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What changed in TENET HEALTHCARE CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TENET HEALTHCARE CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+635 added−686 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-21)

Top changes in TENET HEALTHCARE CORP's 2023 10-K

635 paragraphs added · 686 removed · 496 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

98 edited+22 added−40 removed101 unchanged
Biggest changeSuch factors include, but are not limited to, the following: • The public health and economic impacts of the COVID‑19 pandemic on our future operations, financial condition and liquidity, particularly if the U.S. economy remains volatile for a significant period of time; • 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 effects on our business of healthcare reform efforts, including 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 as affected by the COVID‑19 pandemic, competition and other factors; • 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; • Security threats, catastrophic events and other disruptions that affect our information technology and related systems; • 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; • 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 general adverse economic conditions (including inflation), consumer behavior and other 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.
Biggest changeSuch 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.
COMPLIANCE AND ETHICS General —Our ethics and compliance department maintains our values‑based ethics and compliance program, which is designed to: (1) help staff in our corporate, USPI and Conifer offices, hospitals, outpatient centers and physician practices meet or exceed applicable standards established by federal and state statutes and regulations, as well as industry practice; (2) monitor and raise awareness of ethical issues among employees and others, and stress the importance of understanding and complying with our Code of Conduct ; and (3) provide a channel for employees to make confidential ethics and compliance‑related reports anonymously if they choose.
COMPLIANCE AND ETHICS General —Our ethics and compliance department maintains our values‑based ethics and compliance program, which is designed to: (1) help staff in our corporate and USPI offices, hospitals, outpatient centers and physician practices meet or exceed applicable standards established by federal and state statutes and regulations, as well as industry practice; (2) monitor and raise awareness of ethical issues among employees and others, and stress the importance of understanding and complying with our Code of Conduct ; and (3) provide a channel for employees to make confidential ethics and compliance‑related reports anonymously if they choose.
Also, we provide standby letters of credit to certain 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.
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.
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 Fountain Valley 400 Owned Hi-Desert Medical Center (6) Joshua Tree 179 Leased John F.
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.
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.
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.
At December 31, 2022, 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, 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.
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, 2022 were located in five states, namely Alabama, Florida, South Carolina, Tennessee and Texas, that have not expanded Medicaid under the law.
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.
In addition, we are taking steps to grow our Ambulatory Care segment business by replacing high-volume, low‑acuity services lines with service lines involving higher acuity cases. To that end, we closed or sold our ownership interests in a small number of centers that we believe are no longer part of our long-term growth strategy.
In addition, we are taking steps to grow our Ambulatory Care segment business by replacing high‑volume, low‑acuity service lines with service lines involving higher acuity cases. To that end, we closed or sold our ownership interests in a small number of centers that are no longer part of our long‑term growth strategy.
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 2022, 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 2023, we continued to experience challenges in recruiting and retaining physicians.
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 safety and reporting by connecting employee safety policies with patient safety policies, and we review and refine the policies regularly.
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.
The potential consequences for failing to comply with applicable laws, rules and regulations include (1) required refunds of previously received government program payments, (2) the assessment of civil monetary penalties, including treble damages, (3) fines, which could be significant, (4) exclusion from participation in federal healthcare programs and (5) criminal 10 Table of Contents sanctions, including sanctions against current or former employees.
The potential consequences for failing to comply with applicable laws, rules and regulations include (1) required refunds of previously received government program payments, (2) the assessment of civil monetary penalties, including treble damages, (3) fines, which could be significant, (4) exclusion from participation in federal healthcare programs and (5) criminal sanctions, including sanctions against current or former employees.
Luke’s Baptist Hospital San Antonio 287 Owned Valley Baptist Medical Center Harlingen 586 Owned Valley Baptist Medical Center – Brownsville Brownsville 240 Owned Total Licensed Beds 15,472 (1) Operated by a limited liability company formed as part of a joint venture with Baptist Health System, Inc.
Luke’s Baptist Hospital San Antonio 287 Owned Valley Baptist Medical Center Harlingen 586 Owned Valley Baptist Medical Center – Brownsville Brownsville 240 Owned Total Licensed Beds 15,484 (1) Operated by a limited liability company formed as part of a joint venture with Baptist Health System, Inc.
To that end, we offer: • a competitive range of compensation and benefit programs designed to reward performance and promote well‑being, including an employee stock purchase plan, a 401(k) plan, health care and insurance benefits, health savings and flexible spending accounts, and paid time off; • opportunities for continuing education and advancement through a broad range of clinical training and leadership development experiences, including in‑person and online courses and mentoring opportunities; • a supportive, inclusive and patient‑centered culture aligned with our values and based on respect for others; • company‑sponsored efforts encouraging and recognizing volunteerism and community service; and • a code of conduct that promotes integrity, accountability and transparency, among other high ethical standards.
To that end, we offer: • a competitive range of compensation and benefit programs (which vary by location and other factors) designed to reward performance and promote well‑being, including an employee stock purchase plan, a 401(k) plan, health care and insurance benefits, health savings and flexible spending accounts, and paid time off; • opportunities for continuing education and advancement through a broad range of clinical training and leadership development experiences, including in‑person and online courses and mentoring opportunities; • a supportive, inclusive and patient‑centered culture aligned with our values and based on respect for others; • company‑sponsored efforts encouraging and recognizing volunteerism and community service; and • a code of conduct that promotes integrity, accountability and transparency, among other high ethical standards.
Moreover, any violations by and resulting penalties or exclusions imposed upon USPI’s joint venture partners or Conifer’s clients could adversely affect their financial condition and, in turn, have a material adverse effect on our business and results of operations.
Moreover, any violations by and resulting penalties or exclusions imposed upon USPI’s joint venture partners could adversely affect their financial condition and, in turn, have a material adverse effect on our business and results of operations.
Conifer’s revenue cycle management solutions consist of: (1) patient services, including: centralized insurance and benefit verification; financial clearance, pre‑certification, registration and check‑in services; and financial counseling services, including reviews of eligibility for government healthcare or financial assistance programs, for both insured and uninsured patients, as well as qualified health plan coverage; (2) clinical revenue integrity solutions, including: clinical admission reviews; coding; clinical documentation improvement; coding compliance audits; charge description master management; and health information services; and (3) accounts receivable management solutions, including: third‑party billing and collections; denials management; and patient collections.
The revenue cycle management solutions we offer consist of: (1) patient services, including: centralized insurance and benefit verification; financial clearance, pre‑certification, registration and check‑in services; and financial counseling services, including reviews of eligibility for government healthcare or financial assistance programs, for both insured and uninsured patients, as well as qualified health plan coverage; (2) clinical revenue integrity solutions, including: clinical admission reviews; coding; clinical documentation improvement; coding compliance audits; charge description master management; and health information services; and (3) accounts receivable management solutions, including: third‑party billing and collections; denials management; and patient collections.
Compensation and Benefits; Culture —In general, we seek to attract, develop and retain an engaged workforce, cultivate a high‑performance culture that embraces data‑driven decision‑making, and improve talent management processes to promote diversity and inclusion.
Compensation and Benefits; Culture —In general, we seek to attract, develop and retain a qualified and engaged workforce, cultivate a high‑performance culture that embraces data‑driven decision‑making, and improve talent management processes to promote diversity and inclusion.
We could also 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 affecting the communities in which our facilities are located.
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”). 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 transactions in several states.
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, 2022: 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 217 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.
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.
Moreover, a number of our hospitals offer advanced treatment options for patients, including limb‑salvaging vascular procedures, acute level 1 trauma services, comprehensive intravascular stroke care, minimally invasive cardiac valve replacement, cutting‑edge imaging technology, and telemedicine access for select medical specialties.
Moreover, a number of our hospitals offer advanced treatment options for patients, including limb‑salvaging vascular procedures, acute level 1 trauma services, comprehensive intravascular stroke care, minimally invasive cardiac valve replacement, cutting‑edge imaging technology, surgical robotic capabilities and telemedicine access for select medical specialties.
Availability of Documents —The full text of our Quality, Compliance and Ethics Program Charter , our Code of Conduct , and a number of our ethics and compliance policies and procedures are published on our website, at www.tenethealth.com, under the “Our Commitment To Compliance” caption in the “About Us” section.
Availability of Documents —The full text of our Quality, Compliance and Ethics Program Charter , our Code of Conduct , and a number of our ethics and compliance policies and procedures are published on our website, at www.tenethealth.com, under the “Our Commitment to Compliance” caption in the “About” section.
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 employees and others to engage in certain competitive activities.
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.
(“BHS”), a not‑for‑profit health system in Alabama; a Tenet subsidiary owned a 70% interest in the entity at December 31, 2022, and BHS owned a 30% interest.
(“BHS”), a not‑for‑profit health system in Alabama; a Tenet subsidiary owned a 70% interest in the entity at December 31, 2023, and BHS owned a 30% interest.
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 • the Civil Monetary Penalties Law, which authorizes the Secretary of HHS to impose civil penalties for various forms of fraud and abuse involving the Medicare and Medicaid programs.
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.
Our operations also generate medical waste that must be 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 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.
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 126 Owned MetroWest Medical Center – Leonard Morse Campus (3) Natick 103 Owned Saint Vincent Hospital Worcester 290 Owned 2 Table of Contents Hospital Location Licensed Beds Status 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 Hardeeville 44 Owned East Cooper Medical Center Mount Pleasant 140 Owned Hilton Head Hospital 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 110 Owned Nacogdoches Medical Center Nacogdoches 161 Owned North Central Baptist Hospital San Antonio 443 Owned Northeast Baptist Hospital San Antonio 347 Owned Resolute Health 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 (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.
We have developed a comprehensive set of policies and procedures in our efforts to comply with HIPAA, and similar state privacy laws, under the guidance of our ethics and compliance department. Our compliance officers and information security officers are responsible for implementing and monitoring enterprise‑wide compliance with our HIPAA privacy and security policies and procedures.
We have developed an expansive set of policies and procedures in our efforts to comply with HIPAA, and similar state privacy laws, under the guidance of our ethics and compliance department. Our compliance officers and information security officers are responsible for implementing and monitoring enterprise‑wide compliance with our HIPAA privacy and security policies and procedures.
These capital leases expire between November 2025 and September 2036, but contain two optional renewal terms of 10 years each. (3) Specialty hospital. (4) Designated by the Centers for Medicare & Medicaid Services (“CMS”) as a critical access hospital. (5) Lease expires in May 2027. (6) Lease expires in July 2045.
These capital leases expire between November 2025 and September 2036, but contain two optional renewal terms of 10 years each. 3 Table of Contents (3) Specialty hospital. (4) Designated by the Centers for Medicare & Medicaid Services (“CMS”) as a critical access hospital. (5) Lease expires in May 2027.
BILLING AND COLLECTION ACTIVITIES 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.
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 are also subject to any federal or state privacy-related laws that are 12 Table of Contents more restrictive than the privacy regulations issued under HIPAA. These laws vary and could impose additional penalties and subject us to additional privacy and security restrictions.
We are also subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and could impose additional penalties and subject us to additional privacy and security restrictions.
Reported cases that involve a possible violation of the law or regulatory policies and 15 Table of Contents procedures are referred to the ethics and compliance department for investigation, although certain matters may be referred out to the law or human resources department.
Reported cases that involve a possible violation of the law or regulatory policies and procedures are referred to the ethics and compliance department for investigation, although certain matters may be referred to the law or human resources department.
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 the standards or any ethics concerns.
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.
Conifer audits and monitors its vendors for compliance, but there can be no assurance that such audits and monitoring will detect all instances of potential non‑compliance. Many states also regulate the billing and collection practices of creditors who collect their own debt, as well as the companies a creditor engages to bill and collect from consumers on the creditor’s behalf.
We audit and monitor our vendors for compliance, but there can be no assurance that such audits and monitoring will detect all instances of potential non‑compliance. Many states also regulate the billing and collection practices of creditors who collect their own debt, as well as the companies a creditor engages to bill and collect from consumers on the creditor’s behalf.
At December 31, 2022, we had employees in all 50 U.S. states and the District of Columbia, as well as nearly 3,000 employees providing support across our entire network at our GBC. 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.
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.
The HR Committee also provides, among other things, its perspectives regarding performance management, succession planning, leadership development, diversity, recruiting, retention and employee training. The board’s environmental, social and governance (“ESG”) committee, which was formed in 2021, 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, 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.
(7) Owned by a limited liability company formed as part of a joint venture with John Muir Health (“JMH”), 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, 2022, and JMH owned a 49% interest.
(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.
In recent years, the number of freestanding specialty hospitals, surgery centers, EDs and imaging centers in the geographic areas in which we operate has increased significantly. Some of these facilities are 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 8 Table of Contents physician‑owned.
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.
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.
Violations of the HIPAA privacy and security regulations may result in criminal penalties and in substantial civil penalties per violation. In addition to enforcement by HHS, state attorneys general are authorized to bring civil actions seeking either injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents.
In addition to enforcement by HHS, state attorneys general are authorized to bring civil actions seeking either injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents.
Although we have no contractual relationship with most of the physicians who practice at our hospitals and outpatient centers, at December 31, 2022, we owned over 750 physician practices, and our subsidiaries employed (where permitted by state law) or otherwise affiliated with over 1,450 physicians.
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.
At December 31, 2022, Conifer provided one or more of the business process services described above to approximately 660 Tenet and non‑Tenet hospital and other clients nationwide. Tenet and CHI facilities represented approximately 44% of these clients, and the remainder were unaffiliated health systems, hospitals, physician practices, self‑insured organizations, health plans and other entities.
At December 31, 2023, we provided one or more of the business process services described above to approximately 675 Tenet and non‑Tenet hospitals and other clients nationwide. Tenet and CHI facilities represented approximately 43% of these clients, and the remainder were unaffiliated health systems, hospitals, physician practices, self‑insured organizations, health plans and other entities.
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) disclosure regarding (1) the impact of the COVID‑19 pandemic, (2) our future earnings, financial position, and operational and strategic initiatives, and (3) developments in the healthcare 16 Table of Contents industry.
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.
Kennedy Memorial Hospital Indio 145 Owned Lakewood Regional Medical Center Lakewood 172 Owned Los Alamitos Medical Center Los Alamitos 172 Owned Placentia Linda Hospital Placentia 114 Owned San Ramon Regional Medical Center (7) San Ramon 123 JV/Owned Tenet Health Central Coast Sierra Vista Regional Medical Center San Luis Obispo 162 Owned Tenet Health Central Coast Twin Cities Community Hospital Templeton 122 Owned Florida Delray Medical Center Delray Beach 536 Owned Good Samaritan Medical Center West Palm Beach 333 Owned Palm Beach Gardens Medical Center Palm Beach Gardens 199 Owned St.
Kennedy Memorial Hospital Indio 145 Owned Lakewood Regional Medical Center (6) Lakewood 172 Owned Los Alamitos Medical Center (6) Los Alamitos 172 Owned Placentia Linda Hospital (6) Placentia 114 Owned San Ramon Regional Medical Center (8) San Ramon 123 JV/Owned Tenet Health Central Coast Sierra Vista Regional Medical Center San Luis Obispo 162 Owned Tenet Health Central Coast Twin Cities Community Hospital Templeton 122 Owned 2 Table of Contents Hospital Location Licensed Beds Status Florida Delray Medical Center Delray Beach 536 Owned Good Samaritan Medical Center West Palm Beach 333 Owned Palm Beach Gardens Medical Center Palm Beach Gardens 199 Owned St.
This estimate includes the costs to remediate the issues, lost revenues from the associated business interruption and other related expenses. We have filed a claim within our policy limits. For further information regarding our insurance coverage, see Note 16 to our Consolidated Financial Statements.
We incurred significant costs to remediate the issues, sustained lost revenues from the associated business interruption and incurred other related expenses, and we have filed a claim that may exhaust our policy limits. For further information regarding our insurance coverage, see Note 16 to our Consolidated Financial Statements.
As a result of the aforementioned challenges, we have been, and we may continue to be, required to enhance wages and benefits to recruit and retain experienced employees, pay premiums above standard compensation for essential workers, make greater investments in education and training for newly licensed medical support personnel, or hire more expensive temporary or contract employees, which we also compete with other healthcare providers to secure.
As a result of the aforementioned challenges, as well as inflationary pressures, we have been, and we may continue to be, required to enhance wages and benefits to recruit and retain experienced employees, pay premiums above standard compensation for essential workers, or hire more expensive temporary or contract employees, which we also compete with other healthcare providers to secure.
We lease the majority of our outpatient facilities in both our Hospital Operations segment and our Ambulatory Care segment. These leases typically have initial terms ranging from five to 10 years, and most of the leases contain options to extend the lease periods.
The locations of USPI’s surgical hospitals and ASCs are reflected on the map on page 5 . We lease the majority of our outpatient facilities in both our Hospital Operations segment and our Ambulatory Care segment. These leases typically have initial terms ranging from five to 10 years, and most of the leases contain options to extend the lease periods.
Some reform initiatives, requirements and proposals could have a positive effect on our business, while others 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.
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.
In addition, any determination by a federal or state agency or court that USPI or one of its subsidiaries has violated any of these laws could give certain of our joint venture partners a right to terminate their relationships with us; and any similar determination with respect to Conifer could give Conifer’s clients the right to terminate their services agreements with us.
In addition, any determination by a federal or state agency or court that we or one of our subsidiaries has violated any of these laws could give certain of our joint venture partners or business process solutions clients a right to terminate their relationships with us.
(As a result of its 2019 merger with Dignity Health, CHI is now a part of CommonSpirit Health.) The term “Conifer,” as used in Part I of this report and unless otherwise stated or indicated by the context, refers to Conifer Holdings, our Conifer JV, and their direct or indirect wholly owned subsidiaries.
The term “Conifer,” as used in Part I of this report and unless otherwise stated or indicated by the context, refers to our Conifer JV and its direct or indirect wholly owned subsidiaries.
In addition, at December 31, 2022, our subsidiaries owned or leased and operated: a number of medical office buildings, all of which were located on, or nearby, our hospital campuses; over 750 physician practices with a network of employed physicians; several accountable care organizations and clinically integrated networks; and other ancillary healthcare businesses.
In addition, at December 31, 2023, our subsidiaries owned or leased and operated: a number of medical office buildings, all of which were located on, or nearby, our hospital campuses; nearly 770 physician practices with a network of employed physicians; and other associated healthcare businesses.
(“USPI”), as well as downstream partnerships and joint ventures; the terms “we,” “our” and “us,” as used in this report and unless otherwise stated or indicated by the context, refer to Tenet and these entities.
We operate our expansive, nationwide care delivery network through direct and indirect subsidiaries, as well as downstream partnerships and joint ventures; the terms “we,” “our” and “us,” as used in this report and unless otherwise stated or indicated by the context, refer to Tenet and these entities.
We believe that this focus on physician satisfaction, combined with providing high‑quality healthcare in a friendly and convenient environment for patients, will continue to increase the number of procedures performed at our facilities over time.
We operate USPI’s facilities, structure our joint ventures, and adopt staffing, scheduling, and clinical systems and protocols with the goal of increasing physician productivity and satisfaction. We believe that this focus on physicians, combined with providing high‑quality healthcare in a convenient environment for patients, will continue to increase the number of procedures performed at our facilities 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 and participation in Medicare Advantage health plans that have been experiencing higher growth rates than traditional Medicare, among other strategies, will help us address competitive challenges in our markets. 9 Table of Contents We also recognize that our future success depends, in part, on our ability to maintain and renew our existing managed care contracts and enter into new managed care contracts on competitive terms.
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 and participation in Medicare Advantage health plans that have been experiencing higher growth rates than traditional Medicare, among other strategies, will help us address competitive challenges.
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 on Conifer.
Some of these actions may involve large demands, as well as substantial defense costs. 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.
Our Hospital Operations segment also included 109 outpatient centers at December 31, 2022, the majority of which are provider‑based and freestanding imaging centers, off‑campus hospital EDs and micro‑hospitals, and provider‑based ASCs.
Our Hospital Operations segment also included 164 outpatient centers at December 31, 2023, the majority of which are provider‑based and Table of Contents freestanding imaging centers, freestanding UCCs, off‑campus hospital emergency departments (“EDs”) and micro‑hospitals.
All of these solutions, which aim to assist clients in improving their cash flow, revenue, and physician and patient satisfaction, include ongoing measurement and monitoring of key revenue cycle metrics, as well as productivity and quality improvement programs. In addition, Conifer offers customized communications and engagement solutions to optimize the relationship between providers and patients.
All of these solutions include ongoing measurement and monitoring of key revenue cycle metrics, as well as productivity and quality improvement programs. In addition, we provide customized communications and engagement solutions to optimize the relationship between providers and patients.
Conifer also offers value‑based care solutions, 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. Conifer helps clients build CINs that provide predictive analytics and quality measures across the care continuum.
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.
Conifer is also subject to both federal and state regulatory agencies who have the authority to investigate consumer complaints relating to a variety of consumer protection laws, including but not limited to the Telephone Consumer Protection Act and its state equivalent.
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.
These statutes typically provide for criminal and civil penalties, as well as loss of licensure. 11 Table of Contents Application to Our Operations —We regularly enter into financial arrangements with physicians and other providers in a manner we believe complies with the Anti‑kickback Statute, the Stark law, and other applicable antifraud and abuse laws.
Application to Our Operations —We regularly enter into financial arrangements with physicians and other providers in a manner we believe complies with the Anti‑kickback Statute, the Stark law, and other applicable antifraud and abuse laws.
In some of the regions in which we operate, physician recruitment and retention are affected by a shortage of qualified physicians in certain higher-demand clinical service lines and specialties.
In some of the regions where we operate, physician recruitment and retention are affected by a shortage of qualified physicians in certain higher-demand clinical service lines and specialties. Moreover, we continue to refine our physician base and provider programs to focus on experienced, high-quality and collaborative specialists.
In addition, in some areas, the increased demand for care of patients with COVID‑19, influenza and other respiratory viruses in our hospitals, as well as the direct impact of these illnesses on physicians, employees and their families, have put a strain on our resources and staff.
In addition, in some areas, the increased demand for care of patients with respiratory viruses at our facilities, as well as the direct impact of illnesses on physicians, employees and their families, have put a strain on our resources and staff. 7 Table of Contents We also depend on the available labor pool of semi-skilled and unskilled workers in the areas where we operate.
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.
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.
All non-permitted uses or disclosures of unsecured PHI are presumed to be breaches unless it can be established that there is a low probability the information has been compromised. Various state laws and regulations may also require us to notify the applicable state agency and affected individuals in the event of a data breach involving individually identifiable information.
All non-permitted uses or disclosures of unsecured PHI are presumed to be breaches unless it can be established that there is a low probability the information has been compromised.
The COVID‑19 pandemic exacerbated these shortages – and, thereby, competition for qualified candidates – as more employees chose to retire early, leave the workforce or take travel assignments.
Like other hospital companies, we continue to experience shortages of advanced practice providers and critical‑care nurses in certain disciplines and geographic areas. The COVID‑19 pandemic exacerbated these shortages – and, thereby, competition for qualified candidates – as more employees chose to retire early, leave the workforce or take travel assignments.
As of December 31, 2022, our total workforce was approximately 78% female, and nearly 50% of our employees self‑identified as racially or ethnically diverse. Approximately 55% of new employees (i.e., those we hired in 2022) self‑identified as racially or ethnically diverse.
As of December 31, 2023, our total workforce was approximately 78% female, and over 52% of our employees self‑identified as racially or ethnically diverse.
Moreover, we continue to refine our physician base and provider programs to focus on experienced, high-quality and collaborative specialists. 6 Table of Contents EMPLOYEES We believe each employee across our network has a role integral to our mission, which is to provide quality, compassionate care in the communities we serve.
EMPLOYEES We believe each employee across our network has a role integral to our mission, which is to provide quality, compassionate care in the communities we serve.
In April 2022, we experienced a cybersecurity incident that temporarily disrupted a subset of our acute care hospital operations and involved the exfiltration of certain confidential company and patient information (the “Cybersecurity Incident”). We estimate that the Cybersecurity Incident had an adverse pre-tax impact of approximately $100 million during the year ended December 31, 2022.
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.
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.
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.
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 Manila, Philippines. We operate our expansive, nationwide care delivery network through direct and indirect subsidiaries, including USPI Holding Company, Inc.
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.
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, which could impact our labor costs.
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.
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. 14 Table of Contents 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 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.
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. We operate USPI’s facilities, structure our joint ventures, and adopt staffing, scheduling, and clinical systems and protocols with the goal of increasing physician productivity.
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.
The states in which we operate have adopted laws that prohibit payments in exchange for patient referrals, similar to the federal Anti‑kickback Statute, or that otherwise prohibit fraud and abuse activities. Many states have also passed self‑referral legislation similar to the Stark law.
Department of Health and Human Services (“HHS”) to impose civil penalties for various forms of fraud and abuse involving the Medicare and Medicaid programs. States in which we operate have adopted laws that prohibit payments in exchange for patient referrals, similar to the federal Anti‑kickback Statute, or that otherwise prohibit fraud and abuse activities.
Information regarding the utilization of licensed beds and other operating statistics at December 31, 2022 and 2021 can be found in MD&A. 3 Table of Contents At December 31, 2022, our Hospital Operations segment also included 42 imaging centers, 14 off‑campus EDs and 10 ASCs, all of which are operated as departments of our hospitals and under the same license, as well as 43 separately licensed, freestanding outpatient centers – typically at locations complementary to our hospitals – consisting of 25 imaging centers, 14 emergency facilities (13 of which are licensed as micro‑hospitals), two ASCs and two urgent care centers.
At December 31, 2023, our Hospital Operations segment also included 42 imaging centers, 14 off‑campus EDs and nine ASCs, all of which are operated as departments of our hospitals and under the same license, as well as 99 separately licensed, freestanding outpatient centers – typically at locations complementary to our hospitals – consisting of 58 UCCs (56 of which are jointly owned with and managed by NextCare in Arizona), 25 imaging centers, 15 emergency facilities (14 of which are licensed as micro‑hospitals) and one ASC.
In 2021, the Diversity Council provided oversight to our human resources department in the development and implementation of an enterprise-wide inclusive culture training session. In addition, the Diversity Council has established the following employee resource groups to support team members with similar backgrounds or shared interests: African American, Women’s Network, Asian/Pacific, LGBTQ+, Hispanic and Veteran.
In addition, the Diversity Council has established the following employee resource groups to support team members with similar backgrounds or shared interests: African American, Women’s Network, Asian/Pacific, LGBTQ+, Hispanic and Veteran. Each employee resource group has an executive sponsor to help in setting a unique mission and operating model for the group.
In addition, we have heightened infection-prevention protocols, we maintain consistent availability of personal protective equipment and disinfection supplies, and we regularly provide concise and current infection prevention guidance. 7 Table of Contents We also offer resources to help employees manage challenging circumstances, including a comprehensive employee assistance program comprised of counseling services, financial guidance and legal aid.
We also offer resources to help employees manage challenging circumstances, including a comprehensive employee assistance program comprised of counseling services, financial guidance and legal aid.
We also sold or closed three outpatient centers and exited some service lines at individual facilities in 2022, in each case because we believe they are no longer a core part of our long‑term growth and synergy strategies. At December 31, 2022, our subsidiaries operated 61 hospitals serving primarily urban and suburban communities in nine states.
In addition, we exited some service lines at individual facilities in 2023, in each case because they are no longer a core part of our long‑term growth and synergy strategies.
In those states that do not have certificate of need requirements or that do not require review of healthcare capital expenditure amounts below a relatively high threshold, competition in the form of new services, facilities and capital spending is more prevalent. 13 Table of Contents ENVIRONMENTAL MATTERS Our healthcare operations are subject to a number of federal, state and local environmental laws, rules and regulations that govern, among other things, our disposal of solid waste, as well as our use, storage, transportation and disposal of hazardous and toxic materials (including radiological materials).
ENVIRONMENTAL MATTERS Our healthcare operations are subject to a number of federal, state and local environmental laws, rules and regulations that govern, among other things, our disposal of solid waste, as well as our use, storage, transportation and disposal of hazardous and toxic materials (including radiological materials).
ESG Report —Additional information regarding our approach to and progress in connection with ESG matters can be found in our most recent ESG Report, which is available on our website.
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.
Moreover, from time to time, we are required to limit admissions if we do not have the necessary number of nurses available to meet the required ratios, which has a corresponding adverse effect on our revenues. 8 Table of Contents COMPETITION HEALTHCARE SERVICES 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 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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Acquisitions, Divestitures and Joint Ventures When we acquire new assets or businesses, we become subject to various risks and uncertainties that could adversely affect our results of operations and financial condition. We have completed a number of acquisitions in recent years, and we expect to pursue additional transactions in the future.
Biggest changeIf general economic conditions deteriorate or remain uncertain for an extended period of time, our liquidity and ability to repay our outstanding debt may be impacted, and there can be no assurance that we will be able to raise additional funds on terms acceptable to us, if at all. 24 Table of Contents Risks Related to Acquisitions, Divestitures and Joint Ventures When we acquire new assets or businesses, we become subject to various risks and uncertainties that could adversely affect our results of operations and financial condition.
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 confidential information and other sensitive or regulated data.
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.
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; 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 harm; potential liability under privacy, security, consumer protection or other applicable laws; regulatory penalties; ransomware payments; and negative publicity and damage to our reputation.
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. 26 Table of Contents • 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. • 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.
Furthermore, state‑mandated nurse‑staffing ratios in California affect not only our labor costs, but they also cause us to limit admissions if we do not have the necessary number of nurses available to meet the required ratios, which has a corresponding adverse effect on our revenues.
State‑mandated nurse‑staffing ratios in California affect not only our labor costs, but they also cause us to limit admissions if we do not have the necessary number of nurses available to meet the required ratios, which has a corresponding adverse effect on our revenues.
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.
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.
We have in the past, and may in the future, fail to obtain applicable regulatory approvals, including FTC approvals, with respect to planned divestitures of assets or businesses.
We have in the past, and may in the future, fail to obtain applicable regulatory approvals, including FTC clearances, with respect to planned divestitures of assets or businesses.
Furthermore, our divestiture and other corporate development activities may present financial and operational risks, including (1) the diversion of management attention from existing core businesses, (2) adverse effects (including a deterioration in the related asset or business) from the announcement of the planned or potential activity, and (3) the challenges associated with separating personnel and financial and other systems.
Furthermore, our divestiture and other corporate development activities may present financial and operational risks, including (1) the diversion of management attention from existing core businesses, (2) adverse effects (including a deterioration in the related asset or business) from the announcement of the planned or potential transaction, and (3) the challenges associated with separating personnel and financial and other systems.
Many large commercial payers expect hospitals to report quality data, and several of these payers will not reimburse hospitals for certain preventable adverse events. We expect value‑based purchasing programs, including programs that condition reimbursement on patient outcome measures, to become more common and to involve a higher percentage of reimbursement amounts.
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.
In addition, in certain areas in which we operate, large teaching hospitals provide highly specialized facilities, equipment and services that may not be available at most of our hospitals. The existence or absence of state laws that require findings of need for construction and expansion of healthcare facilities or services may also impact competition.
In addition, in certain areas where we operate, large teaching hospitals provide highly specialized facilities, equipment and services that may not be available at most of our hospitals. The existence or absence of state laws that require findings of need for construction and expansion of healthcare facilities or services may also impact competition.
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.
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.
Our Credit Agreement is collateralized by 27 Table of Contents eligible inventory and patient accounts receivable, including receivables for Medicaid supplemental payments, of substantially all of our wholly owned acute care and specialty hospitals, and our LC Facility is guaranteed and secured by a first priority pledge of the capital stock and other ownership interests of certain of our hospital subsidiaries on an equal‑ranking basis with our existing senior secured notes.
Our Credit Agreement is collateralized by eligible inventory and patient accounts receivable, including receivables for Medicaid supplemental payments, of substantially all of our wholly owned acute care and specialty hospitals, and our LC Facility is guaranteed and secured by a first priority pledge of the capital stock and other ownership interests of certain of our hospital subsidiaries on an equal‑ranking basis with our existing senior secured notes.
In some of the regions in which we operate, physician recruitment and retention are affected by a shortage of qualified physicians in certain higher-demand clinical service lines and specialties. Furthermore, our ability to recruit and employ physicians is closely regulated.
In some of the regions where we operate, physician recruitment and retention are affected by a shortage of qualified physicians in certain higher-demand clinical service lines and specialties. Furthermore, our ability to recruit and employ physicians is closely regulated.
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 2022, 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 2023, we continued to experience challenges in recruiting and retaining physicians.
These liabilities could be significant, and, if we are unable to exclude them from the acquisition transaction or successfully obtain and pursue indemnification from a third party, they could harm our business and financial condition.
These liabilities could be significant, and, if we are unable to exclude them from the acquisition transaction or successfully obtain and pursue indemnification from a third party or insurance proceeds, they could harm our business and financial condition.
In addition, Conifer’s failure to comply with the statutes and regulations applicable to it could result in reduced demand for its services, invalidate all or portions of some of Conifer’s services agreements with its clients, give clients the right to terminate Conifer’s services agreements with them or give rise to contractual liabilities, among other things, any of which could have a material adverse effect on Conifer’s business.
In addition, Conifer’s failure to comply with the statutes and regulations applicable to it could result in a reduced demand for services, invalidate all or portions of some services agreements with clients, give clients the right to terminate services agreements or give rise to contractual liabilities, among other things, any of which could have a material adverse effect on our business.
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.
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.
Our business could be significantly and negatively impacted by security threats, catastrophic events and other disruptions affecting our information technology and related systems. Our information technology systems are critical to the day‑to‑day operation of our business.
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. Our information technology systems are critical to the day‑to‑day operation of our business.
Value‑based purchasing and alternative payment model initiatives of both governmental and private payers tying financial incentives to quality and efficiency of care will increasingly 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.
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.
In addition, our ability to incur secured indebtedness (which would generally enable us to achieve better pricing than the incurrence of unsecured indebtedness) depends in part on the value 28 Table of Contents of our assets, which depends, in turn, on the strength of our cash flows and results of operations, as well as on economic and market conditions and other factors.
In addition, our ability to incur secured indebtedness (which would generally enable us to achieve better pricing than the incurrence of unsecured indebtedness) depends in part on the value of our assets, which depends, in turn, on the strength of our cash flows and results of operations, as well as on economic and market conditions and other factors.
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.
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.
In addition, we may face wrongful termination, 24 Table of Contents 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.
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.
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; 19 Table of Contents • 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, 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.
Third parties to whom we outsource certain of our functions, 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, 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.
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. In general, 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 much legislative interest and public attention.
In recent years, the number of freestanding specialty hospitals, surgery centers, EDs and imaging centers in the geographic areas in which we operate has increased significantly. Some of these facilities are 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.
Based on our eligible receivables, $1.500 billion was available for borrowing under the Credit Agreement at December 31, 2022. If new indebtedness is added or our leverage increases, the related risks that we now face could intensify. 29 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2.
Based on our eligible receivables, $1.500 billion was available for borrowing 28 Table of Contents under the Credit Agreement at December 31, 2023. If new indebtedness is added or our leverage increases, the related risks that we now face could intensify. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition, our Ambulatory Care segment has been 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.
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.
Our LC Facility provides for the issuance of standby and documentary letters of credit in an aggregate principal amount of up to $200 million. At December 31, 2022, we had no cash borrowings outstanding under the Credit Agreement, and we had $116 million of standby letters of credit outstanding in the aggregate under the Credit Agreement and the LC Facility.
Our LC Facility provides for the issuance of standby and documentary letters of credit in an aggregate principal amount of up to $200 million. At December 31, 2023, we had no cash borrowings outstanding under the Credit Agreement, and we had $111 million of standby letters of credit outstanding in the aggregate under the Credit Agreement and the LC Facility.
We continue to exit service lines and businesses that we believe are no longer a core part of our long‑term growth and synergy strategies. We cannot provide any assurances that completed, planned or future divestitures or other strategic transactions will achieve their business goals or the benefits we expect.
We also periodically exit service lines and businesses that are no longer a core part of our long‑term growth and synergy strategies. We cannot provide any assurances that completed, planned or future divestitures or other strategic transactions will achieve their business goals or the benefits we expect.
In general, our failure to successfully recruit qualified employees, manage attrition, avoid labor disruptions, control costs and plan for future labor needs could have a material adverse effect on our ability to treat patients and our overall business, financial condition, results of operations or cash flows.
For the reasons stated above, our failure to successfully recruit qualified employees, manage attrition, avoid labor disruptions, control costs and plan for future labor needs could have a material adverse effect on our ability to treat patients and our overall business, financial condition, results of operations or cash flows.
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.
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.
Regulations governing Conifer’s operations are subject to changing interpretations that may be inconsistent among different jurisdictions. In addition, a regulatory determination made by, or a settlement or consent decree entered into with, one regulatory agency may not be binding upon, or preclude, investigations or regulatory actions by other agencies.
Regulations related to such laws are subject to changing interpretations that may be inconsistent among different jurisdictions. In addition, a regulatory determination made by, or a settlement or consent decree entered into with, one regulatory agency may not be binding upon, or preclude, investigations or regulatory actions by other agencies.
At December 31, 2022, we had approximately $15.079 billion of total long‑term debt, as well as $116 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, 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”).
For the year ended December 31, 2022, approximately 17% and 7% 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, 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.
Violations of existing regulations or failure to comply with new or changed regulations could harm Conifer’s business and financial results. Conifer is subject to numerous federal, state and local consumer protection and other laws governing such topics as privacy, financial services, and billing and collections activities.
Violations of existing consumer protection regulations or failure to comply with new or changed regulations could harm our revenue cycle management services business. Conifer is subject to numerous federal, state and local consumer protection and other laws governing such topics as privacy, financial services, and billing and collections activities.
For the year ended December 31, 2022, approximately 70%, or $9.730 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, 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.
However, the information technology and infrastructure we use, and the third‑party systems we interact with, have been, and will likely continue to be, subject to computer viruses, attacks by hackers, 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 will likely continue to be, subject to cyber attacks, computer viruses or breaches due to malfeasance or employee error.
Federal government denials or delayed approvals of waiver applications or extension requests by the states in which we operate could materially impact our Medicaid funding levels.
Federal government denials or delayed approvals of waiver applications or extension requests by the states where we operate could also materially impact our Medicaid funding levels.
We rely on our information technology to process, transmit and store clinical, financial and operational data that includes PHI, personally identifiable information, and proprietary and confidential business data. We utilize electronic health records and other information technology in connection with all of our operations, including our billing and other financial systems, supply chain and labor management tools.
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 electronic health records (“EHRs”) and other information technology in 20 Table of Contents connection with all of our operations, including our billing and other financial systems, supply chain and labor management tools.
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, 2022, 66% of our net accounts receivable for our Hospital Operations segment 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, 2023, 68% of our Hospital Operations segment’s net accounts receivable was due from managed care payers.
We have always competed with other healthcare providers in recruiting and retaining these employees; however, over the past several years, our industry has been facing considerable workforce challenges. Like other hospital companies, we continue to experience a shortage of advanced practice providers and critical‑care nurses in certain disciplines and geographic areas.
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. Like other hospital companies, we continue to experience shortages of advanced practice providers and critical‑care nurses in certain disciplines and geographic areas.
During 2022, our interest expense was $890 million and represented 38% of our $2.333 billion of operating income. As a result, relatively small percentage changes in our operating income can result in a relatively large percentage change in our net income and earnings per share, both positively and negatively.
During 2023, our interest expense was $901 million and represented 36% of our $2.510 billion of operating income. As a result, relatively small percentage changes in our operating income can result in a relatively large percentage change in our net income and earnings per share, both positively and negatively.
As a result of the aforementioned challenges, we have been, and we may continue to be, required to enhance wages and benefits to recruit and retain experienced employees, pay premiums above standard compensation for essential workers, make greater investments in education and training for newly licensed medical support personnel, or hire more expensive temporary or contract employees, which we also compete with other healthcare providers to secure. 20 Table of Contents We also depend on the available labor pool of semi‑skilled and unskilled workers in each of the areas where we operate.
As a result of the aforementioned challenges, we have been, and we may continue to be, required to enhance wages and benefits to recruit and retain experienced employees, pay premiums above standard compensation for essential workers, make greater investments in education and training for newly licensed medical support personnel, or hire more expensive temporary or contract employees, which we also compete with other healthcare providers to secure.
Our ability to meet this financial ratio and the aforementioned restrictive covenants may be affected by events beyond our control, and we cannot assure you that we will meet those tests.
Our ability to meet this financial ratio and the aforementioned restrictive covenants may be affected by events beyond our control, and there can be no assurance that we will meet those tests.
The COVID‑19 pandemic exacerbated these shortages – and, thereby, competition for qualified candidates – as more employees chose to retire early, leave the workforce or take travel assignments. We expect these impacts may persist beyond the duration of the pandemic.
The COVID‑19 pandemic exacerbated these shortages – and, thereby, competition for qualified candidates – as more employees chose to retire early, leave the workforce or take travel assignments.
We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
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.
Our hospitals, outpatient centers and other healthcare businesses operate in competitive environments, and competition in our markets can adversely affect patient volumes and other aspects of our operations.
Our hospitals, outpatient centers and other healthcare businesses operate in competitive environments, and this competition can adversely affect our operations.
We are unable at this time to predict how the industry trends toward value‑based purchasing and alternative payment models 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. 23 Table of Contents Violations of existing regulations or failure to comply with new or changed regulations could harm our business and financial results.
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.
While we seek to obtain assurances that third parties will protect our information, there is a risk the security of data held by such third parties could be breached.
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.
During the year ended December 31, 2022, we recorded $94 million of impairment charges and $118 million of restructuring charges. Our impairment tests presume stable, improving or, in some cases, declining operating results in our facilities, which are based on programs and initiatives being implemented that are designed to achieve each facility’s most recent projections.
Our impairment tests presume stable, improving or, in some cases, declining operating results in our facilities, which are based on programs and initiatives being implemented that are designed to achieve each facility’s most recent projections.
We currently have thousands of managed care contracts with various HMOs and PPOs; however, our top 10 managed care payers generated 62% of our managed care net patient service revenues for the year ended December 31, 2022.
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.
Business closings and layoffs in the areas we operate may lead to increases in the uninsured and underinsured populations and adversely affect demand for our services, as well as the ability of patients to pay for services.
Additional economic factors, including unemployment rates and consumer spending, affect our patient volumes, service mix and revenue mix. Business closings and layoffs in the areas where we operate may lead to increases in the uninsured and underinsured populations and adversely affect demand for our services, as well as the ability of patients to pay for services.
Future changes in the Medicare and Medicaid programs or other government healthcare programs, including reductions in scale and scope, could have an adverse effect on our business. We are unable to predict the effect of future government healthcare funding policy changes on our operations.
Future changes in healthcare laws generally, and the Medicare and Medicaid programs or other government healthcare programs specifically, including reductions in scale and scope, could have an adverse effect on our business.
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.
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.
Even prior to the COVID‑19 pandemic, several states in which we operate faced budgetary challenges that resulted in reduced Medicaid funding levels to hospitals and other providers.
Several states in which we operate continue to face budgetary challenges that have resulted in reduced Medicaid funding levels to hospitals and other providers.
As cybersecurity threats continue to evolve, we may not be able to anticipate certain attack methods in order to implement effective protective measures, and we continue to be required to expend significant additional resources to modify and strengthen our security measures, investigate and remediate any vulnerabilities in our information systems and infrastructure, and invest in new technology designed to mitigate security risks.
We continue to be required to expend significant additional resources to modify and strengthen our security measures, investigate and respond to cybersecurity incidents, remediate any vulnerabilities in our information systems and infrastructure, and invest in new technology designed to mitigate security risks.
There is also uncertainty regarding the potential impact of other healthcare-related reform efforts at the federal and state levels. Some reform initiatives, requirements and proposals could 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 initiatives, requirements and proposals could increase our operating costs, negatively impact our patient volumes, case mix and revenue mix, adversely affect the reimbursement we receive for our services or require us to expend resources to modify certain aspects of our operations.
As a consequence, we may be exposed to the financial status of the buyer for any payments under such transition services agreements or for transferred contractual liabilities, which could be significant.
Many of our hospital divestitures also necessitate us entering into a transition services agreement with the buyer for information technology and other related services. As a consequence, we may be exposed to the financial status of the buyer for any payments under such transition services agreements or for transferred contractual liabilities, which could be significant.
Our hospitals, outpatient centers and related healthcare businesses are subject to an extensive and complex framework of government regulation at the federal, state and local levels.
Violations of existing regulations or failure to comply with new or changed regulations could harm our business and financial results. Our hospitals, outpatient centers and related healthcare businesses are subject to an extensive and complex framework of government regulation at the federal, state and local levels.
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, the Affordable Care Act prohibits the use of federal funds under the Medicaid program to reimburse providers for treating certain provider‑preventable conditions.
Trends affecting our actual or anticipated results may require us to record impairment and restructuring charges that may negatively impact our results of operations. 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.
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.
In addition, in some areas, the increased demand for care of patients with COVID‑19, influenza and other respiratory viruses in our hospitals, as well as the direct impact of these illnesses on physicians, employees and their families, have put a strain on our resources and staff.
In addition, in some areas, the increased demand for care of patients with respiratory viruses at our facilities, as well as the direct impact of illnesses on physicians, employees and their families, have put a strain on our resources and staff. We also depend on the available labor pool of semi‑skilled and unskilled workers in the areas where we operate.
In addition, the demand for care of COVID‑19 patients in some of our hospitals put a strain on our resources and personnel. We have been required, and we may in the future be required, to temporarily reduce overall operating capacity or suspend certain services at individual facilities due to staffing constraints and other COVID‑19-related factors.
We have been required, and we may in the future be required, to temporarily reduce overall operating capacity or suspend certain services at individual facilities due to staffing constraints and other infectious disease-related factors.
Furthermore, if Conifer becomes subject to fines or other penalties, it could harm Conifer’s reputation, thereby making it more difficult for Conifer to retain existing clients or attract new clients.
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.
If general economic conditions deteriorate or remain uncertain for an extended period of time, our liquidity and ability to repay our outstanding debt may be impacted, and there can be no assurance that we will be able to raise additional funds on terms acceptable to us, if at all. 18 Table of Contents In general, the extent of the impact of the COVID‑19 pandemic on our future operational and financial performance is currently uncertain and will depend on many factors outside of our control, including, among others: the duration, severity and trajectory of the pandemic, including the possible spread of potentially more contagious and/or virulent forms of the virus; future economic conditions, as well as the impact of government actions and administrative regulations on the hospital industry and broader economy, including through existing and any future 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 COVID‑19 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.
Moreover, differences in economic or business interests or goals among joint venture participants could result in delayed decisions, failures to agree on major issues and even litigation.
In that case, our results of operations could be adversely affected or we may be required to increase our level of financial commitment to the joint venture. Moreover, differences in economic or business interests or goals among joint venture participants could result in delayed decisions, failures to agree on major issues and even litigation.
We could be subject to substantial uninsured liabilities or increased insurance costs as a result of significant legal actions. We are subject to medical malpractice lawsuits, antitrust claims and other legal actions in the ordinary course of business.
We are subject to medical malpractice lawsuits, antitrust claims and other legal actions in the ordinary course of business.
Moreover, in 2022, our commercial managed care net inpatient revenue per admission from the hospitals in our Hospital Operations segment was approximately 81% higher than our aggregate yield on a per‑admission basis from government payers, including managed Medicare and Medicaid insurance plans.
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.
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.
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.
Risks Related to Our Indebtedness Our level of indebtedness could, among other things, adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and prevent us from meeting our obligations under the agreements relating to our indebtedness.
While we endeavor to comply with the applicable safe harbors under the Anti‑kickback Statute, certain of our current arrangements, including joint venture arrangements, do not qualify for safe harbor protection. 26 Table of Contents Risks Related to Our Indebtedness Our level of indebtedness could, among other things, adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and prevent us from meeting our obligations under the agreements relating to our indebtedness.
Our less than wholly owned subsidiaries may also be subject to restrictions on their ability to distribute cash to us in their financing or other agreements and, as a result, we may not be able to access their cash flows to service their respective debt obligations.
Subsidiaries that are not wholly owned may also be subject to restrictions on their ability to distribute cash to us in their financing or other agreements and, as a result, we may not be able to access their cash flows to service their respective debt obligations. 27 Table of Contents In recent years, we have regularly issued new notes to refinance our outstanding notes prior to their maturity, and we are likely to continue this practice in the future.
Extended strikes have had, and could in the future have, an adverse effect on our patient volumes, net operating revenues and labor costs at individual hospitals or in local markets.
When we are negotiating collective bargaining agreements with unions (whether such agreements are renewals or first contracts), work stoppages and strikes may be threatened or occur. Extended strikes have had, and could in the future have, an adverse effect on our patient volumes, net operating revenues and labor costs at individual hospitals or in local markets.
We continue to face a heightened risk of cybersecurity threats targeting healthcare providers, including ransomware attacks. In general, 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.
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.
Vertical integration efforts involving third‑party payers and healthcare providers, among other factors, may increase competitive challenges. 21 Table of Contents If our 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.
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.
These joint ventures may not be profitable or may not achieve the profitability that justifies the investments made. Furthermore, the nature of a joint venture requires us to consult with and share certain decision‑making powers with unaffiliated third parties, some of which may be not‑for‑profit health systems.
Furthermore, the nature of a joint venture requires us to consult with and share certain decision‑making powers with unaffiliated third parties, some of which may be not‑for‑profit health systems. If our joint venture partners do not fulfill their obligations, the affected joint venture may not be able to operate according to its business or strategic plans.
Any losses not covered by or in excess of the amounts maintained under insurance policies will be funded from our working capital or other sources of liquidity. Furthermore, one or more of our insurance carriers could become insolvent and unable to fulfill its or their obligations to defend, pay or reimburse us when those obligations become due.
Furthermore, one or more of our insurance carriers could become insolvent and unable to fulfill its or their obligations to defend, pay or reimburse us when those obligations become due.
The preventive actions we take to reduce the risk of such incidents and protect our information technology may not be sufficient.
The preventive actions we take to reduce the risk of such incidents and protect our information technology and data may not be sufficient. As cybersecurity threats continue to evolve, we may not be able to anticipate certain attack methods in order to implement effective protective measures.
Our insurance against cyber‑risks and attacks may not provide the coverage we anticipate or offset the financial impact of a material loss event. In addition, the elevated risk of ransomware attacks, 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 premiums and lower coverage limits.
Any of these could have a material adverse effect on our business, financial condition, results of operations or cash flows. 22 Table of Contents We cannot predict the impact healthcare reform efforts may have on our business, financial condition, results of operations or cash flows.
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.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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, 2017 2018 2019 2020 2021 2022 Tenet Healthcare Corporation $ 100.00 $ 113.06 $ 250.86 $ 263.39 $ 538.85 $ 321.83 S&P 500 $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.89 S&P Health Care $ 100.00 $ 106.47 $ 128.64 $ 145.93 $ 184.07 $ 180.47 Peer Group $ 100.00 $ 131.60 $ 163.19 $ 177.96 $ 267.89 $ 245.98 Repurchase of Common Stock —In October 2022, our board of directors authorized the repurchase of up to $1 billion of our common stock through a share repurchase program.
Biggest changeThe 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.
(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, 2017 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, 2018 in our common stock and each of the indices.
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 10, 2023, there were 3,447 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 9, 2024, there were 3,282 holders of record of our common stock. Our transfer agent and registrar is Computershare.
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 date of December 31, 2024. ITEM 6. RESERVED 32 Table of Contents
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.
Purchases during the period from the commencement of the program through December 31, 2022 are presented in the table below: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Dollar Value of Shares That May Yet be Purchased Under the Program (In Thousands) (In Thousands) (In Millions) Inception through October 31, 2022 1,800 $ 41.81 1,800 $ 925 November 1 through November 30, 2022 4,089 $ 42.74 4,089 $ 750 December 1 through December 31, 2022 — $ — — $ 750 Inception through December 31, 2022 5,889 $ 42.45 5,889 These repurchases were made, and 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.
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.
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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

Item 6. [Reserved]

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

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Biggest changeItem 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 78 Item 8. Financial Statements and Supplementary Data 79 Consolidated Financial Statements 83 Notes to Consolidated Financial Statements 88
Biggest changeItem 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 7. Management's Discussion & Analysis

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

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Biggest changeThe following table presents our estimated costs (based on selected operating expenses, which include salaries, wages and benefits, supplies and other operating expenses) of caring for our uninsured and charity patients: Years Ended December 31, 2022 2021 2020 Estimated costs for: Uninsured patients $ 537 $ 650 $ 617 Charity care patients 83 97 147 Total $ 620 $ 747 $ 764 52 Table of Contents RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2022 COMPARED TO THE YEAR ENDED DECEMBER 31, 2021 The following tables present our consolidated net operating revenues, operating expenses and operating income, both in dollar amounts and as percentages of net operating revenues, on a continuing operations basis: Years Ended December 31, Increase (Decrease) 2022 2021 Net operating revenues: Hospital Operations $ 15,061 $ 15,982 $ (921) Ambulatory Care 3,248 2,718 530 Conifer 1,316 1,267 49 Inter-segment eliminations (451) (482) 31 Net operating revenues 19,174 19,485 (311) Grant income 194 191 3 Equity in earnings of unconsolidated affiliates 216 218 (2) Operating expenses: Salaries, wages and benefits 8,844 8,878 (34) Supplies 3,273 3,328 (55) Other operating expenses, net 3,998 4,206 (208) Depreciation and amortization 841 855 (14) Impairment and restructuring charges, and acquisition-related costs 226 85 141 Litigation and investigation costs 70 116 (46) Net gains on sales, consolidation and deconsolidation of facilities (1) (445) 444 Operating income $ 2,333 $ 2,871 $ (538) Years Ended December 31, Increase (Decrease) 2022 2021 Net operating revenues 100.0 % 100.0 % — % Grant income 1.0 % 1.0 % — % Equity in earnings of unconsolidated affiliates 1.1 % 1.1 % — % Operating expenses: Salaries, wages and benefits 46.1 % 45.6 % 0.5 % Supplies 17.0 % 17.1 % (0.1) % Other operating expenses, net 20.8 % 21.6 % (0.8) % Depreciation and amortization 4.4 % 4.4 % — % Impairment and restructuring charges, and acquisition-related costs 1.2 % 0.4 % 0.8 % Litigation and investigation costs 0.4 % 0.6 % (0.2) % Net gains on sales, consolidation and deconsolidation of facilities — % (2.3) % 2.3 % Operating income 12.2 % 14.7 % (2.5) % 53 Table of Contents The following tables present our net operating revenues, operating expenses and operating income, both in dollar amounts and as percentages of net operating revenues, by operating segment on a continuing operations basis: Year Ended December 31, 2022 Year Ended December 31, 2021 Hospital Operations Ambulatory Care Conifer Hospital Operations Ambulatory Care Conifer Net operating revenues $ 14,610 $ 3,248 $ 1,316 $ 15,500 $ 2,718 $ 1,267 Grant income 190 4 — 142 49 — Equity in earnings of unconsolidated affiliates 10 206 — 25 193 — Operating expenses: Salaries, wages and benefits 7,333 822 689 7,511 690 677 Supplies 2,398 871 4 2,640 684 4 Other operating expenses, net 3,302 438 258 3,586 389 231 Depreciation and amortization 692 112 37 722 95 38 Impairment and restructuring charges, and acquisition-related costs 180 21 25 39 27 19 Litigation and investigation costs 53 3 14 100 14 2 Net gains on sales, consolidation and deconsolidation of facilities (1) — — (411) (34) — Operating income $ 853 $ 1,191 $ 289 $ 1,480 $ 1,095 $ 296 Year Ended December 31, 2022 Year Ended December 31, 2021 Hospital Operations Ambulatory Care Conifer Hospital Operations Ambulatory Care Conifer Net operating revenues 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Grant income 1.3 % 0.1 % — % 0.9 % 1.8 % — % Equity in earnings of unconsolidated affiliates 0.1 % 6.3 % — % 0.2 % 7.1 % — % Operating expenses: Salaries, wages and benefits 50.2 % 25.3 % 52.4 % 48.5 % 25.4 % 53.4 % Supplies 16.4 % 26.8 % 0.3 % 17.0 % 25.2 % 0.3 % Other operating expenses, net 22.7 % 13.5 % 19.5 % 23.2 % 14.3 % 18.2 % Depreciation and amortization 4.7 % 3.4 % 2.8 % 4.7 % 3.5 % 3.0 % Impairment and restructuring charges, and acquisition-related costs 1.2 % 0.6 % 1.9 % 0.3 % 1.0 % 1.5 % Litigation and investigation costs 0.4 % 0.1 % 1.1 % 0.6 % 0.5 % 0.2 % Net gains on sales, consolidation and deconsolidation of facilities — % — % — % (2.7) % (1.3) % — % Operating income 5.8 % 36.7 % 22.0 % 9.5 % 40.3 % 23.4 % Consolidated net operating revenues decreased by $311 million, or 1.6%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Biggest changeThe following tables present our net operating revenues, operating expenses and operating income, both in dollar amounts and as percentages of net operating revenues, by segment on a continuing operations basis: Year Ended December 31, 2022 Year Ended December 31, 2021 Hospital Operations Ambulatory Care Hospital Operations Ambulatory Care Net operating revenues $ 15,926 $ 3,248 $ 16,767 $ 2,718 Grant income 190 4 142 49 Equity in earnings of unconsolidated affiliates 10 206 25 193 Operating expenses: Salaries, wages and benefits 8,022 822 8,188 690 Supplies 2,402 871 2,644 684 Other operating expenses, net 3,560 438 3,817 389 Depreciation and amortization 729 112 760 95 Impairment and restructuring charges, and acquisition-related costs 205 21 58 27 Litigation and investigation costs 67 3 102 14 Net gains on sales, consolidation and deconsolidation of facilities (1) — (411) (34) Operating income $ 1,142 $ 1,191 $ 1,776 $ 1,095 Net operating revenues 100.0 % 100.0 % 100.0 % 100.0 % Grant income 1.2 % 0.1 % 0.8 % 1.8 % Equity in earnings of unconsolidated affiliates 0.1 % 6.3 % 0.1 % 7.1 % Operating expenses: Salaries, wages and benefits 50.4 % 25.3 % 48.8 % 25.4 % Supplies 15.1 % 26.8 % 15.8 % 25.2 % Other operating expenses, net 22.4 % 13.5 % 22.8 % 14.3 % Depreciation and amortization 4.6 % 3.4 % 4.5 % 3.5 % Impairment and restructuring charges, and acquisition-related costs 1.3 % 0.6 % 0.3 % 1.0 % Litigation and investigation costs 0.3 % 0.1 % 0.6 % 0.5 % Net gains on sales, consolidation and deconsolidation of facilities — % — % (2.5) % (1.3) % Operating income 7.2 % 36.7 % 10.6 % 40.3 % Consolidated net operating revenues decreased by $311 million, or 1.6%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
See Note 10 to the accompanying Consolidated Financial Statements for additional information about our defined benefit plans. Information Technology Contracts— We enter into various non‑cancellable contracts for information technology services and licenses as a normal part of our business.
See Note 10 to the accompanying Consolidated Financial Statements for additional information about our defined benefit plans. Information Technology Services Contracts— We enter into various non‑cancellable contracts for information technology services and licenses as a normal part of our business.
Cost reports generally must be filed within five months after the end of the annual cost reporting period. After the cost report is filed, the accrual and corresponding valuation allowance may need to be adjusted.
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.
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.
During the year ended December 31, 2022, the valuation allowance increased by $120 million, including an increase of $123 million due to limitations on the tax deductibility of interest expense, a decrease of $1 million due to the expiration or worthlessness of unutilized net operating loss carryovers, and a decrease of $2 million due to changes in the expected realizability of deferred tax assets.
During the year ended December 31, 2022, the valuation allowance increased by $120 million, including an increase of $123 million due to limitations on the tax deductibility of interest expense, a decrease of $1 million due to the expiration or worthlessness of unutilized net operating loss carryovers, and a decrease of $2 million due to changes in the expected realizability of deferred tax assets.
Subsequently, the FFY 2021 DSH reduction was eliminated entirely and the remaining $8 billion of DSH reductions were delayed until FFY 2024. • The COVID Acts expanded the Medicare accelerated payment program, which provides prepayment of claims to providers in certain circumstances, such as national emergencies or natural disasters.
Subsequently, the FFY 2021 DSH reduction was eliminated entirely, and the remaining $8 billion of DSH reductions were delayed until March 8, 2024. • The COVID Acts expanded the Medicare accelerated payment program, which provides prepayment of claims to providers in certain circumstances, such as national emergencies or natural disasters.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION TO MANAGEMENT’S DISCUSSION AND ANALYSIS The purpose of this section, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), is to provide a narrative explanation of our financial statements that enables investors to better understand our business, to enhance our overall financial disclosures, to provide context to the analysis of our financial information, and to provide information about the quality of, and potential variability of, our financial condition, results of operations and cash flows.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION TO MANAGEMENT’S DISCUSSION AND ANALYSIS The purpose of this section, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), is to provide a narrative explanation of our financial statements that enables investors to better understand our business, to enhance our overall financial disclosures, to give context to the analysis of our financial information, and to provide information about the quality of, and potential variability of, our financial condition, results of operations and cash flows.
However, we continue to have to provide uninsured discounts and charity care due to the failure of certain states to expand Medicaid coverage and for persons living in the country who are not permitted to enroll in a health insurance exchange or government healthcare insurance program.
However, we continue to provide uninsured discounts and charity care due to the failure of certain states to expand Medicaid coverage and for persons living in the country who are not permitted to enroll in a health insurance exchange or government healthcare insurance program.
Under the Consolidated Appropriations Act, providers could retain the accelerated payments for one year from the date of receipt before CMS commenced recoupment. During the year ended December 31, 2020, our hospitals and other providers applied for and received approximately $1.5 billion of accelerated payments.
Under the Consolidated Appropriations Act, 2021, providers could retain the accelerated payments for one year from the date of receipt before CMS commenced recoupment. During the year ended December 31, 2020, our hospitals and other providers applied for and received approximately $1.5 billion of accelerated payments.
Our sources of earnings from each facility consist of: • management and administrative services revenues from the facilities USPI operates through management services contracts, computed as a percentage of each facility’s net revenues; and • our share of each facility’s net income (loss), which is computed by multiplying the facility’s net income (loss) times the percentage of each facility’s equity interests owned by USPI.
Our sources of earnings from each facility consist of: • management and administrative services revenues from the facilities USPI operates through management services contracts, usually computed as a percentage of each facility’s net revenues; and • our share of each facility’s net income (loss), which is computed by multiplying the facility’s net income (loss) times the percentage of each facility’s equity interests owned by USPI.
Defined Benefit Plan Obligations— We maintain three frozen, non‑qualified defined benefit plans that provide supplemental retirement benefits to certain of our current and former executives. These plans are unfunded, and plan obligations are paid from our working capital. We also maintain a frozen, qualified defined benefit plan that benefits certain of our current and former employees in Detroit.
Defined Benefit Plan Obligations— We maintain three frozen, non‑qualified defined benefit plans that provide supplemental retirement benefits to certain of our current and former executives. These plans are unfunded, and plan obligations are paid from our working capital. We also maintain a frozen, qualified defined benefit plan for certain of our current and former employees in Detroit.
IMPAIRMENT OF LONG-LIVED ASSETS We evaluate our long‑lived assets for possible impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable from estimated future undiscounted cash flows.
IMPAIRMENT OF LONG-LIVED ASSETS We evaluate our long‑lived assets for possible impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable from estimated future undiscounted cash flows (“UDCF”).
Our Hospital Operations segment also recognized grant income from federal, state and local grants totaling $190 million and $142 million in the years ended December 31, 2022 and 2021, respectively, which is not included in net operating revenues.
Our Hospital Operations segment also recognized income from federal, state and local grants totaling $190 million and $142 million in the years ended December 31, 2022 and 2021, respectively, which is not included in net operating revenues.
These fluctuations result in material intra-quarter net operating and investing uses of cash that have caused, and in the future may cause, us to use our Credit Agreement as a source of liquidity.
These fluctuations can result in material intra-quarter net operating and investing uses of cash that have caused, and in the future may cause, us to use our Credit Agreement as a source of liquidity.
We believe that Adjusted EBITDA is a useful measure, in part, because certain investors and analysts use both historical and projected Adjusted EBITDA, in addition to GAAP and other non‑GAAP measures, as factors in determining the estimated fair value of shares of our common stock. Company management also regularly reviews the Adjusted EBITDA performance for each operating segment.
We believe that Adjusted EBITDA is a useful measure, in part, because certain investors and analysts use both historical and projected Adjusted EBITDA, in addition to GAAP and other non‑GAAP measures, as factors in determining the estimated fair value of shares of our common stock. Company management also regularly reviews the Adjusted EBITDA performance for each reporting segment.
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 50 Table of Contents 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.
Furthermore, the healthcare industry, in general, and the acute care hospital business, in particular, continue to be subject to significant regulatory uncertainty. Changes in federal or state healthcare laws, regulations, funding policies or reimbursement practices, especially those involving reductions to government payment rates, could have a significant impact on our future revenues and operations.
Furthermore, the healthcare industry, in general, and the acute care hospital business, in particular, continue to be subject to significant regulatory uncertainty. Changes in federal or state healthcare laws, regulations, funding policies or reimbursement practices, especially those involving reductions to government payment rates, could have a significant impact on our future revenues and expenses.
As an alternative means of funding provider payments, many of the states in which we operate have adopted supplemental payment programs authorized under the Social Security Act. Continuing pressure on state budgets and other factors, including legislative and regulatory changes, could result in future reductions to Medicaid payments, payment delays or changes to Medicaid supplemental payment programs.
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. Continuing pressure on state budgets and other factors, including legislative and regulatory changes, could result in future reductions to Medicaid payments, payment delays or changes to Medicaid supplemental payment programs.
However, the managed Medicare and Medicaid insurance plans typically generate lower yields than commercial managed care plans, which have been experiencing an improved pricing trend.
However, Medicare and Medicaid managed care insurance plans typically generate lower yields than commercial managed care plans, which have been experiencing an improved pricing trend.
These factors, many of which have been affected by the pandemic, continuously change and can have an impact on collection trends and our estimation process. We also typically experience ongoing managed care payment delays and disputes; however, we continue to work with these payers to obtain adequate and timely reimbursement for our services.
These factors, many of which were affected by the pandemic, continuously change and can have an impact on collection trends and our estimation process. We also typically experience ongoing managed care payment delays and disputes; however, we continue to work with these payers to obtain adequate and timely reimbursement for our services.
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, 2022, 2021 or 2020. 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, 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.
Over the past several years, we have undertaken enterprise‑wide cost-efficiency measures, and we continue to transition certain support operations to our Global Business Center (“GBC”) in the Philippines. We incurred restructuring charges in conjunction with these initiatives in the year ended December 31, 2022, and we could incur additional restructuring charges in the future.
Over the past several years, we have undertaken enterprise‑wide cost‑efficiency measures, and we continue to transition certain support operations to our Global Business Center (“GBC”) in the Philippines. We incurred restructuring charges in conjunction with these initiatives in the year ended December 31, 2023, and we could incur additional restructuring charges in the future.
Supplies Same‑hospital supplies expense decreased $147 million, or 5.8%, in the year ended December 31, 2022 compared to 2021.
Supplies Same‑hospital supplies expense decreased by $147 million, or 5.8%, in the year ended December 31, 2022 compared to 2021.
These losses primarily related to the redemption in full of our 7.500% senior secured first lien notes due 2025 (“2025 Senior Secured First Lien Notes”) in February 2022 and open market purchases and the subsequent redemption in full of our 6.750% senior unsecured notes due 2023 (the “2023 Senior Unsecured Notes”) during the six months ended June 30, 2022.
The net losses primarily related to the redemption in full of our 7.500% senior secured first lien notes due 2025 (“2025 Senior Secured First Lien Notes”) in February 2022 and open market purchases and the subsequent redemption in full of our 6.750% senior unsecured notes due 2023 (the “2023 Senior Unsecured Notes”) during the six months ended June 30, 2022.
The amount of 67 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 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 updates generally become effective October 1, the beginning of the FFY. In August 2022, CMS issued final changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2023 Rates (“Final IPPS Rule”).
The updates generally become effective October 1, the beginning of the FFY. In August 2023, CMS issued final changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2024 Rates (“Final IPPS Rule”).
All disputed issues with respect to these audits have been resolved and all related tax assessments (including interest) have been paid. Our tax returns for years ended after December 31, 2007 and USPI’s tax returns for years ended after December 31, 2018 remain subject to audit by the IRS.
All disputed issues with respect to these audits have been resolved and all related tax assessments (including interest) have been paid. Our tax returns for years ended after December 31, 2007 and USPI’s tax returns for years ended after December 31, 2020 remain subject to audit by the IRS.
DEBT INSTRUMENTS, GUARANTEES AND RELATED COVENANTS Credit Agreement— At December 31, 2022, 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, 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.
Grant income recognized by our Hospital Operations and Ambulatory Care segments is presented in grant income, and grant income recognized through our unconsolidated affiliates is presented in equity in earnings of unconsolidated affiliates, in each case in the accompanying Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020.
Grant income recognized by our Hospital Operations and Ambulatory Care segments is presented in grant income, and grant income recognized through our unconsolidated affiliates is presented in equity in earnings of unconsolidated affiliates, in each case in the accompanying Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021.
Patient advocates from Conifer’s Eligibility and Enrollment Services program (“EES”) screen patients in the hospital to determine whether those patients meet eligibility requirements for financial assistance programs. They also expedite the process of applying for these government programs.
Patient advocates from our Eligibility and Enrollment Services program (“EES”) screen patients in the hospital to determine whether those patients meet eligibility requirements for financial assistance programs. They also expedite the process of applying for these government programs.
Payment and Policy Changes to the Medicare Outpatient Prospective Payment and Ambulatory Surgery Center Payment Systems— In November 2022, 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”) 2023 (“Final OPPS/ASC Rule”).
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”).
In December 2021, we repaid half of the outstanding deferred Social Security tax payments, and the remainder was repaid in December 2022. 49 Table of Contents CMS Innovation Models The CMS Innovation Center develops and tests innovative payment and service delivery models that have the potential to reduce Medicare, Medicaid or CHIP expenditures while preserving or enhancing the quality of care for beneficiaries.
In December 2021, we repaid half of the outstanding deferred Social Security tax payments, and the remainder was repaid in December 2022. CMS Innovation Models The CMS Innovation Center develops and tests innovative payment and service delivery models that have the potential to reduce Medicare, Medicaid or CHIP expenditures while preserving or enhancing the quality of care for beneficiaries.
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.
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.
Facility Growth The following table summarizes the year-over-year changes in our same‑facility revenue and cases on a pro forma systemwide basis, which includes both consolidated and unconsolidated (equity method) facilities.
Facility Growth The following table presents year-over-year changes in our same‑facility revenue and cases on a pro forma systemwide basis, which includes both consolidated and unconsolidated (equity method) facilities.
While we do not record the revenues of unconsolidated facilities, we believe this information is important in understanding the financial performance of our Ambulatory Care segment because these revenues are the basis for calculating our management services revenues and, together with the expenses of our unconsolidated facilities, are the basis for our equity in earnings of unconsolidated affiliates.
While we do not record the revenues of unconsolidated facilities, we believe this information is important in understanding the financial performance of our 58 Table of Contents Ambulatory Care segment because these revenues are the basis for calculating our management services revenues and, together with the expenses of our unconsolidated facilities, are the basis for our equity in earnings of unconsolidated affiliates.
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.
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
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, provider fee 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 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 impact on our future financial position, results of operations or cash flows could be material.
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, 2023.
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.
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, 2022 and 2021 were $70 million and $116 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, 2023 and 2022 were $47 million and $70 million, respectively.
The 2022 error rate for Hospital IPPS payments is approximately 3%. 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 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.
Funding for the Public Health and Social Services Emergency Fund— The COVID Acts authorized $178 billion in payments to be distributed to providers through the PRF.
Funding for the Public Health and Social Services Emergency Fund— The COVID Acts authorized $178 billion in payments to be distributed to providers through the Public Health and Social Services Emergency Fund (“PRF”).
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.
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.
This increase was primarily due to the impact of higher contract labor and premium pay costs, decreased patient volumes, and the Cybersecurity Incident on our patient revenues during the 2022 period. Salaries, wages and benefits expense for the years ended December 31, 2022 and 2021 included stock‑based compensation expense of $43 million and $41 million, respectively.
This increase was primarily due to the impact of higher contract labor and premium pay costs, decreased patient volumes, and the effect of the Cybersecurity Incident on our patient revenues during 2022. Salaries, wages and benefits expense for the years ended December 31, 2022 and 2021 included stock‑based compensation expense of $45 million and $43 million, respectively.
Our finance leases are primarily for medical equipment and information technology and telecommunications assets. As of December 31, 2022, we had fixed payment obligations of $1.517 billion under non‑cancellable lease agreements. Future payments due in connection with our operating and finance leases, including imputed interest, are summarized in the table above.
Our finance leases are primarily for medical equipment and information technology and telecommunications assets. As of December 31, 2023, we had fixed payment obligations of $1.415 billion under non‑cancellable lease agreements. Future payments due in connection with our operating and finance leases, including imputed interest, are summarized in the table above.
We determine our estimate of implicit price concessions based on our historical collection experience with these classes of patients using a portfolio approach as a practical expedient to account for patient contracts as collective groups rather than individually. The financial statement effects of using this practical expedient are not materially different from an individual contract approach.
We determine our estimate of implicit price concessions based on our historical collection experience using a portfolio approach as a practical expedient to account for patient contracts as collective groups rather than individually. The financial statement effects of using this practical expedient are not materially different from an individual contract approach.
At December 31, 2022, our Hospital Operations segment collection rate on self‑pay accounts was approximately 29.5%. Our self‑pay collection rate includes payments made by patients, including co‑pays, co‑insurance amounts and deductibles paid by patients with insurance.
At December 31, 2023 and 2022, our Hospital Operations segment collection rate on self‑pay accounts was approximately 29.9% and 29.5%, respectively. Our self‑pay collection rate includes payments made by patients, including co‑pays, co‑insurance amounts and deductibles paid by patients with insurance.
Our inpatient admissions have been constrained in recent years by the pandemic, increased competition, utilization pressure by managed care organizations, new delivery models that are designed to lower the utilization of acute care hospital services, the effects of higher patient co‑pays, co‑insurance amounts and deductibles, changing consumer 36 Table of Contents behavior, and adverse economic conditions and demographic trends in certain areas where we operate.
Our inpatient admissions have been constrained in recent years by the COVID‑19 pandemic, increased competition, utilization pressure by managed care organizations, new delivery models that are designed to lower the utilization of acute care hospital services, the effects of higher patient co‑pays, co‑insurance amounts and deductibles, changing consumer behavior, and adverse economic conditions and demographic trends in certain areas where we operate.
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, 2022, a 10% decrease or increase in our self‑pay collection rate, or approximately 3.0%, which we 56 Table of Contents 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, 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.
The expansion of Medicaid in 39 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 in FFY 2024.
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.
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, and reducing clinical and vendor contract variation.
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.
With the recent announcement that the public health emergency will end on May 11, 2023, and the subsequent unwinding of federal flexibilities and funding, there is no assurance or expectation that we will continue to receive or remain eligible for significant funding or assistance under the COVID Acts or similar measures in the future.
With the expiration of the public health emergency on May 11, 2023, and the subsequent unwinding of federal flexibilities and funding, there is no assurance or expectation that we will continue to receive or remain eligible for significant funding or assistance under the COVID Acts or similar measures in the future.
The impact of the Sequester Cuts Act on our operations was an increase of approximately $39 million of revenues in the six months ended June 30, 2022, after which the sequestration was fully reinstated. • The COVID Acts instituted a 20% increase in the Medicare MS‑DRG payment for COVID-19 hospital admissions for the duration of the public health emergency. • The COVID Acts initially eliminated the scheduled nationwide reduction of $4 billion in federal Medicaid DSH allotments in FFY 2020 mandated by the Affordable Care Act and decreased the FFY 2021 DSH reduction from $8 billion to $4 billion effective December 1, 2020.
The impact of the Sequester Cuts Act on our operations was an increase of approximately $39 million of revenues in the six months ended June 30, 2022, after which the sequestration was fully reinstated. • The COVID Acts instituted a 20% increase in the Medicare MS‑DRG payment for COVID-19 hospital admissions through the public health emergency period, which expired May 11, 2023. • The COVID Acts initially eliminated the scheduled nationwide reduction of $4 billion in federal Medicaid DSH allotments in FFY 2020 mandated by the Affordable Care Act and decreased the FFY 2021 DSH reduction from $8 billion to $4 billion effective December 1, 2020.
These contracts generally relate to information technology infrastructure support and services, software licenses for certain operational and administrative systems, and cybersecurity‑related software and services. Purchase Orders— We had outstanding short‑term purchase commitments of $369 million at December 31, 2022, which we expect to pay within 12 months.
These contracts generally relate to information technology infrastructure support and services, software licenses for certain operational and administrative systems, and cybersecurity‑related software and services. Purchase Orders— We had outstanding short‑term purchase commitments of $386 million at December 31, 2023, which we expect to pay within 12 months.
Impairment charges for the year ended December 31, 2021 were comprised of $5 million from our Ambulatory Care segment, primarily related to the impairment of certain management contract intangible assets, and $3 million from our Conifer segment.
Impairment charges for the year ended December 31, 2021 were comprised of $5 million from our Ambulatory Care segment, primarily related to the impairment of certain management contract intangible assets, and $3 million from our Hospital Operations segment.
Restructuring charges during the year ended December 31, 2021 consisted of $14 million of employee severance costs, $19 million related to the transition of various administrative functions to our GBC and $24 million of other restructuring costs. Acquisition‑related costs during 2021 consisted entirely of transaction costs.
Restructuring charges during the year ended December 31, 2021 consisted of $14 million of employee severance costs, $19 million related to the transition of various administrative functions to our GBC and $24 million of other restructuring costs.
The additional NPC work required will not change the timing or general nature of our ongoing or currently planned NPC or SCP work on our buildings. Income Taxes— Income tax payments, net of tax refunds, were $161 million and $92 million in the years ended December 31, 2022 and 2021, respectively.
The additional NPC work required will not change the timing or general nature of our ongoing or currently planned NPC or SCP work on our buildings. Income Taxes— Income tax payments, net of tax refunds, were $243 million, and $161 million in the years ended December 31, 2023 and 2022, respectively.
We recognized an additional $14 million and $17 million of PRF grant income from our unconsolidated affiliates during 2021 and 2020, respectively. Our Hospital Operations and Ambulatory Care segments combined also recognized $56 million, $15 million and $14 million of grant income from state and local grant programs during the years ended December 31, 2022, 2021 and 2020, respectively.
We recognized an additional $14 million of PRF grant income from our unconsolidated affiliates during the year ended December 31, 2021. Our Hospital Operations and Ambulatory Care segments combined also recognized $15 million, $56 million and $15 million of grant income from state and local grant programs during the years ended December 31, 2023, 2022 and 2021, respectively.
No additional accelerated payment funds were applied for or received in the years ended December 31, 2022 and 2021.
No additional accelerated payment funds were applied for or received in the years ended December 31, 2023, 2022 or 2021.
We believe the most significant factors contributing to the adverse financial trends included decreased revenues and lower patient volumes due to the pandemic and competition, as well as higher labor costs as a result of the pandemic.
We believe the most significant factors contributing to the adverse financial trends included decreased revenues and lower patient volumes due to the pandemic and competition, as well as higher labor costs because of the pandemic.
We also recorded $12 million of other impairment charges. For additional discussion, see Note 6 to the accompanying Consolidated Financial Statements. Impairment charges for the year ended December 31, 2022 were comprised of $86 million from our Hospital Operations segment, $6 million from our Ambulatory Care segment and $2 million from our Conifer segment.
We also recorded $12 million of other impairment charges. For additional discussion, see Note 6 to the accompanying Consolidated Financial Statements. Impairment charges for the year ended December 31, 2022 were comprised of $88 million from our Hospital Operations segment and $6 million from our Ambulatory Care segment.
Our estimated Hospital Operations segment collection rate from managed care payers was approximately 95.7% at December 31, 2022. We manage our implicit price concessions using hospital‑specific goals and benchmarks such as (1) total cash collections, (2) point‑of‑service cash collections, (3) AR Days and (4) accounts receivable by aging category.
Our estimated Hospital Operations segment collection rate from managed care payers was approximately 96.7% and 95.7% at December 31, 2023 and 2022, respectively. 55 Table of Contents We manage our implicit price concessions using hospital‑specific goals and benchmarks such as (1) total cash collections, (2) point‑of‑service cash collections, (3) AR Days and (4) accounts receivable by aging category.
Net income available to noncontrolling interests in 2022 was comprised of $469 million related to our Ambulatory Care segment, $77 million related to our Conifer segment and $44 million related to our Hospital Operations segment. Of the portion related to our Ambulatory Care segment, $9 million related to the minority interest Baylor held in USPI until June 30, 2022.
Net income available to noncontrolling interests in 2022 was comprised of $469 million related to our Ambulatory Care segment and $121 million related to our Hospital Operations segment. Of the portion related to our Ambulatory Care segment, $9 million related to the minority interest Baylor held in USPI until June 30, 2022.
At December 31, 2022, we had $116 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, 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.
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, 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.
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.
The change was driven by an increase from acquisitions of $161 million, as well as an increase in same‑facility supplies expense of $32 million due primarily to an increase in surgical cases at our consolidated centers and higher pricing of certain supplies as a result of the pandemic, the impact of general market conditions and inflation.
The change was driven by an increase from acquisitions of $103 million, as well as an increase in same‑facility supplies expense of $81 million due primarily to an increase in surgical cases at our consolidated centers and higher pricing of certain supplies as a result of the impact of general market conditions and inflation.
Year Ended December 31, 2022 Net revenues 4.6% Cases 2.0% Net revenue per case 2.5% Joint Ventures with Health System Partners USPI’s business model is to jointly own its facilities with local physicians and, in many of these facilities, a health system partner.
Year Ended December 31, 2023 Net revenues 9.2 % Cases 5.6 % Net revenue per case 3.4 % Joint Ventures with Health System Partners USPI’s business model is to jointly own its facilities with local physicians and, in many of these facilities, a health system partner.
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 as 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.
We had $858 million of cash and cash equivalents on hand at December 31, 2022 to fund our operations and capital expenditures, and our borrowing availability under our Credit Agreement was $1.500 billion based on our borrowing base calculation at December 31, 2022. Our primary source of operating cash is the collection of accounts receivable.
We had $1.228 billion of cash and cash equivalents on hand at December 31, 2023 to fund our operations and capital expenditures, and our borrowing availability under our Credit Agreement was $1.500 billion based on our borrowing base calculation at December 31, 2023. Our primary source of operating cash is the collection of accounts receivable.
Estimated revenues under various state Medicaid programs, including state‑funded Medicaid managed care programs, constituted approximately 19.4%, 18.7% and 17.8% of the total net patient service revenues of our acute care hospitals and related outpatient facilities for the years ended December 31, 2022, 2021 and 2020, 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 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.
Total Medicaid and Managed Medicaid 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, 2022, 2021 and 2020 were $2.692 billion, $2.760 billion and $2.427 billion, respectively.
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.
At December 31, 2022, the undiscounted aggregate future estimated payments related to these obligations was $184 million. We are unable to predict the timing of these payments due to the uncertainty and long timeframes inherent in these obligations.
At December 31, 2023, the undiscounted aggregate future estimated payments related to these obligations was $206 million. We are unable to predict the timing of these payments due to the uncertainty and long timeframes inherent in these obligations.
We anticipate this ratio will fluctuate from quarter to quarter based on earnings performance and other factors, including the use of our Credit Agreement as a source of liquidity and acquisitions that involve the assumption of long‑term debt.
We anticipate this ratio will fluctuate from quarter to quarter based on earnings performance and other factors, including in the event we use our Credit Agreement as a source of liquidity or enter into acquisitions that involve the assumption of long‑term debt.
The IPF-PPS is based on prospectively determined per‑diem rates and includes an outlier policy that authorizes additional payments for extraordinarily costly cases. As of December 31, 2022, 19 of our general hospitals operated IPF units.
The IPF-PPS is based on prospectively determined per‑diem rates and includes an outlier policy that authorizes additional payments for extraordinarily costly cases. As of December 31, 2023, 18 of our hospitals operated IPF units.
Over the past several years, we have had to rely on higher‑cost temporary and contract labor, which we compete with other healthcare providers to secure, and pay premiums above standard compensation for essential workers.
Over the past several years, we have had to rely on higher-cost contract labor, which we compete with other healthcare providers to secure, and pay premiums above standard compensation for 34 Table of Contents essential workers.
All advances received by our hospitals and other providers were either repaid or recouped during the years ended December 31, 2022 and 2021. • A 6.2% increase in the Federal Medical Assistance Percentage (“FMAP”) matching funds was instituted to help states respond to the COVID‑19 pandemic.
All advances received by our hospitals and other providers were either repaid or recouped during the years ended December 31, 2022 and 2021. • A 6.2% increase in the Federal Medical Assistance Percentage (“FMAP”) matching funds was instituted to help states respond to the COVID‑19 pandemic. The additional funds became available to states effective January 1, 2020.
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 2022 Medicare FFS improper payment rate for the program is approximately 7.46%.
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%.
At December 31, 2022 and 2021, 66% and 67%, respectively, of our net accounts receivable for our Hospital Operations segment 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 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.
According to CMS, the combined impact of the payment and policy changes in the Final IPPS Rule for operating costs will yield an average 2.6% increase in Medicare operating MS‑DRG FFS payments for hospitals in urban areas and an average 3.3% increase in such payments for proprietary hospitals in FFY 2023.
According to CMS, the combined impact of the payment and policy changes in the Final IPPS Rule for operating costs will yield an average 3.1% increase in Medicare operating MS‑DRG FFS payments for hospitals in urban areas and an average 3.8% increase in such payments for proprietary hospitals in FFY 2024.
ADDITIONAL SUPPLEMENTAL NON-GAAP DISCLOSURES The financial information provided throughout this report, including our Consolidated Financial Statements and the notes thereto, has been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
The financial information provided throughout this report, including our Consolidated Financial Statements and the notes thereto, has been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
We seek to manage this ratio and increase the efficiency of our balance sheet by following our business plan and managing our cost structure, including through possible asset divestitures, and through other changes in our capital structure.
We seek to manage this ratio and increase the efficiency of our balance sheet by following our business plan and managing our cost structure, including through currently planned and potential future asset divestitures, and through other changes in our capital structure.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed1 unchanged
Biggest changeMaturity Date, Years Ending December 31, 2023 2024 2025 2026 2027 Thereafter Total Fair Value (Dollars in Millions) Fixed-rate long-term debt $ 145 $ 1,463 $ 77 $ 2,143 $ 3,012 $ 8,370 $ 15,210 $ 14,121 Average effective interest rates 5.2 % 4.7 % 6.0 % 4.9 % 5.7 % 5.4 % 5.3 % 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.
Biggest changeMaturity 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.
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. 78 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. 79 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, 2022. 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, 2023. The fair values were determined based on quoted market prices for the same or similar instruments.

Other THC 10-K year-over-year comparisons