•

Suspended our authorized share repurchase program;

•

Suspended our quarterly dividend program;

COVID-19

Pandemic and CARES Act Funding (continued)

•

Reduced certain planned projects and capital expenditures;

•

During March 2020, executed a new $2 billion

364-day

term loan facility (which was undrawn at June 30, 2020) to supplement our existing credit facilities; and

•

During the second quarter of 2020, we received

approximately $4.4 billion

of accelerated Medicare payments and approximately $1.4 billion in general and targeted Provider Relief Fund distributions, both as provided for under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

We believe the extent of the

COVID-19

pandemic’s adverse impact on our operating results and financial condition has been and will continue to be driven by many factors, most of which are beyond our control and ability to forecast. Such factors include, but are not limited to, the scope and duration of

stay-at-home

practices and business closures and restrictions, government-imposed or recommended suspensions of elective procedures, continued declines in patient volumes for an indeterminable length of time, increases in the number of uninsured and underinsured patients as a result of higher sustained rates of unemployment, incremental expenses required for supplies and personal protective equipment, and changes in professional and general liability exposure. Because of these and other uncertainties, we cannot estimate the length or severity of the impact of the pandemic on our business. Decreases in cash flows and results of operations may have an impact on the inputs and assumptions used in significant accounting estimates, including estimated implicit price concessions related to uninsured patient accounts, professional and general liability reserves, and potential impairments of goodwill and long-lived assets.

During the second quarter of 2020, we received $922 million from the $50 billion general distribution fund and $454 million of targeted distributions from the CARES Act Provider Relief Fund. These distributions from the Provider Relief Fund are not subject to repayment, provided we are able to attest to and comply with the terms and conditions of the funding

including demonstrating that the distributions received have been used for healthcare-related expenses or lost revenue attributable to COVID-19. Such payments are accounted for as government grants, and are recognized on a systematic and rational basis as other income once there is reasonable assurance that the applicable terms and conditions required to retain the funds will be met. Based on an analysis of the compliance and reporting requirements of the Provider Relief Fund and the impact of the pandemic on our operating results through the end of the second quarter, we

recognized $822 million ($590 million net of tax), or $1.73 per diluted share, related to these general distribution funds, and these payments are recorded under the caption “government stimulus income” in our condensed consolidated income statements. The unrecognized amount of general distributions and targeted distributions are recorded under the caption “contract liabilities-deferred revenues” in our condensed consolidated balance sheet.

We will continue to monitor compliance with the terms and conditions of the Provider Relief Fund and the impact of the pandemic on our revenues and expenses. If we are unable to attest to or comply with current or future terms and conditions our ability to retain some or all of the distributions received may be impacted.

The CARES Act also provides

for a deferral of payments

of the employer portion of payroll tax incurred during the pandemic, allowing half of such payroll taxes be deferred until December 2021 and the remaining half

until

December 2022. At June 30, 2020, the Company had deferred $220 million of payroll taxes recorded under the caption “accrued salaries” in our condensed consolidated balance sheet. Additionally, the CARES Act created a payroll tax credit designed to encourage companies to retain employees during the pandemic. During the second quarter of 2020, the Company evaluated its eligibility for this credit and recorded $60 million of employee retention payroll tax credits pursuant to the CARES Act. These tax credits are recorded as a reduction of salaries and benefits in our condensed consolidated income statement.

Revenues

Our revenues generally relate to contracts with patients in which our performance obligations are to provide health care services to the patients. Revenues are recorded during the period our obligations to provide health

care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based on charges incurred in relation to total expected charges. Our performance obligations for outpatient services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges. Medicare generally pays for inpatient and outpatient services at prospectively determined rates based on clinical, diagnostic and other factors. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discounted

fee-for-service

rates. Our revenues for the six months ended June 30, 2020 and 2019, respectively, include $55 million related to the settlement of Medicare outlier calculations for prior periods and $86 million related to the resolution of transaction price differences regarding certain

out-of-network

services performed in prior periods. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

During the second quarter of 2020, we requested accelerated Medicare payments as provided for in the CARES Act, which allows for eligible health care facilities to request up to six months of advance Medicare payments for acute care hospitals or up to three months of advance Medicare payments for other health care providers. After 120 days past receipt of the advance

payments

(beginning in August 2020), claims for services provided to Medicare beneficiaries will be applied against the advance payment balance. Any unapplied advance payment amounts must be paid in full within one year from receipt of the advance payments for acute care hospitals and within 210 days for other health care providers. During the second quarter of 2020, we received approximately $4.4 billion from these accelerated Medicare payment requests, and these amounts are recorded under the caption “contract liabilities-deferred revenues” in our condensed consolidated balance sheet.

Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record these revenues at the estimated amounts we expect to collect. Patients treated at our hospitals for

non-elective

care, who have income at or below 400% of the federal poverty level, are eligible for charity care. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues. Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters and six months ended June 30, 2020 and 2019 are summarized in the following table (dollars in millions):


	Quarter
	2020		Ratio			2019		Ratio
Medicare	$	2,272		20.5	%	$	2,635		20.9	%
Managed Medicare		1,488		13.4			1,595		12.7
Medicaid		564		5.1			416		3.3
Managed Medicaid		531		4.8			554		4.4
Managed care and insurers		5,631		50.9			6,425		50.9
International (managed care and insurers)		239		2.2			284		2.3
Other		343		3.1			693		5.5

Revenues	$	11,068		100.0	%	$	12,602		100.0	%


	Six Months
	2020		Ratio			2019		Ratio
Medicare	$	5,015		21.0	%	$	5,405		21.5	%
Managed Medicare		3,314		13.8			3,184		12.7
Medicaid		978		4.1			763		3.0
Managed Medicaid		1,197		5.0			1,167		4.6
Managed care and insurers		12,276		51.4			12,851		51.1
International (managed care and insurers)		531		2.2			581		2.3
Other		618		2.5			1,168		4.8

Revenues	$	23,929		100.0	%	$	25,119		100.0	%

Revenues (continued)

To quantify the total impact of the trends related to uninsured patient accounts, we believe it is beneficial to view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price concessions. A summary of the estimated cost of total uncompensated care for the quarters and six months ended June 30, 2020 and 2019 follows (dollars in millions):


	Quarter						Six Months
	2020			2019			2020			2019
Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization)	$	9,916		$	10,953		$	21,258		$	21,559
Cost-to-charges ratio (patient care costs as percentage of gross patient charges)		12.6	%		12.2	%		12.2	%		12.0	%
Total uncompensated care	$	6,729		$	7,695		$	14,602		$	14,780
Multiply by the cost-to-charges ratio		12.6	%		12.2	%		12.2	%		12.0	%

Estimated cost of total uncompensated care	$	844		$	938		$	1,781		$	1,774

The total uncompensated care amounts include charity care of $3.077 billion and $3.311 billion,

respectively

and the related estimated costs of charity care were $387 million and $403 million, for the quarters ended June 30, 2020 and 2019, respectively. The total uncompensated care amounts include charity care of $6.812 billion and $6.216 billion,

respectively

and the related estimated costs of charity care were $831 million and $746 million, for the six months ended June 30, 2020 and 2019, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.