<SEC-DOCUMENT>0001193125-19-010996.txt : 20190117
<SEC-HEADER>0001193125-19-010996.hdr.sgml : 20190117
<ACCEPTANCE-DATETIME>20190117080406
ACCESSION NUMBER:		0001193125-19-010996
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20190117
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20190117
DATE AS OF CHANGE:		20190117

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HCA Healthcare, Inc.
		CENTRAL INDEX KEY:			0000860730
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062]
		IRS NUMBER:				273865930
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11239
		FILM NUMBER:		19530083

	BUSINESS ADDRESS:	
		STREET 1:		ONE PARK PLZ
		CITY:			NASHVILLE
		STATE:			TN
		ZIP:			37203
		BUSINESS PHONE:		6153449551

	MAIL ADDRESS:	
		STREET 1:		ONE PARK PLAZA
		CITY:			NASHVILLE
		STATE:			TN
		ZIP:			37203

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	HCA Holdings, Inc.
		DATE OF NAME CHANGE:	20101126

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	HCA INC/TN
		DATE OF NAME CHANGE:	20010627

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	HCA THE HEALTHCARE CO
		DATE OF NAME CHANGE:	20010419
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d673403d8k.htm
<DESCRIPTION>FORM 8-K
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<HTML><HEAD>
<TITLE>Form 8-K</TITLE>
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<Center><DIV STYLE="width:8.5in" align="left">
 <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="margin-top:4pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>UNITED STATES </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Washington, D.C. 20549 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>FORM <FONT
STYLE="white-space:nowrap">8-K</FONT> </B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>CURRENT
REPORT </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>PURSUANT TO SECTION 13 OR 15(d) </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>OF THE SECURITIES EXCHANGE ACT OF 1934 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Date of Report (Date of earliest event reported): January&nbsp;17, 2019 </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center> <P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:24pt; font-family:Times New Roman" ALIGN="center"><B>HCA HEALTHCARE, INC. </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(Exact Name of Registrant as Specified in its Charter) </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Delaware</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(State or other jurisdiction</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>of incorporation)</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><FONT STYLE="white-space:nowrap">001-11239</FONT></B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Commission File Number)</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><FONT STYLE="white-space:nowrap">27-3865930</FONT></B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(IRS Employer</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Identification No.)</B></P></TD></TR>
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<TD VALIGN="bottom" COLSPAN="3" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>One Park Plaza, Nashville, Tennessee</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Address of principal executive offices)</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>37203</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Zip Code)</B></P></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(615) <FONT STYLE="white-space:nowrap">344-9551</FONT> </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Registrant&#146;s telephone number, including area code) </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Not Applicable </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Former
name or former address, if changed since last report) </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Check the appropriate box below
if the Form <FONT STYLE="white-space:nowrap">8-K</FONT> filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Soliciting material pursuant to Rule <FONT STYLE="white-space:nowrap">14a-12</FONT> under the Exchange Act (17
CFR <FONT STYLE="white-space:nowrap">240.14a-12)</FONT> </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><FONT STYLE="white-space:nowrap">Pre-commencement</FONT> communications pursuant to Rule <FONT
STYLE="white-space:nowrap">14d-2(b)</FONT> under the Exchange Act (17 CFR <FONT STYLE="white-space:nowrap">240.14d-2(b))</FONT> </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><FONT STYLE="white-space:nowrap">Pre-commencement</FONT> communications pursuant to Rule <FONT
STYLE="white-space:nowrap">13e-4(c)</FONT> under the Exchange Act (17 CFR <FONT STYLE="white-space:nowrap">240.13e-4(c))</FONT> </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (&#167;230.405 of this
chapter) or Rule <FONT STYLE="white-space:nowrap">12b-2</FONT> of the Securities Exchange Act of 1934 <FONT STYLE="white-space:nowrap">(&#167;240.12b-2</FONT> of this chapter). </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Emerging growth company&nbsp;&nbsp;&#9744; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section&nbsp;13(a) of the Exchange
Act.&nbsp;&nbsp;&#9744; </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
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<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;8.01.</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Other Events. </B></P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On January&nbsp;17, 2019, HCA Healthcare, Inc. (the &#147;Company&#148;) issued a press release (the &#147;Press Release&#148;) announcing the
commencement of its proposed public offering of $1,000,000,000 aggregate principal amount of senior unsecured notes (the &#147;Offering&#148;). The text of the Press Release is set forth as <U>Exhibit&nbsp;99.1</U> and is incorporated herein by
reference. In connection with the Offering, the Company is disclosing certain information, some of which was included in the Company&#146;s Annual Report on <FONT STYLE="white-space:nowrap">Form&nbsp;10-K</FONT> for the fiscal year ended
December&nbsp;31, 2017 (the &#147;Disclosure&#148;). The text of the Disclosure is set forth as <U>Exhibit&nbsp;99.2</U> and is incorporated herein by reference. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;9.01.</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Financial Statements and Exhibits. </B></P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">(d) Exhibits </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; display:table-cell; font-size:8pt; font-family:Times New Roman; " ALIGN="center"><B>Exhibit<BR>No.</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman"><B>Description</B></P></TD></TR>


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<TD VALIGN="top" NOWRAP>99.1</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"><A HREF="d673403dex991.htm">Press Release, dated January&nbsp;17, 2019 </A></TD></TR>
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<TD VALIGN="top" NOWRAP>99.2</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><A HREF="d673403dex992.htm">Part&nbsp;I, <FONT STYLE="white-space:nowrap">Item&nbsp;1-Business</FONT> </A></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><A HREF="d673403dex992.htm">Part I, Item <FONT STYLE="white-space:nowrap">1A-Risk</FONT> Factors</A></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman"><A HREF="d673403dex992.htm">Part I, Item <FONT STYLE="white-space:nowrap">3-Legal</FONT> Proceedings</A></P></TD></TR>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>SIGNATURE </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top">Date: January&nbsp;17, 2019</TD>
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<TD VALIGN="top" COLSPAN="3">HCA HEALTHCARE, INC.</TD></TR>
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<TD VALIGN="bottom" STYLE=" BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">/s/ John M. Franck II</TD></TR>
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<TD VALIGN="top">John M. Franck II</TD></TR>
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<TD VALIGN="bottom">Vice President &#150; Legal and Corporate Secretary</TD></TR>
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<TYPE>EX-99.1
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<FILENAME>d673403dex991.htm
<DESCRIPTION>EX-99.1
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<Center><DIV STYLE="width:8.5in" align="left">
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"><B>Exhibit 99.1 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>HCA Announces Proposed Public Offering of Senior Notes </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">NASHVILLE, Tenn.&#150; (BUSINESS WIRE) &#150; HCA Healthcare, Inc. (NYSE: HCA) today announced that its wholly owned subsidiary, HCA Inc., proposes to offer
$1.0&nbsp;billion aggregate principal amount of senior notes, subject to market and other considerations. Actual terms of the notes, including interest rate and principal amount, will depend on market conditions at the time of pricing. HCA Inc.
intends to use the net proceeds of this offering for general corporate purposes, which may include acquisitions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">UBS Investment Bank, Barclays, BofA
Merrill Lynch, Citigroup, Deutsche Bank Securities, Goldman Sachs&nbsp;&amp; Co. LLC, J.P. Morgan, Morgan Stanley, RBC Capital Markets, SMBC Nikko, SunTrust Robinson Humphrey and Wells Fargo Securities are acting as the joint book-running managers
for the offering. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The offering of the notes is being made pursuant to an effective shelf registration statement filed with the Securities and Exchange
Commission. The offering is being made only by means of a preliminary prospectus supplement and the accompanying prospectus, copies of which may be obtained from UBS Securities LLC, Attention: Anna Mercatili, 1285 Avenue of the Americas, New York,
NY 10019, telephone: <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">203-719-3343,</FONT></FONT> facsimile: <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">212-821-4043</FONT></FONT> or by emailing
<U>anna.mercatili@ubs.com</U>. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">You may also visit www.sec.gov to obtain an electronic copy of the prospectus and related preliminary prospectus
supplement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the notes in
any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">FORWARD LOOKING STATEMENTS </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Information provided and statements
contained in this press release that are not purely historical are forward-looking statements within the meaning of Section&nbsp;27A of the Securities Act, Section&nbsp;21E of the Exchange Act and the Private Securities Litigation Reform Act of
1995. Such forward-looking statements only speak as of the date of this press release and HCA assumes no obligation to update the information included in this press release. Such forward-looking statements include the expected use of proceeds from
the offering. These statements often include words such as &#147;approximate,&#148; &#147;believe,&#148; &#147;expect,&#148; &#147;anticipate,&#148; &#147;intend,&#148; &#147;plan,&#148; &#147;estimate&#148; or similar expressions. These
forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about HCA&#146;s industry, management&#146;s beliefs and certain assumptions made by management, many of which, by their nature,
are inherently uncertain and beyond HCA&#146;s control. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance or occurrence of events and are subject to certain risks, uncertainties and
assumptions that are difficult to predict. Although HCA believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results
expressed or implied by such forward-looking statements. Unless otherwise required by law, HCA also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the
forward-looking statements made in this press release. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">All references to the &#147;Company&#148; and &#147;HCA&#148; as used throughout this press
release refer to HCA Healthcare, Inc. and its affiliates. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"><B>Exhibit 99.2 </B></P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>PART I </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">This disclosure
includes certain disclosures which contain &#147;forward-looking statements.&#148; Forward-looking statements include statements regarding expected share-based compensation expense, expected capital expenditures, expected dividends, expected net
claim payments and all other statements that do not relate solely to historical or current facts, and can be identified by the use of words like &#147;may,&#148; &#147;believe,&#148; &#147;will,&#148; &#147;expect,&#148; &#147;project,&#148;
&#147;estimate,&#148; &#147;anticipate,&#148; &#147;plan,&#148; &#147;initiative&#148; or &#147;continue.&#148; These forward-looking statements are based on our current plans and expectations and are subject to a number of known and unknown
uncertainties and risks, many of which are beyond our control, which could significantly affect current plans and expectations and our future financial position and results of operations. These factors include, but are not limited to (1)&nbsp;the
impact of our substantial indebtedness and the ability to refinance such indebtedness on acceptable terms, (2)&nbsp;the impact of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010
(collectively, the &#147;Health Reform Law&#148;), including the effects of court challenges to, any repeal of, or changes to, the Health Reform Law or changes to its implementation, the possible enactment of additional federal or state health care
reforms and possible changes to other federal, state or local laws or regulations affecting the health care industry, (3)&nbsp;the effects related to the continued implementation of the sequestration spending reductions required under the Budget
Control Act of 2011, and related legislation extending these reductions, and the potential for future deficit reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or create additional spending
reductions, (4)&nbsp;increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (5)&nbsp;the ability to achieve operating and financial targets, and attain expected levels of
patient volumes and control the costs of providing services, (6)&nbsp;possible changes in Medicare, Medicaid and other state programs, including Medicaid supplemental payment programs or Medicaid waiver programs, that may impact reimbursements to
health care providers and insurers and the size of the uninsured or underinsured population, (7)&nbsp;the highly competitive nature of the health care business, (8)&nbsp;changes in service mix, revenue mix and surgical volumes, including potential
declines in the population covered under third-party payer agreements, the ability to enter into and renew third-party payer provider agreements on acceptable terms and the impact of consumer-driven health plans and physician utilization trends and
practices, (9)&nbsp;the efforts of health insurers, health care providers, large employer groups and others to contain health care costs, (10)&nbsp;the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws,
regulations, policies and procedures, (11)&nbsp;increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel, (12)&nbsp;the
availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, (13)&nbsp;changes in accounting practices, (14)&nbsp;changes in general economic conditions nationally and regionally in our
markets, (15)&nbsp;the emergence and effects related to infectious diseases, (16)&nbsp;future divestitures which may result in charges and possible impairments of long-lived assets, (17)&nbsp;changes in business strategy or development plans,
(18)&nbsp;delays in receiving payments for services provided, (19)&nbsp;the outcome of pending and any future tax audits, disputes and litigation associated with our tax positions, (20)&nbsp;potential adverse impact of known and unknown government
investigations, litigation and other claims that may be made against us, (21)&nbsp;the impact of potential cybersecurity incidents or security breaches, (22)&nbsp;our ongoing ability to demonstrate meaningful use of certified electronic health
record (&#147;EHR&#148;) technology, (23)&nbsp;the impact of natural disasters, such as hurricanes and floods, or similar events beyond our control, (24)&nbsp;the effects of the 2017 Tax Cuts and Jobs Act, including potential legislation or
interpretive guidance that may be issued by federal and state taxing authorities or other standard-setting bodies, and (25)&nbsp;other risk factors described herein. As a consequence, current plans, anticipated actions and future financial position
and results of operations may differ from those expressed in any forward-looking statements made by or on behalf of HCA. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this
disclosure. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;1.</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B></B><B><I>Business</I></B><B> </B></P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>General </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">HCA Healthcare, Inc. is one of
the leading health care services companies in the United States. At December&nbsp;31, 2018, we operated 179 hospitals, comprised of 175 general, acute care hospitals; three psychiatric hospitals; and one rehabilitation hospital. In addition, we
operated 123 freestanding surgery centers. Our facilities are located in 20 states and England. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The terms &#147;Company,&#148;
&#147;HCA,&#148; &#147;we,&#148; &#147;our&#148; or &#147;us,&#148; as used herein and unless otherwise stated or indicated by context, refer to HCA Healthcare, Inc. and its affiliates. The term &#147;affiliates&#148; means direct and indirect
subsidiaries of HCA Healthcare, Inc. and partnerships and joint ventures in which such subsidiaries are partners. The terms &#147;facilities&#148; or &#147;hospitals&#148; refer to entities owned and operated by affiliates of HCA, and the term
&#147;employees&#148; refers to employees of affiliates of HCA. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our primary objective is to provide a comprehensive array of quality health care services in
the most cost-effective manner possible. Our general, acute care hospitals typically provide a full range of services to accommodate such medical specialties as internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and
obstetrics, as well as diagnostic and emergency services. Outpatient and ancillary health care services are provided by our general, acute care hospitals, freestanding surgery centers, freestanding emergency care facilities, urgent care facilities, <FONT
STYLE="white-space:nowrap">walk-in</FONT> clinics, diagnostic centers and rehabilitation facilities. Our psychiatric hospitals provide a full range of mental health care services through inpatient, partial hospitalization and outpatient settings.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our common stock is traded on the New York Stock Exchange (symbol &#147;HCA&#148;). Through our predecessors, we commenced operations in
1968. The Company was incorporated in Delaware in October 2010. Our principal executive offices are located at One Park Plaza, Nashville, Tennessee 37203, and our telephone number is <FONT STYLE="white-space:nowrap">(615)&nbsp;344-9551.</FONT> </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Available Information </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We file certain
reports with the Securities and Exchange Commission (the &#147;SEC&#148;), including annual reports on Form <FONT STYLE="white-space:nowrap">10-K,</FONT> quarterly reports on Form <FONT STYLE="white-space:nowrap">10-Q</FONT> and current reports on
Form <FONT STYLE="white-space:nowrap">8-K.</FONT> The SEC maintains an Internet site at http://www.sec.gov that contains the reports, proxy and information statements and other information we file. Our website address is www.hcahealthcare.com.
Please note that our website address is provided as an inactive textual reference only. We make available free of charge, through our website, our annual report on Form <FONT STYLE="white-space:nowrap">10-K,</FONT> quarterly reports on Form <FONT
STYLE="white-space:nowrap">10-Q,</FONT> current reports on Form <FONT STYLE="white-space:nowrap">8-K</FONT> and all amendments to those reports filed or furnished pursuant to Section&nbsp;13 or 15(d) of the Exchange Act, as soon as reasonably
practicable after such material is electronically filed with or furnished to the SEC. The information provided on our website is not part of this report, and is therefore not incorporated by reference unless such information is specifically
referenced elsewhere in this report. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our Code of Conduct is available free of charge upon request to our Corporate Secretary, HCA
Healthcare, Inc., One Park Plaza, Nashville, Tennessee 37203 and is also available on the Ethics and Compliance and Corporate Governance portion of our website at www.hcahealthcare.com. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Business Strategy </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are committed to
providing the communities we serve with high quality, cost-effective health care while growing our business, increasing our profitability and creating long-term value for our stockholders. To achieve these objectives, we align our efforts around the
following growth agenda: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">grow our presence in existing markets; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">achieve industry-leading performance in clinical and satisfaction measures; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">recruit and employ physicians to meet the need for high quality health services; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">continue to leverage our scale and market positions to enhance profitability; and </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">pursue a disciplined development strategy. </P></TD></TR></TABLE>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Health Care Facilities </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We currently own,
manage or operate hospitals, freestanding surgery centers, freestanding emergency care facilities, urgent care facilities, <FONT STYLE="white-space:nowrap">walk-in</FONT> clinics, diagnostic and imaging centers, radiation and oncology therapy
centers, comprehensive rehabilitation and physical therapy centers, physician practices and various other facilities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">At
December&nbsp;31, 2018, we owned and operated 175 general, acute care hospitals with 46,687 licensed beds. Most of our general, acute care hospitals provide medical and surgical services, including inpatient care, intensive care, cardiac care,
diagnostic services and emergency services. The general, acute care hospitals also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy. Each hospital has an organized
medical staff and a local board of trustees or governing board, made up of members of the local community. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">At December&nbsp;31, 2018, we operated three psychiatric hospitals with 412 licensed beds.
Our psychiatric hospitals provide therapeutic programs, including child, adolescent and adult psychiatric care, adolescent and adult alcohol and drug abuse treatment and counseling. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We also operate outpatient health care facilities, which include freestanding ambulatory surgery centers (&#147;ASCs&#148;), freestanding
emergency care facilities, urgent care facilities, <FONT STYLE="white-space:nowrap">walk-in</FONT> clinics, diagnostic and imaging centers, comprehensive rehabilitation and physical therapy centers, radiation and oncology therapy centers, physician
practices and various other facilities. These outpatient services are an integral component of our strategy to develop comprehensive health care networks in select communities. Most of our ASCs are operated through partnerships or limited liability
companies, with majority ownership of each partnership or limited liability company typically held by a general partner or member that is an affiliate of HCA. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Certain of our affiliates provide a variety of management services to our health care facilities, including patient safety programs, ethics
and compliance programs, national supply contracts, equipment purchasing and leasing contracts, accounting, financial and clinical systems, governmental reimbursement assistance, construction planning and coordination, information technology systems
and solutions, legal counsel, human resources services and internal audit services. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Sources of Revenue </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Hospital revenues depend upon inpatient occupancy levels, the medical and ancillary services ordered by physicians and provided to patients,
the volume of outpatient procedures and the charges or payment rates for such services. Charges and reimbursement rates for inpatient services vary significantly depending on the type of third-party payer, the type of service (e.g.,
medical/surgical, intensive care or psychiatric) and the geographic location of the hospital. Inpatient occupancy levels fluctuate for various reasons, many of which are beyond our control. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We receive payments for patient services from the federal government under the Medicare program, state governments under their respective
Medicaid or similar programs, managed care plans (including plans offered through the American Health Benefit Exchanges (&#147;Exchanges&#148;)), private insurers and directly from patients. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Medicare is a federal program that provides certain hospital and medical insurance benefits to persons age 65 and over, some disabled persons,
persons with <FONT STYLE="white-space:nowrap">end-stage</FONT> renal disease and persons with Lou Gehrig&#146;s Disease. Medicaid is a federal-state program, administered by the states, that provides hospital and medical benefits to qualifying
individuals who are unable to afford health care. All of our general, acute care hospitals located in the United States are eligible to participate in Medicare and Medicaid programs. Amounts received under Medicare and Medicaid programs are
generally significantly less than established hospital gross charges for the services provided. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our hospitals generally offer discounts
from established charges to certain group purchasers of health care services, including private health insurers, employers, health maintenance organizations (&#147;HMOs&#148;), preferred provider organizations (&#147;PPOs&#148;) and other managed
care plans, including health plans offered through the Exchanges. These discount programs generally limit our ability to increase revenues in response to increasing costs. See Item&nbsp;1, &#147;Business &#151; Competition.&#148; Patients are
generally not responsible for the total difference between established hospital gross charges and amounts reimbursed for such services under Medicare, Medicaid, HMOs, PPOs and other managed care plans, but are responsible to the extent of any
exclusions, deductibles or coinsurance features of their coverage. The amount of such exclusions, deductibles and coinsurance continues to increase. Collection of amounts due from individuals is typically more difficult than from government health
care programs or other third-party payers. We provide discounts to uninsured patients who do not qualify for Medicaid or for financial relief under our charity care policy. In implementing our uninsured discount policy, we may attempt to provide
assistance to uninsured patients to help determine whether they may qualify for Medicaid, other federal or state assistance or charity care under our charity care policy. If an uninsured patient does not qualify for these programs, the uninsured
discount is applied. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Medicare </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition to the reimbursement reductions and adjustments discussed below, the Budget Control Act of 2011 (the &#147;BCA&#148;) requires
automatic spending reductions to reduce the federal deficit, including Medicare spending reductions of up to 2%&nbsp;per fiscal year, with a uniform percentage reduction across all Medicare programs. These reductions have been extended through 2027.
In 2013, the Centers for Medicare&nbsp;&amp; Medicaid Services (&#147;CMS&#148;) began imposing a 2% reduction on Medicare payments. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Inpatient Acute Care </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under the Medicare program, we receive reimbursement under a prospective payment system (&#147;PPS&#148;) for general, acute care hospital
inpatient services. Under the hospital inpatient PPS, fixed payment amounts per inpatient discharge are established based on the patient&#146;s assigned Medicare severity diagnosis-related group
<FONT STYLE="white-space:nowrap">(&#147;MS-DRG&#148;).</FONT> <FONT STYLE="white-space:nowrap">MS-DRGs</FONT> classify treatments for illnesses according to the estimated intensity of hospital resources necessary to furnish care for each principal
diagnosis. <FONT STYLE="white-space:nowrap">MS-DRG</FONT> weights represent the average resources for a given <FONT STYLE="white-space:nowrap">MS-DRG</FONT> relative to the average resources for all <FONT STYLE="white-space:nowrap">MS-DRGs.</FONT> <FONT
STYLE="white-space:nowrap">MS-DRG</FONT> payments are adjusted for area wage differentials. Hospitals, other than those defined as &#147;new,&#148; receive PPS reimbursement for inpatient capital costs based on
<FONT STYLE="white-space:nowrap">MS-DRG</FONT> weights multiplied by a geographically adjusted federal rate. When the cost to treat certain patients falls well outside the normal distribution, providers typically receive additional
&#147;outlier&#148; payments. These payments are financed by offsetting reductions in the inpatient PPS rates. A high-cost outlier threshold is set annually at a level that will result in estimated outlier payments equaling 5.1% of total inpatient
PPS payments for the fiscal year. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">MS-DRG</FONT> rates are updated, and
<FONT STYLE="white-space:nowrap">MS-DRG</FONT> weights are recalibrated, using cost-relative weights each federal fiscal year (which begins October&nbsp;1). The index used to update the <FONT STYLE="white-space:nowrap">MS-DRG</FONT> rates (the
&#147;market basket&#148;) gives consideration to the inflation experienced by hospitals and entities outside the health care industry in purchasing goods and services. Each federal fiscal year, the annual market basket update is reduced by a
productivity adjustment based on the Bureau of Labor Statistics (&#147;BLS&#148;) <FONT STYLE="white-space:nowrap">10-year</FONT> moving average of changes in specified economy-wide productivity, as required by the Patient Protection and Affordable
Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the &#147;Health Reform Law&#148;). A decrease in payment rates or an increase in rates that is below the increase in our costs may adversely affect our
results of operations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">For federal fiscal year 2018, CMS increased the <FONT STYLE="white-space:nowrap">MS-DRG</FONT> rate by
approximately 1.2%. This increase reflected a 2.7% market basket increase adjusted by the following percentage points: a 0.75 reduction required by the Health Reform Law, a negative 0.6 productivity adjustment, a further reduction of 0.6 to remove
the effects of prior adjustments related to the &#147;two midnight rule,&#148; and a positive 0.46 adjustment in accordance with the 21<SUP STYLE="font-size:85%; vertical-align:top">st</SUP> Century Cures Act. Under the two midnight rule, services
provided to Medicare beneficiaries are payable as inpatient hospital services only when there is a reasonable expectation that the hospital care is medically necessary and will be required across two midnights, absent unusual circumstances. For
federal fiscal year 2019, CMS increased the <FONT STYLE="white-space:nowrap">MS-DRG</FONT> rate by approximately 1.85%. This increase reflects a market basket update of 2.9%, adjusted by the following percentage points: a 0.75 reduction required by
the Health Reform Law, a negative 0.8 productivity adjustment, and a positive 0.5 adjustment in accordance with the Medicare Access and CHIP Reauthorization Act of 2015 (&#147;MACRA&#148;). Additional adjustments may apply, depending on
patient-specific or hospital-specific factors. Under the post-acute care transfer policy, for example, Medicare reimbursement rates may be reduced when an inpatient hospital discharges a patient in a specified
<FONT STYLE="white-space:nowrap">MS-DRG</FONT> to certain post-acute care settings, including, effective October&nbsp;1, 2018, hospice care. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">CMS has implemented, or is implementing, a number of programs and requirements intended to transform Medicare from a passive payer to an
active purchaser of quality goods and services. For example, hospitals that do not successfully participate in the Hospital Inpatient Quality Reporting Program are subject to a 0.25% reduction of the market basket update. Hospitals that do not
demonstrate meaningful use of electronic health records (&#147;EHRs&#148;) are subject to a 0.75% reduction of the market basket update. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Medicare does not allow an inpatient hospital discharge to be assigned to a higher paying <FONT STYLE="white-space:nowrap">MS-DRG</FONT> if
certain designated hospital acquired conditions (&#147;HACs&#148;) were not present on admission and the identified HAC is the only condition resulting in the assignment of the higher paying <FONT STYLE="white-space:nowrap">MS-DRG.</FONT> In this
situation, the case is paid as though the secondary diagnosis was not present. There are currently 14 categories of conditions on the list of HACs. In addition, pursuant to the Health Reform Law, the 25% of hospitals with the worst risk-adjusted HAC
scores in the designated performance period receive a 1% reduction in their inpatient PPS Medicare payments. CMS has also established three National Coverage Determinations that prohibit Medicare reimbursement for erroneous surgical procedures
performed on an inpatient or outpatient basis. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Health Reform Law also provides for reduced payments to hospitals based on readmission
rates. Each federal fiscal year inpatient payments are reduced if a hospital experiences &#147;excess&#148; readmissions within the <FONT STYLE="white-space:nowrap">30-day</FONT> time period from the date of discharge for conditions designated by
CMS. For federal fiscal year 2019, CMS has designated six conditions or procedures, including heart attack, pneumonia and total hip arthroplasty. Hospitals with what CMS defines as excess readmissions for these conditions or procedures receive
reduced payments for all inpatient discharges, not just discharges relating to the conditions or procedures subject to the excess readmission standard. The amount by which payments are reduced is determined by assessing a hospital&#146;s performance
relative to hospitals with similar proportions of dual eligible patients, subject to a cap established by CMS. The reduction in payments to hospitals with excess readmissions can be up to 3% of a hospital&#146;s base payments. Each hospital&#146;s
performance is publicly reported by CMS. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition, pursuant to the Health Reform Law, CMS reduces the inpatient PPS payment amount for
all discharges by 2.0%. The total amount collected from these reductions is pooled and used to fund payments to reward hospitals that meet certain quality performance standards established by CMS. CMS scores each hospital based on achievement
(relative to other hospitals) and improvement ranges (relative to the hospital&#146;s own past performance) for each applicable performance standard. Because the Health Reform Law provides that the pool will be fully distributed, hospitals that meet
or exceed the quality performance standards receive greater reimbursement under the value-based purchasing program than they would have otherwise. Hospitals that do not achieve the necessary quality performance receive reduced Medicare inpatient
hospital payments. Hospitals are scored on a number of individual measures that are categorized into four domains: clinical care; efficiency and cost reduction; safety and patient and caregiver experience of care. CMS estimates that
$1.9&nbsp;billion will be available to hospitals as incentive payments in federal fiscal year 2019 under the value-based purchasing program. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Outpatient </U></I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">CMS
reimburses hospital outpatient services (and certain Medicare Part B services furnished to hospital inpatients who have no Part A coverage) on a PPS basis. CMS uses fee schedules to pay for physical, occupational and speech therapies, durable
medical equipment, clinical diagnostic laboratory services, nonimplantable orthotics and prosthetics, freestanding surgery center services and services provided by independent diagnostic testing facilities. In addition, certain items and services
furnished by <FONT STYLE="white-space:nowrap">off-campus</FONT> provider-based departments, subject to certain exceptions, are not covered as outpatient department services under the outpatient PPS, but are reimbursed under the Medicare Physician
Fee Schedule (&#147;Physician Fee Schedule&#148;), subject to adjustments as specified by CMS. In 2018, CMS finalized a rule that will reimburse clinic visit services provided at all <FONT STYLE="white-space:nowrap">off-campus</FONT> provider-based
departments at the Physician Fee Schedule rate, which is generally lower than the PPS rate. Previously, this rate did not apply to &#147;excepted&#148; provider-based departments. CMS will phase in the expansion of this site-neutral policy over two
calendar years, beginning in 2019. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Hospital outpatient services paid under PPS are classified into groups called ambulatory payment
classifications (&#147;APCs&#148;). Services for each APC are similar clinically and in terms of the resources they require. A payment rate is established for each APC. Depending on the services provided, a hospital may be paid for more than one APC
for a patient visit. The APC payment rates are updated for each calendar year. Each calendar year, the annual market basket update is further reduced by a productivity adjustment based on the BLS <FONT STYLE="white-space:nowrap">10-year</FONT>
moving average of changes in specified economy-wide productivity as required by the Health Reform Law. For calendar year 2018, CMS increased APC payment rates by an estimated 1.4%. The change reflected a market basket increase of 2.7% with a
negative 0.6 percentage point productivity adjustment and a negative 0.75 percentage point adjustment required by the Health Reform Law, along with other payment adjustments and policy changes. For calendar year 2019, CMS increased APC payment rates
by an estimated 1.35%. This increase reflects a market basket increase of 2.9% with a negative 0.8 percentage point productivity adjustment and a negative 0.75 percentage point adjustment required by the Health Reform Law. CMS requires hospitals to
submit quality data relating to outpatient care to avoid receiving a 2.0 percentage point reduction in the annual payment update under the outpatient PPS. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The 340B program allows participating hospitals to purchase certain outpatient drugs from manufacturers at discounted rates. These hospitals
are reimbursed for the discounted drugs under the same Medicare payment methodology and rates as is applied to <FONT STYLE="white-space:nowrap">non-340B-discounted</FONT> drugs. In a final rule effective January&nbsp;1, 2018, CMS reduced the
Medicare payments under the outpatient PPS for most drugs obtained at the 340B-discounted rates. CMS also made corresponding increases to the Medicare reimbursement rates to all hospitals for other drugs and services paid under the outpatient PPS.
On December&nbsp;27, 2018, the United States District Court for the District of Columbia held that the adoption of the 2018 rule had exceeded CMS&#146; statutory authority. The court has asked the parties to submit briefs on the appropriate remedy
to implement the holding. The holding and the court&#146;s remedy could potentially be appealed. Depending upon the court&#146;s remedy and the outcome of any appeal, this case could result in a decrease to the Company&#146;s outpatient Medicare
reimbursement. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Rehabilitation </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">CMS reimburses inpatient rehabilitation facilities (&#147;IRFs&#148;) on a PPS basis. Under the IRF PPS, patients are classified into case mix
groups based upon impairment, age, comorbidities (additional diseases or disorders from which the patient suffers) and functional capability. IRFs are paid a predetermined amount per discharge that reflects the patient&#146;s case mix group and is
adjusted for area wage levels, <FONT STYLE="white-space:nowrap">low-income</FONT> patients, rural areas and high-cost outliers. Each federal fiscal year, the annual market basket update is further reduced by a productivity adjustment based on the
BLS <FONT STYLE="white-space:nowrap">10-year</FONT> moving average of changes in specified economy-wide productivity as required by the Health Reform Law. For federal fiscal year 2018, CMS increased IRF payment rates by an estimated 0.9%. This
reflected an increase factor of 1.0%, the figure required by MACRA, with adjustments related to outlier threshold results. For federal fiscal year 2019, CMS increased IRF payment rates by an estimated 1.3%, reflecting an IRF market basket update of
2.9% with a negative 0.8 percentage point adjustment and a 0.75 percentage point reduction required by the Health Reform Law, among other payment adjustments. In addition, CMS requires IRFs to report quality measures to avoid receiving a reduction
of 2 percentage points to the market basket update. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In order to qualify for classification as an IRF, at least 60% of a facility&#146;s
inpatients during the most recent <FONT STYLE="white-space:nowrap">12-month</FONT> <FONT STYLE="white-space:nowrap">CMS-defined</FONT> review period must have required intensive rehabilitation services for one or more of 13 specified conditions.
IRFs must also meet additional coverage criteria, including patient selection and care requirements relating to <FONT STYLE="white-space:nowrap">pre-admission</FONT> screenings, post-admission evaluations, ongoing coordination of care and
involvement of rehabilitation physicians. A facility that fails to meet the 60% threshold, or other criteria to be classified as an IRF, will be paid under either the acute care hospital inpatient or outpatient PPS, which generally provide for lower
payment amounts. As of December&nbsp;31, 2018, we had one rehabilitation hospital and 62 hospital rehabilitation units. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Psychiatric
</U></I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Inpatient hospital services furnished in psychiatric hospitals and psychiatric units of general, acute care hospitals and critical
access hospitals are reimbursed on a PPS basis. The inpatient psychiatric facility (&#147;IPF&#148;) PPS is based upon a per diem payment, with adjustments to account for certain patient and facility characteristics. The IPF PPS contains an
&#147;outlier&#148; policy for extraordinarily costly cases and an adjustment to a facility&#146;s base payment if it maintains a full-service emergency department. CMS has established the IPF PPS payment rate in a manner intended to be budget
neutral. Each payment year, the Health Reform Law provides for the annual market basket update to be further reduced by a productivity adjustment based on the BLS <FONT STYLE="white-space:nowrap">10-year</FONT> moving average of changes in specified
economy-wide productivity. For federal fiscal year 2018, CMS increased inpatient psychiatric payment rates by approximately 1.0%, which reflected a 2.6% IPF market basket update, reduced by a 0.6 percentage point productivity adjustment and by a
0.75 percentage point as required by the Health Reform Law, among other payment adjustments. For federal fiscal year 2019, CMS increased IPF payment rates by an estimated 1.1%, which reflects a 2.9% IPF market basket update with a negative 0.8
percentage point productivity adjustment, a negative 0.75 percentage point adjustment as required by the Health Reform Law, and other payment adjustments. Inpatient psychiatric facilities are required to report quality measures to CMS to avoid
receiving a 2.0 percentage point reduction to the market basket update. As of December&nbsp;31, 2018, we had three psychiatric hospitals and 55 hospital psychiatric units. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Ambulatory Surgery Centers </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">CMS reimburses ASCs using a predetermined fee schedule. Reimbursements for ASC overhead costs are limited to no more than the overhead costs
paid to hospital outpatient departments under the Medicare hospital outpatient PPS for the same procedure. If CMS determines that a procedure is commonly performed in a physician&#146;s office, the ASC reimbursement for that procedure is limited to
the reimbursement allowable under the Physician Fee Schedule, with limited exceptions. All surgical procedures, other than those that pose a significant safety risk or generally require an overnight stay, are payable as ASC procedures. From time to
time, CMS considers expanding the services that may be performed in ASCs, which may result in more Medicare procedures that historically have been performed in hospitals being moved to ASCs, reducing surgical volume in our hospitals. Also, more
Medicare procedures that historically have been performed in ASCs may be moved to physicians&#146; offices. Commercial third-party payers may adopt similar policies. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Historically, CMS updated reimbursement rates for ASCs based on changes to the consumer
price index. However, for calendar years 2019 through 2023, CMS updates to ASC reimbursement rates will be based on the hospital market basket index. For each federal fiscal year, the ASC payment system update is reduced by a productivity adjustment
based on the BLS <FONT STYLE="white-space:nowrap">10-year</FONT> moving average of changes in specified economy-wide productivity as required by the Health Reform Law. For calendar year 2018, CMS increased ASC payments by 1.2%, which reflected a
consumer price index update of 1.7% and a negative 0.5 percentage point productivity adjustment. For calendar year 2019, CMS increased ASC payment rates by 2.1%, which reflects a market basket increase of 2.9%, less a 0.8 percentage point
productivity adjustment. In addition, CMS has established a quality reporting program for ASCs under which ASCs that fail to report on specified quality measures receive a 2.0 percentage point reduction to the consumer price index update. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Physician Services </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Physician services are reimbursed under the Physician Fee Schedule system, under which CMS has assigned a national relative value unit
(&#147;RVU&#148;) to most medical procedures and services that reflects the various resources required by a physician to provide the services, relative to all other services. Each RVU is calculated based on a combination of work required in terms of
time and intensity of effort for the service, practice expense (overhead) attributable to the service and malpractice insurance expense attributable to the service. These three elements are each modified by a geographic adjustment factor to account
for local practice costs and are then aggregated. While RVUs for various services may change in a given year, any alterations are required by statute to be virtually budget neutral, such that total payments made under the Physician Fee Schedule may
not differ by more than $20&nbsp;million from what payments would have been if adjustments were not made. CMS annually reviews resource inputs for select services as part of the potentially misvalued code initiative. To determine the payment rate
for a particular service, the sum of the geographically adjusted RVUs is multiplied by a conversion factor. For 2019, CMS updated the conversion factor based on the 0.25% increase required by the Bipartisan Budget Act of 2018 and a budget neutrality
adjustment. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Medicare payments are adjusted based on participation in the Quality Payment Program (&#147;QPP&#148;), a payment methodology
intended to reward high-quality patient care. Physicians and certain other health care clinicians are required to participate in one of two QPP tracks. Under both tracks, performance data collected in each performance year will affect Medicare
payments two years later. CMS expects to transition increasing financial risk to providers as the QPP evolves. The Advanced Alternative Payment Model (&#147;APM&#148;) track makes incentive payments available for participation in specific innovative
payment models approved by CMS. Providers may earn a 5% Medicare incentive payment between 2019 and 2024 and will be exempt from the reporting requirements and payment adjustments imposed under the Merit-Based Incentive Payment System
(&#147;MIPS&#148;) if the provider has sufficient participation (based on percentage of payments or patients) in an Advanced APM. Alternatively, providers may participate in the MIPS track. Currently, providers electing this option may receive
payment incentives or be subject to payment reductions of up to 5% of the provider&#146;s Medicare payments based on their performance with respect to clinical quality, resource use, clinical improvement activities, and meeting Promoting
Interoperability standards related to the meaningful use of EHRs. The adjustment percentage will increase incrementally to 9% by 2022. MIPS consolidates components of three previously established physician incentive programs: the Physician Quality
Reporting System, the Physician Value-Based Payment Modifier, and the Medicare EHR Incentive Program. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Other </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under PPS, the payment rates are adjusted for area differences in wage levels by a factor (&#147;wage index&#148;) reflecting the relative wage
level in the geographic area compared to the national average wage level and taking into account occupational mix. The redistributive impact of wage index changes is not anticipated to have a material financial impact for 2019. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Medicare reimburses hospitals for a portion (65%) of bad debts resulting from deductible and coinsurance amounts that are uncollectable from
Medicare beneficiaries. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">CMS has implemented contractor reform whereby CMS competitively bids the Medicare fiscal intermediary and
Medicare carrier functions to Medicare Administrative Contractors (&#147;MACs&#148;), which are geographically assigned across 12 jurisdictions to service both Part A and Part B providers. While chain providers had the option of having all hospitals
use one home office MAC, we chose to use the MACs assigned to the geographic areas in which our hospitals are located. CMS periodically <FONT STYLE="white-space:nowrap">re-solicits</FONT> bids, and the MAC servicing a geographic area can change as a
result of the bid competition. MAC transition periods can impact claims processing functions and the resulting cash flow. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">CMS contracts with third parties to promote the integrity of the Medicare program through
reviews of quality concerns and detections and corrections of improper payments. Quality Improvement Organizations (&#147;QIOs&#148;), for example, are groups of physicians and other health care quality experts that work on behalf of CMS to ensure
that Medicare pays only for goods and services that are reasonable and necessary and that are provided in the most appropriate setting. Under the Recovery Audit Contractor (&#147;RAC&#148;) program, CMS contracts with RACs on a contingency basis to
conduct post-payment reviews to detect and correct improper payments in the <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">fee-for-service</FONT></FONT> Medicare program. The compensation for RACs is based on their review of
claims submitted to Medicare for billing compliance, including correct coding and medical necessity, and the amount of overpayments and underpayments they identify. CMS limits the number of claims that RACs may audit by limiting the number of
records that RACs may request from hospitals based on each provider&#146;s claim denial rate for the previous year. CMS has implemented the RAC program on a permanent, nationwide basis and expanded the RAC program to the Managed Medicare program and
Medicare Part D. CMS is transitioning some of its other integrity programs to a consolidated model by engaging Unified Program Integrity Contractors (&#147;UPICs&#148;) to perform audits, investigations and other integrity activities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We have established policies and procedures to respond to requests from and payment denials by RACs and other Medicare contractors. Payment
recoveries resulting from reviews and denials are appealable through administrative and judicial processes, and we pursue reversal of adverse determinations at appropriate appeal levels. We incur additional costs related to responding to requests
and denials, including costs associated with responding to requests for records and pursuing the reversal of payment denials and losses associated with overpayments that are not reversed upon appeal. Currently, there are significant delays in the
assignment of new Medicare appeals to Administrative Law Judges. Depending upon changes to and the growth of the RAC program and other Medicare integrity programs and our success in appealing claims in future periods, our cash flows and results of
operations could be negatively impacted. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Managed Medicare </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under the Managed Medicare program (also known as Medicare Part C, or Medicare Advantage), the federal government contracts with private health
insurers to provide members with Medicare Part A, Part B and Part D benefits. Managed Medicare plans can be structured as HMOs, PPOs or private <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">fee-for-service</FONT></FONT> plans. In
addition to covering Part A and Part B benefits, the health insurers may choose to offer supplemental benefits and impose higher premiums and plan costs on beneficiaries. CMS makes fee payment adjustments based on service benchmarks and quality
ratings and publishes star ratings to assist beneficiaries with plan selection. According to CMS, over <FONT STYLE="white-space:nowrap">one-third</FONT> of all Medicare enrollees participate in managed Medicare plans. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Medicaid </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Medicaid
programs are funded jointly by the federal government and the states and are administered by states under approved plans. Most state Medicaid program payments are made under a PPS or are based on negotiated payment levels with individual hospitals.
Medicaid reimbursement is often less than a hospital&#146;s cost of services. The Health Reform Law, as enacted, requires states to expand Medicaid coverage to all individuals under age 65 with incomes effectively at or below 138% of the federal
poverty level. However, states may opt out of the expansion without losing existing federal Medicaid funding. A number of states, including Texas and Florida, have opted out of the Medicaid expansion. Some states use, or have applied to use, waivers
granted by CMS to implement expansion, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards. The presidential administration and a number of members of Congress have indicated
their intent to increase state flexibility in the administration of Medicaid programs, including allowing states to condition enrollment on work or other community engagement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Because most states must operate with balanced budgets and because the Medicaid program is often the state&#146;s largest program, states can
be expected to adopt or consider adopting legislation designed to reduce their Medicaid expenditures. Budgetary pressures have, in recent years, resulted and likely will continue to result in decreased spending, or decreased spending growth, for
Medicaid programs in many states. Certain states in which we operate have adopted broad-based provider taxes to fund the <FONT STYLE="white-space:nowrap">non-federal</FONT> share of Medicaid programs. Many states have also adopted, or are
considering, legislation designed to reduce coverage, enroll Medicaid recipients in managed care programs and/or impose additional taxes on hospitals to help finance or expand the states&#146; Medicaid systems. However, the Health Reform Law
requires states to at least maintain Medicaid eligibility standards for children established prior to the enactment of the law until October&nbsp;1, 2019. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Federal funds under the Medicaid program may not be used to reimburse providers for medical
assistance provided to treat certain provider-preventable conditions. Each state Medicaid program must deny payments to providers for the treatment of health care-acquired conditions designated by CMS as well as other provider-preventable conditions
that may be designated by the state. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Congress has expanded the federal government&#146;s involvement in fighting fraud, waste and abuse
in the Medicaid program through the Medicaid Integrity Program. CMS employs UPICs to perform post-payment audits of Medicaid claims, identify overpayments, and perform other program integrity activities, many of which were previously performed by
Medicaid Integrity Contractors. The UPICs collaborate with states and coordinate provider investigations across the Medicare and Medicaid programs. In addition, state Medicaid agencies are required to establish Medicaid RAC programs. These programs
vary by state in design and operation. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Managed Medicaid </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Enrollment in managed Medicaid plans has increased in recent years, as state governments seek to control the cost of Medicaid programs. Managed
Medicaid programs enable states to contract with one or more entities for patient enrollment, care management and claims adjudication. The states usually do not relinquish program responsibilities for financing, eligibility criteria and core benefit
plan design. We generally contract directly with one or more of the designated entities, usually a managed care organization. The provisions of these programs are state-specific. Many states direct managed care plans to pass through supplemental
payments to designated providers, independent of services rendered, to ensure consistent funding of providers that serve large numbers of <FONT STYLE="white-space:nowrap">low-income</FONT> patients. However, in an effort to more closely tie funds to
delivery and outcomes, CMS began limiting these &#147;pass-through payments&#148; to managed Medicaid plans in 2016 and will ultimately prohibit such payments by 2027. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Accountable Care Organizations and Bundled Payment Initiatives </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">An Accountable Care Organization (&#147;ACO&#148;) is a network of providers and suppliers that work together to invest in infrastructure and
redesign delivery processes to attempt to achieve high quality and efficient delivery of services. Promoting accountability and coordination of care, ACOs are intended to produce savings as a result of improved quality and operational efficiency.
ACOs that achieve quality performance standards established by the U.S. Department of Health and Human Services (&#147;HHS&#148;) are eligible to share in a portion of the amounts saved by the Medicare program. There are several types of ACO
programs, including the Medicare Shared Savings Program (&#147;MSSP&#148;), which was established pursuant to the Health Reform Law, and the Next Generation ACO Model. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Center for Medicare&nbsp;&amp; Medicaid Innovation (&#147;CMMI&#148;) is responsible for establishing demonstration projects and other
initiatives in order to identify, develop, test and encourage the adoption of new methods of delivering and paying for health care that create savings under the Medicare and Medicaid programs while improving quality of care. For example, providers
participating in bundled payment initiatives agree to receive one payment for services provided to Medicare patients for certain medical conditions or episodes of care, accepting accountability for costs and quality of care. By rewarding providers
for increasing quality and reducing costs and penalizing providers if costs exceed a set amount, these models are intended to lead to higher quality, more coordinated care at a lower cost to the Medicare program. Hospitals may receive supplemental
Medicare payments or owe repayments to CMS depending on whether overall CMS spending per episode exceeds or falls below a target specified by CMS and whether quality standards are met. The CMMI has implemented a voluntary bundled payment program
known as the Bundled Payment for Care Improvement (&#147;BPCI&#148;) initiative. Participation in bundled payment programs is generally voluntary, but CMS requires hospitals in selected geographic areas to participate in bundling programs for
specified orthopedic procedures. HHS has indicated that it plans to implement additional bundled payment programs, some of which will be mandatory. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">HHS continues to focus on shifting from traditional
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">fee-for-service</FONT></FONT> reimbursement models to alternative payment models that tie reimbursement to quality and/or value, including bundled payment and <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">pay-for-performance</FONT></FONT> programs. Several private third-party payers are increasingly employing such reimbursement models, which may increasingly shift financial risk to
providers. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I>Disproportionate Share Hospital Payments </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition to making payments for services provided directly to beneficiaries, Medicare makes additional payments to hospitals that treat a
disproportionately large number of <FONT STYLE="white-space:nowrap">low-income</FONT> patients (Medicaid and Medicare patients eligible to receive Supplemental Security Income). Disproportionate Share Hospital (&#147;DSH&#148;) payments are
determined annually based on certain statistical information required by HHS and are paid as a percentage addition to <FONT STYLE="white-space:nowrap">MS-DRG</FONT> payments. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Health Reform Law reduced Medicare DSH payments to 25% of the amount they otherwise
would have been absent the law. The remaining 75% of the amount that would otherwise be paid under Medicare DSH is effectively pooled, and this pool is adjusted each year by a formula that reflects changes in the national level of uninsured who are
under 65 years of age. Thus, the greater the level of coverage for the previously uninsured nationally, the more the Medicare DSH payment pool will be reduced. Each DSH hospital is paid out of the DSH payment pool an amount allocated based upon its
estimated cost of providing uncompensated care as a percentage in relation to the cost of providing uncompensated care for all other DSH hospitals. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Hospitals that provide care to a disproportionately high number of <FONT STYLE="white-space:nowrap">low-income</FONT> patients may receive
Medicaid DSH payments. The federal government distributes federal Medicaid DSH funds to each state based on a statutory formula. The states then distribute the DSH funding among qualifying hospitals. States have broad discretion to define which
hospitals qualify for Medicaid DSH payments and the amount of such payments. The Health Reform Law and subsequent legislation provide for reductions to the Medicaid DSH hospital program. However, Congress has delayed the implementation of these
reductions until 2020. Under the budget bill signed into law in February 2018, Medicaid DSH payments will be reduced by $4&nbsp;billion in 2020 and by $8&nbsp;billion per year from 2021 through 2025. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>TRICARE </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">TRICARE is the
Department of Defense&#146;s health care program for members of the armed forces. For inpatient services, TRICARE reimburses hospitals based on a DRG system modeled on the Medicare inpatient PPS. For outpatient services, TRICARE reimburses hospitals
based on a PPS that is similar to that utilized for services furnished to Medicare beneficiaries. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Annual Cost Reports </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">All hospitals participating in the Medicare, Medicaid and TRICARE programs, whether paid on a reasonable cost basis or under a PPS, are
required to meet certain financial reporting requirements. Federal and, where applicable, state regulations require the submission of annual cost reports covering the revenues, costs and expenses associated with the services provided by each
hospital to Medicare beneficiaries and Medicaid recipients. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Annual cost reports required under the Medicare and Medicaid programs are
subject to routine audits, which may result in adjustments to the amounts ultimately determined to be due to us under these reimbursement programs. These audits often require several years to reach the final determination of amounts due to or from
us under these programs. Providers also have rights of appeal, and it is common to contest issues raised in audits of cost reports. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Managed Care and Other Discounted Plans </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Most of our hospitals offer discounts from established charges to certain large group purchasers of health care services, including managed
care plans and private health insurers. Admissions reimbursed by commercial managed care and other insurers were 28%, 28% and 29% of our total admissions for the nine months ended September&nbsp;30, 2018 and the years ended December&nbsp;31, 2017
and 2016, respectively. Managed care contracts are typically negotiated for terms between one and three years. While we generally received contracted annual average increases of 4% to 5% from managed care payers during 2018, there can be no
assurance that we will continue to receive increases in the future. Further, it is not clear what impact, if any, health reform efforts at the federal and state levels, consolidation within the third-party payer industry and vertical integration
among third-party payers and health care providers will have on our ability to negotiate reimbursement rates. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Uninsured and <FONT
STYLE="white-space:nowrap">Self-Pay</FONT> Patients </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">Self-pay</FONT> revenues are derived from
providing health care services to patients without health insurance coverage and from the patient responsibility portion of payments for our health care services that are not covered by an individual&#146;s health plan. Collection of amounts due
from individuals is typically more difficult than collection of amounts due from government health care programs or private third-party payers. Any increases in uninsured individuals, changes to the payer mix or greater adoption of health plan
structures that result in higher patient responsibility amounts could increase amounts due from individuals. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A high percentage of our uninsured patients are initially admitted through our emergency
rooms. For the nine months ended September&nbsp;30, 2018, approximately 84% of our admissions of uninsured patients occurred through our emergency rooms. The Emergency Medical Treatment and Labor Act (&#147;EMTALA&#148;) requires any hospital that
participates in the Medicare program to conduct an appropriate medical screening examination of every person who presents to the hospital&#146;s emergency room for treatment and, if the individual is suffering from an emergency medical condition, to
either stabilize that condition or make an appropriate transfer of the individual to a facility that can handle the condition. The obligation to screen and stabilize emergency medical conditions exists regardless of an individual&#146;s ability to
pay for treatment. In addition, health insurers are required to reimburse hospitals for emergency services provided to enrollees without prior authorization and without regard to whether a participating provider contract is in place. The financial
impact of the obligation to screen for and stabilize emergency medical conditions has been offset, in part, by provisions of the Health Reform Law that decrease the number of uninsured individuals. However, effective January&nbsp;1, 2019, Congress
eliminated the financial penalty associated with the individual mandate. Further, final rules issued in 2018 expand the availability of association health plans and allow the sale of short-term, limited-duration health plans, neither of which are
required to cover all of the essential health benefits mandated by the Health Reform Law. It is difficult to predict the impact of these changes, but they may result in fewer individuals electing to obtain public or private health insurance or
affect the scope of such coverage, if purchased. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Hospital Utilization </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We believe the most important factors relating to the overall utilization of a hospital are the quality and market position of the hospital and
the number and quality of physicians and other health care professionals providing patient care within the facility. Generally, we believe the ability of a hospital to be a market leader is determined by its breadth of services, level of technology,
quality and condition of the facilities, emphasis on quality of care and convenience for patients and physicians. Other factors that impact utilization include the growth in local population, local economic conditions and market penetration of
managed care programs. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Competition </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Generally, other hospitals in the communities we serve provide services similar to those offered by our hospitals. Additionally, in recent
years the number of freestanding specialty hospitals, surgery centers, emergency departments, urgent care centers and diagnostic and imaging centers in the geographic areas in which we operate has increased significantly. As a result, most of our
hospitals operate in a highly competitive environment. In some cases, competing hospitals are more established than our hospitals. Some competing facilities are physician-owned or are owned by <FONT STYLE="white-space:nowrap">tax-supported</FONT>
government agencies and many others are owned by <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">not-for-profit</FONT></FONT> entities that may be supported by endowments, charitable contributions and/or tax revenues and are exempt
from sales, property and income taxes. Such exemptions and support are not available to our hospitals and may provide the <FONT STYLE="white-space:nowrap">tax-supported</FONT> or
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">not-for-profit</FONT></FONT> entities an advantage in funding capital expenditures. In certain localities there are large teaching hospitals that provide highly specialized
facilities, equipment and services that may not be available at most of our hospitals. We also face competition from specialty hospitals and from both our own and unaffiliated freestanding ASCs for market share in certain high margin services. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Psychiatric hospitals frequently attract patients from areas outside their immediate locale and, therefore, our psychiatric hospitals and
units compete with both local and regional hospitals, including the psychiatric units of general, acute care hospitals. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our strategies are designed to ensure our hospitals are competitive. We believe our
hospitals compete within local communities on the basis of many factors, including the quality of care, ability to attract and retain quality physicians, skilled clinical personnel and other health care professionals, location, breadth of services,
technology offered, quality and condition of the facilities and prices charged. Hospitals must publish online a list of their standard charges for items and services. We have increased our focus on operating outpatient services with improved
accessibility and more convenient service for patients and increased predictability and efficiency for physicians. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Two of the most
significant factors to the competitive position of a hospital are the number and quality of physicians affiliated with or employed by the hospital. Although physicians may at any time terminate their relationship with a hospital we operate, our
hospitals seek to retain physicians with varied specialties on the hospitals&#146; medical staffs and to attract other qualified physicians. We believe physicians refer patients to a hospital on the basis of the quality and scope of services it
renders to patients and physicians, the quality of physicians on the medical staff, the location of the hospital and the quality of the hospital&#146;s facilities, equipment and employees. Accordingly, we strive to maintain and provide quality
facilities, equipment, employees and services for physicians and patients. Our hospitals face competition from competitors that are implementing physician alignment strategies, such as employing physicians, acquiring physician practice groups and
participating in ACOs or other clinical integration models. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Another major factor in the competitive position of our hospitals is our
ability to negotiate service contracts with group purchasers of health care services. Managed care plans attempt to direct and control the use of hospital services and obtain discounts from hospitals&#146; established gross charges. Similarly,
employers and traditional health insurers continue to attempt to contain costs through negotiations with hospitals for managed care programs and discounts from established gross charges. Generally, hospitals compete for service contracts with group
purchasers of health care services on the basis of price, market reputation, geographic location, quality and range of services, quality of the medical staff and convenience. Our future success will depend, in part, on our ability to retain and
renew our contracts with third-party payers and enter into new contracts on favorable terms. Other health care providers may impact our ability to enter into contracts with third-party payers or negotiate increases in our reimbursement and other
favorable terms and conditions. For example, some of our competitors may negotiate exclusivity provisions with managed care plans or otherwise restrict the ability of managed care companies to contract with us. Increasing vertical integration
efforts involving third-party payers and health care providers may increase these challenges. Moreover, the trend toward consolidation among private third-party payers tends to increase payer bargaining power over fee structures. In addition, health
reform efforts, such as the Health Reform Law&#146;s creation of the Exchanges and limitations on rescissions of coverage and <FONT STYLE="white-space:nowrap">pre-existing</FONT> condition exclusions, may lead to private third-party payers
increasingly demanding reduced fees or being unwilling to negotiate reimbursement increases. Health plans, including those offered through the Exchanges, increasingly utilize narrow networks that restrict the number of participating providers or
tiered networks that impose significantly higher cost sharing obligations on patients that obtain services from providers in a disfavored tier. These trends may continue regardless of potential repeal or replacement of, or changes to, the Health
Reform Law. The importance of obtaining contracts with group purchasers of health care services varies from community to community, depending on the market strength of such organizations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">State certificate of need (&#147;CON&#148;) laws, which place limitations on a health care facility&#146;s ability to expand services and
facilities, make capital expenditures and otherwise make changes in operations, may also have the effect of restricting competition. We currently operate health care facilities in a number of states with CON laws or that require other types of
approvals for the establishment or expansion of certain facility types or services. Before issuing a CON or other approval, these states consider the need for additional, changes in, or expanded health care facilities or services. In those states
that do not require state approval or that set relatively high levels of expenditures before they become reviewable by state authorities, competition in the form of new services, facilities and capital spending is more prevalent. See Item&nbsp;1,
&#147;Business &#151; Regulation and Other Factors.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We and the health care industry as a whole face the challenge of continuing to
provide quality patient care while dealing with rising costs and strong competition for patients. Changes in medical technology, existing and future legislation, regulations and interpretations and contracting for provider services by third-party
payers remain ongoing challenges. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Admissions, average lengths of stay and reimbursement amounts continue to be negatively affected by
third-party payer <FONT STYLE="white-space:nowrap">pre-admission</FONT> authorization requirements, utilization review and pressure to maximize outpatient and alternative health care delivery services for less acutely ill patients. Increased
competition, admission constraints and third-party payer pressures are expected to continue. To meet these challenges, we intend to expand and update our facilities or acquire or construct new facilities where appropriate, to enhance the provision
of a comprehensive array of outpatient services, offer market competitive pricing to group purchasers of health care services, upgrade facilities and equipment and offer new or expanded programs and services. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Regulation and Other Factors </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Licensure, Certification and Accreditation </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Health care facility construction and operation are subject to numerous federal, state and local regulations relating to the adequacy of
medical care, equipment, personnel, operating policies and procedures, maintenance of adequate records, fire prevention, rate-setting, building codes and environmental protection. Facilities are subject to periodic inspection by governmental and
other authorities to assure continued compliance with the various standards necessary for licensing and accreditation. We believe our health care facilities are properly licensed under applicable state laws. Each of our acute care hospitals located
in the United States is eligible to participate in Medicare and Medicaid programs and is accredited by The Joint Commission. If any facility were to lose its Medicare or Medicaid certification, the facility would be unable to receive reimbursement
from federal health care programs. If any facility were to lose accreditation, the facility would be subject to state surveys, potentially be subject to increased scrutiny by CMS and likely lose payment from private third-party payers. Management
believes our facilities are in substantial compliance with current applicable federal, state, local and independent review body regulations and standards. The requirements for licensure, certification and accreditation are subject to change and, in
order to remain qualified, it may become necessary for us to make changes in our facilities, equipment, personnel and services. The requirements for licensure, certification and accreditation also include notification or approval in the event of the
transfer or change of ownership or certain other changes. Failure to provide required notifications or obtain necessary approvals in these circumstances can result in the inability to complete an acquisition or change of ownership, loss of
licensure, lapses in reimbursement or other penalties. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Certificates of Need </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In some states where we operate hospitals and other health care providers, the construction or expansion of health care facilities, the
acquisition of existing facilities, the transfer or change of ownership, capital expenditures and the addition of new beds or services may be subject to review by and prior approval of, or notifications to, state regulatory agencies under a CON
program. Such laws generally require the reviewing state agency to determine the public need for additional or expanded health care facilities and services or other change. Failure to provide required notifications or obtain necessary state
approvals can result in the inability to expand facilities, complete an acquisition or expenditure or change ownership or other penalties. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>State Rate Review </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Some
states have adopted legislation mandating rate or budget review for hospitals or have adopted taxes on hospital revenues, assessments or licensure fees to fund indigent health care within the state. In the aggregate, indigent tax provisions have not
materially, adversely affected our results of operations. Although we do not currently operate facilities in states that mandate rate or budget reviews, we cannot predict whether we will operate in such states in the future, or whether the states in
which we currently operate may adopt legislation mandating such reviews. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Federal Health Care Program Regulations </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Participation in any federal health care program, including the Medicare and Medicaid programs, is heavily regulated by statute and regulation.
If a hospital or other provider fails to substantially comply with the numerous conditions of participation in the Medicare and Medicaid programs or performs certain prohibited acts, the provider&#146;s participation in the federal health care
programs may be terminated, or civil and/or criminal penalties may be imposed. Civil monetary penalties are adjusted annually based on updates to the consumer price index and were increased under the Bipartisan Budget Act of 2018. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Anti-kickback Statute </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A section of the Social Security Act known as the &#147;Anti-kickback Statute&#148; prohibits providers and others from directly or indirectly
soliciting, receiving, offering or paying any remuneration with the intent of generating referrals or orders for services or items covered by a federal health care program. Courts have interpreted this statute broadly and held that there is a
violation of the Anti-kickback Statute if just one purpose of the remuneration is to generate referrals, even if there are other lawful purposes. Furthermore, the Health Reform Law provides that knowledge of the law or the intent to violate the law
is not required. Violations of the Anti-kickback Statute may be punished by criminal fines of up to $100,000 per violation, imprisonment, substantial civil monetary penalties per violation that are subject to annual adjustment based on updates to
the consumer price index and damages of up to three times the total amount of the remuneration and/or exclusion from participation in federal health care programs, including Medicare and Medicaid. In addition, submission of a claim for services or
items generated in violation of the Anti-kickback Statute may be subject to additional penalties under the federal False Claims Act (&#147;FCA&#148;) as a false or fraudulent claim. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The HHS Office of Inspector General (the &#147;OIG&#148;), among other regulatory agencies,
is responsible for identifying and eliminating fraud, abuse and waste. The OIG carries out this mission through a nationwide program of audits, investigations and inspections. The OIG provides guidance to the industry through various methods,
including advisory opinions and &#147;Special Fraud Alerts.&#148; These Special Fraud Alerts do not have the force of law, but identify features of arrangements or transactions that the government believes may cause the arrangements or transactions
to violate the Anti-kickback Statute or other federal health care laws. The OIG has identified several incentive arrangements that constitute suspect practices, including: (a)&nbsp;payment of any incentive by a hospital each time a physician refers
a patient to the hospital, (b)&nbsp;the use of free or significantly discounted office space or equipment in facilities usually located close to the hospital, (c)&nbsp;provision of free or significantly discounted billing, nursing or other staff
services, (d)&nbsp;free training for a physician&#146;s office staff in areas such as management techniques and laboratory techniques, (e)&nbsp;guarantees which provide, if the physician&#146;s income fails to reach a predetermined level, the
hospital will pay any portion of the remainder, <FONT STYLE="white-space:nowrap">(f)&nbsp;low-interest</FONT> or interest-free loans, or loans which may be forgiven if a physician refers patients to the hospital, (g)&nbsp;payment of the costs of a
physician&#146;s travel and expenses for conferences, (h)&nbsp;coverage on the hospital&#146;s group health insurance plans at an inappropriately low cost to the physician, (i)&nbsp;payment for services (which may include consultations at the
hospital) which require few, if any, substantive duties by the physician, (j)&nbsp;purchasing goods or services from physicians at prices in excess of their fair market value, (k)&nbsp;rental of space in physician offices, at other than fair market
value terms, by persons or entities to which physicians refer, and (l)&nbsp;physician-owned entities (frequently referred to as physician-owned distributorships or PODs) that derive revenue from selling, or arranging for the sale of, implantable
medical devices ordered by their physician-owners for use on procedures that physician-owners perform on their own patients at hospitals or ASCs. The OIG has encouraged persons having information about hospitals who offer the above types of
incentives to physicians to report such information to the OIG. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The OIG also issues &#147;Special Advisory Bulletins&#148; as a means of
providing guidance to health care providers. These bulletins, along with the Special Fraud Alerts, have focused on certain arrangements that could be subject to heightened scrutiny by government enforcement authorities, including:
(a)&nbsp;contractual joint venture arrangements and other joint venture arrangements between those in a position to refer business, such as physicians, and those providing items or services for which Medicare or Medicaid pays, and (b)&nbsp;certain
&#147;gainsharing&#148; arrangements, i.e., the practice of giving physicians a share of any reduction in a hospital&#146;s costs for patient care attributable in part to the physician&#146;s efforts. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition to issuing Special Fraud Alerts and Special Advisory Bulletins, the OIG issues compliance program guidance for certain types of
health care providers. The OIG guidance identifies a number of risk areas under federal fraud and abuse statutes and regulations. These areas of risk include compensation arrangements with physicians, recruitment arrangements with physicians and
joint venture relationships with physicians. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As authorized by Congress, the OIG has published safe harbor regulations that outline
categories of activities deemed protected from prosecution under the Anti-kickback Statute. Currently, there are statutory exceptions and safe harbors for various activities, including the following: certain investment interests, space rental,
equipment rental, practitioner recruitment, personnel services and management contracts, sale of practice, referral services, warranties, discounts, employees, group purchasing organizations, waiver of beneficiary coinsurance and deductible amounts,
managed care arrangements, obstetrical malpractice insurance subsidies, investments in group practices, freestanding surgery centers, ambulance replenishing, and referral agreements for specialty services. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The fact that conduct or a business arrangement does not fall within a safe harbor or is identified in a Special Fraud Alert, Special Advisory
Bulletin or other guidance does not necessarily render the conduct or business arrangement illegal under the Anti-kickback Statute. However, such conduct and business arrangements may lead to increased scrutiny by government enforcement authorities.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We have a variety of financial relationships with physicians and others who either refer or influence the referral of patients to our
hospitals, other health care facilities and employed physicians, including employment contracts, leases, medical director agreements and professional service agreements. We also have similar relationships with physicians and facilities to which
patients are referred from our facilities and other providers. In addition, we provide financial incentives, including minimum revenue guarantees, to recruit physicians into the communities served by our hospitals. While we endeavor to comply with
the applicable safe harbors, certain of our current arrangements, including joint ventures and financial relationships with physicians and other referral sources and persons and entities to which we refer patients, do not qualify for safe harbor
protection. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Although we believe our arrangements with physicians and other referral sources and referral
recipients have been structured to comply with current law and available interpretations, there can be no assurance regulatory authorities enforcing these laws will determine these financial arrangements comply with the Anti-kickback Statute or
other applicable laws. An adverse determination could subject us to liabilities under the Social Security Act and other laws, including criminal penalties, civil monetary penalties and exclusion from participation in Medicare, Medicaid or other
federal health care programs. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Stark Law </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Social Security Act also includes a provision commonly known as the &#147;Stark Law.&#148; The Stark Law prohibits physicians from
referring Medicare and Medicaid patients to entities with which they or any of their immediate family members have a financial relationship, if these entities provide certain &#147;designated health services&#148; reimbursable by Medicare or
Medicaid unless an exception applies. The Stark Law also prohibits entities that provide designated health services reimbursable by Medicare and Medicaid from billing the Medicare and Medicaid programs for any items or services that result from a
prohibited referral and requires the entities to refund amounts received for items or services provided pursuant to the prohibited referral on a timely basis. &#147;Designated health services&#148; include inpatient and outpatient hospital services,
clinical laboratory services and radiology services. Sanctions for violating the Stark Law include denial of payment, substantial civil monetary penalties per claim submitted and exclusion from the federal health care programs. Failure to refund
amounts received as a result of a prohibited referral on a timely basis may constitute a false or fraudulent claim and may result in civil penalties and additional penalties under the FCA. The statute also provides for a penalty for a circumvention
scheme. These penalties are updated annually based on changes to the consumer price index. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">There are exceptions to the self-referral
prohibition for many of the customary financial arrangements between physicians and providers, including employment contracts, leases and recruitment agreements. Unlike safe harbors under the Anti-kickback Statute with which compliance is voluntary,
a financial relationship must comply with every requirement of a Stark Law exception or the arrangement is in violation of the Stark Law. Although there is an exception for a physician&#146;s ownership interest in an entire hospital, the Health
Reform Law prohibits physician-owned hospitals established after December&nbsp;31, 2010 from billing for Medicare or Medicaid patients referred by their physician owners. As a result, the law effectively prevents the formation of new physician-owned
hospitals that participate in Medicare or Medicaid. While the Health Reform Law grandfathers existing physician-owned hospitals, it does not allow these hospitals to increase the percentage of physician ownership and significantly restricts their
ability to expand services. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Through a series of rulemakings, CMS has issued final regulations implementing the Stark Law. While these
regulations were intended to clarify the requirements of the exceptions to the Stark Law, it is unclear how the government will interpret many of these exceptions for enforcement purposes. Further, we do not always have the benefit of significant
regulatory or judicial interpretation of the Stark Law and its implementing regulations. We attempt to structure our relationships to meet an exception to the Stark Law, but the regulations implementing the exceptions are detailed and complex, and
we cannot assure that every relationship complies fully with the Stark Law. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Similar State Laws </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Many states in which we operate also have laws similar to the Anti-kickback Statute that prohibit payments to physicians for patient referrals
and laws similar to the Stark Law that prohibit certain self-referrals. These state laws often apply regardless of the source of payment for care, and little precedent exists for their interpretation or enforcement. These statutes typically provide
for criminal and civil penalties, as well as loss of licensure. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman"><I><U>Other Fraud and Abuse Provisions </U></I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Certain federal fraud and abuse laws apply to all health benefit programs and provide for criminal penalties. The Social Security Act also
imposes criminal and civil penalties for making false claims and statements to Medicare and Medicaid. False claims include, but are not limited to, billing for services not rendered or for misrepresenting actual services rendered in order to obtain
higher reimbursement, billing for unnecessary goods and services and cost report fraud. Federal enforcement officials have the ability to exclude from Medicare and Medicaid any business entities and any investors, officers and managing employees
associated with business entities that have committed health care fraud, even if the officer or managing employee had no knowledge of the fraud. Criminal and civil penalties may be imposed for a number of other prohibited activities, including
failure to return known overpayments, certain gainsharing arrangements, billing Medicare amounts that are substantially in excess of a provider&#146;s usual charges, offering remuneration to influence a Medicare or Medicaid beneficiary&#146;s
selection of a health care provider, contracting with an individual or entity known to be excluded from a federal health care program, making or accepting a payment to induce a physician to reduce or limit services, and soliciting or receiving any
remuneration in return for referring an individual for an item or service payable by a federal health care program. Like the Anti-kickback Statute, these provisions are very broad. Civil penalties may be imposed for the failure to report and return
an overpayment within 60 days of identifying the overpayment or by the date a corresponding cost report is due, whichever is later. To avoid liability, providers must, among other things, carefully and accurately code claims for reimbursement,
promptly return overpayments and accurately prepare cost reports. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Some of these provisions, including the federal Civil Monetary Penalty
Law, require a lower burden of proof than other fraud and abuse laws, including the Anti-kickback Statute. Substantial civil monetary penalties may be imposed under the federal Civil Monetary Penalty Law. These penalties will be updated annually
based on changes to the consumer price index. In some cases, violations of the Civil Monetary Penalty Law may result in penalties of up to three times the remuneration offered, paid, solicited or received. In addition, a violator may be subject to
exclusion from federal and state health care programs. Federal and state governments increasingly use the federal Civil Monetary Penalty Law, especially where they believe they cannot meet the higher burden of proof requirements under the
Anti-kickback Statute. Further, individuals can receive up to $1,000 for providing information on Medicare fraud and abuse that leads to the recovery of at least $100 of Medicare funds under the Medicare Integrity Program. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>The Federal False Claims Act and Similar State Laws </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are subject to state and federal laws that govern the submission of claims for reimbursement and prohibit the making of false claims or
statements. One of the most prominent of these laws is the FCA, which may be enforced by the federal government directly or by a <I>qui tam</I> plaintiff, or whistleblower, on the government&#146;s behalf. The government may use the FCA to prosecute
Medicare and other government program fraud in areas such as coding errors, billing for services not provided and submitting false cost reports. In addition, the FCA covers payments made in connection with the Exchanges created under the Health
Reform Law, if those payments include any federal funds. When a private party brings a <I>qui tam </I>action under the FCA, the defendant is not made aware of the lawsuit until the government commences its own investigation or makes a determination
whether it will intervene. If a defendant is determined by a court of law to be liable under the FCA, the defendant may be required to pay three times the actual damages sustained by the government, plus substantial mandatory civil penalties for
each separate false claim. These penalties are updated annually based on changes to the consumer price index. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">There are many potential
bases for liability under the FCA. Liability often arises when an entity knowingly submits a false claim for reimbursement to the federal government. The FCA defines the term &#147;knowingly&#148; broadly. Though simple negligence will not give rise
to liability under the FCA, submitting a claim with reckless disregard to its truth or falsity constitutes a &#147;knowing&#148; submission under the FCA and, therefore, may create liability. Submission of claims for services or items generated in
violation of the Anti-kickback Statute constitutes a false or fraudulent claim under the FCA. Whistleblowers and the federal government have taken the position, and some courts have held, that providers who allegedly have violated other statutes,
such as the Stark Law, have thereby submitted false claims under the FCA. False claims under the FCA also include the knowing and improper failure to report and refund amounts owed to the government in a timely manner following identification of an
overpayment. An overpayment is deemed to be identified when a person has, or should have through reasonable diligence, determined that an overpayment was received and quantified the overpayment. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Every entity that receives at least $5&nbsp;million annually in Medicaid payments must have written policies for all employees, contractors or
agents, providing detailed information about false claims, false statements and whistleblower protections under certain federal laws, including the FCA, and similar state laws. In addition, federal law provides an incentive to states to enact false
claims laws comparable to the FCA. A number of states in which we operate have adopted their own false claims provisions as well as their own whistleblower provisions under which a private party may file a civil lawsuit in state court. We have
adopted and distributed policies pertaining to the FCA and relevant state laws. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>HIPAA Administrative Simplification and Privacy and Security Requirements </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Administrative Simplification Provisions of the Health Insurance Portability and Accountability Act of 1996 (&#147;HIPAA&#148;) and
implementing regulations require the use of uniform electronic data transmission standards and code sets for certain health care claims and payment transactions submitted or received electronically. In addition, HIPAA requires that each provider use
a National Provider Identifier. These provisions are intended to encourage electronic commerce in the health care industry. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The privacy
and security regulations promulgated pursuant to HIPAA extensively regulate the use and disclosure of individually identifiable health information, known as &#147;protected health information,&#148; and require covered entities, including health
plans and most health care providers, to implement administrative, physical and technical safeguards to protect the security of such information. Certain provisions of the security and privacy regulations apply to business associates (entities that
handle protected health information on behalf of covered entities), and business associates are subject to direct liability for violation of these provisions. In addition, a covered entity may be subject to penalties as a result of a business
associate violating HIPAA, if the business associate is found to be an agent of the covered entity. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Covered entities must report breaches
of unsecured protected health information to affected individuals without unreasonable delay but not to exceed 60 days after discovery of the breach by a covered entity or its agents. Notification must also be made to HHS and, in certain situations
involving large breaches, to the media. HHS is required to publish on its website a list of all covered entities that report a breach involving more than 500&nbsp;individuals. All <FONT STYLE="white-space:nowrap">non-permitted</FONT> uses or
disclosures of unsecured protected health information are presumed to be breaches unless the covered entity or business associate establishes that there is a low probability the information has been compromised. Various state laws and regulations
may also require us to notify affected individuals in the event of a data breach involving individually identifiable information. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Violations of the HIPAA privacy and security regulations may result in criminal penalties and in substantial civil penalties per violation.
These civil penalties are updated annually based on updates to the consumer price index. HHS enforces the regulations and performs compliance audits. In addition to enforcement by HHS, state attorneys general are authorized to bring civil actions
seeking either injunction or damages in response to violations that threaten the privacy of state residents. HHS may resolve HIPAA violations through informal means, such as allowing a covered entity to implement a corrective action plan, but HHS
has the discretion to move directly to impose monetary penalties and is required to impose penalties for violations resulting from willful neglect. We enforce a HIPAA compliance plan, which we believe complies with the HIPAA privacy and security
regulations and under which a HIPAA compliance group monitors our compliance. The HIPAA privacy regulations and security regulations have and will continue to impose significant costs on our facilities in order to comply with these standards. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">There are numerous other laws and legislative and regulatory initiatives at the federal and state levels addressing privacy and security
concerns. Our facilities remain subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and could impose additional penalties. For example, the Federal Trade
Commission uses its consumer protection authority to initiate enforcement actions in response to data breaches. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>EMTALA </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">All of our hospitals in the United States are subject to EMTALA. This federal law requires any hospital participating in the Medicare program
to conduct an appropriate medical screening examination of every individual who presents to the hospital&#146;s emergency room for treatment and, if the individual is suffering from an emergency medical condition, to either stabilize the condition
or make an appropriate transfer of the individual to a facility able to handle the condition. The obligation to screen and stabilize emergency medical conditions exists regardless of an individual&#146;s ability to pay for treatment. There are
severe penalties under EMTALA if a hospital fails to screen or appropriately stabilize or transfer an individual or if the hospital delays appropriate treatment in order to first inquire about the individual&#146;s ability to pay. Penalties for
violations of EMTALA include exclusion from participation in the Medicare program and civil monetary penalties. These civil monetary penalties are adjusted annually based on updates to the consumer price index. In addition, an injured individual,
the individual&#146;s family or a medical facility that suffers a financial loss as a direct result of a hospital&#146;s violation of the law can bring a civil suit against the hospital. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The government broadly interprets EMTALA to cover situations in which individuals do not
actually present to a hospital&#146;s emergency room, but present for emergency examination or treatment to the hospital&#146;s campus, generally, or to a hospital-based clinic that treats emergency medical conditions or are transported in a
hospital-owned ambulance, subject to certain exceptions. At least one court has interpreted the law also to apply to a hospital that has been notified of a patient&#146;s pending arrival in a <FONT STYLE="white-space:nowrap">non-hospital</FONT>
owned ambulance. EMTALA does not generally apply to individuals admitted for inpatient services. The government has expressed its intent to investigate and enforce EMTALA violations actively. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Corporate Practice of Medicine/Fee Splitting </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Some of the states in which we operate have laws prohibiting corporations and other entities from employing physicians, practicing medicine for
a profit and making certain direct and indirect payments to, or entering into <FONT STYLE="white-space:nowrap">fee-splitting</FONT> arrangements with, health care providers designed to induce or encourage the referral of patients to, or the
recommendation of, particular providers for medical products and services. Possible sanctions for violation of these restrictions include loss of license and civil and criminal penalties. In addition, agreements between the corporation and the
physician may be considered void and unenforceable. These statutes vary from state to state, are often vague and have seldom been interpreted by the courts or regulatory agencies. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Health Care Industry Investigations </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Significant media and public attention has focused in recent years on the hospital industry. This media and public attention, changes in
government personnel and other factors have led to increased scrutiny of the health care industry. Except as may be disclosed in our SEC filings, we are not aware of any material investigations of the Company under federal or state health care laws
or regulations. It is possible that governmental entities could initiate investigations or litigation in the future at facilities we operate and that such matters could result in significant penalties, as well as adverse publicity. It is also
possible that our executives and managers could be included in governmental investigations or litigation or named as defendants in private litigation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our substantial Medicare, Medicaid and other governmental billings result in heightened scrutiny of our operations. We continue to monitor all
aspects of our business and have developed a comprehensive ethics and compliance program that is designed to meet or exceed applicable federal guidelines and industry standards. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Because the law in this area is complex and constantly evolving, governmental investigations or litigation may result in interpretations that
are inconsistent with our or industry practices. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In public statements surrounding current investigations, governmental authorities have
taken positions on a number of issues, including some for which little official interpretation previously has been available, that appear to be inconsistent with practices that have been common within the industry and that previously have not been
challenged in this manner. In some instances, government investigations that have in the past been conducted under the civil provisions of federal law may now be conducted as criminal investigations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Both federal and state government agencies have increased their focus on and coordination of civil and criminal enforcement efforts in the
health care area. The OIG and the Department of Justice (&#147;DOJ&#148;) have, from time to time, established national enforcement initiatives, targeting all hospital providers that focus on specific billing practices or other suspected areas of
abuse. The Health Reform Law includes additional federal funding of $350&nbsp;million over 10 years to fight health care fraud, waste and abuse, including $10&nbsp;million in federal fiscal year 2019. In addition, governmental agencies and their
agents, such as MACs, fiscal intermediaries and carriers, may conduct audits of our health care operations. Private third-party payers may conduct similar post-payment audits, and we also perform internal audits and monitoring. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition to national enforcement initiatives, federal and state investigations have addressed a wide variety of routine health care
operations such as: cost reporting and billing practices, including for Medicare outliers; financial arrangements with referral sources; physician recruitment activities; physician joint ventures; and hospital charges and collection practices for <FONT
STYLE="white-space:nowrap">self-pay</FONT> patients. We engage in many of these routine health care operations and other activities that could be the subject of governmental investigations or inquiries. For example, we have significant Medicare and
Medicaid billings, numerous financial arrangements with physicians who are referral sources to our hospitals, and joint venture arrangements involving physician investors. Certain of our individual facilities have received, and other facilities may
receive, government inquiries from, and may be subject to investigation by, federal and state agencies. Any additional investigations of the Company, our executives or managers could result in significant liabilities or penalties to us, as well as
adverse publicity. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Health Care Reform </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The health care industry is subject to changing political, regulatory, and other influences, along with various scientific and technological
initiatives. In recent years, the U.S. Congress and certain state legislatures have passed a large number of laws and regulations intended to effect major change within the U.S. health care system, including the Health Reform Law. The Health Reform
Law affects how health care services are covered, delivered and reimbursed through expanded health insurance coverage, reduced growth in Medicare program spending, reductions in Medicare and Medicaid DSH payments, and the establishment of programs
that tie reimbursement to quality and integration. However, there is uncertainty regarding the future of the Health Reform Law. The law has been subject to legislative and regulatory changes and court challenges. The presidential administration and
a number of members of Congress have stated their intent to repeal or make additional significant changes to the Health Reform Law, its implementation or interpretation. The 2017 Tax Cuts and Jobs Act (the &#147;Tax Act&#148;) repealed the penalty
associated with the individual mandate to maintain health insurance effective January&nbsp;1, 2019. Additionally, final rules issued in 2018 expand the availability of association health plans and allow the sale of short-term, limited-duration
health plans, neither of which are required to cover all of the essential health benefits mandated by the Health Reform Law. These changes may impact the number of individuals that elect to obtain public or private health insurance or the scope of
such coverage, if purchased. Further, the President of the United States signed an executive order that directs agencies to minimize &#147;economic and regulatory burdens&#148; of the Health Reform Law, which may result in additional changes in how
the law is implemented. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As currently structured, the Health Reform Law expands coverage through a combination of public program expansion
and private sector health insurance and other reforms. Expansion in public program coverage has been driven primarily by expanding the categories of individuals eligible for Medicaid coverage and permitting individuals with relatively higher incomes
to qualify. A number of states, including Texas and Florida, have opted out of the Medicaid expansion provisions, which they may do without losing federal funding. For states that have not participated in the Medicaid expansion, the maximum income
level required for individuals and families to qualify for Medicaid varies widely from state to state. Some states are using waivers granted by CMS to expand their Medicaid programs, impose different eligibility or enrollment restrictions, or
otherwise implement programs that vary from federal standards. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The expansion of health coverage through the private sector as a result of
the Health Reform Law has been driven by new requirements applicable to health insurers, employers and individuals. For example, health insurers are prohibited from imposing annual coverage limits, dropping coverage, excluding persons based upon <FONT
STYLE="white-space:nowrap">pre-existing</FONT> conditions or denying coverage for any individual who is willing to pay the premiums for such coverage. Health insurers participating in an Exchange must offer a set of minimum benefits, as defined by
HHS, and may offer more benefits. For individuals and families below 400% of the federal poverty level, the cost of obtaining health insurance through the Exchanges is subsidized by the federal government. Large employers are required to provide
health insurance benefits to their full time employees or pay a penalty if an employee obtains government-subsidized coverage through an Exchange. Although individuals are required to maintain health insurance for a minimum defined set of benefits,
elimination of the penalty associated with this mandate may impact the number of individuals who elect to purchase health insurance. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As
discussed in Item 1, &#147;Business &#151; Sources of Revenue,&#148; the Health Reform Law provides for spending reductions for Medicare, Medicaid and other federal health care programs. It also increasingly ties payment for services to quality
outcomes, provides for the creation of ACOs and creates incentives and other initiatives to better coordinate patient care across settings and over time. The Health Reform Law also makes several significant changes to health care fraud and abuse
laws, provides additional enforcement tools to the government, increases cooperation between agencies by establishing mechanisms for the sharing of information and enhances criminal and administrative penalties for
<FONT STYLE="white-space:nowrap">non-compliance.</FONT> For example, the Health Reform Law tightens up the rules for returning overpayments made by governmental health programs and expands FCA liability to include failure to timely repay identified
overpayments. The Health Reform Law also prohibits newly created physician-owned hospitals from billing for Medicare patients referred by their physician owners. As a result, the law effectively prevents the formation of new physician-owned
hospitals that participate in Medicare and Medicaid. While the law grandfathers existing physician-owned hospitals, it does not allow these hospitals to increase the percentage of physician ownership and significantly restricts their ability to
expand services. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Health Reform Law has had a net positive effect on the Company to date, before considering the impact of Medicare
reductions that began in 2010, and it is expected that the law, as presently implemented, will continue to have a meaningful contribution to the Company&#146;s results of operations. However, in December 2018, the United States District Court for
the Northern District of Texas held that, as a result of the repeal of the penalty associated with the individual mandate, the mandate </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
was unconstitutional. In addition, because the court found that the mandate could not be severed from the rest of the law, the court held that the entire Health Reform Law was also
unconstitutional. The Court issued a stay of the ruling pending its appeal, so that the law currently remains in place. The Company could be affected by the ultimate outcome of this and other court challenges, and by efforts to change, repeal or
replace the Health Reform Law, as discussed in Item 1A, &#147;Risk Factors.&#148; </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>General Economic and Demographic Factors </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The health care industry is impacted by the overall United States economy. Budget deficits at federal, state and local government entities have
had a negative impact on spending for many health and human service programs, including Medicare, Medicaid and similar programs, which represent significant payer sources for our hospitals and other providers. We anticipate that the federal deficit,
the growing magnitude of Medicare expenditures and the aging of the United States population will continue to place pressure on government health care programs. Other risks we face during periods of economic weakness and high unemployment include
potential declines in the population covered under managed care agreements, increased patient decisions to postpone or cancel elective and nonemergency health care procedures (including delaying surgical procedures), potential increases in the
uninsured and underinsured populations, increased adoption of health plan structures that shift financial responsibility to patients and further difficulties in collecting patient receivables for copayment and deductible amounts. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Compliance Program </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We maintain a
comprehensive ethics and compliance program that is designed to meet or exceed applicable federal guidelines and industry standards. The program is intended to monitor and raise awareness of various regulatory issues among employees and to emphasize
the importance of complying with governmental laws and regulations. As part of the ethics and compliance program, we provide annual ethics and compliance training to our employees and encourage all employees to report any violations to their
supervisor, an ethics and compliance officer or a toll-free telephone ethics line. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Antitrust Laws </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The federal government and most states have enacted antitrust laws that prohibit certain types of conduct deemed to be anti-competitive. These
laws prohibit price fixing, market allocation, <FONT STYLE="white-space:nowrap">bid-rigging,</FONT> concerted refusal to deal, market monopolization, price discrimination, tying arrangements, acquisitions of competitors and other practices that
have, or may have, an adverse effect on competition. Violations of federal or state antitrust laws can result in various sanctions, including criminal and civil penalties. Antitrust enforcement in the health care industry is currently a priority of
the Federal Trade Commission and the DOJ. We believe we are in compliance with such federal and state laws, but courts or regulatory authorities may reach a determination in the future that could adversely affect our operations. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Environmental Matters </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are subject to
various federal, state and local statutes and ordinances regulating the discharge of materials into the environment. We do not believe that we will be required to expend any material amounts in order to comply with these laws and regulations. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Insurance </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As is typical in the health
care industry, we are subject to claims and legal actions by patients in the ordinary course of business. Subject, in most cases, to a $15&nbsp;million per occurrence self-insured retention, our facilities are insured by our 100% owned insurance
subsidiary for losses up to $50&nbsp;million per occurrence. The insurance subsidiary has obtained reinsurance for professional liability risks generally above a retention level of $25&nbsp;million per occurrence. We also maintain professional
liability insurance with unrelated commercial carriers for losses in excess of amounts insured by our insurance subsidiary. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We purchase,
from unrelated insurance companies, coverage for cyber security incidents, directors and officers liability and property loss in amounts we believe are adequate. The cyber security and directors and officers liability coverage each include a
$5&nbsp;million corporate deductible. In addition, we will continue to purchase coverage for our directors and officers on an ongoing basis. The property coverage includes varying deductibles depending on the cause of the property damage. These
deductibles range from 2% to 5% of the affected property values for certain flood and wind and earthquake related incidents. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Employees and Medical Staffs </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">At December&nbsp;31, 2018, we had approximately 262,000 employees, including approximately 66,000 part-time employees. References herein to
&#147;employees&#148; refer to employees of our affiliates. We are subject to various state and federal laws that regulate wages, hours, benefits and other terms and conditions relating to employment. At December&nbsp;31, 2018, certain employees at
39 of our domestic hospitals are represented by various labor unions. While no elections are expected in 2019, it is possible additional hospitals may unionize in the future. We consider our employee relations to be good and have not experienced
work stoppages that have materially, adversely affected our business or results of operations. Our hospitals, like most hospitals, have experienced rising labor costs. In some markets, nurse and medical support personnel availability has become a
significant operating issue to health care providers. To address this challenge, we have implemented several initiatives to improve retention, recruiting, compensation programs and productivity. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our hospitals are staffed by licensed physicians, including both employed physicians and physicians who are not employees of our hospitals.
Some physicians provide services in our hospitals under contracts, which generally describe a term of service, provide and establish the duties and obligations of such physicians, require the maintenance of certain performance criteria and fix
compensation for such services. Any licensed physician may apply to be accepted to the medical staff of any of our hospitals, but the hospital&#146;s medical staff and the appropriate governing board of the hospital, in accordance with established
credentialing criteria, must approve acceptance to the staff. Members of the medical staffs of our hospitals often also serve on the medical staffs of other hospitals and may terminate their affiliation with one of our hospitals at any time. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We may be required to continue to enhance wages and benefits to recruit and retain nurses and other medical support personnel or to hire more
expensive temporary or contract personnel. As a result, our labor costs could increase. We also depend on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we operate. Recent changes by the National
Labor Relations Board (the &#147;NLRB&#148;) in its election procedures could increase the likelihood of employee unionization attempts. To the extent a significant portion of our employee base unionizes, our costs could increase materially. In
addition, the states in which we operate could adopt mandatory nurse-staffing ratios or could reduce mandatory nurse-staffing ratios already in place. State-mandated nurse-staffing ratios could significantly affect labor costs, and have an adverse
impact on revenues if we are required to limit patient admissions in order to meet the required ratios. </P>
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<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;1A.</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B></B><B><I>Risk Factors</I></B><B> </B></P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If any of the events discussed in the following risk factors were to occur, our business, financial position, results of operations, cash flows
or prospects could be materially, adversely affected. Additional risks and uncertainties not presently known, or currently deemed immaterial, may also constrain our business and operations. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react
to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are highly leveraged. As of September&nbsp;30, 2018, our total indebtedness was $33.107&nbsp;billion. As of September&nbsp;30, 2018, we had
availability of $1.982&nbsp;billion under our senior secured revolving credit facility and $400&nbsp;million under our asset-based revolving credit facility, after giving effect to letters of credit and borrowing base limitations. Our high degree of
leverage could have important consequences, including: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">increasing our vulnerability to downturns or adverse changes in general economic, industry or competitive
conditions and adverse changes in government regulations; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">requiring a substantial portion of cash flows from operations to be dedicated to the payment of principal and
interest on our indebtedness, therefore reducing our ability to use our cash flows to fund our operations, capital expenditures and future business opportunities; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">exposing us to the risk of increased interest rates as to the extent that our existing unhedged borrowings are at
variable rates of interest or we seek to refinance our debt in a rising rate environment; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
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<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">limiting our ability to make strategic acquisitions or causing us to make nonstrategic divestitures;
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="5%">&nbsp;</TD>
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<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">limiting our ability to obtain additional financing for working capital, capital expenditures, share repurchases,
dividends, product or service line development, debt service requirements, acquisitions and general corporate or other purposes; and </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage
compared to our competitors who are less highly leveraged. </P></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We and our subsidiaries have the ability to incur additional
indebtedness in the future, subject to the restrictions contained in our senior secured credit facilities and the indentures governing our outstanding notes. If new indebtedness is added to our current debt levels, interest rates and the related
risks that we now face could intensify. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>We may not be able to generate sufficient cash to service all of our indebtedness and may not
be able to refinance our indebtedness on favorable terms. If we are unable to do so, we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance,
which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot assure you we will maintain a level of cash flows from operating activities sufficient to permit
us to pay the principal, premium, if any, and interest on our indebtedness. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition, we conduct our operations through our
subsidiaries. Accordingly, repayment of our indebtedness is dependent on the generation of cash flows by our subsidiaries and their ability to make such cash available to us by dividend, debt repayment or otherwise. Our subsidiaries may not be able
to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability
to obtain cash from our subsidiaries. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We may find it necessary or prudent to refinance our outstanding indebtedness, the terms of which
may not be favorable to us. Our ability to refinance our indebtedness on favorable terms, or at all, is directly affected by the then current global economic and financial conditions which affect the availability of debt financing and the rates at
which such financing is available. In addition, our ability to incur secured indebtedness (which would generally enable us to achieve better pricing than the incurrence of unsecured indebtedness) depends in part on the value of our assets, which
depends, in turn, on the strength of our cash flows and results of operations, and on economic and market conditions and other factors. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If our cash flows and capital resources are insufficient to fund our debt service
obligations or we are unable to refinance our indebtedness, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure our indebtedness. These alternative measures may not be
successful and may not permit us to meet our scheduled debt service obligations. If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to
dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions, or the proceeds from the dispositions may not be adequate to meet any debt service obligations then due.
</P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Our debt agreements contain restrictions that limit our flexibility in operating our business. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our senior secured credit facilities and, to a lesser extent, the indentures governing our outstanding notes contain various covenants that
limit our ability to engage in specified types of transactions. These covenants limit our and certain of our subsidiaries&#146; ability to, among other things: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">incur additional indebtedness or issue certain preferred shares; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted
payments; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">make certain investments; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">sell or transfer assets; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">create liens; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">enter into certain transactions with our affiliates. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under our asset-based revolving credit facility, availability is subject to a borrowing base of 85% of eligible accounts receivable less
customary reserves, with any reduction in the borrowing base commensurately reducing our ability to access this facility as a source of liquidity.&nbsp;In addition, under the asset-based revolving credit facility, when (and for as long as) the
combined availability under our asset-based revolving credit facility and our senior secured revolving credit facility is less than a specified amount for a certain period of time or, if a payment or bankruptcy event of default has occurred and is
continuing, funds deposited into any of our depository accounts will be transferred on a daily basis into a blocked account with the administrative agent and applied to prepay loans under the asset-based revolving credit facility and to
collateralize letters of credit issued thereunder. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Under our senior secured credit facilities, we are required to satisfy and maintain
specified financial ratios. Our ability to meet those financial ratios can be affected by events beyond our control, and there can be no assurance we will continue to meet those ratios. A breach of any of these covenants could result in a default
under both the cash flow credit facility and the asset-based revolving credit facility. Upon the occurrence of an event of default under these senior secured credit facilities, the lenders thereunder could elect to declare all amounts outstanding
under the senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit, which would also result in an event of default under a significant portion of our outstanding indebtedness. If we
were unable to repay those amounts, the lenders under the senior secured credit facilities could proceed against the collateral granted to them to secure such indebtedness. We have pledged a significant portion of our assets under our senior secured
credit facilities and that collateral is also pledged as collateral under our first lien notes. If any of the lenders under the senior secured credit facilities accelerate the repayment of borrowings, there can be no assurance there will be
sufficient assets to repay the senior secured credit facilities, the first lien notes and our other indebtedness. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Our hospitals face
competition for patients from other hospitals and health care providers. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The health care business is highly competitive, and
competition among hospitals and other health care providers for patients has intensified in recent years. Generally, other hospitals in the communities we serve provide services similar to those offered by our hospitals. In addition, CMS publicizes
on its Hospital Compare website performance data related to quality </P>
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measures and data on patient satisfaction surveys that hospitals submit in connection with their Medicare reimbursement. Federal law provides for the future expansion of the number of quality
measures that must be reported. Additional quality measures and trends toward clinical transparency may have an unanticipated impact on our competitive position and patient volumes. Further, CMS requires every Medicare-participating hospital to
establish and update annually a public listing online of the hospital&#146;s standard charges for items and services. If any of our hospitals achieve poor results (or results that are lower than our competitors) on these quality measures or on
patient satisfaction surveys or if our standard charges are or are perceived to be higher than our competitors, our patient volumes could decline. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The number of freestanding specialty hospitals, surgery centers, emergency departments, urgent care centers and diagnostic and imaging centers
in the geographic areas in which we operate has increased. Many individuals are seeking a broader range of services at outpatient facilities as a result of the growing availability of stand-alone outpatient health care facilities, the increase in
payer reimbursement policies that restrict inpatient coverage and the increase in the services that can be provided on an outpatient basis, including high margin services. Consequently, most of our hospitals operate in a highly competitive
environment, which may put pressure on our pricing, ability to contract with third-party payers and the Company&#146;s strategy for volume growth. Some of the facilities that compete with our hospitals are physician-owned or are owned by
governmental agencies or <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">not-for-profit</FONT></FONT> corporations supported by endowments, charitable contributions and/or tax revenues and can finance capital expenditures and
operations on a <FONT STYLE="white-space:nowrap">tax-exempt</FONT> basis. Recent consolidations of <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">not-for-profit</FONT></FONT> hospital entities may intensify this competitive
pressure. There is also increasing consolidation in the third-party payer industry, including vertical integration efforts among third-party payers and health care providers, and increasing efforts by payers to influence or direct the patient&#146;s
choice of provider by the use of narrow networks or other strategies. Health care industry participants are increasingly implementing physician alignment strategies, such as employing physicians, acquiring physician practice groups and participating
in ACOs or other clinical integration models. Other industry participants, such as large employer groups and their affiliates, may intensify competitive pressure and affect the industry in ways that are difficult to predict. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our hospitals compete with specialty hospitals and with both our own and unaffiliated freestanding ASCs and other outpatient providers for
market share in certain high margin services and for quality physicians and personnel. If ASCs and other outpatient providers are better able to compete in this environment than our hospitals, our hospitals may experience a decline in patient
volume, and we may experience a decrease in margin, even if those patients use our providers. In states that do not require a CON or other type of approval for the purchase, construction or expansion of health care facilities or services,
competition in the form of new services, facilities and capital spending is more prevalent. Further, if our competitors are better able to attract patients, make capital expenditures and maintain modern and technologically upgraded facilities and
equipment, recruit physicians, expand services or obtain favorable third-party payer contracts at their facilities than our hospitals and other providers, we may experience an overall decline in patient volume. See Item&nbsp;1, &#147;Business &#151;
Competition.&#148; </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>A deterioration in the collectability of uninsured and patient due accounts could adversely affect our results of
operations. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The primary collection risks for our accounts receivable relate to the uninsured patient accounts and patient accounts for
which the primary third-party payer has paid the amounts covered by the applicable agreement, but patient responsibility amounts (exclusions, deductibles and copayments) remain outstanding. Medicare reimburses hospitals for 65% of eligible Medicare
bad debts. To be eligible for reimbursement, the amounts claimed must meet certain criteria, including that the debt is related to unpaid deductible or coinsurance amounts and that the hospital first attempted to collect the fees from the Medicare
beneficiary. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The estimates for implicit price concessions are based upon management&#146;s assessment of historical write-offs and
expected net collections, business and economic conditions, trends in federal and state governmental and private employer health care coverage, the rate of growth in uninsured patient admissions and other collection indicators. At September&nbsp;30,
2018, estimated implicit price concessions of $5.781&nbsp;billion had been recorded as reductions to our accounts receivable to enable us to record our revenues and accounts receivable at the estimated amounts we expect to collect. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Any increase in the amount or deterioration in the collectability of uninsured accounts receivable will adversely affect our cash flows and
results of operations. Our facilities may experience growth in total uncompensated care as a result of a number of factors, including conditions impacting the overall economy and high unemployment. Effective in January 2019, Congress eliminated the
financial penalty associated with the Health Reform Law&#146;s individual mandate. Further, final rules issued in 2018 expand the availability of association health plans and allow the sale of short-term, limited-duration health plans, neither of
which are required to cover all of the essential health benefits mandated by the Health Reform Law. These changes </P>
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may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased. The presidential administration and a number of members
of Congress continue to make other efforts to repeal or significantly change the Health Reform Law. Even if the Health Reform Law remains in effect, we will continue to experience collectability issues and provide uninsured discounts and charity
care for individuals residing in states that choose not to implement the Medicaid expansion, for undocumented aliens who are not permitted to enroll in an Exchange or government health care programs and for certain others who may not have insurance
coverage. Further, some patients may choose to enroll in lower cost Medicaid plans or other health insurance plans with lower reimbursement levels. We may also be adversely affected by the growth in patient responsibility accounts as a result of
increases in the adoption of health plan structures that shift greater responsibility for care to individuals through greater exclusions and copayment and deductible amounts. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Changes in government health care programs may adversely affect our revenues. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A significant portion of our patient volume is derived from government health care programs, principally Medicare and Medicaid. Specifically,
we derived 41.2% of our revenues from the Medicare and Medicaid programs for the nine months ended September&nbsp;30, 2018. Changes in government health care programs, including Medicaid waiver programs, may reduce the reimbursement we receive and
could adversely affect our business and results of operations. The Health Reform Law has made significant changes to Medicare and Medicaid, and future health reform efforts or further efforts to repeal or significantly change the Health Reform Law
may impact these programs. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In recent years, legislative and regulatory changes have resulted in limitations on and, in some cases,
reductions in levels of payments to health care providers for certain services under the Medicare program. Congress has established automatic spending reductions that extend through 2027. However, the percentage reduction for Medicare may not be
more than 2% for a fiscal year, with a uniform percentage reduction across all Medicare programs. We are unable to predict what other deficit reduction initiatives may be proposed by Congress. These reductions are in addition to reductions mandated
by the Health Reform Law and other laws. Further, from time to time, CMS revises the reimbursement systems used to reimburse health care providers, including changes to the <FONT STYLE="white-space:nowrap">MS-DRG</FONT> system and other payment
systems, which may result in reduced Medicare payments. For example, under a site neutrality policy, certain items and services provided by <FONT STYLE="white-space:nowrap">off-campus</FONT> provider-based departments that were formerly paid under
the outpatient PPS are now paid under the Physician Fee Schedule, subject to certain exceptions that are being phased out over the next two years. CMS is also considering proposals to reduce drug costs. CMS may implement changes to how items or
services are reimbursed that result in payment reductions for other services. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Because most states must operate with balanced budgets and
because the Medicaid program is often a state&#146;s largest program, some states have enacted or may consider enacting legislation designed to reduce their Medicaid expenditures. Further, many states have also adopted, or are considering,
legislation designed to reduce coverage, enroll Medicaid recipients in managed care programs, <FONT STYLE="white-space:nowrap">dis-enroll</FONT> Medicaid recipients who fail to meet work requirements and/or impose additional taxes on hospitals to
help finance or expand the states&#146; Medicaid systems. Periods of economic weakness may increase the budgetary pressures on many states, and these budgetary pressures may result in decreased spending, or decreased spending growth, for Medicaid
programs and the Children&#146;s Health Insurance Program in many states. Some states that provide Medicaid supplemental payments are reviewing these programs or have filed waiver requests with CMS to replace these programs, and CMS has performed
and continues to perform compliance reviews of some states&#146; programs, which could result in Medicaid supplemental payments being reduced or eliminated. For example, in December 2017, CMS announced that it will phase out funding for Designated
State Health Programs under certain types of Medicaid waivers. Further, legislation and administrative actions at the federal level may significantly alter the funding for, or structure of, the Medicaid program. For example, from time to time,
Congress considers proposals to restructure the Medicaid program to involve block grants that would be administered by the states. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In
some cases, private third-party payers rely on all or portions of Medicare payment systems to determine payment rates. Changes to government health care programs that reduce payments under these programs may negatively impact payments from private
third-party payers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Current or future health care reform and deficit reduction efforts, changes in laws or regulations regarding
government health care programs, other changes in the administration of government health care programs and changes by private third-party payers in response to health care reform and other changes to government health care programs could have a
material, adverse effect on our financial position and results of operations. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Our results of operations may be adversely affected by health care reform efforts,
particularly court challenges to, and efforts to repeal, replace or otherwise significantly change the Health Reform Law. We are unable to predict what, if any, and when such changes will be made in the future. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In recent years, the Congress and certain state legislatures have introduced and passed a large number of proposals and legislation designed to
make major changes in the health care system, including changes intended to increase access to health insurance. The Health Reform Law is the most prominent of these efforts and represents a significant shift in the way health care services are
delivered, covered, and reimbursed. Although it has reduced our Medicare and Medicaid reimbursement, the Health Reform Law has also reduced the number of uninsured patients to whom we provide health care services, primarily through the Exchanges and
Medicaid expansion. However, effective January 2019, Congress eliminated the financial penalty associated with the individual mandate. Additionally, final rules issued in 2018 expand the availability of association health plans and allow the sale of
short-term, limited-duration health plans, neither of which are required to cover all of the essential health benefits mandated by the Health Reform Law. These developments may impact the number of individuals that elect to obtain public or private
health insurance or the scope of such coverage, if purchased. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In December 2018, as a result of the individual mandate penalty being
eliminated, the United States District Court for the Northern District of Texas found that the entire Health Reform Law was unconstitutional, but the law remains in place pending appeal. If the District Court&#146;s ruling is upheld on appeal, it
could have an adverse effect on the Company&#146;s results of operations. In addition, the presidential administration and a number of members of Congress continue to attempt to repeal, amend or replace the law, or make significant changes to its
implementation, and the law remains subject to court challenges. CMS has indicated that it intends to increase flexibility in state Medicaid programs, including by expanding the scope of waivers under which states may implement Medicaid expansion
provisions, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards. There is uncertainty regarding whether, when, and how the Health Reform Law may be further changed, what
alternative provisions, if any, will be enacted, the timing of enactment and implementation of alternative provisions, the impact of alternative provisions on health care industry participants, the ultimate outcome of court challenges and how the
law will be interpreted and implemented. Changes by Congress or government agencies could eliminate or alter provisions beneficial to us, while leaving in place provisions reducing our reimbursement or otherwise negatively impacting our business.
Members of Congress have also proposed measures that would expand government-sponsored coverage, including single-payer proposals. Other industry participants, such as private payers and large employer groups and their affiliates, may also introduce
financial or delivery system reforms. We are unable to predict the nature and success of such initiatives. Health care reform initiatives, including changes to or repeal or invalidation of the Health Reform Law, may have an adverse effect on our
business, results of operations, cash flow, capital resources, and liquidity. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>If our volume of patients with private health insurance
coverage declines or we are unable to retain and negotiate favorable contracts with private third-party payers, including managed care plans, our revenues may be reduced. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Private third-party payers, including HMOs, PPOs and other managed care plans, typically reimburse health care providers at a higher rate than
Medicare, Medicaid or other government health care programs. Reimbursement rates are set forth by contract when our facilities are <FONT STYLE="white-space:nowrap">in-network,</FONT> and payers utilize plan structures to encourage or require the use
of <FONT STYLE="white-space:nowrap">in-network</FONT> providers. Revenues derived from private third-party payers (domestic only) accounted for 52.6%, 53.5% and 53.7% of our revenues for the nine months ended September&nbsp;30, 2018 and the years
ended December&nbsp;31, 2017 and 2016, respectively. As a result, our ability to maintain or increase patient volumes covered by private third-party payers and to maintain and obtain favorable contracts with private third-party payers significantly
affects the revenues and operating results of our facilities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Private third-party payers, including managed care plans, continue to
demand discounted fee structures, and the ongoing trend toward consolidation among payers tends to increase their bargaining power over fee structures. Payers may utilize plan structures such as narrow networks and tiered networks that limit
beneficiary provider choices or impose significantly higher cost sharing obligations when care is obtained from providers in a disfavored tier. Other health care providers may impact our ability to enter into managed care contracts or negotiate
increases in our reimbursement and other favorable terms and conditions. For example, some of our competitors may negotiate exclusivity provisions with managed care plans or otherwise restrict the ability of managed care plans to contract with us.
In addition to increasing negotiating leverage of private third-party payers, alignment efforts between third-party payers and health care providers may also result in other competitive advantages, such as greater access to performance and pricing
data. Our future success will depend, in part, on our ability to retain and renew our third-party payer contracts and enter into new contracts on terms favorable to us. Cost-reduction strategies by large employer groups and their affiliates, such as
directly contracting with a limited number of providers, may also limit our ability to negotiate favorable terms in our contracts and otherwise intensify competitive pressure. It is not clear what impact,
</P>
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if any, future health reform efforts or the repeal of, or further changes to, the Health Reform Law will have on our ability to negotiate reimbursement increases and participate in third-party
payer networks on favorable terms. If we are unable to retain and negotiate favorable contracts with third-party payers or experience reductions in payment increases or amounts received from third-party payers, our revenues may be reduced. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Our performance depends on our ability to recruit and retain quality physicians. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The success of our hospitals depends in part on the number and quality of the physicians on the medical staffs of our hospitals, the admitting
and utilization practices of those physicians, maintaining good relations with those physicians and controlling costs related to the employment of physicians. Although we employ some physicians, physicians are often not employees of the hospitals at
which they practice, and, in many of the markets we serve, most physicians have admitting privileges at other hospitals in addition to our hospitals. We continue to face increasing competition to recruit physicians. Such physicians may terminate
their affiliation with our hospitals at any time. We may face increased challenges in this area as the physician population reaches retirement age, especially if there is a shortage of physicians willing and able to provide comparable services. If
we are unable to provide adequate support personnel or technologically advanced equipment and hospital facilities that meet the needs of those physicians and their patients, they may be discouraged from referring patients to our facilities,
admissions may decrease and our operating performance may decline. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Our hospitals face competition for staffing, which may increase
labor costs and reduce profitability. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our operations are dependent on the efforts, abilities and experience of our management and
medical support personnel, such as nurses, pharmacists and lab technicians, as well as our physicians. We compete with other health care providers in recruiting and retaining qualified management and support personnel responsible for the daily
operations of each of our hospitals, including nurses and other nonphysician health care professionals. In some markets, the availability of nurses and other medical support personnel has been a significant operating issue to health care providers.
We may be required to continue to enhance wages and benefits to recruit and retain nurses and other medical support personnel or to hire more expensive temporary or contract personnel. As a result, our labor costs could increase. We also depend on
the available labor pool of semi-skilled and unskilled employees in each of the markets in which we operate. Recent changes in federal labor laws and the NLRB&#146;s modification of its election procedures could increase the likelihood of employee
unionization attempts. To the extent a significant portion of our employee base unionizes, it is possible our labor costs could increase materially. When negotiating collective bargaining agreements with unions, whether such agreements are renewals
or first contracts, there is the possibility that strikes could occur during the negotiation process, and our continued operation during any strikes could increase our labor costs. In addition, the states in which we operate could adopt mandatory
nurse-staffing ratios or could reduce mandatory nurse staffing ratios already in place. State-mandated nurse-staffing ratios could significantly affect labor costs and have an adverse impact on revenues if we are required to limit admissions in
order to meet the required ratios. If our labor costs increase, we may not be able to raise rates to offset these increased costs. Because a significant percentage of our revenues consists of fixed, prospective payments, our ability to pass along
increased labor costs is constrained. Our failure to recruit and retain qualified management, nurses and other medical support personnel, or to control labor costs, could have a material, adverse effect on our results of operations. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>We may be unable to attract, hire, and retain a highly qualified and diverse workforce, including key management. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The talents and efforts of our employees, particularly our key management, are vital to our success. Our management team has significant
industry experience and would be difficult to replace. In addition, institutional knowledge may be lost in any potential managerial transition. We may be unable to retain them or to attract other highly qualified employees, particularly if we do not
offer employment terms that are competitive with the rest of the labor market. Failure to attract, hire, develop, motivate, and retain highly qualified and diverse employee talent, or failure to develop and implement an adequate succession plan for
the management team, could disrupt our operations and adversely affect our business and our future success. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>If we fail to comply with
extensive laws and government regulations, we could suffer penalties or be required to make significant changes to our operations. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The
health care industry is required to comply with extensive and complex laws and regulations at the federal, state and local government levels relating to, among other things: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">billing and coding for services and properly handling overpayments; </P></TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">appropriateness and classification of level of care provided, including proper classification of inpatient
admissions, observation services and outpatient care; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">relationships with physicians and other referral sources and referral recipients; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">necessity and adequacy of medical care; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">quality of medical equipment and services; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">qualifications of medical and support personnel; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">confidentiality, maintenance, data breach, identity theft and security issues associated with health-related and
personal information and medical records; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">screening, stabilization and transfer of individuals who have emergency medical conditions;
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">licensure, certification and enrollment with government programs; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">hospital rate or budget review; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">debt collection, limits on balance billing and billing for out of network services; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">communications with patients and consumers; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">preparing and filing of cost reports; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">operating policies and procedures; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">activities regarding competitors; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">addition of facilities and services; and </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">environmental protection. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Among these laws are the federal Anti-kickback Statute, the federal Stark Law, the FCA and similar state laws. We have a variety of financial
relationships with physicians and others who either refer or influence the referral of patients to our hospitals, other health care facilities and employed physicians or who are the recipients of referrals, and these laws govern those relationships.
The OIG has enacted safe harbor regulations that outline practices deemed protected from prosecution under the Anti-kickback Statute. While we endeavor to comply with the applicable safe harbors, certain of our current arrangements, including joint
ventures and financial relationships with physicians and other referral sources and persons and entities to which we refer patients, do not qualify for safe harbor protection. Failure to qualify for a safe harbor does not mean the arrangement
necessarily violates the Anti-kickback Statute but may subject the arrangement to greater scrutiny. However, we cannot offer assurance that practices outside of a safe harbor will not be found to violate the Anti-kickback Statute. Allegations of
violations of the Anti-kickback Statute may be brought under the federal Civil Monetary Penalty Law, which requires a lower burden of proof than other fraud and abuse laws, including the Anti-kickback Statute. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Our financial relationships with referring physicians and their immediate family members must comply with the Stark Law by meeting an
exception. We attempt to structure our relationships to meet an exception to the Stark Law, but the regulations implementing the exceptions are detailed and complex, and we cannot provide assurance that every relationship complies fully with the
Stark Law. Unlike the Anti-kickback Statute, failure to meet an exception under the Stark Law results in a violation of the Stark Law, even if such violation is technical in nature. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Additionally, if we violate the Anti-kickback Statute or Stark Law, or if we improperly bill for our services, we may be found to violate the
FCA, either under a suit brought by the government or by a private person under a <I>qui tam</I>, or &#147;whistleblower,&#148; suit. See Item&nbsp;1, &#147;Business &#151; Regulation and Other Factors.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We also operate health care facilities in the United Kingdom and have operations and commercial relationships with companies in other foreign
jurisdictions and, as a result, are subject to certain U.S. and foreign laws applicable to businesses generally, including anti-corruption laws. The Foreign Corrupt Practices Act regulates U.S. companies in their dealings with foreign officials,
prohibiting bribes and similar practices, and requires that they maintain records that fairly and accurately reflect transactions and appropriate internal accounting controls. In addition, the United Kingdom Bribery Act has wide jurisdiction over
certain activities that affect the United Kingdom. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A variety of state, national, foreign and international laws and regulations apply to the
collection, use, retention, protection, security, disclosure, transfer and other processing of personal data. Many foreign data privacy regulations (including the General Data Protection Regulation (the &#147;GDPR&#148;), which became effective in
the European Union on May&nbsp;25, 2018) are more stringent than those in the United States. These laws and regulations are rapidly evolving and changing, and could have an adverse effect on our operations. Companies&#146; obligations and
requirements under these laws and regulations are subject to uncertainty in how they may be interpreted by government authorities and regulators. The costs of compliance with, and the other burdens imposed by, these and other laws or regulatory
actions may increase our operational costs, result in interruptions or delays in the availability of systems and/or result in a patient volume decline. In the case of <FONT STYLE="white-space:nowrap">non-compliance</FONT> with a material provision
of the GDPR (such as <FONT STYLE="white-space:nowrap">non-adherence</FONT> to the core principles of processing personal data), regulators have the authority to levy a fine in an amount that is up to the greater of &#128;20&nbsp;million or 4% of
global annual turnover in the prior year. If it is determined that <FONT STYLE="white-space:nowrap">non-compliance</FONT> is related to a <FONT STYLE="white-space:nowrap">non-material</FONT> provision (such as failure to comply with technical
measures), regulators may impose a fine in an amount that is up to the greater of &#128;10&nbsp;million or 2% of the global annual turnover from the prior year. These administrative fines are discretionary and based, in each case, on a
multi-factored approach. We may also face audits or investigations by one or more domestic or foreign government agencies relating to our compliance with these regulations. An adverse outcome under any such investigation or audit could result in
liability, result in adverse publicity, and adversely affect our business. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We engage in consumer debt collection for <FONT
STYLE="white-space:nowrap">HCA-affiliated</FONT> hospitals and certain <FONT STYLE="white-space:nowrap">non-affiliated</FONT> hospitals. The federal Fair Debt Collection Practices Act and Telephone Consumer Protection Act restrict the methods that
companies may use to contact and seek payment from consumer debtors regarding past due accounts. Many states impose additional requirements on debt collection practices, and some of those requirements may be more stringent than the federal
requirements. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If we fail to comply with these or other applicable laws and regulations, we could be subject to liabilities, including
civil penalties, the loss of our licenses to operate one or more facilities, exclusion of one or more facilities from participation in the Medicare, Medicaid and other federal and state health care programs and criminal penalties. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We do not always have the benefit of significant regulatory or judicial interpretation of these laws and regulations. In the future, different
interpretations or enforcement of, or amendment to, these or other laws and regulations could subject our current or past practices to allegations of impropriety or illegality or could require us to make changes in our facilities, equipment,
personnel, services, capital expenditure programs and operating expenses. A determination that we have violated these or other laws, or the public announcement that we are being investigated for possible violations of these or other laws, could have
a material, adverse effect on our business, financial condition, results of operations or prospects, and our business reputation could suffer significantly. In addition, other legislation or regulations at the federal or state level may be adopted
that adversely affect our business. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>We have been and could become the subject of government investigations, claims and litigation.
</I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Health care companies are subject to numerous investigations by various government agencies. Further, under the FCA, private parties
have the right to bring <I>qui tam</I>, or &#147;whistleblower,&#148; suits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. Some states have adopted similar state whistleblower and
false claims provisions. Certain of our individual facilities and/or affiliates have received, and other facilities and/or affiliates may receive, government inquiries from, and may be subject to investigation by, federal and state agencies.
Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material, adverse effect on our financial position, results of operations and liquidity. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Government agencies and their agents, such as the MACs, fiscal intermediaries and carriers, as well as the OIG, CMS and state Medicaid
programs, conduct audits of our health care operations. CMS and state Medicaid agencies contract with RACs and other contractors on a contingency fee basis to conduct post-payment reviews to detect and correct improper payments in the Medicare
program, including managed Medicare plans, and the Medicaid programs. RAC denials are appealable; however, there are currently significant delays in the assignment of new Medicare appeals to Administrative Law Judges, which negatively impacts our
ability to appeal RAC payment denials. Private third-party payers may conduct similar post-payment audits, and we also perform internal audits and monitoring. Depending on the nature of the conduct found in such audits and whether the underlying
conduct could be considered systemic, the resolution of these audits could have a material, adverse effect on our financial position, results of operations and liquidity. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Should we be found out of compliance with any of these laws, regulations or programs,
depending on the nature of the findings, our business, our financial position and our results of operations could be negatively impacted. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Changes to physician utilization practices and treatment methodologies, third-party payer controls designed to reduce inpatient services or
surgical procedures and other factors outside our control that impact demand for medical services may reduce our revenues. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Controls
imposed by Medicare, managed Medicare, Medicaid, managed Medicaid and private third-party payers designed to reduce admissions, intensity of services, surgical volumes and lengths of stay, in some instances referred to as &#147;utilization
review,&#148; have affected and are expected to continue to affect our facilities. Utilization review entails the review of the admission and course of treatment of a patient by third-party payers. The Medicare program also issues national or local
coverage determinations that restrict the circumstances under which Medicare pays for certain services. Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by third-party payers&#146; preadmission
authorization requirements, coverage restrictions, utilization review and by pressure to maximize outpatient and alternative health care delivery services for less acutely ill patients. Efforts to impose more stringent cost controls are expected to
continue. Additionally, trends in physician treatment protocols and health plan design, such as health plans that shift increased costs and accountability for care to patients, could reduce our surgical volumes and admissions in favor of lower
intensity and lower cost treatment methodologies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Volume, admission and <FONT STYLE="white-space:nowrap">case-mix</FONT> trends may be
impacted by other factors beyond our control, such as changes in volume of certain high acuity services, variations in the prevalence and severity of outbreaks of influenza and other illnesses and medical conditions, seasonal and severe weather
conditions, changes in treatment regimens and medical technology and other advances. These factors may reduce the demand for services we offer and decrease the reimbursement that we receive. Significant limits on the scope of services reimbursed,
cost controls, changes to physician utilization practices, treatment methodologies, reimbursement rates and fees and other factors beyond our control could have a material, adverse effect on our business, financial position and results of
operations. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Our overall business results may suffer during periods of general economic weakness. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Budget deficits at federal, state and local government entities have had a negative impact on spending, and may continue to negatively impact
spending, for health and human service programs, including Medicare, Medicaid and similar programs, which represent significant third-party payer sources for our hospitals. We anticipate that the federal deficit, the growing magnitude of Medicare
expenditures and the aging of the United States population will continue to place pressure on government health care programs. Other risks we face during periods of economic weakness and high unemployment include potential declines in the population
covered under managed care agreements, increased patient decisions to postpone or cancel elective and nonemergency health care procedures (including delaying surgical procedures), potential increases in the uninsured and underinsured populations,
increased adoption of health plan structures that shift financial responsibility to patients and further difficulties in collecting patient receivables for copayment and deductible receivables. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>The industry trend toward value-based purchasing may negatively impact our revenues. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">There is a trend in the health care industry toward value-based purchasing of health care services. These value-based purchasing programs
include both public reporting of quality data and preventable adverse events tied to the quality and efficiency of care provided by facilities. Governmental programs including Medicare currently require hospitals to report certain quality data to
receive full reimbursement updates. In addition, Medicare does not reimburse for care related to certain preventable adverse events (also called &#147;never events&#148;). The Health Reform Law also prohibits the use of federal funds under the
Medicaid program to reimburse providers for medical assistance provided to treat HACs. The 25% of hospitals with the worst risk-adjusted HAC scores in the designated performance period receive a 1% reduction in their inpatient PPS Medicare payments.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Hospitals with excess readmission rates for conditions designated by HHS will receive a reduction in their inpatient PPS operating
Medicare payments for all Medicare inpatient discharges, not just discharges relating to the conditions subject to the excess readmission standard. The reduction in payments to hospitals with excess readmissions can be up to 3% of a hospital&#146;s
base payments. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">HHS has implemented a value-based purchasing program for inpatient hospital services that
reduces inpatient hospital payments for all discharges by 2% in each federal fiscal year. HHS pools the amount collected from these reductions to fund payments to reward hospitals that meet or exceed certain quality performance standards established
by HHS. HHS estimates that $1.9&nbsp;billion in value-based incentive payments will be available to hospitals in federal fiscal year 2019 based on achievement (relative to other hospitals) and improvement (relative to the hospital&#146;s own past
performance). Hospitals that meet or exceed the quality performance standards will receive greater reimbursement under the value-based purchasing program than they would have otherwise. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">CMS has developed several alternative payment models that are intended to reduce costs and improve quality of care for Medicare beneficiaries.
Examples of alternative payment models include bundled payment models in which, depending on whether overall CMS spending per episode exceeds or falls below a target specified by CMS and whether quality standards are met, hospitals may receive
supplemental Medicare payments or owe repayments to CMS. Generally, participation in bundled payment programs is voluntary, but CMS requires hospitals in selected markets to participate in a bundled payment initiative for orthopedic services. CMS
has indicated that it is developing more voluntary and mandatory bundled payment models. Participation in mandatory or voluntary demonstration projects, particularly demonstrations with the potential to affect payment, may negatively impact our
results of operations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Many large private third-party payers currently require hospitals to report quality data, and several private
third-party payers do not reimburse hospitals for certain preventable adverse events. Further, we have implemented a policy pursuant to which we do not bill patients or third-party payers for fees or expenses incurred due to certain preventable
adverse events. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We expect value-based purchasing programs, including programs that condition reimbursement on patient outcome measures,
to become more common and to involve a higher percentage of reimbursement amounts. CMS has announced aggressive goals for adopting alternative payment models, which may include additional bundled payment programs, and private third-party payers may
also transition away from <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">fee-for-service</FONT></FONT> payment models. It is unclear whether these and other alternative payment models will successfully coordinate care and reduce
costs or whether they will decrease aggregate reimbursement. We are unable at this time to predict our future payments or whether we will be subject to payment reductions under these programs or how this trend will affect our results of operations.
If we are unable to meet or exceed the quality performance standards under any applicable value-based purchasing program, perform at a level below the outcomes demonstrated by our competitors, or otherwise fail to effectively provide or coordinate
the efficient delivery of quality health care services, our reputation in the industry may be negatively impacted, we may receive reduced reimbursement amounts and we may owe repayments to payers, causing our revenues to decline. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Our operations could be impaired by a failure of our information systems. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The performance of our information systems is critical to our business operations. In addition to our shared services initiatives, our
information systems are essential to a number of critical areas of our operations, including: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">accounting and financial reporting; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">billing and collecting accounts; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">coding and compliance; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">clinical systems and medical devices; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">medical records and document storage; </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="5%">&nbsp;</TD>
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<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">inventory management; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">negotiating, pricing and administering managed care contracts and supply contracts; and </P></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
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<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">monitoring quality of care and collecting data on quality measures necessary for full Medicare payment updates.
</P></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Information systems may be vulnerable to damage from a variety of sources, including telecommunications or network
failures, human acts and natural disasters. We have taken precautionary measures to prevent unanticipated problems that could affect our information systems. Nevertheless, we may experience system failures. The occurrence of any system failure could
result in interruptions, delays, the loss or corruption of data and cessations or interruptions in the availability of systems, all of which could have a material, adverse effect on our financial position and results of operations and harm our
business reputation. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>A cybersecurity incident could result in the compromise of our facilities, confidential
data or critical data systems and give rise to potential harm to patients, remediation and other expenses, expose us to liability under HIPAA, consumer protection laws, common law theories or other laws, subject us to litigation and foreign, federal
and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We, independently and through
third-party vendors, collect and store on our networks and devices sensitive information, including intellectual property, proprietary business information and personally identifiable information of our patients and employees. We have made
significant investments in technology to adopt and meaningfully use EHR and in the use of medical devices that store sensitive data and are integral to the provision of patient care. In addition, medical devices manufactured by third parties that
are used within our facilities are increasingly connected to the internet, hospital networks and other medical devices. The secure maintenance of this information and technology is critical to our business operations. We have implemented multiple
layers of security measures to protect the confidentiality, integrity and availability of this data and the systems and devices that store and transmit such data. We utilize current security technologies, and our defenses are monitored and routinely
tested internally and by external parties. Despite these efforts, threats from malicious persons and groups, new vulnerabilities and advanced new attacks against information systems and devices against us or our third party vendors create risk of
cybersecurity incidents, including ransomware and malware incidents. We are regularly the target of attempted cybersecurity and other threats that could have a security impact. There can be no assurance that we or our third-party vendors will not be
subject to cybersecurity incidents that bypass our security measures, impact the integrity, availability or privacy of personal health information or other data subject to privacy laws or disrupt our information systems, devices or business,
including our ability to provide various health care services. As a result, cybersecurity, physical security and the continued development and enhancement of our controls, processes and practices designed to protect our facilities, information
systems and data from attack, damage or unauthorized access remain a priority for us. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to
investigate and remediate any cybersecurity vulnerabilities or incidents. The occurrence of any of these events could result in (i)&nbsp;harm to patients; (ii)&nbsp;business interruptions and delays; (iii)&nbsp;the loss, misappropriation, corruption
or unauthorized access of data; (iv)&nbsp;litigation and potential liability under privacy, security, breach notification and consumer protection laws, common law theories or other applicable laws; (v)&nbsp;reputational damage and (vi)&nbsp;foreign,
federal and state governmental inquiries, any of which could have a material, adverse effect on our financial position and results of operations and harm our business reputation. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>If we fail to continue to demonstrate meaningful use of certified electronic health record systems, our operations could be adversely
affected. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Eligible hospitals and eligible professionals that fail to demonstrate meaningful use of certified EHR technology in an
applicable prior reporting period are subject to reduced payments from Medicare in connection with the CMS Promoting Interoperability Program. Failure to continue to demonstrate meaningful use of certified EHR technology could have a material,
adverse effect on our financial position and results of operations. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>The emergence and effects related to a pandemic, epidemic or
outbreak of an infectious disease could adversely affect our operations. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If a pandemic, epidemic, outbreak of an infectious disease or
other public health crisis were to occur in an area in which we operate, our operations could be adversely affected. Such a crisis could diminish the public trust in health care facilities, especially hospitals that fail to accurately or timely
diagnose, or are treating (or have treated) patients affected by infectious diseases. If any of our facilities were involved, or perceived as being involved, in treating patients from such an infectious disease, patients might cancel elective
procedures or fail to seek needed care at our facilities. Further, a pandemic, epidemic or outbreak might adversely affect our operations by causing a temporary shutdown or diversion of patients, by disrupting or delaying production and delivery of
materials and products in the supply chain or by causing staffing shortages in our facilities. We have disaster plans in place and operate pursuant to infectious disease protocols, but the potential emergence of a pandemic, epidemic or outbreak is
difficult to predict and could adversely affect our operations. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>State efforts to regulate the construction or expansion of health care
facilities could impair our ability to operate and expand our operations. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Some states, particularly in the eastern part of the
country, require health care providers to obtain prior approval, often known as a CON, for the purchase, construction or expansion of health care facilities, to make certain capital expenditures or to make changes in services or bed capacity. In
giving approval, these states consider the need for additional or expanded health </P>
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care facilities or services. We currently operate health care facilities in a number of states with CON laws or that require other types of approvals for the establishment or expansion of certain
facility types or services. The failure to obtain any required CON or other required approval could impair our ability to operate or expand operations. Any such failure could, in turn, adversely affect our ability to attract patients and physicians
to our facilities and grow our revenues, which would have an adverse effect on our results of operations. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>We may encounter difficulty
acquiring hospitals and other health care businesses, encounter challenges integrating the operations of acquired hospitals and other health care businesses and become liable for unknown or contingent liabilities as a result of acquisitions.
</I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A component of our business strategy is acquiring hospitals and other health care businesses. We may encounter difficulty acquiring
new facilities or other businesses as a result of competition from other purchasers that may be willing to pay purchase prices that are higher than we believe are reasonable. Some states require CONs in order to acquire a hospital or other facility
or to expand facilities or services. In addition, the acquisition of health care facilities often involves licensure approvals or reviews and complex change of ownership processes for Medicare and other payers. Further, many states have laws that
restrict the conversion or sale of <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">not-for-profit</FONT></FONT> hospitals to <FONT STYLE="white-space:nowrap">for-profit</FONT> entities. These laws may require prior approval from
the state attorney general, advance notification of the attorney general or other regulators and community involvement. Attorneys general in states without specific requirements may exercise broad discretionary authority over transactions involving
the sale of <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">not-for-profits</FONT></FONT> under their general obligations to protect the use of charitable assets. These conversion legislative and administrative efforts often focus
on the appropriate valuation of the assets divested and the use of the proceeds of the sale by the <FONT STYLE="white-space:nowrap">non-profit</FONT> seller and may include consideration of commitments for capital improvements and charity care by
the purchaser. Also, the increasingly challenging regulatory and enforcement environment may negatively impact our ability to acquire health care businesses if they are found to have material unresolved compliance issues, such as repayment
obligations. Resolving compliance issues as well as completion of oversight, review or approval processes could seriously delay or even prevent our ability to acquire hospitals or other businesses and increase our acquisition costs. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We may be unable to timely and effectively integrate hospitals and other businesses that we acquire with our ongoing operations, or we may
experience delays implementing operating procedures and systems. Hospitals and other health care businesses that we acquire may have unknown or contingent liabilities, including liabilities for failure to comply with health care and other laws and
regulations, medical and general professional liabilities, workers&#146; compensation liabilities and tax liabilities. Although we typically exclude significant liabilities from our acquisition transactions and seek indemnification from the sellers
for these matters, we could experience difficulty enforcing those obligations, experience liability in excess of any indemnification obtained or otherwise incur material liabilities for the <FONT STYLE="white-space:nowrap">pre-acquisition</FONT>
conduct of acquired businesses. Such liabilities and related legal or other costs could harm our business and results of operations. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Our facilities are heavily concentrated in Florida and Texas, which makes us sensitive to regulatory, economic, environmental and
competitive conditions and changes in those states. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We operated 179 hospitals at September&nbsp;30, 2018, and 92 of those hospitals
are located in Florida and Texas. Our Florida and Texas facilities&#146; combined revenues represented approximately 49% of our consolidated revenues for the nine months ended September&nbsp;30, 2018. This concentration makes us particularly
sensitive to regulatory, economic, environmental and competitive conditions and changes in those states. Any material change in the current payment programs or regulatory, economic, environmental or competitive conditions in those states could have
a disproportionate effect on our overall business results. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition, our hospitals in Florida, Texas and other coastal states are
located in hurricane-prone areas. In the past, hurricanes have had a disruptive effect on the operations of our hospitals in Florida, Texas and other coastal states and the patient populations in those states. Our business activities could be harmed
by a particularly active hurricane season or even a single storm, and the property insurance we obtain may not be adequate to cover losses from future hurricanes or other natural disasters. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>We may be subject to liabilities from claims by taxing authorities. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are subject to examination by federal, state and foreign taxing authorities. Management believes HCA Healthcare, Inc., its predecessors,
subsidiaries and affiliates properly reported taxable income and paid taxes in accordance with applicable laws and agreements established with the IRS, state and foreign taxing authorities and final resolution of any disputes will not have a
material, adverse effect on our results of operations or financial position. However, if payments due upon final resolution of any issues exceed our recorded estimates, such resolutions could have a material, adverse effect on our results of
operations or financial position. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>We may be subject to liabilities from claims brought against our facilities. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are subject to litigation relating to our business practices, including claims and legal actions by patients and others in the ordinary
course of business alleging malpractice, product liability or other legal theories. Many of these actions seek large sums of money as damages and involve significant defense costs. We insure a portion of our professional liability risks through a
100% owned subsidiary. Management believes our reserves for self-insured retentions and insurance coverage are sufficient to cover insured claims arising out of the operation of our facilities. Our 100% owned liability insurance subsidiary has
entered into certain reinsurance contracts; however, the subsidiary remains liable to the extent that the reinsurers do not meet their obligations under the reinsurance contracts. If payments for claims exceed actuarially determined estimates, are
not covered by insurance, or reinsurers, if any, fail to meet their obligations, our results of operations and financial position could be adversely affected. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>We are exposed to market risk related to changes in the market values of securities and interest rate changes. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are exposed to market risk related to changes in market values of securities. The value of investment securities of our 100% owned insurance
subsidiaries were $413&nbsp;million at September&nbsp;30, 2018. These investments are carried at fair value, with changes in unrealized gains and losses being recorded as adjustments to other comprehensive income. At September&nbsp;30, 2018, we had
a net unrealized gain of $2&nbsp;million on the insurance subsidiaries&#146; investment securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are exposed to market risk related
to market illiquidity. Investment securities of our 100% owned insurance subsidiaries could be impaired by the inability to access the capital markets. Should the 100% owned insurance subsidiaries require significant amounts of cash in excess of
normal cash requirements to pay claims and other expenses on short notice, we may have difficulty selling these investments in a timely manner or be forced to sell them at a price less than what we might otherwise have been able to in a normal
market environment. We may be required to recognize other-than-temporary impairments on long-term investments in future periods should issuers default on interest payments or should the fair market valuations of the securities deteriorate due to
ratings downgrades or other issue specific factors. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are also exposed to market risk related to changes in interest rates that impact
the amount of the interest expense we incur with respect to our floating rate obligations as well as the value of certain investments. We periodically enter into interest rate swap agreements to manage our exposure to these fluctuations. Our
interest rate swap agreements involve the exchange of fixed and variable rate interest payments between two parties, based on common notional principal amounts and maturity dates. The notional amounts of the swap agreements represent balances used
to calculate the exchange of cash flows and are not our assets or liabilities. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>There can be no assurance that we will continue to pay
dividends. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In January 2018, the Board of Directors initiated a cash dividend program under which the Company commenced and expects to
continue to pay a regular quarterly cash dividend. The declaration, amount and timing of such dividends are subject to capital availability and determinations by our Board of Directors that cash dividends are in the best interest of our stockholders
and are in compliance with all respective laws and our agreements applicable to the declaration and payment of cash dividends. Our ability to pay dividends will depend upon, among other factors, our cash flows from operations, our available capital
and potential future capital requirements for strategic transactions, including acquisitions, debt service requirements, share repurchases and investing in our existing markets as well as our results of operations, financial condition and other
factors beyond our control that our Board of Directors may deem relevant. A reduction in or elimination of our dividend payments could have a negative effect on our stock price. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Uncertainties in the interpretation and application of the 2017 Tax Cuts and Jobs Act
could materially affect our tax obligations and effective tax rate. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The 2017 Tax Cuts and Jobs Act (the &#147;Tax Act&#148;) was
enacted on December&nbsp;22, 2017. The Tax Act significantly revises U.S. corporate income taxes, including lowering the statutory corporate tax rate from 35% to 21% beginning in 2018 and imposing a mandatory
<FONT STYLE="white-space:nowrap">one-time</FONT> transition tax on undistributed foreign earnings. Due to the complexity and uncertainty regarding numerous provisions of the Tax Act, we continue to monitor legislative developments and interpretive
guidance issued by federal and state taxing authorities or other standard-setting bodies to determine if adjustments to amounts we have recorded for federal, state, and foreign tax assets and liabilities as of December&nbsp;31, 2018 are appropriate.
Any adjustments or additional amounts recorded may materially impact our provision for income taxes and effective tax rate in the periods in which they are made. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Certain of our investors may continue to have influence over us. </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On November&nbsp;17, 2006, HCA Inc. was acquired by a private investor group, including affiliates of HCA founder, Dr.&nbsp;Thomas&nbsp;F.
Frist, Jr. and certain other investors. Through their investment in Hercules Holding II and other holdings, certain of the Frist-affiliated investors continue to hold a significant interest in our outstanding common stock (approximately 20% as of
December&nbsp;31, 2018). In addition, pursuant to a shareholders agreement we entered into with Hercules Holding II and the Frist-affiliated investors, certain representatives of these investors have the continued right to nominate certain of the
members of our Board of Directors. As a result, certain of these investors potentially have the ability to influence our decisions to enter into corporate transactions (and the terms thereof) and prevent changes in the composition of our Board of
Directors and any transaction that requires stockholder approval. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;3.</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B></B><B><I>Legal Proceedings</I></B><B> </B></P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We operate in a highly regulated and litigious industry. As a result, various lawsuits, claims and legal and regulatory proceedings have been
and can be expected to be instituted or asserted against us. We are also subject to claims and suits arising in the ordinary course of business, including claims for personal injuries or wrongful restriction of, or interference with,
physicians&#146; staff privileges. In certain of these actions the claimants may seek punitive damages against us which may not be covered by insurance. We are also subject to claims by various taxing authorities for additional taxes and related
interest and penalties. The resolution of any such lawsuits, claims or legal and regulatory proceedings could have a material, adverse effect on our results of operations, financial position or liquidity. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:2%; font-size:10pt; font-family:Times New Roman"><I>Government Investigations, Claims and Litigation </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Health care companies are subject to numerous investigations by various governmental agencies. Under the federal False Claims Act
(&#147;FCA&#148;), private parties have the right to bring <I>qui tam</I>, or &#147;whistleblower,&#148; suits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. Some states have
adopted similar state whistleblower and false claims provisions. Certain of our individual facilities have received, and from time to time, other facilities may receive, government inquiries from, and may be subject to investigation by, federal and
state agencies. Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material, adverse effect on our results of operations, financial position or
liquidity. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Texas operates a state Medicaid program pursuant to a waiver from CMS under Section&nbsp;1115 of the Social Security Act
(&#147;Program&#148;).&nbsp;The Program includes uncompensated-care pools; payments from these pools are intended to defray the uncompensated costs of services provided by our and other hospitals to Medicaid eligible or uninsured individuals.
Separately, we and other hospitals provide charity care services in several communities in the state.&nbsp;The Civil Division of the U.S. Department of Justice and the U.S. Attorney&#146;s Office for the Southern District of Texas have requested
information about whether the Program as operated in Harris County complies with the laws and regulations applicable to provider related donations.&nbsp;The Company is cooperating with this request.&nbsp;We believe that our participation is and has
been consistent with the requirements of the Program.<B></B><B>&nbsp;</B>However, at this time, we cannot predict what effect, if any, the request or resulting claims under the federal FCA, other statutes, regulations or laws, could have on the
Company. </P>
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
