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TENET HEALTHCARE CORP

TENET HEALTHCARE CORPTHC決算レポート

NYSE · health care

Tenet Healthcare Corporation is an American for-profit multinational healthcare services company based in Dallas. Through its brands, subsidiaries, joint ventures, and partnerships including United Surgical Partners International (USPI), the company operates 65 hospitals and over 450 healthcare facilities. Tenet also runs Conifer Health Solutions, which provides healthcare support services to health systems and other clients.

What changed in TENET HEALTHCARE CORP's 10-K — 2023 vs 2024

Top changes in TENET HEALTHCARE CORP's 2024 10-K

578 paragraphs added · 693 removed · 483 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

97 edited+21 added−30 removed94 unchanged
ANTIFRAUD AND ABUSE LAWS A number of federal statutes, and the regulations implementing them, govern our participation in the Medicare and Medicaid payment programs, including: • the anti‑kickback and antifraud and abuse amendments codified under Section 1128B(b) of the Social Security Act (the “Anti‑kickback Statute”), which prohibit the knowing and willful remuneration of anything of value intended to induce or reward patient referrals or the generation of business involving any item or service payable by federal healthcare programs, subject to certain government-established “safe harbor” exceptions; • the False Claims Act (“FCA”), which prohibits the submission of claims for payment to government programs that are known to be, or should be known to be, fraudulent; • the Stark law, which generally restricts physician referrals of Medicare or Medicaid patients to entities the physician or an immediate family member has a financial relationship with, regardless of any intent to violate the law, unless one of several exceptions applies; and 10 Table of Contents • the Civil Monetary Penalties Law, which authorizes the Secretary of the U.S.
ANTIFRAUD AND ABUSE LAWS A number of federal statutes, and the regulations implementing them, govern our participation in the Medicare and Medicaid payment programs, including: • the anti‑kickback and antifraud and abuse amendments codified under Section 1128B(b) of the Social Security Act (the “Anti‑kickback Statute”), which prohibit the knowing and willful remuneration of anything of value intended to induce or reward patient referrals or the generation of business involving any item or service payable by federal healthcare programs, subject to certain government-established “safe harbor” exceptions; • the False Claims Act (“FCA”), which prohibits the submission of claims for payment to government programs that are known to be, or should be known to be, fraudulent; • the Stark law, which generally restricts physician referrals of Medicare or Medicaid patients to entities the physician or an immediate family member has a financial relationship with, regardless of any intent to violate the law, unless one of several exceptions applies; and 9 Table of Contents • the Civil Monetary Penalties Law, which authorizes the Secretary of the U.S.
Violations of federal or state antitrust laws can result in various sanctions, including criminal and civil penalties. Antitrust enforcement in the healthcare industry is a priority of the U.S. Federal Trade Commission (“FTC”) and analogous state regulatory agencies. In recent years, the FTC has filed multiple administrative complaints and public comments challenging hospital transactions in several states.
Violations of federal or state antitrust laws can result in various sanctions, including criminal and civil penalties. Antitrust enforcement in the healthcare industry is a priority of the U.S. Federal Trade Commission (“FTC”) and analogous state regulatory agencies. In recent years, the FTC has filed multiple administrative complaints and public comments challenging hospital and other healthcare transactions in several states.
We also continue to engage in contracting strategies that create shared value with payers. The market for our revenue cycle management services is also competitive. To be successful, we must respond more quickly and effectively than our competitors to new or changing opportunities, technologies, standards, regulations and client requirements.
We also continue to engage in contracting strategies that create shared value with payers and patients. The market for our revenue cycle management services is also competitive. To be successful, we must respond more quickly and effectively than our competitors to new or changing opportunities, technologies, standards, regulations and client requirements.
The initial expansion of health insurance coverage under the Affordable Care Act resulted in an increase in the number of patients using our facilities with either private or public program coverage and a decrease in uninsured and charity care admissions, along with reductions in Medicare and Medicaid reimbursement to healthcare providers, including us.
The expansion of health insurance coverage under the Affordable Care Act resulted in an increase in the number of patients using our facilities with either private or public program coverage and a decrease in uninsured and charity care admissions, along with reductions in Medicare and Medicaid reimbursement to healthcare providers, including us.
These agencies may initiate enforcement actions, including actions to seek restitution and monetary penalties from, or to require changes in business practices of, regulated entities. In addition, affected consumers may bring suits, including class action suits, to seek monetary remedies (including statutory damages) for violations of the federal and state provisions discussed above.
These agencies may initiate enforcement actions, including actions to seek restitution and monetary penalties from, or to require changes in business practices of, regulated entities. In addition, affected consumers may bring lawsuits, including class action suits, to seek monetary remedies (including statutory damages) for violations of the federal and state provisions discussed above.
In addition, the competitive positions of hospitals and outpatient facilities depend in large part on the number, quality, specialties, and admitting and scheduling practices of the licensed physicians who are members of the medical staffs of those facilities, as well as physicians who affiliate with and use outpatient centers as an extension of their practices.
In addition, the competitive positions of hospitals and outpatient facilities depend in part on the number, quality, specialties, and admitting and scheduling practices of the licensed physicians who are members of the medical staffs of those facilities, as well as physicians who affiliate with and use outpatient centers as an extension of their practices.
These legal and regulatory standards relate to, among other topics: ownership and operation of facilities and physician practices; licensure, certification and enrollment in government programs; the necessity and adequacy of medical care; quality of medical equipment and services; relationships with and qualifications of physicians and employees; operating conduct, policies and procedures; screening, stabilization and transfer of individuals who have emergency medical conditions; rate-setting, billing and coding for services; the preparation and filing of cost reports; the handling of overpayments; contractual arrangements; relationships with referral sources and referral recipients; privacy and security; maintenance of adequate records; construction, acquisition, expansion and closure of healthcare facilities or services; 9 Table of Contents environmental protection; compliance with fire prevention and building codes; debt collection; and communications with patients and consumers.
These legal and regulatory standards relate to, among other topics: ownership and operation of facilities and physician practices; licensure, certification and enrollment in government programs; the necessity and adequacy of medical care; quality of medical equipment and services; relationships with and qualifications of physicians and employees; operating conduct, policies and procedures; screening, stabilization and transfer of individuals who have emergency medical conditions; rate-setting, billing and coding for services; the preparation and filing of cost reports; the handling of overpayments; contractual arrangements; relationships with referral sources and referral recipients; privacy and security; maintenance of adequate records; construction, acquisition, expansion and closure of healthcare facilities or services; environmental protection; compliance with fire prevention and building codes; debt collection; and communications with patients and consumers.
From time to time, we also capitalize on opportunities to refine our portfolio of hospitals and other healthcare facilities when we believe such refinements will help us improve profitability, allocate capital more effectively in areas where we have a stronger presence, deploy proceeds on higher‑return investments across our business, enhance cash flow generation and reduce our debt, among other things.
From time to time, we also capitalize on opportunities to refine our portfolio of hospitals and other healthcare facilities when we believe such refinements will help us improve profitability, allocate capital more effectively in areas where we have a stronger presence, deploy proceeds toward higher-return investments across our business, enhance cash flow generation or reduce our debt, among other things.
At December 31, 2023, the majority of the surgical hospitals and ASCs in our Ambulatory Care segment were owned by joint ventures with physicians and/or health systems. In addition, we have contracts with physicians and non‑physician referral sources providing for a variety of financial arrangements, including employment agreements, leases and professional service contracts, such as medical director agreements.
At December 31, 2024, the majority of the surgical hospitals and ASCs in our Ambulatory Care segment were owned by joint ventures with physicians and/or health systems. In addition, we have contracts with physicians and non‑physician referral sources providing for a variety of financial arrangements, including employment agreements, leases and professional service contracts, such as medical director agreements.
All statements, other than statements of historical or present facts, that 15 Table of Contents address activities, events, outcomes, business strategies and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, target, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward‑looking statements, including (but not limited to) disclosures regarding (1) our future earnings, financial position, and operational and strategic initiatives, (2) developments in the healthcare industry, and (3) the anticipated impacts of economic and public health conditions on our business.
All statements, other than statements of historical or present facts, that address activities, events, outcomes, business strategies and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, target, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward‑looking statements, including (but not limited to) disclosures regarding (1) our future earnings, financial position, and operational and strategic initiatives, (2) developments in the healthcare industry, and (3) the anticipated impacts of economic and public health conditions on our business.
Moreover, we expect to encounter additional competition from system‑affiliated hospitals and healthcare companies, as well as health insurers and private equity companies seeking to acquire providers, in certain regions in the future. Another major factor in the competitive position of a hospital or outpatient facility is the scope of its relationships with managed care plans.
Moreover, we expect to encounter additional competition from system‑affiliated hospitals and healthcare companies, as well as health insurers and private equity companies seeking to acquire providers, in certain regions in the future. Another factor in the competitive position of a hospital or outpatient facility is the scope and terms of its relationships with managed care plans.
Our operations also generate medical waste that must be 12 Table of Contents discarded in compliance with statutes and regulations that vary from state to state. In addition, our operating expenses could be adversely affected if legal and regulatory developments related to climate change or other initiatives result in increased energy or other costs.
Our operations also generate medical waste that must be 11 Table of Contents discarded in compliance with statutes and regulations that vary from state to state. In addition, our operating expenses could be adversely affected if legal and regulatory developments related to climate change or other initiatives result in increased energy or other costs.
Also, we provide standby letters of credit to some of our insurers, which can be drawn upon under certain circumstances, to collateralize the deductible and self‑insured retentions under a select number of our professional and general liability insurance programs. We also purchase property, cyber-liability and other insurance coverage from third parties.
We provide standby letters of credit to some of our insurers, which can be drawn upon under certain circumstances, to collateralize the deductible and self‑insured retentions under a select number of our professional and general liability insurance programs. We also purchase property, business interruption, cyber-liability and other insurance coverage from third parties.
Our ability to employ physicians is closely regulated, with a number of states prohibiting the corporate practice of medicine or otherwise regulating what types of entities may employ physicians, and we structure our arrangements with healthcare providers to comply with these state laws. In 2023, we continued to experience challenges in recruiting and retaining physicians.
Our ability to employ physicians is closely regulated, with a number of states prohibiting the corporate practice of medicine or otherwise regulating what types of entities may employ physicians, and we structure our arrangements with healthcare providers to comply with these state laws. In 2024, we continued to experience challenges in recruiting and retaining physicians.
Various state laws 11 Table of Contents and regulations may also require us to notify the applicable state agency and affected individuals in the event of a data breach involving personally identifiable information (“PII”). Violations of the HIPAA privacy and security regulations may result in criminal penalties and in substantial civil penalties per violation.
Various state laws 10 Table of Contents and regulations may also require us to notify the applicable state agency and affected individuals in the event of a data breach involving personally identifiable information (“PII”). Violations of the HIPAA privacy and security regulations may result in criminal penalties and in substantial civil penalties per violation.
Operations of USPI —USPI acquires and develops its facilities primarily through the formation of joint ventures with physicians and health system partners. USPI’s subsidiaries hold ownership interests in the facilities directly or indirectly and operate the majority of its facilities on a day‑to‑day basis through management services contracts.
Operations of USPI —USPI acquires and develops its facilities primarily through the formation of joint ventures with physicians and/or health system partners. USPI’s subsidiaries hold ownership interests in the facilities directly or indirectly, and we operate the facilities on a day‑to‑day basis through management services contracts.
Moreover, we could be affected by climate change and other environmental issues to the extent such issues adversely affect the general economy or result in severe weather affecting the communities in which our facilities are located.
Moreover, we could be affected by climate change and other environmental issues to the extent such issues adversely affect the general economy or result in severe weather or natural disasters affecting the communities in which our facilities are located.
They involve known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control, that may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward‑looking statements.
They involve known and unknown risks, uncertainties and other factors, many of which we are unable to predict 14 Table of Contents or control, that may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward‑looking statements.
All such persons are required to report incidents that they believe in 14 Table of Contents good faith may be in violation of the Code of Conduct or our policies, and all are encouraged to contact our Ethics Action Line when they have questions about any aspect of our Code of Conduct or any ethics concerns.
All such persons are required to report incidents that they believe in good faith may be in violation of the Code of Conduct or our policies, and all are encouraged to contact our Ethics Action Line when they have questions about any aspect of our Code of Conduct or any ethics concerns.
COMPETITION We believe our hospitals and outpatient facilities compete within local communities on the basis of many factors, including: quality of care; location and ease of access; the scope and breadth of services offered; reputation; and the caliber of the facilities, equipment and employees.
COMPETITION We believe our hospitals and outpatient facilities compete within local areas and regions on the basis of many factors, including: quality of care; location and ease of access; the scope and breadth of services offered; reputation; and the caliber of the facilities, equipment and employees.
Retaliation against anyone in connection with reporting ethical concerns is considered a serious violation of our Code of Conduct , and, if it occurs, it will result in discipline, up to and including termination of employment.
Retaliation against anyone in connection with reporting 13 Table of Contents ethical concerns is considered a serious violation of our Code of Conduct , and, if it occurs, it will result in discipline, up to and including termination of employment.
In recent years, the number of freestanding specialty hospitals, surgery centers, EDs, imaging centers and UCCs in the geographic areas where we operate has increased significantly. Some of these facilities are 8 Table of Contents physician‑owned.
In recent years, the number of freestanding specialty hospitals, surgery centers, EDs, imaging centers and UCCs in the geographic areas where we operate has increased significantly. Some of these facilities are physician‑owned.
LAWS AND REGULATIONS AFFECTING OUR GBC Our operations at our GBC in the Philippines are subject to certain U.S. healthcare industry-specific requirements, as well as U.S. and foreign laws applicable to businesses generally, including anti-corruption laws.
LAWS, REGULATIONS AND OTHER MATTERS AFFECTING OUR GBC Our GBC operations in the Philippines are subject to certain U.S. healthcare industry-specific requirements, as well as U.S. and foreign laws applicable to businesses generally, including anti-corruption laws.
One such law, the Foreign Corrupt Practices Act (“FCPA”), 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. FCPA enforcement actions continue to be a high priority for the SEC and the U.S. Department of Justice.
One such law, the Foreign Corrupt 12 Table of Contents Practices Act (“FCPA”), 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. FCPA enforcement actions continue to be a high priority for the SEC and the U.S.
The Tenet Care Fund (the “Care Fund”) is a 501(c)(3) public charity that provides financial assistance to our employees who have experienced hardship due to, among other things, fires, natural disasters, catastrophic injuries and extended illnesses. The Care Fund is funded primarily by our employees for our employees.
The Tenet Care Fund (the “Care Fund”) is a 501(c)(3) public charity that provides financial assistance to our employees who have experienced hardship due to, among other things, fires, natural disasters, catastrophic injuries and extended illnesses.
Each of our general hospitals offers acute care services, operating and recovery rooms, radiology services, respiratory therapy services, clinical laboratories and pharmacies; in addition, most have: intensive care, critical care and/or coronary care units; cardiovascular, digestive disease, neurosciences, musculoskeletal and obstetrics services; and outpatient services, including physical therapy.
Our general hospitals offer acute care services, operating and recovery rooms, radiology services, respiratory therapy services, clinical laboratories and pharmacies; in addition, most have: intensive care, critical care and/or coronary care units; cardiovascular, digestive disease, neurosciences, musculoskeletal and obstetrics services; and outpatient services, including physical therapy.
In addition to hospital merger enforcement, the FTC has given increased attention to the effect of combinations involving other healthcare providers, including physician practices, as well as to the use of restrictive covenants that limit the ability of employees and others to engage in certain competitive activities.
In addition, the FTC has given increased attention to the effect of combinations involving other healthcare providers, including physician practices, as well as to the use of restrictive covenants that limit the ability of owners, employees and others to engage in certain competitive activities.
Through these efforts, we have reduced onboarding and training time of some of our new nurses, and we have reduced certain of our expenses related to new-hire training. Union Activity and Labor Relations —At December 31, 2023, approximately 23% of the employees in our Hospital Operations segment were represented by labor unions.
Through these efforts, we have streamlined onboarding and training time of some of our new nurses, and we have reduced certain of our expenses related to new-hire training. Union Activity and Labor Relations —At December 31, 2024, approximately 21% of the employees in our Hospital Operations segment were represented by labor unions.
Of the nine states in which we operate hospitals, four have taken action in accordance with the Affordable Care Act to expand their Medicaid programs; however, over half of our licensed beds at December 31, 2023 were located in five states, namely Alabama, Florida, South Carolina, Tennessee and Texas, that have not expanded Medicaid under the law.
Of the eight states in which we operate hospitals, four have taken action in accordance with the Affordable Care Act to expand their Medicaid programs; however, over half of our licensed beds at December 31, 2024 were located in four states, namely Florida, South Carolina, Tennessee and Texas, that have not expanded Medicaid under the law.
Health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”), third‑party administrators, and other third‑party payers use managed care contracts to encourage patients to use certain hospitals in exchange for discounts from the hospitals’ established charges.
Health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”), third‑party administrators and other third‑party payers use managed care contracts to encourage patients to use certain facilities in exchange for discounts from the facilities’ established charges.
The HR Committee also provides, among other things, its perspectives regarding performance management, succession planning, leadership development, diversity, recruiting, 6 Table of Contents retention and employee training. The board’s environmental, social and governance (“ESG”) committee provides oversight with respect to our ESG strategy and guidance on ESG matters that are relevant to our business.
The HR Committee also provides, among other things, its perspectives regarding performance management, succession planning, leadership development, equality of opportunity, recruiting, retention and employee training. The board’s environmental, social and governance (“ESG”) committee provides oversight with respect to our ESG strategy and guidance on ESG matters that are relevant to our business.
The FTC has focused its enforcement efforts on preventing hospital mergers that may, in the government’s view, leave insufficient local options for patient services, which could result in increased costs to consumers.
The FTC has focused its enforcement efforts on preventing hospital transactions that may, in the government’s view, leave insufficient local options for patient services, which could result in higher costs to consumers.
Such factors include, but are not limited to, the following: • Our ability to enter into or renew managed care provider arrangements on acceptable terms; changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under managed care agreements; and the impact of the industry trends toward value‑based purchasing and alternative payment models; • The impacts on our business from the enactment of, or changes in, statutes and regulations affecting the healthcare industry generally; and regulatory developments, including reductions to Medicare and Medicaid payment rates or changes in reimbursement practices or to Medicaid supplemental payment programs; • Our success in recruiting and retaining physicians, nurses and other healthcare professionals; • The effect of competition generally, and clinical and price transparency regulations, on our business; • The timing, outcome and impact of: government investigations and litigation; changes in federal tax laws, regulations and policies; and future tax audits, disputes and litigation associated with our tax positions; • The future course and impact of COVID-19, or the potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease, on our operations, financial condition and liquidity; • Security threats, catastrophic events and other disruptions that affect our information technology and related information systems and confidential business data; • Our ability to achieve operating and financial targets, attain expected levels of patient volumes, and identify and execute on measures designed to save or control costs or streamline operations; • Operational and other risks associated with acquisitions, divestitures and joint venture arrangements, including the integration of newly acquired businesses and the risk that transactions may not receive necessary government clearances; • The impact of our significant indebtedness; the availability and terms of capital to refinance existing debt, fund our operations and expand our business; and our ability to comply with our debt covenants and, over time, reduce leverage; • The effect that inflation, consumer behavior and other economic factors have on our volumes and our ability to collect outstanding receivables on a timely basis, among other things; and increases in the amount of uninsured accounts, as well as deductibles, co‑insurance amounts and co‑pays for insured accounts; and • Other factors and risks referenced in this report and our other public filings.
Such factors include, but are not limited to, the following: • Our ability to enter into or renew managed care provider arrangements on acceptable terms; changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under managed care agreements; and the impact of alternative payment models and value-based purchasing initiatives; • The impacts on our business from the enactment, amendment or expiration of statutes and regulations affecting the healthcare industry, and potential reductions to Medicare and Medicaid payment rates, changes in reimbursement practices or funding levels, or modification of Medicaid supplemental payment programs; • Our success in recruiting and retaining physicians, nurses and other healthcare professionals; • The effect of competition generally, and clinical and price transparency regulations, on our business; • The timing, outcome and impact of: government investigations and litigation; changes in federal tax laws, regulations and policies (including those related to tariffs and trade restrictions); and future tax audits, disputes and litigation associated with our tax positions; • The potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease on our operations, financial condition and liquidity; • Security threats, catastrophic events and other disruptions that affect our information technology and related information systems and confidential business data; • Our ability to achieve operating and financial targets, attain expected levels of patient volumes, and identify and execute on measures designed to save or control costs or streamline operations; • Operational and other risks associated with acquisitions, divestitures and joint venture arrangements, including the integration of newly acquired businesses and the risk that transactions may not receive necessary government clearances; • The impact of our indebtedness; the availability and terms of capital, if needed, to refinance existing debt, fund our operations and expand our business; and our ability to comply with our debt covenants and effectively manage our capital structure and leverage ratio; • The effect that inflation, consumer behavior and other economic factors have on our volumes and our ability to collect outstanding receivables on a timely basis, among other things; and increases in the number of uninsured accounts, as well as deductibles, co‑insurance amounts and co‑pays for insured accounts; and • Other factors and risks referenced in this report and our other public filings.
We have a Diversity Council, which consists of leaders representing different facets of our enterprise, to support our overall diversity and inclusion efforts, including in the areas of recruiting, talent development, new‑hire mentoring, community partnerships, and educational opportunities. The Diversity Council works to provide tools, guidelines and training with respect to best practices in these areas.
We have a Community Healthcare Engagement Council, which consists of leaders representing different facets of our enterprise, to support our efforts in the areas of recruiting, talent development, new‑hire mentoring, community partnerships, and educational opportunities. The Council works to provide tools, guidelines and training with respect to best practices in these areas.
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. Vertical integration efforts involving third‑party payers and healthcare providers, among other factors, may increase competitive challenges.
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 through the formation of narrow networks or other similar structures. Vertical integration efforts involving third‑party payers and healthcare providers, among other factors, may increase competitive challenges.
The Quality Improvement Organization program established under the Social Security Act seeks: to improve the effectiveness, efficiency, economy and quality of services delivered to Medicare beneficiaries; to preserve the Medicare Trust Fund by ensuring that Medicare pays only for services that are reasonable and necessary and that are provided in the most appropriate setting; and to protect Medicare beneficiaries by expeditiously addressing complaints, violations under the Emergency Medical Treatment and Active Labor Act, and other quality‑related issues.
The Quality Improvement Organization program established under the Social Security Act seeks: to improve the effectiveness, efficiency, economy and quality of services delivered to Medicare beneficiaries; to use data to track healthcare quality improvements at the local level; to preserve the Medicare Trust Fund by ensuring that Medicare pays only for services that are reasonable and necessary and that are provided in the most appropriate setting; and to protect Medicare beneficiaries by expeditiously addressing complaints, violations under the Emergency Medical Treatment and Active Labor Act, and other quality‑related issues.
Conifer is also subject to both federal and state regulatory agencies who have the authority to investigate consumer complaints relating to unfair, deceptive and abusive acts and practices, as well as a variety of consumer protection laws, 13 Table of Contents including but not limited to the Telephone Consumer Protection Act and all applicable state equivalents.
Conifer is also subject to laws under which both federal and state regulatory agencies have the authority to investigate consumer complaints relating to unfair, deceptive and abusive acts and practices, as well as a variety of consumer protection laws, including but not limited to the Telephone Consumer Protection Act and all applicable state equivalents.
None of the employees in our Ambulatory Care segment belong to a union. Unionized employees – primarily registered nurses and service, technical and maintenance workers – are located at 33 of our hospitals, the majority of which are in California, Florida and Michigan.
None of the employees in our Ambulatory Care segment belong to a 6 Table of Contents union. Unionized employees – primarily registered nurses and service, technical and maintenance workers – are located at 27 of our hospitals, the majority of which are in California, Florida and Michigan.
(8) Owned by a limited liability company formed as part of a joint venture with John Muir Health (“John Muir”), a not‑for‑profit health system in the San Francisco Bay area; a Tenet subsidiary owned a 51% interest in the entity at December 31, 2023, and John Muir owned a 49% interest.
(5) Owned by a limited liability company formed as part of a joint venture with John Muir Health, a not‑for‑profit health system in the San Francisco Bay area; a Tenet subsidiary owned a 51% interest in the entity at December 31, 2024, and John Muir Health owned a 49% interest.
To bolster our competitive position, we have sought to include all of our hospitals and other healthcare businesses in the related geographic area or nationally when negotiating new managed care contracts, which may result in additional volumes at facilities that were not previously a part of such managed care networks.
To bolster our competitive position, we have sought to include all of our hospitals, outpatient centers and physician practices in the related geographic area or nationally when negotiating new managed care contracts, which may result in additional volumes at facilities that were not previously a part of such managed care networks.
We had employees in all 50 U.S. states and the District of Columbia, as well as approximately 3,250 employees providing support across our entire network at our GBC, at December 31, 2023. Approximately 33% of our employees are nurses. Board Oversight —Our board of directors and its committees oversee human capital matters through regular reports from management and advisors.
We had employees in all 50 U.S. states and the District of Columbia, as well as approximately 4,000 GBC employees providing support across our entire network, at December 31, 2024. Approximately 32% of our employees are nurses. Board Oversight —Our board of directors and its committees oversee human capital matters through regular reports from management and advisors.
In addition, we maintain administrative offices in regions where we operate hospitals and other businesses, as well as our GBC in Manila. We believe that all of our properties are suitable for their respective uses and are, in general, adequate for our present needs.
In addition, we maintain administrative offices in regions where we operate hospitals and other businesses, as well as our GBC 4 Table of Contents in the Philippines. We believe that all of our properties are suitable for their respective uses and are, in general, adequate for our present needs.
Although we have no contractual relationship with most of the physicians who practice at our hospitals and outpatient centers, at December 31, 2023, we owned nearly 770 physician practices, and our subsidiaries employed (where permitted by state law) or otherwise affiliated with nearly 1,320 physicians.
Although we have no contractual relationship with most of the physicians who practice at our hospitals and outpatient centers, at December 31, 2024, we owned over 650 physician practices, and our subsidiaries employed (where permitted by state law) or were otherwise affiliated with nearly 1,135 physicians.
Other competing health systems may implement similar strategies. In addition, we have significantly increased our focus on operating our outpatient centers with improved accessibility and more convenient service for patients, increased predictability and efficiency for physicians, and (for most services) lower costs for payers than would be incurred with a hospital visit.
In addition, we have significantly increased our focus on operating our outpatient centers with improved accessibility and more convenient service for patients, increased predictability and efficiency for physicians, and (for most services) lower costs for payers and patients than would be incurred with a hospital visit.
At our hospitals, outpatient facilities, and other care sites, we align staffing to need in our nursing units, and we invest in appropriate training to improve the competency of our caregivers. In addition, we have heightened infection-prevention protocols, we maintain availability of personal protective equipment and disinfection supplies, and we regularly provide concise and current infection prevention guidance.
At our hospitals, outpatient facilities and other care sites, we align staffing to need in our nursing units, and we invest in appropriate training to improve the competency of our caregivers. In addition, we maintain up‑to‑date infection-prevention protocols and availability of personal protective equipment and disinfection supplies.
Moreover, government regulations often change, and we may have to make adjustments to our facilities, equipment, personnel and services to remain in compliance.
Moreover, as discussed in greater detail below, government regulations often change, and we may have to make adjustments to our facilities, equipment, personnel and services to remain in compliance.
The FTC has also entered into numerous consent decrees in the past several years settling allegations of price‑fixing among providers. Moreover, a number of states have recently enacted antitrust laws requiring state agency notification and review of proposed healthcare industry transactions that are below federal reporting thresholds. The potential impact and future enforcement of these recently enacted laws remain uncertain.
The FTC has also entered into numerous consent decrees in the past several years settling allegations of price‑fixing among providers. Moreover, a number of states, including California and Massachusetts, have enacted antitrust laws requiring state agency notification and review of proposed healthcare industry transactions that are below federal reporting thresholds.
However, these concentrations increase the risk that, should any adverse economic, regulatory, environmental, competitive or other condition (including surges of COVID‑19 or other illnesses) occur in these areas, our overall business, financial condition, results of operations or cash flows could be materially adversely affected.
However, these concentrations increase the risk that, should any adverse economic, regulatory, environmental, competitive or other condition (including an epidemic or outbreak of an infectious disease) occur in these areas, our overall business, financial condition, results of operations or cash flows could be materially adversely affected.
ITEM 1. BUSINESS OVERVIEW Tenet Healthcare Corporation (“Tenet”) is a diversified healthcare services company with its headquarters in Dallas, Texas, and a Global Business Center (“GBC”) supporting various administrative functions in Manila, Philippines.
ITEM 1. BUSINESS OVERVIEW Tenet Healthcare Corporation (“Tenet”) is a diversified healthcare services company with its headquarters in Dallas, Texas, and a Global Business Center (“GBC”) in the Philippines, that supports various enterprise-wide administrative functions.
Mary’s Medical Center West Palm Beach 420 Owned West Boca Medical Center Boca Raton 195 Owned Massachusetts MetroWest Medical Center – Framingham Union Campus Framingham 136 Owned MetroWest Medical Center – Leonard Morse Campus (3) Natick 103 Owned Saint Vincent Hospital Worcester 290 Owned Michigan Children’s Hospital of Michigan Detroit 228 Owned Detroit Receiving Hospital Detroit 273 Owned Harper University Hospital Detroit 470 Owned Huron Valley-Sinai Hospital Commerce Township 158 Owned Hutzel Women’s Hospital Detroit 114 Owned Rehabilitation Institute of Michigan (3) Detroit 69 Owned Sinai-Grace Hospital Detroit 404 Owned South Carolina Coastal Carolina Hospital (9) Hardeeville 44 Owned East Cooper Medical Center (9) Mount Pleasant 140 Owned Hilton Head Hospital (9) Hilton Head Island 93 Owned Piedmont Medical Center Rock Hill 294 Owned Piedmont Medical Center Fort Mill Fort Mill 100 Owned Tennessee Saint Francis Hospital Memphis 479 Owned Saint Francis Hospital – Bartlett Bartlett 196 Owned Texas Baptist Medical Center San Antonio 607 Owned The Hospitals of Providence East Campus El Paso 218 Owned The Hospitals of Providence Memorial Campus El Paso 480 Owned The Hospitals of Providence Sierra Campus El Paso 306 Owned The Hospitals of Providence Transmountain Campus El Paso 108 Owned Mission Trail Baptist Hospital San Antonio 114 Owned Nacogdoches Medical Center Nacogdoches 161 Owned North Central Baptist Hospital San Antonio 443 Owned Northeast Baptist Hospital San Antonio 347 Owned Resolute Baptist Hospital New Braunfels 128 Owned St.
Mary’s Medical Center West Palm Beach 420 Owned West Boca Medical Center Boca Raton 195 Owned Massachusetts MetroWest Medical Center – Framingham Union Campus Framingham 136 Owned MetroWest Medical Center – Leonard Morse Campus (1) Natick 103 Owned Saint Vincent Hospital Worcester 290 Owned Michigan Children’s Hospital of Michigan Detroit 228 Owned Detroit Receiving Hospital Detroit 273 Owned Harper University Hospital Detroit 470 Owned Huron Valley-Sinai Hospital Commerce Township 158 Owned Hutzel Women’s Hospital Detroit 114 Owned Rehabilitation Institute of Michigan (1) Detroit 69 Owned Sinai-Grace Hospital Detroit 404 Owned South Carolina Piedmont Medical Center Rock Hill 294 Owned Piedmont Medical Center Fort Mill Fort Mill 100 Owned Tennessee Saint Francis Hospital Memphis 479 Owned Saint Francis Hospital – Bartlett Bartlett 196 Owned 2 Table of Contents Hospital Location Licensed Beds Status Texas Baptist Medical Center San Antonio 607 Owned The Hospitals of Providence East Campus El Paso 218 Owned The Hospitals of Providence Memorial Campus El Paso 480 Owned The Hospitals of Providence Rehabilitation Hospital East (1) El Paso 36 JV/Owned The Hospitals of Providence Sierra Campus El Paso 306 Owned The Hospitals of Providence Transmountain Campus El Paso 108 Owned Mission Trail Baptist Hospital San Antonio 114 Owned Nacogdoches Medical Center Nacogdoches 161 Owned North Central Baptist Hospital San Antonio 443 Owned Northeast Baptist Hospital San Antonio 351 Owned Resolute Baptist Hospital New Braunfels 128 Owned St.
Commercial insurance we purchase is subject to per‑claim and policy period aggregate limits. If the policy period aggregate limit of any of these policies is exhausted, in whole or in part, it could deplete or reduce the limits available to pay other material claims applicable to that policy period.
If the policy period aggregate limit of any of these policies is exhausted, in whole or in part, it could deplete or reduce the limits available to pay other material claims applicable to that policy period.
Some of the hospitals that compete with our hospitals are owned by tax‑supported government agencies, and many others are owned by not‑for‑profit organizations that may have financial advantages not available to our facilities, including (1) support through endowments, charitable contributions and tax revenues, (2) access to tax‑exempt financing, and (3) exemptions from sales, property and income taxes.
Some competing healthcare facilities are owned by tax‑supported government agencies, and many others are owned by not‑for‑profit organizations that may have financial advantages not available to our facilities, including (1) support through endowments, charitable contributions and tax revenues, (2) access to tax‑exempt financing, (3) exemptions from sales, property and income taxes, and (4) discounted prescription drug pricing.
Employee Safety and Welfare —We believe our employees comprise a community built on care, and we place a high priority on maintaining a secure and healthy workplace for them. We promote a culture of well‑being and reporting by connecting employee safety policies with patient safety policies, and we review and refine the policies regularly.
Employee Safety and Welfare —We place a high priority on maintaining a secure and healthy workplace. We promote a culture of well‑being and reporting by connecting employee safety policies with patient safety policies, and we review and refine the policies regularly.
Our subsidiaries operate acute care hospitals in five states that require a form of state approval under certificate of need programs applicable to those hospitals. Approximately 34% of our licensed hospital beds are located in these states (namely, Alabama, Massachusetts, Michigan, South Carolina and Tennessee).
Approximately 27% of our licensed hospital beds are located in four states (namely, Massachusetts, Michigan, South Carolina and Tennessee) that currently require a form of state approval under certificate of need programs applicable to acute care hospitals.
Mary’s Hospital Tucson 400 Owned California Desert Regional Medical Center (5) Palm Springs 385 Leased Doctors Hospital of Manteca Manteca 73 Owned Doctors Medical Center Modesto 461 Owned Emanuel Medical Center Turlock 209 Owned Fountain Valley Regional Hospital and Medical Center (6) Fountain Valley 400 Owned Hi-Desert Medical Center (7) Joshua Tree 179 Leased John F.
Joseph’s Hospital Tucson 451 Owned St. Mary’s Hospital Tucson 400 Owned California Desert Regional Medical Center (3) Palm Springs 385 Leased Doctors Hospital of Manteca Manteca 73 Owned Doctors Medical Center Modesto 461 Owned Emanuel Medical Center Turlock 209 Owned Hi-Desert Medical Center (4) Joshua Tree 179 Leased John F.
Diversity and Inclusion —We continue to focus on the hiring, advancement and retention of underrepresented populations to further our objective of fostering an engaging culture with a workforce and leadership teams that represent the communities we serve.
Culture —We continue to focus on fostering an engaging culture through the hiring, advancement and retention of a workforce and leadership teams that represent the communities we serve.
Moreover, we participate in various value‑based programs to improve quality and cost of care. We believe the use of these practices will promote the most effective and efficient utilization of resources and result in more appropriate lengths of stay, as well as reductions in readmissions for hospitalized patients.
We believe the use of these practices will promote the most effective and efficient utilization of resources and result in more appropriate lengths of stay, as well as reductions in readmissions for hospitalized patients.
In addition to the hospitals and outpatient facilities discussed above, our Hospital Operations segment now includes our Conifer JV’s revenue cycle management and value‑based care service offerings. At December 31, 2023, we owned 76.2% of the Conifer JV, and Catholic Health Initiatives (“CHI”) had a 23.8% ownership position.
In addition to the hospitals and outpatient facilities discussed above, our Hospital Operations segment includes physician practices and other associated healthcare businesses, as well as our Conifer JV’s revenue cycle management and value‑based care service offerings. At December 31, 2024, we owned 76.2% of the Conifer JV, and CommonSpirit Health held a 23.8% ownership position.
Lucie, Florida that is expected to include a 54-bed hospital, as well as medical office space. We expect to complete construction of the Port St. Lucie medical campus in late 2025.
In addition, we continued construction in 2024 on a new medical campus located in Port St. Lucie, which will include the 54‑bed Florida Coast Surgical Hospital, as well as medical office space. We expect to complete construction of the Port St. Lucie medical campus in late 2025.
The following table lists, by state, the hospitals wholly owned, operated as part of a joint venture, or leased and operated by our wholly owned subsidiaries at December 31, 2023 : Hospital Location Licensed Beds Status Alabama Brookwood Baptist Medical Center (1) Homewood 595 JV/Owned Citizens Baptist Medical Center (1)(2) Talladega 122 JV/Leased Princeton Baptist Medical Center (1)(2) Birmingham 505 JV/Leased Shelby Baptist Medical Center (1)(2) Alabaster 252 JV/Leased Walker Baptist Medical Center (1)(2) Jasper 267 JV/Leased Arizona Abrazo Arizona Heart Hospital (3) Phoenix 59 Owned Abrazo Arrowhead Campus Glendale 215 Owned Abrazo Central Campus Phoenix 206 Owned Abrazo Scottsdale Campus Phoenix 120 Owned Abrazo West Campus Goodyear 216 Owned Holy Cross Hospital (4) Nogales 25 Owned St.
Table of Contents The following table lists, by state, the hospitals wholly owned, operated as part of a joint venture, or leased and operated by our wholly owned subsidiaries at December 31, 2024 : Hospital Location Licensed Beds Status Arizona Abrazo Arizona Heart Hospital (1) Phoenix 59 Owned Abrazo Arrowhead Campus Glendale 229 Owned Abrazo Central Campus Phoenix 206 Owned Abrazo Scottsdale Campus Phoenix 120 Owned Abrazo West Campus Goodyear 216 Owned Holy Cross Hospital (2) Nogales 25 Owned St.
Competition; Staffing and Labor Trends —Our operations are dependent on the availability, efforts, abilities and experience of management and medical support personnel, including nurses, therapists, pharmacists and lab technicians, among others. We have always competed with other healthcare providers in recruiting and retaining qualified employees; however, over the past several years, our industry has faced considerable workforce challenges.
Competition; Staffing and Labor Trends —Our operations are dependent on the availability, efforts, abilities and experience of management and medical support personnel, including nurses, therapists, pharmacists and lab technicians, among others. We compete with other healthcare providers in recruiting and retaining qualified personnel responsible for the operation of our facilities.
All of the hospitals in our Hospital Operations segment are licensed under appropriate state laws, and each is accredited by The Joint Commission. With such accreditation, our hospitals are deemed to meet the Medicare Conditions of Participation and Conditions for Coverage, and they are eligible to participate Medicare, Medicaid and other government‑sponsored provider programs.
With such accreditation, our hospitals are deemed to meet the Medicare Conditions of Participation and Conditions for Coverage, and they are eligible to participate in Medicare, Medicaid and other government‑sponsored provider programs.
Our commercial insurance does not cover all claims against us and may not offset the financial impact of a material loss event. Moreover, commercial insurance may not continue to be available at a reasonable cost for us to maintain at adequate levels.
Commercial insurance may not continue to be available at a reasonable cost for us to maintain at adequate levels in the future. In addition, our insurance against cybersecurity risks and cyber-attacks may not provide the coverage we anticipate or offset the financial impact of a material loss event.
Approximately 60% of the outpatient centers in our Hospital Operations segment at December 31, 2023 were in Arizona and Texas. Strong concentrations of facilities within operating areas may help us expand our managed care payer network, reduce management, marketing and other expenses, and more efficiently utilize resources.
Strong concentrations of facilities within operating areas may help us expand our managed care payer network, reduce management, marketing and other expenses, and more efficiently utilize resources.
We also offer value‑based care services, including clinical integration, financial risk management and population health management, all of which aim to assist clients in improving the cost and quality of their healthcare delivery, as well as their patient outcomes.
We also offer value‑based care services, including clinical integration, financial risk management and population health management, all of which aim to assist clients in improving the cost and quality of their healthcare delivery, as well as their patient outcomes. 3 Table of Contents At December 31, 2024, we provided one or more of the business process services described above to approximately 620 Tenet and non‑Tenet hospitals and other clients nationwide.
At this time, based on current climate conditions and our assessment of existing and pending environmental rules and regulations, as well as treaties and international accords relating to climate change, we do not believe that the costs of complying with environmental laws, including regulations relating to climate change issues, will have a material adverse effect on our future capital expenditures, results of operations or cash flows.
At this time, we do not believe that the costs of complying with environmental laws, including regulations relating to climate change issues, will have a material adverse effect on our future capital expenditures, results of operations or cash flows. There were no material capital expenditures for environmental matters in the year ended December 31, 2024.
In some of our communities, employers across various industries have increased their minimum wage, which has created more competition and, in some cases, higher labor costs for this sector of employees. Furthermore, we expect that state-mandated minimum wage increases in California will result in an increase in compensation costs for certain of our employees and vendors beginning in 2024.
In some of our communities, employers across various industries have increased their minimum wage, which has created more competition and, in some cases, higher labor costs for this sector of employees. Furthermore, state-mandated minimum wage increases in California became effective for healthcare workers in October 2024, with further annual increases anticipated through 2028.
To that end, we have made significant investments in equipment, technology, education and operational strategies designed to improve clinical quality at all of our facilities. In addition, we continually collaborate with physicians to implement the most current evidence‑based medicine techniques to improve the way we provide care, while using labor management tools and supply‑chain initiatives to reduce variable costs.
In addition, we continually collaborate with physicians to implement the most current evidence‑based medicine techniques to improve the way we provide care, while using labor management tools and supply‑chain initiatives to reduce variable costs. Moreover, we participate in various value‑based programs to improve quality and cost of care.
Many of our hospitals provide tertiary care services, such as cardiothoracic surgery, complex spinal surgery, neonatal intensive care and neurosurgery, and some also offer quaternary care in areas such as heart and kidney transplants.
Many of our hospitals provide tertiary care services, such as cardiothoracic surgery, complex spinal surgery, neonatal intensive care and neurosurgery, and our Children’s Hospital of Michigan also offers pediatric quaternary care through its heart, kidney and liver transplant programs.
(9) These hospitals, their affiliated physician practices and other related hospital operations were sold on January 31, 2024. Information regarding the utilization of licensed beds and other operating statistics at December 31, 2023 and 2022 can be found in MD&A.
Information regarding the utilization of licensed beds and other operating statistics at December 31, 2024 and 2023 can be found in MD&A.
HEALTHCARE REFORM The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), extended health coverage to millions of uninsured legal U.S. residents through a combination of private sector health insurance reforms and public program expansion.
Any of the aforementioned consequences could have a material adverse effect on our business, financial condition, results of operations or cash flows. 8 Table of Contents POTENTIAL CHANGES IN HEALTHCARE POLICY The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), extended health coverage to millions of uninsured legal U.S. residents through a combination of private sector health insurance reforms and public program expansion.
Our Medicare and Medicaid payments may be suspended pending even an investigation of what the government determines to be a credible allegation of fraud. Any of the aforementioned consequences could have a material adverse effect on our business, financial condition, results of operations or cash flows.
Our Medicare and Medicaid payments may be suspended pending even an investigation of what the government determines to be a credible allegation of fraud.
Our business is now classified into two separate reporting segments: • Hospital Operations and Services (“Hospital Operations”), including: (i) 61 acute care and specialty hospitals, a network of employed physicians, and 164 outpatient facilities, including imaging centers, urgent care centers (each, a “UCC”), ancillary emergency facilities and micro‑hospitals, at December 31, 2023; and (ii) the revenue cycle management and value‑based care services that our Conifer Health Solutions, LLC joint venture (“Conifer JV”) provides to hospitals, health systems, physician practices, employers and other clients; and • Ambulatory Care, which is comprised of the operations of our subsidiary USPI Holding Company, Inc.
At December 31, 2024, our Hospital Operations segment was comprised of: (1) 49 acute care and specialty hospitals, a network of employed physicians, and 135 outpatient facilities, including urgent care centers (each, a “UCC”), imaging centers, off-campus hospital emergency departments (“EDs”) and micro‑hospitals; and (2) the revenue cycle management and value‑based care services we provide to hospitals, health systems, physician practices, employers and other clients through our Conifer Health Solutions, LLC joint venture (“Conifer JV”).
In general, we believe that quality of care improvements may have the effects of: (1) reducing costs; (2) increasing payments from Medicare and certain managed care payers for our services as governmental and private payers continue to move to pay‑for‑performance models, and the commercial market continues to move to more narrow networks and other methods designed to encourage covered individuals to use certain facilities over others; and (3) increasing physician and patient satisfaction, which may improve our volumes.
In general, we believe that quality of care improvements may have the effects of: (1) reducing costs; (2) increasing payments from Medicare and certain managed care payers for our services; and (3) increasing physician and patient satisfaction, which may improve our volumes. Other competing health systems may implement similar strategies.
The federal Fair Debt Collection Practices Act (“FDCPA”) regulates persons who regularly collect or attempt to collect, directly or indirectly, consumer debts owed or asserted to be owed to another person.
We cannot predict the outcome of current or future legal actions against Conifer or the effect that judgments, penalties or settlements in such matters may have. The federal Fair Debt Collection Practices Act (“FDCPA”) regulates persons who regularly collect or attempt to collect, directly or indirectly, consumer debts owed or asserted to be owed to another person.
Human Resources Practices —We have established – and continue to enhance and refine – a comprehensive set of practices for recruiting, managing and optimizing the human resources of our organization. In many cases, we utilize objective benchmarking and other tools in our efforts in such areas as organizational effectiveness, engagement, voluntary turnover and staffing efficiencies.
Human Resources Practices —We have established – and continue to enhance and refine – a comprehensive set of practices for recruiting, managing and optimizing the human resources of our organization.
Our subsidiaries had sole ownership of 53 of these hospitals, six were owned or leased by entities that are majority owned by a Tenet subsidiary, and two were owned by third parties and leased by our wholly owned subsidiaries.
At December 31, 2024, our subsidiaries operated 49 acute care and specialty hospitals serving primarily urban and suburban communities in eight states. Our subsidiaries had sole ownership of 45 of these hospitals, two were owned by entities that are majority owned by a Tenet subsidiary, and two were owned by third parties and leased by our wholly owned subsidiaries.
More recent healthcare-related reform efforts at the federal and state levels include initiatives, requirements and proposals that could have a positive effect on our business, as well as others that may increase our operating costs, negatively impact our case mix, adversely affect the reimbursement we receive for our services or require us to expend resources to modify certain aspects of our operations.
Some federal and state changes, initiatives and requirements could, among other things, negatively impact our patient volumes, case mix and revenue mix, increase our operating costs, adversely affect the reimbursement we receive for our services, impact our competitive position or require us to expend resources to modify certain aspects of our operations.
There were no material capital expenditures for environmental matters in the year ended December 31, 2023. Additional information regarding our approach to environmental matters can be found in our most recent ESG Report, which is available on our website.
ESG Report —Additional information on matters relating to human capital resources can be found in our most recent ESG Report, which is available on our website.
INSURANCE The healthcare industry has seen significant increases in the cost of professional and general liability insurance due to increased claims and lawsuits in the ordinary course of business. We maintain captive insurance companies to self‑insure for the majority of our professional and general liability claims, and we purchase insurance from third parties to cover catastrophic claims.
INSURANCE We maintain captive insurance companies to self‑insure for the majority of our professional and general liability claims, and we purchase insurance from third parties to cover catastrophic claims. Commercial insurance we purchase is subject to per‑claim and policy period aggregate limits.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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While we seek to obtain assurances that third parties will protect our information and business operations, there is a risk the security of data held by such third parties could be breached or that systems are rendered unavailable causing direct business operations impacts.
While we seek to obtain assurances that third parties will protect our information and business operations, there is a risk the security of data held by such third parties could be breached or that systems are rendered unavailable, causing direct impacts to our business operations.
Medicare requires providers to report certain quality measures in order to receive full reimbursement increases for inpatient and outpatient procedures that were previously awarded automatically; each year, CMS updates these measures through refinement or removal of existing measures and the addition of new measures.
Medicare requires providers to report certain quality measures in order to receive full reimbursement increases that were previously awarded automatically for inpatient and outpatient procedures; each year, CMS updates these measures through refinement or removal of existing measures and the addition of new measures.
Because we cannot predict what actions the federal government or the states may take under existing or future legislation and/or regulatory changes to address budget gaps, deficits, Medicaid expansion, Medicaid eligibility redeterminations, provider fee programs, state‑directed payment programs or Medicaid Section 1115 waivers, we are unable to assess the effect that any such legislation or regulatory action might have on our business; however, the overall impact on our future financial position, results of operations or cash flows could be material.
Because we cannot predict what actions the federal government or the states may take under existing or future legislation and/or regulatory changes to address budget gaps, deficits, Medicaid expansion, Medicaid eligibility redeterminations, provider fee programs, state‑directed payment programs or Medicaid Section 1115 waivers, we are unable to assess the effect that any such legislation or regulatory action might have on our business; however, the overall adverse impact on our future financial position, results of operations or cash flows could be material.
Any ransomware attack, breach, system interruption or unavailability of our information systems or of third-party systems with access to our data could result in: the unauthorized disclosure, misuse, loss or corruption of such data; interruptions and delays in our normal business operations (including the collection of revenues); patient harm; potential liability under privacy, security, consumer protection or other applicable laws; regulatory penalties; ransomware payments; and negative publicity and damage to our reputation.
Any ransomware attack, breach, system interruption or unavailability of our information systems or of third-party systems with access to our data could result in: the unauthorized disclosure, misuse, loss or corruption of such data; interruptions and delays in our normal business operations (including the collection of revenues); patient or client harm; potential liability under privacy, security, consumer protection or other applicable laws; regulatory penalties; ransomware payments; and negative publicity and damage to our reputation.
In April 2022, we experienced a cybersecurity incident that temporarily disrupted a subset of our hospital operations and involved the exfiltration of certain confidential company and patient information. Threat actors continue to proliferate, adapt and devote significant effort to attacking the information systems and electronically transmitted and stored data of healthcare providers and related entities.
In April 2022, we experienced a cybersecurity incident that disrupted a subset of our hospital operations and involved the exfiltration of certain confidential company and patient information. Threat actors continue to proliferate, adapt and devote significant effort to attacking the information systems and electronically transmitted and stored data of healthcare providers and related entities.
Furthermore, even a public announcement that we are being investigated for possible violations of law could have a material adverse effect on the value of our common stock and our business reputation could suffer. As noted, the healthcare industry continues to attract much legislative interest and public attention.
Furthermore, even a public announcement that we are being investigated for possible violations of law could have a material adverse effect on the value of our common stock and our business reputation could suffer. As noted, the healthcare industry continues to attract legislative interest and public attention.
In addition, our ability to meet our debt service obligations is dependent upon the operating results of our subsidiaries and their ability to pay dividends or make other payments or advances to us. We hold most of our assets at, and conduct substantially all of our operations through, direct and indirect subsidiaries.
In addition, our ability to meet our debt service obligations is primarily dependent upon the operating results of our subsidiaries and their ability to pay dividends or make other payments or advances to us. We hold most of our assets at, and conduct substantially all of our operations through, direct and indirect subsidiaries.
In addition, the occurrence of cybersecurity incidents and the continued and elevated risk of attacks (including ransomware), system and data breaches, and other disruptions to information technology systems in the current environment has caused increases in our cyber premiums and lower coverage limits.
In addition, the occurrence of cybersecurity incidents and the continued and elevated risk of attacks (including ransomware), system and data breaches, and other disruptions to information technology systems in the current environment has caused increases in our cyber insurance premiums and lower coverage limits.
With respect to planned or future transactions, we cannot provide any assurances that we will be able to identify suitable candidates, consummate transactions on terms that are favorable to us, or achieve synergies or other benefits in a timely manner or at all.
With respect to future transactions, we cannot provide any assurances that we will be able to identify suitable candidates, consummate transactions on terms that are favorable to us, or achieve synergies or other benefits in a timely manner or at all.
We may not be able to generate sufficient cash to service all of our indebtedness, and we may not be able to refinance our indebtedness on favorable terms. If we are forced to take other actions to satisfy our obligations under our indebtedness, these actions may not be successful.
We may not be able to generate sufficient cash to service all of our indebtedness, and we may not be able to refinance our indebtedness on favorable terms, if needed. If we are forced to take other actions to satisfy our obligations under our indebtedness, these actions may not be successful.
These legal and regulatory standards relate to, among other topics: ownership and operation of facilities and physician practices; licensure, certification and enrollment in government 22 Table of Contents programs; the necessity and adequacy of medical care; quality of medical equipment and services; relationships with and qualifications of physicians and employees; operating conduct, policies and procedures; screening, stabilization and transfer of individuals who have emergency medical conditions; rate‑setting, billing and coding for services; the preparation and filing of cost reports; the handling of overpayments; contractual arrangements; relationships with referral sources and referral recipients; privacy and security; maintenance of adequate records; construction, acquisition, expansion and closure of healthcare facilities or services; environmental protection; compliance with fire prevention and building codes; debt collection; and communications with patients and consumers.
These legal and regulatory standards relate to, among other topics: ownership and operation of facilities and physician practices; licensure, certification and enrollment in government programs; the necessity and adequacy of medical care; quality of medical equipment and services; relationships with and qualifications of physicians and employees; operating conduct, policies and procedures; screening, stabilization and transfer of individuals who have emergency medical conditions; rate‑setting, billing and coding for services; the preparation and filing of cost reports; the handling of overpayments; contractual arrangements; relationships with referral sources and referral recipients; privacy and security; maintenance of adequate records; construction, acquisition, expansion and closure of healthcare facilities or services; environmental protection; compliance with fire prevention and building codes; debt collection; and communications with patients and consumers.
Our participation in joint ventures is also subject to the risks that: • We could experience an impasse on certain decisions because we do not have sole decision‑making authority, which could require us to expend additional resources on resolving such impasses or potential disputes. • We may not be able to maintain good relationships with our joint venture partners (including health systems), which could limit our future growth potential and could have an adverse effect on our business strategies. • Our joint venture partners could have investment or operational goals that are not consistent with our corporate‑wide objectives, including the timing, terms and strategies for investments or future growth opportunities. • Our joint venture partners might become bankrupt, fail to fund their share of required capital contributions or fail to fulfill their other obligations as joint venture partners, which may require us to infuse our own capital into any such venture on behalf of the related joint venture partner or partners despite other competing uses for such capital. • The requirements in many of our existing joint ventures that one of our wholly owned subsidiaries provide a working capital line of credit to the joint venture could necessitate the allocation of substantial financial resources to the joint venture, potentially impacting our ability to fund our other short‑term obligations. • Provisions in some of our existing joint venture arrangements requiring mandatory capital expenditures for the benefit of the applicable joint venture could limit our ability to expend funds on other corporate opportunities. • Our joint venture partners may have competing interests in our markets that could create conflict of interest issues, which could impact the sustainability of our relationships. • Any sale or other disposition of our interest in a joint venture or underlying assets of the joint venture may require consents from our joint venture partners, which we may not be able to obtain. • Certain corporate‑wide or strategic transactions may also trigger other contractual rights held by a joint venture partner (including termination or liquidation rights) depending on how the transaction is structured, which could impact our ability to complete such transactions. • Put/call arrangements and other joint venture exit rights could require us to utilize our cash flow, incur additional indebtedness or issue stock to satisfy the payment obligations in respect of such arrangements. • Our joint venture arrangements that involve financial and ownership relationships with physicians and others who either refer or influence the referral of patients to our hospitals or other healthcare facilities are subject to greater regulatory scrutiny from government enforcement agencies.
Our participation in joint ventures is also subject to the risks that: • We could experience an impasse on certain decisions because we do not have sole decision‑making authority, which could require us to expend additional resources on resolving such impasses or potential disputes. • We may not be able to maintain good relationships with our joint venture partners (including health systems), which could limit our future growth potential and could have an adverse effect on our business strategies. • Our joint venture partners could have investment or operational goals that are not consistent with our corporate‑wide objectives (including the timing, terms and strategies for investments or future growth opportunities) or their relevant contractual obligations. • Our joint venture partners might become bankrupt, fail to fund their share of required capital contributions or fail to fulfill their other obligations as joint venture partners, which may require us to infuse our own capital into any such venture on behalf of the related joint venture partner or partners despite other competing uses for such capital. • The requirements in some of our existing joint ventures that one of our wholly owned subsidiaries provide a working capital line of credit to the joint venture could necessitate the allocation of substantial financial resources to the joint venture, potentially impacting our ability to fund our other short‑term obligations. • Provisions in some of our existing joint venture arrangements requiring mandatory capital expenditures for the benefit of the applicable joint venture could limit our ability to expend funds on other corporate opportunities. • Our joint venture partners may have competing interests in our markets that could create conflict of interest issues, which could impact the sustainability of our relationships. • Any sale or other disposition of our interest in a joint venture or underlying assets of the joint venture may require consents from our joint venture partners, which we may not be able to obtain. 25 Table of Contents • Certain corporate‑wide or strategic transactions may also trigger other contractual rights held by a joint venture partner (including termination or liquidation rights) depending on how the transaction is structured, which could impact our ability to complete such transactions. • Put/call arrangements and other joint venture exit rights could require us to utilize our cash flow or incur additional indebtedness to satisfy the payment obligations in respect of such arrangements. • Our joint venture arrangements that involve financial and ownership relationships with physicians and others who either refer or influence the referral of patients to our hospitals or other healthcare facilities are subject to greater regulatory scrutiny from government enforcement agencies.
As an alternative means of funding provider payments, many of the states where we operate have adopted supplemental payment programs under the Social Security Act.
As an alternative means of funding provider payments, many of the states where we operate have adopted supplemental payment programs authorized under the Social Security Act.
Moreover, we rely on dividends or other intercompany transfers of funds from our subsidiaries to meet our debt service and other obligations, including payment on our outstanding debt.
Moreover, we principally rely on dividends or other intercompany transfers of funds from our subsidiaries to meet our debt service and other obligations, including payment on our outstanding debt.
Many large commercial payers expect hospitals to report quality data, and several of these payers will not reimburse hospitals for certain preventable adverse events. Value‑based purchasing programs, including programs that condition reimbursement on patient outcome measures, may become more common and may involve a higher percentage of reimbursement amounts.
Some large commercial payers expect hospitals to report quality data, and several of these payers will not reimburse hospitals for certain preventable adverse events. Value‑based purchasing programs, including programs that condition reimbursement on patient outcome measures, may become more common and may involve a higher percentage of reimbursement amounts.
If we are unable to successfully maintain, enhance or operate our information systems, including through the implementation of such technologies or applications in our operations, we may be, among other things, unable to efficiently adapt to evolving laws and requirements, unable to remain competitive with others who successfully implement and advance this technology, and our patients’ safety may be adversely impacted, any of which could have a material adverse impact on our overall business, financial condition, results of operations or cash flows.
Conversely, if we are unable to successfully maintain, enhance or operate our information systems, including through the implementation of AI technologies or applications in our operations, we may be, among other things, unable to efficiently adapt to evolving laws and requirements, unable to remain competitive with others who successfully implement and advance this technology, and our patients’ safety may be adversely impacted, any of which could have a material adverse impact on our overall business, financial condition, results of operations or cash flows.
Furthermore, material payment delays and disputes between us and significant managed care payers could have a material adverse effect on our financial condition, results of operations or cash flows. At December 31, 2023, 68% of our Hospital Operations segment’s net accounts receivable was due from managed care payers.
Furthermore, material payment delays and disputes between us and significant managed care payers could have a material adverse effect on our financial condition, results of operations or cash flows. At December 31, 2024, 68% of our Hospital Operations segment’s net accounts receivable was due from managed care payers.
If one or more of the events discussed in this report were to occur, actual outcomes could differ materially from those expressed in or implied by any forward‑looking statements we make in this report or our other filings with the SEC, and our business, financial condition, results of operations or liquidity could be materially adversely affected; furthermore, the 16 Table of Contents trading price of our common stock could decline and our shareholders could lose all or part of their investment.
If one or more of the events discussed in this report were to occur, actual outcomes could differ materially from those expressed in or implied by any forward‑looking statements we make in this report or our other filings with the SEC, and our business, financial condition, results of operations or liquidity could be materially adversely affected; furthermore, the trading price of our common stock could decline and our shareholders could lose all or part of their investment.
Unionized employees – primarily registered nurses and service, technical and maintenance workers – are located at 33 of our hospitals, the majority of which are in California, Florida and Michigan. Organizing activities by labor unions could increase our level of union representation in future periods.
Unionized employees – primarily registered nurses and service, technical and maintenance workers – are located at 27 of our hospitals, the majority of which are in California, Florida and Michigan. Organizing activities by labor unions could increase our level of union representation in future periods.
From time to time, we pursue opportunities to refine our portfolio of hospitals and other healthcare facilities when we believe such refinements will help us improve profitability, allocate capital more effectively in areas where we have a stronger presence, deploy proceeds on higher-return investments across our business, enhance cash flow generation and reduce our debt, among other things.
From time to time, we pursue opportunities to refine our portfolio of hospitals and other healthcare facilities when we believe such refinements will help us improve profitability, allocate capital more effectively in areas where we have a stronger presence, deploy proceeds toward higher-return investments across our business, enhance cash flow generation or reduce our debt, among other things.
Our ability to make scheduled payments on or to refinance our indebtedness depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to financial, business and other factors that may be beyond our control.
Our ability to make scheduled payments on or to refinance our indebtedness depends on our cash on hand and our financial and operating performance, which is subject to prevailing economic and competitive conditions and to financial, business and other factors that may be beyond our control.
The information technology and infrastructure we use, the third‑party systems we interact with and the suppliers we use, have been, and will likely continue to be, subject to cyber attacks, computer viruses or breaches due to malfeasance or employee error.
The information technology and infrastructure we use, the third‑party systems we interact with and the suppliers we use, have been, and continue to be, subject to cyber-attacks, computer viruses or breaches due to malfeasance or employee error.
If we are unable to attract and retain sufficient numbers of quality physicians by providing adequate support personnel, technologically advanced equipment, and facilities that 18 Table of Contents meet the needs of those physicians and their patients, physicians may choose not to refer patients to our facilities, admissions and outpatient visits may decrease, and our operating performance may decline.
If we are unable to attract and retain sufficient numbers of quality physicians by providing adequate support personnel, technologically advanced equipment, and facilities that meet the needs of those physicians and their patients, physicians may choose not to refer patients to our facilities, admissions and outpatient visits may decrease, and our operating performance may decline.
Furthermore, if Conifer becomes subject to fines or other penalties, it could harm Conifer’s reputation, thereby making it more difficult to retain existing clients or attract new clients. We could be subject to substantial uninsured liabilities or increased insurance costs as a result of significant legal actions.
Furthermore, if Conifer becomes subject to fines or other penalties, it could harm Conifer’s reputation, thereby making it more difficult to retain existing clients or attract new clients. 22 Table of Contents We could be subject to substantial uninsured liabilities or increased insurance costs as a result of significant legal actions.
Moreover, not all standard cybersecurity tools and solutions we use are employed at all locations, as expansion of tool and solution use is based 21 Table of Contents on numerous factors. There is no guarantee that we will employ the right tools and solutions at each location or that the expansion of certain tools and solutions will be successful.
Moreover, not all standard cybersecurity tools and solutions we use are employed at all locations, as expansion of tool and solution use is based on numerous factors. There is no guarantee that we will employ the right tools and solutions at each location or that the expansion of certain tools and solutions will be successful.
Moreover, in 2023, our commercial managed care net inpatient revenue per admission from the hospitals in our Hospital Operations segment was approximately 86% higher than our aggregate yield on a per‑admission basis from government payers, including Medicare and Medicaid managed care programs. The ongoing trend toward consolidation among non‑government payers tends to increase their bargaining power over contract terms.
Moreover, in 2024, our commercial managed care net inpatient revenue per admission from the hospitals in our Hospital Operations segment was approximately 67% higher than our aggregate yield on a per‑admission basis from government payers, including Medicare and Medicaid managed care programs. The ongoing trend toward consolidation among non‑government payers tends to increase their bargaining power over contract terms.
The Medicare and Medicaid programs are subject to: • statutory and regulatory changes, administrative and judicial rulings, interpretations and determinations concerning patient eligibility requirements, funding levels and the method of calculating reimbursements, among other things; • requirements for utilization review; and • federal and state funding restrictions.
The Medicare and Medicaid programs are subject to: • statutory and regulatory changes, administrative and judicial rulings, executive orders, interpretations and determinations concerning eligibility requirements, funding levels and the method of calculating reimbursements, among other things; • requirements for utilization review; and • federal and state funding restrictions.
Our labor costs have been, and we expect will continue to be, adversely affected by competition for staffing, the shortage of experienced nurses and other healthcare professionals, and labor union activity. Our operations are dependent on the availability, efforts, abilities and experience of management and medical support personnel, including nurses, therapists, pharmacists and lab technicians, among others.
Our labor costs have been, and may continue to be, adversely affected by competition for staffing, the shortage of experienced nurses and other healthcare professionals, and labor union activity. Our operations are dependent on the availability, efforts, abilities and experience of management and medical support personnel, including nurses, therapists, pharmacists and lab technicians, among others.
In addition: • Our substantial indebtedness may limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors that have less debt. • We may be more vulnerable in the event of a deterioration in our business, in the healthcare industry or in the economy generally, or if federal or state governments substantially limit or reduce reimbursement under the Medicare or Medicaid programs. • Our debt service obligations reduce the amount of funds available for our operations, capital expenditures and corporate development activities, and may make it more difficult for us to satisfy our financial obligations. • Our operations are capital intensive and require significant investment to maintain buildings, equipment, software and other assets.
Our indebtedness could have important consequences, including the following: • Our indebtedness may limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors that have less debt. • We may be more vulnerable in the event of a deterioration in our business, in the healthcare industry or in the economy generally, or if federal or state governments substantially limit or reduce reimbursement under the Medicare or Medicaid programs. • Our debt service obligations reduce the amount of funds available for our operations, capital expenditures and corporate development activities, and may make it more difficult for us to satisfy our financial obligations. • Our operations are capital intensive and require significant investment to maintain buildings, equipment, software and other assets.
There can be no assurance that we will be able to 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.
There can be no assurance that we will be able to maintain a level of 26 Table of Contents cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
In addition, although physicians who own interests in our facilities are generally subject to agreements restricting them from owning an interest in competitive facilities, we may not learn of, or may be unsuccessful in preventing, our physician partners from acquiring interests in competitive facilities.
In addition, although physicians who own interests in our facilities are generally subject to agreements restricting them from owning an interest in competing facilities, we may not learn of, or may be unsuccessful in preventing, our physician partners from acquiring interests in such facilities.
We are unable at this time to predict how the industry trends toward value‑based purchasing and alternative payment models will affect our future results of operations, but they could negatively impact our revenues, particularly if we are unable to meet the quality and cost standards established by both governmental and private payers.
We are unable at this time to predict how future alternative payment models and value-based purchasing initiatives will affect our results of operations, but they could negatively impact our revenues, particularly if we are unable to meet the quality and cost standards established by both governmental and private payers.
We believe our hospitals and outpatient facilities compete within local communities on the basis of many factors, including: quality of care; location and ease of access; the scope and breadth of services offered; reputation; and the caliber of the facilities, equipment and employees.
We believe our hospitals and outpatient facilities compete within local areas and regions on the basis of many factors, including: quality of care; location and ease of access; the scope and breadth of services offered; reputation; and the caliber of the facilities, equipment and employees.
Any of these could have a material adverse effect on our business, financial condition, results of operations or cash flows. We are subject to operational cybersecurity risks that could materially impact our business.
Any of these could have a material adverse effect on our business, financial condition, results of operations or cash flows. 20 Table of Contents We are subject to operational cybersecurity risks that could materially impact our business.
In addition, the competitive positions of hospitals and outpatient facilities depend in large part on the number, quality, specialties, and admitting and scheduling practices of the licensed physicians who are members of the medical staffs of those facilities, as well as physicians who affiliate with and use outpatient centers as an extension of their practices.
In addition, the competitive positions of hospitals and outpatient facilities depend in part on the number, quality, specialties, and admitting and scheduling practices of the licensed physicians who are members of the medical staffs of those facilities, as well as physicians who affiliate with and use 18 Table of Contents outpatient centers as an extension of their practices.
If these technologies or applications fail to operate as anticipated or do not perform as specified, including due to potential design defects and defects in the development of algorithms or other technologies, human error or otherwise, we may be subject to liability and reputational harm.
If our current or future technologies or applications fail to operate as anticipated or do not perform as specified, including due to potential design defects and defects in the development of algorithms or other technologies, human error or otherwise, we may be subject to liability and reputational harm.
Generally, the bundled payment models hold hospitals financially accountable for the quality and costs for an entire episode of care for a specific diagnosis or procedure from the date of the hospital admission or inpatient procedure through 90 days post‑discharge, including services not provided by the hospital, such as physician, inpatient rehabilitation, skilled nursing and home health care.
Bundled payment models hold hospitals financially accountable for the quality and cost of an entire episode of care for a specific diagnosis or procedure, from the date of the hospital admission or inpatient procedure through 90 days post‑discharge, and include services not provided by the hospital, such as physician services, inpatient rehabilitation, skilled nursing and home health care.
Our systems, in turn, interface with and rely on third‑party systems that we do not control, including medical devices and other processes supporting the interoperability of healthcare infrastructures. We rely on these third‑party providers to have appropriate controls to protect our systems, confidential information and other sensitive or regulated data.
Our systems, in turn, interface with and rely on third‑party systems that store and transmit information integral to patient care and that we do not control, including medical devices and other processes supporting the interoperability of healthcare infrastructures. We rely on these third‑party providers to have appropriate controls to protect our systems, confidential information and other sensitive or regulated data.
Further, COVID‑19 surges, outbreaks of new variants and future pandemics, epidemics or outbreaks could exacerbate existing workforce shortages, result in significant price increases in medical supplies, particularly for personal protective equipment, and worsen supply shortages and delays, all of which may impact our ability to see, admit and treat patients.
Further, future pandemics, epidemics or outbreaks could exacerbate existing workforce shortages, result in significant price increases in medical supplies, particularly for personal protective equipment, and worsen supply shortages and delays, all of which may impact our ability to see, admit and treat patients.
As previously experienced during the COVID-19 pandemic, we could experience spikes in admissions at our hospitals, which may put a strain on our resources and personnel, and increased case cancellations in our Ambulatory Care segment.
As with the COVID-19 pandemic, we could experience spikes in admissions at our hospitals, which may put a strain on our resources and personnel, and increased case cancellations in our Ambulatory Care segment.
Another major factor in the competitive position of a hospital or outpatient facility is the scope of its relationships with managed care plans given that HMOs, PPOs, third‑party administrators and other third‑party payers use managed care contracts to encourage patients to use certain hospitals in exchange for discounts from the hospitals’ established charges.
Another factor in the competitive position of a hospital or outpatient facility is the scope and terms of its relationships with managed care plans given that HMOs, PPOs, third‑party administrators and other third‑party payers use managed care contracts to encourage patients to use certain facilities in exchange for discounts from the facilities’ established charges.
In addition, we expect that inflationary pressures, which we are unable to predict or control, will continue to impact our salaries, wages, benefits and other costs. Increased labor union activity is another factor that can adversely affect our labor costs. At December 31, 2023, approximately 23% of the employees in our Hospital Operations segment were represented by labor unions.
In addition, inflationary pressures, which we are unable to predict or control, may continue to impact our salaries, wages, benefits and other costs. Increased labor union activity is another factor that can adversely affect our labor costs. At December 31, 2024, approximately 21% of the employees in our Hospital Operations segment were represented by labor unions.
We compete with system‑affiliated hospitals and healthcare companies, as well as health insurers 19 Table of Contents and private equity companies, in recruiting physicians, acquiring physician practices and, where permitted by law, employing physicians.
We compete with system‑affiliated hospitals and healthcare companies, as well as health insurers and private equity companies, in recruiting physicians, acquiring physician practices and, where permitted by law, employing physicians.
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. Vertical integration efforts involving third‑party payers and healthcare providers, among other factors, may increase competitive challenges.
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 through the formation of narrow networks or other similar structures. Vertical integration efforts involving third‑party payers and healthcare providers, among other factors, may increase competitive challenges.
Value‑based purchasing and alternative payment model initiatives of both governmental and private payers tying financial incentives to quality and efficiency of care are increasingly affecting the results of operations of our hospitals and other healthcare facilities, and may negatively impact our revenues if we are unable to meet expected quality standards.
Alternative payment models and value‑based purchasing initiatives of both governmental and private payers tying financial incentives to quality and efficiency of care can affect the results of operations of our hospitals and other healthcare facilities, and may negatively impact our revenues if we are unable to meet expected quality standards.
As a result of factors that have negatively affected our industry generally and our business specifically, we have been, and in the future expect to be, required to record various charges in our results of operations. During the year ended December 31, 2023, we recorded $43 million of impairment charges and $79 million of restructuring charges.
As a result of factors that have negatively affected our industry generally and our business specifically, we have been, and in the future expect to be, required to record various charges in our results of operations. During the year ended December 31, 2024, we recorded $7 million of impairment charges and $56 million of restructuring charges.
For the year ended December 31, 2023, approximately 16% and 8% of our net patient service revenues for the hospitals and related outpatient facilities in our Hospital Operations segment were from the Medicare program and various state Medicaid programs, respectively, in each case excluding Medicare and Medicaid managed care programs.
For the year ended December 31, 2024, approximately 15% and 10% of our net patient service revenues for the hospitals and related outpatient facilities in our Hospital Operations segment were from the Medicare program and various state Medicaid programs, respectively, in each case excluding Medicare and Medicaid managed care programs.
We cannot predict the future course and impacts of COVID-19, or the potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease, on our operations, financial condition and liquidity.
We cannot predict the potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease, on our operations, financial condition and liquidity.
For the year ended December 31, 2023, approximately 70%, or $10.248 billion, of our net patient service revenues for the hospitals and related outpatient facilities in our Hospital Operations segment was attributable to managed care payers, including Medicare and Medicaid managed care programs.
For the year ended December 31, 2024, approximately 70%, or $9.809 billion, of our net patient service revenues for the hospitals and related outpatient facilities in our Hospital Operations segment was attributable to managed care payers, including Medicare and Medicaid managed care programs.
Our hospitals, outpatient centers and other healthcare businesses operate in competitive environments, and this competition can adversely affect our operations.
Our hospitals, outpatient centers and other healthcare businesses operate in competitive environments, and this competition can adversely affect their performance.
Also, we are increasingly experiencing payment denials from managed care payers, both prospectively and retroactively. We currently have thousands of managed care contracts with various HMOs and PPOs; however, our top 10 managed care payers generated 65% of our managed care net patient service revenues for the year ended December 31, 2023.
Also, we are increasingly experiencing payment denials from and other administrative challenges with managed care payers, both prospectively and retroactively. We currently have thousands of managed care contracts with various HMOs and PPOs; however, our top 10 managed care payers generated 71% of our managed care net patient service revenues for the year ended December 31, 2024.
Our relationships with payers, and reimbursement for the care we provide, may be further impacted by clinical and price transparency initiatives and out‑of‑network billing restrictions, including those in the No Surprises Act, which took effect January 1, 2022.
Our relationships with payers, and reimbursement for the care we provide, may be further impacted by clinical and price transparency initiatives and out‑of‑network billing restrictions, including those in the No Surprises Act.
We compete with system‑affiliated hospitals and healthcare companies, as well as health insurers and private equity companies, in recruiting physicians, acquiring physician practices and, where permitted by law, employing physicians. In 2023, we continued to experience challenges in recruiting and retaining physicians.
We compete with system‑affiliated hospitals and healthcare companies, as well as health insurers and private equity companies, in recruiting physicians, acquiring physician practices and, where permitted by law, employing physicians. In 2024, 17 Table of Contents we continued to experience challenges in recruiting and retaining physicians.
Provider participation in some of these models is voluntary; however, participation in certain other bundled payment arrangements is mandatory for providers located in randomly selected geographic locations. Under the mandatory models, hospitals are eligible to receive incentive payments or will be subject to payment reductions within certain corridors based on their performance against quality and spending criteria.
Participation in certain bundled payment models is voluntary; however, other bundled payment models are mandatory for providers in randomly selected geographic areas. Under the mandatory models, hospitals are eligible to receive incentive payments or will be subject to payment reductions within certain corridors based on their performance against quality and spending criteria.
If any of our hospitals achieve poor results (or results that are lower than our competitors) on quality measures or patient satisfaction surveys, or if our standard charges are or are perceived to be higher than our competitors, we may attract fewer patients.
If any of our facilities achieve poor results (or results that are lower than our competitors) on quality measures or patient satisfaction surveys, or if our pricing is or is perceived to be higher than our competitors, we may attract fewer patients.
If our healthcare competitors are better able to attract patients, recruit physicians, expand services or obtain favorable managed care contracts at their facilities than we are, we may experience an overall decline in patient volumes. The market for our revenue cycle management services is also competitive.
If our healthcare competitors are better able to attract patients, recruit physicians, expand services or obtain favorable managed care contracts at their facilities than we are, we may experience an overall decline in patient volumes, which could have an adverse impact on our net operating revenues. The market for our revenue cycle management services is also competitive.
Our substantial indebtedness could limit our ability to obtain additional financing to fund future capital expenditures, as well as working capital, acquisitions or other needs. • Our significant indebtedness may result in the market value of our stock being more volatile, potentially resulting in larger investment gains or losses for our shareholders, than the market value of the common stock of other companies that have a relatively smaller amount of indebtedness. • A significant portion of our outstanding debt is subject to early prepayment penalties, such as make‑whole premiums; as a result, it may be costly to pursue debt repayment as a deleveraging strategy.
Our indebtedness could limit our ability to obtain additional financing, if needed, to fund future capital expenditures, as well as working capital, acquisitions or other needs. • Our indebtedness may result in the market value of our stock being more volatile, potentially resulting in larger investment gains or losses for our shareholders, than the market value of the common stock of other companies that have a relatively smaller amount of indebtedness. • A significant portion of our outstanding debt is subject to early call price or make‑whole premiums; as a result, it may be costly to pursue debt repayment as a deleveraging strategy depending on when we decide to retire the debt.
In general, any material reductions in the contracted or out-of-network rates we receive for our services or any significant difficulties in collecting receivables from managed care payers could have a material adverse effect on our financial condition, results of operations or cash flows.
In general, any material reductions in the contracted or out-of-network rates we receive for our services or any significant difficulties in collecting receivables from managed care payers could have a material adverse effect on our financial condition, results of operations or cash flows. Changes in healthcare laws, regulations and policies could have an adverse effect on our business.
At December 31, 2023, we had approximately $15.002 billion of total long‑term debt, as well as $111 million in standby letters of credit outstanding in the aggregate under our senior secured revolving credit facility (as amended, “Credit Agreement”) and our letter of credit facility agreement (as amended, “LC Facility”).
At December 31, 2024, we had approximately $13.173 billion of total long‑term debt, as well as $106 million in standby letters of credit outstanding in the aggregate under our senior secured revolving credit facility (as amended, “Credit Agreement”) and our letter of credit facility agreement (as amended, “LC Facility”).
Attacks on, or breaches or other disruptions to, our information technology assets or those of third parties that we rely upon could impact the integrity, security or availability of data we process, transmit or store and could impact our operations, as well as patient PHI and customer PII.
Attacks on, or breaches or other disruptions to, our information technology assets or those of third parties that we rely upon could impact the integrity, security or availability of data we process, transmit or store and could impact our operations, as well as PHI and PII, and result in potential harm to our patients and clients.
In addition, enrollment of individuals in high-deductible health plans has increased over the last decade. In comparison to traditional health plans, these plans have higher co-pays and deductibles due from patients, which subjects us to increased collection risk. Moreover, high-deductible health plans may exclude our hospitals and employed physicians from coverage.
In addition, enrollment of individuals in high-deductible health plans has increased over the last decade. In comparison to traditional health plans, these plans have higher co-pays and deductibles due from patients, which subjects us to increased collection risk.
In general, the future course and impacts of COVID-19, or the potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease, on our operational and financial performance is uncertain and will depend on many factors outside of our control, including, among others: the duration, severity and trajectory of the illness, including the possible spread of potentially more contagious and/or virulent forms of the infection; future economic conditions, as well as the impact of government actions and administrative regulations on the hospital industry and broader economy, including through stimulus efforts; the development, availability and widespread use of effective medical treatments and vaccines; the imposition of public safety measures; the volume of canceled or rescheduled procedures at our facilities; and the volume of affected patients across our care network.
In general, the future course and impacts of COVID-19 or the potential emergence and effects of a future pandemic, epidemic or outbreak of an infectious disease on our operational and financial performance is uncertain and will depend on many factors outside of our control, including, among others: the duration, severity and trajectory of the illness, including the possible spread of potentially more contagious and/or virulent forms of the infection; future economic conditions, as well as the impact of government actions and administrative regulations on the hospital industry and broader economy, including through stimulus efforts; the development, availability and widespread use of effective medical treatments and vaccines; the imposition of public safety measures; the volume of canceled or rescheduled procedures at our facilities; and the volume of affected patients across our care network. 19 Table of Contents Our business could be significantly and negatively impacted by security threats, catastrophic events and other disruptions affecting our information technology and related information systems and confidential business data.
In addition, we may face wrongful termination, discrimination or other legal claims from employees affected by any workforce reductions, and we may incur substantial costs defending against such claims, regardless of their merits. The threat of such claims may also significantly increase our severance costs.
We may encounter challenges in executing cost‑reduction initiatives and not achieve the intended cost savings. In addition, we may face wrongful termination, discrimination or other legal claims from employees affected by any workforce reductions, and we may incur substantial costs defending against such claims, regardless of their merits. The threat of such claims may also significantly increase our severance costs.
Furthermore, healthcare consumers are now able to access hospital performance data on quality measures and patient satisfaction, as well as standard charges for services, to compare competing providers.
Furthermore, healthcare consumers are able to access performance data on quality measures and patient satisfaction, as well as pricing information for services, to compare competing providers.
Some of the hospitals that compete with our hospitals are owned by tax‑supported government agencies, and many others are owned by not‑for‑profit organizations that may have financial advantages not available to our facilities, including (1) support through endowments, charitable contributions and tax revenues, (2) access to tax‑exempt financing, and (3) exemptions from sales, property and income taxes.
Some competing healthcare facilities are owned by tax‑supported government agencies, and many others are owned by not‑for‑profit organizations that may have financial advantages not available to our facilities, including (1) support through endowments, charitable contributions and tax revenues, (2) access to tax‑exempt financing, (3) exemptions from sales, property and income taxes, (4) discounted prescription drug pricing.
If the rates paid by governmental payers are reduced, if the scope of services covered by governmental payers is limited, or if we or one or more of our hospitals are excluded from participation in the Medicare or Medicaid program or any other government healthcare program, there could be a material adverse effect on our business, financial condition, results of operations or cash flows.
If the rates paid by governmental payers are reduced, if the scope of services covered by governmental payers is limited, if eligibility or enrollment is further restricted, if there are changes to align payment rates for certain procedures across various care settings, or if we or one or more of our hospitals are excluded from participation in the Medicare or Medicaid program or any other government healthcare program, there could be a material adverse effect on our business, financial condition, results of operations or cash flows.
It is difficult to predict what impact, if any, these demonstration programs will have on our inpatient volumes, net revenues or cash flows. There are also trends among private payers toward value‑based purchasing and alternative payment models for healthcare services.
It is difficult to predict what impact, if any, these demonstration programs will have on our inpatient volumes, net revenues or cash flows. 21 Table of Contents Over the years, private payers have also sought to move toward value‑based purchasing and alternative payment models for healthcare services.
Risks Related to Our Overall Operations If we are unable to enter into, maintain and renew managed care contractual arrangements on competitive terms, if we experience material reductions in the contracted rates we receive from managed care payers or if we have difficulty collecting from managed care payers, our results of operations could be adversely affected.
Additional risks and uncertainties not presently known, or currently deemed immaterial, may also constrain our business and operations. 15 Table of Contents Risks Related to Our Overall Operations If we are unable to enter into, maintain and renew managed care contractual arrangements on competitive terms, if we experience material reductions in the contracted rates we receive from managed care payers or if we have difficulty collecting from managed care payers, our results of operations could be adversely affected.
An attack, breach or other system disruption affecting any of these third parties could similarly harm our business.
An attack, breach or other system disruption affecting any of these third parties could similarly harm our business, impact payment of claims, and potentially harm our patients and clients.
The industry trends toward value-based purchasing and alternative payment models may negatively impact our revenues.
Alternative payment models and value-based purchasing initiatives may negatively impact our revenues.
Our future financial performance and level of profitability may depend, in part, on various cost‑reduction initiatives, including the outsourcing of certain functions unrelated to direct patient care. We may encounter challenges in executing cost‑reduction initiatives and not achieve the intended cost savings.
Any future cost-reduction initiatives may not deliver the benefits we expect, and actions taken may adversely affect our business. Our future financial performance and level of profitability may depend, in part, on various cost‑reduction initiatives, including the outsourcing of certain functions unrelated to direct patient care.
From time to time, we expect to engage in additional capital market, bank credit and other financing activities, depending on our needs and financing alternatives available at that time. The interest expense associated with our indebtedness offsets a substantial portion of our operating income.
From time to time, we expect to engage in additional capital market, bank credit and other financing activities, depending on our needs and financing alternatives available at that time.
In that case or if payments of claims exceed our estimates or are not covered by insurance, it could have a material adverse effect on our business, financial condition, results of operations or cash flows. Any future cost-reduction initiatives may not deliver the benefits we expect, and actions taken may adversely affect our business.
In that case or if payments of claims exceed our estimates or are not covered by insurance, it could have a material adverse effect on our business, financial condition, results of operations or cash flows. Economic conditions and other factors have had, and may in the future have, an adverse impact on our business.
The No Surprises Act created additional price transparency requirements beginning January 1, 2022, including requiring providers to send to health plans of insured patients and to uninsured patients good faith estimates of the expected charges and diagnostic codes prior to the scheduled dates of services.
In addition, the No Surprises Act requires providers to send to health plans of insured patients and to uninsured patients good faith estimates of the expected charges and diagnostic codes prior to the scheduled dates of services.
We have completed a number of acquisitions in recent years, and we expect to pursue additional transactions in the future. A key business strategy for USPI, in particular, is the acquisition and development of facilities, primarily through the formation of joint ventures with physicians and health system partners.
A key business strategy for USPI, in particular, is the acquisition and development of facilities, primarily through the formation of joint ventures with physicians and/or health system partners.
Third parties to whom we outsource certain of our functions, that are part of our supply chain or with whom our systems interface and who may, in some instances, store our sensitive and confidential data, are also subject to the risks outlined above and may not have or use controls effective to protect such information.
Third parties to whom we outsource certain of our functions, with whom we share data for interoperability purposes or from whom we obtain or to whom we provide products and related services, including those that are part of our revenue cycle processes or supply chain, or other third parties with whom our systems interface (such as clients and their vendors, among others), in some instances, store our sensitive and confidential data; these third parties are also subject to the risks outlined above and may not have or use controls effective to protect such information.
In addition, our Ambulatory Care segment continues to be impacted by shipment delays in construction materials and capital equipment with respect to its de novo facility development efforts, which are a key part of our portfolio expansion strategy.
Medical supply prices remain high due to current economic conditions and other factors. In addition, our Ambulatory Care segment continues to be impacted by shipment delays in specialty building systems with respect to its de novo facility development efforts, which are a key part of our portfolio expansion strategy.
Some of these actions involve large demands, as well as substantial defense costs. Even in states that have imposed caps on damages, litigants are seeking recoveries under new theories of liability that might not be subject to such caps.
Some of these actions involve large demands, as well as substantial defense costs. Even in states that have imposed caps on damages, litigants are seeking recoveries under theories of liability that might not be subject to such caps. Our commercial insurance does not cover all claims against us and may not offset the financial impact of a material loss event.
In addition, the Affordable Care Act prohibits the use of federal funds under the Medicaid program to reimburse providers for treating certain provider‑preventable conditions.
Hospitals that rank in the worst 25% of all hospitals nationally for HACs in the previous year receive reduced Medicare reimbursements. In addition, the Affordable Care Act prohibits the use of federal funds under the Medicaid program to reimburse providers for treating certain provider‑preventable conditions.
In addition, a breach of any of these covenants could cause an event of default, which, if not cured or waived, could require us to repay the indebtedness immediately. Under these conditions, we are not certain whether we would have, or be able to obtain, sufficient funds to make accelerated payments.
In addition, a breach of any of these covenants could cause an event of default, which, if not cured or waived, could require us to repay the indebtedness immediately.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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As the head of our cybersecurity team, both internal and outsourced, our CISO is primarily responsible for assessing and managing risks from cybersecurity threats. The processes by which he is informed about and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents is described above.
As the head of our cybersecurity team, both internal and outsourced, our CISO is primarily responsible for assessing and managing risks from cybersecurity threats. The processes by which he is informed about and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents are described above.
We manage this risk through an information technology review and approval process that considers the anticipated use and implementation of proposed technologies, and includes cybersecurity team assessments of third-party products and systems proposed to connect to our information systems environment or access our data.
We manage this risk through an information technology review and approval process that considers the anticipated use and implementation of proposed technologies, and includes cybersecurity team assessments of third-party products and systems proposed to connect to our information systems 28 Table of Contents environment or access our data.
We also engage third parties, such as forensics consultants, external legal counsel and law enforcement, as needed and as appropriate based on the circumstances.
We also engage third parties, such as forensics consultants, external legal counsel and law enforcement, as needed and as appropriate based on the circumstances. Incidents are escalated to senior management in accordance with our plan and as otherwise appropriate based on the nature of the incident.
Our internal audit team performs random sampling audits of security practices at our facilities, and we routinely perform security risk assessments. We also require all employees to participate in cybersecurity awareness training annually, and we circulate cybersecurity awareness alerts, safety tips and newsletters to employees across the enterprise regularly.
We also require all employees to participate in cybersecurity awareness training annually, and we circulate cybersecurity awareness alerts, safety tips and newsletters to employees across the enterprise regularly. In addition, we routinely run phishing campaigns and perform other tests to increase awareness of cybersecurity threats.
However, we continue to face a heightened risk of cybersecurity threats targeting healthcare providers, including ransomware attacks, which may materially impact our operations. Threat actors continue to proliferate, adapt and devote significant effort to attacking the information systems and electronically transmitted and stored data of healthcare providers and related entities.
However, we continue to face a heightened risk of cybersecurity threats targeting healthcare providers, including ransomware attacks, which may materially impact our business, financial condition or results of operations. Additional information on cybersecurity‑related risks is included in Item 1A, Risk Factors, of Part I of this report.
We incurred significant costs to remediate the issues, sustained lost revenues from the associated business interruption and incurred other related expenses.
EXISTING AND POTENTIAL RISKS As previously disclosed, in April 2022, we experienced a cybersecurity incident that disrupted a subset of our hospital operations and involved the exfiltration of certain confidential company and patient information. We incurred significant costs to remediate the issues, sustained lost revenues from the associated business interruption and incurred other related expenses.
We strive to stay abreast of cybersecurity threats through integrated threat intelligence feeds, industry and federal threat notices, and participation in healthcare industry intelligence sharing. We also conduct table-top exercises, which serve to simulate cybersecurity incidents to practice response and identify gaps, on a regular basis.
We also conduct table-top exercises, which serve to simulate cybersecurity incidents to practice response and identify gaps, on a regular basis. Our internal audit team performs random sampling audits of security practices at our facilities, and we routinely perform security risk assessments.
Removed
In addition, we routinely run phishing campaigns and perform other tests to increase awareness of cybersecurity threats.
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We strive to stay abreast of cybersecurity threats through integrated threat intelligence feeds, industry and federal threat notices, and participation in healthcare industry intelligence sharing. Our program leverages best practices and is guided by industry frameworks, including the National Institute of Standards and Technology Cyber Security Framework.
Removed
Incidents are escalated to senior management as appropriate based on the nature of the incident. 29 Table of Contents EXISTING AND POTENTIAL RISKS As discussed in the Risk Factors section above, our operations could be significantly and negatively impacted by cybersecurity threats and other disruptions affecting our information technology, related information systems and sensitive information.
Removed
We rely on our information technology to process, transmit and store clinical, financial and operational data that includes PHI, PII and proprietary and confidential business data. We utilize EHRs and other information technology in connection with all of our operations, including our billing and other financial systems, supply chain and labor management tools.
Removed
As described above, our information systems, in turn, interface with and rely on third‑party systems that we do not control, including medical devices and other processes supporting the interoperability of healthcare infrastructures. In April 2022, we experienced a cybersecurity incident that temporarily disrupted a subset of our hospital operations and involved the exfiltration of certain confidential company and patient information.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 30 Table of Contents PART II.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 29 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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(CYH), HCA Healthcare, Inc. (HCA), Tenet Healthcare Corporation (THC) and Universal Health Services, Inc. (UHS)), which we refer to as our “Peer Group” herein. Performance data assumes that $100.00 was invested on December 31, 2018 in our common stock and each of the indices.
(CYH), HCA Healthcare, Inc. (HCA), Tenet Healthcare Corporation (THC) and Universal Health Services, Inc. (UHS)), which we refer to as our “Peer Group” herein. Performance data assumes that $100.00 was invested on December 31, 2019 in our common stock and each of the indices.
The share repurchase program does not obligate us to acquire any particular amount of common stock, and it may be suspended for periods or discontinued at any time before its scheduled expiration.
The share repurchase program does not obligate us to acquire any particular amount of common stock, and it may be suspended for periods or discontinued at any time.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock —Our common stock is listed on the New York Stock Exchange under the symbol “THC.” As of February 9, 2024, there were 3,282 holders of record of our common stock. Our transfer agent and registrar is Computershare.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock —Our common stock is listed on the New York Stock Exchange under the symbol “THC.” As of February 7, 2025, there were 3,053 holders of record of our common stock. Our transfer agent and registrar is Computershare.
These repurchases were made, and any future repurchases will be made, in open-market or privately negotiated transactions, at management’s discretion subject to market conditions and other factors, and in a manner consistent with applicable securities laws and regulations.
Repurchases under the program may be made in open‑market or privately negotiated transactions, at management’s discretion subject to market conditions and other factors, and in a manner consistent with applicable securities laws and regulations.
The table does not include shares tendered to satisfy the exercise price in connection with cashless exercises of employee stock options or shares tendered to satisfy tax withholding obligations in connection with employee or director equity awards. ITEM 6. RESERVED 32 Table of Contents
We had no share repurchase transactions during the three months ended December 31, 2024 (not including shares tendered to satisfy the exercise price in connection with cashless exercises of employee stock options or shares tendered to satisfy tax withholding obligations in connection with employee or director equity awards).
The performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. 31 Table of Contents At December 31, 2018 2019 2020 2021 2022 2023 Tenet Healthcare Corporation $ 100.00 $ 221.88 $ 232.96 $ 476.60 $ 284.66 $ 440.90 S&P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P Health Care $ 100.00 $ 120.82 $ 137.07 $ 172.89 $ 169.51 $ 172.99 Peer Group $ 100.00 $ 124.00 $ 135.23 $ 203.56 $ 186.91 $ 215.92 Repurchases of Common Stock —The table below presents share repurchase transactions completed during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program (1) Maximum Dollar Value of Shares That May Yet be Purchased Under the Program (In Thousands) (In Thousands) (In Millions) October 1 through October 31, 2023 — $ — — $ 660 November 1 through November 30, 2023 982 $ 67.12 982 $ 594 December 1 through December 31, 2023 644 $ 68.53 644 $ 550 1,626 1,626 (1) In October 2022, our board of directors authorized the repurchase of up to $1 billion of our common stock through a share repurchase program that expires on December 31, 2024.
The performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. 30 Table of Contents At December 31, 2019 2020 2021 2022 2023 2024 Tenet Healthcare Corporation $ 100.00 $ 105.00 $ 214.80 $ 128.29 $ 198.71 $ 331.92 S&P 500 $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P Health Care $ 100.00 $ 113.45 $ 143.09 $ 140.29 $ 143.18 $ 146.87 Peer Group $ 100.00 $ 109.05 $ 164.16 $ 150.73 $ 174.12 $ 203.85 Repurchases of Common Stock —In July 2024, our board of directors authorized the repurchase of up to $1.500 billion of our common stock through a share repurchase program that has no expiration date.
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The maximum dollar value of shares that may yet be purchased under the program is $1.376 billion. ITEM 6. RESERVED 31 Table of Contents

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. Reserved 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 79 Item 8. Financial Statements and Supplementary Data 80 Consolidated Financial Statements 84 Notes to Consolidated Financial Statements 89
Item 6. Reserved 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 69 Item 8. Financial Statements and Supplementary Data 70 Consolidated Financial Statements 74 Notes to Consolidated Financial Statements 79

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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For filed cost reports, we adjust the accrual for estimated cost report settlements based on those cost reports and subsequent activity, and we consider the necessity of recording a valuation allowance based on historical settlement results.
For filed cost reports, we adjust the accrual for estimated cost report settlements based on those cost reports and subsequent activity, and we consider the necessity of recording a valuation allowance based on historical settlement results.
The accrual for estimated cost report settlements for periods for which a cost report is yet to be filed is recorded based on estimates of what we expect to report on the filed cost reports, and a corresponding valuation allowance is recorded, if necessary, based on the method previously described.
The accrual for estimated cost report settlements for periods for which a cost report is yet to be filed is recorded based on estimates of what we expect to report on the filed cost reports, and a corresponding valuation allowance is recorded, if necessary, based on the method previously described.
These revenues are also subject to review and possible audit by the payers, which can take several years before they are completely resolved. The payers are billed for patient services on an individual patient basis.
These revenues are also subject to review and possible audit by the payers, which can take several years before they are completely resolved. The payers are billed for patient services on an individual patient basis.
An individual patient’s bill is subject to adjustment on a patient‑by‑patient basis in the ordinary course of business by the payers following their review and adjudication of each particular bill. We estimate the discounts for contractual allowances at the individual hospital level utilizing billing data on an individual patient basis.
An individual patient’s bill is subject to adjustment on a patient‑by‑patient basis in the ordinary course of business by the payers following their review and adjudication of each particular bill. We estimate the discounts for contractual allowances at the individual hospital level utilizing billing data on an individual patient basis.
Some of the factors that can contribute to changes in the contractual allowance estimates include: (1) changes in reimbursement levels for procedures, supplies and drugs when threshold levels are triggered; (2) changes in reimbursement levels when stop‑loss or outlier limits are reached; (3) changes in the admission status of a patient due to physician orders subsequent to initial diagnosis or testing; (4) final coding of in‑house and discharged‑not‑final‑billed patients that change reimbursement levels; (5) secondary benefits determined after primary insurance payments; and (6) reclassification of patients among insurance plans with different coverage and payment levels.
Some of the factors that can contribute to changes in the contractual allowance estimates include: (1) changes in reimbursement levels for procedures, supplies and drugs when threshold levels are triggered; (2) changes in reimbursement levels when stop‑loss or outlier limits are reached; (3) changes in the admission status of a patient due to physician orders subsequent to initial diagnosis or testing; (4) final coding of in‑house and discharged‑not‑final‑billed patients that change reimbursement levels; (5) secondary benefits determined after primary insurance payments; and (6) reclassification of patients among insurance plans with different coverage and payment levels.
Contractual allowance estimates are periodically reviewed for accuracy by taking into consideration known contract terms, as well as payment history. We believe our estimation and review process enables us to identify instances on a timely basis where such estimates need to be revised.
Contractual allowance estimates are periodically reviewed for accuracy by taking into consideration known contract terms, as well as payment history. We believe our estimation and review process enables us to identify instances on a timely basis where such estimates need to be revised.
As such, we have enhanced our focus on treating our patients as traditional customers by: (1) establishing networks of physicians and facilities that provide convenient access to services across the care continuum; (2) expanding service lines aligned with growing community demand, including a focus on aging and chronic disease patients; (3) offering greater affordability and predictability, including simplified registration and discharge procedures, particularly in our outpatient centers; (4) improving our culture of service; and (5) creating health and benefit programs, patient education and health literacy materials that are customized to the needs of the communities we serve.
As such, we have enhanced our focus on treating our patients as traditional customers by: (1) establishing networks of physicians and facilities that provide convenient access to services across the care continuum; (2) expanding service lines with growing community demand, including a focus on aging and chronic disease patients; (3) offering greater affordability and predictability, including simplified registration and discharge procedures, particularly in our outpatient centers; (4) improving our culture of service; and (5) creating health and benefit programs, patient education and health literacy materials that are customized to the needs of the communities we serve.
Medicare is a federally funded health insurance program primarily for individuals 65 years of age and older, as well as some younger people with certain disabilities and conditions, and is provided without regard to income or assets. Medicaid is co‑administered by the states and is jointly funded by the federal government and state governments.
Medicare is a federally funded health insurance program primarily for individuals 65 years of age and older, as well as some younger people with certain disabilities and conditions, and is provided without regard to income or assets. Medicaid is co‑administered by the states and is jointly funded by the federal and state governments.
The initial expansion of health insurance coverage under the Affordable Care Act resulted in an increase in the number of patients using our facilities with either private or public program coverage and a decrease in uninsured and charity care admissions, along with reductions in Medicare and Medicaid reimbursement to healthcare providers, including us.
The expansion of health insurance coverage under the Affordable Care Act resulted in an increase in the number of patients using our facilities with either private or public program coverage and a decrease in uninsured and charity care admissions, along with reductions in Medicare and Medicaid reimbursement to healthcare providers, including us.
The initial expansion of health insurance coverage under the Affordable Care Act resulted in an increase in the number of patients using our facilities with either private or public program coverage and a decrease in uninsured and charity care admissions.
The expansion of health insurance coverage under the Affordable Care Act resulted in an increase in the number of patients using our facilities with either private or public program coverage and a decrease in uninsured and charity care admissions.
We use this information in our analysis of the performance of our business, excluding items we do not consider relevant to the performance of our continuing operations. In addition, we use these measures to define certain performance targets under our compensation programs.
We use this information in our analysis of the performance of our business, excluding items we do not consider relevant to the performance of our operations. In addition, we use these measures to define certain performance targets under our compensation programs.
From time to time, we also capitalize on opportunities to refine our portfolio of hospitals and other healthcare facilities when we believe such refinements will help us improve profitability, allocate capital more effectively in areas where we have a stronger presence, deploy proceeds on higher-return investments across our business, enhance cash flow generation and reduce our debt, among other things.
From time to time, we also capitalize on opportunities to refine our portfolio of hospitals and other healthcare facilities when we believe such refinements will help us improve profitability, allocate capital more effectively in areas where we have a stronger presence, deploy proceeds toward higher-return investments across our business, enhance cash flow generation or reduce our debt, among other things.
However, we also believe that emphasis on higher‑demand clinical service lines (including outpatient services), focus on expanding our ambulatory care business, cultivation of our culture of service, participation in Medicare Advantage health plans that have been experiencing higher growth rates than traditional Medicare, and contracting strategies that create shared value with payers should help us grow our patient volumes over time.
We believe that emphasis on higher‑demand clinical service lines (including outpatient services), focus on expanding our ambulatory care business, cultivation of our culture of service, participation in Medicare Advantage health plans that have been experiencing higher growth rates than traditional Medicare, and contracting strategies that create shared value with payers should help us grow our patient volumes over time.
In addition, we do not have significant exposure to floating interest rates given that all of our current long-term indebtedness has fixed rates of interest except for borrowings, if any, under our Credit Agreement. RECENTLY ISSUED ACCOUNTING STANDARDS See Note 24 to the accompanying Consolidated Financial Statements for a discussion of recently issued accounting standards.
In addition, we do not have significant exposure to floating interest rates given that all of our current long-term indebtedness has fixed rates of interest except for borrowings, if any, under our Credit Agreement. RECENTLY ISSUED ACCOUNTING STANDARDS See Note 24 to the accompanying Consolidated Financial Statements for a discussion of recently issued and recently adopted accounting standards.
We do not believe there were any adjustments to estimates of patient bills that were material to our revenues during the years ended December 31, 2023, 2022 or 2021. In addition, on a corporate‑wide basis, we do not record any general provision for adjustments to estimated contractual allowances for managed care plans.
We do not believe there were any adjustments to estimates of patient bills that were material to our revenues during the years ended December 31, 2024, 2023 or 2022. In addition, on a corporate‑wide basis, we do not record any general provision for adjustments to estimated contractual allowances for managed care plans.
Due to budget neutrality requirements, CMS also proposed a reduction to future non‑drug item and service payments through an adjustment to the OPPS conversion factor by minus 0.5% starting in CY 2026 until the full amount is offset (which CMS estimates will take 16 years).
Due to budget neutrality requirements, CMS also implemented a reduction to future non‑drug item and service payments through an adjustment to the OPPS conversion factor by minus 0.5% starting in CY 2026 until the full amount is offset (which CMS estimates will take 16 years).
We estimate this adjustment will result in a reduction of less than $10 million annually to our acute care and surgical hospital revenue. Payment and Policy Changes to the MPFS —In November 2023, CMS released the CY 2024 Medicare Physician Fee Schedule Final Rule (“MPFS Final Rule”).
We estimate this adjustment will result in a reduction of less than $10 million annually to our acute care and surgical hospital revenue. Payment and Policy Changes to the MPFS —In November 2024, CMS released the CY 2025 Medicare Physician Fee Schedule Final Rule (“MPFS Final Rule”).
OPERATING ENVIRONMENT AND TRENDS Staffing and Labor Trends —We compete with other healthcare providers in recruiting and retaining qualified personnel responsible for the operation of our facilities. There is limited availability of experienced medical support personnel nationwide, which drives up the wages and benefits required to recruit and retain employees.
Staffing and Labor Trends —We compete with other healthcare providers in recruiting and retaining qualified personnel responsible for the operation of our facilities. There is limited availability of experienced medical support personnel nationwide, which drives up the wages and benefits required to recruit and retain employees.
Legislative Changes The No Surprises Act (“NSA”) established federal protections, which became effective on January 1, 2022, against balance billing for patients who obtain medical services from physicians and other providers not chosen by the patient and outside of the patient’s health insurance network.
The No Surprises Act The No Surprises Act (“NSA”) established federal protections, which became effective on January 1, 2022, against balance billing for patients who obtain medical services from physicians and other providers not chosen by the patient and outside of the patient’s health insurance network.
Other than the obligations described above, we had no off‑balance sheet arrangements that may have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources at December 31, 2023.
Other than the obligations described above, we had no off‑balance sheet arrangements that may have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources at December 31, 2024.
USPI operates its surgical facilities in partnership with local physicians and, in many of these facilities, a health system partner. In most cases, we hold ownership interests in the facilities and operate them through a separate legal entity. USPI operates facilities on a day‑to‑day basis through management services contracts.
USPI operates its surgical facilities in partnership with local physicians and, in many of these facilities, a health system partner. In most cases, we hold ownership interests in the facilities and operate them through separate legal entities. USPI operates facilities on a day‑to‑day basis through management services contracts.
Loss from Early Extinguishment of Debt We recorded losses from the early extinguishment of debt totaling $11 million during the year ended December 31, 2023.
We recorded losses from the early extinguishment of debt totaling $11 million during the year ended December 31, 2023.
We were in compliance with all covenants and conditions in our Credit Agreement at December 31, 2023. Letter of Credit Facility— Our LC Facility provides for the issuance, from time to time, of standby and documentary letters of credit in an aggregate principal amount of up to $200 million.
We were in compliance with all covenants and conditions in our Credit Agreement at December 31, 2024. Letter of Credit Facility— Our LC Facility provides for the issuance, from time to time, of standby and documentary letters of credit in an aggregate principal amount of up to $200 million.
The main factors that we consider include: • Cumulative profits/losses in recent years, adjusted for certain nonrecurring items; • Income/losses expected in future years; • Unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels; • The availability, or lack thereof, of taxable income in prior carryback periods that would limit realization of tax benefits; and • The carryforward period associated with the deferred tax assets and liabilities.
The main factors that we consider include: • Cumulative profits/losses in recent years, adjusted for certain nonrecurring items; 68 Table of Contents • Income/losses expected in future years; • Unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels; • The availability, or lack thereof, of taxable income in prior carryback periods that would limit realization of tax benefits; and • The carryforward period associated with the deferred tax assets and liabilities.
Because of the uncertainty associated with various factors that may influence our future OPPS payments, including legislative or legal actions, volumes and case mix, we cannot provide any assurances regarding our estimate of the impact of the final payment and policy changes.
Because of the uncertainty associated with various factors that may influence our future OPPS payments, including legislative or legal actions, volumes and case mix, we cannot provide any assurances regarding our estimates of the impact of the final payment and policy changes.
DEBT INSTRUMENTS, GUARANTEES AND RELATED COVENANTS Credit Agreement— At December 31, 2023, our Credit Agreement provided for revolving loans in an aggregate principal amount of up to $1.500 billion with a $200 million subfacility for standby letters of credit.
DEBT INSTRUMENTS, GUARANTEES AND RELATED COVENANTS Credit Agreement— At December 31, 2024, our Credit Agreement provided for revolving loans in an aggregate principal amount of up to $1.500 billion with a $200 million subfacility for standby letters of credit.
These methods use our specific historical claims data related to paid losses and loss adjustment expenses, historical and current case reserves, reported and closed claim counts, and a variety of hospital census information. These analyses are considered in our determination of our estimate of the professional liability claims, including the incurred but not reported and loss development reserve estimates.
These methods use our specific historical claims data related to paid losses and loss adjustment expenses, historical and current case reserves, reported and closed claim counts, and a variety of hospital census information. 66 Table of Contents These analyses are considered in our determination of our estimate of the professional liability claims, including the incurred but not reported and loss development reserve estimates.
At the end of each month, on an individual hospital basis, we estimate our expected reimbursement for patients of managed care plans based on the applicable contract terms. We believe it is reasonably likely for there to be an 49 Table of Contents approximately 3% increase or decrease in the estimated contractual allowances related to managed care plans.
At the end of each month, on an individual hospital basis, we estimate our expected reimbursement for patients of managed care plans based on the applicable contract terms. We believe it is reasonably likely for there to be an approximately 3% increase or decrease in the estimated contractual allowances related to managed care plans.
Moreover, due in part to advancements in surgical techniques, medical technology 35 Table of Contents and anesthesia, as well as the lower cost structure and greater efficiencies that are attainable at a specialized outpatient site, we believe the volume and complexity of surgical cases performed in an outpatient setting will continue to increase over time.
Moreover, due in part to advancements in surgical techniques, medical technology and anesthesia, as well as the lower cost structure and greater efficiencies that are attainable at a specialized outpatient site, we believe the volume and complexity of surgical cases performed in an outpatient setting will continue to increase over time.
Because of the uncertainty associated with various factors that may influence our future IPPS payments by individual hospital, including legislative, regulatory or legal actions, admission volumes, length of stay and case mix, we cannot provide any assurances regarding our estimate of the impact of the payment and policy changes.
Because of the uncertainty associated with various factors that may influence our future IPPS payments by individual hospital, including legislative, regulatory or legal actions, admission volumes, length of stay and case mix, we cannot provide any assurances regarding our estimates of the final impact of the payment and policy changes.
We believe our existing debt agreements provide flexibility for future secured or unsecured borrowings. Our cash on hand fluctuates day‑to‑day throughout the year based on the timing and levels of routine cash receipts and disbursements, including our book overdrafts, and required cash disbursements, such as interest payments and income tax payments.
We believe our existing debt agreements provide flexibility for future secured or unsecured borrowings. 63 Table of Contents Our cash on hand fluctuates day‑to‑day throughout the year based on the timing and levels of routine cash receipts and disbursements, including our book overdrafts, and required cash disbursements, such as interest payments and income tax payments.
In response to the Supreme Court’s decision, the final rules regarding OPPS payment and policy changes for CY 2023 affirmed that CMS was now applying the default rate, generally ASP plus 6%, to 340B Drugs and biologicals, and it had removed the 340B Payment Adjustment made in 2018. In January 2023, the U.S.
In response to the Supreme Court’s decision, the final rules regarding OPPS payment and policy changes for CY 2023 affirmed that CMS was now applying the default rate, generally ASP plus 6%, to 340B Drugs and biologicals, and it had removed the 340B Payment Adjustment made in 2018.
While we believe we have adequately provided for our income tax receivables or liabilities and our deferred tax assets or liabilities, adverse determinations by taxing authorities or changes in tax laws and regulations could have a material adverse effect on our consolidated financial position, results of operations or cash flows. 78 Table of Contents
While we believe we have adequately provided for our income tax receivables or liabilities and our deferred tax assets or liabilities, adverse determinations by taxing authorities or changes in tax laws and regulations could have a material adverse effect on our consolidated financial position, results of operations or cash flows.
The MPFS Final Rule includes updates to payment policies, payment rates and other provisions for services reimbursed under the MPFS from January 1 through December 31, 2024.
The MPFS Final Rule includes updates to payment policies, payment rates and other provisions for services reimbursed under the MPFS from January 1 through December 31, 2025.
If these projections are not met, or negative trends occur that impact our future outlook, future impairments of long-lived assets and goodwill may occur, and we may incur additional restructuring charges, which could be material. Litigation and Investigation Costs Litigation and investigation costs for the years ended December 31, 2023 and 2022 were $47 million and $70 million, respectively.
If these projections are not met, or negative trends occur that impact our future outlook, future impairments of long-lived assets and goodwill may occur, and we may incur additional restructuring charges, which could be material. Litigation and Investigation Costs Litigation and investigation costs for the years ended December 31, 2024 and 2023 were $35 million and $47 million, respectively.
The timing of professional and general liability payments is uncertain as such payments depend on several factors, including the nature of claims and when they are received. Baylor Note Payable— We entered into an agreement in June 2022 to purchase the 5% voting ownership interest in USPI Baylor held at that time.
The timing of professional and general liability payments is uncertain as such payments depend on several factors, including the nature of claims and when they are received. Baylor Note Payable— We entered into an agreement in June 2022 to purchase the 5% voting ownership interest in USPI that Baylor University Medical Center (“Baylor”) held at that time.
The amount of 69 Table of Contents collateral required is primarily dependent upon the level of claims activity and our creditworthiness. The insurers require the collateral in case we are unable to meet our obligations to claimants within the deductible or self‑insured retention layers.
The amount of collateral required is primarily dependent upon the level of claims activity and our creditworthiness. The insurers require the collateral in case we are unable to meet our obligations to claimants within the deductible or self‑insured retention layers.
If the presumed level of performance does not occur as expected, impairment may result. 76 Table of Contents We report long‑lived assets to be disposed of at the lower of their carrying amounts or fair values less costs to sell.
If the presumed level of performance does not occur as expected, impairment may result. We report long‑lived assets to be disposed of at the lower of their carrying amounts or fair values less costs to sell.
SOURCES OF REVENUE FOR OUR HOSPITAL OPERATIONS SEGMENT We earn revenues for patient services from a variety of sources, primarily managed care payers and the federal Medicare program, as well as state Medicaid programs, indemnity‑based health insurance companies and uninsured patients (that is, patients who do not have health insurance and are not covered by some other form of third‑party arrangement). 40 Table of Contents The following table presents the sources of net patient service revenues for our hospitals and related outpatient facilities, expressed as percentages of net patient service revenues from all sources on a continuing operations basis: Years Ended December 31, 2023 2022 2021 Medicare 16.4 % 17.1 % 17.7 % Medicaid 8.5 % 7.7 % 8.5 % Managed care (1) 70.4 % 69.4 % 67.7 % Uninsured 0.6 % 1.0 % 1.3 % Indemnity and other 4.1 % 4.8 % 4.8 % (1) Includes Medicare and Medicaid managed care programs.
SOURCES OF REVENUE FOR OUR HOSPITAL OPERATIONS SEGMENT We earn revenues for patient services from a variety of sources, primarily managed care payers and the federal Medicare program, as well as state Medicaid programs, indemnity‑based health insurance companies and uninsured patients (that is, patients who do not have health insurance and are not covered by some other form of third‑party arrangement). 38 Table of Contents The following table presents the sources of net patient service revenues for our hospitals and related outpatient facilities, expressed as percentages of net patient service revenues from all sources on a continuing operations basis: Years Ended December 31, 2024 2023 2022 Medicare 15.3 % 16.4 % 17.1 % Medicaid 10.3 % 8.5 % 7.7 % Managed care (1) 70.2 % 70.4 % 69.4 % Uninsured 0.5 % 0.6 % 1.0 % Indemnity and other 3.7 % 4.1 % 4.8 % (1) Includes Medicare and Medicaid managed care programs.
At December 31, 2023, we were in compliance with all covenants and conditions in the LC Facility, and we had $111 million of standby letters of credit outstanding thereunder. Senior Unsecured Notes and Senior Secured Notes —A detailed discussion of our debt transactions during the year ended December 31, 2023 is provided under the Cash Requirements subsection above.
At December 31, 2024, we were in compliance with all covenants and conditions in the LC Facility, and we had $106 million of standby letters of credit outstanding thereunder. Senior Unsecured Notes and Senior Secured Notes —A detailed discussion of our debt transactions during the year ended December 31, 2024 is provided under the Cash Requirements subsection above.
These sources of liquidity, in combination with any potential future debt incurrence, should also be adequate to finance planned capital expenditures, payments on the current portion of our long-term debt, payments to current and former joint venture partners, including those related to our share purchase agreement with Baylor, and other presently known operating needs.
These sources of liquidity, in combination with any potential future debt incurrence, are adequate to finance planned capital expenditures, payments on the current portion of our long-term debt, payments to current and former joint venture partners, including those related to our share purchase agreement with Baylor, and other presently known operating needs.
A general description of the types of payments we receive for services provided to patients enrolled in the Original Medicare Plan is provided below. Recent regulatory and legislative updates to the terms of these payment systems and their estimated effect on our revenues can be found under “Regulatory and Legislative Changes” below.
A general description of the types of payments we receive for services provided to patients enrolled in the Original Medicare Plan is provided below. Recent regulatory and legislative updates to the terms of these payment systems and their estimated effect on our revenues can be found under “Recent Regulatory and Legislative Updates” below.
The balance in the valuation allowance as of December 31, 2022 was $177 million. Deferred tax assets relating to interest expense limitations under Internal Revenue Code Section 163(j) have a full valuation allowance because the interest expense carryovers are not expected to be utilized in the foreseeable future.
The balance in the valuation allowance as of December 31, 2023 was $248 million. Deferred tax assets relating to interest expense limitations under Internal Revenue Code Section 163(j) have a full valuation allowance because the interest expense carryovers are not expected to be utilized in the foreseeable future.
For example, our Compact with Uninsured Patients (“ Compact ”) is designed to offer managed care‑style discounts to certain uninsured patients, which enables us to offer lower rates to those patients who historically had been charged standard gross charges.
For example, our Compact with Uninsured Patients (“ Compact ”) is designed to offer discounts to certain uninsured patients, which enables us to offer lower rates to those patients who historically had been charged standard gross charges.
Revenues are recognized as performance obligations are satisfied. We determine performance obligations based on the nature of the services we provide. We recognize revenues for performance obligations satisfied over time based on actual charges incurred in relation to total expected charges.
Revenues are recognized as performance obligations are satisfied. 64 Table of Contents We determine performance obligations based on the nature of the services we provide. We recognize revenues for performance obligations satisfied over time based on actual charges incurred in relation to total expected charges.
In the year ended December 31, 2023, our commercial managed care net inpatient revenue per admission from the hospitals in our Hospital Operations segment was approximately 86% higher than our aggregate yield on a per-admission basis from government payers, including Medicare and Medicaid managed care programs.
In the year ended December 31, 2024, our commercial managed care net inpatient revenue per admission from the hospitals in our Hospital Operations segment was approximately 67% higher than our aggregate yield on a per-admission basis from government payers, including Medicare and Medicaid managed care programs.
Our payer mix on an admissions basis for our hospitals, expressed as a percentage of total admissions from all sources on a continuing operations basis, is presented below: Years Ended December 31, 2023 2022 2021 Medicare 19.9 % 20.7 % 20.8 % Medicaid 5.0 % 5.4 % 5.8 % Managed care (1) 67.3 % 65.8 % 64.4 % Charity and uninsured 4.5 % 4.9 % 5.8 % Indemnity and other 3.3 % 3.2 % 3.2 % (1) Includes Medicare and Medicaid managed care programs.
Our payer mix on an admissions basis for our hospitals, expressed as a percentage of total admissions from all sources on a continuing operations basis, is presented below: Years Ended December 31, 2024 2023 2022 Medicare 18.4 % 19.9 % 20.7 % Medicaid 4.6 % 5.0 % 5.4 % Managed care (1) 68.9 % 67.3 % 65.8 % Charity and uninsured 4.5 % 4.5 % 4.9 % Indemnity and other 3.6 % 3.3 % 3.2 % (1) Includes Medicare and Medicaid managed care programs.
We believe that existing cash and cash equivalents on hand, borrowing availability under our Credit Agreement and anticipated future cash provided by our operating activities should be adequate to meet our current cash needs.
We believe that existing cash and cash equivalents on hand, borrowing availability under our Credit Agreement and anticipated future cash provided by our operating activities are adequate to meet our current cash needs.
The 2023 error rate for Hospital IPPS payments is approximately 3.4%. CMS has identified the FFS program as a program at risk for significant erroneous payments, and one of the agency’s stated key goals is to pay claims properly the first time.
The 2024 error rate for Hospital IPPS payments is approximately 3.90%. CMS has identified the FFS program as a program at risk for significant erroneous payments, and one of the agency’s stated key goals is to pay claims properly the first time.
Regulatory and Legislative Changes The Medicare and Medicaid programs are subject to: statutory and regulatory changes, administrative and judicial rulings, interpretations and determinations concerning patient eligibility requirements, funding levels and the method of calculating reimbursements, among other things; requirements for utilization review; and federal and state funding restrictions.
The Medicare and Medicaid programs are subject to: • statutory and regulatory changes, administrative and judicial rulings, executive orders, interpretations and determinations concerning eligibility requirements, funding levels and the method of calculating reimbursements, among other things; • requirements for utilization review; and • federal and state funding restrictions.
The amount of our managed care net patient service revenues, including Medicare and Medicaid managed care programs, from our hospitals and related outpatient facilities during the years ended December 31, 2023, 2022 and 2021 was $10.248 billion, $9.607 billion and $9.985 billion, respectively.
The amount of our managed care net patient service revenues, including Medicare and Medicaid managed care programs, from our hospitals and related outpatient facilities during the years ended December 31, 2024, 2023 and 2022 was $9.809 billion, $10.248 billion and $9.607 billion, respectively.
Estimated revenues under various state Medicaid programs, including state‑funded Medicaid managed care programs, constituted approximately 19.1%, 19.4% and 18.7% of the total net patient service revenues of our hospitals and related outpatient facilities for the years ended December 31, 2023, 2022 and 2021, respectively. We also receive DSH and other supplemental revenues under various state Medicaid programs.
Estimated revenues under various state Medicaid programs, including state‑funded Medicaid managed care programs, constituted approximately 20.4%, 19.1% and 19.4% of the total net patient service revenues of our hospitals and related outpatient facilities for the years ended December 31, 2024, 2023 and 2022, respectively. We also receive DSH and other supplemental revenues under various state Medicaid programs.
At December 31, 2023 and 2022, 68% and 66%, respectively, of our Hospital Operations segment’s net accounts receivable were due from managed care payers. Revenues under managed care plans are based primarily on payment terms involving predetermined rates per diagnosis, per‑diem rates, discounted FFS rates and/or other similar contractual arrangements.
At both December 31, 2024 and 2023, 68% of our Hospital Operations segment’s net accounts receivable were due from managed care payers. Revenues under managed care plans are based primarily on payment terms involving predetermined rates per diagnosis, per‑diem rates, discounted FFS rates and/or other similar contractual arrangements.
STRATEGIES Expanding Our Ambulatory Care Segment —We continue to focus on opportunities to expand our Ambulatory Care segment through acquisitions, organic growth, construction of new outpatient centers and strategic partnerships. We believe USPI’s ASCs and surgical hospitals offer many advantages to patients and physicians, including greater affordability, predictability, flexibility and convenience.
STRATEGIES Expanding Our Ambulatory Care Segment —We continue to focus on opportunities to expand our Ambulatory Care segment through acquisitions, organic growth in our physician relationships and service lines, construction of new outpatient centers and strategic partnerships. We believe USPI’s ASCs and surgical hospitals offer many advantages to patients and physicians, including greater affordability, predictability, flexibility and convenience.
At December 31, 2023, we had $111 million of standby letters of credit outstanding under the LC Facility. The timing of reimbursement payments is uncertain, as we cannot foresee when, or if, a standby letter of credit will be drawn upon.
At December 31, 2024, we had $106 million of standby letters of credit outstanding under the LC Facility. The timing of reimbursement payments is uncertain, as we cannot foresee when, or if, a standby letter of credit will be drawn upon.
We do not believe there were any adjustments to estimates of patient bills that were material to our revenues during the year ended December 31, 2023. In addition, on a corporate‑wide basis, we do not record any general provision for adjustments 74 Table of Contents to estimated contractual allowances for managed care plans.
We do not believe there were any adjustments to estimates of patient bills that were material to our revenues during the year ended December 31, 2024. In addition, on a corporate‑wide basis, we do not record any general provision for adjustments to estimated contractual allowances for managed care plans.
Under our Compact and other uninsured discount programs, the discount offered to certain uninsured patients is recognized as a contractual allowance, which reduces net operating revenues at the time the self‑pay accounts are recorded.
Under our Compact and other uninsured 65 Table of Contents discount programs, the discount offered to certain uninsured patients is recognized as a contractual allowance, which reduces net operating revenues at the time the self‑pay accounts are recorded.
These three factors are adjusted for variation in the input prices in different markets, and the sum is multiplied by the fee schedule’s conversion factor (average payment amount) to produce a total payment amount.
These three factors are adjusted for variation in the input prices in different markets, 42 Table of Contents and the sum is multiplied by the fee schedule’s conversion factor (average payment amount) to produce a total payment amount.
Funding for the CHIP has been reauthorized through federal fiscal year (“FFY”) 2029. 41 Table of Contents Healthcare Reform The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), extended health coverage to millions of uninsured legal U.S. residents through a combination of private sector health insurance reforms and public program expansion.
Funding for the CHIP has been reauthorized through federal fiscal year (“FFY”) 2029. 39 Table of Contents Potential Changes in Healthcare Policy The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), extended health coverage to millions of uninsured legal U.S. residents through a combination of private sector health insurance reforms and public program expansion.
Many factors and assumptions can impact the estimates, including the following risks: • future financial results, which can be impacted by volumes of insured patients and declines in commercial managed care patients, terms of managed care payer arrangements, our ability to collect amounts due from uninsured and managed care payers, loss of volumes as a result of competition, physician recruitment and retention, and our ability to manage costs such as labor costs, which can be adversely impacted by labor shortages, inflationary pressure on wages and union activity; • changes in payments from governmental healthcare programs and in government regulations, such as reductions to Medicare and Medicaid payment rates resulting from government legislation or rule‑making or from budgetary challenges of states in which we operate; • how the hospitals and ambulatory centers are operated in the future; • the nature of the ultimate disposition of the assets; and • macro-economic conditions such as inflation, gross domestic product (GDP) growth and unforeseen technological advancements.
Many factors and assumptions can impact the estimates, including the following risks: • future financial results, which can be impacted by: volumes of insured patients and declines in commercial managed care patients; terms of managed care payer arrangements; healthcare policy changes; our ability to collect amounts due from uninsured and managed care payers; loss of volumes as a result of competition; physician recruitment and retention; and our ability to manage costs, such as labor costs, which can be adversely impacted by labor shortages, inflationary pressure on wages, minimum wage increases and labor union activity; • changes in payments from governmental healthcare programs and in government regulations, such as reductions to Medicare and Medicaid payment rates resulting from government legislation or rule‑making or from budgetary challenges of states where we operate; 67 Table of Contents • how the facilities are operated in the future; • the impact of future technological advancements on our business; • the nature of the ultimate disposition of the assets; and • macro-economic conditions, such as inflation and gross domestic product (GDP) growth.
This increase was driven by higher patient and surgical volumes, as well as the impact of general market conditions on the cost of medical supplies during 2023, partially offset by the cost‑efficiency measures discussed below.
This increase was driven by higher patient volumes and acuity, as well as the impact of general market conditions on the cost of medical supplies during 2024, partially offset by the cost‑efficiency measures discussed below.
We continue to implement our portfolio diversification strategy into ambulatory surgery and have a baseline intention to invest $250 million annually in ambulatory business acquisitions and de novo facilities. Capital expenditures were $751 million, $762 million and $658 million in the years ended December 31, 2023, 2022 and 2021, respectively.
We continue to implement our portfolio diversification strategy into ambulatory surgery and have a baseline intention to invest at least $250 million annually in ambulatory business acquisitions and de novo facilities. Capital expenditures were $931 million, $751 million and $762 million in the years ended December 31, 2024, 2023 and 2022, respectively.
Driving Growth in Our Hospital Systems —We remain committed to better positioning our hospital systems and competing more effectively in the ever‑evolving healthcare environment by focusing on driving performance through operational effectiveness, increasing capital efficiency and margins, investing in our physician enterprise, particularly our specialist network, enhancing patient and physician satisfaction, growing our higher‑demand and higher‑acuity clinical service lines (including outpatient lines), expanding patient and physician access, and optimizing our portfolio of assets.
Driving Growth in Our Hospital Operations Segment —We remain committed to better positioning our hospitals and competing more effectively in the ever‑evolving healthcare environment by focusing on driving performance through operational effectiveness, investing in our physician enterprise, particularly our specialist network, enhancing patient and physician satisfaction, growing our higher‑demand and higher‑acuity clinical service lines (including outpatient lines), expanding patient and physician access, and optimizing our portfolio of assets.
LIQUIDITY AND CAPITAL RESOURCES CASH REQUIREMENTS Scheduled Contractual Obligations Our obligations to make future cash payments for scheduled contractual obligations are summarized in the table below, all as of December 31, 2023.
LIQUIDITY AND CAPITAL RESOURCES CASH REQUIREMENTS Scheduled Contractual Obligations Our obligations to make future cash payments under scheduled contractual obligations are summarized in the table below, all as of December 31, 2024.
Based on our accounts receivable from uninsured patients and co-pays, co-insurance amounts and deductibles owed to us by patients with insurance at December 31, 2023, a 10% increase or decrease in our self‑pay collection rate, or approximately 3%, which we believe could be a reasonably likely change, would result in a favorable or unfavorable adjustment to patient accounts receivable of approximately $11 million.
Based on our accounts receivable from uninsured patients and co-pays, co-insurance amounts and deductibles owed to us by patients with insurance at December 31, 2024, a 10% increase or decrease in our self‑pay collection rate, equivalent to a fluctuation of approximately 3 percentage points in the collection rate, which we believe could be a reasonably likely change, would result in a favorable or unfavorable adjustment to patient accounts receivable of approximately $10 million.
At December 31, 2023, we had no cash borrowings outstanding under the Credit Agreement, and we had less than $1 million of standby letters of credit outstanding. Based on our eligible receivables, $1.500 billion was available for borrowing under the Credit Agreement at December 31, 2023.
At December 31, 2024, we had no cash borrowings outstanding under the Credit Agreement, and we had less than $1 million of standby letters of credit outstanding. Based on our eligible receivables and inventory, $1.327 billion was available for borrowing under the Credit Agreement at December 31, 2024.
Cost reports must generally be filed within five months after the end of the annual cost report reporting period. After the cost report is filed, the accrual and corresponding valuation allowance may need to be adjusted. 44 Table of Contents Medicare Claims Reviews HHS estimates that the overall 2023 Medicare FFS improper payment rate for the program is approximately 7.38%.
Cost reports must generally be filed within five months after the end of the annual cost report reporting period. After the cost report is filed, the accrual and corresponding valuation allowance may need to be adjusted. Medicare Claims Reviews HHS estimates that the overall 2024 Medicare FFS improper payment rate for the program is approximately 7.66%.
For many of the facilities our Ambulatory Care segment holds an ownership interest in (155 of 485 facilities at December 31, 2023), this influence does not represent control of the facility, so we account for our investment in each of these facilities under the equity method for an unconsolidated affiliate.
For many of the facilities our Ambulatory Care segment holds an ownership interest in (161 of 543 facilities at December 31, 2024), this influence does not represent control of the facility, so we account for our investment in each of these facilities under the equity method for an unconsolidated affiliate.
Our Hospital Operations segment also included 164 outpatient facilities at December 31, 2023, including imaging centers, urgent care centers (each, a “UCC”), ancillary emergency facilities and micro‑hospitals. In addition, our Hospital Operations segment provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients through our Conifer Health Solutions, LLC joint venture.
Our Hospital Operations segment also included 135 outpatient facilities at December 31, 2024, including urgent care centers (each, a “UCC”), imaging centers, off-campus hospital emergency departments and micro‑hospitals. In addition, our Hospital Operations segment provides revenue cycle management and value‑based care services to hospitals, health systems, physician practices, employers and other clients through our Conifer Health Solutions, LLC joint venture.
Cost report settlements receivable, net of payables and related valuation allowances, of $47 million and $48 million at December 31, 2023 and 2022, respectively, are excluded from the table.
Cost report settlements receivable, net of payables and related valuation allowances, of $6 million and $47 million at December 31, 2024 and 2023, respectively, are excluded from the table.
Total Medicaid and Medicaid managed care net patient service revenues from continuing operations recognized by the hospitals and related outpatient facilities in our Hospital Operations segment for the years ended December 31, 2023, 2022 and 2021 were $2.776 billion, $2.692 billion and $2.760 billion, respectively.
Total Medicaid and Medicaid managed care net patient service revenues recognized by the hospitals and related outpatient facilities in our Hospital Operations segment for the years ended December 31, 2024, 2023 and 2022 were $2.845 billion, $2.776 billion and $2.692 billion, respectively.
Based on our accounts receivable from uninsured patients and co‑pays, co‑insurance amounts and deductibles owed to us by patients with insurance at December 31, 2023, a 10% decrease or increase in our self‑pay collection rate, or approximately 3.0%, which we believe could be a reasonably likely change, would result in an unfavorable or favorable adjustment to patient accounts receivable of approximately $11 million.
Based on our accounts receivable from uninsured patients and co‑pays, co‑insurance amounts and deductibles owed to us by patients with insurance at December 31, 2024, a 10% decrease or increase in our self‑pay collection rate, equivalent to a fluctuation of approximately 3 percentage points in the collection rate, which we believe could be a reasonably likely change, would result in an unfavorable or favorable adjustment to patient accounts receivable of approximately $10 million.
Based on reserves at December 31, 2023, a 3% increase or decrease in the estimated contractual allowance would impact the estimated reserves by approximately $25 million.
Based on reserves at December 31, 2024, a 3% increase or decrease in the estimated contractual allowance would impact the estimated reserves by approximately $29 million.
Based on reserves at December 31, 2023, a 3% increase or decrease in the estimated contractual allowance would impact the estimated reserves by approximately $25 million.
Based on reserves at December 31, 2024, a 3% increase or decrease in the estimated contractual allowance would impact the estimated reserves by approximately $29 million.
We are also continuing to pursue new opportunities to enhance efficiency, including 36 Table of Contents further integration of enterprise‑wide centralized support functions, outsourcing additional functions unrelated to direct patient care, and reducing clinical and vendor contract variation.
We are also continuing to pursue new opportunities to enhance efficiency, including further integration of enterprise‑wide centralized support functions, outsourcing additional functions unrelated to direct patient care, supply chain management, and reducing clinical and vendor contract variation.
The expansion of Medicaid in 41 states (including four of the nine states in which we operate acute care hospitals) and the District of Columbia is currently financed through: • negative “productivity adjustments” to the annual market basket updates, which began in 2011 and do not expire under current law; and • reductions to Medicare and Medicaid disproportionate share hospital (“DSH”) payments, which began for Medicare payments in FFY 2014 and, under current law, are scheduled to commence for Medicaid payments on March 9, 2024.
The expansion of Medicaid in 40 states (including four of the eight states in which we operate acute care hospitals) and the District of Columbia is currently financed through: • negative “productivity adjustments” to the annual market basket updates, which began in 2011 and do not expire under current law; and • reductions to Medicare and Medicaid disproportionate share hospital (“DSH”) payments, which began for Medicare payments in FFY 2014 and, under current law, are scheduled to commence for Medicaid payments on April 1, 2025.
The statutes and regulations that govern Medicare DSH payments have been the subject of various administrative appeals and lawsuits, and our hospitals have been participating in such appeals, including challenges to the inclusion of the Medicare Advantage (Part C) days used in the DSH calculation as set forth in the Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2005 Rates.
As of December 31, 2024, 40 of our hospitals qualified for Medicare DSH payments. 41 Table of Contents The statutes and regulations that govern Medicare DSH payments have been the subject of various administrative appeals and lawsuits, and our hospitals have been participating in such appeals, including challenges to the inclusion of the Medicare Advantage (Part C) days used in the DSH calculation as set forth in the Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2005 Rates.
We strive to control supplies expense through product standardization, consistent contract terms and end‑to‑end contract management, improved utilization, bulk purchases, focused spending with a smaller number of vendors and operational improvements. The items of current cost‑reduction focus include cardiac stents and pacemakers, orthopedics, implants and high‑cost pharmaceuticals.
We strive to control supplies expense through product standardization, consistent contract terms and end‑to‑end contract management, improved utilization, bulk purchases, focused spending with a smaller number of vendors and operational improvements. The items of current cost‑reduction focus include surgical devices, cardiovascular and orthopedic implants, and high‑cost pharmaceuticals.
Industry Trends —We believe that several key trends are continuing to shape the demand for healthcare services: (1) consumers, employers and insurers are actively seeking lower‑cost solutions and better value as they focus more on healthcare spending; (2) patient volumes are shifting from inpatient to outpatient settings due to technological advancements and demand for care that is more convenient, affordable and accessible; (3) the growing aging population requires greater chronic disease management and higher‑acuity treatment; and (4) consolidation continues across the entire healthcare sector.
MANAGEMENT OVERVIEW OPERATING ENVIRONMENT AND TRENDS Industry Trends and Healthcare Policy Changes —We believe that several key trends are continuing to shape the demand for healthcare services: (1) consumers, employers and insurers are actively seeking lower‑cost solutions and better value with respect to healthcare spending; (2) patient volumes are shifting from inpatient to outpatient settings due to technological advances and demand for care that is more convenient, affordable and accessible; (3) the growing aging population requires greater chronic disease management and higher‑acuity treatment; and (4) consolidation continues across the entire healthcare sector.
Payment and Policy Changes to the Medicare Outpatient Prospective Payment and Ambulatory Surgery Center Payment Systems— In November 2023, CMS released the final policy changes and payment rates for the Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System for calendar year (“CY”) 2024 (“Final OPPS/ASC Rule”).
Payment and Policy Changes to the Medicare Outpatient Prospective Payment and Ambulatory Surgery Center Payment Systems— In November 2024, CMS released the final policy changes and payment rates for the Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System for CY 2025 (“Final OPPS/ASC Rule”).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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As a result, we have no exposure to the financing, liquidity, market or credit risks associated with such entities. We do not hold or issue derivative instruments for trading purposes and are not a party to any instruments with leverage or prepayment features. 79 Table of Contents
As a result, we have no exposure to the financing, liquidity, market or credit risks associated with such entities. We do not hold or issue derivative instruments for trading purposes and are not a party to any instruments with leverage or prepayment features. 69 Table of Contents
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The following table presents information about certain of our market‑sensitive financial instruments at December 31, 2023. The fair values were determined based on quoted market prices for the same or similar instruments.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The following table presents information about certain of our market‑sensitive financial instruments at December 31, 2024. The fair values were determined based on quoted market prices for the same or similar instruments.
Maturity Date, Years Ending December 31, 2024 2025 2026 2027 2028 Thereafter Total Fair Value (Dollars in Millions) Fixed-rate long-term debt $ 120 $ 92 $ 2,149 $ 3,029 $ 3,114 $ 6,619 $ 15,123 $ 14,656 Average effective interest rates 6.4 % 7.2 % 4.9 % 5.7 % 5.8 % 5.5 % 5.6 % We have no affiliation with partnerships, trusts or other entities (sometimes referred to as “special‑purpose” or “variable‑interest” entities) whose purpose is to facilitate off‑balance sheet financial transactions or similar arrangements by us.
Maturity Date, Years Ending December 31, 2025 2026 2027 2028 2029 Thereafter Total Fair Value (Dollars in Millions) Fixed-rate long-term debt $ 92 $ 69 $ 3,096 $ 3,135 $ 1,418 $ 5,457 $ 13,267 $ 12,882 Average effective interest rates 7.8 % 8.4 % 5.8 % 5.9 % 4.3 % 6.0 % 5.8 % We have no affiliation with partnerships, trusts or other entities (sometimes referred to as “special‑purpose” or “variable‑interest” entities) whose purpose is to facilitate off‑balance sheet financial transactions or similar arrangements by us.

Other THC 10-K year-over-year comparisons