyses are considered in our determination of our estimate of the professional liability claims, including the incurredbut not reported and loss development reserve estimates. The determination of our estimates involves subjective judgmentand could result in material changes to our estimates in future periods if our actual experience is materially different than ourassumptions. Malpractice claims generally take four to five years to settle from the time of the initial reporting of the occurrence tothe settlement payment. Accordingly, the percentage of undiscounted reserves as of December 31, 2014 and 2013 representingunsettled claims is approximately 98%.The following table, which includes both our continuing and discontinued operations, presents the amount of ouraccruals for professional and general liability claims and the corresponding activity therein: Years Ended December 31, 2014 2013 2012 Accrual for professional and general liability claims, beginning of the year $711 $356 $412 Assumed from acquisition — 373 — Expense (income) related to: Current year 144 102 86 Prior years 57 13 (2) Expense (income) from discounting 7 (13) 4 Total incurred loss and loss expense 208 102 88 Paid claims and expenses related to: Current year (3) (3) (2) Prior years (235) (117) (142) Total paid claims and expenses (238) (120) (144) Accrual for professional and general liability claims, end of year $681 $711 $356 (1)Total malpractice expense for continuing operations, including premiums for insured coverage, was $232 million, $112 million and$92 million in the years ended December 31, 2014, 2013 and 2012, respectively. 95 (1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsACCRUALS FOR DEFINED BENEFIT PLANS Our defined benefit plan obligations and related costs are calculated using actuarial concepts. The discount rate is acritical assumption in determining the elements of expense and liability measurement. We evaluate this critical assumptionannually. Other assumptions include employee demographic factors such as retirement patterns, mortality, turnover and rate ofcompensation increase. During the year ended December 31, 2014, the Society of Actuaries issued new mortality tables (RP-2014) and a mortality improvement scale (MP-2014), which we have incorporated into the estimates of our defined benefitplan obligations as of December 31, 2014. The discount rate enables us to state expected future cash payments for benefits as a present value on themeasurement date. The guideline for setting these rates is a high-quality long-term corporate bond rate. A lower discount rateincreases the present value of benefit obligations and impacts pension expense. Our discount rates for 2014 ranged from4.16% to 4.25%, and our discount rate for 2013 ranged from 5.00% to 5.18%. The assumed discount rate for pension plansreflects the market rates for high-quality corporate bonds currently available. A 100 basis point decrease in the assumeddiscount rate would decrease total net periodic pension expense for 2014 by less than $1 million and would increase theprojected benefit obligation at December 31, 2014 by approximately $209 million. A 100 basis point increase in the assumeddiscount rate would decrease net periodic pension expense for 2014 by approximately $1 million and decrease the projectedbenefit obligation at December 31, 2014 by approximately $171 million. IMPAIRMENT OF LONG-LIVED ASSETS We evaluate our long-lived assets for possible impairment annually or whenever events or changes in circumstancesindicate that the carrying amount of the asset, or related group of assets, may not be recoverable from estimated futureundiscounted cash flows. If the estimated future undiscounted cash flows are less than the carrying value of the assets, wecalculate the amount of an impairment charge if the carrying value of the long-lived assets exceeds the fair value of the assets.The fair value of the assets is estimated based on appraisals, established market values of comparable assets or internalestimates of future net cash flows expected to result from the use and ultimate disposition of the asset. The estimates of thesefuture cash flows are based on assumptions and projections we believe to be reasonable and supportable. They require oursubjective judgments and take into account assumptions about revenue and expense growth rates. These assumptions mayvary by type of facility and presume stable, improving or, in some cases, declining results at our hospitals, depending on theircircumstances. If the presumed level of performance does not occur as expected, impairment may result. We report long-lived assets to be disposed of at the lower of their carrying amounts or fair values less costs to sell. Insuch circumstances, our estimates of fair value are based on appraisals, established market prices for comparable assets orinternal estimates of future net cash flows. Fair value estimates can change by material amounts in subsequent periods. Many factors and assumptions canimpact the estimates, including the following risks: ·future financial results of our hospitals, which can be impacted by volumes of insured patients and declines incommercial managed care patients, terms of managed care payer arrangements, our ability to collect accountsdue from uninsured and managed care payers, loss of volumes as a result of competition, and our ability tomanage costs such as labor costs, which can be adversely impacted by union activity and the shortage ofexperienced nurses; ·changes in payments from governmental healthcare programs and in government regulations such as reductionsto Medicare and Medicaid payment rates resulting from government legislation or rule-making or frombudgetary challenges of states in which we operate; ·how the hospitals are operated in the future; and ·the nature of the ultimate disposition of the assets. 96 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDuring the year ended December 31, 2014, we recorded $20 million of impairment charges for the write-down ofbuildings and equipment of one of our previously impaired hospitals to their estimated fair values, primarily due to a declinein the fair value of real estate in the market in which the hospital operates and a decline in the estimated fair value ofequipment. Material adverse trends in our most recent estimates of future undiscounted cash flows of the hospital, consistentwith our previous estimates in prior years when impairment charges were recorded at this hospital, indicated the carrying valueof the hospital’s long-lived assets was not recoverable from the estimated future cash flows. We believe the most significantfactors contributing to the adverse financial trends include reductions in volumes of insured patients, shifts in payer mix fromcommercial to governmental payers combined with reductions in reimbursement rates from governmental payers, and highlevels of uninsured patients. As a result, we updated the estimate of the fair value of the hospital’s long-lived assets andcompared the fair value estimate to the carrying value of the hospital’s long-lived assets. Because the fair value estimate waslower than the carrying value of the hospital’s long-lived assets, an impairment charge was recorded for the difference in theamounts. Unless the anticipated future financial trends of this hospital improve to the extent that the estimated futureundiscounted cash flows exceed the carrying value of the long-lived assets, this hospital is at risk of future impairments,particularly if we spend significant amounts of capital at the hospital without generating a corresponding increase in thehospital’s fair value or if the fair value of the hospital’s real estate or equipment declines. The aggregate carrying value ofassets held and used of the hospital for which an impairment charge was recorded was $23 million as of December 31, 2014after recording the impairment charge. Additionally, in our most recent impairment analysis as of December 31, 2014, we hadtwo hospitals with an aggregate carrying value of long-lived assets of approximately $57 million whose estimated futureundiscounted cash flows exceeded the carrying value of long-lived assets by an aggregate amount of approximately $28million. These two hospitals had the smallest excess of future undiscounted cash flows on an annual basis necessary to recoverthe carrying value of their assets. We also had three hospitals whose estimated future undiscounted cash flows did not exceedthe carrying value of long-lived assets. However, in each case, the fair value of those assets, based on independent appraisals,exceeded the carrying value, so no impairment was recorded. Future adverse trends that result in necessary changes in theassumptions underlying these estimates of future undiscounted cash flows could result in the hospitals’ estimated cash flowsbeing less than the carrying value of the assets, which would require a fair value assessment of the long-lived assets and, if thefair value amount is less than the carrying value of the assets, impairment charges would occur and could be material. IMPAIRMENT OF GOODWILL Goodwill represents the excess of costs over the fair value of assets of businesses acquired. Goodwill and otherintangible assets acquired in purchase business combinations and determined to have indefinite useful lives are not amortized,but instead are subject to impairment tests performed at least annually. For goodwill, we perform the test at the reporting unitlevel, as defined by applicable accounting standards, when events occur that require an evaluation to be performed or at leastannually. If we determine the carrying value of goodwill is impaired, or if the carrying value of a business that is to be sold orotherwise disposed of exceeds its fair value, then we reduce the carrying value, including any allocated goodwill, to fair value.Estimates of fair value are based on appraisals, established market prices for comparable assets or internal estimates of futurenet cash flows and presume stable, improving or, in some cases, declining results at our hospitals, depending on theircircumstances. If the presumed level of performance does not occur as expected, impairment may result. As of December 31, 2014, our continuing operations consisted of two reportable segments, our Hospital Operationsand other and Conifer. During the three months ended March 31, 2014, we combined our California region and our Phoenixmarket to form our Western region. Our Hospital Operations and other segment is currently structured as follows: ·Our Central region includes all of our hospitals and other operations in Missouri, New Mexico, Tennessee andTexas, except for those in the Resolute Health, San Antonio and South Texas markets; ·Our Florida region includes all of our hospitals and other operations in Florida; ·Our Northeast region includes all of our hospitals and other operations in Illinois, Massachusetts andPennsylvania;97 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents ·Our Southern region includes all of our hospitals and other operations in Alabama, Georgia, North Carolina andSouth Carolina; ·Our Western region includes all of our hospitals and other operations in Arizona and California; ·Our Detroit market includes all of our hospitals and other operations in the Detroit, Michigan area; ·Our Resolute Health market includes our hospital and other operations in the New Braunfels, Texas area; ·Our San Antonio market includes all of our hospitals and other operations in the San Antonio, Texas area; and ·Our South Texas market includes all of our hospitals and other operations in the Brownsville and Harlingen,Texas areas. These regions and markets are reporting units used to perform our goodwill impairment analysis and are one level below ourhospital operations reportable business segment level. Our allocated goodwill balance is primarily related to our San Antonio market, which balance totals approximately$1.088 million, our Conifer segment, which balance totals approximately $606 million, and our Western region, whichbalance totals approximately $527 million. In our latest impairment analysis as of December 31, 2014, the estimated fair valueof these reporting units exceeded the carrying value of long-lived assets, including goodwill, by approximately 6%, 123%and 158%, respectively. ACCOUNTING FOR INCOME TAXES We account for income taxes using the asset and liability method. This approach requires the recognition of deferredtax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts andthe tax bases of assets and liabilities. Income tax receivables and liabilities and deferred tax assets and liabilities arerecognized based on the amounts that more likely than not will be sustained upon ultimate settlement with taxing authorities. Developing our provision for income taxes and analysis of uncertain tax positions requires significant judgment andknowledge of federal and state income tax laws, regulations and strategies, including the determination of deferred tax assetsand liabilities and, if necessary, any valuation allowances that may be required for deferred tax assets. We assess the realization of our deferred tax assets to determine whether an income tax valuation allowance isrequired. Based on all available evidence, both positive and negative, and the weight of that evidence to the extent suchevidence can be objectively verified, we determine whether it is more likely than not that all or a portion of the deferred taxassets will be realized. The main factors that we consider include: ·Cumulative profits/losses in recent years, adjusted for certain nonrecurring items; ·Income/losses expected in future years; ·Unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels; ·The availability, or lack thereof, of taxable income in prior carryback periods that would limit realization of taxbenefits; and ·The carryforward period associated with the deferred tax assets and liabilities. 98 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDuring the year ended December 31, 2012, we reduced the valuation allowance by $5 million based on 2012 profits andprojected profits for 2013. During the year ended December 31, 2013, we increased the valuation allowance by $51 million —$34 million due to the acquisition of Vanguard and $17 million primarily due to the recording of deferred tax assets for statenet operating loss carryforwards that have a full valuation allowance. During the year ended December 31, 2014, we decreasedthe valuation allowance by $20 million primarily due to the expiration of unutilized state net operating loss carryovers. Theremaining balance in the valuation allowance as of December 31, 2014 is $87 million. We consider many factors when evaluating our uncertain tax positions, and such judgments are subject to periodicreview. Tax benefits associated with uncertain tax positions are recognized in the period in which one of the followingconditions is satisfied: (1) the more likely than not recognition threshold is satisfied; (2) the position is ultimately settledthrough negotiation or litigation; or (3) the statute of limitations for the taxing authority to examine and challenge theposition has expired. Tax benefits associated with an uncertain tax position are derecognized in the period in which the morelikely than not recognition threshold is no longer satisfied. While we believe we have adequately provided for our income tax receivables or liabilities and our deferred taxassets or liabilities, adverse determinations by taxing authorities or changes in tax laws and regulations could have a materialadverse effect on our consolidated financial position, results of operations or cash flows. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The table below presents information about certain of our market-sensitive financial instruments as ofDecember 31, 2014. The fair values were determined based on quoted market prices for the same or similar instruments. Theaverage effective interest rates presented are based on the rate in effect at the reporting date. The effects of unamortizedpremiums and discounts are excluded from the table. Maturity Date, Years Ending December 31, 2015 2016 2017 2018 2019 Thereafter Total Fair Value (Dollars in Millions) Fixed rate long-term debt $112 $39 $53 $1,103 $1,611 $8,690 $11,608 $12,188 Average effective interestrates 6.2 % 6.6 % 6.3 % 6.7 % 5.4 % 7.0 % 6.7 % Variable rate long-term debt $ — $220 $ — $ — $ — $ — $220 $220 Average effective interestrates — 2.38 % — — — — 2.38 % At December 31, 2014, the potential reduction of annual pretax earnings due to a one percentage point (100 basispoint) increase in variable interest rates on long-term debt would be approximately $2 million. At December 31, 2014, we had long-term, market-sensitive investments held by our captive insurance subsidiaries.Our market risk associated with our investments in debt securities classified as non-current assets is substantially mitigated bythe long-term nature and type of the investments in the portfolio. We have no affiliation with partnerships, trusts or other entities (sometimes referred to as “special-purpose” or“variable-interest” entities) whose purpose is to facilitate off-balance sheet financial transactions or similar arrangements byus. Thus, we have no exposure to the financing, liquidity, market or credit risks associated with such entities. We do not hold or issue derivative instruments for trading purposes and are not a party to any instruments withleverage or prepayment features.99 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING To Our Shareholders: Management is responsible for establishing and maintaining adequate internal control over financial reporting, assuch term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Management assessed theeffectiveness of Tenet’s internal control over financial reporting as of December 31, 2014. This assessment was performedunder the supervision of and with the participation of management, including the chief executive officer and chief financialofficer. In making this assessment, management used criteria based on the framework in Internal Control — IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based onthe assessment using the COSO framework, management concluded that Tenet’s internal control over financial reporting waseffective as of December 31, 2014. Tenet’s internal control over financial reporting as of December 31, 2014 has been audited by Deloitte & ToucheLLP, an independent registered public accounting firm, as stated in their report, which is included herein. Deloitte & ToucheLLP has also audited Tenet’s Consolidated Financial Statements as of and for the year ended December 31, 2014, and thatfirm’s audit report on such Consolidated Financial Statements is also included herein. Internal control over financial reporting cannot provide absolute assurance of achieving financial reportingobjectives because of its inherent limitations. Internal control over financial reporting is a process that involves humandiligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal controlover financial reporting also can be circumvented by collusion or improper management override. Because of suchlimitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal controlover financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore,it is possible to design into the process safeguards to reduce, though not eliminate, this risk. /s/ TREVOR FETTER /s/ DANIEL J. CANCELMI Trevor Fetter Daniel J. CancelmiPresident and Chief Executive Officer Chief Financial OfficerFebruary 23, 2015 February 23, 2015 100 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders ofTenet Healthcare CorporationDallas, Texas We have audited the internal control over financial reporting of Tenet Healthcare Corporation andsubsidiaries (the “Company”) as of December 31, 2014, based on criteria established in Internal Control —Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission. The Company’s management is responsible for maintaining effective internal control overfinancial 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. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based onour audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether effective internal control over financial reporting was maintained in all material respects. Our audit includedobtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, 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 auditprovides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed by, or under the supervision of, thecompany’s principal executive and principal financial officers, or persons performing similar functions, and effectedby the company’s board of directors, management, and other personnel to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal control over financial reporting includes thosepolicies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets thatcould have a material effect on the financial statements. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusionor improper management override of controls, material misstatements due to error or fraud may not be prevented ordetected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control overfinancial reporting to future periods are subject to the risk that the controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting asof December 31, 2014, based on the criteria established in Internal Control — Integrated Framework (2013) issuedby the Committee of Sponsoring Organizations of the Treadway Commission. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates), the consolidated financial statements and financial statement schedule as of and for the year endedDecember 31, 2014 of the Company and our report dated February 23, 2015 expressed an unqualified opinion onthose financial statements and financial statement schedule. /s/ DELOITTE & TOUCHE LLPDallas, TexasFebruary 23, 2015 101 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders ofTenet Healthcare CorporationDallas, Texas We have audited the accompanying consolidated balance sheets of Tenet Healthcare Corporation and subsidiaries (the“Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, othercomprehensive income (loss), changes in equity, and cash flows for each of the three years in the period endedDecember 31, 2014. Our audits also included the financial statement schedule listed in the Index at Item 15. Thesefinancial statements and financial statement schedule are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on the financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of TenetHealthcare Corporation and subsidiaries at December 31, 2014 and 2013, and the results of their operations and their cashflows for each of the three years in the period ended December 31, 2014, in conformity with accounting principlesgenerally accepted in the United States of America. Also, in our opinion, such financial statement schedule, whenconsidered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all materialrespects, the information set forth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates), the Company’s internal control over financial reporting as of December 31, 2014, based on the criteria establishedin Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission and our report dated February 23, 2015 expressed an unqualified opinion on the Company’sinternal control over financial reporting. /s/ DELOITTE & TOUCHE LLPDallas, TexasFebruary 23, 2015102 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCONSOLIDATED BALANCE SHEETSDollars in Millions December 31, December 31, 2014 2013ASSETS Current assets: Cash and cash equivalents $193 $113 Accounts receivable, less allowance for doubtful accounts ($852 atDecember 31, 2014 and $589 at December 31, 2013) 2,404 1,890 Inventories of supplies, at cost 276 260 Income tax receivable 2 —Current portion of deferred income taxes 747 692 Other current assets 1,095 737 Total current assets 4,717 3,692 Investments and other assets 384 357 Deferred income taxes, net of current portion 116 148 Property and equipment, at cost, less accumulated depreciation and amortization ($4,478at December 31, 2014 and $3,907 at December 31, 2013) 7,733 7,582 Goodwill 3,913 3,566 Other intangible assets, at cost, less accumulated amortization ($671at December 31, 2014 and $516 at December 31, 2013) 1,278 1,105 Total assets $18,141 $16,450 LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt $112 $153 Accounts payable 1,179 1,085 Accrued compensation and benefits 852 622 Professional and general liability reserves 189 156 Accrued interest payable 194 198 Other current liabilities 1,051 879 Total current liabilities 3,577 3,093 Long-term debt, net of current portion 11,695 10,696 Professional and general liability reserves 492 555 Defined benefit plan obligations 633 398 Other long-term liabilities 558 490 Total liabilities 16,955 15,232 Commitments and contingencies Redeemable noncontrolling interests in equity of consolidated subsidiaries 401 340 Equity: Shareholders’ equity: Common stock, $0.05 par value; authorized 262,500,000 shares;145,578,735 shares issued at December 31, 2014 and 144,057,351 sharesissued at December 31, 2013 7 7 Additional paid-in capital 4,614 4,572 Accumulated other comprehensive loss (182) (24)Accumulated deficit (1,410) (1,422)Common stock in treasury, at cost, 47,196,902 shares at December 31, 2014and 47,197,722 shares at December 31, 2013 (2,378) (2,378)Total shareholders’ equity 651 755 Noncontrolling interests 134 123 Total equity 785 878 Total liabilities and equity $18,141 $16,450 See accompanying Notes to Consolidated Financial Statements. 103 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCONSOLIDATED STATEMENTS OF OPERATIONSDollars in Millions, Except Per-Share Amounts Years Ended December 31, 2014 2013 2012Net operating revenues: Net operating revenues before provision for doubtful accounts$17,920 $12,074 $9,904 Less: Provision for doubtful accounts 1,305 972 785 Net operating revenues 16,615 11,102 9,119 Operating expenses: Salaries, wages and benefits 8,023 5,371 4,257 Supplies 2,630 1,784 1,552 Other operating expenses, net 4,114 2,701 2,147 Electronic health record incentives (104) (96) (40)Depreciation and amortization 849 545 430 Impairment and restructuring charges, and acquisition-related costs 153 103 19 Litigation and investigation costs 25 31 5 Operating income 925 663 749 Interest expense (754) (474) (412)Loss from early extinguishment of debt (24) (348) (4)Investment earnings — 1 1 Net income (loss) from continuing operations, before income taxes 147 (158) 334 Income tax benefit (expense) (49) 65 (125)Net income (loss) from continuing operations, before discontinued operations 98 (93) 209 Discontinued operations: Loss from operations (17) (5) (2)Impairment of long-lived assets and goodwill — — (100)Litigation and investigation costs (18) (2) —Net gains on sale of facilities — — 1 Income tax benefit (expense) 13 (4) 25 Net loss from discontinued operations (22) (11) (76)Net income (loss) 76 (104) 133 Less: Preferred stock dividends — — 11 Less: Net income (loss) attributable to noncontrolling interests Continuing operations 64 30 13 Discontinued operations — — (32)Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $12 $(134) $141 Amounts attributable to Tenet Healthcare Corporation common shareholders Net income (loss) from continuing operations, net of tax $34 $(123) $185 Net loss from discontinued operations, net of tax (22) (11) (44)Net income (loss) attributable to Tenet Healthcare Corporation common shareholders $12 $(134) $141 Earnings (loss) per share attributable to Tenet Healthcare Corporation common shareholders: Basic Continuing operations $0.35 $(1.21) $1.77 Discontinued operations (0.23) (0.11) (0.42) $0.12 $(1.32) $1.35 Diluted Continuing operations $0.34 $(1.21) $1.70 Discontinued operations (0.22) (0.11) (0.40) $0.12 $(1.32) $1.30 Weighted average shares and dilutive securities outstanding (in thousands): Basic 97,801 101,648 104,200 Diluted 100,287 101,648 108,926 See accompanying Notes to Consolidated Financial Statements. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.104 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)Dollars in Millions Years Ended December 31, 2014 2013 2012 Net income (loss) $76 $(104) $133 Other comprehensive income (loss): Adjustments for defined benefit plans (258) 68 (25) Amortization of prior-year service costs included in netperiodic benefit costs 4 1 — Unrealized gains on securities held as available-for-sale 3 — — Other comprehensive income (loss) before income taxes (251) 69 (25) Income tax benefit (expense) related to items of other comprehensiveincome (loss) 93 (25) 9 Total other comprehensive income (loss), net of tax (158) 44 (16) Comprehensive net income (loss) (82) (60) 117 Less: Preferred stock dividends — — 11 Less: Comprehensive income (loss) attributable to noncontrolling interests 64 30 (19) Comprehensive net income (loss) attributable to Tenet Healthcare Corporationcommon shareholders $(146) $(90) $125 See accompanying Notes to Consolidated Financial Statements. 105 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCONSOLIDATED STATEMENTS OF CHANGES IN EQUITYDollars in Millions,Share Amounts in Thousands Tenet Healthcare Corporation Shareholders’ Equity Preferred Stock Common Stock Accumulated Additional Other Shares Issued Shares Issued Par Paid-in Comprehensive Accumulated Treasury Noncontrolling Outstanding Amount Outstanding Amount Capital Loss Deficit Stock Interests Total EquityBalances atDecember 31, 2011 345 $334 103,756 $7 $4,427 $(52) $(1,440) $(1,853) $69 $1,492 Net income (loss) — — — — — — 152 — (22) 130 Distributions paid tononcontrolling interests — — — — — — — — (12) (12)Contributions fromnoncontrolling interests — — — — — — — — 3 3 Other comprehensive loss — — — — — (16) — — — (16)Purchases of businesses orjoint venture interests — — — — — — — — 37 37 Preferred stock dividends — — — — (11) — — — — (11)Repurchases of common stock — — (4,733) — — — — (126) — (126)Repurchases of preferred stock (299) (289) — — — — — — (289)Conversion of preferred stockto common stock (46) (45) 1,979 — 45 — — — — —Stock-based compensationexpense and issuance ofcommon stock — — 3,631 — 10 — — — — 10 Balances atDecember 31, 2012 — $ — 104,633 $7 $4,471 $(68) $(1,288) $(1,979) $75 $1,218 Net income (loss) — — — — — — (134) — 21 (113)Distributions paid tononcontrolling interests — — — — — — — — (22) (22)Other comprehensive income — — — — — 44 — — — 44 Contributions fromnoncontrolling interests — — — — 56 — — — 49 105 Repurchases of common stock — — (9,485) — — — — (400) — (400)Stock-based compensationexpense and issuance ofcommon stock — — 1,712 — 45 — — 1 — 46 Balances atDecember 31, 2013 — $ — 96,860 $7 $4,572 $(24) $(1,422) $(2,378) $123 $878 Net income — — — — — — 12 — 31 43 Distributions paid tononcontrolling interests — — — — — — — — (37) (37)Contributions fromnoncontrolling interests — — — — — — — — 7 7 Other comprehensive income — — — — — (158) — — — (158)Purchases (sales) of businessesor joint venture interests — — — — (22) — — — 10 (12)Stock-based compensationexpense and issuance ofcommon stock — — 1,522 — 64 — — — — 64 Balances atDecember 31, 2014 — $ — 98,382 $7 $4,614 $(182) $(1,410) $(2,378) $134 $785 See accompanying Notes to Consolidated Financial Statements. 106 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsCONSOLIDATED STATEMENTS OF CASH FLOWSDollars in Millions Years Ended December 31, 2014 2013 2012 Net income (loss) $76 $(104) $133 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 849 545 430 Provision for doubtful accounts 1,305 972 785 Deferred income tax expense (benefit) 30 (67) 92 Stock-based compensation expense 51 36 32 Impairment and restructuring charges, and acquisition-related costs 153 103 19 Litigation and investigation costs 25 31 5 Loss from early extinguishment of debt 24 348 4 Amortization of debt discount and debt issuance costs 28 19 22 Pre-tax loss from discontinued operations 35 7 101 Other items, net (40) (33) (12) Changes in cash from operating assets and liabilities: Accounts receivable (1,896) (987) (868) Inventories and other current assets (314) (203) (59) Income taxes 3 — (5) Accounts payable, accrued expenses and other current liabilities 505 38 9 Other long-term liabilities 44 13 3 Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (168) (114) (63) Net cash used in operating activities from discontinued operations, excluding income taxes (23) (15) (35) Net cash provided by operating activities 687 589 593 Cash flows from investing activities: Purchases of property and equipment — continuing operations (933) (691) (506) Purchases of property and equipment — discontinued operations — — (2) Purchases of businesses or joint venture interests, net of cash acquired (428) (1,515) (211) Proceeds from sales of facilities and other assets — discontinued operations 6 16 45 Proceeds from sales of marketable securities, long-term investments and other assets 31 15 17 Other long-term assets 1 8 (9) Other items, net 1 3 4 Net cash used in investing activities (1,322) (2,164) (662) Cash flows from financing activities: Repayments of borrowings under credit facility (2,430) (1,286) (1,773) Proceeds from borrowings under credit facility 2,245 1,691 1,693 Repayments of other borrowings (683) (5,133) (248) Proceeds from other borrowings 1,608 6,507 1,092 Repurchases of preferred stock — — (292) Repurchases of common stock — (400) (126) Cash dividends on preferred stock — — (14) Deferred debt issuance costs (27) (154) (17) Distributions paid to noncontrolling interests (45) (27) (15) Contributions from noncontrolling interests 18 99 3 Proceeds from exercise of stock options 26 22 11 Other items, net 3 5 6 Net cash provided by financing activities 715 1,324 320 Net increase (decrease) in cash and cash equivalents 80 (251) 251 Cash and cash equivalents at beginning of period 113 364 113 Cash and cash equivalents at end of period $193 $113 $364 Supplemental disclosures: Interest paid, net of capitalized interest $(726) $(426) $(376) Income tax payments, net $(8) $(6) $(13) See accompanying Notes to Consolidated Financial Statements. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.107 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SIGNIFICANT ACCOUNTING POLICIES Description of Business Tenet Healthcare Corporation (together with our subsidiaries, referred to herein as “Tenet,” “we” or “us”) is anational, diversified healthcare services company. As of December 31, 2014 we operated 80 hospitals, 210 outpatient centers,six health plans, and Conifer Health Solutions, LLC (“Conifer”), which provides healthcare business process services in theareas of revenue cycle management, value-based care and patient communications. Effective October 1, 2013, we acquired the common stock of Vanguard Health Systems, Inc. (“Vanguard”) for $21 pershare in an all cash transaction. Vanguard owned and operated 28 hospitals (plus one more under construction, which wascompleted in June 2014), 39 outpatient centers and five health plans, serving communities in Arizona, California, Illinois,Massachusetts, Michigan and Texas. We paid approximately $4.3 billion to acquire Vanguard, including the assumption of$2.5 billion of Vanguard’s net debt. Basis of Presentation Our Consolidated Financial Statements include the accounts of Tenet and its wholly owned and majority-ownedsubsidiaries. We eliminate intercompany accounts and transactions in consolidation, and we include the results of operationsof businesses that are newly acquired in purchase transactions from their dates of acquisition. We account for significantinvestments in other affiliated companies using the equity method. Unless otherwise indicated, all financial and statisticaldata included in these notes to our Consolidated Financial Statements relate to our continuing operations, with dollaramounts expressed in millions (except per-share amounts). The accompanying Consolidated Balance Sheet as of December31, 2013 has been revised to reflect the impact of completing the purchase price allocation for the acquisition of Vanguard, asdescribed in Note 19. Furthermore, all amounts related to shares, share prices and earnings per share for periods ending priorto October 11, 2012 have been restated to give retrospective presentation for the reverse stock split described in Note 2. Use of Estimates The preparation of financial statements, in conformity with accounting principles generally accepted in the UnitedStates of America (“GAAP”), requires us to make estimates and assumptions that affect the amounts reported in ourConsolidated Financial Statements and these accompanying notes. We regularly evaluate the accounting policies andestimates we use. In general, we base the estimates on historical experience and on assumptions that we believe to bereasonable given the particular circumstances in which we operate. Although we believe all adjustments considered necessaryfor a fair presentation have been included, actual results may vary from those estimates. Financial and statistical informationwe report to other regulatory agencies may be prepared on a basis other than GAAP or using different assumptions or reportingperiods and, therefore, may vary from amounts presented herein. Although we make every effort to ensure that the informationwe report to those agencies is accurate, complete and consistent with applicable reporting guidelines, we cannot beresponsible for the accuracy of the information they make available to the public. Net Operating Revenues Before Provision for Doubtful Accounts We recognize net operating revenues before provision for doubtful accounts in the period in which our services areperformed. Net operating revenues before provision for doubtful accounts primarily consist of net patient service revenues thatare recorded based on established billing rates (i.e., gross charges), less estimated discounts for contractual and otherallowances, principally for patients covered by Medicare, Medicaid, managed care and other health plans, as well as certainuninsured patients under our Compact with Uninsured Patients (“Compact”) and other uninsured discount and charityprograms. 108 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsGross charges are retail charges. They are not the same as actual pricing, and they generally do not reflect what ahospital is ultimately paid and, therefore, are not displayed in our consolidated statements of operations. Hospitals aretypically paid amounts that are negotiated with insurance companies or are set by the government. Gross charges are used tocalculate Medicare outlier payments and to determine certain elements of payment under managed care contracts (such asstop-loss payments). Because Medicare requires that a hospital’s gross charges be the same for all patients (regardless of payercategory), gross charges are also what hospitals charge all other patients prior to the application of discounts and allowances. Revenues under the traditional fee-for-service Medicare and Medicaid programs are based primarily on prospectivepayment systems. Retrospectively determined cost-based revenues under these programs, which were more prevalent in earlierperiods, and certain other payments, such as Indirect Medical Education, Direct Graduate Medical Education,disproportionate share hospital and bad debt expense, which are based on our hospitals’ cost reports, are estimated usinghistorical trends and current factors. Cost report settlements under these programs are subject to audit by Medicare andMedicaid auditors and administrative and judicial review, and it can take several years until final settlement of such matters isdetermined and completely resolved. Because the laws, regulations, instructions and rule interpretations governing Medicareand Medicaid reimbursement are complex and change frequently, the estimates recorded by us could change by materialamounts. We have a system and estimation process for recording Medicare net patient revenue and estimated cost reportsettlements. This results in us recording accruals to reflect the expected final settlements on our cost reports. For filed costreports, we record the accrual based on those cost reports and subsequent activity, and record a valuation allowance againstthose cost reports based on historical settlement trends. The accrual for periods for which a cost report is yet to be filed isrecorded based on estimates of what we expect to report on the filed cost reports, and a corresponding valuation allowance isrecorded as previously described. Cost reports generally must be filed within five months after the end of the annual costreporting period. After the cost report is filed, the accrual and corresponding valuation allowance may need to be adjusted.Adjustments for prior-year cost reports and related valuation allowances, principally related to Medicare and Medicaid,increased revenues in the years ended December 31, 2014, 2013 and 2012 by $20 million, $38 million, and $114 million (in2012, $81 million related to the industry-wide Medicare Budget Neutrality settlement), respectively. Estimated cost reportsettlements and valuation allowances are included in accounts receivable in the accompanying Consolidated Balance Sheets(see Note 3). We believe that we have made adequate provision for any adjustments that may result from final determination ofamounts earned under all the above arrangements with Medicare and Medicaid. Revenues under managed care plans are based primarily on payment terms involving predetermined rates perdiagnosis, per-diem rates, discounted fee-for-service rates and/or other similar contractual arrangements. These revenues arealso subject to review and possible audit by the payers, which can take several years before they are completely resolved. Thepayers are billed for patient services on an individual patient basis. An individual patient’s bill is subject to adjustment on apatient-by-patient basis in the ordinary course of business by the payers following their review and adjudication of eachparticular bill. We estimate the discounts for contractual allowances at the individual hospital level utilizing billing data onan individual patient basis. At the end of each month, on an individual hospital basis, we estimate our expectedreimbursement for patients of managed care plans based on the applicable contract terms. Contractual allowance estimates areperiodically reviewed for accuracy by taking into consideration known contract terms as well as payment history. Althoughwe do not separately accumulate and disclose the aggregate amount of adjustments to the estimated reimbursement for everypatient bill, we believe our estimation and review process enables us to identify instances on a timely basis where suchestimates need to be revised. We do not believe there were any adjustments to estimates of patient bills that were material toour revenues. In addition, on a corporate-wide basis, we do not record any general provision for adjustments to estimatedcontractual allowances for managed care plans. Managed care accounts, net of contractual allowances recorded, are furtherreduced to their net realizable value through provision for doubtful accounts based on historical collection trends for thesepayers and other factors that affect the estimation process. We know of no material claims, disputes or unsettled matters with any payer that would affect our revenues for whichwe have not adequately provided for in the accompanying Consolidated Financial Statements.109 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsUnder our Compact or other uninsured discount programs, the discount offered to certain uninsured patients isrecognized as a contractual allowance, which reduces net operating revenues at the time the self-pay accounts are recorded.The uninsured patient accounts, net of contractual allowances recorded, are further reduced to their net realizable valuethrough provision for doubtful accounts based on historical collection trends for self-pay accounts and other factors that affectthe estimation process. We also provide charity care to patients who are financially unable to pay for the healthcare services they receive.Most patients who qualify for charity care are charged a per-diem amount for services received, subject to a cap. Except for theper-diem amounts, our policy is not to pursue collection of amounts determined to qualify as charity care; therefore, we do notreport these amounts in net operating revenues or in provision for doubtful accounts. Patient advocates from Conifer’sMedical Eligibility Program screen patients in the hospital to determine whether those patients meet eligibility requirementsfor financial assistance programs. They also expedite the process of applying for these government programs. The table below shows the sources of net operating revenues before provision for doubtful accounts from continuingoperations: Years Ended December 31, 2014 2013 2012 General Hospitals: Medicare $3,452 $2,357 $2,195 Medicaid 1,485 975 783 Managed care 9,250 6,277 5,382 Indemnity, self-pay and other 1,602 1,201 1,007 Acute care hospitals — other revenue 54 78 69 Other: Other operations 2,077 1,186 468 Net operating revenues before provision for doubtful accounts $17,920 $12,074 $9,904 Provision for Doubtful Accounts Although outcomes vary, our policy is to attempt to collect amounts due from patients, including co-pays anddeductibles due from patients with insurance, at the time of service while complying with all federal and state laws andregulations, including, but not limited to, the Emergency Medical Treatment and Active Labor Act (“EMTALA”). Generally,as required by EMTALA, patients may not be denied emergency treatment due to inability to pay. Therefore, services,including the legally required medical screening examination and stabilization of the patient, are performed without delayingto obtain insurance information. In non-emergency circumstances or for elective procedures and services, it is our policy toverify insurance prior to a patient being treated; however, there are various exceptions that can occur. Such exceptions caninclude, for example, instances where (1) we are unable to obtain verification because the patient’s insurance company wasunable to be reached or contacted, (2) a determination is made that a patient may be eligible for benefits under variousgovernment programs, such as Medicaid or Victims of Crime, and it takes several days or weeks before qualification for suchbenefits is confirmed or denied, and (3) under physician orders we provide services to patients that require immediatetreatment. We provide for an allowance against accounts receivable that could become uncollectible by establishing anallowance to reduce the carrying value of such receivables to their estimated net realizable value. Generally, we estimate thisallowance based on the aging of our accounts receivable by hospital, our historical collection experience by hospital and foreach type of payer over a look-back period, and other relevant factors. A significant portion of our provision for doubtfulaccounts relates to self-pay patients, as well as co-pays and deductibles owed to us by patients with insurance. Paymentpressure from managed care payers also affects our provision for doubtful accounts. We typically experience ongoingmanaged care payment delays and disputes; however, we continue to work with these payers to obtain adequate and timelyreimbursement for our services. There are various factors that can impact collection trends, such as changes in the economy,which in turn have an impact on unemployment rates and the number of uninsured and underinsured patients, the volume ofpatients through our emergency departments, the increased burden of co-pays and deductibles to110 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsbe made by patients with insurance, and business practices related to collection efforts. These factors continuously change andcan have an impact on collection trends and our estimation process. Electronic Health Record Incentives Under certain provisions of the American Recovery and Reinvestment Act of 2009 (“ARRA”), federal incentivepayments are available to hospitals, physicians and certain other professionals when they adopt, implement or upgrade(“AIU”) certified electronic health record (“EHR”) technology or become “meaningful users,” as defined under ARRA, of EHRtechnology in ways that demonstrate improved quality, safety and effectiveness of care. Providers can become eligible forannual Medicare incentive payments by demonstrating meaningful use of EHR technology in each period over four periods.Medicaid providers can receive their initial incentive payment by satisfying AIU criteria, but must demonstrate meaningfuluse of EHR technology in subsequent years in order to qualify for additional payments. Hospitals may be eligible for bothMedicare and Medicaid EHR incentive payments; however, physicians and other professionals may be eligible for eitherMedicare or Medicaid incentive payments, but not both. Hospitals that are meaningful users under the Medicare EHRincentive payment program are deemed meaningful users under the Medicaid EHR incentive payment program and do notneed to meet additional criteria imposed by a state. Medicaid EHR incentive payments to providers are 100% federally fundedand administered by the states. The Centers for Medicare and Medicaid Services (“CMS”) established calendar year 2011 asthe first year states could offer EHR incentive payments. Before a state may offer EHR incentive payments, the state mustsubmit and CMS must approve the state’s incentive plan. We recognize Medicaid EHR incentive payments in our consolidated statements of operations for the first paymentyear when: (1) CMS approves a state’s EHR incentive plan; and (2) our hospital or employed physician acquires certified EHRtechnology (i.e., when AIU criteria are met). Medicaid EHR incentive payments for subsequent payment years are recognizedin the period during which the specified meaningful use criteria are met. We recognize Medicare EHR incentive paymentswhen: (1) the specified meaningful use criteria are met; and (2) contingencies in estimating the amount of the incentivepayments to be received are resolved. During the years ended December 31, 2014, 2013 and 2012, certain of our hospitals andphysicians satisfied the CMS AIU and/or meaningful use criteria. As a result, we recognized approximately $104 million,$96 million and $40 million of Medicare and Medicaid EHR incentive payments as a reduction to expense in ourConsolidated Statement of Operations for the years ended December 31, 2014, 2013 and 2012, respectively. Cash and Cash Equivalents We treat highly liquid investments with original maturities of three months or less as cash equivalents. Cash and cashequivalents were approximately $193 million and $113 million at December 31, 2014 and 2013, respectively. As ofDecember 31, 2014 and 2013, our book overdrafts were approximately $264 million and $245 million, respectively, whichwere classified as accounts payable. At December 31, 2014 and 2013, approximately $104 million and $62 million, respectively, of total cash and cashequivalents in the accompanying Consolidated Balance Sheets were intended for the operations of our captive insurancesubsidiaries. Also at December 31, 2014 and 2013, we had $150 million and $193 million, respectively, of property andequipment purchases accrued for items received but not yet paid. Of these amounts, $112 million and $138 million,respectively, were included in accounts payable. During the years ended December 31, 2014 and 2013, we entered into non-cancellable capital leases ofapproximately $173 million and $341 million, respectively, primarily for buildings and equipment. Investments in Debt and Equity Securities We classify investments in debt and equity securities as either available-for-sale, held-to-maturity or as part of atrading portfolio. At December 31, 2014 and 2013, we had no significant investments in securities classified as either111 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsheld-to-maturity or trading. We carry securities classified as available-for-sale at fair value. We report their unrealized gainsand losses, net of taxes, as accumulated other comprehensive income (loss) unless we determine that a loss is other-than-temporary, at which point we would record a loss in our consolidated statements of operations. We include realized gains orlosses in our consolidated statements of operations based on the specific identification method. Property and Equipment Additions and improvements to property and equipment exceeding established minimum amounts with a useful lifegreater than one year are capitalized at cost. Expenditures for maintenance and repairs are charged to expense as incurred. Weuse the straight-line method of depreciation for buildings, building improvements and equipment. The estimated useful lifefor buildings and improvements is primarily 15 to 40 years, and for equipment three to 15 years. Newly constructed hospitalsare usually depreciated over 50 years. We record capital leases at the beginning of the lease term as assets and liabilities. Thevalue recorded is the lower of either the present value of the minimum lease payments or the fair value of the asset. Suchassets, including improvements, are generally amortized over the shorter of either the lease term or their estimated useful life.Interest costs related to construction projects are capitalized. In the years ended December 31, 2014, 2013 and 2012,capitalized interest was $25 million, $14 million and $6 million, respectively. We evaluate our long-lived assets for possible impairment annually or whenever events or changes in circumstancesindicate that the carrying amount of the asset, or related group of assets, may not be recoverable from estimated futureundiscounted cash flows. If the estimated future undiscounted cash flows are less than the carrying value of the assets, wecalculate the amount of an impairment if the carrying value of the long-lived assets exceeds the fair value of the assets. Thefair value of the assets is estimated based on appraisals, established market values of comparable assets or internal estimates offuture net cash flows expected to result from the use and ultimate disposition of the asset. The estimates of these future cashflows are based on assumptions and projections we believe to be reasonable and supportable. They require our subjectivejudgments and take into account assumptions about revenue and expense growth rates. These assumptions may vary by typeof facility and presume stable, improving or, in some cases, declining results at our hospitals, depending on theircircumstances. We report long-lived assets to be disposed of at the lower of their carrying amounts or fair values less costs to sell. Insuch circumstances, our estimates of fair value are based on appraisals, established market prices for comparable assets orinternal estimates of future net cash flows. Goodwill and Other Intangible Assets Goodwill represents the excess of costs over the fair value of assets of businesses acquired. Goodwill and otherintangible assets acquired in purchase business combinations and determined to have indefinite useful lives are not amortized,but instead are subject to impairment tests performed at least annually. For goodwill, we perform the test at the reporting unitlevel when events occur that require an evaluation to be performed or at least annually. If we determine the carrying value ofgoodwill is impaired, or if the carrying value of a business that is to be sold or otherwise disposed of exceeds its fair value, wereduce the carrying value, including any allocated goodwill, to fair value. Estimates of fair value are based on appraisals,established market prices for comparable assets or internal estimates of future net cash flows and presume stable, improving or,in some cases, declining results at our hospitals, depending on their circumstances. Other intangible assets primarily consist of capitalized software costs, which are amortized on a straight-line basisover the estimated useful life of the software, which ranges from three to 15 years. Also included in intangible assets are costsassociated with the issuance of our long-term debt, which are primarily being amortized under the effective interest methodbased on the terms of the specific notes, and miscellaneous intangible assets. Accruals for General and Professional Liability Risks We accrue for estimated professional and general liability claims, when they are probable and can be reasonablyestimated. The accrual, which includes an estimate for incurred but not reported claims, is updated each quarter based on amodel of projected payments using case-specific facts and circumstances and our historical loss112 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsreporting, development and settlement patterns and is discounted to its net present value using a risk-free discount rate (1.97%at December 31, 2014 and 2.45% at December 31, 2013). To the extent that subsequent claims information varies from ourestimates, the liability is adjusted in the period such information becomes available. Malpractice expense is presented withinother operating expenses in the accompanying Consolidated Statements of Operations. Income Taxes We account for income taxes using the asset and liability method. This approach requires the recognition of deferredtax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts andthe tax bases of assets and liabilities. Income tax receivables and liabilities and deferred tax assets and liabilities arerecognized based on the amounts that more likely than not will be sustained upon ultimate settlement with taxing authorities. Developing our provision for income taxes and analysis of uncertain tax positions requires significant judgment andknowledge of federal and state income tax laws, regulations and strategies, including the determination of deferred tax assetsand liabilities and, if necessary, any valuation allowances that may be required for deferred tax assets. We assess the realization of our deferred tax assets to determine whether an income tax valuation allowance isrequired. Based on all available evidence, both positive and negative, and the weight of that evidence to the extent suchevidence can be objectively verified, we determine whether it is more likely than not that all or a portion of the deferred taxassets will be realized. The main factors that we consider include: ·Cumulative profits/losses in recent years, adjusted for certain nonrecurring items; ·Income/losses expected in future years; ·Unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels; ·The availability, or lack thereof, of taxable income in prior carryback periods that would limit realization of taxbenefits; and ·The carryforward period associated with the deferred tax assets and liabilities. We consider many factors when evaluating our uncertain tax positions, and such judgments are subject to periodicreview. Tax benefits associated with uncertain tax positions are recognized in the period in which one of the followingconditions is satisfied: (1) the more likely than not recognition threshold is satisfied; (2) the position is ultimately settledthrough negotiation or litigation; or (3) the statute of limitations for the taxing authority to examine and challenge theposition has expired. Tax benefits associated with an uncertain tax position are derecognized in the period in which the morelikely than not recognition threshold is no longer satisfied. Segment Reporting We primarily operate acute care hospitals and related healthcare facilities. Our general hospitals generated 88%, 90%and 95% of our net operating revenues before provision for doubtful accounts in the years ended December 31, 2014, 2013and 2012, respectively. Each of our operating regions and markets reports directly to our president of hospital operations.Major decisions, including capital resource allocations, are made at the consolidated level, not at the regional, market orhospital level. Historically, our business has consisted of one reportable segment, Hospital Operations and other. However,during 2012, our Hospital Operations and other segment and our Conifer subsidiary entered into formal agreements, pursuantto which it was agreed that services provided by both parties to each other would be billed based on estimated third-partypricing terms. As a result, we have presented Conifer as a separate reportable business segment for all periods113 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentspresented. The factors for determining the reportable segments include the manner in which management evaluates operatingperformance combined with the nature of the individual business activities. Costs Associated With Exit or Disposal Activities We recognize costs associated with exit (including restructuring) or disposal activities when they are incurred andcan be measured at fair value, rather than at the date of a commitment to an exit or disposal plan.NOTE 2. EQUITY Reverse Stock Split On October 11, 2012, our common stock began trading on the New York Stock Exchange on a split-adjusted basisfollowing a one-for-four reverse stock split we announced on October 1, 2012. Every four shares of our issued and outstandingcommon stock were exchanged for one issued and outstanding share of common stock, without any change in the par valueper share, and our authorized shares of common stock were proportionately decreased from 1,050,000,000 shares to262,500,000 shares. No fractional shares were issued in connection with the stock split. All amounts in the accompanyingConsolidated Financial Statements and these notes related to shares, share prices and earnings per share for periods endingprior to October 11, 2012 have been restated to give retrospective presentation for this reverse stock split. Share Repurchase Programs In October 2012, we announced that our board of directors had authorized the repurchase of up to $500 million of ourcommon stock through a share repurchase program that expired in December 2013. Under the program, shares could bepurchased in the open market or through privately negotiated transactions in a manner consistent with applicable securitieslaws and regulations, including pursuant to a Rule 10b5-1 plan we maintained. Shares were repurchased at times and inamounts based on market conditions and other factors. Pursuant to the share repurchase program, we paid approximately$500 million to repurchase a total of 12,891,298 shares during the period from the commencement of the program throughDecember 31, 2013. Total Number of Maximum Dollar Value Total Number of Average Price Shares Purchased as of Shares That May Yet Shares Paid Per Part of Publicly Be Purchased Under Period Purchased Share Announced Program the Program (In Thousands) (In Thousands) (In Millions) November 1, 2012through December 31, 2012 3,406 $29.36 3,406 $400 January 1, 2013 through January 31, 2013 531 37.13 531 380 February 1, 2013 through February 28, 2013 914 39.30 914 344 March 1, 2013 through March 31, 2013 1,010 43.95 1,010 300 Three Months Ended March 31, 2013 2,455 40.74 2,455 300 May 1, 2013 through May 31, 2013 933 46.78 933 256 June 1, 2013 through June 30, 2013 1,065 45.71 1,065 208 Three Months Ended June 30, 2013 1,998 46.21 1,998 208 July 1, 2013 through July 31, 2013 166 46.08 166 200 August 1, 2013 through August 31, 2013 1,045 40.43 1,045 158 September 1, 2013 through September 30,2013 1,431 40.35 1,431 100 Three Months Ended September 30, 2013 2,642 40.75 2,642 100 November 1, 2013 through November 30,2013 796 42.28 796 66 December 1, 2013 through December 31, 2013 1,594 41.62 1,594 — Three Months Ended December 31, 2013 2,390 41.84 2,390 — Total 12,891 $38.79 12,891 $ — Repurchased shares are recorded based on settlement date and are held as treasury stock.114 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Changes in Redeemable Noncontrolling Interests in Equity of Consolidated Subsidiaries The following table shows the changes in redeemable noncontrolling interests in equity of consolidated subsidiariesduring the year ended December 31, 2014 and 2013: Year Ended December 31, 2014 2013Balances at beginning of period $340 $16 Net income 33 9 Distributions paid to noncontrolling interests (8) (5)Contributions from noncontrolling interests 11 —Sales of joint venture interests — 52 Purchases of businesses 25 268 Balances at end of period $401 $340 As part of the acquisition of Vanguard, we obtained a 51% controlling interest in a limited liability company thatheld the assets and liabilities of Valley Baptist Health System (“Valley Baptist”), which consists of our hospitals inBrownsville and Harlingen, Texas. The remaining 49% non-controlling interest in the joint venture was held by the formerowner of Valley Baptist (the “seller”). The joint venture operating agreement included a put option that would allow the sellerto require us to purchase all or a portion of the seller’s remaining non-controlling interest in the limited liability company atcertain specified time periods. In November 2014, the seller provided notice of its intent to exercise the put option for itsentire 49% non-controlling interest, which is described in Note 22.NOTE 3. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS The principal components of accounts receivable are shown in the table below: December 31, December 31, 2014 2013 Continuing operations: Patient accounts receivable $3,178 $2,459 Allowance for doubtful accounts (851) (589) Estimated future recoveries from accounts assigned to our Conifer subsidiary 125 92 Net cost reports and settlements payable and valuation allowances (51) (75) 2,401 1,887 Discontinued Operations 3 3 Accounts receivable, net $2,404 $1,890 At December 31, 2014 and 2013, our allowance for doubtful accounts was 26.8% and 24.0%, respectively, of ourpatient accounts receivable. The increase in the allowance for doubtful accounts as a percentage of patient accountsreceivable related to the accounts receivable acquired from Vanguard as of October 1, 2013. Under the purchase priceallocation rules, allowance for doubtful accounts as of the acquisition date are offset against the gross receivables. As of theacquisition date, the acquirer begins to disclose the net receivable amount with no disclosure of the former allowance fordoubtful accounts amount. Accounts receivable generated after the acquisition are disclosed before the allowance for doubtfulaccounts and the associated allowance for doubtful accounts is also disclosed to arrive at net accounts receivable. Theincrease also related to the 120 basis point decrease in our self-pay collection rate for the 49 hospitals we operated throughoutthe years ended December 31, 2014 and 2013, as well as higher patient co–pays and deductibles, partially offset by a declinein uninsured revenues due to the expansion of insurance coverage under the Patient Protection and Affordable Care Act, asamended by the Health Care and Education Reconciliation Act of 2010. The increase in our total accounts receivable net of allowance for doubtful accounts from December 31, 2013 toDecember 31, 2014 is primarily related to the growth in hospital patient volumes, our outpatient development initiatives, atemporary buildup in accounts receivable of certain hospitals we acquired from Vanguard due to the implementation of115 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsa new billing system, growth in physician practices, the acquisition of Texas Regional Medical Center at Sunnyvale, EmanuelMedical Center and the opening of Resolute Health Hospital. Accounts that are pursued for collection through Conifer’s regional business offices are maintained on our hospitals’books and reflected in patient accounts receivable with an allowance for doubtful accounts established to reduce the carryingvalue of such receivables to their estimated net realizable value. Generally, we estimate this allowance based on the aging ofour accounts receivable by hospital, our historical collection experience by hospital and for each type of payer, and otherrelevant factors. At December 31, 2014 and 2013, our allowance for doubtful accounts for self-pay was 78.0% and 75.9%,respectively, of our self-pay patient accounts receivable, including co-pays and deductibles owed by patients with insurance.At December 31, 2014 and 2013, our allowance for doubtful accounts for managed care was 6.5% and 5.9%, respectively, ofour managed care patient accounts receivable. Accounts assigned to our Conifer subsidiary are written off and excluded from patient accounts receivable andallowance for doubtful accounts; however, an estimate of future recoveries from all accounts at our Conifer subsidiary isdetermined based on historical experience and recorded on our hospitals’ books as a component of accounts receivable in theaccompanying Consolidated Balance Sheets. At the present time, our new acquisitions have not yet been fully integrated intoour Conifer collections processes. We also provide charity care to patients who are financially unable to pay for the healthcare services they receive.Most patients who qualify for charity care are charged a per-diem amount for services received, subject to a cap. Except for theper-diem amounts, our policy is not to pursue collection of amounts determined to qualify as charity care; therefore, we do notreport these amounts in net operating revenues. Most states include an estimate of the cost of charity care in the determinationof a hospital’s eligibility for Medicaid disproportionate share hospital payments. These payments are intended to mitigate ourcost of uncompensated care, as well as reduced Medicaid funding levels. Generally, our method of measuring the estimatedcosts uses adjusted self-pay/charity patient days multiplied by selected operating expenses (which include salaries, wages andbenefits, supplies and other operating expenses) per adjusted patient day. The adjusted self-pay/charity patient days representsactual self-pay/charity patient days adjusted to include self-pay/charity outpatient services by multiplying actual self-pay/charity patient days by the sum of gross self-pay/charity inpatient revenues and gross self-pay/charity outpatient revenuesand dividing the results by gross self-pay/charity inpatient revenues. The table below shows our estimated costs for charitycare patients and self-pay patients, as well as DSH payments we received, for the years ended December 31, 2014, 2013 and2012. Years Ended December 31, 2014 2013 2012Estimated costs for: Charity care patients $180 $158 $136 Self-pay patients $620 $545 $430 DSH payments received $817 $428 $283 As of December 31, 2014 and 2013, we had approximately $399 million and $64 million, respectively, of receivablesrecorded in other current assets and approximately $212 million and $32 million, respectively, of payables recorded in othercurrent liabilities in the accompanying Consolidated Balance Sheets related to California’s provider fee program.NOTE 4. DISCONTINUED OPERATIONS Net operating revenues and loss before income taxes reported in discontinued operations are as follows: Years Ended December 31, 2014 2013 2012 Net operating revenues $4 $7 $154 Net loss before income taxes (35) (7) (101) Net loss before income taxes from discontinued operations in the year ended December 31, 2014 includedapproximately $18 million of expense recorded in litigation and investigation costs allocable to one of our previously116 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsdivested hospitals related to a class action lawsuit discussed in Note 15. In the year ended December 31, 2013, we recognizeda $12 million gain in discontinued operations related to the sale of land. In the three months ended June 30, 2012, our Creighton University Medical Center hospital (“CUMC”) in Nebraskawas reclassified into discontinued operations based on the guidance in the Financial Accounting Standards Board’sAccounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment,” as a result of our plan to sell CUMC. Werecorded an impairment charge in discontinued operations of $100 million, consisting of $98 million for the write-down ofCUMC’s long-lived assets to their estimated fair values, less estimated costs to sell, and a $2 million charge for the write-downof goodwill related to CUMC in the three months ended June 30, 2012. We completed the sale of CUMC on August 31, 2012at a transaction price of $40 million, excluding working capital, and recognized a loss on sale of approximately $1 million indiscontinued operations. In May 2012, we completed the sale of Diagnostic Imaging Services, Inc. (“DIS”), our former diagnostic imagingcenter business in Louisiana, for net proceeds of approximately $10 million. As a result of the sale, DIS was reclassified intodiscontinued operations in the three months ended June 30, 2012, and a gain on sale of approximately $2 million wasrecognized in discontinued operations. Should we dispose of additional hospitals or other assets in the future, we may incur additional asset impairment andrestructuring charges in future periods.NOTE 5. IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION-RELATED COSTS We recognized impairment charges on long-lived assets in 2014, 2013 and 2012 because the fair values of thoseassets or groups of assets indicated that the carrying amount was not recoverable. The fair value estimates were derived fromappraisals, established market values of comparable assets, or internal estimates of future net cash flows. These fair valueestimates can change by material amounts in subsequent periods. Many factors and assumptions can impact the estimates,including the future financial results of the hospitals, how the hospitals are operated in the future, changes in healthcareindustry trends and regulations, and the nature of the ultimate disposition of the assets. In certain cases, these fair valueestimates assume the highest and best use of hospital assets in the future to a market place participant is other than as ahospital. In these cases, the estimates are based on the fair value of the real property and equipment if utilized other than as ahospital. The impairment recognized does not include the costs of closing the hospitals or other future operating costs, whichcould be substantial. Accordingly, the ultimate net cash realized from the hospitals, should we choose to sell them, could besignificantly less than their impaired value. Our impairment tests presume stable, improving or, in some cases, declining operating results in our hospitals, whichare based on programs and initiatives being implemented that are designed to achieve the hospital’s most recent projections. Ifthese projections are not met, or if in the future negative trends occur that impact our future outlook, impairments of long-lived assets and goodwill may occur, and we may incur additional restructuring charges, which could be material. As of December 31, 2014, our continuing operations consisted of two reportable segments, our Hospital Operationsand other and Conifer. During the three months ended March 31, 2014, we combined our California region and our Phoenixmarket to form our Western region. Our Hospital Operations and other segment is currently structured as follows: ·Our Central region includes all of our hospitals and other operations in Missouri, New Mexico, Tennessee andTexas, except for those in the Resolute Health, San Antonio and South Texas markets; ·Our Florida region includes all of our hospitals and other operations in Florida; ·Our Northeast region includes all of our hospitals and other operations in Illinois, Massachusetts andPennsylvania; ·Our Southern region includes all of our hospitals and other operations in Alabama, Georgia, North Carolina andSouth Carolina;117 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents ·Our Western region includes all of our hospitals and other operations in Arizona and California; ·Our Detroit market includes all of our hospitals and other operations in the Detroit, Michigan area; ·Our Resolute Health market includes our hospital and other operations in the New Braunfels, Texas area; ·Our San Antonio market includes all of our hospitals and other operations in the San Antonio, Texas area; and ·Our South Texas market includes all of our hospitals and other operations in the Brownsville and Harlingen,Texas areas. These regions and markets are reporting units used to perform our goodwill impairment analysis and are one level below ourhospital operations reportable business segment level. We periodically incur costs to implement restructuring efforts for specific operations, which are recorded in ourstatement of operations as they are incurred. Our restructuring plans focus on various aspects of operations, including aligningour operations in the most strategic and cost-effective structure. Certain restructuring and acquisition-related costs are basedon estimates. Changes in estimates are recognized as they occur. Year Ended December 31, 2014 During the year ended December 31, 2014, we recorded impairment and restructuring charges and acquisition-relatedcosts of $153 million. This amount included a $20 million impairment charge for the write-down of buildings and equipmentof one of our previously impaired hospitals to their estimated fair values, primarily due to a decline in the fair value of realestate in the market in which the hospital operates and a decline in the estimated fair value of equipment. Material adversetrends in our most recent estimates of future undiscounted cash flows of the hospital, consistent with our previous estimates inprior years when impairment charges were recorded at this hospital, indicated the carrying value of the hospital’s long-livedassets was not recoverable from the estimated future cash flows. We believe the most significant factors contributing to theadverse financial trends include reductions in volumes of insured patients, shifts in payer mix from commercial togovernmental payers combined with reductions in reimbursement rates from governmental payers, and high levels ofuninsured patients. As a result, we updated the estimate of the fair value of the hospital’s long-lived assets and compared thefair value estimate to the carrying value of the hospital’s long-lived assets. Because the fair value estimate was lower than thecarrying value of the hospital’s long-lived assets, an impairment charge was recorded for the difference in the amounts. Unlessthe anticipated future financial trends of this hospital improve to the extent that the estimated future undiscounted cash flowsexceed the carrying value of the long-lived assets, this hospital is at risk of future impairments, particularly if we spendsignificant amounts of capital at the hospital without generating a corresponding increase in the hospital’s fair value or if thefair value of the hospital’s real estate or equipment declines. The aggregate carrying value of assets held and used of thehospital for which an impairment charge was recorded was $23 million as of December 31, 2014 after recording theimpairment charge. We also recorded $16 million of employee severance costs, $19 million of contract and lease terminationfees, $3 million of restructuring costs, and $95 million in acquisition-related costs, which include $16 million of transactioncosts and $79 million of acquisition integration charges. Year Ended December 31, 2013 During the year ended December 31, 2013, we recorded impairment and restructuring charges and acquisition-relatedcosts of $103 million. This amount included a $12 million impairment charge for the write-down of buildings and equipmentand other long-lived assets, primarily capitalized software costs classified in other intangible assets, of one of our hospitals totheir estimated fair values, primarily due to a decline in the fair value of real estate in the market in which the hospital operatesand a decline in the estimated fair value of equipment. Material adverse trends in our estimates of future undiscounted cashflows of the hospital at that time indicated the carrying value of the hospital’s long-lived assets was not recoverable from theestimated future cash flows. We believed the most significant factors118 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentscontributing to the adverse financial trends at that time included reductions in volumes of insured patients, shifts in payer mixfrom commercial to governmental payers combined with reductions in reimbursement rates from governmental payers, andhigh levels of uninsured patients. As a result, we updated the estimate of the fair value of the hospital’s long-lived assets andcompared the fair value estimate to the carrying value of the hospital’s long-lived assets. Because the fair value estimate waslower than the carrying value of the hospital’s long-lived assets, an impairment charge was recorded for the difference in theamounts. We disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013 that, unless the anticipatedfuture financial trends of this hospital improved to the extent that the estimated future undiscounted cash flows exceeded thecarrying value of the long-lived assets, this hospital was at risk of future impairments, which impairments occurred in 2014 asdescribed above, particularly if we spent significant amounts of capital at the hospital without generating a correspondingincrease in the hospital’s fair value or if the fair value of the hospital’s real estate or equipment declined. The aggregatecarrying value of assets held and used of the hospital for which an impairment charge was recorded was $44 million as ofDecember 31, 2013 after recording the impairment charge. We also recorded $16 million of restructuring costs, $14 million ofemployee severance costs, $2 million of lease termination fees, and $59 million in acquisition-related costs, which includedboth transaction costs and acquisition integration charges. Year Ended December 31, 2012 During the year ended December 31, 2012, we recorded net impairment and restructuring charges of $19 million,consisting of $3 million relating to the impairment of obsolete assets, $2 million relating to other impairment charges, $8million of employee severance costs and $6 million of other related costs. NOTE 6. LONG-TERM DEBT AND LEASE OBLIGATIONS The table below shows our long-term debt as of December 31, 2014 and 2013: December 31, December 31, 2014 2013 Senior notes: 9/8%, due 2014 $ — $60 9/4%, due 2015 — 474 5%, due 2019 1,100 — 5/2%, due 2019 500 — 6/4%, due 2020 300 300 8%, due 2020 750 750 8/8%, due 2022 2,800 2,800 6/8%, due 2031 430 430 Senior secured notes: 6/4%, due 2018 1,041 1,041 4/4%, due 2020 500 500 6%, due 2020 1,800 1,800 4/2%, due 2021 850 850 4/8%, due 2021 1,050 1,050 Credit facility due 2016 220 405 Capital leases and mortgage notes 487 417 Unamortized note discounts and premium (21) (28) Total long-term debt 11,807 10,849 Less current portion 112 153 Long-term debt, net of current portion $11,695 $10,696 Credit Agreement We have a senior secured revolving credit facility (as amended, “Credit Agreement”) that provides, subject toborrowing availability, for revolving loans in an aggregate principal amount of up to $1 billion, with a $300 million119 7113171313Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentssubfacility for standby letters of credit. The Credit Agreement, which has a scheduled maturity date of November 29, 2016, iscollateralized by patient accounts receivable of all of our wholly owned acute care and specialty hospitals. In addition,borrowings under the Credit Agreement are guaranteed by our wholly owned hospital subsidiaries. Outstanding revolvingloans accrue interest at a base rate plus a margin ranging from 1.00% to 1.50% or the London Interbank Offered Rate plus amargin ranging from 2.00% to 2.50% per annum based on available credit. An unused commitment fee payable on theundrawn portion of the revolving loans ranges from 0.375% to 0.500% per annum based on available credit. Our borrowingavailability is based on a specified percentage of eligible accounts receivable, including self-pay accounts. AtDecember 31, 2014, we had $220 million of cash borrowings outstanding under the revolving credit facility subject to aninterest rate of 2.38%, and we had approximately $4 million of standby letters of credit outstanding. Based on our eligiblereceivables, approximately $776 million was available for borrowing under the revolving credit facility atDecember 31, 2014. Letter of Credit Facility On March 7, 2014, we entered into a new letter of credit facility agreement (“LC Facility”) that provides for theissuance of standby and documentary letters of credit (including certain letters of credit issued under our existing CreditAgreement, which we transferred to the LC Facility (the “Existing Letters of Credit”)), from time to time, in an aggregateprincipal amount of up to $180 million (subject to increase to up to $200 million). The LC Facility has a scheduled maturitydate of March 7, 2017, and obligations thereunder are guaranteed by and secured by a first priority pledge of the capital stockand other ownership interests of certain of our hospital subsidiaries on an equal ranking basis with our existing senior securednotes. Drawings under any letter of credit issued under the LC Facility (including the Existing Letters of Credit) that wehave not reimbursed within three business days after notice thereof will accrue interest at a base rate plus a margin equal to0.875% per annum. An unused commitment fee is payable at an initial rate of 0.50% per annum with a step down to 0.375%per annum based on the secured debt to EBITDA ratio of 3.00 to 1.00. A per annum fee on the aggregate outstanding amountof issued but undrawn letters of credit (including Existing Letters of Credit) will accrue at a rate of 1.875% per annum. Anissuance fee equal to 0.125% per annum of the aggregate face amount of each outstanding letter of credit is payable to theaccount of the issuer of the related letter of credit. At December 31, 2014, we had approximately $115 million of standbyletters of credit outstanding under the LC Facility. Senior Notes and Senior Secured Notes In September 2014, we sold $500 million aggregate principal amount of 5/2% senior notes, which will mature onMarch 1, 2019. We will pay interest on the notes semi-annually in arrears on March 1 and September 1 of each year,commencing on March 1, 2015. The proceeds from the sale of the notes were used for general corporate purposes, includingthe repayment of indebtedness and drawings under our Credit Agreement, related transaction fees and expenses, andacquisitions. In June and March 2014, we sold $500 million and $600 million aggregate principal amount, respectively, of5% senior notes, which will mature on March 1, 2019. We will pay interest on the notes semi-annually in arrears on March 1and September 1 of each year, which payments commenced on September 1, 2014. The net proceeds from the sale of the notesin June 2014 were used to redeem our 91/4% senior notes due 2015 in July 2014. In connection with the redemption, werecorded a loss from early extinguishment of debt of approximately $24 million, primarily related to the difference betweenthe redemption price and the par value of the notes, as well as the write-off of associated unamortized note discounts andissuance costs. The net proceeds from the sale of the notes in March 2014 were used for general corporate purposes, includingthe repayment of borrowings under our Credit Agreement. In October 2013, we sold $2.8 billion aggregate principal amount of 81/8% senior notes, which will mature onApril 1, 2022, and $1.8 billion aggregate principal amount of 6% senior secured notes, which will mature on October 1, 2020.We will pay interest on the 81/8% senior notes and 6% senior secured notes semi-annually in arrears on April 1 and October 1of each year, commencing on April 1, 2014. The proceeds from the sale of the notes were used to finance the acquisition ofVanguard. 120 1Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsIn May 2013, we sold $1.050 billion aggregate principal amount of 43/8% senior secured notes, which will mature onOctober 1, 2021. We will pay interest on the 43/8% senior secured notes semi-annually in arrears on January 1 and July 1 ofeach year, commencing on January 1, 2014. We used a portion of the proceeds from the sale of the notes to purchaseapproximately $767 million aggregate principal amount outstanding of our 87/8% senior secured notes due 2019 in a tenderoffer and to call approximately $158 million of the remaining aggregate principal amount outstanding of those notes. Inconnection with the purchase, we recorded a loss from early extinguishment of debt of $171 million, primarily related to thedifference between the purchase prices and the par values of the purchased notes, as well as the write-off of unamortized notediscounts and issuance costs. In February 2013, we sold $850 million aggregate principal amount of 41/2% senior secured notes, which will matureon April 1, 2021. We will pay interest on the 41/2% senior secured notes semi-annually in arrears on April 1 and October 1 ofeach year, which payments commenced on October 1, 2013. We used a portion of the proceeds from the sale of the notes topurchase approximately $645 million aggregate principal amount outstanding of our 10% senior secured notes due 2018 in atender offer and to call approximately $69 million of the remaining aggregate principal amount outstanding of those notes. Inconnection with the purchase, we recorded a loss from early extinguishment of debt of $177 million, primarily related to thedifference between the purchase prices and the par values of the purchased notes, as well as the write-off of unamortized notediscounts and issuance costs. The remaining net proceeds were used for general corporate purposes, including the repaymentof borrowings under our senior secured revolving credit facility. In October 2012, we sold $500 million aggregate principal amount of 43/4% senior secured notes due 2020 and$300 million aggregate principal amount of 63/4% senior notes due 2020. The 43/4% senior secured notes will mature onJune 1, 2020, and the 63/4% senior notes will mature on February 1, 2020. We will pay interest on the 43/4% senior securednotes semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2013. We will pay interest onthe 63/4% senior notes semi-annually in arrears on February 1 and August 1 of each year; payments commenced on February 1,2013. We used a portion of the proceeds from the sale of the notes to purchase $161 million aggregate principal amountoutstanding of our 73/8% senior notes due 2013 in a tender offer. In connection with the purchase, we recorded a loss fromearly extinguishment of debt of approximately $4 million primarily related to the difference between the purchase prices andthe par values of the purchased notes. In April 2012, we issued an additional $141 million aggregate principal amount of our 61/4% senior secured notesdue 2018 at a premium for $142 million of cash proceeds and an additional $150 million aggregate principal amount of our8% senior notes due 2020 in a private financing related to our repurchase and subsequent retirement of 298,700 shares of our7% mandatory convertible preferred stock. All of our senior notes are general unsecured senior debt obligations that rank equally in right of payment with all ofour other unsecured senior indebtedness, but are effectively subordinated to our senior secured notes described below, theobligations of our subsidiaries and any obligations under our Credit Agreement to the extent of the collateral. We may redeemany series of our senior notes, in whole or in part, at any time at a redemption price equal to 100% of the principal amount ofthe notes redeemed, plus a make-whole premium specified in the applicable indenture, together with accrued and unpaidinterest to the redemption date. All of our senior secured notes are guaranteed by certain of our hospital company subsidiaries and secured by a first-priority pledge of the capital stock and other ownership interests of those subsidiaries. All of our senior secured notes and therelated subsidiary guarantees are our and the subsidiary guarantors’ senior secured obligations. All of our senior secured notesrank equally in right of payment with all of our other senior secured indebtedness. Our senior secured notes rank senior to anysubordinated indebtedness that we or such subsidiary guarantors may incur; they are effectively senior to our and suchsubsidiary guarantors’ existing and future unsecured indebtedness and other liabilities to the extent of the value of thecollateral securing the notes and the subsidiary guarantees; they are effectively subordinated to our and such subsidiaryguarantors’ obligations under our Credit Agreement to the extent of the value of the collateral securing borrowingsthereunder; and they are structurally subordinated to all obligations of our non-guarantor subsidiaries. The indentures setting forth the terms of our senior secured notes contain provisions governing our ability to redeemthe notes and the terms by which we may do so. At our option, we may redeem our senior secured notes, in121 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentswhole or in part, at any time at a redemption price equal to 100% of the principal amount of the notes redeemed plus themake-whole premium set forth in the related indenture, together with accrued and unpaid interest thereon, if any, to theredemption date. In addition, we may be required to purchase for cash all or any part of each series of our senior secured notes upon theoccurrence of a change of control (as defined in the applicable indentures) for a cash purchase price of 101% of the aggregateprincipal amount of the notes, plus accrued and unpaid interest. Covenants Our Credit Agreement contains customary covenants for an asset-backed facility, including a minimum fixed chargecoverage ratio to be met when the available credit under the revolving credit facility falls below $80 million, as well as limitson debt, asset sales and prepayments of senior debt. The Credit Agreement also includes a provision, which we believe iscustomary in receivables-backed credit facilities, that gives our banks the right to require that proceeds of collections ofsubstantially all of our consolidated accounts receivable be applied directly to repay outstanding loans and other amountsthat are due and payable under the Credit Agreement at any time that unused borrowing availability under the revolvingcredit facility is less than $100 million or if an event of default has occurred and is continuing thereunder. In that event, wewould seek to re-borrow under the Credit Agreement to satisfy our operating cash requirements. Our ability to borrow underthe Credit Agreement is subject to conditions that we believe are customary in revolving credit facilities, including that noevents of default then exist. The indentures governing our senior notes contain covenants and conditions that have, among other requirements,limitations on (1) liens on principal properties and (2) sale and lease-back transactions with respect to principal properties. Aprincipal property is defined in the indentures as a hospital that has an asset value on our books in excess of 5% of ourconsolidated net tangible assets, as defined. The above limitations do not apply, however, to (1) debt that is not secured byprincipal properties or (2) debt that is secured by principal properties if the aggregate of such secured debt does not exceed15% of our consolidated net tangible assets, as further described in the indentures. The indentures also prohibit theconsolidation, merger or sale of all or substantially all assets unless no event of default would result after giving effect to suchtransaction. The indentures governing our senior secured notes contain covenants that, among other things, restrict our abilityand the ability of our subsidiaries to incur liens, consummate asset sales, enter into sale and lease-back transactions orconsolidate, merge or sell all or substantially all of our or their assets, other than in certain transactions between one or more ofour wholly owned subsidiaries. These restrictions, however, are subject to a number of important exceptions andqualifications. In particular, there are no restrictions on our ability or the ability of our subsidiaries to incur additionalindebtedness, make restricted payments, pay dividends or make distributions in respect of capital stock, purchase or redeemcapital stock, enter into transactions with affiliates or make advances to, or invest in, other entities (including unaffiliatedentities). In addition, the indentures governing our senior secured notes contain a covenant that neither we nor any of oursubsidiaries will incur secured debt, unless at the time of and after giving effect to the incurrence of such debt, the aggregateamount of all such secured debt (including the aggregate principal amount of senior secured notes outstanding at such time)does not exceed the greater of (i) $3.2 billion or (ii) the amount that would cause the secured debt ratio (as defined in theindentures) to exceed 4.0 to 1.0; provided that the aggregate amount of all such debt secured by a lien on par to the liensecuring the senior secured notes may not exceed the greater of (a) $2.6 billion or (b) the amount that would cause the secureddebt ratio to exceed 3.0 to 1.0. 122 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsFuture Maturities Future long-term debt maturities and minimum operating lease payments as of December 31, 2014 are as follows: Years Ending December 31, Later Total 2015 2016 2017 2018 2019 Years Long-term debt, including capital leaseobligations $11,828 $112 $259 $53 $1,103 $1,611 $8,690 Long-term non-cancelable operating leases $907 $156 $140 $120 $96 $79 $316 Rental expense under operating leases, including short-term leases, was $242 million, $186 million and $156 millionin the years ended December 31, 2014, 2013 and 2012, respectively. Included in rental expense for each of these periods wassublease income of $9 million, $8 million and $8 million, respectively, which were recorded as a reduction to rental expense.NOTE 7. GUARANTEES Consistent with our policy on physician relocation and recruitment, we provide income guarantee agreements tocertain physicians who agree to relocate to fill a community need in the service area of one of our hospitals and commit toremain in practice in the area for a specified period of time. Under such agreements, we are required to make payments to thephysicians in excess of the amounts they earn in their practices up to the amount of the income guarantee. The incomeguarantee periods are typically 12 months. If a physician does not fulfill his or her commitment period to the community,which is typically three years subsequent to the guarantee period, we seek recovery of the income guarantee payments fromthe physician on a prorated basis. We also provide revenue collection guarantees to hospital-based physician groupsproviding certain services at our hospitals with terms generally ranging from one to three years. At December 31, 2014, the maximum potential amount of future payments under our income guarantees to certainphysicians who agree to relocate and revenue collection guarantees to hospital-based physician groups providing certainservices at our hospitals was $97 million. We had a liability of $76 million recorded for these guarantees included in othercurrent liabilities at December 31, 2014. NOTE 8. EMPLOYEE BENEFIT PLANS Share-Based Compensation Plans We currently grant stock-based awards to our directors and key employees pursuant to our 2008 Stock Incentive Plan,which was approved by our shareholders at their 2008 annual meeting. At December 31, 2014, approximately 5.3 millionshares of common stock were available under our 2008 Stock Incentive Plan for future stock option grants and other incentiveawards, including restricted stock units. Options have an exercise price equal to the fair market value of the shares on the dateof grant and generally expire 10 years from the date of grant. A restricted stock unit is a contractual right to receive one shareof our common stock or the equivalent value in cash in the future. Options and restricted stock units typically vest one-thirdon each of the first three anniversary dates of the grant; however, from time to time, we grant performance-based options andrestricted stock units that vest subject to the achievement of specified performance goals within a specified timeframe. Our income from continuing operations for the years ended December 31, 2014, 2013 and 2012 includes $51 million,$39 million and $33 million, respectively, of pretax compensation costs related to our stock-based compensationarrangements ($32 million, $24 million and $21 million, respectively, after-tax). The table below shows certain stock optionand restricted stock unit grants and other awards that comprise the $51 million of stock-based compensation expense recordedin salaries, wages and benefits in the year ended December 31, 2014. Compensation cost is measured by the fair value of theawards on their grant dates and is recognized over the requisite service period of the awards, whether or not the awards had anyintrinsic value during the period.123 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Stock-Based Fair Value Compensation Expense Exercise Price Per Share at for Year Ended Grant Date Awards Per Share Grant Date December 31, 2014 (In Thousands) (In Millions) Stock Options: February 28, 2013 278 $39.31 $14.46 $1 February 29, 2012 356 $22.60 11.96 2 Restricted Stock Units: August 25, 2014 394 59.90 2 May 9, 2014 32 44.36 1 February 26, 2014 1,291 44.12 17 June 13, 2013 318 47.13 3 February 28, 2013 883 39.31 12 February 29, 2012 946 22.60 7 Other grants 6 $51 (1)End of month fair market value was used for this grant to calculate compensation expense. Prior to our shareholders approving the 2008 Stock Incentive Plan, we granted stock-based awards to our directorsand employees pursuant to other plans. Stock options remain outstanding under those other plans, but no additional stock-based awards will be granted under them. Pursuant to the terms of our stock-based compensation plans, awards granted under the plans vest and may beexercised as determined by the compensation committee of our board of directors. In the event of a change in control, thecompensation committee may, at its sole discretion without obtaining shareholder approval, accelerate the vesting orperformance periods of the awards. Stock Options The following table summarizes stock option activity during the years ended December 31, 2014, 2013 and 2012: Weighted Average Exercise Price Aggregate Weighted Average Options Per Share Intrinsic Value Remaining Life (In Millions) Outstanding as of December 31, 2011 8,498,393 25.04 Granted 477,500 22.79 Exercised (3,657,127) 5.77 Forfeited/Expired (1,029,574) 69.72 Outstanding as of December 31, 2012 4,289,192 30.49 Granted 295,639 39.41 Exercised (946,086) 23.34 Forfeited/Expired (330,634) 55.79 Outstanding as of December 31, 2013 3,308,111 $30.79 Granted — Exercised (699,910) 33.53 Forfeited/Expired (624,052) 47.97 Outstanding as of December 31, 2014 1,984,149 $24.42 $52 3.7 years Vested and expected to vest at December 31, 2014 1,907,464 $24.35 $50 3.6 years Exercisable as of December 31, 2014 1,579,018 $21.92 $45 3.5 years 124 (1) Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThere were 699,910 stock options exercised during the year ended December 31, 2014 with a $13 million aggregateintrinsic value, and 946,086 stock options exercised in 2013 with a $18 million aggregate intrinsic value. As of December 31, 2014, there were $2 million of total unrecognized compensation costs related to stock options.These costs are expected to be recognized over a weighted average period of one year. In the year ended December 31, 2014, there were no stock options granted. In the year ended December 31, 2013, wegranted an aggregate of 295,639 stock options under our 2008 Stock Incentive Plan to certain of our senior officers. Thesestock options will all vest on the third anniversary of the grant date, subject to the terms of the Plan, and will expire on thefifth anniversary of the grant date. The weighted average estimated fair value of stock options we granted in the year ended December 31, 2013 was$14.46 per share. These fair values were calculated based on each grant date, using a binomial lattice model with thefollowing assumptions: Year Ended December 31, 2013 Expected volatility 50% Expected dividend yield 0% Expected life 3.6 years Expected forfeiture rate 6% Risk-free interest rate 0.48% Early exercise threshold 100% gain Early exercise rate 50% per year The expected volatility used in the binomial lattice model incorporated historical and implied share-price volatilityand was based on an analysis of historical prices of our stock and open-market exchanged options. The expected volatilityreflects the historical volatility for a duration consistent with the contractual life of the options, and the volatility implied bythe trading of options to purchase our stock on open-market exchanges. The historical share-price volatility excludes themovements in our stock price on two dates (one in 2010 and one in 2011) with unusual volatility due to an unsolicitedacquisition proposal. The expected life of options granted is derived from the output of the binomial lattice model andrepresents the period of time that the options are expected to be outstanding. This model incorporates an early exerciseassumption in the event of a significant increase in stock price. The risk-free interest rates are based on zero-coupon UnitedStates Treasury yields in effect at the date of grant consistent with the expected exercise timeframes. The following table summarizes information about our outstanding stock options at December 31, 2014: Options Outstanding Options Exercisable Weighted Average Number of Remaining Weighted Average Number of Weighted Average Range of Exercise Prices Options Contractual Life Exercise Price Options Exercise Price $0.00 to $4.569 237,303 4.2 years $4.56 237,303 $4.56 $4.57 to $25.089 957,583 5.0 years 20.96 830,903 20.67 $25.09 to $32.569 402,816 1.6 years 29.32 402,816 29.32 $32.57 to $42.089 386,447 2.3 years 40.08 107,996 42.08 1,984,149 3.7 years $24.42 1,579,018 $21.92 As of December 31, 2014, all of our outstanding options were in-the-money, that is, they had exercise price less thanthe $50.67 market price of our common stock on December 31, 2014. 125 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsRestricted Stock Units The following table summarizes restricted stock unit activity during the years ended December 31, 2014, 2013and 2012: Restricted Stock Weighted Average Grant Units Date Fair Value Per Unit Unvested as of December 31, 2011 1,927,307 $24.52 Granted 1,654,337 22.18 Vested (1,033,632) 23.51 Forfeited (252,070) 23.39 Unvested as of December 31, 2012 2,295,942 23.40 Granted 1,564,224 41.20 Vested (966,838) 24.20 Forfeited (186,106) 29.69 Unvested as of December 31, 2013 2,707,222 33.34 Granted 1,772,276 48.42 Vested (1,009,927) 27.49 Forfeited (169,851) 36.64 Unvested as of December 31, 2014 3,299,720 $40.99 In the year ended December 31, 2014, we granted 1,046,910 restricted stock units subject to time-vesting of which945,409 will vest and be settled ratably over a three-year period from the date of the grant, 23,435 will vest 100% on the tenthanniversary of the grant date, 63,623 will vest 100% on the fifth anniversary of the grant date and 14,443 will vest 100% onthe third anniversary of the grant date. In addition, our newly appointed Board of Director member received an initial grant of1,240 restricted stock units that immediately vested but will not settle until her separation from the board and an annual grantof 1,368 restricted stock units that immediately vested but will not settle until the earlier of three years or her separation fromthe board. Also, we granted 271,815 performance-based restricted stock units to certain of our senior officers; the vesting ofthese restricted stock units is contingent on our achievement of a specified one-year performance goal for the year endedDecember 31, 2014, which performance goal was achieved. The performance-based restricted stock units will vest ratably overa three-year period from the grant date. If the performance goal had not been achieved, the restricted stock units would havebeen forfeited. The actual number of performance-based restricted stock units that could have vested ranged from 0% to 200%of the 271,815 units granted, depending on our level of achievement with respect to the performance goal. We also granted450,943 special retention restricted stock units to a select group of officers; two-thirds of the award will vest contingent on ourachievement of a performance goal of which one-half will vest based on performance over a one-year period ending inDecember 2015 and the remaining one-half will vest based on performance over a four-year period ending in December2018. The remaining one-third of this special retention award will vest in full on the fifth anniversary of the grant date. In the year ended December 31, 2013, we granted 1,122,811 restricted stock units subject to time-vesting, of which1,023,112 will vest and be settled ratably over a three-year period from the grant date and 80,133 will vest 100% on the fifthanniversary of the grant date and 19,566 will vest 100% on the third anniversary of the grant date. In addition, we granted206,058 performance-based restricted stock units to certain of our senior officers. Because the performance goal for the yearended December 31, 2013 was met at the target level, 100% of the performance-based restricted stock units will vest and besettled ratably over a three-year period from the grant date. We also awarded a grant of 23,175 performance-based restrictedstock units to one of our senior executives. If target conditions are met, 100% of this grant will vest and be settled three yearsfrom the grant date. We also awarded a grant of 212,180 restricted stock units to our chief executive officer, of which 106,090are subject to time-vesting and 106,090 are performance-based. If target conditions are met, 50% of this grant will vest threeyears from the grant date and the remaining 50% will vest six years from the grant date. The award also allows for anadditional 106,090 shares to be issued if higher performance criteria are met. As of December 31, 2014, there were $99 million of total unrecognized compensation costs related to restricted stockunits. These costs are expected to be recognized over a weighted average period of 2.8 years.126 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Employee Stock Purchase Plan We have an employee stock purchase plan under which we are currently authorized to issue up to 5,062,500 shares ofcommon stock to our eligible employees. As of December 31, 2014, there were approximately 258,875 shares available forissuance under our employee stock purchase plan. Under the terms of the plan, eligible employees may elect to have between1% and 10% of their base earnings withheld each quarter to purchase shares of our common stock. Shares are purchased at aprice equal to 95% of the closing price on the last day of the quarter. The plan requires a one-year holding period for all sharesissued. The holding period does not apply upon termination of employment. Under the plan, no individual may purchase, inany year, shares with a fair market value in excess of $25,000. The plan is currently not considered to be compensatory. We sold the following numbers of shares under our employee stock purchase plan in the years endedDecember 31, 2014, 2013 and 2012: Years Ended December 31, 2014 2013 2012 Number of shares 162,128 100,217 144,021 Weighted average price $46.91 $42.88 $22.81 Employee Retirement Plans Substantially all of our employees, upon qualification, are eligible to participate in one of our defined contribution401(k) plans. Under the plans, employees may contribute a portion of their eligible compensation, and we match suchcontributions annually up to a maximum percentage for participants actively employed, as defined by the plan documents.Employer matching contributions will vary by plan. Plan expenses, primarily related to our contributions to the plan, wereapproximately $92 million, $35 million and $32 million for the years ended December 31, 2014, 2013 and 2012, respectively.Such amounts are reflected in salaries, wages and benefits in the accompanying Consolidated Statements of Operations. We maintain three frozen non-qualified defined benefit pension plans (“SERPs”) that provide supplementalretirement benefits to certain of our current and former executives. One of these SERPs was frozen during the year endedDecember 31, 2014. These plans are not funded, and plan obligations for these plans are paid from our working capital.Pension benefits are generally based on years of service and compensation. Upon completing the acquisition of Vanguard onOctober 1, 2013, we assumed a frozen qualified defined benefit plan (“DMC Pension Plan”) covering substantially all of theemployees of our Detroit market that were hired prior to June 1, 2003. The benefits paid under the DMC Pension Plan areprimarily based on years of service and final average earnings. During the year ended December 31, 2014, the Society ofActuaries issued new mortality tables (RP-2014) and a mortality improvement scale (MP-2014), which we have incorporatedinto the estimates of our defined benefit plan obligations as of December 31, 2014. These changes to our mortalityassumptions increased our projected benefit obligations by127 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsapproximately $87 million. The following tables summarize the balance sheet impact, as well as the benefit obligations,funded status and rate assumptions associated with the SERPs and the DMC Pension Plan based on actuarial valuationsprepared as of December 31, 2014 and 2013: December 31, 2014 2013 Reconciliation of funded status of plans and the amounts included in theConsolidated Balance Sheets: Projected benefit obligations Beginning obligations $(1,303) $(312) Assumed from acquisition — (1,037) Service cost (3) (2) Interest cost (66) (25) Actuarial gain(loss) (268) 44 Plan changes — (2) Benefits paid/employer contributions 81 31 Ending obligations (1,559) (1,303) Fair value of plans assets Beginning obligations 886 — Assumed from acquisition — 863 Gain on plan assets 70 34 Employer contribution 3 — Benefits paid (61) (11) Ending plan assets 898 886 Funded status of plans $(661) $(417) Amounts recognized in the Consolidated Balance Sheets consist of: Other current liability $(28) $(19) Other long-term liability (633) (398) Accumulated other comprehensive loss 276 22 $(385) $(395) SERP Assumptions: Discount rate 4.25 % 5.00 % Compensation increase rate 3.00 % 3.00 % Measurement date December 31, 2014 December 31, 2013 DMC Pension Plan Assumptions: Discount rate 4.16 % 5.18 Compensation increase rate Frozen Frozen Measurement date December 31, 2014 December 31, 2013 (1)The accumulated benefit obligation at December 31, 2014 and 2013 was approximately $1.544 billion and $1.297 billion, respectively. 128 (1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe components of net periodic benefit costs and related assumptions are as follows: Years Ended December 31, 2014 2013 2012 Service costs $3 $2 $2 Interest costs 66 25 14 Expected return on plan assets (60) (15) — Amortization of prior-year service costs — — — Amortization of net actuarial loss 4 7 5 Net periodic benefit cost $13 $19 $21 SERP Assumptions: Discount rate 5.00 % 4.00 % 5.00 % Long-term rate of return on assets n/a n/a n/a Compensation increase rate 3.00 % 3.00 % 3.00 % Measurement date January 1, 2014 January 1, 2013 January 1, 2012 Census date January 1, 2014 January 1, 2013 January 1, 2012 DMC Pension Plan Assumptions: Discount rate 5.18 % 5.01 % n/a Long-term rate of return on assets 7.00 % 7.00 % n/a Compensation increase rate Frozen Frozen n/a Measurement date January 1, 2014 October 1, 2013 n/a Census date January 1, 2014 January 1, 2013 n/a Net periodic benefit costs for the current year are based on assumptions determined at the valuation date of the prioryear for the SERPs and the DMC Pension Plan. We recorded gain/(loss) adjustments of ($254) million, $69 million and ($25) million in other comprehensive income(loss) in the years ended December 31, 2014, 2013 and 2012, respectively, to recognize changes in the funded status of ourSERPs and the DMC Pension Plan. Changes in the funded status are recorded as a direct increase or decrease to shareholders’equity through accumulated other comprehensive loss. Net actuarial gains/(losses) of ($258) million, $63 million and($30) million during the years ended December 31, 2014, 2013 and 2012, respectively, and the amortization of net actuarialloss of $4 million, $7 million and $5 million for the years ended December 31, 2014, 2013 and 2012, respectively, wererecognized in other comprehensive income (loss). Cumulative net actuarial losses of $276 million, $22 million and$90 million as of December 31, 2014, 2013 and 2012, respectively, and unrecognized prior service costs of less than $1million as of each of the years ended December 31, 2014, 2013 and 2012, have not yet been recognized as components of netperiodic benefit costs. To develop the expected long-term rate of return on plan assets assumption, the DMC Pension Plan considers thecurrent level of expected returns on risk-free investments (primarily government bonds), the historical level of risk premiumassociated with the other asset classes in which the portfolio is invested and the expectations for future returns on each assetclass. The expected return for each asset class is then weighted based on the target asset allocation to develop the expectedlong-term rate of return on assets assumption for the portfolio. The weighted-average asset allocations by asset category as ofDecember 31, 2014, were as follows: Asset Category Target Actual Cash and cash equivalents 6 % 6 % United States government obligations 1 % 1 % Equity securities 50 % 50 % Debt Securities 43 % 43 % The DMC Pension Plan assets are invested in separately managed portfolios using investment management firms. Theobjective for all asset categories is to maximize total return without assuming undue risk exposure. The DMC Pension Planmaintains a well-diversified asset allocation that best meets these objectives. The DMC Pension Plan assets129 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsare largely comprised of equity securities, which include companies with various market capitalization sizes in addition tointernational and convertible securities. Cash and cash equivalents are comprised of money market funds. Debt securitiesinclude domestic and foreign government obligations, corporate bonds, and mortgage-backed securities. Under theinvestment policy of the DMC Pension Plan, investments in derivative securities are not permitted for the sole purpose ofspeculating on the direction of market interest rates. Included in this prohibition are leveraging, shorting, swaps, futures,options, forwards, and similar strategies. In each investment account, the DMC Pension Plan investment managers are responsible to monitor and react toeconomic indicators, such as gross domestic product, consumer price index and U.S. monetary policy that may affect theperformance of their account. The performance of all managers and the aggregate asset allocation are formally reviewed on aquarterly basis, with a rebalancing of the asset allocation occurring at least once a year. The current asset allocation objectiveis to maintain a certain percentage with each class allowing for a 10% deviation from the target. The following tables summarize the DMC Pension Plan assets measured at fair value on a recurring basis as ofDecember 31, 2014, aggregated by the level in the fair value hierarchy within which those measurements are determined. Fairvalue methodologies for Level 1, Level 2 and Level 3 are consistent with the inputs described in Note 18. December 31, 2014 (Level 1) (Level 2) (Level 3) Cash and cash equivalents $55 $55 $— $— United States government obligations 5 5 — — Corporate bonds 391 391 — — Equity securities 447 447 — — $898 $898 $— $— The following table presents the estimated future benefit payments to be made from the SERPs and the DMC PensionPlan, a portion of which will be funded from plan assets, for the next five years and in the aggregate for the five yearsthereafter: Years Ending December 31, 2014 Five Years Total 2015 2016 2017 2018 2019 Thereafter Estimated benefit payments $896 $84 $80 $83 $86 $89 $474 The SERP and DMC Pension Plan obligations of $661 million at December 31, 2014 are classified in theaccompanying Consolidated Balance Sheet as an other current liability ($28 million) and defined benefit plan obligations ($633 million) based on an estimate of the expected payment patterns. We expect to make total contributions to the plans ofapproximately $28 million for the year ending December 31, 2015.NOTE 9. CAPITAL COMMITMENTS In connection with Vanguard’s acquisition of Detroit Medical Center, certain capital commitments were agreed to besatisfied at particular dates. If these commitments are not met by these required dates, we are required to escrow cash for thepurpose of funding certain capital projects. There was no required escrow balance as of December 31, 2014. 130 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNOTE 10. PROPERTY AND EQUIPMENT The principal components of property and equipment are shown in the table below: December 31, 2014 2013 Land $650 $660 Buildings and improvements 7,013 6,166 Construction in progress 161 593 Equipment 4,387 4,070 12,211 11,489 Accumulated depreciation and amortization (4,478) (3,907) Net property and equipment $7,733 $7,582 Property and equipment is stated at cost, less accumulated depreciation and amortization and impairment write-downs related to assets held and used. NOTE 11. GOODWILL AND OTHER INTANGIBLE ASSETS The following table provides information on changes in the carrying amount of goodwill, which is included in theaccompanying Consolidated Balance Sheets as of December 31, 2014 and 2013: 2014 2013 Hospital Operations and other As of January 1: Goodwill $5,584 $3,268 Accumulated impairment losses (2,430) (2,430) Total 3,154 838 Goodwill acquired during the year and purchase price allocation adjustments 153 2,316 Goodwill allocated to hospital sold — — Impairment of goodwill — — Total $3,307 $3,154 As of December 31: Goodwill $5,737 $5,584 Accumulated impairment losses (2,430) (2,430) Total $3,307 $3,154 2014 2013 Conifer As of January 1: Goodwill $412 $78 Accumulated impairment losses — — Total 412 78 Goodwill acquired during the year and purchase price allocation adjustments 194 334 Total $606 $412 As of December 31: Goodwill $606 $412 Accumulated impairment losses — — Total $606 $412 131 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe following table provides information regarding other intangible assets, which are included in the accompanyingConsolidated Balance Sheets as of December 31, 2014 and 2013: Gross Carrying Accumulated Net Book Amount Amortization Value As of December 31, 2014: Capitalized software costs $1,412 $(586) $826 Long-term debt issuance costs 245 (49) 196 Trade names 106 — 106 Contracts 57 (6) 51 Other 129 (30) 99 Total $1,949 $(671) $1,278 As of December 31, 2013: Capitalized software costs $1,148 $(468) $680 Long-term debt issuance costs 230 (31) 199 Trade Names 106 — 106 Contracts 57 (2) 55 Other 80 (15) 65 Total $1,621 $(516) $1,105 Estimated future amortization of intangibles with finite useful lives as of December 31, 2014 is as follows: Years Ending December 31, Later Total 2015 2016 2017 2018 2019 Years Amortization of intangible assets $1,166 $218 $208 $151 $141 $102 $346 NOTE 12. INVESTMENTS AND OTHER ASSETS The principal components of investments and other assets in our accompanying Consolidated Balance Sheets are asfollows: December 31, 2014 2013 Marketable debt securities $77 $16 Equity investments in unconsolidated healthcare entities 56 56 Total investments 133 72 Cash surrender value of life insurance policies 27 25 Long-term deposits 36 35 Land held for expansion, long-term receivables and other assets 188 225 Investments and other assets $384 $357 (1)Equity earnings of unconsolidated affiliates are included in net operating revenues in the accompanying Consolidated Statements ofOperations and were $12 million and $15 million for the years ended December 31, 2014 and 2013, respectively. Our policy is to classify investments that may be needed for cash requirements as “available-for-sale.” In doing so,the carrying values of the shares and debt instruments are adjusted at the end of each accounting period to their market valuesthrough a credit or charge to other comprehensive income (loss), net of taxes. At both December 31, 2014 and 2013, there wereless than $1 million of accumulated unrealized gains on these investments. 132 (1)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNOTE 13. ACCUMULATED OTHER COMPREHENSIVE LOSS Our accumulated other comprehensive loss is comprised of the following: December 31, 2014 2013 Adjustments for defined benefit plans $(182) $(24) Accumulated other comprehensive loss $(182) $(24) There was a tax effect allocated to the adjustments for our defined benefit plans for the years endedDecember 31, 2014 and 2013 of $93 million and $(25) million, respectively.NOTE 14. PROPERTY AND PROFESSIONAL AND GENERAL LIABILITY INSURANCE Property Insurance We have property, business interruption and related insurance coverage to mitigate the financial impact ofcatastrophic events or perils that is subject to deductible provisions based on the terms of the policies. These policies are onan occurrence basis. Professional and General Liability Insurance At December 31, 2014 and 2013, the aggregate current and long-term professional and general liability reserves inour accompanying Consolidated Balance Sheets were approximately $681 million and $711 million, respectively. Thesereserves include the reserves recorded by our captive insurance subsidiaries and our self-insured retention reserves recordedbased on modeled estimates for the portion of our professional and general liability risks, including incurred but not reportedclaims, for which we do not have insurance coverage. We estimated the reserves for losses and related expenses using expectedloss-reporting patterns discounted to their present value under a risk-free rate approach using a Federal Reserve seven-yearmaturity rate of 1.97%, 2.45% and 1.18% at December 31, 2014, 2013 and 2012, respectively. If the aggregate limit of any of our professional and general liability policies is exhausted, in whole or in part, itcould deplete or reduce the limits available to pay any other material claims applicable to that policy period. Included in other operating expenses, net, in the accompanying Consolidated Statements of Operations ismalpractice expense of $232 million, $112 million and $92 million for the years ended December 31, 2014, 2013 and 2012,respectively. NOTE 15. CLAIMS AND LAWSUITS We operate in a highly regulated and litigious industry. As a result, we commonly become involved in disputes,litigation and regulatory matters incidental to our operations, including governmental investigations, personal injurylawsuits, employment claims and other matters arising out of the normal conduct of our business. We record accruals for estimated losses relating to claims and lawsuits when available information indicates that aloss is probable and we can reasonably estimate the amount of the loss or a range of loss. If a loss on a material matter isreasonably possible and estimable, we disclose an estimate of the loss or a range of loss. In cases where we have not disclosedan estimate, we have concluded that the loss is either not reasonably possible or the loss, or a range of loss, is not reasonablyestimable, based on available information. Governmental Reviews Healthcare companies are subject to numerous investigations by various governmental agencies. Further, privateparties have the right to bring qui tam or “whistleblower” lawsuits against companies that allegedly submit false133 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsclaims for payments to, or improperly retain overpayments from, the government and, in some states, private payers. Certain ofour individual facilities and Conifer have received inquiries from government agencies, and our hospitals and otherhealthcare-related businesses may receive such inquiries in future periods. The following material governmental reviews,which have been previously reported, are currently pending. •Review of Conifer’s Debt Collection Activities—As previously reported, Syndicated Office Systems, LLC, awholly owned subsidiary of Conifer doing business under the name Central Financial Control (“CFC”), receiveda Civil Investigative Demand (“CID”) in August 2013 from the U.S. Consumer Financial Protection Bureau(“CFPB”) and, in July 2014, CFC received a second CID from the CFPB requesting additional information. InNovember 2014, the CFPB informed CFC’s external counsel that, based on its investigation, the CFPB believesCFC has not complied in limited instances with certain notification and other requirements under federalconsumer financial laws with respect to credit reporting and debt collection. In January 2015, CFC commencedinformal discussions with the CFPB to resolve the agency’s investigation. Based on CFC’s initial settlementproposal, management established a reserve of $1.7 million in the three months ended December 31, 2014 toreflect its current estimate of CFC’s potential liability in connection with this matter. However, because thediscussions are still in their early stages, it is not possible at this time to predict a possible range of loss withrespect to the investigation. Although there can be no assurance that CFC and the CFPB will reach an agreement,the Company believes, based on current information, that the ultimate resolution of this matter will not have amaterial adverse effect on the consolidated results of operations, financial condition or cash flows of theCompany and its subsidiaries. •Implantable Cardioverter Defibrillators (“ICDs”)—We are engaged in potential settlement discussions with theU.S. Department of Justice (“DOJ”) to resolve an investigation to determine whether ICD procedures performed at56 of our hospitals from 2002 to 2010 complied with Medicare coverage requirements. It is impossible at thistime to predict with any certainty the outcome of those discussions or the amount of any potential resolution.However, based on current discussions, we believe the amount of the reserve management has established for thismatter, as described below, continues to reflect our current estimate of probable liability for all of the hospitalsunder review as part of the government’s examination, which commenced in March 2010. •Clinica de la Mama Investigations and Qui Tam Action—As previously reported, we received a subpoena in May2012 from the Office of Inspector General (“OIG”) of U.S. Department of Health and Human Services in Atlantaseeking documents from January 2004 through May 2012 related to the relationship that certain of our Georgiaand South Carolina hospitals had with Hispanic Medical Management, Inc. (“HMM”). HMM was an unaffiliatedentity that owned and operated clinics that provided, among other things, prenatal care predominantly touninsured patients. The hospitals contracted with HMM for translation, marketing, management and Medicaideligibility determination services. The civil investigation is being conducted by the Civil Division of the DOJ,the U.S. Attorney’s Office for the Middle District of Georgia and the Georgia Attorney General’s Office, while aparallel criminal investigation is being conducted by the Criminal Division of the DOJ and the U.S. Attorney’sOffice for the Northern District of Georgia. The investigations arose out of a qui tam action captioned United States of America, ex. rel. Ralph D. Williams v.Health Management Associates, Inc., et al. filed in the U.S. District Court for the Middle District of Georgia. Weand four of our hospital subsidiaries are defendants in the qui tam action, which alleges that the arrangements thehospitals had with HMM violated the federal and state anti-kickback statutes and false claims acts. Both theGeorgia Attorney General’s Office, on behalf of the State of Georgia, and the U.S. Attorney’s Office, on behalf ofthe United States, have intervened in the qui tam action. We submitted answers to the complaints filed by therelator, the State of Georgia and the United States on July 15, 2014 following the court’s denial of our motions todismiss in June 2014. The parties have agreed to stay discovery in the case until March 31, 2015. If we or our subsidiaries were determined to have violated the anti-kickback statutes, the government couldrequire us to reimburse related government program payments received during the subject period, assess134 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentscivil monetary penalties including treble damages, exclude individuals or subsidiaries from participation infederal healthcare programs, or seek criminal sanctions against current or former employees of our hospitalsubsidiary companies or the hospital companies themselves. In a Bill of Information filed on July 23, 2014 withthe U.S. District Court for the Northern District of Georgia, Atlanta Division, the U.S. Attorney for that Districtasserted charges of one count of criminal conspiracy against a former owner of HMM (a non-employee of Tenet)related to the agreements between HMM and the Tenet hospitals described above. In a separate Bill ofInformation also filed with the court on July 23, 2014, the U.S. Attorney asserted charges of one count ofcriminal conspiracy against a former employee of a Tenet hospital, but such charges relate to an unaffiliatedentity. It is impossible at this time to predict with any certainty the amount and terms of any potential resolutionof these matters; however, we believe the amount of the reserve established, as described below, continues toreflect our current estimate of probable liability. We will continue to vigorously defend against the government’sallegations. Our analysis of each of these pending reviews is still ongoing, and we are unable to predict with any certainty theprogress or final outcome of any discussions with government agencies at this time. Management has established reserves ofapproximately $38 million in the aggregate for our potential obligations with respect to the CFPB investigation, all of thehospitals under review for their billing practices for cardiac defibrillator implantation procedures, and the Clinica de la Mamamatters. Changes in the reserves may be required in the future as additional information becomes available. We cannot predictthe ultimate resolution of any governmental review, and the final amounts paid in settlement or otherwise, if any, could differmaterially from our currently recorded reserves. The following previously reported governmental review was recently resolved: •Kyphoplasty—From March 2009 through July 2010, seven of our hospitals became the subject of a review by theDOJ and certain other federal agencies regarding the appropriateness of inpatient treatment for Medicare patientsreceiving kyphoplasty, which is a surgical procedure used to treat certain spinal conditions. In January 2013, wepaid $900,000 to settle claims against one of our hospitals subject to this review, and, in April 2014, weconfirmed that another hospital is no longer the subject of investigation. In January 2015, we reached finalagreement with the government to settle this matter with respect to the remaining five hospitals forapproximately $2 million, which was fully reserved as of December 31, 2014. Ordinary Course Matters We are also subject to other claims and lawsuits arising in the ordinary course of business, including potential claimsrelated to, among other things, the care and treatment provided at our hospitals and outpatient facilities, the application ofvarious federal and state labor laws, tax audits and other matters. Although the results of these claims and lawsuits cannot bepredicted with certainty, we believe that the ultimate resolution of these ordinary course claims and lawsuits will not have amaterial effect on our business or financial condition. In addition, in October 2014, we received court approval of a final agreement to settle a previously disclosed classaction lawsuit captioned Doe, et al. v. Jo Ellen Smith Medical Foundation, which was filed in the Civil District Court for theParish of Orleans in Louisiana in March 1997. The plaintiffs pursued a claim for tortious invasion of privacy due to the factthat in April 1996 patient identifying records from a psychiatric hospital we closed in 1995 were temporarily placed in anunsecure location while the hospital was undergoing renovations. The court certified a class of over 5,000 persons; however,only eight individuals (in addition to the two plaintiffs) have been identified to date in the class certification process. Theplaintiffs have asserted each member of the class is entitled to common damages under a theory of presumed “commondamage” regardless of whether or not any members of the class were actually harmed or even aware of the incident. In an effortto avoid protracted litigation, the parties settled this matter in June 2014 for a maximum potential payment of $32.5 million,subject to the number and type of claims asserted by the class members between January 15 and March 31, 2015. We made aninitial deposit of $5.5 million into an escrow account in late November 2014. The settlement will be funded in amounts andon a schedule to be agreed to by the parties. Management has established a reserve of $11.5 million, recorded in discontinuedoperations, to reflect our current estimate of probable liability for this matter based on anticipated levels of class memberparticipation. 135 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNew claims or inquiries may be initiated against us from time to time. These matters could (1) require us to paysubstantial damages or amounts in judgments or settlements, which, individually or in the aggregate, could exceed amounts, ifany, that may be recovered under our insurance policies where coverage applies and is available, (2) cause us to incursubstantial expenses, (3) require significant time and attention from our management, and (4) cause us to close or sell hospitalsor otherwise modify the way we conduct business. The table below presents reconciliations of the beginning and ending liability balances in connection with legalsettlements and related costs recorded during the years ended December 31, 2014, 2013 and 2012: Balances at Litigation and Balances at Beginning Investigation Cash End of of Period Costs Payments Other Period Year Ended December 31, 2014 Continuing operations $64 $25 $(16) $ — $73 Discontinued operations 6 18 (14) — 10 $70 $43 $(30) $ — $83 Year Ended December 31, 2013 Continuing operations $5 $31 $(10) $38 $64 Discontinued operations 5 2 (1) — 6 $10 $33 $(11) $38 $70 Year Ended December 31, 2012 Continuing operations $49 $5 $(49) $ — $5 Discontinued operations 17 — (12) — 5 $66 $5 $(61) $ — $10 For the years ended December 31, 2014, 2013 and 2012, we recorded net costs of $43 million, $33 million and$5 million, respectively, in connection with significant legal proceedings and governmental reviews. The amount for 2013 inthe column entitled “Other” above relates to reserves assumed as part of our acquisition of Vanguard in October 2013.NOTE 16. INCOME TAXES The provision for income taxes for continuing operations for the years ended December 31, 2014, 2013 and 2012consists of the following: Year Ended December 31, 2014 2013 2012 Current tax expense (benefit): Federal $(12) $2 $(3) State 18 4 11 6 6 8 Deferred tax expense (benefit): Federal 46 (56) 117 State (3) (15) — 43 (71) 117 $49 $(65) $125 A reconciliation between the amount of reported income tax expense (benefit) and the amount computed bymultiplying income (loss) from continuing operations before income taxes by the statutory federal income tax rate is shownbelow. State income tax for the year ended December 31, 2014 includes $34 million of expense related to the136 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentswrite off of expired unutilized state net operating loss carryforwards for which a full valuation allowance had been provided inprior years. A corresponding tax benefit of $34 million is included for the year ended December 31, 2014 to reflect thereduction in the valuation allowance. Year Ended December 31, 2014 2013 2012 Tax expense at statutory federal rate of 35% $52 $(55) $117 State income taxes, net of federal income tax benefit 5 1 13 Expired state net operating losses, net of federal income tax benefit 34 — — Tax attributable to noncontrolling interests (23) (10) (4) Nondeductible acquisition costs 2 6 — Nondeductible health insurance provider fee 3 — — Changes in valuation allowance (20) (2) (5) Change in tax contingency reserves, including interest (2) (7) (1) Prior-year provision to return adjustment and other changes in deferred taxes (5) 3 3 Other items 3 (1) 2 $49 $(65) $125 Deferred income taxes reflect the tax effects of temporary differences between the carrying amount of assets andliabilities for financial reporting purposes and the amount used for income tax purposes. The following table discloses thosesignificant components of our deferred tax assets and liabilities, including any valuation allowance: December 31, 2014 December 31, 2013 Assets Liabilities Assets Liabilities Depreciation and fixed-asset differences $ — $847 $ — $681 Reserves related to discontinued operations and restructuring charges 28 — 20 — Receivables (doubtful accounts and adjustments) 173 — 252 — Deferred gain on debt exchanges — 42 — 53 Accruals for retained insurance risks 329 — 335 — Intangible assets — 157 — 147 Other long-term liabilities 166 — 81 — Benefit plans 451 — 294 — Other accrued liabilities 83 — 97 — Investments and other assets — 4 — 27 Net operating loss carryforwards 659 — 708 — Stock-based compensation 31 — 31 — Other items 80 — 37 — 2,000 1,050 1,855 908 Valuation allowance (87) — (107) — $1,913 $1,050 $1,748 $908 Below is a reconciliation of the deferred tax assets and liabilities and the corresponding amounts reported in theaccompanying Consolidated Balance Sheets. December 31, 2014 2013 Current portion of deferred income tax asset $747 $692 Deferred income tax asset, net of current portion 116 148 Net deferred tax asset $863 $840 137 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsDuring the year ended December 31, 2014, the valuation allowance decreased by $20 million primarily due to theexpiration of unutilized state net operating loss carryforwards. The remaining balance in the valuation allowance as ofDecember 31, 2014 is $87 million. During the year ended December 31, 2013, the valuation allowance increased by$51 million, $34 million due to the acquisition of Vanguard and $17 million primarily due to the adjustment of deferred taxassets for state net operating loss carryforwards that have a full valuation allowance. During the year endedDecember 31, 2012, we reduced the valuation allowance by an additional $5 million based on 2012 profits and projectedprofits for 2013. We account for uncertain tax positions in accordance with ASC 740-10-25, which prescribes a comprehensive modelfor the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expectedto be taken in income tax returns. The table below summarizes the total changes in unrecognized tax benefits during the yearended December 31, 2014. The additions and reductions for tax positions include the impact of items for which the ultimatedeductibility is highly certain, but for which there is uncertainty about the timing of such deductions. Such amounts includeunrecognized tax benefits that have impacted deferred tax assets and liabilities at December 31, 2014, 2013 and 2012. Continuing Discontinued Operations Operations Total Balance at December 31, 2011 $34 1 $35 Additions for prior-year tax positions — — — Reductions for tax positions of prior years (2) — (2) Additions for current-year tax positions 2 — 2 Reductions for current-year tax positions — — — Reductions due to settlements with taxing authorities (3) — (3) Reductions due to a lapse of statute of limitations — — — Balance at December 31, 2012 31 1 32 Additions for prior-year tax positions 15 — 15 Reductions for tax positions of prior years — — — Additions for current-year tax positions 3 — 3 Reductions for current-year tax positions — — — Reductions due to settlements with taxing authorities — — — Reductions due to a lapse of statute of limitations (6) (1) (7) Balance at December 31, 2013 43 $ — 43 Additions for prior-year tax positions — — — Reductions for tax positions of prior years (1) — (1) Additions for current-year tax positions 1 — 1 Reductions for current-year tax positions — — — Reductions due to settlements with taxing authorities — — — Reductions due to a lapse of statute of limitations (5) — (5) Balance at December 31, 2014 $38 $ — $38 The total amount of unrecognized tax benefits as of December 31, 2014 was $38 million, of which $31 million, ifrecognized, would affect our effective tax rate and income tax expense (benefit) from continuing operations. Income taxexpense in the year ended December 31, 2014 includes a benefit of $6 million in continuing operations attributable to adecrease in our estimated liabilities for uncertain tax positions, net of related deferred tax effects. The total amount ofunrecognized tax benefits as of December 31, 2013 was $43 million, of which $34 million, if recognized, would affect oureffective tax rate and income tax expense (benefit) from continuing operations. Income tax expense in the year endedDecember 31, 2013 includes a benefit of $1 million in continuing operations attributable to a decrease in our estimatedliabilities for uncertain tax positions, net of related deferred tax effects. The total amount of unrecognized tax benefits as ofDecember 31, 2012 was $32 million which, if recognized, would affect our effective tax rate and income tax expense (benefit)from continuing and discontinued operations. Income tax expense in the year ended December 31, 2012 includes expense of$3 million in continuing operations attributable to an increase in our estimated liabilities for uncertain tax positions, net ofrelated deferred tax effects.138 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense in ourconsolidated statements of operations. Approximately $1 million of interest and penalties related to accrued liabilities foruncertain tax positions related to continuing operations are included in the accompanying Consolidated Statement ofOperations for the year ended December 31, 2014. Total accrued interest and penalties on unrecognized tax benefits as ofDecember 31, 2014 were $4 million, all of which related to continuing operations. The Internal Revenue Service (“IRS”) has completed audits of our tax returns for all tax years ending on or beforeDecember 31, 2007, and of Vanguard’s tax returns for fiscal years ending on or before June 30, 2004. All disputed issues withrespect to these audits have been resolved and all related tax assessments (including interest) have been paid. Our tax returnsfor years ended after December 31, 2007, and Vanguard’s tax returns for fiscal years ended after June 30, 2004 remain subjectto examination by the IRS. As of December 31, 2014, approximately $2 million of unrecognized federal and state tax benefits, as well as reservesfor interest and penalties, may decrease in the next 12 months as a result of the settlement of audits, the filing of amended taxreturns or the expiration of statutes of limitations. At December 31, 2014, our carryforwards available to offset future taxable income consisted of (1) federal netoperating loss (“NOL”) carryforwards of approximately $1.6 billion pretax expiring in 2024 to 2033, (2) approximately$28 million in alternative minimum tax credits with no expiration, (3) general business credit carryforwards of approximately$19 million expiring in 2023 through 2034, and (4) state NOL carryforwards of $3.3 billion expiring in 2014 through 2033 forwhich the associated deferred tax benefit, net of valuation allowance and federal tax impact, is $18 million. Our ability toutilize NOL carryforwards to reduce future taxable income may be limited under Section 382 of the Internal Revenue Code ifcertain ownership changes in our company occur during a rolling three-year period. These ownership changes includepurchases of common stock under share repurchase programs (see Note 2), the offering of stock by us, the purchase or sale ofour stock by 5% shareholders, as defined in the Treasury regulations, or the issuance or exercise of rights to acquire our stock.If such ownership changes by 5% shareholders result in aggregate increases that exceed 50 percentage points during the three-year period, then Section 382 imposes an annual limitation on the amount of our taxable income that may be offset by theNOL carryforwards or tax credit carryforwards at the time of ownership change.139 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNOTE 17. EARNINGS (LOSS) PER COMMON SHARE The table below is a reconciliation of the numerators and denominators of our basic and diluted earnings (loss) percommon share calculations for income (loss) from continuing operations for the years ended December 31, 2014, 2013and 2012. Income (loss) is expressed in millions and weighted average shares are expressed in thousands. Weighted Net Income Average (Loss) Shares Per-Share (Numerator) (Denominator) Amount Year Ended December 31, 2014 Net income attributable to Tenet Healthcare Corporation common shareholders forbasic earnings per share $34 97,801 $0.35 Effect of dilutive stock options, restricted stock units and deferred compensationunits — 2,486 (0.01) Net income attributable to Tenet Healthcare Corporation common shareholdersfor diluted earnings per share $34 100,287 $0.34 Year Ended December 31, 2013 Net loss attributable to Tenet Healthcare Corporation common shareholders forbasic earnings per share $(123) 101,648 $(1.21) Effect of dilutive stock options, restricted stock units and deferred compensationunits — — — Net loss attributable to Tenet Healthcare Corporation common shareholders fordiluted earnings per share $(123) 101,648 $(1.21) Year Ended December 31, 2012 Net income attributable to Tenet Healthcare Corporation common shareholders forbasic earnings per share $185 104,200 $1.77 Effect of dilutive stock options, restricted stock units and deferred compensationunits — 4,726 (0.07) Net income attributable to Tenet Healthcare Corporation common shareholdersfor diluted earnings per share $185 108,926 $1.70 All potentially dilutive securities were excluded from the calculation of diluted earnings (loss) per share for the yearended December 31, 2013 because we did not report income from continuing operations in the period. In circumstances wherewe do not have income from continuing operations, the effect of stock options and other potentially dilutive securities is anti-dilutive, that is, a loss from continuing operations has the effect of making the diluted loss per share less than the basic lossper share. Had we generated income from continuing operations in that period, the effect (in thousands) of employee stockoptions, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increasein shares of 2,310. Stock options (in thousands) whose exercise price exceeded the average market price of our common stockand, therefore, were not included in the computation of diluted shares for the years ended December 31, 2013 and 2012were 755 and 2,876 shares, respectively.NOTE 18. FAIR VALUE MEASUREMENTS Our financial assets and liabilities recorded at fair value on a recurring basis primarily relate to investments inavailable-for-sale securities held by our captive insurance subsidiaries. The following tables present information about ourassets and liabilities that are measured at fair value on a recurring basis as of December 31, 2014 and 2013. The followingtables also indicate the fair value hierarchy of the valuation techniques we utilized to determine such fair values. In general,fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for140 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsidentical assets or liabilities. We consider a security that trades at least weekly to have an active market. Fair valuesdetermined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fairvalues determined by Level 3 inputs are unobservable data points for the asset or liability, and include situations where thereis little, if any, market activity for the asset or liability. Quoted Prices in Active Significant Markets for Significant Other Unobservable Identical Assets Observable Inputs InputsInvestments December 31, 2014 (Level 1) (Level 2) (Level 3)Marketable securities — current $2 $2 $ — $ —Investments in Reserve Yield Plus Fund 2 — 2 —Marketable debt securities — noncurrent 60 54 5 1 $64 $56 $7 $1 Quoted Prices in Active Significant Markets for Significant Other Unobservable Identical Assets Observable Inputs InputsInvestments: December 31, 2013 (Level 1) (Level 2) (Level 3)Marketable securities — current $1 $1 $ — $ —Investments in Reserve Yield Plus Fund 2 — 2 —Marketable debt securities — noncurrent 62 23 38 1 $65 $24 $40 $1 Our non-financial assets and liabilities not permitted or required to be measured at fair value on a recurring basistypically relate to long-lived assets held and used, long-lived assets held for sale and goodwill. We are required to provideadditional disclosures about fair value measurements as part of our financial statements for each major category of assets andliabilities measured at fair value on a non-recurring basis. The following table presents this information and indicates the fairvalue hierarchy of the valuation techniques we utilized to determine such fair values. In general, fair values determined byLevel 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities, which generally are notapplicable to non-financial assets and liabilities. Fair values determined by Level 2 inputs utilize data points that areobservable, such as definitive sales agreements, appraisals or established market values of comparable assets. Fair valuesdetermined by Level 3 inputs are unobservable data points for the asset or liability and include situations where there is little,if any, market activity for the asset or liability, such as internal estimates of future cash flows. Quoted Prices in Active Significant Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs December 31, 2014 (Level 1) (Level 2) (Level 3) Long-lived assets held and used $23 $— $23 $— Quoted Prices in Active Significant Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs December 31, 2013 (Level 1) (Level 2) (Level 3)Long-lived assets held and used $44 $— $44 $— As described in Note 5, we recorded impairment charge in continuing operations of $20 million and $12 million inthe years ended December 31, 2014 and 2013, respectively, for the write-down of buildings, equipment and other long-livedassets of one of our hospitals to their estimated fair values primarily due to a decline in the fair value of real estate in themarket in which the hospital operates and a decline in the estimated fair value of equipment. 141Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe fair value of our long-term debt is based on quoted market prices (Level 1). At December 31, 2014 and 2013, theestimated fair value of our long-term debt was approximately 105.0% and 103.5%, respectively, of the carrying value of thedebt.NOTE 19. ACQUISITIONS During the year ended December 31, 2014, we acquired a majority interest in Texas Regional Medical Center atSunnyvale, a 70-bed hospital in Sunnyvale, Texas, a suburban community east of Dallas, and completed our acquisition ofEmanuel Medical Center, a 209-bed hospital in Turlock, California, located approximately 100 miles southeast of SanFrancisco. We also acquired five ambulatory surgery centers, three urgent care centers, one diagnostic imaging center, SPiHealthcare, a provider of revenue cycles management, health information management and software solutions, and variousphysician practice entities in the same period. The fair value of the consideration conveyed in the acquisitions (the “purchaseprice”) was $428 million. During the year ended December 31, 2013, we acquired 28 hospitals (plus one more under construction),39 outpatient centers and five health plans, serving communities in Arizona, California, Illinois, Massachusetts, Michigan andTexas, through our acquisition of Vanguard. We also purchased the following businesses: (1) 11 ambulatory surgery centers(in one of which we had previously held a noncontrolling interest); (2) an urgent care center; (3) a provider network based inSouthern California that includes contracted independent physicians, ancillary providers and hospitals; (4) a medical officebuilding; and (5) various physician practice entities. The fair value of the consideration conveyed in the acquisitions (the“purchase price”) was $1.515 billion. We are required to allocate the purchase prices of the acquired businesses to assets acquired or liabilities assumedand, if applicable, noncontrolling interests based on their fair values. The excess of the purchase price allocation over thosefair values is recorded as goodwill. We are in process of finalizing the purchase price allocations, including valuations ofthe acquired property and equipment, primarily for several recent acquisitions; therefore, those purchase price allocations aresubject to adjustment once the valuations are completed. During the year ended December 31, 2014, we completed theanalysis required to finalize the purchase price allocation for our acquisition of Vanguard. We have revised our ConsolidatedBalance Sheet as of December 31, 2013 and the related footnote disclosures to reflect the impact of these adjustments. Duringthe years ended December 31, 2014 and 2013, we made adjustments to purchase price allocations for businesses acquired in2013 and 2012 (other than Vanguard) that increased goodwill by approximately $7 million and $5 million, respectively. Preliminary or final purchase price allocations for all the acquisitions made during the years endedDecember 31, 2014 and 2013 are as follows: 2014 2013 Current assets $34 $980 Property and equipment 113 2,890 Other intangible assets 46 213 Goodwill 340 2,645 Other long-term assets 2 160 Current liabilities (30) (1,205) Deferred tax liabilities (18) (116) Long-term liabilities (23) (3,725) Redeemable noncontrolling interests in equity of consolidated subsidiaries (21) (268) Noncontrolling interests (15) (49) Net cash paid $428 $1,515 Gain on business combination $ — $10 The goodwill generated from these transactions, the majority of which will not be deductible for income tax purposes, can beattributed to the benefits that we expect to realize from operating efficiencies and increased reimbursement. Approximately$16 million in transaction costs related to prospective and closed acquisitions were expensed during the142 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contentsyear ended December 31, 2014, and are included in impairment and restructuring charges, and acquisition-related costs in theaccompanying Consolidated Statement of Operations. Included in equity earnings of unconsolidated affiliates for the year ended December 31, 2013 is $10 million ofearnings associated with stepping up our basis in a previously held investment in an ambulatory surgery center in which weacquired a controlling interest and are now consolidating. Pro Forma Information - Unaudited The following table provides certain pro forma financial information for Tenet as if the Vanguard Health Systemsacquisition had occurred at the beginning of the year ended December 31, 2012. Year Ended December 31, 2013 2012 Net operating revenues $15,459 $15,140 Net income (loss) from continuing operations, before incometaxes $(433) $294 NOTE 20. SEGMENT INFORMATION In the three months ended June 30, 2012, we began reporting Conifer as a separate reportable business segment. Ourother segment is Hospital Operations and other. Historically, our business has consisted of one reportable segment. However,during the three months ended June 30, 2012, our Hospital Operations and other segment and our Conifer subsidiary enteredinto formal agreements, pursuant to which it was agreed that services provided by both parties to each other would be billedbased on estimated third-party pricing terms. The factors for determining the reportable segments include the manner in whichmanagement evaluates operating performance combined with the nature of the individual business activities. Our core business is Hospital Operations and other, which is focused on operating acute care hospitals and outpatientfacilities. We also own various related healthcare businesses. At December 31, 2014, our subsidiaries operated 80 hospitalswith a total of 20,814 licensed beds, primarily serving urban and suburban communities in 14 states, as well as 210 outpatientcenters and six health plans. We operate revenue cycle management and patient communications and engagement services businesses under ourConifer subsidiary. In addition, Conifer operates a management services business that supports value-based performancethrough clinical integration, financial risk management and population health management. At December 31, 2014, Coniferprovided services to approximately 800 Tenet and non-Tenet hospitals and other clients nationwide. As mentioned above, in 2012, our Conifer subsidiary and our Hospital Operations and other segment entered intoformal agreements documenting terms and conditions of various services provided by Conifer to Tenet hospitals, as well ascertain administrative services provided by our Hospital Operations and other segment to Conifer. The services provided byboth parties under these agreements are charged to the other party based on estimated third-party pricing terms.143 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsThe following table includes amounts for each of our reportable segments and the reconciling items necessary toagree to amounts reported in the accompanying Consolidated Balance Sheets and Consolidated Statements of Operations: December 31, 2014 2013 2012 Assets: Hospital Operations and other $17,212 $15,865 $8,825 Conifer 929 585 219 Total $18,141 $16,450 $9,044 Year Ended December 31, 2014 2013 2012 Capital expenditures: Hospital Operations and other $908 $670 $495 Conifer 25 21 13 Total $933 $691 $508 Net operating revenues: Hospital Operations and other $16,013 $10,587 $9,002 Conifer Tenet 591 404 371 Other customers 602 515 117 17,206 11,506 9,490 Intercompany eliminations (591) (404) (371) Total $16,615 $11,102 $9,119 Adjusted EBITDA: Hospital Operations and other $1,749 $1,210 $1,098 Conifer 203 132 105 Total $1,952 $1,342 $1,203 Depreciation and amortization: Hospital Operations and other $824 $526 $420 Conifer 25 19 10 Total $849 $545 $430 Adjusted EBITDA $1,952 $1,342 $1,203 Depreciation and amortization (849) (545) (430) Impairment and restructuring charges, and acquisition-related costs (153) (103) (19) Litigation and investigation costs (25) (31) (5) Interest expense (754) (474) (412) Loss from early extinguishment of debt (24) (348) (4) Investment earnings — 1 1 Net income (loss) from continuing operations before income taxes $147 $(158) $334 144 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsNOTE 21. RECENT ACCOUNTING STANDARDS Recently Issued Accounting Standards In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): ReportingDiscontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 changesthe requirements for reporting discontinued operations in FASB Accounting Standards Codification Subtopic 205-20, suchthat a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinuedoperations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations andfinancial results. ASU 2014-08 requires an entity to present, for each comparative period, the assets and liabilities of a disposalgroup that includes a discontinued operation separately in the asset and liability sections, respectively, of the statement offinancial position, as well as additional disclosures about discontinued operations. Additionally, ASU 2014-08 requiresdisclosures about a disposal of an individually significant component of an entity that does not qualify for discontinuedoperations presentation in the financial statements and expands the disclosures about an entity’s significant continuinginvolvement with a discontinued operation. This guidance will be effective for us beginning in 2015. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters intocontracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The coreprinciple of the guidance in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goodsor services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange forthose goods or services. We are currently evaluating the potential impact of this guidance, which will be effective for usbeginning in 2017. NOTE 22. SUBSEQUENT EVENTS In January 2015, Conifer announced a 10-year extension and expansion of its agreement with Catholic HealthInitiatives (“CHI”) to provide patient access, revenue integrity and patient financial services to 92 CHI hospitals through2032. At that time and as a result of CHI’s relationship with Tenet, CHI received an increase in its minority ownership positionin Conifer to approximately 23.8%. CHI’s ownership percentage in Conifer may experience a future one-time additionalpositive or negative adjustment after December 31, 2019 (to no more than 25% and no less than 20%) as a result of significantchanges in Tenet’s and CHI’s relative relationship with Conifer at such time. CHI’s ownership percentage was scheduled toincrease to 9.03% on January 1, 2015 under the terms of our original agreement with CHI. In connection with the settlement of the Valley Baptist put option, we acquired the remaining 49% non-controllinginterest from the seller on February 11, 2015 in exchange for approximately $254 million in cash, which was applied toredeemable non-controlling interest with the difference between the payment and the carrying value of approximately$270 million recorded as additional paid-in capital. The redemption value of the put option was calculated pursuant to theterms of the operating agreement based on the operating results and the debt of the joint venture. As a result, we now own100% of Valley Baptist as of February 11, 2015.145 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents SUPPLEMENTAL FINANCIAL INFORMATION SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Year Ended December 31, 2014 First Second Third Fourth Net operating revenues $3,926 $4,042 $4,179 $4,468 Net income (loss) attributable to Tenet Healthcare Corporationcommon shareholders $(32) $(26) $9 $61 Net income (loss) $(16) $(7) $18 $81 Earnings (loss) per share attributable to Tenet Healthcare Corporationcommon shareholders: Basic $(0.33) $(0.27) $0.09 $0.62 Diluted $(0.33) $(0.27) $0.09 $0.61 Year Ended December 31, 2013 First Second Third Fourth Net operating revenues $2,387 $2,422 $2,408 $3,885 Net income (loss) attributable to Tenet Healthcare Corporation commonshareholders $(88) $(50) $28 $(24) Net income (loss) $(83) $(43) $36 $(14) Earnings (loss) per share attributable to Tenet Healthcare Corporationcommon shareholders: Basic $(0.85) $(0.49) $0.28 $(0.24) Diluted $(0.85) $(0.49) $0.27 $(0.24) Quarterly operating results are not necessarily indicative of the results that may be expected for the full year. Reasonsfor this include, but are not limited to: overall revenue and cost trends, particularly the timing and magnitude of pricechanges; fluctuations in contractual allowances and cost report settlements and valuation allowances; managed care contractnegotiations, settlements or terminations and payer consolidations; changes in Medicare and Medicaid regulations; Medicaidand other supplemental funding levels set by the states in which we operate; the timing of approval by the Centers forMedicare and Medicaid Services of Medicaid provider fee revenue programs; trends in patient accounts receivablecollectability and associated provisions for doubtful accounts; fluctuations in interest rates; levels of malpractice insuranceexpense and settlement trends; the number of covered lives managed by our health plans and the plans’ ability to effectivelymanage medical costs; the timing of when we meet the criteria to recognize electronic health record incentives; impairment oflong-lived assets and goodwill; restructuring charges; losses, costs and insurance recoveries related to natural disasters;litigation and investigation costs; acquisitions and dispositions of facilities and other assets; income tax rates and deferred taxasset valuation allowance activity; changes in estimates of accruals for annual incentive compensation; the timing andamounts of stock option and restricted stock unit grants to employees and directors; gains or losses from early extinguishmentof debt; and changes in occupancy levels and patient volumes. Factors that affect patient volumes and, thereby, the results ofoperations at our hospitals and related healthcare facilities include, but are not limited to: the business environment,economic conditions and demographics of local communities in which we operate; the number of uninsured and underinsuredindividuals in local communities treated at our hospitals; seasonal cycles of illness; climate and weather conditions;physician recruitment, retention and attrition; advances in technology and treatments that reduce length of stay; localhealthcare competitors; managed care contract negotiations or terminations; the number of patients with high-deductiblehealth insurance plans; any unfavorable publicity about us, which impacts our relationships with physicians and patients;changes in healthcare regulations and the participation of individual states in federal programs; and the timing of electiveprocedures. These considerations apply to year-to-year comparisons as well. 146 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES We carried out an evaluation of the effectiveness of our disclosure controls and procedures as defined by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report.The evaluation was performed under the supervision and with the participation of management, including our chief executiveofficer and chief financial officer. Based upon that evaluation, the chief executive officer and chief financial officer concludedthat, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring thatinformation required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reportedin a timely manner and that such information is accumulated and communicated to management, including our chiefexecutive officer and chief financial officer, to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial reporting during the quarter ended December 31, 2014that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s report on internal control over financial reporting is set forth on page 100 and is incorporated hereinby reference. The independent registered public accounting firm that audited the financial statements included in this reporthas issued an attestation report on our internal control over financial reporting as set forth on page 101 herein. ITEM 9B. OTHER INFORMATION None.147 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents PART III. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Certain information required by this Item is hereby incorporated by reference to our definitive proxy statement inaccordance with General Instruction G(3) to Form 10-K. Information concerning our Standards of Conduct, by which all ofour employees, including our chief executive officer, chief financial officer and principal accounting officer, are required toabide appears under Item I, Business — Compliance and Ethics, of Part I of this report. ITEM 11. EXECUTIVE COMPENSATION Information required by this Item is hereby incorporated by reference to our definitive proxy statement in accordancewith General Instruction G(3) to Form 10-K. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS Information required by this Item is hereby incorporated by reference to our definitive proxy statement in accordancewith General Instruction G(3) to Form 10-K. ITEM 13. . CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information required by this Item is hereby incorporated by reference to our definitive proxy statement in accordancewith General Instruction G(3) to Form 10-K. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Information required by this Item is hereby incorporated by reference to our definitive proxy statement in accordancewith General Instruction G(3) to Form 10-K.148 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents PART IV. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES FINANCIAL STATEMENTS The Consolidated Financial Statements and notes thereto can be found on pages 103 through 145. FINANCIAL STATEMENT SCHEDULES Schedule II—Valuation and Qualifying Accounts (included on page 156). All other schedules and financial statements of the Registrant are omitted because they are not applicable or notrequired or because the required information is included in the Consolidated Financial Statements or notes thereto. EXHIBITS (2)Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession (a)Agreement and Plan of Merger, dated as of June 24, 2013, by and among the Registrant, Orange MergerSub, Inc. and Vanguard Health Systems, Inc. (Incorporated by reference to Exhibit 2.1 to Registrant’sCurrent Report on Form 8-K, dated and filed June 24, 2013) (3)Articles of Incorporation and Bylaws (a)Amended and Restated Articles of Incorporation of the Registrant, as amended and restated May 8,2008 (Incorporated by reference to Exhibit 3(a) to Registrant’s Quarterly Report on Form 10-Q for thequarter ended June 30, 2008, filed August 5, 2008) (b)Certificate of Designation, Preferences, and Rights of Series A Junior Participating Preferred Stock, parvalue $0.15 per share, dated January 7, 2011 (Incorporated by reference to Exhibit 3.1 to Registrant’sCurrent Report on Form 8-K, dated and filed January 7, 2011) (c)Certificate of Change Pursuant to NRS 78.209, filed with the Nevada Secretary of State effectiveOctober 10, 2012 (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K,dated October 10, 2012 and filed October 11, 2012) (d)Amended and Restated Bylaws of the Registrant, as amended and restated effective January 7, 2011(Incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K, dated and filedJanuary 7, 2011) (4)Instruments Defining the Rights of Security Holders, Including Indentures (a)Indenture, dated as of November 6, 2001, between the Registrant and The Bank of New York, as trustee(Incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K, dated November6, 2001 and filed November 9, 2001) (b)Third Supplemental Indenture, dated as of November 6, 2001, between the Registrant and The Bank ofNew York, as trustee, relating to 6⅞% Senior Notes due 2031 (Incorporated by reference to Exhibit 4.4to Registrant’s Current Report on Form 8-K, dated November 6, 2001 and filed November 9, 2001)149 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(c)Twelfth Supplemental Indenture, dated as of August 17, 2010, between the Registrant and The Bank ofNew York Mellon Trust Company, N.A., as successor trustee to The Bank of New York, relating to 8%Senior Notes due 2020 (Incorporated by reference to Exhibit 4.1 to Registrant’s Current Report onForm 8-K, dated and filed August 17, 2010) (d)Fourteenth Supplemental Indenture, dated as of November 21, 2011, by and among the Registrant, TheBank of New York Mellon Trust Company, N.A., as successor trustee to The Bank of New York, and theguarantors party thereto, relating to 6¼% Senior Secured Notes due 2018 (Incorporated by reference toExhibit 4.2 to Registrant’s Current Report on Form 8-K, dated November 21, 2011 and filed November22, 2011) (e)Fifteenth Supplemental Indenture, dated as of October 16, 2012, by and among the Registrant, TheBank of New York Mellon Trust Company, N.A., as successor trustee to The Bank of New York, and theguarantors party thereto, relating to 4¾% Senior Secured Notes due 2020 (Incorporated by reference toExhibit 4.1 to Registrant’s Current Report on Form 8-K, dated and filed October 16, 2012) (f)Sixteenth Supplemental Indenture, dated as of October 16, 2012, between the Registrant and The Bankof New York Mellon Trust Company, N.A., as successor trustee to The Bank of New York, relating to6¾% Senior Notes due 2020 (Incorporated by reference to Exhibit 4.2 to Registrant’s Current Report onForm 8-K, dated and filed October 16, 2012) (g)Seventeenth Supplemental Indenture, dated as of February 5, 2013, by and among the Registrant, TheBank of New York Mellon Trust Company, N.A., as successor trustee to The Bank of New York, and theguarantors party thereto, relating 4½% Senior Secured Notes due 2021 (Incorporated by reference toExhibit 4.1 to Registrant’s Current Report on Form 8-K, dated and filed February 5, 2013) (h)Twentieth Supplemental Indenture, dated as of May 30, 2013, by and among the Registrant, The Bankof New York Mellon Trust Company, N.A., as successor trustee to The Bank of New York, and theguarantors party thereto, relating 4⅜% Senior Secured Notes due 2021 (Incorporated by reference toExhibit 4.1 to Registrant’s Current Report on Form 8-K, dated May 30, 2013 and filed May 31, 2013) (i)Indenture, dated as of September 27, 2013, among THC Escrow Corporation and The Bank of New YorkMellon Trust Company, N.A., as trustee, relating to 6% Senior Secured Notes due 2020 (Incorporated byreference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K, dated and filed October 1, 2013) (j)Supplemental Indenture, dated as of October 1, 2013, among the Registrant, certain of its subsidiariesand The Bank of New York Mellon Trust Company, N.A., as trustee, relating to 6% Senior SecuredNotes due 2020 (Incorporated by reference to Exhibit 4.2 to Registrant’s Current Report on Form 8-K,dated and filed October 1, 2013) (k)Indenture, dated as of September 27, 2013, among THC Escrow Corporation and The Bank of New YorkMellon Trust Company, N.A., as trustee, relating to 8⅛% Senior Notes due 2022 (Incorporated byreference to Exhibit 4.3 to Registrant’s Current Report on Form 8-K, dated and filed October 1, 2013) (l)Supplemental Indenture, dated as of October 1, 2013, among the Registrant, certain of its subsidiariesand The Bank of New York Mellon Trust Company, N.A., as trustee, relating to 8⅛% Senior Notes due2022 (Incorporated by reference to Exhibit 4.4 to Registrant’s Current Report on Form 8-K, dated andfiled October 1, 2013) 150 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(m)Twenty-Third Supplemental Indenture, dated as of March 10, 2014, between the Registrant and TheBank of New York Mellon Trust Company, N.A., as successor trustee to The Bank of New York, relatingto 5% Senior Notes due 2019 (Incorporated by reference to Exhibit 4.2 to Registrant’s Current Reporton Form 8-K, dated March 7, 2014 and filed March 10, 2014) (n)Twenty-Fourth Supplemental Indenture, dated as of September 29, 2014, between the Registrant andThe Bank of New York Mellon Trust Company, N.A., as successor trustee to The Bank of New York,relating to 5½% Senior Notes due 2019 (Incorporated by reference to Exhibit 4.2 to Registrant’s CurrentReport on Form 8-K dated and filed September 29, 2014) (10)Material Contracts (a)Amended and Restated Credit Agreement, dated as of October 19, 2010, among the Registrant, thelenders and issuers party thereto, Citicorp USA, Inc., as administrative agent, Bank of America, N.A., assyndication agent, Citigroup Global Markets Inc. and Banc of America Securities LLC, as joint leadarrangers, and the joint bookrunners and co-documentation agents named therein (Incorporated byreference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K, dated October 19, 2010 and filedOctober 20, 2010) (b)Amendment No. 1, dated as of November 29, 2011, to that certain Amended and Restated CreditAgreement, dated as of October 19, 2010, among the Registrant, the lenders and issuers party thereto,Citicorp USA, Inc., as administrative agent, Bank of America, N.A., as syndication agent, CitigroupGlobal Markets Inc. and Banc of America Securities LLC, as joint lead arrangers, and the jointbookrunners and co-documentation agents named therein (Incorporated by reference to Exhibit 10.1 toRegistrant’s Current Report on Form 8-K, dated November 29, 2011 and filed December 1, 2011) (c)Amendment No. 2, dated as of January 23, 2014, to that certain Amended and Restated CreditAgreement, dated as of October 19, 2010, among the Registrant, the lenders and issuers party thereto,Citicorp USA, Inc., as administrative agent, Bank of America, N.A., as syndication agent, CitigroupGlobal Markets Inc. and Banc of America Securities LLC, as joint lead arrangers, and the jointbookrunners and co-documentation agents named therein (Incorporated by reference to Exhibit 10(c) toRegistrant’s Annual Report on Form 10-K for the year ended December 31, 2013, filedFebruary 24, 2014) (d)Letter of Credit Facility Agreement, dated as of March 7, 2014, among the Registrant, certain financialinstitutions party thereto from time to time as letter of credit participants and issuers, and Barclays BankPLC, as administrative agent (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Reporton Form 8-K, dated March 7, 2014 and filed March 10, 2014) (e)Guaranty, dated as of March 7, 2014, among Barclays Bank PLC, as administrative agent and theguarantors party thereto (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report onForm 8-K, dated March 7, 2014 and filed March 10, 2014) (f)Stock Pledge Agreement, dated as of March 3, 2009, by and among the Registrant, as pledgor, The Bankof New York Mellon Trust Company, N.A., as collateral trustee, and the other pledgers party thereto(Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K, datedMarch 3, 2009 and filed March 5, 2009) (g)Second Amendment to Stock Pledge Agreement, dated as of June 15, 2009, by and among theRegistrant, as pledgor, The Bank of New York Mellon Trust Company, N.A., as collateral trustee, andthe other pledgors party thereto (Incorporated by reference to Exhibit 10.1 to Registrant’s CurrentReport on Form 8-K, dated June 15, 2009 and filed June 16, 2009) 151 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(h)Collateral Trust Agreement, dated as of March 3, 2009, by and among the Registrant, as pledgor, TheBank of New York Mellon Trust Company, N.A., as collateral trustee, and the other pledgers partythereto (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K, datedMarch 3, 2009 and filed March 5, 2009) (i)Exchange and Registration Rights Agreement, dated as of March 10, 2014, between the Registrant andBarclays Capital Inc., as representative of the initial purchasers (Incorporated by reference to Exhibit10.3 to Registrant’s Current Report on Form 8-K, dated March 7, 2014 and filed March 10, 2014) (j)Exchange and Registration Rights Agreement, dated as of September 29, 2014, between the Registrantand Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the initial purchasers(Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K, dated and filedSeptember 29, 2014) (k)Letter from the Registrant to Trevor Fetter, dated November 7, 2002 (Incorporated by reference toExhibit 10(k) to Registrant’s Transition Report on Form 10-K for the seven-month transition periodended December 31, 2002, filed May 15, 2003)* (l)Letter from the Registrant to Trevor Fetter dated September 15, 2003 (Incorporated by reference toExhibit 10(l) to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003,filed November 10, 2003)* (m)Letter from the Registrant to Keith B. Pitts dated June 21, 2013 (Incorporated by reference to Exhibit10(j) to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013, filedFebruary 24, 2014)* (n)Letter from the Registrant to Britt T. Reynolds, dated December 15, 2011 (Incorporated by reference toExhibit 10(j) to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2011, filedFebruary 28, 2012)* (o)Letter from the Registrant to Daniel J. Cancelmi, dated September 6, 2012 (Incorporated by reference toExhibit 10(c) to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012,filed November 7, 2012)* (p)Letter from the Registrant to Audrey Andrews, dated January 22, 2013 (Incorporated by reference toExhibit 10(m) to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012, filedFebruary 26, 2013)* (q)Tenet Second Amended and Restated Executive Severance Plan, as amended and restated effective May9, 2012 (Incorporated by reference to Exhibit 10(e) to Registrant’s Quarterly Report on Form 10-Q forthe quarter ended September 30, 2012, filed November 7, 2012)* (r)Tenet Healthcare Corporation Seventh Amended and Restated Supplemental Executive RetirementPlan, as amended and restated effective May 9, 2012 (Incorporated by reference to Exhibit 10(f) toRegistrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, filedNovember 7, 2012)* (s)Ninth Amended and Restated Tenet 2001 Deferred Compensation Plan, as amended and restatedeffective May 9, 2012 (Incorporated by reference to Exhibit 10(g) to Registrant’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2012, filed November 7, 2012)* (t)Third Amended and Restated Tenet 2006 Deferred Compensation Plan, as amended and restatedeffective January 1, 2015 *†152 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(u)Fifth Amended and Restated Tenet Healthcare Corporation 2001 Stock Incentive Plan, as amended andrestated effective May 9, 2012 (Incorporated by reference to Exhibit 10(i) to Registrant’s QuarterlyReport on Form 10-Q for the quarter ended September 30, 2012, filed November 7, 2012)* (v)Form of Stock Award used to evidence grants of stock options and/or restricted units underthe Amended and Restated Tenet Healthcare Corporation 2001 Stock Incentive Plan (Incorporated byreference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K, dated February 14, 2006 and filedFebruary 17, 2006)* (w)Fifth Amended and Restated Tenet Healthcare 2008 Stock Incentive Plan, as amended and restatedeffective February 26, 2014 (Incorporated by reference to Exhibit 4.1 to Registrant’s RegistrationStatement on Form S-8, filed May 23, 2014)* (x)Forms of Award used to evidence (i) initial grants of restricted stock units to directors, (ii) annual grantsof restricted stock units to directors, (iii) grants of stock options to executives, and (iv) grants ofrestricted stock units to executives, all under the Amended and Restated Tenet Healthcare 2008 StockIncentive Plan (Incorporated by reference to Exhibit 10(aa) to Registrant’s Annual Report on Form 10-Kfor the year ended December 31, 2008, filed February 24, 2009)* (y)Award Agreement, dated June 13, 2013, used to evidence grant of performance-based restricted stockunits to Trevor Fetter under the Amended and Restated Tenet Healthcare 2008 Stock Incentive Plan(Incorporated by reference to Exhibit 10 to Registrant’s Quarterly Report on Form 10-Q for the quarterended June 30, 2013, filed August 6, 2013)* (z)Form of Award used to evidence grants of performance cash awards under the Amended and RestatedTenet Healthcare Corporation 2001 Stock Incentive Plan and the Amended and Restated TenetHealthcare 2008 Stock Incentive Plan (Incorporated by reference to Exhibit (ee) to Registrant’s AnnualReport on Form 10-K for the year ended December 31, 2009, filed February 23, 2010)* (aa)Tenet Special RSU Deferral Plan (Incorporated by reference to Exhibit 10(d) to Registrant’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2009, filed May 5, 2009)* (bb)Second Amended Tenet Healthcare Corporation Annual Incentive Plan, as amended and restatedeffective May 9, 2012 (Incorporated by reference to Exhibit 10(k) to Registrant’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2012, filed November 7, 2012)* (cc)Fifth Amended and Restated Tenet Executive Retirement Account, as amended and restated effectiveNovember 6, 2013*† (dd)Form of Indemnification Agreement entered into with each of the Registrant’s directors (Incorporated byreference to Exhibit 10(a) to Registrant’s Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2005, filed November 1, 2005) (21)Subsidiaries of the Registrant† (23)Consent of Deloitte & Touche LLP† (31)Rule 13a-14(a)/15d-14(a) Certifications (a)Certification of Trevor Fetter, President and Chief Executive Officer† (b)Certification of Daniel J. Cancelmi, Chief Financial Officer†153 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents(32)Section 1350 Certifications of Trevor Fetter, President and Chief Executive Officer, and Daniel J. Cancelmi,Chief Financial Officer† (101 INS)XBRL Instance Document (101 SCH)XBRL Taxonomy Extension Schema Document (101 CAL)XBRL Taxonomy Extension Calculation Linkbase Document (101 DEF)XBRL Taxonomy Extension Definition Linkbase Document (101 LAB)XBRL Taxonomy Extension Label Linkbase Document (101 PRE)XBRL Taxonomy Extension Presentation Linkbase Document________________________________________*Management contract or compensatory plan or arrangement.†Filed herewith. 154 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of ContentsSIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TENET HEALTHCARE CORPORATION(Registrant) Date: February 23, 2015By:/s/ R. SCOTT RAMSEY R. Scott Ramsey Vice President and Controller (Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by thefollowing persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: February 23, 2015By:/s/ TREVOR FETTER Trevor FetterPresident, Chief Executive Officer and Director(Principal Executive Officer) Date: February 23, 2015By:/s/ DANIEL J. CANCELMI Daniel J. CancelmiChief Financial Officer(Principal Financial Officer) Date: February 23, 2015By:/s/ R. SCOTT RAMSEY R. Scott RamseyVice President and Controller(Principal Accounting Officer) Date: February 23, 2015By:/s/ BRENDA J. GAINES Brenda J. GainesDirector Date: February 23, 2015By:/s/ KAREN M. GARRISON Karen M. GarrisonDirector Date: February 23, 2015By:/s/ EDWARD A. KANGAS Edward A. KangasDirector Date: February 23, 2015By:/s/ J. ROBERT KERREY J. Robert KerreyDirector Date: February 23, 2015By:/s/ FREDA C. LEWIS-HALL, M.D. Freda C. Lewis-Hall, M.D.Director Date: February 23, 2015By:/s/ RICHARD R. PETTINGILL Richard R. PettingillDirector Date: February 23, 2015By:/s/ RONALD A. RITTENMEYER Ronald A. RittenmeyerDirector Date: February 23, 2015By:/s/ JAMES A. UNRUH James A. UnruhDirector 155 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Table of Contents SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS(In Millions) Additions Charged To: Balance at Balance at Beginning Costs and Other Other End of of Period Expenses Accounts Deductions Items Period Allowance for doubtful accounts: Year ended December 31, 2014 $589 $1,305 $ — $(1,042) $ — $852 Year ended December 31, 2013 $401 $975 $ — $(787) $ — $589 Year ended December 31, 2012 $397 $789 $ — $(785) $ — $401 Valuation allowance for deferred tax assets Year ended December 31, 2014 $107 $(20) $ — $ — $ — $87 Year ended December 31, 2013 $56 $23 $(1) $ — $29 $107 Year ended December 31, 2012 $61 $(5) $ — $ — $ — $56 (1)Includes amounts recorded in discontinued operations.(2)Before considering recoveries on accounts or notes previously written off.(3)Accounts written off.(4)Vanguard acquisition. 156(1)(2)(3)(4)Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10(cc) TENETFIFTH AMENDED AND RESTATEDEXECUTIVE RETIREMENT ACCOUNT As Amended and Restated Effective as of November 6, 2013 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.FIFTH AMENDED AND RESTATEDTENET EXECUTIVE RETIREMENT ACCOUNTTABLE OF CONTENTS Page ARTICLE I PREAMBLE AND PURPOSE1 1.1Preamble.1 1.2Purpose.2 ARTICLE II DEFINITIONS AND CONSTRUCTION3 2.1Definitions.3 2.2Construction.10 2.3409A Compliance.10 ARTICLE III PARTICIPATION AND FORFEITABILITY OF BENEFITS11 3.1Eligibility and Participation.11 3.2Forfeitability of Benefits.12 ARTICLE IV COMPANY CONTRIBUTIONS, VESTING, ACCOUNTING AND INVESTMENTCREDITING RATES13 4.1Company Contributions.13 4.2Vesting in ERA Account.13 4.3Accounting for Deferred Compensation.15 4.4Computation of Earnings Credited.16 ARTICLE V DISTRIBUTION OF BENEFITS18 5.1Normal Retirement Distribution.18 5.2Early Retirement Distribution.18 5.3Termination of Employment Distribution.18 5.4Termination Distributions to Key Employees.19 5.5Death Distribution.19 5.6Disability Distribution.19 5.7Deferral of Distributions.20 5.8Withholding.20 5.9Impact of Reemployment on Benefits.20 ARTICLE VI PAYMENT LIMITATIONS21 6.1Spousal Claims21 6.2Legal Disability.21 6.3Assignment.21 ARTICLE VII FUNDING23 7.1No Right to Assets.23 7.2Creditor Status.23 ARTICLE VIII ADMINISTRATION24 8.1The RPAC.24 8.2Powers of RPAC.24 8.3Appointment of Plan Administrator.24 (i) Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 8.4Duties of Plan Administrator.24 8.5Indemnification of RPAC and Plan Administrator.26 8.6Claims for Benefits.26 8.7Arbitration.29 8.8Receipt and Release of Necessary Information.30 8.9Overpayment and Underpayment of Benefits.30 8.10Change of Control.31 ARTICLE IX OTHER BENEFIT PLANS OF THE COMPANY32 9.1Other Plans.32 ARTICLE X AMENDMENT AND TERMINATION OF THE PLAN33 10.1Continuation.33 10.2Amendment of ERA.33 10.3Termination of ERA.33 10.4Termination of Affiliate's Participation.34 ARTICLE XI MISCELLANEOUS35 11.1No Reduction of Employer Rights.35 11.2Provisions Binding.35 EXHIBIT AGRANDFATHERED CONIFER EMPLOYEESA-1 EXHIBIT BLIMITS ON ELIGIBILITY AND PARTICIPATIONB-1 (ii) Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.FIFTH AMENDED AND RESTATEDTENET EXECUTIVE RETIREMENT ACCOUNTARTICLE IPREAMBLE AND PURPOSE1.1Preamble. Tenet Healthcare Corporation (the "Company'') established the Tenet Executive RetirementAccount (the "ERA") effective July 1, 2007, to permit the Company and its participating Affiliates, as definedherein (collectively, the "Employer"), to attract and retain a select group of management or highlycompensated employees, as defined herein.Through an instrument adopted in December 2008, the Company previously amended and restated theERA, effective December 31, 2008, to (a) modify the fixed return investment option to provide that interestwill be credited based on one hundred and twenty percent (120%) of the long-term applicable federal rate asopposed to the current provision which credited interest based on the prime rate of interest less one percent(1%), (b) revise the manner for determining vesting to years of plan participation. (c) reflect the right of thePension Administration Committee to make non-material amendments to the ERA to comply with changes inthe law or facilitate administration and (d) comply with final regulations issued under section 409A of theInternal Revenue Code of 1986, as amended (the "Code"). The amended and restated ERA was known asthe First Amended and Restated Tenet Executive Retirement Account.Through an instrument, adopted on December 11, 2009, the Company further amended and restated theERA, also effective December 31, 2008, to clarify the ERA's intent to comply with section 409A of the Code;namely, to clarify that (a) ERA participants who incur a separation from service and are reemployed suchthat they do not have a break in employment under the Company's Rehire and Reinstatement Policy (or anysuccessor thereto) will have any prior forfeited ERA account balance restored at the time of suchreemployment (i.e., for consistency purposes, both the participant's prior years of service and accountbalance will be restored and administered on a going forward basis under the ERA) and (b) any subsequentdeferral election made in accordance with the terms of the ERA will apply to an ERA participant's "NormalRetirement Benefit" (as defined herein). The amended and restated ERA was known as the SecondAmended and Restated Tenet Executive Retirement Account,Through an instrument adopted on July 21, 2011, the Company further amended and restated the ERA,effective May 3, 2011, to (a) provide that in the event of a Change of Control before July 1 of any year, the fullAnnual Contribution will be made to the ERA within ten (10) days following the occurrence of such Change ofControl and (b) make other clarifying amendments to the ERA. The amended and restated ERA was knownas the Third Amended and Restated Tenet Executive Retirement Account.The Company subsequently amended and restated the ERA, effective as of May 9, 2012, to clarify certainChange of Control provisions; substitute a prorated payout for post Change of Control terminations, in placeof the prior automatic post-Change of Control contributions; and revise the definitions for certain terminationevents. The amended and restated ERA was known as the Fourth Amended and Restated Tenet ExecutiveRetirement Account. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. By this instrument the Company desires to further amend and restate the ERA, effective November 6, 2013to (i) delegate to the Senior Vice President, Human Resources and the Plan Administrator the authority todetermine the employees eligible to participate in the ERA and the amount of contribution each employee willreceive, (ii) modify the definition of “Year of Vesting Service” to include service performed for an entityacquired by the Company through a stock, asset or other business transaction to the extent provided in thetransaction documents or as determined by to the Senior Vice President, Human Resources or the PlanAdministrator and (iii) clarify that a participant who is terminated for “Cause” will forfeit his ERA benefit in itsentirety. By this restatement, the Company also desires to remove Conifer Health Solutions, LLC(“Conifer”) as a participating employer in the ERA effective as of December 31, 2013 except for priorCompany employees who now work for Conifer and will be grandfathered. The amended and restated ERAwill be known as the Fifth Amended and Restated Tenet Executive Retirement Account.The Employer may adopt one (1) or more domestic trusts to serve as a possible source of funds for thepayment of benefits under this ERA.1.2Purpose. Through this ERA, the Employer intends to permit the deferral of compensation and to provideadditional benefits to a select group of management or highly compensated employees of the Employer.Accordingly, it is intended that this ERA will not constitute a "qualified plan" subject to the limitations ofsection 401(a) of the Code, nor will it constitute a "funded plan," for purposes of such requirements. It also isintended that this ERA will be exempt from the participation and vesting requirements of Part 2 of Title I of theEmployee Retirement Income Security Act of 1974, as amended ("ERISA"). The funding requirements ofPart 3 of Title I of ERISA, and the fiduciary requirements of Part 4 of Title I of ERISA by reason of theexclusions afforded plans that are unfunded and maintained by an employer primarily for the purpose ofproviding deferred compensation for a select group of management or highly compensated employees. End of Article I 2 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE IIDEFINITIONS AND CONSTRUCTION2.1Definitions. When a word or phrase appears in this ERA with the initial letter capitalized, and the word orphrase does not commence a sentence, the word or phrase will generally be a term defined in this Section2.1. The following words and phrases with the initial letter capitalized will have the meaning set forth in thisSection 2.1, unless a different meaning is required by the context in which the word or phrase is used.(a)"Account" means one (1) or more of the bookkeeping accounts maintained by the Company or itsagent on behalf of a Participant, as described in more detail in Section 4.3. A Participant's Accountmay be divided into one or more "Cash Accounts" or "Stock Unit Accounts" as defined in Section4.3.(b)"Affiliate" means a corporation that is a member of a controlled group of corporations (as defined insection 414(b) of the Code) that includes the Company, any trade or business (whether or notincorporated) that is in common control (as defined in section 414(c) of the Code) with the Company,or any entity that is a member of the same affiliated service group (as defined in section 414(m) of theCode) as the Company.(c)"Alternate Payee" means any spouse, former spouse, child, or other dependent of a Participant whois recognized by a DRO as having a right to receive all, or a portion of the benefits payable under theERA with respect to such Participant.(d)"Annual Contribution" means the contribution made by the Employer on behalf of a Participant asdescribed in Section 4.1(a).(e)"Beneficiary" means the person designated by the Participant to receive a distribution of his benefitsunder the ERA upon the death of the Participant. If the Participant is married, his spouse will be hisBeneficiary, unless his spouse consents in writing to the designation of an alternate Beneficiary. Forthis purpose, the term “spouse” means a Participant’s spouse under applicable state law, includingeffective August 3, 2011, a Participant's Domestic Partner as defined under the Criteria for DomesticPartnership Status under the Tenet Employee Benefit Plan, and effective September 16, 2013, asame sex spouse recognized as such in the state where the marriage is performed. In the event thata Participant fails to designate a Beneficiary, or if the Participant's Beneficiary does not survive theParticipant, the Participant's Beneficiary will be his surviving spouse, if any, or if the Participant doesnot have a surviving spouse, his estate. The term "Beneficiary" also will mean a Participant's spouseor former spouse who is entitled to all or a portion of a Participant's benefit pursuant to Section 6.1.(f)"Board" means the Board of Directors of the Company.(g)"Cause" means(i)For any event occurring on or within two (2) years after a Change of Control, the samemeaning as set forth in Section 2.1(f)(ii) of the ESP.3 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(ii)For any Participant who is a Covered Executive under the Company’s Executive SeverancePlan, with respect to any event not occurring on or within two (2) years after a Change ofControl, the same meaning as set forth in Section 2.1(f)(i) of the ESP.(iii)for any Participant who is not a Covered Executive under the Company’s ExecutiveSeverance Plan, with respect to any event not occurring on or within two (2) years after aChange of Control, the same meaning as set forth in Section 2.5(b)(ii) of the Stock IncentivePlan.(h)“Change of Control” will have the meaning set forth in the ESP.(i)"Code" means the Internal Revenue Code of 1986, as amended from time to time and anyregulations and rulings issued thereunder.(j)"Compensation" means the Participant's annual gross base salary including amounts reduced fromthe Participant's salary and contributed on the Participant's behalf as deferrals under any qualified ornon-qualified employee benefit plans sponsored by the Employer. Compensation excludes bonuses,hardship withdrawal allowances, annual cash and/or stock bonuses, automobile allowances, housingallowances, relocation payments, deemed income, income payable under stock incentive plans,Christmas gifts, insurance premiums and other imputed income, pensions, and retirement benefits.(k)"Compensation Committee" means the Compensation Committee of the Board, which has theauthority to amend and terminate the ERA as provided in Article X.(l)"Disability" means the inability of a Participant to engage in any substantial gainful activity by reasonof a mental or physical impairment expected to result in death or last for at least twelve (12) months,or the Participant, because of such a condition. is receiving income replacement benefits for at leastthree (3) months under an accident or health plan covering the Employer's employees.(m)"Discretionary Contribution" means the contribution made by the Employer on behalf of aParticipant as described in Section 4.1(b).(n)"DRO" means a domestic relations order that is a judgment, decree, or order (including one thatapproves a property settlement agreement) that relates to the provision of child support, alimonypayments or marital property rights to a spouse, former spouse, child or other dependent of aParticipant and is rendered under a state (within the meaning of section 7701(a)(10) of the Code)domestic relations law (including a community property law) and that:(i)Creates or recognizes the existence of an Alternate Payee's right to, or assigns to anAlternate Payee the right to receive all or a portion of the benefits payable with respect to aParticipant under the ERA;(ii)Does not require the ERA to provide any type or form of benefit, or any option, not otherwiseprovided under the ERA;4 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(iii)Does not require the ERA to provide increased benefits (determined on the basis of actuarialvalue);(iv)Does not require the payment of benefits to an Alternate Payee that are required to be paid toanother Alternate Payee under another order previously determined to be a DRO; and(v)Clearly specifies: the name and last known mailing address of the Participant and of eachAlternate Payee covered by the DRO; the amount or percentage of the Participant's benefitsto be paid by the ERA to each such Alternate Payee, or the manner in which such amount orpercentage is to be determined; the number of payments or payment periods to which suchorder applies; and that it is applicable with respect to this ERA.(o)"Early Retirement Age" means the date the Participant attains age fifty-five (55) and has completedten (10) Years of Vesting Service.(p)"Early Retirement Benefit" means the benefit payable to a Participant who has attained EarlyRetirement Age as provided in Section 5.2.(q)"Effective Date" means November 6, 2013, except as provided otherwise herein.(r)"Eligible Person" means an Employee who is designated as eligible to participate in the ERA by theSenior Vice President, Human Resources or the Plan Administrator or an Employee who satisfied thedefinition of Eligible Person in a prior ERA document and, in each case, who is not a participant in theSERP. As provided in Section 3.1 the RPAC may at any time, in its sole and absolute discretion,limit the classification of Employees who are eligible to participate in the ERA for a Plan Year and/ormay modify or terminate an Eligible Person's participation in the ERA without the need for anamendment to the ERA.(s)"Employee" means each select member of management or highly compensated employeereceiving remuneration, or who is entitled to remuneration, for services rendered to the Employer, inthe legal relationship of employer and employee.(t)"Employer" means the Company and each Affiliate which has adopted the ERA as a participatingemployer. An Affiliate may evidence its adoption of the ERA either by a formal action of its governingbody or by commencing deferrals and taking other administrative actions with respect to this ERA onbehalf of its employees. An entity will cease to be a participating employer as of the date such entityceases to be an Affiliate or the date specified by the Company. Effective December 31, 2013,Conifer Health Solutions, LLC will cease to be an Employer under the ERA with respect to all of itsEmployees except those specified in Exhibit A.(u)"Employment" means any continuous period during which an employee is actively engaged inperforming services for the Employer plus the term of any leave of absence approved by theEmployer; provided, however. that if an employee takes an approved leave of absence and does notreturn to the employ of the Employer, such leave of absence will not count as Employment except asrequired by law.5 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(v)"ERA" means the Fifth Amended and Restated Tenet Executive Retirement Account as set forthherein and as the same may be amended from time to time.(w)"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time totime.(x)"ESP" means the Tenet Executive Severance Plan, as amended from time to time. (y)"Five Percent Owner" means any person who owns (or is considered as owning within the meaningof section 318 of the Code (as modified by section 416(i)(1)(B)(iii) of the Code)) more than fivepercent (5%) of the outstanding stock of the Company or an Affiliate or stock possessing more thanfive percent (5%) of the total combined voting power of all stock of the Company or an Affiliate. Therules of sections 414(b), (c) and (m) of the Code will not apply for purposes of applying theseownership rules. Thus, this ownership test will be applied separately with respect to the Companyand each Affiliate.(z)"Good Reason" means(i)For an event occurring on or within two (2) years of a Change of Control, the same meaningas set forth in Section 2.1(x)(ii) of the ESP.(ii)For any event not occurring on or within two (2) years after a Change of Control, the samemeaning as set forth in Section 2.1(x)(i) of the ESP.(aa)"Initial Enrollment Period" means the thirty (30) day period immediately following the date theEligible Person first becomes eligible to participate in the ERA during which the Eligible Person mayelect the time at which to receive a distribution of Early Retirement Benefits pursuant to Section3.1(b).(bb)"Involuntary Termination" means:(i)the Participant's Termination of Employment by the Employer without Cause, or(ii)the Participant's resignation from Employment of the Employer for Good Reason;provided, however, that an Involuntary Termination will not occur by reason of the divestiture of anAffiliate with respect to a Participant employed by such Affiliate who is offered a comparable positionwith the purchaser and either declines or accepts such position.(cc)"Key Employee" means any employee or former employee (including any deceased employee)who at any time during the Plan Year was:(i)an officer of the Company or an Affiliate having greater than one hundred thirty thousanddollars ($130,000) (as adjusted under section 416(i)(1) of the Code for Plan Years beginningafter December 31, 2002) (such limit is one hundred seventy thousand dollars ($170,000) for2014);6 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(ii)a Five Percent Owner; or(iii)a One Percent Owner having compensation of more than one hundred fifty thousand dollars($150,000).For purposes of the preceding paragraphs, the Company has elected to determine the compensationof an officer or One Percent Owner in accordance with section 1.415(c)-2(d)(4) of the TreasuryRegulations (i.e., W-2 wages plus amounts that would be includible in wages except for an electionunder section 125(a) of the Code (regarding cafeteria plan elections) under section 132(f) of the Code(regarding qualified transportation fringe benefits) or section 402(e)(3) of the Code (regarding section401(k) plan deferrals)) without regard to the special timing rules and special rules set forth,respectively, in sections 1.415(c)-2(e) and 2(g) of the Treasury Regulations.The determination of Key Employees will be based upon a twelve (12) month period ending onDecember 31 of each year (i.e., the identification date). Employees that are Key Employees duringsuch twelve (12) month period will be treated as Key Employees for the twelve (12) month periodbeginning on the first day of the fourth month following the end of the twelve (12) month period (i.e.,since the identification date is December 31, then the twelve (12) month period to which it appliesbegins on the next following April 1).The determination of who is a Key Employee will be made in accordance with section 416(i)(1) of theCode and other guidance of general applicability issued thereunder. For purposes of determiningwhether an employee or former employee is an officer, a Five Percent Owner or a One PercentOwner, the Company and each Affiliate will be treated as a separate employer (i.e., the controlledgroup rules of sections 414(b), (c), (m) and (o) of the Code will not apply). Conversely, for purposesof determining whether the one hundred thirty thousand dollar ($130,000) adjusted limit oncompensation is met under the officer test described in Section 2.1(cc)(i), compensation from theCompany and all Affiliates will be taken into account (i.e., the controlled group rules of sections414(b). (c), (m) and (o) of the Code will apply). Further, in determining who is an officer under theofficer test described in Section 2.1(cc)(i), no more than fifty (50) employees of the Company or itsAffiliates (i.e., the controlled group rules of sections 414(b), (c), (m) and (o) of the Code will apply) willbe treated as officers. If the number of officers exceeds fifty (50). the determination of whichemployees or former employees are officers will be determined based on who had the largest annualcompensation from the Company and its Affiliates for the Plan Year.(dd)"Normal Retirement Age" means the date the Participant attains age sixty-two (62).(ee)"Normal Retirement Benefit" means the benefit payable to a Participant at Normal Retirement Agepursuant to Section 5.1.(ff)"One Percent Owner" means any person who would be described as a Five Percent Owner if "onepercent (1%)" were substituted for "five percent (5%)" each place where it appears therein.7 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(gg)"Other Termination" means a Termination of Employment that is not an Involuntary Termination,including a Termination of Employment for Cause.(hh)"Participant" means each Eligible Person who participates in this ERA and each Eligible Person orformer Eligible Person whose participation in this ERA has not terminated.(ii)"Plan Administrator" means the individual or entity appointed by the RPAC to handle the day-to-dayadministration of the ERA, including but not limited to determining an Employee's status as an EligiblePerson, the Employee’s Annual Contribution amount, a Participant's eligibility for benefits and theamount of a Participant's benefits and complying with all applicable reporting and disclosureobligations imposed on the ERA. If the RPAC does not appoint an individual or entity as PlanAdministrator, the RPAC will serve as the Plan Administrator.(jj)"Plan Year" means the fiscal year of this ERA, which will commence on January 1 each year andend on December 31 of such year. The initial Plan Year was a short Plan Year beginning July 1, 2007and ending December 31. 2007.(kk)"Retirement" means a Termination of Employment on or after a Participant has attained EarlyRetirement Age or Normal Retirement Age.(ll)"RPAC" means the Retirement Plans Administration Committee of the Company established by theCompensation Committee, and whose members have been appointed by such CompensationCommittee or a delegate thereof. The RPAC will have the responsibility to administer the ERA andmake final determinations regarding claims for benefits, as described in Article VIII.(mm)"SERP" means the Tenet Healthcare Corporation Supplemental Executive Retirement Plan.(nn)"Stock" means the common stock, par value $0.05 per share, of the Company.(oo)"Stock Unit" means a non-voting, non-transferable unit of measurement that is deemed forbookkeeping and distribution purposes only to represent one outstanding share of Stock.(pp)"Stock Incentive Plan" means the Tenet Healthcare 2008 Stock Incentive Plan, as amended fromtime to time.(qq)"Target Bonus" means the target bonus percent applicable to the Participant under the Company'sAnnual Incentive Plan multiplied by his Compensation at the time of a Termination of Employment.For example, if the Covered Executive earns one hundred and fifty thousand dollars ($150,000) andhas a Target Bonus of fifty percent (50%), his Target Bonus equals seventy five thousand dollars($75,000).(rr)"Termination of Employment" means the date that a Participant ceases performing services for theEmployer and its Affiliates in the capacity of an employee, or a reduction in Employment or otherprovision of services that qualifies as a separation from service under Section 409A of the Code. Forthis8 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. purpose a Participant who is on a leave of absence that exceeds six (6) months and who does nothave statutory or contractual reemployment rights with respect to such leave, will be deemed to haveincurred a Termination of Employment on the first day of the seventh (7) month of such leave. AParticipant who transfers Employment from an Employer to an Affiliate, regardless of whether suchAffiliate has adopted the ERA as a participating employer, will not incur a Termination of Employment.A Termination of Employment will either be an Involuntary Termination or an Other Termination.(ss)“Trust” means the rabbi trust established with respect to the ERA the assets of which are to beused for the payment of benefits under the ERA.(tt)“Trustee” means the individual or entity appointed to serve as trustee of any Trust established as apossible source of funds for the payment of benefits under this ERA as provided in Section 7.1. Afterthe occurrence of a Change of Control, the Trustee must be independent of any successor to theCompany or any affiliate of such successor.(uu)“Year of Vesting Service” means each complete Plan Year in which an Eligible Person isemployed as an Employee of the Employer, beginning with the Plan Year in which the Participantcommences participation in the ERA, and has an Account balance under the ERA. Such Plan Yearswill be referred to as “Years of Plan Participation” for purposes of this Section 2.1(uu). At the time anEligible Person first becomes eligible to participate in the ERA, his prior complete years of continuousEmployment with the Employer, commencing on the Eligible Person’s date of Employment with theEmployer in any capacity, will be converted to an equivalent number of complete Years of PlanParticipation and count as Years of Vesting Service under the ERA. In addition, service performed foran entity that is acquired by the Company through a stock, asset or other business transaction will becounted as Years of Vesting Service under the ERA to the extent provided in the transactiondocuments or as determined by the Senior Vice President, Human Resources or the PlanAdministrator. An Eligible Person will not be given credit for partial Years of Plan Participation orpartial years of Employment as Years of Vesting Service under the ERA. Further, to be counted as aYear of Vesting Service such Years of Plan Participation or years of Employment must becontinuous.In the event an Eligible Person incurs a Termination of Employment and is reemployed by theEmployer within the time period required to prevent a break in Employment under the Company’sRehire and Reinstatement Policy (or any successor thereto), the provisions of which are incorporatedherein by this reference:(b)such Eligible Person’s previously forfeited ERA Account balance will be restored at the time ofsuch reemployment, and(ii)his Years of Plan Participation or years of Employment completed before such reemploymentwill be treated as Years of Vesting Service under the ERA to the extent provided in suchRehire and Reinstatement Policy (or any successor thereto).9 thSource: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.2.2Construction. If any provision of this ERA is determined to be for any reason invalid or unenforceable, theremaining provisions of this ERA will continue in full force and effect. All of the provisions of this ERA will beconstrued and enforced in accordance with the laws of the State of Texas and will be administered accordingto the laws of such state, except as otherwise required by ERISA, the Code or other applicable federal law.The term “delivered to the RPAC or Plan Administrator,” as used in this ERA, will include delivery to a personor persons designated by the RPAC or Plan Administrator, as applicable, for the disbursement and thereceipt of administrative forms. Delivery will be deemed to have occurred only when the form or othercommunication is actually received. Headings and subheadings are for the purpose of reference only andare not to be considered in the construction of this ERA. The pronouns “he,” “him” and “his” used in the ERAwill also refer to similar pronouns of the female gender unless otherwise qualified by the context.2.3409A Compliance. The ERA is intended to comply with the requirements of section 409A of the Code. Theprovisions of the ERA will be construed and administered in a manner that enables the ERA to comply withthe provisions of section 409A of the Code. End of Article II 10 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE IIIPARTICIPATION AND FORFEITABILITY OF BENEFITS3.1Eligibility and Participation.(a)Determination of Eligibility. An Employee who is designated as an Eligible Person by the SeniorVice President, Human Resources, or Plan Administrator will automatically become a Participant inthe ERA as of the effective date of such designation. An Employee who was a Participant under theterms of a prior ERA document will continue participation on and after the Effective Date inaccordance with the terms of this document. (b)Early Retirement Election. An Eligible Person must elect during the Initial Enrollment Periodwhether he desires or does not desire to commence the distribution of the vested balance of hisAccount on the first day of the second calendar month following the date of his Retirement on or afterattaining Early Retirement Age as provided pursuant to Section 5.2. If the Eligible Person fails tomake this election during the Initial Enrollment Period, he will be deemed to have affirmatively electedto commence the distribution of the vested balance of his Account on the first day of the secondcalendar month following the date of his Retirement on or after attaining Early Retirement Age. Oncemade (or deemed made), this election cannot be revoked; however, the Participant may elect to deferpayment of his vested Account balance pursuant to Section 5.7. Payment of such Early RetirementBenefit will be subject to the six (6) month restriction applicable to Key Employees, described inSection 5.4 of this ERA. The provisions of this Section 3.1(b) will apply to all Eligible Persons who areEmployees on or after the Effective Date.(c)Limits on Eligibility. The RPAC may at any time, in its sole and absolute discretion, limit theclassification of Employees eligible to participate in the ERA and/or may limit or terminate an EligiblePerson’s participation in the ERA. Any action taken by the RPAC that limits the classification ofEmployees eligible to participate in the ERA or that modifies or terminates an Eligible Person’sparticipation in the ERA will be set forth in Exhibit B attached hereto. Exhibit B may be modified fromtime to time without a formal amendment to the ERA. In which case a revised Exhibit B will beattached hereto.(d)Loss of Eligibility Status. A Participant under this ERA who separates from Employment with theEmployer, or who ceases to be an Eligible Person, will continue as an inactive Participant (i.e., nofuture contributions or earnings will be credited to his Account) under this ERA until the Participanthas received payment of any and all amounts payable to him under this ERA.(e)Subsequent SERP Participation. A Participant’s participation and Account balances will be frozenupon being named to the SERP (i.e., no additional contributions or earnings credits will be made);however, the Participant will continue to earn Years of Vesting Service for purposes of this ERA.Upon termination or retirement, the Participant will receive his Account balance under the ERApursuant to the terms hereof. In addition, the Participant will be entitled to receive a benefit from theSERP equal to the benefit accrued under the SERP11 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.as reduced by his benefit under the ERA. Distribution of the Participant’s SERP benefit will be made pursuantto the terms of the SERP.(f)Initial SERP Participation. A Participant who participated in the SERP before becoming aParticipant in the ERA will be entitled to a benefit under this ERA, if any, equal to the amount of hisAccount. The Participant’s accrued benefit under the SERP will be paid pursuant to the terms of theSERP and his benefit under this ERA, if any, will be paid pursuant to the terms hereof.3.2Forfeitability of Benefits. A Participant will forfeit any amounts credited to his Account as follows:(a)Other Termination. Except as provided in section 4.2(a), if a Participant incurs an OtherTermination before attaining age fifty-five (55), he will forfeit the entire balance of his Account. If aParticipant incurs an Other Termination on or after attaining age fifty-five (55), he will forfeit the non-vested balance of his Account, as determined in accordance with Section 4.2(b) below.(b)Involuntary Termination. If a Participant incurs an Involuntary Termination either before or on orafter attaining age fifty-five (55), he will forfeit the non-vested balance of his Account. The vestedbalance of a Participant’s Account in the event of an Involuntary Termination is determined inaccordance with Section 4.2(c) (or, if applicable, Section 4.2(a)) below.(c)Cause. If a Participant incurs a Termination of Employment for Cause, he will forfeit the entirebalance, whether vested or not, of his Account. End of Article III12 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE IVCOMPANY CONTRIBUTIONS, VESTING, ACCOUNTINGAND INVESTMENT CREDITING RATES4.1Company Contributions.(a)Annual Contribution. The Company will make an Annual Contribution to the ERA each Plan Yearon behalf of each Participant in an amount equal to ten percent (10%) of the Participant’sCompensation unless the Senior Vice President, Human Resources or the Plan Administratordetermine a different amount will apply and communicate that to the Participant in an offer letter orother communication. Unless declared otherwise by the Senior Vice President, Human Resourcesor the Plan Administrator, such Annual Contribution will be based on the Participant’s Compensationon the date on which the Annual Contribution is made. In addition, in the case of Retirement on orafter Normal Retirement Age, death, Disability, or an Involuntary Termination or change in positionthat results in the termination of active participation in the ERA without establishment of a successorplan within two (2) years after a Change of Control, a Participant will receive a prorated AnnualContribution based on the number of months he was employed from July 1 immediately precedingthe applicable event.(b)Discretionary Contribution. The President and Chief Executive Officer of the Company maydeclare that a Discretionary Contribution be made by the Employer to a Participant’s Account in suchamount, and at such time, as he may determine in his sole and absolute discretion.4.2Vesting in ERA Account.(a)Full Vesting Events. A Participant will become one hundred percent (100%) vested in the balance ofhis Account upon the occurrence of any of the following events while an employee:(i)the Participant’s attainment of age sixty (60) and completion of five (5) Years of VestingService;(ii)the Participant’s attainment of sixty-two (62) regardless of Years of Vesting Service;(iii)the Participant’s death;(iv)the Participant’s Disability; or(v)the occurrence of a Change of Control.(b)Other Termination of Employment. Except in the case of a Termination of Employment for Cause,a Participant who incurs an Other Termination before the occurrence of a full vesting event describedin Section 4.2(a) will vest in the balance of his Account pursuant to the following schedule:13 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Vesting Schedule for Other TerminationVesting (as a % ofAccount Balance)Age54 and Below5556575859606162Whole Years ofService4 or less0%0% 525% 630%735%840%945%1050%1155%1260%1365%1470%1575%1680%1785%1890%1995%20100% The non-vested portion of the Participant’s Account will be forfeited as of the date of his Termination ofEmployment (subject to the rules set forth in Section 2.1(uu) (regarding an individual who is reemployed beforeexperiencing a break in employment under the Company’s Rehire and Reinstatement Policy (or any successorthereto))).In the case of a Termination of Employment for Cause, the Participant will forfeit the entire balance of hisAccount regardless if vested or not.(c)Involuntary Termination of Employment. A Participant who incurs an Involuntary Termination before theoccurrence of a full vesting event described in Section 4.2(a) will vest in the balance of his Account as follows:Vesting Schedule for Involuntary TerminationYears of Vesting ServiceVested Percent4 or less0%525%630%735%840%945%1050%1155%Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.1260%1365%1470%1575%1680%1785%1890%1995%20100% 14 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The non-vested portion of the Participant’s Account will be forfeited as of the date of his Terminationof Employment.4.3Accounting for Deferred Compensation. The Plan Administrator will establish and maintain an individualAccount or Accounts under the name of each Participant under the ERA. Depending on the Participant’sselection of an investment crediting rate option pursuant to Section 4.4, the Plan Administrator may set up aCash Account and/or a Stock Unit Account.(a)Cash Account. If a Participant has made an election to have the balance of his Account to bedeemed invested in a fixed rate of return or benchmark mutual funds pursuant to Section 4.4(a) orSection 4.4(b), the Company may, in its sole and absolute discretion, establish and maintain a CashAccount for the Participant under this ERA. Each Cash Account will be adjusted at least monthly toreflect the Annual Contributions and Discretionary Contributions credited thereto, earnings credited onsuch Annual Contributions and Discretionary Contributions pursuant to Section 4.4, and any paymentof such Annual Contributions or Discretionary Contributions under this ERA. Such AnnualContributions and any Discretionary Contributions made on behalf of the Participant will be credited toeach Participant’s Cash Account at such times as determined by the Compensation Committee. Inthe sole discretion of the Plan Administrator. More than one (1) Cash Account may be established foreach Participant to facilitate record keeping convenience and accuracy.(b)Stock Unit Account. If a Participant has made an election to have the balance of his Account to bedeemed invested in Stock Units pursuant to Section 4.4(c), the Plan Administrator may, in its soleand absolute discretion. Establish and maintain a Stock Unit Account and credit the Participant’sStock Unit Account with a number of Stock Units determined by dividing an amount equal to theAnnual Contributions and Discretionary Contributions made on behalf of the Participant for a PlanYear by the Fair Market Value of a share of Stock on the date such Contributions are made. SuchStock Units will be credited to the Participant’s Stock Unit Account as soon as administrativelypracticable after the determination of the number of Stock Units is made pursuant to the precedingsentence. In the sole and absolute discretion of the Plan Administrator, more than one Stock UnitAccount may be established for each Participant to facilitate record-keeping convenience andaccuracy. Each such Stock Unit Account will be credited and adjusted as provided in this ERA.The Stock Units credited to a Participant’s Stock Unit Account will be used solely as a device fordetermining the number of shares of Stock eventually to be distributed to the Participant inaccordance with this ERA. The Stock Units will not be treated as property of the Participant or as atrust fund of any kind. No Participant will be entitled to any voting or other stockholder rights withrespect to Stock Units credited under this ERA.If the outstanding shares of Stock are increased, decreased, or exchanged for a different number orkind of shares or other securities, or if additional shares or new or different shares or other securitiesare distributed with respect to such shares of Stock or other securities, through merger,consolidation, spin-off, sale of all or substantially all the assets of the Company, reorganization.Recapitalization, reclassification, stock dividend, stock split, reverse stock split or other distributionwith respect to such shares of Stock or other securities, an15 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.appropriate and proportionate adjustment will be made by the Compensation Committee in thenumber and kind of Stock Units credited to a Participant’s Stock Unit Account.(c)Unfunded Nature of Accounts. Amounts credited to the Participant’s Cash and Stock UnitAccounts will be held with the general assets of the Employer and, as provided in Section 7.2, will besubject to the claims of the Employer’s general creditors. Establishment and maintenance of aseparate Account or Accounts for each Participant will not be construed as giving any person anyinterest in assets of the Employer, or a right to payment other than as provided under this ERA. SuchAccounts will be maintained until all amounts credited as to such Account have been distributed inaccordance with the terms and provisions of this ERA.4.4Computation of Earnings Credited. The Participant may, pursuant to administrative proceduresestablished by the RPAC, request the type of investment crediting rate option with which the Participantwould like the Employer, in its sole and absolute discretion, to credit to the Participant’s Account during theParticipant’s Employment. Such investment crediting rate election will apply to all contributions under theERA; provided that no investment crediting will be made after the Participant incurs a Termination ofEmployment or transfers to an ineligible position. To the extent the Participant has invested in Stock Units,upon his Termination of Employment or transfer to another position, the number of shares of Stock to whichhe is entitled will be determined and distributable to him pursuant to the terms of the ERA. For purposes ofdetermining when a Participant incurs a Termination of Employment for investment crediting purposes,Employment will be deemed to have ceased on the last day of the calendar month of Employment.The Participant will specify his preference from among the following possible investment crediting rateoptions:The annual rate of interest based on the benchmark money market mutual fund, compounded daily, suchbenchmark money market mutual fund will be for periods before October 1, 2008, the Fidelity Money MarketFund and from October 1, 2008, through December 31, 2008, an annual rate of interest equal to one percent(1%) below the prime rate of interest as quoted by Bloomberg, compounded daily, and effective on and afterJanuary 1, 2009, an annual rate of interest equal to one hundred and twenty percent (120%) of the long-termapplicable federal rate. Compounded daily;One (1) or more benchmark mutual funds; orStock Units; provided that any request to have the Participant’s Account to be deemed invested in StockUnits is irrevocable (i.e., a Participant may only change such investment election on a prospective basis)and such amounts will be distributed in an equivalent whole number of shares of Stock pursuant to theprovisions of Article V. Any fractional share interests will be paid in cash with the last distribution.During his Employment, the Participant may change, on a monthly basis, the investment crediting ratepreference under this Section 4.4 by filing an election in such manner as will be determined by the RPAC.Notwithstanding any request made by a Participant, the Company will not be bound by such request and theCompany, in its sole and absolute discretion, will determine the investment rate with which to credit amountscontributed on behalf of Participants under this ERA, provided, however, that if the Company chooses aninvestment crediting rate other than the investment crediting rate requested by the16 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Participant, such investment crediting rate cannot be less than (a) above. If a Participant fails to set forth hisinvestment crediting rate preference under this Section 4.4, he will be deemed to have elected the moneymarket mutual fund. The RPAC will select from time to time, in its sole and absolute discretion, the possibleinvestment crediting rate options to be offered under the ERA. End of Article IV17 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE VDISTRIBUTION OF BENEFITS5.1Normal Retirement Distribution. A Participant who remains in the employ of the Employer until hisNormal Retirement Age will receive a Normal Retirement Benefit equal to the vested balance of his Accountas of the date of his Retirement. Except as provided in Section 10.3, payment of the Normal RetirementBenefit will begin on the first day of the second calendar month following the date of the Participant’sRetirement in the form of equal annual installments through the date the Participant attains age eighty (80).Distributions will be made in the form of cash or Stock, depending on the Participant’s investment creditingrates as provided in Section 4.4. The commencement of payment of the Normal Retirement Benefit will besubject to the six (6) month delay applicable to Key Employees under Section 5.4. A Participant who isentitled to a Normal Retirement Benefit distribution may elect to defer payment of such distribution pursuantto Section 5.7.5.2Early Retirement Distribution. A Participant who remains in the employ of the Employer until his EarlyRetirement Age will receive an Early Retirement Benefit equal to the vested balance of his Account as of thedate of his Retirement. Payment of the Early Retirement Benefit will begin on the first day of the secondcalendar month following the date of the Participant’s Retirement; provided, that the Participant timely elected(or was deemed to have timely elected) to receive an Early Retirement Benefit pursuant to Section 3.1(b)and did not subsequently elect to defer such payment pursuant to Section 5.7. Except as provided in Section10.3, distribution of the Early Retirement Benefit will be made in the form of equal annual installments throughthe date the Participant attains age eighty (80). Distributions will be made in the form of cash or Stock,depending on the Participant’s investment crediting rates as provided in Section 4.4. The commencement ofthe payment of the Early Retirement benefit will be subject to the six (6) month delay applicable to KeyEmployees under Section 5.4.5.3Termination of Employment Distribution. A Participant who incurs a Termination of Employment for areason other than Retirement, Disability or death, will receive a distribution of the vested balance of hisAccount, if any, pursuant to this Section 5.3. The commencement of the payment of the vested balance ofthe Participant’s Account will be subject to the six (6) month delay applicable to Key Employees underSection 5.4.(a)Involuntary Termination Distribution. If a Participant incurs an Involuntary Termination, he willreceive payment of his vested Account balance, as determined in accordance with Section 4.2(c),commencing on the first day of the second calendar month following his attainment of age sixty-two(62) unless he elected to defer payment pursuant to Section 5.7. Except as provided in Section 10.3,distribution of the Participant’s vested Account balance will be made in equal annual installmentsthrough the date the Participant attains age eighty (80). Distributions will be made in the form of cashor Stock, depending on the Participant’s investment crediting rates as provided in Section 4.4.(b)Other Termination Distribution. Except in the case of a Termination of Employment for Cause, ifa Participant incurs an Other Termination after attaining age fifty-five (55) and completing ten (10)Years of Vesting Service and the Participant elected (or was deemed to have elected) an EarlyRetirement Benefit pursuant to Section 3.1(b), distribution of the Participant’s vested Account18 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. balance will be made pursuant to Section 5.2. If the Participant has not completed ten (10) Years ofVesting Service or did not elect (or was not deemed to have elected) an Early Retirement Benefit,distribution of the Participant's vested Account balance will commence on the first day of the secondcalendar month following the date he attains age sixty-two (62) unless he elected to defer paymentpursuant to Section 5.7. Except as provided in Section 10.3, distribution of the Participant's vestedAccount balance will be made in the form of equal annual installments through the date the Participantattains age eighty (80). Distributions will be made in the form of cash or Stock, depending on theParticipant's investment crediting rates as provided in Section 4.4.A Participant who incurs a Termination of Employment for Cause will forfeit the entire balance of his Accountregardless if vested.5.4Termination Distributions to Key Employees. Distributions under this ERA that are payable to a KeyEmployee on account of a Termination of Employment, including Retirement, will be delayed for a period ofsix (6) months following such Participant's Termination of Employment. This six (6) month restriction will notapply, or will cease to apply, with respect to a distribution to a Participant's Beneficiary by reason of the deathof the Participant.5.5Death Distribution. In the event of the Participant's death, his vested Account balance will be distributed asfollows:(a)Death While an Employee. If the Participant dies while employed by the Employer, the Participant'svested Account balance, as determined pursuant to Section 4.2(a), will be paid to the Participant'sBeneficiary in a lump sum, in cash and/or Stock depending on the Participant's investment creditingrates, by the later of the end of the Plan Year in which the Participant dies or ninety (90) daysfollowing the date of the Participant's death.(b)Death Following Termination. If the Participant dies after his Termination of Employment whilereceiving installment payments from the ERA, the remaining amount of such installment paymentswill be paid to the Participant's Beneficiary in a lump sum, in cash and/or Stock depending on theParticipant's investment crediting rates, by the later of the end of the Plan Year in which theParticipant dies or ninety (90) days following the date of the Participant's death. If the Participant diesafter his Termination of Employment before he begins receiving installment payments from the ERA,his vested Account balance will be paid in a to his Beneficiary in a lump sum, in cash and/or Stockdepending on the Participant's investment crediting rates, by the later of the end of the Plan Year inwhich the Participant dies or ninety (90) days following the date of the Participant's death.Amounts distributed pursuant to this Section 5.5 will not be subject to or, in the event installment payments tothe Participant had already commenced at the time of the Participant's death, will cease to be subject to thesix (6) month delay applicable to Key Employees under Section 5.4.5.6Disability Distribution. If a Participant incurs a Disability while employed by the Employer, distribution ofhis vested Account balance will begin on the first day of the19 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.second calendar month following the Participant's attainment of age sixty-five (65). Except as provided inSection 10.3, distribution of the Participant's vested Account will be made in the form of equal annualinstallments through the date the Participant attains age eighty (80). Distributions will be made in the form ofcash or Stock, depending on the Participant's investment crediting rates as provided in Section 4.4. AParticipant who is entitled to a Disability distribution may not elect to defer payment of such distributionpursuant to Section 5.7. Amounts distributed pursuant to this Section 5.6, will not be subject to the six (6)month delay applicable to Key Employees. 5.7Deferral of Distributions. A Participant may elect to defer payment of his Normal Retirement Benefitpayable pursuant to Section 5.1, his Early Retirement Benefit payable pursuant to Section 5.2 or aTermination of Employment distribution pursuant to Section 5.3 for a period of five (5) years from the datesuch payment would otherwise be made by making a deferral election at least twelve (12) months before thedate payment would otherwise be made. In the event that the Participant becomes entitled to a distributionpursuant to Section 5.1, Section 5.2 or Section 5.3 during this twelve (12) month period, the deferral electionwill be of no effect and payment of the Participant's benefits will commence at the time specified in Section5.1, Section 5.2 or Section 5.3, as applicable. A Participant who becomes entitled to distribution of a Disabilitybenefit pursuant to Section 5.6 may not elect to defer payment of such distribution pursuant to this Section5.7 and any deferral election made by such Participant will be null and of no effect.5.8Withholding. Any taxes or other legally required withholdings from distributions to Participants under theERA will be deducted and withheld from the Participant's vested Accounts by the Employer, benefit provideror funding agent as required pursuant to applicable law. A Participant will be provided with a tax withholdingelection form for purposes of federal and state tax withholding, if applicable. A Beneficiary will be responsiblefor payment of his own federal, state and local taxes.5.9Impact of Reemployment on Benefits. If a Participant incurs a Termination of Employment and beginsreceiving, installment payments from the ERA and such Participant is reemployed by the Employer, thensuch Participant's installment payments will continue as scheduled during the period of his reemployment. End of Article V20 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE VIPAYMENT LIMITATIONS6.1Spousal Claims(a)Distribution of Benefit. In the event that an Alternate Payee is entitled to all or a portion of aParticipant's vested Account balance pursuant to the terms of a DRO, such amount will be paid to theAlternate Payee in a lump sum, in cash or Stock, based on the Participant's investment creditingrates under the ERA as provided in Section 4.4 and the terms of the DRO, within ninety (90) daysafter the Plan Administrator approves the DRO.An Alternate Payee must complete and deliver to the Plan Administrator all required forms withinthirty (30) days from the date the Alternate Payee is notified by the Plan Administrator that the DROhas been accepted.. The Alternate Payee will be responsible for payment of any federal, state or localtaxes. (b)Determination of Qualification of DRO. The Plan Administrator will have sole and absolutediscretion to determine whether a judgment, decree or order is a DRO, to determine whether a DROwill be accepted for purposes of this Section 6.1 and to make interpretations under this Section 6.1,including determining who is to receive benefits, the amount of such benefits, and the amount oftaxes to be withheld. The decisions of the Plan Administrator will be binding on all parties with aninterest.(c)Subject to ERA Provisions. Any benefits payable to an Alternate Payee pursuant to the terms of aDRO will be subject to all provisions and restrictions of the ERA and any dispute regarding suchbenefits will be resolved pursuant to the ERA claims procedure in Article VIII.6.2Legal Disability. If a person entitled to any payment under this ERA is, in the sole judgment of the PlanAdministrator, under a legal disability, or otherwise is unable to apply such payment to his own interest andadvantage, the Plan Administrator, in the exercise of its discretion, may direct the Employer or payor of thebenefit to make any such payment in any one (1) or more of the following ways:(a)Directly to such person;(b)To his legal guardian or conservator; or(c)To his spouse or to any person charged with the duty of his support, to be expended for his benefitand/or that of his dependents.The decision of the Plan Administrator will in each case be final and binding upon all persons in interest,unless the Plan Administrator reverses its decision due to changed circumstances.6.3Assignment. Except as provided in Section 6,1, no Participant or Beneficiary will have any right to assign,pledge, transfer, convey, hypothecate, anticipate or in any way create a lien on any amounts payable underthis ERA. No amounts payable under this ERA will be subject to assignment or transfer or otherwise bealienable, either by21 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.voluntary or involuntary act, or by operation of law, or subject to attachment, execution, garnishment,sequestration or other seizure under any legal, equitable or other process, or be liable in any way for thedebts or defaults of Participants and their Beneficiaries. End of Article VI22 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE VIIFUNDING7.1No Right to Assets.(a)Employer Obligation. Benefits under this ERA will be funded solely by the Employer. Benefitsunder this ERA will constitute an unfunded general obligation of the Employer, but the Employer maycreate reserves, funds and/or provide for amounts to be held in trust to fund such benefits on itsbehalf. Payment of benefits may be made by the Employer, any trust established by the Employer orthrough a service or benefit provider to the Employer or such trust. Upon the occurrence of a Changeof Control, the Company will establish a rabbi trust to fund the benefits accrued under the ERA as ofthe date of the Change of Control.(b)Rabbi Trust. Upon a Change of Control, the following will occur:(i)the Trust will become (or continue to be) irrevocable;(ii)for three (3) years following a Change of Control, the Trustee can only be removed as set forthin the Trust;(iii)if the Trustee is removed or resigns within three (3) years following a Change of Control, theTrustee will select a successor Trustee, as set forth in the Trust;(iv)for three (3) years following a Change of Control, the Company will be responsible for directlypaying all Trustee fees and expenses, together with all fees and expenses incurred underArticle VIII relating to the RPAC, Plan Administrator, and ERA administrative expenses(unless otherwise paid by the Trust from the Trust’s expense reserve); and(v)the Trust Agreement may be amended only as set forth in the Trust (with the Trustee'sconsent); provided, however, that no such amendment will (A) change the irrevocable natureof the Trust; (B) adversely affect a Participant's rights to benefits under the ERA without theconsent of the Participant; (C) impair the rights of the Company's creditors under the Trust; or(D) cause the Trust to fail to be a "grantor trust" pursuant to Code sections 671 through 679.7.2Creditor Status. Participants and their Beneficiaries will be general unsecured creditors of their respectiveEmployer with respect to the payment of any benefit under this ERA, unless such benefits are providedunder a contract of insurance or an annuity contract that has been delivered to Participants, in which caseParticipants and their Beneficiaries will look to the insurance carrier or annuity provider for payment, and notto the Employer. The Employer's obligation for such benefit will be discharged by the purchase and deliveryof such annuity or insurance contract. End of Article VII23 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE VIIIADMINISTRATION8.1The RPAC. The overall administration of the ERA will be the responsibility of the RPAC.8.2Powers of RPAC. The RPAC will have sole and absolute discretion regarding the exercise of its powersand duties under this ERA. In order to effectuate the purposes of the ERA, the RPAC will have the followingpowers and duties:(a)To appoint the Plan Administrator;(b)To review and render decisions respecting a denial of a claim for benefits under the ERA;(c)To construe the ERA and to make equitable adjustments for any mistakes or errors made in theadministration of the ERA; and(d)To determine and resolve, in its sole and absolute discretion, all questions relating to theadministration of the ERA and the trust established to secure the assets of the ERA when differencesof opinion arise between the Company, an Affiliate, the Plan Administrator, the Trustee, a Participant,or any of them, and whenever it is deemed advisable to determine such questions in order to promotethe uniform and nondiscriminatory administration of the ERA for the greatest benefit of all partiesconcerned.The foregoing list of express powers is not intended to be either complete or conclusive, and the RPAC will,in addition, have such powers as it may reasonably determine to be necessary or appropriate in theperformance of its powers and duties under the ERA.8.3Appointment of Plan Administrator. The RPAC will appoint the Plan Administrator, who will have theresponsibility and duty to administer the ERA on a daily basis. The RPAC may remove the PlanAdministrator with or without cause at any time. The Plan Administrator may resign upon written notice to theRPAC.8.4Duties of Plan Administrator. The Plan Administrator will have sole and absolute discretion regarding theexercise of its powers and duties under this ERA. The Plan Administrator will have the following powers andduties:(a)To direct the administration of the ERA in accordance with the provisions herein set forth;(b)To adopt rules of procedure and regulations necessary for the administration of the ERA, providedsuch rules are not inconsistent with the terms of the ERA:(c)To determine all questions with regard to rights of Employees. Participants, and Beneficiaries underthe ERA including, but not limited to, questions involving eligibility of an Employee to participate in theERA, the amount of a Participant’s Annual Contribution and the value of a Participant's vestedAccount:(d)To enforce the terms of the ERA and any rules and regulations adopted by the RPAC; 24 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(e)To review and render decisions respecting a claim for a benefit under the ERA;(f)To furnish the Employer with information that the Employer may require for tax or other purposes;(g)To engage the service of counsel (who may, if appropriate, be counsel for the Employer), actuaries,and agents whom it may deem advisable to assist it with the performance of its duties;(h)To prescribe procedures to be followed by Participants in obtaining benefits;(i)To receive from the Employer and from Participants such information as is necessary for the properadministration of the ERA;(j)To establish and maintain, or cause to be maintained, the individual Accounts described in Section4.3;(k)To create and maintain such records and forms as are required for the efficient administration of theERA;(l)To make all determinations and computations concerning the benefits, credits and debits to whichany Participant, or other Beneficiary, is entitled under the ERA;(m)To give the Trustee of the trust established to serve as a source of funds under the ERA specificdirections in writing with respect to:(i)making distribution payments, giving the names of the payees, specifying the amounts to bepaid and the time or times when payments will be made; and(ii)making any other payments which the Trustee is not by the terms of the trust agreementauthorized to make without a direction in writing by the Plan Administrator;(n)To comply with all applicable lawful reporting and disclosure requirements of ERISA;(o)To comply (or transfer responsibility for compliance to the Trustee) with all applicable federal incometax withholding requirements for benefit distributions; and(p)To construe the ERA, in its sole and absolute discretion, and make equitable adjustments for anyerrors made in the administration of the ERA.The foregoing list of express duties is not intended to be either complete or conclusive, and the PlanAdministrator will, in addition, exercise such other powers and perform such other duties as it may deemnecessary, desirable, advisable or proper for the supervision and administration of the ERA.25 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.8.5Indemnification of RPAC and Plan Administrator. To the extent not covered by insurance, or if there is afailure to provide full insurance coverage for any reason, and to the extent permissible under corporate by-laws and other applicable laws and regulations. the Employer agrees to hold harmless and indemnify theRPAC and Plan Administrator against any and all claims and causes of action by or on behalf of any and allparties whomsoever, and all losses therefrom, including, without limitation, costs of defense and reasonableattorneys' fees, based upon or arising out of any act or omission relating to or in connection with the ERAother than losses resulting from the RPAC's, or any such person's commission of fraud or willfulmisconduct.8.6Claims for Benefits.(a)Initial Claim. In the event that an Employee, Eligible Person, Participant or his Beneficiary claims tobe eligible for benefits, or claims any rights under this ERA, such claimant must complete and submitsuch claim forms and supporting documentation as will be required by the Plan Administrator, in itssole and absolute discretion. Likewise, any Participant or Beneficiary who feels unfairly treated as aresult of the administration of the ERA must file a written claim. setting forth the basis of the claim,with the Plan Administrator. In connection with the determination of a claim, or in connection withreview of a denied claim. the claimant may examine this ERA, and any other pertinent documentsgenerally available to Participants that are specifically related to the claim.Different claims procedures apply to claims for benefits on account of Disability, referred to as"Disability claims," and all other claims for benefits, referred to as "non-Disability claims "(b)Non-Disability Claims.(i)Initial Decision. If a claimant files a non-Disability claim, written notice of the disposition ofsuch claim will be furnished to the claimant within ninety (90) days after the claim is filed withthe Plan Administrator. Such notice will refer, if appropriate, to pertinent provisions of thisERA, will set forth in writing the reasons for denial of the claim if a claim is denied (includingreferences to any pertinent provisions of this ERA) and, where appropriate, will describe anyadditional material or information necessary for the claimant to perfect the claim and anexplanation of why such material or information is necessary. If the claim is denied, in wholeor in part, the claimant will also be notified of the ERA's claim review procedure and the timelimits applicable to such procedure, including the claimant's right to arbitration following anadverse benefit determination on review as provided below. All benefits provided in this ERAas a result of the disposition of a claim will be paid as soon as practicable following receipt ofproof of entitlement, if requested.(ii)Request for Review. Within ninety (90) days after receiving written notice of the PlanAdministrator's disposition of the claim, the claimant may file with the RPAC a written requestfor review of his claim. In connection with the request for review, the claimant will be entitled tobe represented by counsel and will be given; upon request and free of charge, reasonableaccess to all pertinent documents for the preparation26 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.of his claim. If the claimant does not file a written request for review within ninety (90) daysafter receiving written notice of the Plan Administrator's disposition of the claim, the claimantwill be deemed to have accepted the Plan Administrator's written disposition, unless theclaimant was physically or mentally incapacitated so as to be unable to request review withinthe ninety (90) day period.(iii)Decision on Review. After receipt by the RPAC of a written application for review of his claim,the RPAC will review the claim taking into account all comments, documents, records andother information submitted by the claimant regarding the claim without regard to whethersuch information was considered in the initial benefit determination. The RPAC will notify theclaimant of its decision by delivery or by certified or registered mail to his last known address.A decision on review of the claim will be made by the RPAC at its next meeting followingreceipt of the written request for review. If no meeting of the RPAC is scheduled within forty-five (45) days of receipt of the written request for review, then the RPAC will hold a specialmeeting to review such written request for review within such forty-five (45) day period. Ifspecial circumstances require an extension of the forty-five (45) day period, the RPAC will sonotify the claimant and a decision will be rendered within ninety (90) days of receipt of therequest for review. In any event, if a claim is not determined by the RPAC within ninety (90)days of receipt of written submission for review. it will be deemed to be denied.The decision of the RPAC will be provided to the claimant as soon as possible but no laterthan five (5) days after the benefit determination is made. The decision will be in writing andwill include the specific reasons for the decision presented in a manner calculated to beunderstood by the claimant and will contain references to all relevant ERA provisions onwhich the decision was based. Such decision will also advise the claimant that he mayreceive upon request, and free of charge, reasonable access to and copies of all documents,records and other information relevant to his claim and will inform the claimant of his right toarbitration in the case of an adverse decision regarding his appeal. The decision of the RPACwill be final and conclusive.(c)Disability Claims.(i)Initial Decision. If a claimant files a Disability claim, written notice of the disposition of suchclaim will be furnished to the claimant within forty-five (45) days after the claim is filed with thePlan Administrator. This period may be extended by the Plan Administrator for up to thirty (30)days provided that the Plan Administrator determines that such an extension is necessarydue to matters beyond its control and the claimant is notified before the expiration of the initialforty-five (45) day period of the circumstances requiring the extension of time and the date bywhich the Plan Administrator expects to render a decision. If, before the first thirty (30) dayextension period, the Plan Administrator determines that, due to matters beyond its control, adecision cannot be made within that extension period, the period for making the determinationmay be27 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.extended for up to an additional thirty (30) days provided that the claimant is notified before theexpiration of the first thirty (30) day extension period of the circumstances requiring theextension and the date as of which the Plan Administrator expects to issue a decision. In thecase of any extension. the notice of extension will specifically explain the standards on whichentitlement to a benefit on account of Disability is based, the unresolved issues that prevent adecision on the claim, and the additional information needed to resolve those issues and theclaimant will be given at least forty-five (45) days within which to provide the specifiedinformation.Written notice of the disposition of the claim will refer. if appropriate, to pertinent provisions ofthis ERA, will set forth in writing the reasons for denial of the claim if a claim is denied(including references to any pertinent provisions of this ERA), the protocol relied upon indenying the claim or a statement that such protocol is available on request and, whereappropriate, will describe any additional material or information necessary for the claimant toperfect the claim and an explanation of why such material or information is necessary. If theclaim is denied, in whole or in part, the claimant will also be notified of the ERA's claim reviewprocedure and the time limits applicable to such procedure, including the claimant's right toarbitration following an adverse benefit determination on review as provided below.(ii)Request for Review. Within one hundred and eighty (180) days after receiving written noticeof the Plan Administrator’s denial of the claim, the claimant may file with the RPAC a writtenrequest for review of his claim. In connection with the request for review, the claimant will beentitled to be represented by counsel and will be given, upon request and free of charge,reasonable access to all pertinent documents for the preparation of his claim. If the claimantdoes not file a written request for review within this one hundred and eighty (180) day period,the claimant will be deemed to have accepted the Plan Administrator's written disposition,unless the claimant was physically or mentally incapacitated so as to be unable to requestreview within the one hundred and eighty (180) day period.If the benefit denial is based in whole or in part on a medical judgment. the claimant will beentitled to a review by the RPAC based on the RPAC's consultation with a health careprofessional who has appropriate training and experience in the field of medicine involved inthe medical judgment whereby such professional is neither an individual who was consulted inconnection with the benefit denial that is the subject of the request for review nor thesubordinate of any such individual. The claimant will also be provided with the identity of anymedical or vocational experts whose advice was obtained on behalf of the ERA in connectionwith the benefit denial, without regard to whether the advice was relied upon in making theinitial benefit determination.The RPAC's review will take into account all comments, documents, records and otherinformation submitted by the claimant relating to the28 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.claim without regard to whether such information was submitted or considered in the initialbenefit determination. In addition, the RPAC's review will not give deference to the initialadverse benefit determination. If the Plan Administrator is a member of the RPAC, he will notparticipate in the RPAC's review of the request for review(iii)Decision on Review. The claimant will be provided with written notice of the RPAC's benefitdetermination on review within a reasonable period of time; provided, however, that suchperiod will not last more than forty-five (45) days or ninety (90) days if an extension is requiredand proper notice is given to the claimant. In any event, if a claim is not determined by theRPAC within ninety (90) days of receipt of written submission for review, it will be deemed tobe denied.The decision of the RPAC will be in writing and will include the specific reasons for thedecision presented in a manner calculated to be understood by the claimant and will containreferences to all relevant ERA provisions on which the decision was based. Such decision willalso advise the claimant that he may receive upon request, and free of charge, reasonableaccess to and copies of all documents, records and other information relevant to his claimand will inform the claimant of his right to arbitration in the case of an adverse decisionregarding his appeal. In addition, the notice will set forth the following additional information, tothe extent applicable:(A)the protocol relied upon in making the adverse decision;(B)if the adverse decision is based on a medical necessity or similar exclusion or limit,either an explanation of the scientific or clinical judgment for the decision, applying theterms of the ERA to the claimant's medical circumstances, or a statement that suchexplanation will be provided free of charge upon request; and(C)the following statement: You and your ERA may have other voluntary alternativedispute resolution options, such as mediation. One way to find out what may beavailable is to contact your local U.S. Department of Labor Office.The decision of the RPAC will be final and conclusive.8.7Aoprbitration. In the event the claims review procedure described in Section 8.6 of the ERA does notresult in an outcome thought by the claimant to be in accordance with the ERA document, he may appeal toa third party neutral arbitrator. The claimant must appeal to an arbitrator within sixty (60) days after receivingthe RPAC’s denial or deemed denial of his request for review and before bringing suit in court. Thearbitration will be conducted pursuant to the American Arbitration Association (“AAA”) Rules on EmployeeBenefit Claims.The arbitrator will be mutually selected by the claimant and the RPAC from a list of arbitrators who areexperienced in nonqualified deferred compensation plan benefit matters that is provided by the AAA. If theparties are unable to agree on the selection of29 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.an arbitrator within ten (10) days of receiving the list from the AAA, the AAA will appoint an arbitrator. Thearbitrator’s review will be limited to interpretation of the ERA document in the context of the particular factsinvolved. The claimant, the RPAC and the Company agree to accept the award of the arbitrator as binding,and all exercises of power by the arbitrator hereunder will be final, conclusive and binding on all interestedparties, unless found by a court of competent jurisdiction, in a final judgment that is no longer subject toreview or appeal, to be arbitrary and capricious. The claimant, RPAC and the Company agree that the venuefor the arbitration will be in Dallas, Texas. The costs of arbitration will be paid by the Company; the costs oflegal representation for the claimant or witness costs for the claimant will be borne by the claimant; provided,that, as part of his award, the Arbitrator may require the Company to reimburse the claimant for all or aportion of such amounts.The following discovery may be conducted by the parties: interrogatories, demands to produce documents,requests for admissions and oral depositions. The arbitrator will resolve any discovery disputes by such prehearing conferences as may be needed. The Company, RPAC and claimant agree that the arbitrator willhave the power of subpoena process as provided by law. Disagreements concerning the scope ofdepositions or document production, its reasonableness and enforcement of discovery requests will besubject to agreement by the Company and the claimant or will be resolved by the arbitrator. All discoveryrequests will be subject to the proprietary rights and rights of privilege and other protections granted byapplicable law to the Company and the claimant and the arbitrator will adopt procedures to protect suchrights. With respect to any dispute, the Company, RPAC and the claimant agree that all discovery activitieswill be expressly limited to matters directly relevant to the dispute and the arbitrator will be required to fullyenforce this requirement.The arbitrator will have no power to add to, subtract from, or modify any of the terms of the ERA, or tochange or add to any benefits provided by the ERA, or to waive or fail to apply any requirements of eligibilityfor a benefit under the ERA. Nonetheless, the arbitrator will have absolute discretion in the exercise of itspowers in this ERA. Arbitration decisions will not establish binding precedent with respect to theadministration or operation of the ERA.8.8Receipt and Release of Necessary Information. In implementing the terms of this ERA, the RPAC andPlan Administrator, as applicable, may, without the consent of or notice to any person, release to or obtainfrom any other insuring entity or other organization or person any information, with respect to any person,which the RPAC or Plan Administrator deems to be necessary for such purposes. Any Participant orBeneficiary claiming benefits under this ERA will furnish to the RPAC or Plan Administrator, as applicable,such information as may be necessary to determine eligibility for and amount of benefit, as a condition ofclaiming and receiving such benefit.8.9Overpayment and Underpayment of Benefits. The Plan Administrator may adopt, in its sole and absolutediscretion, whatever rules, procedures and accounting practices are appropriate in providing for the collectionof any overpayment of benefits. If a Participant or Beneficiary receives an underpayment of benefits. the PlanAdministrator will direct that payment be made as soon as practicable to make up for the underpayment. Ifan overpayment is made to a Participant or Beneficiary. for whatever reason, the Plan Administrator may, inits sole and absolute discretion, (a) withhold payment of any further benefits under the ERA until theoverpayment has been30 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.collected; provided, that the entire amount of reduction in any calendar year does not exceed five thousanddollars ($5,000), and the reduction is made at the same time and in the same amount as the debt otherwisewould have been due and collected from the Participant, or (b) may require repayment of benefits paid underthis ERA without regard to further benefits to which the Participant or Beneficiary may be entitled.8.10Change of Control. Upon a Change of Control and for the following three (3) years thereafter, if anyarbitration arises relating to an event occurring or a claim made within three (3) years of a Change of Control,(i) the arbitrator will not decide the claim based on an abuse of discretion principle or give the previous RPACdecision any special deference, but rather will determine the claim de novo based on its own independentreading of the ERA; and (ii) the Company will pay the Participant's reasonable legal and other related feesand expenses, by applying Section 3.1(f) of the ESP (except that if the Participant is not entitled to severancebenefits under the ESP on account of the Termination of Employment that entitles the Participant to receivebenefits under this ERA, the reference to the “shorter of the Severance Period or the Reimbursement Period”in the ESP will be changed to the “Reimbursement Period” only). End of Article VIII 31 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE IXOTHER BENEFIT PLANS OF THE COMPANY9.1Other Plans. Nothing contained in this ERA will prevent a Participant before his death, or a Participant'sspouse or other Beneficiary after such Participant's death, from receiving, in addition to any paymentsprovided for under this ERA, any payments provided for under any other plan or benefit program of theEmployer, or which would otherwise be payable or distributable to him, his surviving spouse or Beneficiaryunder any plan or policy of the Employer or otherwise. Nothing in this ERA will be construed as preventingthe Company or any of its Affiliates from establishing any other or different plans providing for current ordeferred compensation for employees. Unless otherwise specifically provided in any plan of the Companyintended to "qualify” under section 401 of the Code, Compensation made under this ERA will constituteearnings or compensation for purposes of determining contributions or benefits under such qualified plan. End of Article IX 32 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE XAMENDMENT AND TERMINATION OF THE PLAN10.1Continuation. The Company intends to continue this ERA indefinitely, but nevertheless assumes nocontractual obligation beyond the promise to pay the benefits described in this ERA.10.2Amendment of ERA. The Company, through an action of the Compensation Committee, reserves theright in its sole and absolute discretion to amend this ERA in any respect at any time, except that upon orduring the two (2) year period after any Change of Control of the Company, (a) ERA benefits cannot bereduced, (b) Articles VIII and X and Section 7.1(b) cannot be changed, and (c) (except as provided in Section10.3) no prospective amendment that adversely affects the rights or obligations of a Participant may bemade unless the affected Participant receives at least one (1) year's advance written notice of suchamendment. Moreover, no amendment may ever be made that retroactively reduces or diminishes the rights of anyParticipant to the benefits described herein that have been accrued or earned through the date of suchamendment, even if a Termination of Employment has not yet occurred with respect to such Participant.In addition to the Compensation Committee, the RPAC has the right to make non-material amendments tothe ERA to comply with changes in the law or to facilitate ERA administration; provided, however, that eachsuch proposed non¬-material amendment must be discussed with the Chairperson of the CompensationCommittee in order to determine whether such change would constitute a material amendment to the ERA.The provisions of this Section 10.2 will not restrict the right of the Company to terminate this ERA underSection 10.3 below or the termination of an Affiliate’s participation under Section 10.4 below.10.3Termination of ERA. The Company, through an action of the Compensation Committee, may terminate orsuspend this ERA in whole or in part at any time, provided that no such termination or suspension willdeprive a Participant, or person claiming benefits under this ERA through a Participant, of any amountcredited to his Account under this ERA up to the date of suspension or termination. Except as required byapplicable law and pursuant to the valuation of such Account pursuant to Section 4.4, the CompensationCommittee may decide to liquidate the ERA upon termination under the following circumstances:(a)Corporate Dissolution or Bankruptcy. The Compensation Committee may terminate and liquidatethe ERA within twelve (12) months of a corporate dissolution taxed under section 331 of the Code orwith the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A). provided that theamounts deferred under the ERA are included in Participants' gross income in the latest of thefollowing years (or if earlier, the taxable year in which the amount is actually or constructivelyreceived):(i)The calendar year in which the ERA termination and liquidation occurs.33 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(ii)The first calendar year in which the amount is no longer subject to a substantial risk offorfeiture.(iii)The first calendar year in which the payment is administratively practicable.(b)Change in Control. The Compensation Committee may terminate and liquidate the ERA within thethirty (30) days preceding or the twelve (12) months following a Change in Control (except on accountof a liquidation or dissolution of the Company), provided that all plans or arrangements that would beaggregated with the ERA under section 409A of the Code are also terminated and liquidated withrespect to each Participant that experienced the Change in Control event so that under the terms ofthe ERA and all such arrangements the Participant is required to receive all amounts ofcompensation deferred under such arrangements within twelve (12) months of the termination of theERA or arrangement, as applicable. In the case of a Change of Control event which constitutes a saleof assets, the termination of the ERA pursuant to this Section 10.3(b) may be made with respect tothe Employer that is primarily liable immediately after the Change of Control transaction for thepayment of benefits under the ERA.(c)Termination of ERA. The Compensation Committee may terminate and liquidate the ERA providedthat (i) the termination and liquidation does not occur by reason of a downturn of the financial health ofthe Company or an Employer, (ii) all plans all plans or arrangements that would be aggregated withthe ERA under section 409A of the Code are also terminated and liquidated, (iii) no payments inliquidation of the ERA are made within twelve (12) months of the date of termination of the ERA otherthan payments that would be made in the ordinary course operation of the ERA, (iv) all payments aremade within twenty-four (24) months of the date the ERA is terminated and (v) the Company or theEmployer, as applicable depending on whether the ERA is terminated with respect to such entity, donot adopt a new plan that would be aggregated with the ERA within three (3) years of the date of thetermination of the ERA.10.4Termination of Affiliate's Participation. An Affiliate may terminate its participation in the ERA at any timeby an action of its governing body and providing written notice to the Company. Likewise, the Company mayterminate an Affiliate's participation in the ERA at any time by an action of the Compensation Committee andproviding written notice to the Affiliate. The effective date of any such termination will be the later of the datespecified in the notice of the termination of participation or the date on which the RPAC can administrativelyimplement such termination. In the event that an Affiliate's participation in the ERA is terminated, unlessdeclared otherwise by the Company and specified in Exhibit A each Participant employed by such Affiliatewill continue to participate in the ERA as an inactive Participant and will be entitled to a distribution of hisentire Account or a portion thereof upon his Termination of Employment pursuant to Section 5.3. End of Article X34 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE XIMISCELLANEOUS11.1No Reduction of Employer Rights. Nothing contained in this ERA will be construed as a contract ofemployment between the Employer and an Employee, or as a right of any Employee to continue in theEmployment of the Employer, or as a limitation of the right of the Employer to discharge any of itsEmployees, with or without cause.11.2Provisions Binding. All of the provisions of this ERA will be binding upon all persons who will be entitled toany benefit hereunder, their heirs and personal representatives. End of Article XI 35 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IN WITNESS WHEREOF, this Fifth Amended and Restated Tenet Executive Retirement Account has beenexecuted on this 31 day of December, 2013, effective as of November 6, 2013, except as specifically providedotherwise herein. TENET HEALTHCARE CORPORATION By:/s/ Paul Slavin Paul Slavin, Vice President, Compensation, Benefits and Corporate HR stSource: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT AGRANDFATHERED CONIFER EMPLOYEESSection 2.1(t) of the Fifth Amended and Restated Tenet Executive Retirement Account (the "ERA")provides that certain Employees of Conifer Health Solutions, LLC will continue to participate in the ERAafter December 31, 2013, the date that Conifer Health Solutions, LLC ceased to be an Employer.[Table omitted] A-1 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT BLIMITS ON ELIGIBILITY AND PARTICIPATIONSection 3.1 of the Tenet Executive Retirement Account (the ''Prior ERA'') provided the Retirement PlansAdministration Committee, formerly the Pension Administration Committee (the “RPAC”), with theauthority to limit the classification of employees of Tenet Healthcare Corporation or its participatingaffiliates (collectively the "Employer") eligible to participate in the ERA and/or to limit or terminate anEligible Person's participation in the ERA at any time and states that any such limitation will be set forth inthis Exhibit B. This provision has been continued in this Fifth Amended and Restated Tenet ExecutiveRetirement Account. This Exhibit B identifies the employees excluded from ERA participation pursuantto this provision.NameTitleEffective Date AndApplicable Modification B-1Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10(t) TENET THIRD AMENDED AND RESTATEDTENET 2006 DEFERREDCOMPENSATIONPLAN As Amended and Restated Effective as of January 1, 2015 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.THIRD AMENDED AND RESTATEDTENET 2006 DEFERRED COMPENSATION PLANTABLE OF CONTENTSARTICLE I PREAMBLE AND PURPOSE 1 1.1Preamble. 1 1.2Purpose. 1 ARTICLE II DEFINITIONS AND CONSTRUCTION 3 2.1Definitions. 3 2.2Construction. 14 ARTICLE III PARTICIPATION AND FORFEITABILITY OF BENEFITS15 3.1Eligibility and Participation. 15 3.2Forfeitability of Benefits. 16 ARTICLE IV DEFERRAL, COMPANY CONTRIBUTIONS, ACCOUNTING AND INVESTMENTCREDITING RATES17 4.1General Rules Regarding Deferral Elections. 17 4.2Compensation and Bonus Deferrals. 17 4.3RSU Deferrals. 19 4.4Company Contributions. 20 4.5Accounting for Deferred Compensation. 20 4.6Investment Crediting Rates. 22 ARTICLE V DISTRIBUTION OF BENEFITS 24 5.1Distribution Election. 24 5.2Termination Distributions to Key Employees. 25 5.3Scheduled In-Service Withdrawals. 25 5.4Unforeseeable Emergency. 25 5.5Death of a Participant. 26 5.6Withholding. 26 5.7Impact of Reemployment on Benefits. 26 ARTICLE VI PAYMENT LIMITATIONS 27 6.1Spousal Claims. 27 6.2Legal Disability. 28 6.3Assignment. 28 ARTICLE VII FUNDING 29 7.1Funding. 29 7.2Creditor Status. 29 ARTICLE VIII ADMINISTRATION 30 8.1The RPAC. 30 8.2Powers of RPAC. 30 8.3Appointment of Plan Administrator. 30 8.4Duties of Plan Administrator. 30 8.5Indemnification of RPAC and Plan Administrator. 32 8.6Claims for Benefits. 32 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 8.7Receipt and Release of Necessary Information. 34 8.8Overpayment and Underpayment of Benefits. 34 8.9Change of Control. 34 ARTICLE IX OTHER BENEFIT PLANS OF THE COMPANY 36 9.1Other Plans. 36 ARTICLE X AMENDMENT AND TERMINATION OF THE PLAN 37 10.1Continuation. 37 10.2Amendment of Plan. 37 10.3Termination of Plan. 37 10.4Termination of Affiliate's Participation. 38 ARTICLE XI MISCELLANEOUS 39 11.1No Reduction of Employer Rights. 39 11.2Provisions Binding. 39 EXHIBIT A LIMITS ON ELIGIBILITY AND PARTICIPATION A-1 (ii) Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.THIRD AMENDED AND RESTATEDTENET 2006 DEFERRED COMPENSATION PLANARTICLE IPREAMBLE AND PURPOSE1.1Preamble. Tenet Healthcare Corporation (the "Company") previously adopted the Tenet 2006 DeferredCompensation Plan (the "Plan") to permit the Company and its participating Affiliates, as defined herein(collectively, the "Employer"), to attract and retain a select group of management or highly compensatedemployees and Directors, as defined herein. The Plan replaced the Tenet 2001 Deferred CompensationPlan (the "2001 DCP") and compensation and bonus deferrals and employer contributions made to the 2001DCP during the 2005 Plan Year (i.e., January 1, through December 31) were transferred to the Plan and willbe administered pursuant to its terms.Pursuant to the First Amended and Restated Plan, the Company amended and restated the Plan effectiveDecember 31, 2008 to (a) reflect that compensation and bonus deferrals and employer contributions made tothe 2001 DCP have been transferred to the Plan and will be administered pursuant to its terms, (b) permitparticipants to elect before December 31, 2008 pursuant to transition relief issued under section 409A of theInternal Revenue Code of 1986, as amended (the "Code") to receive an in-service withdrawal of amountsdeemed invested in stock units in 2009 or a subsequent year, (c) modify the fixed return investment option toprovide that interest will be credited based on one hundred and twenty percent (120%) of the long-termapplicable federal rate as opposed to the current provision which credits interest based on the prime rate ofinterest less one percent (1%), (d) reduce the employer matching contribution effective January 1, 2009, (e)comply with final regulations issued under section 409A of the Code and (f) make certain other designchanges. This amended and restated Plan is known as the First Amended and Restated Tenet 2006Deferred Compensation Plan.The Company further amended the Plan, through the adoption of the Second Amended and Restated Plan,effective as of May 9, 2012, to add certain Change of Control provisions and revise certain termination eventdefinitions. By this instrument, the Company desires to amend and restate the Plan to increase the employer matchingcontribution under the Plan to conform with the matching contribution provided under the Company’s tax-qualified section 401(k) plan and to incorporate certain administrative changes adopted with respect to thePlan since its prior restatement. This amended and restated Plan will be known as the Third Amended andRestated Tenet 2006 Deferred Compensation Plan.The Employer may adopt one or more domestic trusts to serve as a possible source of funds for thepayment of benefits under this Plan.1.2Purpose. Through this Plan, the Employer intends to permit the deferral of compensation and to provideadditional benefits to Directors and a select group of management or highly compensated employees of theEmployer. Accordingly, it is intended that this Plan will not constitute a "qualified plan" subject to thelimitations of section 401(a) of the Code, nor will it constitute a "funded plan," for purposes of suchrequirements. It also is intended that this Plan will be exempt from the participation and vesting requirementsof Part 2 of Title I of the Employee Retirement Income Security Act of 1974, as amended (the "Act"), thefunding requirements of Part 3 of Title I of the Act, Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.and the fiduciary requirements of Part 4 of Title I of the Act by reason of the exclusions afforded plans thatare unfunded and maintained by an employer primarily for the purpose of providing deferred compensationfor a select group of management or highly compensated employees.End of Article I2 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE IIDEFINITIONS AND CONSTRUCTION2.1Definitions. When a word or phrase appears in this Plan with the initial letter capitalized, and the word orphrase does not commence a sentence, the word or phrase will generally be a term defined in this Section2.1. The following words and phrases with the initial letter capitalized will have the meaning set forth in thisSection 2.1, unless a different meaning is required by the context in which the word or phrase is used.(a)"Account" means one or more of the bookkeeping accounts maintained by the Company or itsagent on behalf of a Participant, as described in more detail in Section 4.5. A Participant's Accountmay be divided into one or more "Cash Accounts" or "Stock Unit Accounts" as defined in Section4.5.(b)"Act" means the Employee Retirement Income Security Act of 1974, as amended from time to time.(c)"Affiliate" means a corporation that is a member of a controlled group of corporations (as defined insection 414(b) of the Code) that includes the Company, any trade or business (whether or notincorporated) that is in common control (as defined in section 414(c) of the Code) with the Company,or any entity that is a member of the same affiliated service group (as defined in section 414(m) of theCode) as the Company.(d)"Alternate Payee" means any spouse, former spouse, child, or other dependent of a Participant whois recognized by a DRO as having a right to receive all, or a portion of, the benefits payable under thePlan with respect to such Participant.(e)"Annual Incentive Plan Award" means the amount payable to an employee each year, if any, underthe Company's Annual Incentive Plan, as the same may be amended, restated, modified, renewed orreplaced from time to time.(f)"Base Deferral" means the Compensation deferral made by a Participant pursuant to Section 4.2(a).(g)"Base with Match Deferral" means the Base with Match Deferral made pursuant to Section 4.2(c).(h)"Beneficiary" means the person designated by the Participant to receive a distribution of his benefitsunder the Plan upon the death of the Participant. If the Participant is married, his spouse will be hisBeneficiary, unless his spouse consents in writing to the designation of an alternate Beneficiary. Inthe event that a Participant fails to designate a Beneficiary, or if the Participant's Beneficiary does notsurvive the Participant, the Participant's Beneficiary will be his surviving spouse, if any, or if theParticipant does not have a surviving spouse, his estate. The term "Beneficiary" also will mean aParticipant's spouse or former spouse who is entitled to all or a portion of a Participant's benefitpursuant to Section 6.1.(i)"Board" means the Board of Directors of the Company.3 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(j)"Bonus" means (i) a bonus paid to a Participant in the form of an Annual Incentive Plan award, (ii)a performance-based bonus payment to a Participant pursuant to an employment or similaragreement, or (iii) any other bonus payment designated by the RPAC as an eligible bonus under thePlan.(k)"Bonus Deferral" means the Bonus deferral made by a Participant pursuant to Section 4.2(b). AParticipant may also defer a portion of his Bonus as a Bonus with Match Deferral pursuant to Section4.2(c).(l)"Bonus with Match Deferral" means the Bonus with Match Deferral made pursuant to Section4.2(d).(m)"Cause" means(i)with respect to any event not occurring on or within two (2) years after a Change of Control,except as provided otherwise in a separate severance agreement or plan in which theParticipant participates:(A)dishonesty,(B)fraud,(C)willful misconduct,(D)breach of fiduciary duty,(E)conflict of interest,(F)commission of a felony,(G)material failure or refusal to perform his job duties in accordance with Companypolicies,(H)a material violation of Company policy that causes harm to the Company or anAffiliate, or(I)other wrongful conduct of a similar nature and degree.A failure to meet or achieve business objectives, as defined by the Company, will not beconsidered Cause so long as the Participant has devoted his best efforts and attention to theachievement of those objectives.(ii)With respect to any event occurring on or within two (2) years after a Change of Control,except as provided otherwise in a separate severance agreement or plan in which theParticipant participates:(A)any intentional act or misconduct materially injurious to the Company or any Affiliate,financial or otherwise, but not limited to, misappropriation or fraud, embezzlement orconversion by the Participant of the Company’s or any Affiliate’s property in4 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.connection with the Participant’s employment with the Company or an Affiliate,(B)Any willful act or omission constituting a material breach by the Participant of afiduciary duty,(C)A final, non-appealable order in a proceeding before a court of competent jurisdictionor a final order in an administrative proceeding finding that the Participant committedany willful misconduct or criminal activity (excluding minor traffic violations or otherminor offenses), which commission is materially inimical to the interests of theCompany or any Affiliate, whether for his personal benefit or in connection with hisduties for the Company or an Affiliate,(D)The conviction (or plea of no contest) of the Participant for any felony,(E)Material failure or refusal to perform his job duties in accordance with Companypolicies (other than resulting from the Participant’s disability as defined by Companypolicies), or(F)A material violation of Company policy that causes material harm to the Company oran Affiliate.A failure to meet or achieve business objectives, as defined by the Company, will not beconsidered Cause so long as the Participant has devoted his reasonable efforts and attentionto the achievement of those objectives. For purposes of this Section, no act or failure to acton the part of the Participant will be deemed "willful", "intentional" or "knowing" if it wasundertaken in reasonable reliance on the advice of counsel or at the instruction of theCompany, including but not limited to the Board, a committee of the Board or the ChiefExecutive Officer ("CEO") of the Company, or was due primarily to an error in judgment ornegligence, but will be deemed "willful", "intentional" or "knowing" only if done or omitted to bedone by the Participant not in good faith and without reasonable belief that the Participant’saction or omission was in the best interest of the Company.(iii)A Participant will not be deemed to have been terminated for Cause, under either this Section2.1(m)(i) or 2.1(m)(ii) above, as applicable, unless and until there has been delivered to theParticipant written notice that the Participant has engaged in conduct constituting Cause. Thedetermination of Cause will be made by the Compensation Committee with respect to anyParticipant who is employed as the CEO, by the CEO (or an individual acting in such capacityor possessing such authority on an interim basis) with respect to any other Participant excepta Hospital Chief Executive Officer ("Hospital CEO") and by the Chief Operating Officer of theCompany (the "COO") with respect to any Participant who is employed as a Hospital CEO. AParticipant who receives written notice that he has engaged in conduct constituting Cause, willbe given the opportunity to be heard (either in person or in writing as mutually agreed5 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.to by the Participant and the Compensation Committee, CEO or COO, as applicable) for thepurpose of considering whether Cause exists. If it is determined either at or following suchhearing that Cause exists, the Participant will be notified in writing of such determination withinfive (5) business days. If the Participant disagrees with such determination, the Participantmay file a claim contesting such determination pursuant to Article VIII within thirty (30) daysafter his receipt of such written determination finding that Cause exists.(n)"Change of Control" means the occurrence of one of the following:(i)A "change in the ownership of the Company" which will occur on the date that any one person,or more than one person acting as a group within the meaning of section 409A of the Code,acquires, directly or indirectly, whether in a single transaction or series of related transactions,ownership of stock in the Company that, together with stock held by such person or group,constitutes more than fifty percent (50%) of the total fair market value or total voting power ofthe stock of the Company ("Ownership Control"). However, if any one person or more thanone person acting as a group, has previously acquired ownership of more than fifty percent(50%) of the total fair market value or total voting power of the stock of the Company, theacquisition of additional stock by the same person or persons will not be considered a"change in the ownership of the Company" (or to cause a "change in the effective control ofthe Company" within the meaning of Section 2.1(n)(ii) below). Further, an increase in theeffective percentage of stock owned by any one person, or persons acting as a group, as aresult of a transaction in which the Company acquires its stock in exchange for cash orproperty will be treated as an acquisition of stock for purposes of this paragraph; provided,that for purposes of this Section 2.1(n)(i), the following acquisitions of Company stock will notconstitute a Change of Control:(A)any acquisition, whether in a single transaction or series of related transactions, byany employee benefit plan (or related trust) sponsored or maintained by the Companyor an Affiliate which results in such employee benefit plan obtaining "OwnershipControl" of the Company or(B)any acquisition, whether in a single transaction or series of related transactions, bythe Company which results in the Company acquiring stock of the Companyrepresenting "Ownership Control" or(C)any acquisition, whether in a single transaction or series of related transactions, afterwhich those persons who were owners of the Company’s stock immediately beforesuch transaction(s) own more than fifty percent (50%) of the total fair market value ortotal voting power of the stock of the Company (or if after the consummation of suchtransaction(s) the Company (or another entity into which the Company is merged intoor otherwise combined, such the Company does not survive such6 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.transaction(s)) is a direct or indirect subsidiary of another entity which itself is not asubsidiary of an entity, then the more than fifty percent (50%) ownership test will beapplied to the voting securities of such other entity) in substantially the samepercentages as their respective ownership of the Company immediately before suchtransaction(s).This Section 2.1(n)(i) applies either when there is a transfer of the stock of the Company (orissuance of stock) and stock in the Company remains outstanding after the transaction orwhen there is a transfer of the stock of the Company (including a merger or similartransaction) and stock in the Company does not remain outstanding after the transaction.(ii)A "change in the effective control of the Company" which will occur on the date that either (A)or (B) occurs:(A)any one person, or more than one person acting as a group within the meaning ofsection 409A of the Code, acquires (taking into consideration any prior acquisitionsduring the twelve (12) month period ending on the date of the most recent acquisitionby such person or persons), directly or indirectly, ownership of stock of the Companypossessing thirty-five percent (35%) or more of the total voting power of the stock ofthe Company (not considering stock owned by such person or group before suchtwelve (12) month period) (i.e., such person or group must acquire within a twelve (12)month period stock possessing at least thirty-five percent (35%) of the total votingpower of the stock of the Company) ("Effective Control"), except for (i) anyacquisition by any employee benefit plan (or related trust) sponsored or maintained bythe Company or an Affiliate which results in such employee benefit plan obtaining"Effective Control" of the Company or (ii) any acquisition by the Company. Theoccurrence of "Effective Control" under this Section 2.1(n)(ii)(A) may be nullified by avote of that number of the members of the Board of Directors of the Company("Board"), that exceeds two-thirds (2/3) of the independent members of the Board,which vote must occur before the time, if any, that a "change in the effective control ofthe Company" has occurred under Section 2.1(n)(ii)(B) below. In the event of such asupermajority vote, such transaction or series of related transactions will not betreated as an event constituting "Effective Control". For avoidance of doubt, the Planprovides that in the event of the occurrence of the acquisition of ownership of stock ofthe Company that reaches or exceeds the thirty-five percent (35%) ownershipthreshold described above, if more than two-thirds (2/3) of the independent membersof the Board take action to resolve that such an acquisition is not a "change in theeffective control of the Company" and a majority of the members of the Board have notbeen replaced as provided under Section 2.1(n)(ii)(B) below, then such Board actionwill be final and no "Effective Control" will be deemed to have occurred for any purposeunder the Plan.7 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(B)a majority of the members of the Board are replaced during any twelve (12) monthperiod by directors whose appointment or election is not endorsed by a majority of themembers of the Board before the date of the appointment or election.For purposes of a "change in the effective control of the Company," if any one person, or morethan one person acting as a group, is considered to effectively control the Company within themeaning of this Section 2.1(n)(ii), the acquisition of additional control of the Company by thesame person or persons is not considered a "change in the effective control of the Company,"or to cause a "change in the ownership of the Company" within the meaning of Section 2.1(n)(i) above.(iii)A sale, exchange, lease, disposition or other transfer of all or substantially all of the assets ofthe Company.(iv)A liquidation or dissolution of the Company that is approved by a majority of the Company'sstockholders. For purposes of this Section 2.1(n), the provisions of section 318(a) of the Code regarding theconstructive ownership of stock will apply to determine stock ownership; provided, that, stockunderlying unvested options (including options exercisable for stock that is not substantially vested)will not be treated as owned by the individual who holds the option.(o)"Code" means the Internal Revenue Code of 1986, as amended from time to time.(p)"Company" means Tenet Healthcare Corporation.(q)"Company Match Deferral" means a Base with Match Deferral and/or Bonus with Match Deferral.(r)"Compensation" means base salaries, commissions, and certain other amounts of cashcompensation payable to the Participant during the Plan Year Compensation will exclude cashbonuses, foreign service pay, hardship withdrawal allowances and any other pay intended toreimburse the employee for the higher cost of living outside the United States, Annual Incentive PlanAwards, automobile allowances, housing allowances, relocation payments, deemed income, incomepayable under stock incentive plans, insurance premiums, and other imputed income, pensions,retirement benefits, and contributions to and payments from the 401(k) Plan and this Plan or anyother nonqualified retirement plan maintained by the Employer. The term "Compensation" forDirectors will mean any cash compensation from retainers, meeting fees and committee fees paidduring the Plan Year.(s)"Compensation and Bonus Deferrals" means the Base Deferrals, Bonus Deferrals, CompanyMatch Deferrals and/or Discretionary Deferrals made pursuant to Section 4.2 of the Plan.(t)"Compensation Committee" means the Compensation Committee of the Board, which has theauthority to amend and terminate the Plan as provided in Article X.8 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Compensation Committee also will be responsible for determining the amount of theDiscretionary Contribution, if any, to be made by the Employer.(u)"Director" means a member of the Board who is not an employee.(v)"Discretionary Contribution" means the contribution made by the Employer on behalf of aParticipant as described in Section 4.4(b).(w)"Discretionary Deferral" means the Compensation deferral described in Section 4.2(d) made by aParticipant.(x)"DRO" means a domestic relations order that is a judgment, decree, or order (including one thatapproves a property settlement agreement) that relates to the provision of child support, alimonypayments or marital property rights to a spouse, former spouse, child or other dependent of aParticipant and is rendered under a state (within the meaning of section 7701(a)(10) of the Code)domestic relations law (including a community property law) and that:(i)Creates or recognizes the existence of an Alternate Payee's right to, or assigns to anAlternate Payee the right to receive all or a portion of the benefits payable with respect to aParticipant under the Plan;(ii)Does not require the Plan to provide any type or form of benefit, or any option, not otherwiseprovided under the Plan;(iii)Does not require the Plan to provide increased benefits (determined on the basis of actuarialvalue);(iv)Does not require the payment of benefits to an Alternate Payee that are required to be paid toanother Alternate Payee under another order previously determined to be a DRO; and(v)Clearly specifies: the name and last known mailing address of the Participant and of eachAlternate Payee covered by the DRO; the amount or percentage of the Participant's benefitsto be paid by the Plan to each such Alternate Payee, or the manner in which such amount orpercentage is to be determined; the number of payments or payment periods to which suchorder applies; and that it is applicable with respect to this Plan.(y)"Effective Date" means January 1, 2015, except as provided otherwise herein.(z)"Election" means the Participant’s written, on-line or telephonic elections with respect to deferrals,requested investment crediting rates and distributions under this Plan. (aa)"Eligible Person" means (i) each Employee who is paid from a Tenet payroll and eligible for aBonus as defined in Section 2.1(j) for the applicable Plan Year, and (ii) each Director. In addition, theterm "Eligible Person" will include any Employee designated as an Eligible Person by the RPAC. Asprovided in Section 3.1, the RPAC or Plan Administrator may at any time, in its sole and absolutediscretion, limit the classification of Employees who are eligible to9 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.participate in the Plan for a Plan Year, limit the enrollment period during which an Eligible Person mayenroll in the Plan to the Open Enrollment Period and/or modify or terminate an Eligible Person'sparticipation in the Plan without the need for an amendment to the Plan. (bb)"Employee" means each select member of management or highly compensated employeereceiving remuneration, or who is entitled to remuneration, for services rendered to the Employer, inthe legal relationship of employer and employee.(cc)"Employer" means the Company and each Affiliate which has adopted the Plan as a participatingemployer. An Affiliate may evidence its adoption of the Plan either by a formal action of its governingbody or by commencing deferrals and taking other administrative actions with respect to this Plan onbehalf of its employees. An entity will cease to be a participating employer as of the date such entityceases to be an Affiliate.(dd)"Employer Contribution" means a Matching Contribution and/or Discretionary Contribution.(ee)"Fair Market Value" means the closing price of a share of Stock on the New York Stock Exchangeon the date as of which fair market value is to be determined.(ff)"Five Percent Owner" means any person who owns (or is considered as owning within the meaningof section 318 of the Code (as modified by section 416(i)(1)(B)(iii) of the Code)) more than fivepercent (5%) of the outstanding stock of the Company or an Affiliate or stock possessing more thanfive percent (5%) of the total combined voting power of all stock of the Company or an Affiliate. Therules of sections 414(b), (c) and (m) of the Code will not apply for purposes of applying theseownership rules. Thus, this ownership test will be applied separately with respect to the Companyand each Affiliate.(gg)"401(k) Plan" means the Company’s 401(k) Retirement Savings Plan, as such plan may beamended, restated, modified, renewed or replaced from time to time.(hh)"Key Employee" means any employee or former employee (including any deceased employee)who at any time during the Plan Year was:(i)an officer of the Company or an Affiliate having compensation of greater than one hundredthirty thousand dollars ($130,000) (as adjusted under section 416(i)(1) of the Code for PlanYears beginning after December 31, 2002);(ii)a Five Percent Owner; or(iii)a One Percent Owner having compensation of more than one hundred fifty thousand dollars($150,000).For purposes of the preceding paragraphs, the Company has elected to determine the compensationof an officer or One Percent Owner in accordance10 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.with section 1.415(c)-2(d)(4) of the Treasury Regulations (i.e., W-2 wages plus amounts that wouldbe includible in wages except for an election under section 125(a) of the Code (regarding cafeteriaplan elections) under section 132(f) of the Code (regarding qualified transportation fringe benefits) orsection 402(e)(3) of the Code (regarding section 401(k) plan deferrals)) without regard to the specialtiming rules and special rules set forth, respectively, in sections 1.415(c)-2(e) and 2(g) of theTreasury Regulations.The determination of Key Employees will be based upon a twelve (12) month period ending onDecember 31 of each year (i.e., the identification date). Employees that are Key Employees duringsuch twelve (12) month period will be treated as Key Employees for the twelve (12) month periodbeginning on the first day of the fourth month following the end of the twelve (12) month period (i.e.,since the identification date is December 31, then the twelve (12) month period to which it appliesbegins on the next following April 1).The determination of who is a Key Employee will be made in accordance with section 416(i)(1) of theCode and other guidance of general applicability issued thereunder. For purposes of determiningwhether an employee or former employee is an officer, a Five Percent Owner or a One PercentOwner, the Company and each Affiliate will be treated as a separate employer (i.e., the controlledgroup rules of sections 414(b), (c), (m) and (o) of the Code will not apply). Conversely, for purposesof determining whether the one hundred thirty thousand dollar ($130,000) adjusted limit oncompensation is met under the officer test described in Section 2.1(hh)(i), compensation from theCompany and all Affiliates will be taken into account (i.e., the controlled group rules of sections414(b), (c), (m) and (o) of the Code will apply). Further, in determining who is an officer under theofficer test described in Section 2.1(hh)(i), no more than fifty (50) employees of the Company or itsAffiliates (i.e., the controlled group rules of sections 414(b), (c), (m) and (o) of the Code will apply) willbe treated as officers. If the number of officers exceeds fifty (50), the determination of whichemployees or former employees are officers will be determined based on who had the largest annualcompensation from the Company and Affiliates for the Plan Year.(ii)"Matching Contribution" means the contribution made by the Employer pursuant to Section 4.4(a)on behalf of a Participant who makes Company Match Deferrals to the Plan as described in Section4.2(c).(jj)"One Percent Owner" means any person who would be described as a Five Percent Owner if "onepercent (1%)" were substituted for "five percent (5%)" each place where it appears therein.(kk)"Open Enrollment Period" means the period occurring each year during which an Eligible Personmay make his elections to defer his Compensation, Bonus and RSUs for a subsequent Plan Yearpursuant to Article IV. Open Enrollment Periods will occur in accordance with section 409A of theCode (i.e., no later than December 31st of each year with respect to Compensation, no later thanJune 30 of each year with respect to Bonus and either before or within thirty (30) days after the dateof grant with respect to RSUs). Different Open Enrollment Periods may apply with respect todifferent groups of Eligible Persons. An Employee who is not an Eligible Person at the time of theOpen Enrollment Period, but who is11 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.expected to become an Eligible Person during the next Plan Year, may be permitted to enroll in thePlan during the Open Enrollment Period with his Election becoming effective at the time he becomesan Eligible Person with respect to Compensation, Bonus and RSUs earned after such date.(ll)"Participant" means each Eligible Person who has been designated for participation in this Plan andhas made an Election and each Employee or former Employee (or Director or former Director)whose participation in this Plan has not terminated (i.e., the individual still has amounts credited to hisAccount).(mm)"Participant Deferral" means a Base Deferral, Bonus Deferral, Company Match Deferral, RSUDeferral and/or Discretionary Deferral.(nn)"Plan" means the Third Amended and Restated Tenet 2006 Deferred Compensation Plan as setforth in this document and as the same may be amended from time to time.(oo)"Plan Administrator" means the individual or entity appointed by the RPAC to handle the day-to-day administration of the Plan, including but not limited to determining a Participant's eligibility forbenefits and the amount of such benefits and complying with all applicable reporting and disclosureobligations imposed on the Plan. If the RPAC does not appoint an individual or entity as PlanAdministrator, the RPAC will serve as the Plan Administrator.(pp)"Plan Year" means the fiscal year of this Plan, which will commence on January 1 each year andend on December 31 of such year.(qq)"RPAC" means the Retirement Plans Administration Committee of the Company established by theCompensation Committee of the Board, and whose members have been appointed by suchCompensation Committee. The RPAC will have the responsibility to administer the Plan and makefinal determinations regarding claims for benefits, as described in Article VIII. In addition, the RPAChas limited amendment authority over the Plan as provided in Section 10.2.(rr)"RSU Deferral" means the RSU deferral made by a Participant pursuant to Section 4.3.(ss)"RSU" means the restricted stock units awarded under the SIP.(tt)"Scheduled In-Service Withdrawal" means a distribution elected by the Participant pursuant toSection 4.2 or Section 4.3 for an in-service withdrawal of amounts of Base Deferrals, Bonus Deferralsand/or RSU Deferrals made in a given Plan Year, and earnings or losses attributable to suchamounts, as reflected in the Participant’s Election for such Plan Year. (uu)"Scheduled Withdrawal Date" means the distribution date elected by the Participant for aScheduled In-Service Withdrawal.(vv)"SIP" means the Company’s Stock Incentive Plan.12 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(ww)"Special Enrollment Period" means, subject to Section 3.1(b) and Section 3.1(c), a period of nomore than thirty (30) days after an Employee is employed by the Employer (or a Director is elected tothe Board) or an Employee is transferred to the status of an Eligible Person provided that suchEmployee does not already participate in another plan of the Employer that would be aggregated withthe Plan and advised of his eligibility to participate in the Plan during which the Eligible Person maymake an Election to defer Compensation and RSUs earned after such Election pursuant to ArticleIV. If the Employee becomes an Eligible Person before June 30, he may make an Election to deferBonus earned after such Election to the extent permitted by the Plan Administrator. For purposes ofdetermining an Eligible Person's initial eligibility, an Eligible Person, who incurs a Termination ofEmployment and is reemployed and eligible to participate in the Plan at a date which is more thantwenty-four (24) months after such Termination of Employment, will be treated as being initiallyeligible to participate in the Plan on such reemployment. The Plan Administrator may also designatecertain periods as Special Enrollment Periods to the extent permitted under section 409A of the Code.(xx)"Stock" means the common stock, par value $0.05 per share, of the Company.(yy)"Stock Unit" means a non-voting, non-transferable unit of measurement that is deemed forbookkeeping and distribution purposes only to represent one outstanding share of Stock.(zz)"Termination of Employment" means (i) with respect to an Employee, the date that suchEmployee ceases performing services for the Employer and its Affiliates in the capacity of anemployee or a reduction in employment or other provision of services that qualifies as a separationfrom service under Code section 409A and (ii) with respect to a Director, the date that such Directorceases to provide services to the Company as a member of the Board or a reduction in employmentor other provision of services that qualifies as a separation from service under Code section409A. For this purpose an Employee who is on a leave of absence that exceeds six (6) months andwho does not have statutory or contractual reemployment rights with respect to such leave, will bedeemed to have incurred a Termination of Employment on the first day of the seventh (7th) month ofsuch leave. An Employee who transfers employment from an Employer to an Affiliate, regardless ofwhether such Affiliate has adopted the Plan as a participating employer, will not incur a Termination ofEmployment. (aaa)"Trust" means the rabbi trust established with respect to the Plan, the assets of which are to beused for the payment of benefits under the Plan.(bbb)"Trustee" means the individual or entity appointed to serve as trustee of any trust established as apossible source of funds for the payment of benefits under this Plan as provided in Section 7.1. Afterthe occurrence of a Change of Control, the Trustee must be independent of any successor to theCompany or any affiliate of such successor.(ccc)"2001 DCP" means the Tenet 2001 Deferred Compensation Plan which was in effect before theenactment of section 409A of the Code. All pre-2005 employee13 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.deferrals and employer contributions under the 2001 DCP were fully vested as of January 31, 2004and as such are not subject to the provisions of section 409A of the Code. All 2005 employeedeferrals and employer contributions under the 2001 DCP are subject to, and were made inaccordance with, the requirements of section 409A of the Code and such employee deferrals andemployer contributions were transferred to and will be administered under this Plan. No employeedeferrals or employer contributions will be made to the 2001 DCP after 2005.(ddd)"Unforeseeable Emergency" means (i) a severe financial hardship to the Participant resulting froman illness or accident of the Participant, his spouse or his dependent (as defined under section 152(a)of the Code), (ii) a loss of the Participant's property due to casualty, or (iii) other similar extraordinaryand unforeseeable circumstances arising as a result of events beyond the control of the Participant,as determined by the Plan Administrator in its sole and absolute discretion in accordance with therequirements of section 409A of the Code.2.2Construction. If any provision of this Plan is determined to be for any reason invalid or unenforceable, theremaining provisions of this Plan will continue in full force and effect. All of the provisions of this Plan will beconstrued and enforced in accordance with the laws of the State of Texas and will be administered accordingto the laws of such state, except as otherwise required by the Act, the Code or other applicable federal law. The term "delivered to the RPAC or Plan Administrator," as used in this Plan, will include delivery to a personor persons designated by the RPAC or Plan Administrator, as applicable, for the disbursement and thereceipt of administrative forms. Delivery will be deemed to have occurred only when the form or othercommunication is actually received. Headings and subheadings are for the purpose of reference only and are not to be considered in theconstruction of this Plan. The pronouns "he," "him" and "his" used in the Plan will also refer to similarpronouns of the female gender unless otherwise qualified by the context.End of Article II14 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE IIIPARTICIPATION AND FORFEITABILITY OF BENEFITS3.1Eligibility and Participation.(a)Determination of Eligibility. It is intended that eligibility to participate in the Plan will be limited toEligible Persons, as determined by the RPAC, in its sole and absolute discretion. During the OpenEnrollment Period, each Eligible Person will be contacted and informed that he may elect to deferportions of his Compensation, Bonus and/or RSUs by making an Election. An Eligible Person willbecome a Participant by completing an Election during an Open Enrollment Period pursuant toSection 4.1. Eligibility to become a Participant for any Plan Year will not entitle an Eligible Person tocontinue as an active Participant for any subsequent Plan Year.(b)Limits on Eligibility. The RPAC or Plan Administrator may at any time, in its sole and absolutediscretion, limit the classification of Employees eligible to participate in the Plan and/or limit the periodof such Employee’s enrollment to an Open Enrollment Period and to not permit such Employee toenroll during a Special Enrollment Period. In addition, the RPAC may limit or terminate an EligiblePerson's participation in the Plan; provided, that no such termination will result in a cancellation ofCompensation and Bonus Deferrals or RSU Deferrals for the remainder of a Plan Year in which anElection to make such deferrals is in effect. Any action taken by the RPAC or Plan Administrator thatlimits the classification of Employees eligible to participate in the Plan, limits the time of anEmployee’s enrollment in the Plan or modifies or terminates an Eligible Person’s participation in thePlan will be set forth in Exhibit A attached hereto. Exhibit A may be modified from time to time withouta formal amendment to the Plan, in which case a revised Exhibit A will be attached hereto.An Employee who takes an Unforeseeable Emergency distribution pursuant to Section 5.4 of thisPlan will have his Compensation and Bonus Deferrals and RSU Deferrals under this Plan suspendedfor the remainder of the Plan Year in which such distribution occurs. This mid-year suspensionprovision will also apply with respect to an Unforeseeable Emergency distribution made pursuant to5.4 of the 2001 DCP. In addition, an Employee who takes an Unforeseeable Emergency distributionunder either the 2001 DCP or this Plan will be ineligible to participate in the Plan for purposes ofmaking Compensation and Bonus Deferrals and RSU Deferrals and receiving a MatchingContribution for the Plan Year following the year in which such distribution occurs.(c)Initial Eligibility. If an Eligible Person is employed or elected to the Board during the Plan Year orpromoted or transferred into an eligible position and designated by the RPAC to be a Participant forsuch year, such Eligible Person will be eligible to elect to participate in the Plan during a SpecialEnrollment Period, unless determined otherwise by the Plan Administrator pursuant to Section 3.1(b),in which case, such Eligible Person will be permitted to enroll in the Plan during the next OpenEnrollment Period. For purposes of determining an Eligible Person's initial eligibility, an EligiblePerson, who incurs a Termination of Employment and is reemployed and eligible to participate in thePlan at a date which is more than twenty-four (24) months after such Termination of15 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Employment, will be treated as being initially eligible to participate in the Plan on suchreemployment. Designation as a Participant for the Plan Year in which he is employed or elected tothe Board or promoted will not entitle the Eligible Person to continue as an active Participant for anysubsequent Plan Year.(d)Loss of Eligibility Status. A Participant under this Plan who separates from employment with theEmployer, or who ceases to be a Director, or who transfers to an ineligible employment position willcontinue as an inactive Participant under this Plan until the Participant has received payment of allamounts payable to him under this Plan. In the event that a Participant ceases to be an EligiblePerson during the Plan Year, such Participant's Compensation and Bonus Deferrals and RSUDeferrals will continue through the remainder of the Plan Year, but the Participant will not be permittedto make such deferrals for the following Plan Year unless he again becomes an Eligible Employeeand makes a deferral Election pursuant to Section 3.1(a). An Eligible Person who ceases activeparticipation in the Plan because the Eligible Person is no longer described as a Participant pursuantto this Section 3.1, or because he ceases making deferrals of Compensation, Bonuses or RSUs, willcontinue as an inactive Participant under this Plan until he has received payment of all amountspayable to him under this Plan.3.2Forfeitability of Benefits. Except as provided in Section 6.1, a Participant will at all times have anonforfeitable right to amounts credited to his Account pursuant to Section 4.5. As provided in Section 7.2,however, each Participant will be only a general creditor of the Company and/or his Employer with respect tothe payment of any benefit under this Plan. End or Article III16 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE IVDEFERRAL, COMPANY CONTRIBUTIONS, ACCOUNTINGAND INVESTMENT CREDITING RATES4.1General Rules Regarding Deferral Elections. An Eligible Person may become a Participant in the Plan forthe applicable Plan Year by making an Election during the Open Enrollment Period to defer hisCompensation, Bonus and/or RSUs pursuant to the terms of this Section 4.1. Such Election will be made bythe date specified by the Plan Administrator and will be effective with respect to:(a)Compensation and/or Bonus paid for services performed on or after the following January 1; and(b)RSUs that are awarded under the SIP, either before or within thirty (30) days after the grant date asrequired by section 409A of the Code.An Eligible Person who is employed by the Employer or elected to the Board during the Plan Year may makean Election during the Special Enrollment Period with respect to Compensation, Bonus and/or RSUs earnedafter the date of such Election to the extent permitted under Section 2.1(ww).A Participant's Election will only be effective with respect to a single Plan Year and will be irrevocable for theduration of such Plan Year. Deferral elections for each applicable Plan Year of participation will be madeduring the Open Enrollment Period pursuant to a new Election. Deferrals will not be required to be takenfrom each paycheck during the applicable Plan Year so long as the total Compensation and Bonus elected tobe deferred for the Plan Year has been captured by December 31 of such Plan Year. 4.2Compensation and Bonus Deferrals. Five types of Compensation and Bonus Deferrals may be madeunder the Plan:(a)Base Deferral. Each Eligible Person may elect to defer a stated dollar amount, or designated fullpercentage, of Compensation to the Plan up to a maximum percentage of seventy five percent (75%)(one hundred percent (100%) for Directors) of the Eligible Person's Compensation for the applicablePlan Year until either (i) the Participant's Termination of Employment or (ii) a future year in which theParticipant is still employed by the Employer (or providing services as a member of the Board) andthat is at least two (2) calendar years after the end of the Plan Year in which the Compensation wouldhave otherwise been paid (i.e., as a Scheduled In-Service Withdrawal subject to the provisions ofSection 5.3).Base Deferrals will be made pursuant to administrative procedures established by the PlanAdministrator. Such procedures will provide that Base Deferrals will be subject to a "withholdinghierarchy" for purposes of determining the amount of such contributions that may be contributed onbehalf of a Participant. The Plan Administrator (or its delegatee) will determine the order ofwithholdings taken from a Participant's Compensation (e.g., for federal, state and local taxes, socialsecurity, wage garnishments, welfare plan contributions, 401(k) deferrals, and similar withholdings)and Base Deferrals will be subject to such withholding17 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.hierarchy. As a result, Base Deferrals may be effectively limited to Compensation available after theapplication of such withholding hierarchy.The Employer will not make any Matching Contributions with respect to any Base Deferrals made tothe Plan.(b)Bonus Deferral. Each Eligible Person may elect to defer a stated dollar amount, or designated fullpercentage, of his Bonus to the Plan up to a maximum percentage of one hundred percent (100%)(ninety four percent (94%) if a Bonus with Match Deferral is elected pursuant to Section 4.2(d)) of theEmployee's Bonus for the applicable Plan Year until either (i) the Eligible Person's Termination ofEmployment or (ii) a future year in which the Eligible Person is still employed by the Employer (orproviding services as a member of the Board) and that is at least two (2) calendar years after the endof the Plan Year in which the Bonus would have otherwise been paid (i.e., as a Scheduled In-ServiceWithdrawal subject to the provisions of Section 5.3).Bonus Deferrals will be made pursuant to administrative procedures established by the PlanAdministrator. Such procedures will provide that Bonus Deferrals will be subject to a "withholdinghierarchy" for purposes of determining the amount of such contributions that may be contributed onbehalf of a Participant. The Plan Administrator (or its delegatee) will determine the order ofwithholdings taken from a Participant's Bonus (e.g., for federal, state and local taxes, social security,wage garnishments, welfare plan contributions, and similar withholdings) and Bonus Deferrals will besubject to such withholding hierarchy. As a result, Bonus Deferrals may be effectively limited toBonus available after the application of such withholding hierarchy.Bonus Deferrals generally will be made in the form of cash; provided, however, that if the Companymodifies the Annual Incentive Plan to provide for the payment of awards in Stock, Bonus Deferralsmay be made in the form of Stock. Any Bonus Deferrals made in the form of Stock will be convertedto Stock Units, based on the number of shares so deferred, credited to the Stock Unit Account anddistributed to the Participant at the time specified herein in an equivalent number of whole shares ofStock as provided in Section 4.5(b).The Employer will not make any Matching Contributions with respect to any Bonus Deferrals made tothe Plan.(c)Base with Match Deferral. Each Eligible Person who is a participant in the 401(k) Plan may elect tohave one percent (1%) to six percent (6%) of his Compensation deferred under the Plan as a Basewith Match Deferral with respect to the pay period in which he reaches any of the following statutorylimitations under the 401(k) Plan:(i)the limitation on Compensation under section 401(a)(17) of the Code, as such limit is adjustedfor cost of living increases, or(ii)the limitation imposed on elective deferrals under section 402(g) of the Code, including the limitapplicable to catch-up contributions to the extent18 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.the Eligible Person is eligible to make such contributions, as such limit is adjusted for cost ofliving increases.All Base with Match Deferrals will be payable upon Termination of Employment (i.e., Scheduled In-Service Withdrawals are not available with respect to Base with Match Deferrals). A Participant whoearns more than Four Hundred Thousand Dollars ($400,000) in Compensation (excluding Bonus), orsuch other amount as the Plan Administrator deems necessary to satisfy the requirements of section409A of the Code, and elects to make Base with Match Deferrals under this Section 4.2(c) will not bepermitted to modify his 401(k) Plan deferral elections during the Plan Year in which such Base withMatch Deferral Election is in effect.The Employer will make Matching Contributions with respect to Base with Match Deferrals made tothe Plan as provided in Section 4.4.(d)Bonus with Match Deferral. Each Eligible Person may elect to automatically have six percent(6%) of his Bonus deferred under the Plan as a Bonus with Match Deferral whether or not the EligiblePerson is a participant in the 401(k) Plan or has reached the statutory limitations under the 401(k)Plan described in Section 4.2(c). This Bonus with Match Deferral will be applied to that portion of theEligible Person's Bonus in excess of that deferred as a Bonus Deferral under Section 4.2(b). Forexample, if the Eligible Person elects to defer fifty percent (50%) of his Bonus under Section 4.2(b)and also elects to make a Bonus with Match Deferral under this Section 4.2(d), fifty percent (50%) ofthe Eligible Person's Bonus will be deferred under Section 4.2(b) and six percent (6%) of the EligiblePerson's Bonus will be deferred under this Section 4.2(d). All Bonus with Match Deferrals will bepayable upon Termination of Employment (i.e., Scheduled In-Service Withdrawals are not availablewith respect to Bonus with Match Deferrals).The Employer will make Matching Contributions with respect to Company Match Deferrals made tothe Plan as provided in Section 4.4.(e)Discretionary Deferral. The RPAC may authorize an Eligible Person to defer a stated dollaramount, or designated full percentage, of Compensation to the Plan as a Discretionary Deferral. TheRPAC, in its sole and absolute discretion, may limit the amount or percentage of Compensation anEligible Person may defer to the Plan as a Discretionary Deferral and may prohibit Scheduled In-Service Withdrawals with respect to such Discretionary Deferral. The Employer will not make anyMatching Contributions pursuant to Section 4.4(a) with respect to any Discretionary Deferrals, butmay elect to make a Discretionary Contribution to the Plan with respect to such DiscretionaryDeferrals in the form of a discretionary matching contribution as described in Section 4.4(b).4.3RSU Deferrals. To the extent authorized by the RPAC, an Eligible Person may make an Election to defer adesignated full percentage, up to one hundred percent (100%) of his RSUs until either (a) the EligiblePerson's Termination of Employment or (b) a future year while the Eligible Person is still employed by theEmployer and that is at least two (2) calendar years after the end of the Plan Year in which the RSU isgranted (i.e., as a Scheduled In-Service Withdrawal subject to the provisions of 5.3. A deferral Election19 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.made pursuant to this Section 4.3 will apply to the entire RSU grant (i.e., a Participant may not elect to makea separate Election with respect to each portion of the RSU award based on the award's vestingschedule). Such RSU Deferrals will be converted to Stock Units, based on the number of shares sodeferred, credited to the Stock Unit Account and distributed to the Participant at the time specified in hisElection in an equivalent number of whole shares of Stock as provided in Section 4.5(b).The Employer will not make any Matching Contributions with respect to any RSU Deferrals made to thePlan.4.4Company Contributions.(a)Matching Contribution. The Employer will make a Matching Contribution to the Plan each PlanYear on behalf of each Participant who makes Base with Match Deferrals and Bonus with MatchDeferrals to the Plan for such Plan Year. Such Matching Contribution will equal fifty percent (50%) ofthe first six percent (6%) of the Participant's Base with Match and/or six percent (6%) of theParticipant’s Bonus with Match Deferrals for such Plan Year. Matching Contributions and earningsand losses thereon will be distributed upon the Participant's Termination of Employment in themanner elected by the Participant (or deemed elected by the Participant) for the Plan Year to whichthe Matching Contribution relates as provided in Section 5.1.(b)Discretionary Contribution. The Employer may elect to make a Discretionary Contribution to aParticipant's Account in such amount, and at such time, as will be determined by the CompensationCommittee. Any Discretionary Contribution made by the Employer, plus earnings and lossesthereon, will be paid to the Participant upon his Termination of Employment with the Employer in themanner elected by the Participant (or deemed elected by the Participant) for the Plan Year to whichthe Discretionary Contribution relates as provided in Section 5.1.4.5Accounting for Deferred Compensation.(a)Cash Account. If a Participant has made an Election to defer his Compensation and/or Bonus andhas made a request for amounts deferred to be deemed invested pursuant to Section 4.5(a), theCompany may, in its sole and absolute discretion, establish and maintain a Cash Account for theParticipant under this Plan. Each Cash Account will be adjusted at least quarterly to reflect the BaseDeferrals, Bonus Deferrals, Company Match Deferrals, Discretionary Deferrals, MatchingContributions and Discretionary Contributions credited thereto, earnings or losses credited thereon,and any payment of such Base Deferrals, Bonus Deferrals, Company Match Deferrals, DiscretionaryDeferrals, Matching Contributions and Discretionary Contributions pursuant to Article V. Theamounts of Base Deferrals, Bonus Deferrals, Company Match Deferrals, Discretionary Deferrals andMatching Contributions will be credited to the Participant's Cash Account within five (5) businessdays of the date on which such Compensation and/or Bonus would have been paid to the Participanthad the Participant not elected to defer such amount pursuant to the terms and provisions of thePlan. Any Discretionary Contributions will be credited to each Participant's Cash Account at suchtimes as determined by the Compensation Committee. In the sole and absolute discretion of the PlanAdministrator, more20 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.than one Cash Account may be established for each Participant to facilitate record-keepingconvenience and accuracy. Each such Cash Account will be credited and adjusted as provided inthis Plan.(b)Stock Unit Account. If a Participant has made an Election to defer his Compensation and/or Bonusand has made a request for such deferrals to be deemed invested in Stock Units pursuant to Section4.5(b), the Plan Administrator may, in its sole and absolute discretion, establish and maintain a StockUnit Account and credit the Participant's Stock Unit Account with a number of Stock Unitsdetermined by dividing an amount equal to the Base Deferrals, Bonus Deferrals, Company MatchDeferrals and associated Matching Contributions, and Discretionary Deferrals made as of such dateby the Fair Market Value of a share of Stock on the date such Compensation and/or Bonus otherwisewould have been payable. Such Stock Units will be credited to the Participant's Stock Unit Accountas soon as administratively practicable after the determination of the number of Stock Units is madepursuant to the preceding sentence.If the Participant is entitled to a Discretionary Contribution and has elected to have amounts creditedto his Account to be deemed invested in Stock Units pursuant to Section 4.6(b), the PlanAdministrator may, in its sole discretion, establish and maintain a Stock Unit Account and credit theParticipant's Stock Unit Account with a number of Stock Units determined by dividing an amountequal to the Discretionary Contribution made as of such date by the Fair Market Value of a share ofStock on the date such Discretionary Contribution would have otherwise been made. Such StockUnits will be credited to the Participant's Stock Unit Account as soon as administratively practicableafter the determination of the number of Stock Units has been made pursuant to the precedingsentence.Bonus Deferrals made in Stock and RSU Deferrals will be credited to the Stock Unit Account asprovided in Section 4.2(b).In the sole and absolute discretion of the Plan Administrator, more than one Stock Unit Account maybe established for each Participant to facilitate record​ keeping convenience and accuracy.(i)The Stock Units credited to a Participant's Stock Unit Account will be used solely as a devicefor determining the number of shares of Stock eventually to be distributed to the Participant inaccordance with this Plan. The Stock Units will not be treated as property of the Participant oras a trust fund of any kind. No Participant will be entitled to any voting or other stockholderrights with respect to Stock Units credited under this Plan.(ii)If the outstanding shares of Stock are increased, decreased, or exchanged for a differentnumber or kind of shares or other securities, or if additional shares or new or different sharesor other securities are distributed with respect to such shares of Stock or other securities,through merger, consolidation, spin-off, sale of all or substantially all the assets of theCompany, reorganization, recapitalization, reclassification, stock dividend, stock split, reversestock split or other distribution with21 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.respect to such shares of Stock or other securities, an appropriate and proportionateadjustment in a manner consistent with section 409A of the Code will be made by theCompensation Committee in the number and kind of Stock Units credited to a Participant'sStock Unit Account.(c)Accounts Held in Trust. Amounts credited to Participants' Accounts may be secured by one ormore trusts, as provided in Section 7.1, but will be subject to the claims of the general creditors ofeach such Participant's Employer. Although the principal of such trust and any earnings or lossesthereon will be separate and apart from other funds of the Employer and will be used for the purposesset forth therein, neither the Participants nor their Beneficiaries will have any preferred claim on, orany beneficial ownership in, any assets of the trust before the time such assets are paid to theParticipant or Beneficiaries as benefits and all rights created under this Plan will be unsecuredcontractual rights of Plan Participants and Beneficiaries against the Employer. Any assets held in thetrust with respect to a Participant will be subject to the claims of the general creditors of thatParticipant's Employer under federal and state law in the event of insolvency. The assets of any trustestablished pursuant to this Plan will never inure to the benefit of the Employer and the same will beheld for the exclusive purpose of providing benefits to that Employer's Participants and theirbeneficiaries.4.6Investment Crediting Rates. At the time the Participant makes an Election under Section 4.1, he mustspecify the type of investment crediting rate option with which he would like the Company, in its sole andabsolute discretion, to credit his Account as described in this Section 4.6. Such investment crediting rateElection will apply to all deferrals and contributions under the Plan, except for Bonus Deferrals made in Stockand RSU Deferrals which will automatically be credited to the Stock Unit Account as provided in Section4.2(b) and Section 4.3.(a)Cash Investment Crediting Rate Options. A Participant may make an Election as to the type ofinvestment in which the Participant would like Compensation and Bonus Deferrals to be deemedinvested for purposes of determining the amount of earnings to be credited or losses to be debited tohis Cash Account. The Participant will specify his preference from among the following possibleinvestment crediting rate options:(i)An annual rate of interest equal to one hundred and twenty percent (120%) of the long-termapplicable federal rate, compounded daily; or(ii)One or more benchmark mutual funds.A Participant may make elect, on a daily basis, to modify the investment crediting rate preferenceunder this Section 4.6(a) by making a new Election with respect to such investment creditingrate. Notwithstanding any request made by a Participant, the Company, in its sole and absolutediscretion, will determine the investment rate with which to credit amounts deferred by Participantsunder this Plan, provided, however, that if the Company chooses an investment crediting rate otherthan the investment crediting rate requested by the Participant, such investment crediting rate cannotbe less than (i) above.22 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(b)Stock Units. A Participant may make an Election to have all or a portion of his Compensation andBonus Deferrals to be deemed invested in Stock Units. Any request to have Compensation andBonus Deferrals to be deemed invested in Stock Units is irrevocable and such amounts will bedistributed in an equivalent whole number of shares of Stock pursuant to the provisions of ArticleV. Any fractional share interests will be paid in cash with the last distribution.(c)Deemed Election. In his request(s) pursuant to this Section 4.6, the Participant may request that allor any portion of his Account (in whole percentage increments) be deemed invested in one or more ofthe investment crediting rate preferences provided under the Plan as communicated from time totime by the RPAC. Although a Participant may express an investment crediting rate preference, theCompany will not be bound by such request. If a Participant fails to set forth his investment creditingrate preference under this Section 4.6, he will be deemed to have elected an annual rate of interestequal to the rate of interest set forth in Section 4.6(a)(i) (i.e., one hundred and twenty percent (120%)of the long-term applicable federal rate, compounded daily). The RPAC will select from time to time,in its sole and absolute discretion, the possible investment crediting rate options to be offered underthe Plan.(d)Employer Contributions. Matching Contributions to the Plan made by the Employer and allocatedto a Participant's Account pursuant to Section 4.3 will be credited with the same investment creditingrate as the Participant's associated Company Match Deferrals for the relevant PlanYear. Discretionary Contributions, if any, made by the Employer and allocated to a Participant'sAccount pursuant to Section 4.4 will be credited with the investment crediting rate specified (ordeemed specified) by such Participant in his Election for the relevant Plan Year with respect to theParticipant's Base Deferrals and Bonus Deferrals.A Participant will retain the right to change the investment crediting rate applicable to MatchingContributions and Discretionary Contributions as provided in this Section 4.6.(e)Prior Plan Contributions. The Company transferred Participant 2005 employee deferrals andemployer contributions under the 2001 DCP to this Plan and permitted Participants to express aninvestment crediting rate preference with respect to such transferred amounts. Such transferredamounts will be administered pursuant to the terms of this Plan. End of Article IV23 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE VDISTRIBUTION OF BENEFITS5.1Distribution Election. During each Open Enrollment Period, the Eligible Person must make an Election asto the time and manner in which his Base Deferrals, Bonus Deferrals, Company Match Deferrals, RSUDeferrals and/or Discretionary Deferrals and any associated Matching Contributions or DiscretionaryContributions will be paid. A Participant may make a separate distribution Election for each type ofParticipant Deferral or Employer Contribution for each Plan Year beginning on or after January 1, 2010 inwhich he elects to make Participant Deferrals to the Plan. The Participant may not modify his Election as tothe manner in which such Participant Deferrals or Employer Contributions will be paid.For Plan Years beginning before January 1, 2010, the Participant had to specify upon his initial enrollment inthe Plan the time and form in which distributions of Base Deferrals, Bonus Deferrals, Company MatchDeferrals, RSU Deferrals and/or Discretionary Deferrals and any associated Matching Contributions orDiscretionary Contributions would be made upon a Termination of Employment and such terminationdistribution election governed all deferrals or Employer contributions made to the Plan before January 1,2010 (i.e., deferrals and Employer contributions made during the 2005, 2006, 2007, 2008 and 2009 PlanYears). Alternatively, the Participant could have elected to receive a Scheduled In-Service Withdrawal of hisBase Deferrals, Bonus Deferrals, RSU Deferrals and/or Discretionary Deferrals (if allowed by the RPAC).(a)Time of Distribution. A Participant who elects to receive a Scheduled In-Service Withdrawal withrespect to Base Deferrals, Bonus Deferrals, RSU Deferrals or Discretionary Deferrals will receive thedeferred amount, as adjusted for earnings and losses, in a lump sum at the time specified in hisElection. In the event that the Participant incurs a Termination of Employment before his ScheduledIn-Service Withdrawal date, his Scheduled In-Service Withdrawal election will be cancelled and of noeffect and such amounts will be paid according to the Participant's Termination of Employmentdistribution Election with respect to the Plan Year for which the Scheduled In-Service Withdrawalamounts relate (i.e., the Plan Year such amounts were deferred) or if no Termination of Employmentdistribution Election is on file, in a lump sum upon such Termination of Employment based on thePlan's default form of payment.A Participant who elects to receive his Base Deferrals, Bonus Deferrals, Company Match Deferrals,RSU Deferrals and/or Discretionary Deferrals and any associated Matching Contributions orDiscretionary Contributions made for a Plan Year upon his Termination of Employment, may receivesuch amounts at any of the following times:(i)Subject to the six (6) month delay applicable to Key Employees described in Section 5.2, assoon as practicable after the Participant's Termination of Employment;(ii)In the twelfth (12th) month following the Participant's Termination of Employment; or24 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(iii)In the twenty-fourth (24th) month following the Participant's Termination of Employment.Such amounts may be paid in the form of a lump sum or in the form of annual installments over aperiod of one (1) to fifteen (15) years. Such lump sum or installments will be made in cash or inStock, or in a combination thereof, depending on the Participant's investment crediting rates asprovided in Section 4.6. If the Participant's Account is paid in installments, such Account will berevalued during the term of such installments based on procedures established by the PlanAdministrator.A Participant who dies while an Employee or a Director, as applicable, will be deemed to haveincurred a Termination of Employment on the date of his death; provided, however, that amountspayable pursuant to the Plan on account of death will not be subject to the six (6) month delayapplicable to Key Employees.(b)Failure to Elect Distribution. In the event that a Participant fails to elect the manner in which hisAccount balance will be paid upon his Termination of Employment, such Account balance will be paidin the form of a lump sum as soon as practicable following the Participant's Termination ofEmployment, subject to the six (6) month delay applicable to Key Employees described in Section5.2.(c)Taxation of Distributions. All distributions from the Plan will be taxable as ordinary income whenreceived and subject to appropriate withholding of income taxes. In the case of distributions in Stock,the appropriate number of shares of Stock may be sold to satisfy such withholding obligationspursuant to administrative procedures adopted by the Plan Administrator.5.2Termination Distributions to Key Employees. Distributions under this Plan that are payable to a KeyEmployee on account of a Termination of Employment will be delayed for a period of six (6) months followingsuch Participant's Termination of Employment. This six (6) month restriction will not apply, or will cease toapply, with respect to a distribution to a Participant's Beneficiary by reason of the death of the Participant.5.3Scheduled In-Service Withdrawals. A Participant who elects a Scheduled In-Service Withdrawal pursuantto Section 4.2 (regarding Compensation and Bonus Deferrals), Section 4.3 (regarding RSU Deferrals) maysubsequently elect to delay such distribution for a period of at least five (5) additional calendar years;provided, that such Election is made at least (12) twelve months before the date that such distribution wouldotherwise be made. Further, in the event that a Participant elects a Scheduled In-Service Withdrawal andincurs a Termination of Employment before the Scheduled Withdrawal Date, the Participant's Scheduled In-Service Withdrawal Election and Compensation and Bonus Deferral and/or RSU Deferral Election underSection 4.2 or Section 4.3 will be cancelled and the Participant's entire Account balance will be paidaccording to the Participant's termination distribution Election as provided in Section 5.1.5.4Unforeseeable Emergency. Upon application by the Participant, the Plan Administrator, in its sole andabsolute discretion, may direct payment of all or a portion of the Participant's Account balance before hisTermination of Employment and any Scheduled Withdrawal Date in the event of an UnforeseeableEmergency. Any such25 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.application will set forth the circumstances constituting such Unforeseeable Emergency. The PlanAdministrator will determine whether to grant an application for a distribution on account of an UnforeseeableEmergency in accordance with guidance issued pursuant to section 409A of the Code.A Participant who takes an Unforeseeable Emergency distribution pursuant to this Section 5.4 (includingamounts attributable to 2005 employee deferrals and employer contributions made under the 2001 DCPwhich are transferred to and administered under this Plan) will have his Participant Deferrals under this Plansuspended for the remainder of the Plan Year in which such Unforeseeable Emergency distributionoccurs. In addition, such Participant will be ineligible to participate in the Plan for purposes of makingParticipant Deferrals and receiving an Employer Contribution for the Plan Year following the year in whichsuch distribution occurs.5.5Death of a Participant. If a Participant dies while employed by the Employer, the Participant's Accountbalance will be paid to the Participant's Beneficiary in the manner elected (or deemed elected) by theParticipant pursuant to Section 5.1; provided, that the six (6) month restriction on distributions to KeyEmployees under Section 5.2 will not apply.In the event a terminated Participant dies while receiving installment payments, the remaining installmentswill be paid to the Participant's Beneficiary as such payments become due in accordance with Section 5.1.In the event a terminated Participant dies before receiving his lump sum payment or before he beginsreceiving installment payments, the lump sum payment or installment payments will be paid to theParticipant's Beneficiary as such payments become due in accordance with Section 5.1; provided, that thesix (6) month restriction on distributions to Key Employees under Section 5.2 will not apply.5.6Withholding. Any taxes or other legally required withholdings from Compensation and Bonus Deferrals,RSU Deferrals, termination distributions, Scheduled In-Service Withdrawal payments and UnforeseeableEmergency distributions to Participants or Beneficiaries under the Plan will be deducted and withheld by theEmployer, benefit provider or funding agent as required pursuant to applicable law. To the extent amountsare payable under this Plan in Stock, the appropriate number of shares of Stock may be withheld to satisfysuch withholding obligation. A Participant or Beneficiary will be permitted to make a withholding election withrespect to any federal and state tax withholding applicable to such distribution.5.7Impact of Reemployment on Benefits. If a Participant incurs a Termination of Employment and beginsreceiving installment payments from the Plan and such Participant is reemployed by the Employer, thensuch Participant's installment payments will continue as scheduled during the period of his reemployment. End of Article V26 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE VIPAYMENT LIMITATIONS6.1Spousal Claims.(a)In the event that an Alternate Payee is entitled to all or a portion of a Participant's Accounts pursuantto the terms of a DRO, such Alternate Payee will have the following distribution rights with respect tosuch Participant's Account to the extent set forth pursuant to the terms of the DRO:(i)payment of benefits in a lump sum, in cash or Stock, based on the Participant's investmentcrediting rates under the Plan as provided in Section 4.6 and the terms of the DRO, as soonas practicable following the acceptance of the DRO by the Plan Administrator;(ii)payment of benefits in a lump sum in cash or Stock, based on the Participant's investmentcrediting rates under the Plan as provided in Section 4.6 and the terms of the DRO, twelve(12) months following, or twenty four (24) months following, the acceptance of the DRO by thePlan Administrator;(iii)payment of benefits in substantially equal annual installments, in cash and/or Stock, based onthe Participant's investment crediting rates under the Plan as provided in Section 4.6 and theterms of the DRO, over a period of not less than one (1) nor more than fifteen (15) years fromthe date the DRO is accepted by the Plan Administrator; and(iv)payment of benefits in substantially equal annual installments, in cash and/or Stock, based onthe Participant's investment crediting rates under the Plan as provided in Section 4.6 and theterms of the DRO, over a period of not less than one (1) nor more than fifteen (15) yearsbeginning twelve (12) months following, or twenty four (24) months following, the date theDRO is accepted by the Plan Administrator.An Alternate Payee with respect to a DRO that provides for any of the distributions described insubsections (ii), (iii), or (iv) above, must complete and deliver to the Plan Administrator all requiredforms within thirty (30) days from the date the Alternate Payee is notified by the Plan Administratorthat the DRO has been accepted. Any Alternate Payee who does not complete and deliver to thePlan Administrator all required forms and/or whose DRO does not provide for any of the distributionsdescribed in subsections (ii), (iii), or (iv) above will receive his benefits in a lump sum according tosubsection (i) above. Unvested RSUs may not be transferred pursuant to a DRO.(b)Any taxes or other legally required withholdings from payments to such Alternate Payee will bededucted and withheld by the Employer, benefit provider or funding agent. To the extent amounts arepayable under this Plan in Stock, the appropriate number of shares of Stock may be sold to satisfysuch withholding obligation. The Alternate Payee will be permitted to make a withholding election withrespect to any federal and state tax withholding applicable to such payments.27 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(c)The Plan Administrator will have sole and absolute discretion to determine whether a judgment,decree or order is a DRO, to determine whether a DRO will be accepted for purposes of this Section6.1 and to make interpretations under this Section 6.1, including determining who is to receivebenefits, all calculations of benefits and determinations of the form of such benefits, and the amountof taxes to be withheld. The decisions of the Plan Administrator will be binding on all parties with aninterest.(d)Any benefits payable to an Alternate Payee pursuant to the terms of a DRO will be subject to allprovisions and restrictions of the Plan and any dispute regarding such benefits will be resolvedpursuant to the Plan claims procedure in Article VIII.6.2Legal Disability. If a person entitled to any payment under this Plan is, in the sole judgment of the PlanAdministrator, under a legal disability, or otherwise is unable to apply such payment to his own interest andadvantage, the Plan Administrator, in the exercise of its discretion, may direct the Employer or payer of thebenefit to make any such payment in any one or more of the following ways:(a)Directly to such person;(b)To his legal guardian or conservator; or(c)To his spouse or to any person charged with the duty of his support, to be expended for his benefitand/or that of his dependents.The decision of the Plan Administrator will in each case be final and binding upon all persons in interest,unless the Plan Administrator reverses its decision due to changed circumstances.6.3Assignment. Except as provided in Section 6.1, no Participant or Beneficiary will have any right to assign,pledge, transfer, convey, hypothecate, anticipate or in any way create a lien on any amounts payable underthis Plan. No amounts payable under this Plan will be subject to assignment or transfer or otherwise bealienable, either by voluntary or involuntary act, or by operation of law, or subject to attachment, execution,garnishment, sequestration or other seizure under any legal, equitable or other process, or be liable in anyway for the debts or defaults of Participants and their Beneficiaries. End of Article VI28 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE VIIFUNDING7.1Funding.(a)Funding. Benefits under this Plan will be funded solely by the Employer. Benefits under this Planwill constitute an unfunded general obligation of the Employer, but the Employer may create reserves,funds and/or provide for amounts to be held in trust to fund such benefits on its behalf. Payment ofbenefits may be made by the Employer, any trust established by the Employer or through a serviceor benefit provider to the Employer or such trust.(b)Rabbi Trust. Upon a Change of Control, the following will occur:(i)the Trust will become (or continue to be) irrevocable;(ii)for three (3) years following a Change of Control, the Trustee can only be removed as set forthin the Trust;(iii)if the Trustee is removed or resigns within three (3) years of a Change of Control, the Trusteewill select a successor Trustee, as set forth in the Trust;(iv)for three (3) years following a Change of Control, the Company will be responsible for directlypaying all Trustee fees and expenses, together with all fees and expenses incurred underArticle 8 relating to the RPAC, Plan Administrator, and Plan administrative expenses; and(v)the Trust Agreement may be amended only as set forth in the Trust (with the Trustee'sconsent); provided, however, that no such amendment will (A) change the irrevocable natureof the Trust; (B) adversely affect a Participant's rights to benefits without the consent of theParticipant; (C) impair the rights of the Company's creditors under the Trust; or (0) cause theTrust to fail to be a "granter trust" pursuant to Code sections 671 -- 679.7.2Creditor Status. Participants and their Beneficiaries will be general unsecured creditors of their respectiveEmployer with respect to the payment of any benefit under this Plan, unless such benefits are providedunder a contract of insurance or an annuity contract that has been delivered to Participants, in which caseParticipants and their Beneficiaries will look to the insurance carrier or annuity provider for payment, and notto the Employer. The Employer's obligation for such benefit will be discharged by the purchase and deliveryof such annuity or insurance contract. End of Article VII29 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE VIIIADMINISTRATION8.1The RPAC. The overall administration of the Plan will be the responsibility of the RPAC.8.2Powers of RPAC. The RPAC will have sole and absolute discretion regarding the exercise of its powersand duties under this Plan. In order to effectuate the purposes of the Plan, the RPAC will have the followingpowers and duties:(a)To appoint the Plan Administrator;(b)To review and render decisions respecting a denial of a claim for benefits under the Plan;(c)To construe the Plan and to make equitable adjustments for any mistakes or errors made in theadministration of the Plan; and(d)To determine and resolve, in its sole and absolute discretion, all questions relating to theadministration of the Plan and the trust established to secure the assets of the Plan (i) whendifferences of opinion arise between the Company, an Affiliate, the Plan Administrator, the Trustee, aParticipant, or any of them, and (ii)whenever it is deemed advisable to determine such questions inorder to promote the uniform and nondiscriminatory administration of the Plan for the greatest benefitof all parties concerned.The foregoing list of express powers is not intended to be either complete or conclusive, and the RPAC will,in addition, have such powers as it may reasonably determine to be necessary or appropriate in theperformance of its powers and duties under the Plan.8.3Appointment of Plan Administrator. The RPAC will appoint the Plan Administrator, who will have theresponsibility and duty to administer the Plan on a daily basis. The RPAC may remove the PlanAdministrator with or without cause at any time. The Plan Administrator may resign upon written notice tothe RPAC.8.4Duties of Plan Administrator. The Plan Administrator will have sole and absolute discretion regarding theexercise of its powers and duties under this Plan. The Plan Administrator will have the following powers andduties:(a)To direct the administration of the Plan in accordance with the provisions herein set forth;(b)To adopt rules of procedure and regulations necessary for the administration of the Plan, providedsuch rules are not inconsistent with the terms of the Plan;(c)To determine all questions with regard to rights of Employees, Participants, and Beneficiaries underthe Plan including, but not limited to, questions involving eligibility of an Employee to participate in thePlan and the value of a Participant's Accounts;(d)To enforce the terms of the Plan and any rules and regulations adopted by the RPAC;30 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(e)To review and render decisions respecting a claim for a benefit under the Plan;(f)To furnish the Employer with information that the Employer may require for tax or other purposes;(g)To engage the service of counsel (who may, if appropriate, be counsel for the Employer), actuaries,and agents whom it may deem advisable to assist it with the performance of its duties;(h)To prescribe procedures to be followed by Participants in obtaining benefits;(i)To receive from the Employer and from Participants such information as is necessary for the properadministration of the Plan;(j)To establish and maintain, or cause to be maintained, the individual Accounts described in Section4.4;(k)To create and maintain such records and forms as are required for the efficient administration of thePlan;(l)To make all determinations and computations concerning the benefits, credits and debits to whichany Participant, or other Beneficiary, is entitled under the Plan;(m)To give the Trustee of the trust established to serve as a source of funds under the Plan specificdirections in writing with respect to:(i)making distribution payments, giving the names of the payees, specifying the amounts to bepaid and the time or times when payments will be made; and(ii)making any other payments which the Trustee is not by the terms of the trust agreementauthorized to make without a direction in writing by the Plan Administrator;(n)To comply with all applicable lawful reporting and disclosure requirements of the Act;(o)To comply (or transfer responsibility for compliance to the Trustee) with all applicable federal incometax withholding requirements for benefit distributions; and(p)To construe the Plan, in its sole and absolute discretion, and make equitable adjustments for anyerrors made in the administration of the Plan.The foregoing list of express duties is not intended to be either complete or conclusive, and the PlanAdministrator will, in addition, exercise such other powers and perform such other duties as it may deemnecessary, desirable, advisable or proper for the supervision and administration of the Plan.31 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.8.5Indemnification of RPAC and Plan Administrator. To the extent not covered by insurance, or if there is afailure to provide full insurance coverage for any reason, and to the extent permissible under corporate by-laws and other applicable laws and regulations, the Employer agrees to hold harmless and indemnify theRPAC and Plan Administrator against any and all claims and causes of action by or on behalf of any and allparties whomsoever, and all losses therefrom, including, without limitation, costs of defense and reasonableattorneys' fees, based upon or arising out of any act or omission relating to or in connection with the Planother than losses resulting from the RPAC's, or any such person's commission of fraud or willfulmisconduct.8.6Claims for Benefits.(a)Initial Claim. In the event that an Employee, Eligible Person, Participant or his Beneficiary claims tobe eligible for benefits, or claims any rights under this Plan, such claimant must complete and submitsuch claim forms and supporting documentation as will be required by the Plan Administrator, in itssole and absolute discretion. Likewise, any Participant or Beneficiary who feels unfairly treated as aresult of the administration of the Plan, must file a written claim, setting forth the basis of the claim,with the Plan Administrator. In connect ion with the determination of a claim, or in connection withreview of a denied claim, the claimant may examine this Plan, and any other pertinent documentsgenerally available to Participants that are specifically related to the claim.A written notice of the disposition of any such claim will be furnished to the claimant within ninety (90)days after the claim is filed with the Plan Administrator. Such notice will refer, if appropriate, topertinent provisions of this Plan, will set forth in writing the reasons for denial of the claim if a claim isdenied (including references to any pertinent provisions of this Plan) and, where appropriate, willdescribe any additional material or information necessary for the claimant to perfect the claim and anexplanation of why such material or information is necessary. If the claim is denied, in whole or inpart, the claimant will also be notified of the Plan's claim review procedure and the time limitsapplicable to such procedure, including the claimant's right to arbitration following an adverse benefitdetermination on review as provided below. All benefits provided in this Plan as a result of thedisposition of a claim will be paid as soon as practicable following receipt of proof of entitlement, ifrequested.(b)Request for Review. Within ninety (90) days after receiving written notice of the PlanAdministrator's disposition of the claim, the claimant may file with the RPAC a written request forreview of his claim. In connection with the request for review, the claimant will be entitled to berepresented by counsel and will be given, upon request and free of charge, reasonable access to allpertinent documents for the preparation of his claim. If the claimant does not file a written request forreview within ninety (90) days after receiving written notice of the Plan Administrator's disposition ofthe claim, the claimant will be deemed to have accepted the Plan Administrator's written disposition,unless the claimant was physically or mentally incapacitated so as to be unable to request reviewwithin the ninety (90) day period.(c)Decision on Review. After receipt by the RPAC of a written application for review of his claim, theRPAC will review the claim taking into account all32 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.comments, documents, records and other information submitted by the claimant regarding the claimwithout regard to whether such information was considered in the initial benefit determination. TheRPAC will notify the claimant of its decision by delivery or by certified or registered mail to his lastknown address. A decision on review of the claim will be made by the RPAC at its next meetingfollowing receipt of the written request for review. If no meeting of the RPAC is scheduled withinforty-five (45) days of receipt of the written request for review, then the RPAC will hold a specialmeeting to review such written request for review within such forty-five (45) day period. If specialcircumstances require an extension of the forty-five (45) day period, the RPAC will so notify theclaimant and a decision will be rendered within ninety (90) days of receipt of the request for review. Inany event, if a claim is not determined by the RPAC within ninety (90) days of receipt of writtensubmission for review, it will be deemed to be denied.The decision of the RPAC will be provided to the claimant as soon as possible but no later than five(5) days after the benefit determination is made. The decision will be in writing and will include thespecific reasons for the decision presented in a manner calculated to be understood by the claimantand will contain references to all relevant Plan provisions on which the decision was based. Suchdecision will also advise the claimant that he may receive upon request, and free of charge,reasonable access to and copies of all documents, records and other information relevant to hisclaim and will inform the claimant of his right to arbitration in the case of an adverse decisionregarding his appeal. The decision of the RPAC will be final and conclusive.(d)Arbitration. In the event the claims review procedure described in Section 8.6 of the Plan does notresult in an outcome thought by the claimant to be in accordance with the Plan document, he mayappeal to a third party neutral arbitrator. The claimant must appeal to an arbitrator within sixty (60)days after receiving the RPAC's denial or deemed denial of his request for review and before bringingsuit in court. The arbitration will be conducted pursuant to the American Arbitration Association("AAA") Rules on Employee Benefit Claims.The arbitrator will be mutually selected by the Participant and the RPAC from a list of arbitrators whoare experienced in nonqualified deferred compensation plan benefit matters that is provided by theAAA. If the parties are unable to agree on the selection of an arbitrator within ten (10) days ofreceiving the list from the AAA, the AAA will appoint an arbitrator. The arbitrator's review will belimited to interpretation of the Plan document in the context of the particular facts involved. Theclaimant, the RPAC and the Employer agree to accept the award of the arbitrator as binding, and allexercises of power by the arbitrator hereunder will be final, conclusive and binding on all interestedparties, unless found by a court of competent jurisdiction, in a final judgment that is no longer subjectto review or appeal, to be arbitrary and capricious. The claimant, RPAC and the Company agree thatthe venue for the arbitration will be in Dallas, Texas. The costs of arbitration will be paid by theEmployer; the costs of legal representation for the claimant or witness costs for the claimant will beborne by the claimant; provided, that, as part of his award, the Arbitrator may require the Employer toreimburse the claimant for all or a portion of such amounts.33 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following discovery may be conducted by the parties: interrogatories, demands to producedocuments, requests for admissions and oral depositions. The arbitrator will resolve any discoverydisputes by such pre hearing conferences as may be needed. The Company, RPAC and claimantagree that the arbitrator will have the power of subpoena process as provided by law. Disagreementsconcerning the scope of depositions or document production, its reasonableness and enforcement ofdiscovery requests will be subject to agreement by the Company and the claimant or will be resolvedby the arbitrator. All discovery requests will be subject to the proprietary rights and rights of privilegeand other protections granted by applicable law to the Company and the claimant and the arbitratorwill adopt procedures to protect such rights. With respect to any dispute, the Company, RPAC andthe claimant agree that all discovery activities will be expressly limited to matters relevant to thedispute and the arbitrator will be required to fully enforce this requirement.The arbitrator will have no power to add to, subtract from, or modify any of the terms of the Plan, or tochange or add to any benefits provided by the Plan, or to waive or fail to apply any requirements ofeligibility for a benefit under the Plan. Nonetheless, the arbitrator will have absolute discretion in theexercise of its powers in this Plan. Arbitration decisions will not establish binding precedent withrespect to the administration or operation of the Plan.8.7Receipt and Release of Necessary Information. In implementing the terms of this Plan, the RPAC andPlan Administrator, as applicable, may, without the consent of or notice to any person, release to or obtainfrom any other insuring entity or other organization or person any information, with respect to any person,which the RPAC or Plan Administrator deems to be necessary for such purposes. Any Participant orBeneficiary claiming benefits under this Plan will furnish to the RPAC or Plan Administrator, as applicable,such information as may be necessary to determine eligibility for and amount of benefit, as a condition ofclaiming and receiving such benefit.8.8Overpayment and Underpayment of Benefits. The Plan Administrator may adopt, in its sole and absolutediscretion, whatever rules, procedures and accounting practices are appropriate in providing for the collectionof any overpayment of benefits. If a Participant or Beneficiary receives an underpayment of benefits, thePlan Administrator will direct that payment be made as soon as practicable to make up for theunderpayment. If an overpayment is made to a Participant or Beneficiary, for whatever reason, the PlanAdministrator may, in its sole and absolute discretion, (a) withhold payment of any further benefits under thePlan until the overpayment has been collected; provided, that the entire amount of reduction in any calendaryear does not exceed five thousand dollars ($5,000), and the reduction is made at the same time and in thesame amount as the debt otherwise would have been due and collected from the Participant, or (b) mayrequire repayment of benefits paid under this Plan without regard to further benefits to which the Participantor Beneficiary may be entitled.8.9Change of Control. Upon a Change of Control and for the following three (3) years thereafter, if anyarbitration arises relating to an event occurring or a claim made with in three (3) years of a Change ofControl, (i) the arbitrator will not decide the claim based on an abuse of discretion principle or give theprevious RPAC decision any special deference, but rather will determine the claim de novo based on its ownindependent reading of the Plan; and (ii) the Company will pay the Participant's reasonable legal and34 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.other related fees and expenses upon the Participant’s provision of satisfactory documentation of suchexpenses with such reimbursement being made no later than the close of the second taxable year followingthe year in which such expenses were incurred. End of Article VIII35 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE IXOTHER BENEFIT PLANS OF THE COMPANY9.1Other Plans. Nothing contained in this Plan will prevent a Participant before his death, or a Participant'sspouse or other Beneficiary after such Participant's death, from receiving, in addition to any paymentsprovided for under this Plan, any payments provided for under any other plan or benefit program of theEmployer, or which would otherwise be payable or distributable to him, his surviving spouse or Beneficiaryunder any plan or policy of the Employer or otherwise. Nothing in this Plan will be construed as preventingthe Company or any of its Affiliates from establishing any other or different plans providing for current ordeferred compensation for employees and/or Directors. Unless otherwise specifically provided in any planof the Company intended to "qualify" under section 401 of the Code, Compensation and Bonus Deferralsmade under this Plan will constitute earnings or compensation for purposes of determining contributions orbenefits under such qualified plan. End of Article IX36 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE XAMENDMENT AND TERMINATION OF THE PLAN10.1Continuation. The Company intends to continue this Plan indefinitely, but nevertheless assumes nocontractual obligation beyond the promise to pay the benefits described in this Plan.10.2Amendment of Plan. The Company, through an action of the Compensation Committee, reserves the rightin its sole and absolute discretion to amend this Plan in any respect at any time, except that upon or duringthe two (2) year period after any Change of Control of the Company, (a) Plan benefits cannot be reduced, (b)Articles VIII and X and Plan Section 7.1(b) cannot be changed, and (c) (except as provided in Section 10.3)no prospective amendment that adversely affects the rights or obligations of a Participant may be madeunless the affected Participant receives at least one (1) year's advance written notice of such amendment.Moreover, no amendment may ever be made that retroactively reduces or diminishes the rights of anyParticipant to the benefits described herein that have been accrued or earned through the date of suchamendment, even if a Termination of Employment has not yet occurred with respect to such Participant.In addition to the Compensation Committee, the RPAC has the right to make non-material amendments tothe Plan to comply with changes in the law or to facilitate Plan administration; provided, however, that eachsuch proposed non-material amendment must be discussed with the Chairperson of the CompensationCommittee in order to determine whether such change would constitute a material amendment to the Plan.The provisions of this Section 10.2 will not restrict the right of the Company to terminate this Plan underSection 10.3 below or the termination of an Affiliate's participation under Section 10.4 below.10.3Termination of Plan. The Company, through an action of the Compensation Committee, may terminate orsuspend this Plan in whole or in part at any time, provided that no such termination or suspension will deprivea Participant, or person claiming benefits under this Plan through a Participant, of any amount credited to hisAccounts under this Plan up to the date of suspension or termination, except as required by applicable lawand pursuant to the valuation of such Accounts pursuant to Section 4.6.The Compensation Committee may decide to liquidate the Plan upon termination under the followingcircumstances:(a)Corporate Dissolution or Bankruptcy. The Compensation Committee may terminate and liquidatethe Plan within twelve (12) months of a corporate dissolution taxed under section 331 of the Code orwith the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A), provided that theamounts deferred under the Plan are included in Participants' gross income in the latest of thefollowing years (or if earlier, the taxable year in which the amount is actually or constructivelyreceived):(i)The calendar year in which the Plan termination and liquidation occurs.37 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(ii)The first calendar year in which the amount is no longer subject to a substantial risk offorfeiture.(iii)The first calendar year in which the payment is administratively practicable.(b)Change in Control. The Compensation Committee may terminate and liquidate the Plan within thethirty (30) days preceding or the twelve (12) months following a "change in control" as defined inTreasury Regulation 1.409A-3(i)(5) provided that all plans or arrangements that would be aggregatedwith the Plan under section 409A of the Code are also terminated and liquidated with respect to eachParticipant that experienced the change in control event so that under the terms of the Plan and allsuch arrangements the Participant is required to receive all amounts of compensation deferred undersuch arrangements within twelve (12) months of the termination of the Plan or arrangement, asapplicable. In the case of a Change of Control event which constitutes a sale of assets, thetermination of the Plan pursuant to this Section 10.3(b) may be made with respect to the Employerthat is primarily liable immediately after the change of control transaction for the payment of benefitsunder the Plan.(c)Termination of Plan. The Compensation Committee may terminate and liquidate the Plan providedthat (i) the termination and liquidation does not occur by reason of a downturn of the financial health ofthe Company or an Employer, (ii) all plans all plans or arrangements that would be aggregated withthe Plan under section 409A of the Code are also terminated and liquidated, (iii) no payments inliquidation of the Plan are made within twelve (12) months of the date of termination of the Plan otherthan payments that would be made in the ordinary course operation of the Plan, (iv) all payments aremade within twenty​ four (24) months of the date the Plan is terminated and (v) the Company or theEmployer, as applicable depending on whether the Plan is terminated with respect to such entity, donot adopt a new plan that would be aggregated with the Plan within three (3) years of the date of thetermination of the Plan.10.4Termination of Affiliate's Participation. An Affiliate may terminate its participation in the Plan at any timeby an action of its governing body and providing written notice to the Company. Likewise, the Company mayterminate an Affiliate's participation in the Plan at any time by an action of the Compensation Committee andproviding written notice to the Affiliate. The effective date of any such termination will be the later of the datespecified in the notice of the termination of participation or the date on which the RPAC can administrativelyimplement such termination. In the event that an Affiliate's participation in the Plan is terminated, eachParticipant employed by such Affiliate will continue to participate in the Plan as an inactive Participant and willbe entitled to a distribution of his entire Account or a portion thereof upon the earlier of his ScheduledWithdrawal Date, if any, or his Termination of Employment, in the form elected (or deemed elected) by suchParticipant pursuant to Section 5.1. End of Article X38 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ARTICLE XIMISCELLANEOUS11.1No Reduction of Employer Rights. Nothing contained in this Plan will be construed as a contract ofemployment between the Employer and an Employee, or as a right of any Employee to continue in theemployment of the Employer, or as a limitation of the right of the Employer to discharge any of itsEmployees, with or without cause or as a right of any Director to be renominated to serve as a Director.11.2Provisions Binding. All of the provisions of this Plan will be binding upon all persons who will be entitled toany benefit hereunder, their heirs and personal representatives. End of Article IX39 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.IN WITNESS WHEREOF, this Third Amended and Restated Tenet 2006 Deferred Compensation Plan has beenexecuted on this 18 of November, 2014, effective as of January 1, 2015, except as specifically provided otherwisehere TENET HEALTHCARE CORPORATION By:/s/ Paul Slavin Paul Slavin, Vice President, Compensation, Benefits & Corporate Human Resources 40 th1Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.EXHIBIT ALIMITS ON ELIGIBILITY AND PARTICIPATIONSection 3.1 of the Tenet 2006 Deferred Compensation Plan (the "Plan") provides the Retirement PlansAdministration Committee ("RPAC") and Plan Administrator with the authority to limit the classification of Employeeseligible to participate in the Plan, limit the time of an Employee’s enrollment in the Plan to an Open Enrollment Periodand/or modify or terminate an Eligible Person’s participation in the Plan and states that any such limitation will be setforth in this Exhibit A. Capitalized terms used in this Appendix that are not defined herein will have the meaning setforth in Section 2.1.·The classification of Employees eligible to participate in the Plan will be limited to those employees who arepaid from a Tenet payroll (i.e., eligible employees who were previously employed by Vanguard HealthSystem will not be eligible to participate in the Plan until they transition to a Tenet payroll). This Exhibit A may be updated from time to time without the need for a formal amendment to the Plan.A-111Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 21Tenet Subsidiaries List(As of 12/31/14) All of the subsidiaries listed below are 100% owned by Tenet Healthcare Corporation unless otherwise indicated. Conifer Holdings, Inc.(a)Asia Outsourcing US, Inc.(b)SPi America Holdings, Inc.(c)Laguna Medical Systems, Inc.(c)Springfield Service Holding Corporation(d)Springfield Service Corporation(a)Conifer Ethics and Compliance, Inc.(a)Conifer Health Solutions, LLC – ownership – Conifer Holdings, Inc., managing member (98%);Catholic Health Initiatives (2%)(b)Conifer Patient Communications, LLC(b)Conifer Revenue Cycle Solutions, LLC(c)Conifer HIM & Revenue Integrity Services, LLC(c)Syndicated Office Systems, LLC(c)Hospital RCM Services, LLC(c)United Patient Financing, Inc.(b)Conifer Value-Based Care, LLC(c)Conifer Care Continuum Solutions, LLC (formerly known as InforMed Medical ManagementServices, LLC)(c)InforMed Insurance Services, LLC DigitalMed, Inc. Healthcare Network Holdings, Inc. (formerly known as Tenet HealthSystem Holdings, Inc.)(a)Tenet HealthSystem Medical, Inc.(b)601 N 30th Street III, Inc.(c)601 N 30th Street I, L.L.C. – ownership – 601 N 30th Street II, Inc. (74.06%)Tenet HealthSystem Medical, Inc. (25.94%)(d)601 N 30th Street II, L.L.C.(b)American Medical (Central), Inc.(c)Amisub (Heights), Inc.(c)Amisub (Twelve Oaks), Inc.(c)Lifemark Hospitals, Inc.(d)Amisub of Texas, Inc.(d)Houston Specialty Hospital, Inc.(d)Lifemark Hospitals of Florida, Inc.(e)Surgicare of Miramar, L.L.C. – ownership – Lifemark Hospitals of Florida, Inc.,managing member (50.97%); other outside members (49.03%)(d)Lifemark Hospitals of Louisiana, Inc.(d)TH Healthcare, Ltd. – ownership – GP: Lifemark Hospitals, Inc. (1%);LP: Amisub of Texas, Inc. (70%); LP: Amisub (Heights), Inc. (10%);LP: Amisub (Twelve Oaks), Inc. (19%)(e)Park Plaza Hospital Billing Center, L.L.C.(c)Tenet Employment, Inc.(b)AMI Diagnostic Services, Inc.(b)AMI Information Systems Group, Inc.(b)AMI/HTI Tarzana Encino Joint Venture – ownership – Tenet HealthSystem Medical, Inc. (30%);Amisub of California, Inc. (26%); New H Acute, Inc. (12%)AMI Information Systems Group, Inc. (7%)(b)Amisub (Hilton Head), Inc.(c)Hilton Head Health System, L.P. – ownership – Amisub (Hilton Head), Inc. (79%)Tenet Physician Services - Hilton Head, Inc. (21%) Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(b)Amisub (North Ridge Hospital), Inc.(c)NRMC Physician Services, L.L.C.(b)Amisub (SFH), Inc.(c)Saint Francis Hospital Billing Center, L.L.C.(c)Saint Francis Surgery Center, L.L.C. (60.6061% member interest)(b)Amisub of California, Inc.(b)Amisub of North Carolina, Inc.(c)Central Carolina Ambulatory Surgery Center, LLC(b)Amisub of South Carolina, Inc.(c)Piedmont Medical Center Cardiovascular Clinical Co-Management, L.L.C. – ownership – Amisub of South Carolina, Inc. (50%); other outside members (50%)(c)Rock Hill Surgery Center, L.P. – ownership – Amisub of South Carolina, Inc. (72%)Surgical Center of Rock Hill (28%)(c)Tenet Rehab Piedmont, Inc.(b)Atlanta Medical Center, Inc. (formerly known as Tenet HealthSystem GB, Inc.)(c)AMC Acquisition Company, L.L.C.(c)Atlanta Medical Billing Center, L.L.C.(c)Sheffield Educational Fund, Inc.(c)South Fulton Health Care Centers, Inc. (formerly known as Tenet South Fulton Health Care Centers, Inc.)(b)Brookwood Center Development Corporation(c)Alabama Digestive Health Endoscopy Center, L.L.C. (53% member interest)(c)Brookwood Home Health, LLC – ownership – Brookwood Center Development Corporation (51%);other outside member (49%)(c)BWP Associates, Ltd. – ownership – Brookwood Center Development Corporation (80%)Brookwood Development, Inc. (20%)(c)C.K. of Birmingham, LLC(c)Hoover Doctors Group, Inc.(c)Medplex Outpatient Medical Centers, Inc.(c)Medplex Outpatient Surgery Center, Ltd. – ownership – Others (15%); Brookwood Center DevelopmentCorporation (8% GP, 73.765% LP); Hoover Doctors Group, Inc. (1% LP);Medplex Outpatient Medical Centers, Inc. (1% LP)(b)Brookwood Development, Inc.(b)Brookwood Health Services, Inc.(c)Brookwood Cardiovascular, LLC(c)Brookwood Garages, L.L.C.(b)Brookwood Parking Associates, Ltd. – ownership – Tenet HealthSystem Medical, Inc. (99%),Brookwood Garages, L.L.C. (1%)(b)Coastal Carolina Medical Center, Inc.(c)Coastal Carolina Pro Fee Billing, L.L.C.(b)Coastal Carolina Physician Practices, L.L.C.(c)Hardeeville Medical Group, L.L.C.(c)Hardeeville Primary Care, L.L.C.(b)East Cooper Community Hospital, Inc.(c)The Southeastern Spine Institute Surgery Center, L.L.C. – ownership – East Cooper CommunityHospital, Inc., managing member (55%); other outside members (45%)(b)Eastern Professional Properties, Inc.(b)Frye Regional Medical Center, Inc.(c)Catawba Valley Heart Services Management LLC – ownership –Frye Regional Medical Center, Inc. (50%);Catawba Valley Medical Center, Inc. (50%)(c)FryeCare Outpatient Imaging, L.L.C.(c)Frye Heart Excellence Team, LLC (50% member interest)(c)Frye Home Infusion, Inc.(c)Guardian Health Service, L.L.C. (50% member interest)(c)Tate Surgery Center, L.L.C.(c)Unifour Neurosurgery, L.L.C.(c)Viewmont Surgery Center, L.L.C.(b)Good Samaritan Medical Center, Inc. (formerly known as Tenet Good Samaritan, Inc.) Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(c)Good Samaritan Surgery, L.L.C.(c)Good Samaritan Cardiac & Vascular Management, LLC – ownership –Good Samaritan MedicalCenter, Inc. (50%); other outside physician partners (50%)(b)Magnetic Resonance Imaging of San Luis Obispo, Inc.(b)Nacogdoches ASC-LP, Inc. (formerly known as Tenet HealthSystem Nacogdoches ASC LP, Inc.)(b)New H Acute, Inc.(b)North Fulton Medical Center, Inc.(c)Endoscopy Consultants, LLC – ownership – North Fulton Medical Center, Inc. (51%);other outside physician partners (49%)(c)Georgia Center, LLC – ownership – North Fulton Medical Center, Inc. (51%);other outside physician partners (49%)(c)North Fulton GI Center, L.L.C.(c)Orthopedic & Spine Clinical Co-Management, LLC(c)NorthPoint Health System, Inc.(c)Roswell Georgia Surgery Center, L.L.C.(b)North Fulton MOB Ventures, Inc.(c)North Fulton Professional Building I, L.P. – ownership – (16.4078% LP)(b)North Shore Medical Center, Inc. (formerly known as Tenet HealthSystem North Shore, Inc.)(c)North Shore Medical Billing Center, L.L.C.(c)North Shore Physician Hospital Organization (50%)(c)North Shore Physician Practices, L.L.C.(b)Palm Beach Gardens Community Hospital, Inc.(c)Palm Beach Gardens Cardiac and Vascular Partners, LLC – ownership – Palm Beach GardensCommunity Hospital, Inc. (50%); other outside physician partners (50%)(b)Piedmont Urgent Care and Industrial Health Centers, Inc.(c)Catawba-Piedmont Cardiothoracic Surgery, L.L.C.(c)Imaging Center at Baxter Village, L.L.C.(c)Piedmont Behavioral Medicine Associates, LLC(c)Piedmont Cardiovascular Physicians, L.L.C.(c)Piedmont Carolina OB/GYN of York County, L.L.C.(c)Piedmont Carolina Vascular Surgery, L.L.C.(c)Piedmont East Urgent Care Center, L.L.C.(c)Piedmont Express Care at Sutton Road, L.L.C.(c)Piedmont Family Practice at Baxter Village, L.L.C.(c)Piedmont Family Practice at Rock Hill, L.L.C.(c)Piedmont Family Practice at Tega Cay, L.L.C.(c)Piedmont General Surgery Associates, L.L.C.(c)Piedmont Internal Medicine at Baxter Village, L.L.C.(c)Piedmont Pulmonology, L.L.C.(c)Piedmont Surgical Specialists, L.L.C.(c)Piedmont Urgent Care Center at Baxter Village, LLC(c)Piedmont West Urgent Care Center, L.L.C.(c)PMC Physician Network, L.L.C. (formerly known as Piedmont Internal Medicine andFamily Practice at York, L.L.C.)(c)Sutton Road Pediatrics, L.L.C.(b)Physician Performance Network, L.L.C.(c)Physician Performance Network of Georgia, L.L.C.(c)Physician Performance Network of North Carolina, Inc.(c)Physician Performance Network of Philadelphia, L.L.C.(b)Professional Healthcare Systems Licensing Corporation(b)Roswell Medical Ventures, Inc.(c)North Fulton Parking Deck, L.P. – ownership – Roswell Medical Ventures, Inc. (89.836%),other outside partners (10.164%)(b)Saint Francis Hospital-Bartlett, Inc. (formerly known as Tenet HealthSystem Bartlett, Inc.)(b)Sierra Vista Hospital, Inc.(b)SL-HLC, Inc. (formerly known as Tenet HealthSystem SL-HLC, Inc.)(b)SLH Vista, Inc. (formerly known as Tenet HealthSystem SL, Inc.)(c)SLUH Anesthesia Physicians, L.L.C. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(c)SLH Physicians, L.L.C. (formerly known as Tenet SLUH Physicians, L.L.C.)(b)South Carolina Health Services, Inc.(c)Bluffton Okatie Primary Care, L.L.C.(c)Broad River Primary Care, L.L.C.(c)Burnt Church Primary and Urgent Care, L.L.C.(c)Cardiovascular & Thoracic Surgery Associates, L.L.C.(c)Okatie Surgical Partners, L.L.C.(c)Hardeeville Hospitalists, L.L.C.(c)Heritage Medical Group of Hilton Head, L.L.C.(c)Hilton Head Occupational Medicine, L.L.C.(c)Hilton Head Regional Anesthesia Partners, L.L.C.(c)Hilton Head Regional Endocrinology Associates, L.L.C.(c)Hilton Head Regional OB/GYN Partners, L.L.C.(c)Mid-Island Primary and Urgent Care, L.L.C.(c)Nephrology Associates of Hilton Head, L.L.C.(c)Oncology Associates of the Low Country, L.L.C.(c)Orthopedic Associates of the Lowcountry, L.L.C.(c)Tenet Hilton Head Heart, L.L.C.(c)Tenet South Carolina Lowcountry OB/GYN, L.L.C.(b)Spalding Regional Medical Center, Inc. (formerly known as Tenet HealthSystem Spalding, Inc.)(c)Griffin Imaging, LLC – ownership –Spalding Regional Medical Center, Inc., managing member (50.5%);other outside members (49.5%)(c)Spalding GI, L.L.C.(c)Spalding Medical Ventures, L.P.(c)Tenet EMS/Spalding 911, LLC – ownership – (64.1%)(b)St. Mary’s Medical Center, Inc. (formerly known as Tenet St. Mary's, Inc.)(c)The Heart and Vascular Clinic, L.L.C.(b)Sylvan Grove Hospital, Inc. (formerly known as Tenet HealthSystem SGH, Inc.)(b)Tenet Central Carolina Physicians, Inc.(b)Tenet DISC Imaging, Inc.(b)Tenet EKG, Inc.(b)Tenet Finance Corp.(b)Tenet HealthSystem Nacogdoches ASC GP, Inc.(c)NMC Lessor, L.P. – ownership – GP: Tenet HealthSystem Nacogdoches ASC GP, Inc. (1%);LP: TH Healthcare, Ltd. (99%)(c)NMC Surgery Center, L.P. – ownership – Tenet HealthSystem Nacogdoches ASC GP, Inc. (1% GP);Nacogdoches ASC, LP, Inc. (58.999% LP); other outside partners (49.001% LP)(b)Tenet HealthSystem Philadelphia, Inc.(c)HPS of PA, L.L.C.(c)Tenet HealthSystem Bucks County, L.L.C.(c)Tenet HealthSystem City Avenue, L.L.C.(c)Tenet HealthSystem Elkins Park, L.L.C.(c)Tenet HealthSystem Graduate, L.L.C.(c)Tenet HealthSystem Hahnemann, L.L.C.(c)Tenet HealthSystem Parkview, L.L.C.(c)Tenet HealthSystem Roxborough, LLC(c)Tenet HealthSystem Roxborough MOB, LLC(c)Tenet HealthSystem St. Christopher’s Hospital for Children, L.L.C.(d)Center for the Urban Child, Inc.(d)SCHC Pediatric Anesthesia Associates, L.L.C.(d)SCHC Pediatric Associates, L.L.C.(e)St. Chris Onsite Pediatric Partners, L.L.C. – ownership – SCHC Pediatric Associates, L.L.C., managingmember (51%); Onsite Neonatal Partners, Inc. (49%)(e)St. Christopher’s Pediatric Urgent Care Center, L.L.C.(e)St. Christopher’s Pediatric Urgent Care Center - Allentown, L.L.C.(d)StChris Care at Northeast Pediatrics, L.L.C.(c)Tenet Home Services, L.L.C.(c)Tenet Medical Equipment Services, L.L.C. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(c)The Healthcare Underwriting Company, a Risk Retention Group(c)TPS of PA, L.L.C.(d)TPS II of PA, L.L.C.(d)TPS III of PA, L.L.C.(d)TPS IV of PA, L.L.C.(d)TPS V of PA, L.L.C.(d)TPS VI of PA, L.L.C.(b)Tenet Healthcare - Florida, Inc.(b)Tenet Physician Resources, LLC (formerly known as Tenet Practice Resources, LLC)(b)Tenet Physician Services - Hilton Head, Inc.(b)Tenet Ventures, Inc.(b)West Palm Healthcare Real Estate, Inc. (formerly known as Tenet West Palm Real Estate, Inc.)(c)G.S. North, Ltd. – ownership – (1% GP and 93.03% LP) Healthcare Network Hospitals, Inc. (formerly known as Tenet HealthSystem Hospitals, Inc.)(a)Alvarado Hospital Medical Center, Inc. HealthCorp Network, Inc. (formerly known as Tenet HealthSystem HealthCorp)(a)OrNda Hospital Corporation(b)AHM Acquisition Co., Inc.(b)Commonwealth Continental Health Care, Inc.(b)Coral Gables Hospital, Inc.(c)CGH Hospital, Ltd. – ownership – GP: Coral Gables Hospital, Inc. (99.913%)LP: FMC Medical, Inc. (0.087%)(d)Coral Gables Physician Services, L.L.C.(d)Universal Medical Care Center, L.L.C.(b)Cypress Fairbanks Medical Center, Inc.(c)New Medical Horizons II, Ltd. – ownership – GP: Cypress Fairbanks Medical Center, Inc. (5%)LP: Healthcare Network CFMC, Inc. (95%)(b)FMC Medical, Inc.(b)Fountain Valley Regional Hospital and Medical Center(c)Specialty Surgery Center at Fountain Valley Regional Hospital, L.L.C. – ownership –Fountain Valley Regional Hospital and Medical Center (93.684%);other outside member (6.316%)(b)GCPG, Inc.(c)Garland MOB Properties, LLC(b)Gulf Coast Community Hospital, Inc.(c)Gulf Coast Community Health Care Systems, Inc.(b)Houston Northwest Medical Center, Inc.(c)HNMC, Inc.(d)HNW GP, Inc.(e)Houston Northwest Partners, Ltd. – ownership – GP: HNW GP, Inc. (1%); LP: HNW LP, Inc. (99%)(f)Conroe Surgery Center 2, LLC – ownership – Houston Northwest Partners, Ltd.managing member (50.89%); other outside members (49.11%)(f)Houston Northwest Operating Company, L.L.C. – ownership –Houston Northwest Partners, Ltd. (87.48%); other outside members (12.52%)(g)Houston Northwest Concessions, L.L.C.(f)Northwest Surgery Center, Ltd – ownership – Houston Northwest Partners, Ltd. (51%);other outside partners (49%)(d)HNW LP, Inc.(c)Northwest Houston Providers Alliance, Inc.(b)Newhope Imaging Center, Inc.(b)NWSC, L.L.C.(b)Republic Health Corporation of Rockwall County(c)Lake Pointe GP, Inc. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(d)Lake Pointe Partners, Ltd. – ownership – GP: Lake Pointe GP, Inc. (1%);LP: Lake Pointe Investments, Inc. (99%)(e)Lake Pointe Operating Company, L.L.C. – ownership –Lake Pointe Partners, Ltd. (94.674%); other outside members (5.326%)(f)Billing Center Lake Pointe Medical, L.L.C.(c)Lake Pointe ASC GP, Inc.(c)Lake Pointe Investments, Inc.(d)Lake Pointe Rockwall ASC, LP – ownership – GP: Lake Pointe Rockwall ASC GP, Inc. (1%);LP: Lake Pointe Investments, Inc. (99%)(b)RHC Parkway, Inc.(c)North Miami Medical Center, Ltd. – ownership – RHC Parkway, Inc. (85.91%)Commonwealth Continental Health Care, Inc. (14.09%)(b)Saint Vincent Healthcare System, Inc.(c)OHM Services, Inc.(c)Saint Vincent Hospital, L.L.C.(b)SHL/O Corp.(b)Healthcare Network CFMC, Inc. (formerly known as Tenet HealthSystem CFMC, Inc.) Health Services Network Hospitals, Inc. (formerly known as Tenet Hospitals, Inc.)(a)Healthcare Network Alabama, Inc. (formerly known as Tenet Alabama, Inc.)(b)Brookwood Primary Network Care, Inc.(c)Alabama Cardiovascular Associates, L.L.C.(c)Alabama Hand and Sports Medicine, L.L.C.(c)Brookwood - Maternal Fetal Medicine, L.L.C.(c)Brookwood Medical Partners - ENT, L.L.C.(c)Brookwood Occupational Health Clinic, L.L.C.(c)Brookwood Primary Care Cahaba Heights, L.L.C.(c)Brookwood Primary Care - Homewood, L.L.C.(c)Brookwood Primary Care Hoover, L.L.C.(c)Brookwood Primary Care - Inverness, L.L.C.(c)Brookwood Primary Care - Mountain Brook, L.L.C.(c)Brookwood Primary Care - Oak Mountain, L.L.C.(c)Brookwood Primary Care - Red Mountain, L.L.C.(c)Brookwood Primary Care The Narrows, L.L.C.(c)Brookwood Primary Care - Trussville, L.L.C.(c)Brookwood Primary Care - Vestavia, L.L.C.(c)Brookwood Primary Care Network - McCalla, L.L.C.(c)Brookwood Sports and Orthopedics, L.L.C.(c)Brookwood Specialty Care - Endocrinology, L.L.C.(c)Brookwood Women’s Care, L.L.C.(c)Cardiovascular Associates of the Southeast, L.L.C.(c)Greystone Internal Medicine - Brookwood, L.L.C.(c)Norwood Clinic of Alabama, L.L.C.(b)Brookwood Retail Pharmacy, L.L.C.(a)Healthcare Network Georgia, Inc. (formerly known as Tenet Georgia, Inc.)(b)AMC Neurosurgical Associates, L.L.C.(b)Atlanta Medical Center Interventional Neurology Associates, L.L.C.(b)Atlanta Medical Center Neurosurgical & Spine Specialists, L.L.C.(b)Atlanta Medical Center Physician Group, L.L.C.(b)Buckhead Orthopedic Surgery Center, L.L.C.(b)Gastric Health Institute, L.L.C.(b)Georgia Gifts From Grace, L.L.C.(b)Georgia North Fulton Healthcare Associates, L.L.C.(b)Georgia Northside Ear, Nose and Throat, L.L.C.(b)Georgia Physicians of Cardiology, L.L.C.(b)Georgia Spectrum Neurosurgical Specialists, L.L.C.(b)Jackson Medical Center, L.L.C.(b)North Fulton Cardiovascular Medicine, L.L.C. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(b)North Fulton Hospitalist Group, L.L.C.(b)North Fulton Primary Care Associates, L.L.C.(b)North Fulton Primary Care - Willeo Rd, L.L.C. (formerly known as Roswell Orthopedic Specialists, L.L.C.)(b)North Fulton Primary Care - Windward Parkway, L.L.C.(b)North Fulton Primary Care - Wylie Bridge, L.L.C.(b)North Fulton Pulmonary Specialists, L.L.C.(b)North Fulton Regional Medical Center Pro Fee Billing, L.L.C.(b)North Fulton Women’s Consultants, L.L.C.(b)Rock Bridge Surgical Institute, L.L.C.(b)Rheumatology Associates of Atlanta Medical Center, L.L.C.(b)Spalding Regional Ambulatory Surgery Center, L.L.C.(b)Spalding Regional OB/GYN, L.L.C.(b)Spalding Regional Physician Services, L.L.C.(b)Spalding Regional Urgent Care Center at Heron Bay, L.L.C.(b)SouthCare Physicians Group Neurology, L.L.C.(b)SouthCare Physicians Group Obstetrics & Gynecology, L.L.C.(b)South Fulton Regional Medical Center Pro Fee Billing, L.L.C.(b)Surgical & Bariatric Associates of Atlanta Medical Center, L.L.C.(a)Healthcare Network Louisiana, Inc. (formerly known as Tenet Louisiana, Inc.)(b)Meadowcrest Hospital, LLC(b)Meadowcrest Multi-Specialty Clinic, L.L.C.(b)Tenet 100 Medical Center Slidell, L.L.C.(b)Tenet HealthSystem Memorial Medical Center, Inc.(c)Tenet Mid-City Medical, LLC(a)Healthcare Network Missouri, Inc. (formerly known as Tenet Missouri, Inc.)(b)Cedar Hill Primary Care, L.L.C.(b)Des Peres Hospital, Inc. (formerly known as Tenet HealthSystem DI, Inc.)(c)Bridgeton Imaging, L.L.C.(c)U.S. Center for Sports Medicine, L.L.C.(b)Premier Emergency Physicians, L.L.C.(b)Premier Medical Specialists, L.L.C.(b)St. Louis University Hospital Ambulatory Surgery Center, L.L.C.(a)Healthcare Network North Carolina, Inc. (formerly known as Tenet North Carolina, Inc.)(b)Cardiology Physicians Associates, L.L.C.(b)Cardiology Physicians Corporation, L.L.C.(b)Central Carolina-CIM, L.L.C.(b)Central Carolina-IMA, L.L.C.(b)Central Carolina Hospital Pro Fee Billing, L.L.C.(b)Central Carolina Physicians - Sandhills, L.L.C.(b)FryeCare Appalachian, L.L.C.(b)FryeCare Boone, L.L.C.(b)FryeCare Morganton, L.L.C.(b)FryeCare Northwest Hickory, L.L.C.(b)FryeCare Physicians, L.L.C.(b)FryeCare Specialty Center, L.L.C.(b)FryeCare Valdese, L.L.C.(b)FryeCare Watauga, L.L.C.(b)FryeCare Women’s Services, L.L.C.(b)Frye Physicians - Tenet NC, L.L.C.(b)Graystone Family Healthcare - Tenet North Carolina, L.L.C.(b)Hallmark Family Physicians - Tenet North Carolina, L.L.C.(b)Healthpoint of North Carolina, L.L.C.(b)Hickory Family Practice Associates - Tenet North Carolina, L.L.C.(b)North Carolina Community Family Medicine, L.L.C.(b)Parkway Internal Medicine - Tenet North Carolina, L.L.C.(b)Southern States Physician Operations, Inc.(b)Tenet Claremont Family Medicine, L.L.C.(b)Tenet Unifour Urgent Care Center, L.L.C. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(b)Viewmont Internal Medicine - Tenet North Carolina, L.L.C.(a)Healthcare Network South Carolina, Inc. (formerly known as Tenet South Carolina, Inc.)(b)East Cooper Coastal Family Physicians, L.L.C.(b)East Cooper Hyperbarics, L.L.C.(b)East Cooper OBGYN, L.L.C.(b)East Cooper Primary Care Physicians, L.L.C.(b)Hilton Head Regional Healthcare, L.L.C.(b)South Carolina East Cooper Surgical Specialists, L.L.C.(b)South Carolina SeWee Family Medicine, L.L.C.(b)Southern Orthopedics and Sports Medicine, L.L.C.(b)Tenet Fort Mill, Inc.(b)Tenet SC East Cooper Hospitalists, L.L.C.(b)Tenet South Carolina Gastrointestinal Surgical Specialists, L.L.C.(b)Tenet South Carolina Island Medical, L.L.C.(b)Tenet South Carolina Mt. Pleasant OB/GYN, L.L.C.(a)Healthcare Network Tennessee, Inc. (formerly known as Tenet Tennessee, Inc.)(b)Saint Francis Behavioral Health Associates, L.L.C.(b)Saint Francis Cardiology Associates, L.L.C.(b)Saint Francis Cardiovascular Surgery, L.L.C.(b)Saint Francis Center for Surgical Weight Loss, L.L.C.(b)Saint Francis Hospital Inpatient Physicians, L.L.C.(b)Saint Francis Hospital Pro Fee Billing, L.L.C.(b)Saint Francis Medical Partners, East, L.L.C.(b)Saint Francis Medical Partners, General Surgery, L.L.C.(b)Saint Francis Medical Specialists, L.L.C.(b)Saint Francis Surgical Associates, L.L.C.(a)Healthcare Network Texas, Inc. (formerly known as Tenet Texas, Inc.)(b)Eastside ASC GP, Inc.(b)EPHC, Inc.(b)Fort Bend Clinical Services, Inc.(b)Greater Dallas Healthcare Enterprises(b)Greater Northwest Houston Enterprises(b)Healthcare Network Hospitals (Dallas), Inc. (formerly known as Tenet HealthSystem Hospitals Dallas, Inc.)(b)Health Services Network Texas, Inc. (formerly known as Tenetsub Texas, Inc.)(b)Houston Sunrise Investors, Inc.(c)PM CyFair Land Partners, LLC(b)National Ancillary, Inc.(b)National HHC, Inc.(b)National ICN, Inc.(c)Physician Performance Network of Detroit(b)Physicians Performance Network of Houston(b)Physicians Performance Network of North Texas(b)Practice Partners Management, L.P. – ownership – GP: Healthcare Network Texas, Inc. (1%); LP: Health Services Network Texas, Inc. (99%)(b)Sierra Providence Healthcare Enterprises(b)Sierra Providence Health Network, Inc.(b)Tenet El Paso, Ltd. – ownership – GP: Tenet Texas, Inc. (1%); LP: Health ServicesNetwork Texas, Inc. (99%)(b)Tenet Frisco, Ltd. – ownership – GP: Healthcare Network Texas, Inc. (1%);LP: Health Services Network Texas, Inc. (99%)(b)Tenet Hospitals Limited – ownership – GP: Healthcare Network Texas, Inc. (1%);LP: Health Services Network Texas, Inc. (99%)(c)Billing Center Doctors Hospital at White Rock Lake, L.L.C. (c)Cardiovascular Clinical Excellence at Sierra Providence, LLC – ownership – Tenet Hospitals Limited (50%); other outside members (50%)(c)PDN, L.L.C.(d)Surgery Affiliate of El Paso, LLC – ownership – PDN, LLC, managing member (61%); Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.other outside members (39%)(c)Sun View Imaging, L.L.C. (formerly known as Tenet Sun View Imaging, L.L.C.)(b)Tenet Relocation Services, L.L.C.(b)TRMC Holdings, Inc.(c)Texas Regional Medical Center, LLC – ownership – TRMC Holdings, Inc. (55%);other outside members (45%)(b)Valley Baptist Physician Performance Network(a)HCN Physicians, Inc. (formerly known as Tenet Physicians, Inc.)(a)National ASC, Inc.(a)Tenet California, Inc.(b)Anaheim MRI Holding, Inc.(b)Community Hospital of Los Gatos, Inc.(c)Los Gatos Multi-Specialty Group, Inc.(b)Desert Regional Medical Center, Inc. (formerly known as Tenet HealthSystem Desert, Inc.)(c)Cardiovascular Clinical Excellence at Desert Regional, LLC – ownership – Desert Regional Medical Center, Inc. (50%); other outside members (50%)(b)Doctors Hospital of Manteca, Inc.(b)Doctors Medical Center of Modesto, Inc.(c)Health & Wellness Surgery Center, L.P. – ownership – Doctors Medical Center of Modesto, Inc. (57%);other outside partners (43%)(c)Modesto Radiology Imaging, Inc.(c)Turlock Imaging Services, LLC – ownership – Doctors Medical Center of Modesto, Inc. (50%):other outside members (50%)(c)Turlock Land Company, LLC – ownership – Doctors Medical Center of Modesto, Inc. (50%);other outside members (50%)(c)Yosemite Medical Clinic, Inc.(b)El Mirador ASC, Inc. (formerly known as Tenet El Mirador Surgical Center, Inc.)(b)First Choice Physician Partners(b)Golden State Medicare Health Plan(b)Hialeah Hospital, Inc. (formerly known as Tenet Hialeah HealthSystem, Inc.)(c)Hialeah Real Properties, Inc.(b)JFK Memorial Hospital, Inc.(c)Medical Services Co-Management Collaborative @ JFK Memorial Hospital, L.L.C.(c)SSC Holdings, L.L.C.(c)Surgical Services Co-Management Collaborative @ JFK Memorial Hospital, L.L.C.(b)Lakewood Regional Medical Center, Inc.(b)Los Alamitos Medical Center, Inc.(c)Reagan Street Surgery Center, L.L.C. – ownership – Los Alamitos Medical Center, Inc. (52%);other outside members (48%)(b)National Medical Ventures, Inc.(b)Network Management Associates, Inc.(b)PHPS-CHM Acquisition, Inc.(c)Coast Healthcare Management, LLC(c)Premier Health Plan Services, Inc.(b)Placentia-Linda Hospital, Inc.(c)Anaheim Hills Medical Imaging, L.L.C.(b)San Ramon ASC, L.P.(b)San Ramon Surgery Center, L.L.C.(b)SRRMC Management, Inc.(c)San Ramon Network Joint Venture, LLC – ownership – SRRMC Management, Inc. (51%);John Muir Health (49%)(d)San Ramon Ambulatory Care, LLC (c)San Ramon Regional Medical Center, LLC – ownership – SRRMC Management, Inc. (51%);John Muir Health (49%)(d)Pleasanton Diagnostic Imaging, Inc.(b)Twin Cities Community Hospital, Inc.(c)Templeton Imaging, Inc. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(a)Tenet Florida, Inc.(b)Advantage Health Network, Inc. – ownership – Tenet Florida, Inc. (50%); other outside members (50%)(b)Center for Advanced Research Excellence, L.L.C.(b)Delray Medical Center, Inc.(c)Delray Medical Physician Services, L.L.C.(b)Florida Regional Medical Center, Inc.(b)FMCC Network Contracting, L.L.C.(b)FREH Real Estate, L.L.C.(b)FRS Imaging Services, L.L.C.(b)Hollywood Medical Center, Inc.(b)International Health and Wellness, Inc.(b)National Medical Services II, Inc.(b)National Urgent Care, Inc.(b)Tenet Florida Physician Services, L.L.C.(c)Sunrise Medical Group I, L.L.C.(c)Sunrise Medical Group II, L.L.C.(c)Sunrise Medical Group III, L.L.C.(c)Sunrise Medical Group IV, L.L.C.(c)Sunrise Medical Group V, L.L.C.(c)Sunrise Medical Group VI, L.L.C.(c)Tenet Florida Physician Services II, L.L.C.(c)Tenet Florida Physician Services III, L.L.C.(c)TFPS IV, L.L.C.(c)TFPS V, L.L.C.(b)Tenet Network Management, Inc.(b)West Boca Medical Center, Inc.(c)West Boca Health Services, L.L.C. Health Services Network Care, Inc. (formerly known as TenetCare, Inc.)(a)National Diagnostic Imaging Centers, Inc.(a)SFMP, Inc. (formerly known as TenetCare Tennessee, Inc.)(a)TenetCare Frisco, Inc.(b)Centennial ASC, L.P. (1% GP: TenetCare Frisco, Inc.; 99% LP: Tenet Hospitals Limited) HSRM International, Inc. (formerly known as Tenet HealthSystem International, Inc.)(a)N.M.E. International (Cayman) Limited(b)HUG Services, Inc. – ownership – N.M.E. International (Cayman) Limited (67%); Tenet HealthcareCorporation (30%); Tenet HealthSystem Medical, Inc. (3%)(c)Captive Insurance Services, Inc.(c)Hospital Underwriting Group, Inc.(d)Professional Liability Insurance Company(a)The Healthcare Insurance Corporation National Imaging Center Holdings, Inc.(a)DMC Imaging, L.L.C. National Outpatient Services Holdings, Inc. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.National Surgery Center Holdings, Inc.(a)ARC Worcester Center, L.P. – ownership – National Surgery Center Holdings, Inc., general partner (56.43%);other outside limited partners (43.57%)(a)Bluffton Okatie Surgery Center, L.L.C.(a)Coral Ridge Outpatient Center, LLC – ownership – National Surgery Center Holdings, Inc., managing member (51%); other outside members (49%)(a)Doctors Outpatient Surgery Center of Jupiter, L.L.C. – ownership – National Surgery Center Holdings, Inc.,managing member (53.5%); other outside members (46.5%)(a)El Paso Day Surgery, LLC – ownership – National Surgery Center Holdings, Inc.,managing member (61%); other outside members (39%)(a)Fountain Valley Surgery Center, LLC(a)GCSA Ambulatory Surgery Center, LLC – ownership – National Surgery Center Holdings, Inc.,managing member (51%); other outside members (49%)(a)Hyde Park Surgery Center, LLC – ownership – National Surgery Center Holdings, Inc.,managing member (60%); other outside members (40%)(a)Murdock Ambulatory Surgical Center, LLC – ownership – National Surgery Center Holdings, Inc.,managing member (51%); other outside members (49%)(a)North Anaheim Surgery Center, LLC(a)NSCH/USP Desert Surgery Centers, LLC – ownership – National Surgery Center Holdings, Inc.,managing member (50.1%); Surgical Health Partners, Inc. (49.9%)(b)El Mirador Surgery Center, L.L.C. – ownership – NSCH/USP Desert Surgery Centers, LLC,managing member (77.93%); other outside members (22.07%)(a)Pacific Endoscopy and Surgery Center, LLC – ownership – National Surgery Center Holdings, Inc.,managing member (55%); other outside members (45%)(a)Pediatric Surgery Center - Odessa, LLC– ownership – National Surgery Center Holdings, Inc.,managing member (60%); other outside members (40%)(a)Pediatric Surgery Centers, LLC – ownership – National Surgery Center Holdings, Inc.,managing member (60%); other outside members (40%)(a)South Florida Ambulatory Surgical Center, LLC – ownership – National Surgery Center Holdings, Inc.(50.65%); other outside physician partners (49.35%)(a)Surgery Center of Okeechobee, LLC – ownership – National Surgery Center Holdings, Inc.,managing member (51%); other outside members (49%)(a)Surgery Center of Pembroke Pines, L.L.C. – ownership – National Surgery Center Holdings, Inc.,managing member (67.5%); other outside members (32.5%)(a)Surgical Elite of Avondale, L.L.C. – ownership – National Surgery Center Holdings, Inc.,managing member (51%); other outside members (49%)(a)The Surgery Center at Jensen Beach, LLC– ownership – National Surgery Center Holdings, Inc.,managing member (53.5%); other outside members (46.5%)(a)Theda Oaks Gastroenterology & Endoscopy Center, LLC – ownership – National Surgery CenterHoldings, Inc., managing member (51%); other outside members (49%)(a)The Tresanti Surgical Center, LLC – ownership – National Surgery Center Holdings, Inc., managingmember (51%); Tresanti Surgical Holdings, Inc. (49%)(a)Winter Haven Ambulatory Surgical Center, L.L.C. – ownership – National Surgery Center Holdings, Inc.,managing member (51%); other outside members (49%) National Urgent Care Holdings, Inc.(a)AMC/North Fulton Urgent Care #1, L.L.C.(a)AMC/North Fulton Urgent Care #2, L.L.C.(a)AMC/North Fulton Urgent Care #3, L.L.C.(a)AMC/North Fulton Urgent Care #4, L.L.C.(a)AMC/North Fulton Urgent Care #5, L.L.C.(a)AMC/North Fulton Urgent Care #6, L.L.C.(a)Camp Creek Urgent Care, L.L.C.(a)Des Peres Urgent Care, L.L.C.(a)East Cobb Urgent Care, LLC(a)Memphis Urgent Care #1, L.L.C.(a)Memphis Urgent Care #2, L.L.C. Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(a)NUCH of Connecticut, LLC(a)NUCH of Georgia, L.L.C.(a)NUCH of Massachusetts, LLC(a)NUCH of Michigan, LLC(a)NUCH of Texas(a)Olive Branch Urgent Care #1, LLC(a)Selma Carlson, Inc.(a)St. Louis Urgent Care #2, L.L.C.(a)St. Louis Urgent Care #3, L.L.C.(a)Urgent Care Centers of Arizona, LLC(a)Walker Street Imaging Care, Inc.(a)West Boynton Urgent Care, L.L.C. NME Headquarters, Inc. NME Properties Corp.(a)NME Properties, Inc.(b)Lake Health Care Facilities, Inc.(a)NME Property Holding Co., Inc. NME Psychiatric Hospitals, Inc.(a)The Huron Corporation NME Rehabilitation Properties, Inc. (a)R.H.S.C. El Paso, Inc. Tenet Healthcare Foundation T.I. GPO, Inc. Vanguard Health Systems, Inc.(a)Vanguard Health Holding Company I, LLC(b)Vanguard Holding Company I, Inc.(b)Vanguard Health Holding Company II, LLC(c)Vanguard Health Management, Inc.(d)Harbor Health Plan, Inc.(d)Vanguard Health Financial Company, LLC(e)Allegian Insurance Company (formerly known as Valley Baptist Insurance Company)(e)C7 Technologies, LLC(e)Central Texas Corridor Hospital Company, LLC(e)CML-Chicago Market Labs, Inc. (formerly known as VHS Genesis Labs, Inc.)(e)Hospital Development of West Phoenix, Inc.(e)MacNeal Management Services, Inc.(f)Chicago Health System ACO, LLC(f)MacNeal Health Providers, Inc.(f)Midwest Pharmacies, Inc.(f)Primary Care Physicians Center, LLC – ownership – MacNeal Management Services, Inc.(94% of capital interests) and Thomas Mizen (6% of capital interests)(f)Pros Temporary Staffing, Inc.(f)The 6300 West Roosevelt Partnership – ownership – MacNeal Management Services, Inc.50.326% (29.876% GP interest and 20.450% LP interest) and numerous limited partners(f)Watermark Physician Services, Inc.(e)MacNeal Medical Records, Inc.(e)Resolute Hospital Company, LLC(e)Southwest Children’s Hospital, LLC(e)V-II Acquisition Co., Inc.(e)VHS Acquisition Corporation Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(e)VHS Acquisition Subsidiary Number 1, Inc.(e)VHS Acquisition Subsidiary Number 2, Inc.(e)VHS Acquisition Subsidiary Number 3, Inc.(f)LakeFront Medical Associates, LLC(e)VHS Acquisition Subsidiary Number 4, Inc.(e)VHS Acquisition Subsidiary Number 5, Inc. – ownership – Vanguard Health FinancialCompany, LLC (100% voting common - 8,010 common shares) and Baptist HealthFoundation of San Antonio (3,582 preferred)(f)VHS San Antonio Imaging Partners, L.P. – ownership – VHS Acquisition Subsidiary Number 5, Inc.General Partner (2%), Imaging Center Partners, L.P., Limited Partner(50%) and VHS San Antonio Partners, LLC, Limited Partner (48%)(f)VHS San Antonio Partners, LLC – ownership – VHS Acquisition Subsidiary Number 5, Inc.,Managing Member (2%), VHS Holding Company, Inc. (97%) and Vanguard HealthFinancial Company, LLC (1%)(g)Baptist Medical Management Service Organization, LLC(g)BHS Accountable Care, LLC(g)BHS Integrated Physician Partners, LLC(g)BHS Physicians Alliance For ACE, LLC(g)Home Health Partners of San Antonio, LLC(h)Journey Home Healthcare of San Antonio, LLC(e)VHS Acquisition Subsidiary Number 6, Inc.(f)VHS Acquisition Partnership Number 1, L.P. – ownership – VHS AcquisitionSubsidiary Number 6, Inc., General Partner (2%), and VHS Holding Company, Inc.,Limited Partner (98%)(e)VHS Acquisition Subsidiary Number 7, Inc.(f)Saint Vincent Physician Services, Inc.(e)VHS Acquisition Subsidiary Number 8, Inc.(f)Cardiovascular Care Network of Arizona, L.L.C. – ownership – VHS Acquisition Subsidiary Number 8, Inc. (50%); other outside members (50%)(f)Community Connection Health Plan, Inc.(f)Advantage Health Care Management Company, LLC(e)VHS Acquisition Subsidiary Number 9, Inc.(f)MetroWest Accountable Health Care Organization, LLC – ownership – VHS AcquisitionSubsidiary Number 9, Inc. (50%) and MetroWest Health Care Alliance, Inc. (50%)(g)Total Accountable Care Organization, LLC – ownership – MetroWest Accountable Health CareOrganization, LLC (70%) and VHS Acquisition Subsidiary Number 7, Inc.(30%)(f)VHM Services, Inc.(e)VHS Acquisition Subsidiary Number 10, Inc.(e)VHS Acquisition Subsidiary Number 11, Inc.(e)VHS Acquisition Subsidiary Number 12, Inc.(e)VHS Holding Company, Inc.(f)BHS Physicians Network, Inc.(f)BHS Specialty Network, Inc.(g)Heart & Vascular Institute of Texas, Inc.(f)Resolute Health Family Urgent Care, Inc.(f)Resolute Health Physicians Network, Inc.(e)VHS Imaging Centers, Inc.(e)VHS New England Holding Company I, Inc.(e)VHS of Illinois, Inc.(f)HCM/CV, LLC – ownership – VHS of Illinois, Inc. (50%), HeartCare Centers of Illinois,S.C. (25%) and Cardiac Surgery Associates, S.C. (25%)(f)MacNeal Physicians Group, LLC(f)Vanguard Medical Specialists, LLC(f)VHS Chicago Market Procurement, LLC(e)VHS of Michigan, Inc.(f)CRNAS of Michigan(f)Detroit Education and Research Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(f)DMC Education & Research(f)Heart & Vascular Institute of Michigan(f)Southeast Michigan Physicians Insurance Company(f)VHS Children’s Hospital of Michigan, Inc.(f)VHS Detroit Businesses, Inc.(f)VHS Detroit Receiving Hospital, Inc.(f)VHS Detroit Ventures, Inc.(g)DMC Shared Savings ACO, LLC(g)Michigan Pioneer ACO, LLC – ownership – VHS Detroit Ventures, Inc. (99.875%),George E. Evans (0.25%), Murtaza Hussain (0.25%), Muhammad Y. Karim (0.25%),Michael G. Taylor (0.25%) and Carl D. Fowler (0.25%)(f)VHS Harper-Hutzel Hospital, Inc.(f)VHS Huron Valley-Sinai Hospital, Inc.(f)VHS of Michigan Staffing, Inc.(f)VHS Physicians of Michigan(f)VHS Rehabilitation Institute of Michigan, Inc.(f)VHS Sinai-Grace Hospital, Inc.(f)VHS University Laboratories, Inc.(e)VHS of Orange County, Inc.(f)VHS Acquisition Partnership Number 2, L.P. – ownership – VHS of Orange County, Inc.,General Partner (1%), VHS of Orange County, Inc., Limited Partner (58.4%),VHS Holding Company, Inc., Limited Partner (35%), Physician Investors, LimitedPartners (5.6%)(f)VHS of Anaheim, Inc.(g)North Anaheim Surgicenter, Ltd. – ownership – VHS of Anaheim, Inc., General Partner(76.5%) and Physician Investors, Limited Partners (23.5%)(f)VHS of Huntington Beach, Inc.(g)Magnolia Surgery Center Limited Partnership – ownership – VHS of Huntington Beach,Inc., General Partner (1%), VHS Holding Company, Inc., Limited Partner (82.6%) andThird Parties (physicians), Limited Partner (16.4%)(e)VHS of Phoenix, Inc.(f)VHS Arizona Heart Institute, Inc.(f)VHS of Arrowhead, Inc.(f)VHS of South Phoenix, Inc.(g)Arizona Health Partners, LLC(g)Palm Valley Medical Center Campus Association – ownership – VHS of South Phoenix,Inc. (72.38%), Palm Valley Med Bldg L.P. (Plaza) (5.72%), Palm Valley Med Bldg L.P.(Ruiz) (12.60%) and Palm Valley Nursing Facility L.P. (Nursing Home) (9.30%)(g)Phoenix Health Plans, Inc.(h)VHS Phoenix Health Plan, LLC(g)VHS Acquisition Company Number 1, LLC – ownership – VHS of South Phoenix, Inc.(60%) and Medical Professional Associates of Arizona, P.C. (40%)(f)VHS Outpatient Clinics, Inc.(g)Abrazo Medical Group Urgent Care, LLC(e)VHS Valley Management Company, Inc.(f)Harlingen Physician Network, Inc.(f)Rio Grande Valley Indigent Health Care Corporation(f)Valley Health Care Network(f)VHS Valley Health System, LLC – ownership – VHS Valley Management Company, Inc.,Manager (51%) and VB Medical Holdings (49%)(g)VHS Brownsville Hospital Company, LLC(g)VHS Harlingen Hospital Company, LLC(g)Valley Baptist Realty Company, LLC(g)VHS Valley Holdings, LLC(h)Valley Baptist Lab Services, LLC(h)Valley Baptist Wellness Center, LLC(h)VB Brownsville IMP ASC, LLC(h)VB Brownsville LTACH, LLC Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(h)VBOA ASC GP, LLC(i) VBOA ASC Partners, L.P. – ownership – VBOA ASC GP, LLC GeneralPartner (1%), Various physicians, Class A Limited Partners (38%) and VBBrownsville IMP ASC, LLC, Class B Limited Partner (61%)(e)VHS West Suburban Medical Center, Inc.(f)West Suburban Radiation Therapy Center, LLC(e)VHS Westlake Hospital, Inc.(d)Vanguard Physician Services, LLC – ownership – Vanguard Health Management, Inc. (60%) andMedSynergies, Inc. (40%)(d)Healthcare Compliance, L.L.C.(d)New Dimensions, LLC(c)Vanguard Holding Company II, Inc. Wilshire Rental Corp.(a)Hitchcock State Street Real Estate, Inc.Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement Nos. 33-55285, 33-57801, 333-21867, 333-24955,333-26621, and 333-185162 on Form S-3 and Registration Statement Nos. 33-57375, 333-00709, 333-01183, 333-38299,333-41903, 333-41476, 333-41478, 333-48482, 333-74216, 333-151884, 333-151887, 333-166767, 333-166768, 333-191614 and 333-196262 on Form S-8 of our reports dated February 23, 2015, relating to the consolidated financial statementsand financial statement schedule of Tenet Healthcare Corporation and subsidiaries, and the effectiveness of Tenet HealthcareCorporation and subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K ofTenet Healthcare Corporation for the year ended December 31, 2014.We consent to the incorporation We consent to the incorporation/s/ Deloitte & Touche LLP Dallas, TexasFebruary 23, 2015 Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31(a) Rule 13a-14(a)/15d-14(a) Certification I, Trevor Fetter, certify that: 1.I have reviewed this annual report on Form 10-K of Tenet Healthcare Corporation (the “Registrant”); 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 tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects 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 and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-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 oursupervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known tous 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 underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements 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 aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and (d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’smost recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the Registrant’s internal control over financial reporting; and 5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing theequivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably 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’sinternal control over financial reporting. Date: February 23, 2015 /s/ TREVOR FETTER Trevor Fetter President and Chief Executive Officer Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31(b) Rule 13a-14(a)/15d-14(a) Certification I, Daniel J. Cancelmi, certify that: 1.I have reviewed this annual report on Form 10-K of Tenet Healthcare Corporation (the “Registrant”); 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 tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects 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 and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-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 oursupervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known tous 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 underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements 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 aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and (d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’smost recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the Registrant’s internal control over financial reporting; and 5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing theequivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably 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’sinternal control over financial reporting. Date: February 23, 2015 /s/ DANIEL J. CANCELMI Daniel J. Cancelmi Chief Financial Officer Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32 Certifications Pursuant to Section 1350 of Chapter 63of Title 18 of the United States Code We, the undersigned Trevor Fetter and Daniel J. Cancelmi, being, respectively, the President and Chief ExecutiveOfficer and the Chief Financial Officer of Tenet Healthcare Corporation (the “Registrant”), do each hereby certify that (i) theRegistrant’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “Form 10-K”), to be filed with theSecurities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d) of theSecurities Exchange Act of 1934 and (ii) the information contained in the Form 10-K fairly presents, in all material respects,the financial condition and results of operations of the Registrant and its subsidiaries. Date: February 23, 2015 /s/ TREVOR FETTER Trevor Fetter President and Chief Executive Officer Date: February 23, 2015 /s/ DANIEL J. CANCELMI Daniel J. Cancelmi Chief Financial Officer The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350; it is not being filed for purposes ofSection 18 of the Securities Exchange Act, and is not to be incorporated by reference into any filing of the Registrant, whethermade before or after the date hereof, regardless of any general incorporation language in such filing.Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: TENET HEALTHCARE CORP, 10-K, February 23, 2015Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

Continue reading text version or see original annual report in PDF format above