What changed in this filing

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Item 1A. Risk Factors

2025-02-14 compared with 2024-02-16 · 235 added, 219 removed, 338 unchanged (57% of the section changed)

22 unchanged sentences

Accordingly, repayment of our indebtedness is dependent on the generation of cash flows by our subsidiaries and their ability to make such cash available to us by dividend, debt repayment or otherwise.

Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness.

Our subsidiaries may not be able to, or may not be permitted to, make distributions

to enable us to make payments in respect of our indebtedness.

Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries.

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A breach of this or any other covenant could result in a default under both the cash flow credit facility and the asset-based revolving credit facility.

Upon the occurrence of an event of default under these senior secured credit facilities, the lenders thereunder could elect to declare

all amounts outstanding under the senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit, which would also result in an event of default under a significant portion of our other outstanding indebtedness.

Upon the occurrence of an event of default under these senior secured credit facilities, the lenders thereunder could elect to declare all amounts outstanding under the senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit, which would also result in an event of default under a significant portion of our other outstanding indebtedness.

If we were unable to repay those amounts, the lenders under the senior secured credit facilities could proceed against the collateral granted to them to secure such indebtedness.

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We compete with other health care providers in recruiting and retaining qualified management and personnel responsible for the daily operations of each of our hospitals and other facilities, including nurses and other nonphysician health care professionals.

In some markets, the availability of nurses and other medical support personnel has been a significant operating issue to health care providers, including at certain of our facilities.

The impact of labor shortages across the health care industry may result in other health care facilities, such as nursing homes, limiting admissions, which may constrain our ability to discharge patients to such facilities and further exacerbate the demand on our resources, supplies and staffing.

Economic conditions, increased inflationary pressure and COVID-19 have exacerbated workforce competition, shortages and capacity constraints.

We depend on the available labor pool of employees in each of the markets in which we operate to fill other necessary positions.

In some markets, the availability of nonphysician health care professionals and medical support personnel has been a significant operating issue to health care providers, including at certain of our facilities.

The impact of labor shortages across the health care industry may result in other health care facilities, such as nursing homes, limiting admissions, which may constrain our ability to discharge patients to such facilities, increase labor costs and further exacerbate the demand on our resources, supplies and staffing.

Economic conditions, including macroeconomic uncertainties and inflationary pressure, workforce burnout, and public health conditions have exacerbated workforce competition, personnel shortages and capacity constraints.

We may be required to increase wages and benefits to recruit and retain nurses and other medical support personnel and to hire more expensive temporary or contract personnel.

As a result of labor shortages, competition and inflationary pressures, our labor costs could increase and our capacity could be negatively impacted.

We also depend on the available labor pool of employees in each of the markets in which we operate to fill other necessary positions.

If there is continued competition for these employees or additional union organizing activity or a significant portion of our employee base unionizes, it is possible our labor costs could increase.

If there is additional union organizing activity or a significant portion of our employee base unionizes, it is possible our labor costs could increase.

When negotiating collective bargaining agreements with unions, whether such agreements are renewals or first contracts, we have experienced, and could experience in the future, labor strikes.

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We operate in states that have adopted mandatory nurse-staffing ratios or mandate staffing committees to develop staffing plans.

If these states reduce, or if additional states in which we operate adopt, mandatory nurse-staffing ratios or related measures, such changes could significantly affect labor costs and have an adverse impact on revenues if we are required to limit admissions or incur other costs in order to comply.

If our labor costs continue to increase, we may not be able to offset these increased costs as a significant percentage of our revenues consists of fixed, prospective payments.

If these states reduce, or if additional states in which we operate adopt or the federal government adopts, mandatory nurse-staffing ratios or related measures, our compliance with such measures could significantly affect labor costs and have an adverse impact on revenues or our results of operations if we are required to limit admissions, hire additional personnel or otherwise incur additional costs.

If our labor costs continue to increase, we may not be able to offset these increased costs, as a significant percentage of our revenues are based on reimbursement rates that are fixed or negotiated no less frequently than annually.

Our performance depends on our ability to recruit and retain quality physicians.

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In many of the markets we serve, physicians may have admitting privileges at other hospitals in addition to our hospitals.

We continue to face increasing competition to recruit and retain quality physicians, as well as increasing cost to contract with hospital-based physicians.

We continue to face increasing competition to recruit and retain quality physicians, as well as increasing costs to contract with hospital-based physicians.

Such physicians may terminate their affiliation with our hospitals at any time.

If states enact legal restrictions on the provision of medical care, such restrictions may impact providers' recruitment and retention efforts in certain states.

We anticipate facing increased challenges in this area as the physician population reaches retirement age, especially if there is a shortage of physicians willing and able to provide comparable services.

If we are unable to recruit and retain quality physicians to affiliate with our hospitals, enter into contractual arrangements with hospital-based physicians, or provide adequate support personnel or technologically advanced equipment and hospital facilities that meet the needs of those physicians and their patients, our admissions may decrease, our operating performance may decline, and our capacity and growth prospects may be materially adversely affected.

We may be unable to attract, hire and retain a highly qualified and diverse workforce, including key management.

We may be unable to attract, hire and retain a highly qualified workforce, including key management.

The talents and efforts of our employees, particularly our key management, are vital to our success.

The members of our management team have significant industry experience, and if any member leaves the Company, such member would be difficult to replace.

In addition, institutional knowledge may be lost in any potential managerial transition.

We may be unable to retain key management or attract other highly qualified employees, particularly if we do not offer employment terms that are competitive with the rest of the labor market.

Failure to attract, hire, develop, motivate, and retain highly qualified and diverse employee talent, or failure to develop and implement an adequate succession plan for the management team, could disrupt our operations and adversely affect our business and our future success.

While we have adopted succession plans to prepare for such an event, our succession plans may not result in a successful transition.

Further, institutional knowledge may be lost in any potential managerial transition.

We may be unable to retain key management or attract other highly qualified employees, particularly if we do

not offer employment terms that are competitive with the rest of the labor market.

Failure to attract, hire, develop, motivate, and retain highly qualified employee talent or failure to develop and implement an adequate succession plan for the management team could disrupt our operations and adversely affect our business and our future success.

Risks related to technology, data privacy and cybersecurity:

Cybersecurity incidents or other forms of data breaches could result in the compromise of our facilities, confidential data or critical data systems.

Cybersecurity incidents or other forms of data breaches could result in the compromise of our facilities, confidential data or critical data systems, causing our operations to be impaired or impacted.

A cybersecurity incident or other form of data breach could also give rise to potential harm to patients;

remediation and other expenses;

and exposure to liability under HIPAA, consumer protection laws, common law theories or other laws.

and exposure to liability under privacy and security laws, consumer protection laws, common law theories or other laws.

Such incidents could subject us to litigation and foreign, federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business.

We, directly and through our vendors and other third parties, collect and store on our networks and devices and third-party technology platforms sensitive information, including intellectual property, proprietary business information, personally identifiable information and protected health information of our patients and personally identifiable information of our employees and consumers.

We, directly and through our vendors and other third parties, collect and store on our networks and devices and third-party technology platforms sensitive information, including intellectual property, proprietary business information, protected health information of our patients and personally identifiable information of our employees, patients and consumers.

Our facilities use EHRs and medical devices that store or transmit information that are integral to the provision of patient care, and these systems and devices are increasingly connected to the internet, hospital networks and other medical devices.

The secure maintenance of this information and technology is critical to our business operations.

Despite our efforts to mitigate our exposure to cyberattack, even an advanced internal control environment is vulnerable to compromise.

In July 2023, we disclosed a security incident in which an unauthorized party accessed information at an external storage location exclusively used to automate the formatting of email messages.

Approximately 11 million patients were affected by the security incident.

In response to this security incident, we reinforced our cybersecurity systems, protocols and monitoring procedures, particularly focusing on data interfaces with third party storage locations.

We continue to be the target of attempted cybersecurity and other threats that could have a security impact, including those by third parties to access, misappropriate, corrupt or manipulate our information or disrupt our operations.

We expect to continue to experience an increase in cybersecurity threats in the future, as the volume and intensity of cyberattacks on hospitals, health systems and other health care entities continue to increase.

Threats from malicious persons and groups, new vulnerabilities and advanced new attacks against our, or our vendors’, information systems and devices create risk of cybersecurity incidents, including ransomware, malware and phishing incidents, in which third parties attempt to fraudulently induce our employees or our vendors’ employees into disclosing usernames, passwords or other sensitive information, which can in turn be used for unauthorized access to our or our vendors’ systems.

The rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks by making cyberattacks more difficult to detect, contain or mitigate.

We have implemented multiple layers of security measures, including cybersecurity and information security systems, protocols and monitoring procedures, intended to protect the confidentiality, integrity and availability of our data and the systems and devices that store and transmit such data.

In addition, we rely on various third parties to have appropriate controls to protect our information that is on their systems or otherwise in their control, and we seek to obtain assurances that such third parties will protect our information.

However, despite our efforts to mitigate our exposure to cyberattack, even an advanced internal control environment is vulnerable to compromise.

We have seen, and believe we will continue to see, widespread vulnerabilities that could affect our or other third parties’ data or systems.

Mitigation and remediation recommendations continue to evolve, and addressing this and other critical vulnerabilities pertaining to widely used systems, platforms and infrastructure is a priority for us.

Internal access management failures could result in the compromise or unauthorized exposure of confidential data.

Moreover, hardware, software or applications we use may have inherent vulnerabilities or defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security.

We rely on a substantial number of employees, contractors, personnel, hardware, software, applications, and third-party vendors, platforms and technologies, each of which may represent an attack surface for threat actors.

Threats from malicious threat actors, including nation-state actors and ransomware groups, new vulnerabilities and advanced new attacks against our, or our vendors’, information systems and devices create risk of cybersecurity incidents, including ransomware, malware and phishing incidents, in which third parties attempt to fraudulently induce our employees or our vendors’ employees into disclosing usernames, passwords or other sensitive information, which can in turn be used for unauthorized access to our or our vendors’ systems.

We, our vendors and other third parties have experienced cybersecurity incidents in the past and continue to be the target of attempted cybersecurity and other threats that could have a significant impact on our business, including threats by third parties seeking to access, misappropriate, corrupt, or manipulate our information or disrupt our operations.

We expect that we, our vendors and other third parties will continue to experience an increase in cybersecurity threats in the future, both directly and indirectly through threats targeting third parties, as the volume and intensity of cyberattacks on hospitals, health systems and other health care entities continue to increase.

Furthermore, because the tools and techniques used by attackers change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures.

We, our vendors and other third parties may experience security incidents that may remain undetected for an extended period.

Even if identified, we, our vendors and other third parties may be unable to adequately investigate or remediate incidents or breaches, including due to attackers increasingly using tools and techniques that are designed to circumvent controls, avoid detection and remove or obfuscate forensic evidence.

State-sponsored threat actors are increasingly targeting critical infrastructure sectors, including health systems and other critical infrastructure on which we rely.

Increasing use of AI technologies in our internal systems may create new attack surfaces or methods for threat actors, and threat actors may use AI technologies to make cyberattacks more difficult to detect, contain or mitigate.

Internal access management failures could also result in the compromise or unauthorized exposure of confidential data.

Moreover, hardware, software or applications we use may have inherent vulnerabilities or defects of design, manufacture, or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise cybersecurity or information security.

There can be no assurance that we or our vendors and other third parties will not be subject to additional cybersecurity threats and incidents that bypass our or their security measures, impact the integrity, availability or privacy of personal health information or other data subject to privacy laws or disrupt our or their information systems, devices or business, including our ability to provide various health care services.

In such an event, we may incur substantial costs, including but not limited to, costs associated with remediating the effects of the cybersecurity incident, costs for security measures to guard against similar future incidents and costs to recover data.

In such an event, we may incur substantial costs, including but not limited to, costs associated with remediating the effects of the cybersecurity or information security incident, costs for security measures to guard against similar future incidents and costs to recover data.

Further, consumer confidence in the integrity and security of personal information and critical operations data in the health care industry generally could be shaken to the extent there are successful cyberattacks at other health care services companies, which could have a material, adverse effect on our business, financial position or results of operations.

Cybersecurity, privacy, physical security and the continued development and enhancement of our controls, processes and practices designed to protect our facilities, information systems and data from attack, damage or unauthorized access remain a priority for us.

As cyber threats continue to evolve, along with their increased volume and sophistication, we may be required to expend significant additional resources to continue to modify or enhance our

protective measures or to investigate and remediate any cybersecurity vulnerabilities or incidents.

Although to date no cyberattack or other information or security breach, including those experienced by us in 2023, has resulted in material losses or other material consequences to us, there can be no assurance that our controls and procedures in place to monitor and mitigate the risks of cyber threats, including the remediation of critical information security and software vulnerabilities, will be sufficient and/or timely and that we will not suffer material losses or consequences in the future.

As cyber threats continue to evolve, along with their increased volume and sophistication, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any cybersecurity vulnerabilities or incidents, and such measures may decrease the efficiency of our operations.

We may also be required to expend additional resources to comply with evolving federal and state requirements related to cybersecurity and information security, including those focused on health care providers.

Although, to date, no cyberattack or other information or security breach has resulted in material losses or other material consequences to us, there can be no assurance that our controls and procedures in place to monitor and mitigate the risks of cyber threats, including the remediation of critical cybersecurity, information security and software vulnerabilities, will be sufficient and/or timely and that we will not suffer material losses or consequences in the future.

Additionally, while we have in place insurance coverage designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover our losses in excess of what we self-insure, or all types of claims that may arise.

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• monitoring quality of care and collecting data on quality measures necessary for full Medicare payment updates.

Information systems may be vulnerable to damage from a variety of sources, including telecommunications or network failures, human acts such as inadvertent or intentional misuse by employees, natural disasters and cyberattacks, including ransomware and data theft, such as the data security incident we disclosed in July 2023.

Moreover, we rely on various third-party technology platforms, which are increasingly important to our business and continue to grow in complexity and scope.

Failure to adequately manage implementations of new technology, updates or enhancements of such platforms or interfaces between platforms could place us at a competitive disadvantage, disrupt our operations, and have a material, adverse impact on our business and results of operations.

We have taken precautionary measures to prevent unanticipated problems that could affect our information systems.

Failure to adequately and timely manage implementations of new technology, updates or enhancements of such platforms or interfaces between platforms could place us at a competitive disadvantage, disrupt our operations, and have a material, adverse impact on our business and results of operations.

We have taken precautionary measures designed to prevent problems that could affect our information systems.

Nevertheless, we or our vendors and other third parties that we rely upon may experience system failures and disruptions.

The occurrence of any system failure could result in interruptions, delays, the loss or corruption of data and cessations or interruptions in the availability of systems, any of which could have a material, adverse effect on our financial position and results of operations and harm our business reputation.

Health care technology initiatives, particularly those related to sharing patient data and interoperability, may adversely affect our operations.

Health care technology initiatives, particularly those related to sharing patient data and interoperability and AI, involve risks that may adversely affect our operations.

The federal government is working to promote the adoption of health information technology and the promotion of nationwide health information exchange to improve health care.

For example, HHS incentivizes the adoption and meaningful use of certified EHR technology through its Promoting Interoperability Programs.

Eligible hospitals and eligible professionals, including our hospitals and employed professionals, are subject to reduced payments from Medicare if they fail to demonstrate meaningful use of certified EHR technology.

As these technologies have become widespread, the focus has shifted to increasing patient access to health care data and interoperability.

The 21 st Century Cures Act and its implementing regulations promote information sharing by prohibiting information blocking by health care providers and certain other entities.

For example, HHS incentivizes the adoption and meaningful use of certified EHR technology through its Medicare Promoting Interoperability Program and Quality Payment Program.

Eligible hospitals that fail to demonstrate meaningful use of certified EHR technology and have not applied and qualified for a hardship exception are subject to reduced reimbursement from Medicare.

Eligible health care professionals are also subject to positive or negative payment adjustments based, in part, on their use of EHR technology.

Therefore, if our hospitals and employed professionals are unable to properly adopt, maintain and utilize certified EHR

systems, we could be subject to penalties that may have an adverse effect on our financial condition and results of operations.

As EHR technologies have become widespread, the federal government has increased its focus on promoting patient access to health care data and interoperability.

The 21st Century Cures Act and its implementing regulations prohibit information blocking by health care providers and certain other entities.

Information blocking is defined as engaging in activities likely to interfere with the access, exchange or use of electronic health information, except as required by law or specified by HHS as a reasonable and necessary activity.

Under a rule proposed by HHS in November 2023, a hospital found to have engaged in information blocking would not qualify as a “meaningful electronic health record user” under the Medicare Promoting Interoperability Program and as a result would lose 75% of the annual market basket increase it would otherwise receive.

Current and future initiatives related to health care technology (including artificial intelligence and other predictive algorithms), data sharing and interoperability may require changes to our operations, impose new and complex compliance obligations and require investments in infrastructure.

For example, HHS finalized a rule in December 2023 imposing transparency requirements for artificial intelligence and other predictive algorithms that are part of certified health information technology.

Under a rule finalized by HHS in July 2024, a hospital found to have engaged in information blocking will not qualify as a “meaningful electronic health record user” under the Medicare Promoting Interoperability Program and as a result will lose 75% of the annual market basket increase it would otherwise receive, and MIPS-eligible clinicians, ACOs and ACO participants face similar disincentives.

Current and future initiatives related to health care technology, data sharing and interoperability may require changes to our operations, impose new and complex compliance obligations and require investments in infrastructure.

In particular, AI is driving innovation and, in some cases, augmenting risks related to health care technology.

For example, our physicians are adopting the use of generative AI to assist with the taking of patient medical notes, among other tasks.

Rapid changes in technology driven by AI may require us to expend significant resources to acquire, develop, implement and maintain that technology.

Failure to integrate these technologies in a timely, cost-efficient and resource-efficient manner may impede our ability to deliver health care services in a competitive manner.

There is also a risk that our confidential information becomes part of a model that is accessible by other third-party AI applications or users as a result of a cybersecurity incident or a third-party AI developer’s violation of our vendor engagement terms.

The development of AI technologies is complex, and there are technical challenges associated with achieving the desired level of accuracy, efficiency and reliability.

For instance, AI models used by us or third-party vendors may be based on biased or deficient datasets, which could result in inaccurate or misleading outputs.

Ineffective or inadequate AI development or deployment practices by us or third-party developers or vendors, including any disruptions or failures of AI systems once implemented, could result in unintended consequences.

Should the use of AI technologies fail to operate as anticipated or not perform as specified, including any biases or errors in the outputs of AI, patient care may be affected, legal claims may be asserted against us and our reputation may be harmed.

Further, federal and state requirements regarding the use of AI by health care providers continue to evolve.

For example, HHS finalized a rule in December 2023 imposing transparency requirements for AI and other predictive algorithms that are part of certified health information technology.

Some states have adopted or are considering additional measures regarding the use of AI within the health care industry.

For example, AB 3030 requires that certain disclaimers and instructions be provided to patients if generative AI is used to create patient communications pertaining to patient clinical information.

In addition, the AIPA requires that physicians, nurses and other regulated health care providers disclose when an individual is interacting with generative AI while receiving the regulated service.

Further, the CAIA will impose significant requirements on companies that use AI systems to recommend certain health decisions.

If we or our third-party providers are restricted from using AI as a result of any laws or regulations, it could impact our operations and cause us to incur costs to replace or modify our use of AI.

We may be subject to financial penalties or other disincentives or experience reputational damage for failure to comply with applicable laws and regulations.

It is difficult to predict how these initiatives will affect our relationships with providers and vendors, participation in health care information exchanges or networks, the exchange of patient data and patient engagement.

Machine learning and artificial intelligence are driving innovations in technology in the health care industry, which presents certain risks.

As currently employed, our physicians use generative AI to assist with the taking of medical notes regarding our patients.

Should the use of generative AI fail to operate as anticipated or not perform as specified, patient care may be affected, legal claims may be asserted against us and our reputation may be harmed.

In addition, any failure or perceived failure by us or our third-party providers to comply with applicable AI laws and regulations could result in investigations or legal proceedings, which could result in significant legal costs and potential liability.

We may not be adequately reimbursed by third-party payers for services involving new technology.

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Risks related to public health crises:

COVID-19 has affected, and may continue to affect, our operations.

In addition, the emergence and effects related to a potential future pandemic, epidemic or outbreak of an infectious disease could adversely affect our business and operations.

As a front-line provider of health care services, we have been and continue to be affected by the health and economic effects of COVID-19.

COVID-19 continues to evolve, and we may not be able to predict or effectively respond to future developments.

If public health conditions related to COVID-19 significantly worsen, any such developments could materially and adversely affect our business, results of operations, financial position and cash flows.

The ongoing impact of COVID-19 on our business will depend on, among other factors, the duration and severity of any severe or widespread outbreaks of COVID-19;

the impact of COVID-19 on economic conditions;

the volume of canceled or rescheduled procedures at our facilities;

the volume of COVID-19 patients cared for across our health systems;

the availability, acceptance of, and need for effective vaccines and medical treatments;

the spread of potentially more contagious and/or virulent forms of the virus;

and the impact of government actions on the health care industry and broader economy.

If another pandemic, epidemic, outbreak of an infectious disease or other public health crisis were to occur in an area in which we operate, our operations could be adversely affected.

Such a crisis could diminish the public trust in health care facilities, especially hospitals that fail to accurately or timely diagnose, or are treating (or have treated) patients affected by infectious diseases.

The emergence and effects related to a potential future pandemic, epidemic or outbreak of an infectious disease could adversely affect our business and operations.

As a front-line provider of health care services, we are subject to the health and economic effects of public health conditions.

If a pandemic, epidemic, outbreak of an infectious disease or other public health crisis were to occur in an area in which we operate, our operations could be adversely affected.

Such a crisis could diminish the public trust in health care

facilities, especially hospitals that fail to accurately or timely diagnose, or are treating (or have treated) patients affected by infectious diseases.

If any of our facilities are involved, or perceived as being involved, in treating patients from such an infectious disease, other patients might cancel elective procedures or fail to seek needed care at our facilities, and our reputation may be negatively affected.

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Risks related to governmental regulation and other legal matters:

Our business and results of operations may be adversely affected by health care reform efforts.

We are unable to predict whether, what, and when additional health reform measures will be adopted or implemented, and the effects and ultimate impact of any such measures are uncertain and may adversely affect our business and results of operations.

In recent years, the U.S.

health care industry has undergone significant changes at the federal and state levels, many of which have been aimed at reducing costs and government spending and increasing access to health insurance.

The most prominent of these legislative reform efforts is the Affordable Care Act, which affects how health care services are covered, delivered and reimbursed, and expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms.

The Affordable Care Act has been, and continues to be, subject to legislative and regulatory changes and court challenges.

For example, effective January 1, 2019, the penalty associated with the individual mandate to maintain health insurance was effectively eliminated.

However, some states have imposed individual health insurance mandates, and other states have explored or offer public health insurance options.

To increase access to health insurance during the COVID-19 pandemic, the ARPA enhanced subsidies for individuals eligible to purchase coverage through the Exchanges.

Subsequent legislation extended these enhanced subsidies through 2025.

These and other changes and initiatives may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased.

There is uncertainty regarding whether, when and how the Affordable Care Act may be further changed, and how the law will be interpreted.

Changes by Congress or government agencies could eliminate or alter provisions beneficial to us, while leaving in place provisions reducing our reimbursement or otherwise negatively impacting our business.

There is also uncertainty regarding whether, when, and what other health reform initiatives will be adopted and the impact of such efforts on providers and other health care industry participants.

Some members of Congress have proposed measures that would expand government-sponsored coverage, including proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or establish a single-payer system (such reforms often referred to as “Medicare for All”).

CMS administrators may grant states additional flexibility in the administration of state Medicaid programs and make changes to Medicaid payment models.

Other recent health reform initiatives and proposals at the federal and state levels include those focused on price transparency and out-of-network charges, which may impact prices, our relationships with patients, payers or ancillary providers (such as anesthesiologists, radiologists and pathologists) and our competitive position.

For example, among other consumer protections, the No Surprises Act imposes various requirements on providers and health plans intended to prevent “surprise” medical bills.

Some states are considering or have imposed rate-setting measures, including limits on hospital rates, or site-neutral pricing requirements.

Trends toward transparency and value-based pricing may impact our competitive position and patient volumes.

For example, the CMS Care Compare website makes publicly available certain data on performance of hospitals and other Medicare-certified providers on quality measures and patient satisfaction, and our patient volumes could decline if any of our facilities achieve poor results.

Further, Medicare reimbursement for hospitals is adjusted based on quality and efficiency measures.

Our business, financial condition and results of operations may be adversely affected by changes and uncertainty in the health care industry, including health care public policy developments and other changes to laws and regulations.

We are unable to predict whether, what, and when changes in the health care industry may occur, and the effects and ultimate impact of any changes are uncertain and may adversely affect our business and results of operations.

The health care industry is subject to changing political, regulatory and other influences.

Regulatory uncertainty has increased as a result of decisions issued by the U.S.

Supreme Court in June 2024 that affect review of federal agency actions.

These decisions increase judicial scrutiny of agency authority, shift greater responsibility for statutory interpretation to courts, expand the time period during which a plaintiff can sue regulators, and may result in inconsistent judicial interpretations and delays in agency rulemaking processes.

In Loper Bright Enterprises v.

Raimondo , the Court overruled a legal framework that gave significant judicial deference to federal agency interpretations of federal statutes.

The Court held that courts must instead exercise independent judgment when deciding whether an agency has acted within its statutory authority and that courts may not defer to an agency interpretation simply because a statute is ambiguous.

The Loper Bright decision and other recent decisions of the U.S.

Supreme Court could have significant impacts on government agency regulation, particularly within the heavily regulated health care industry, and may have broad implications for our business.

While the effects of these decisions will become apparent over the coming months and years, we anticipate an increase in legal challenges to health care regulations and agency guidance and decisions, including, but not limited to, those issued by HHS and its agencies, including CMS, the FDA and the OIG.

Federal agencies oversee, regulate and otherwise affect many aspects of our business, including through Medicare and Medicaid payment and coverage policies, policies affecting the size of the uninsured population, administration of state Medicaid programs and enforcement and interpretation of fraud and abuse laws.

Impacts of the recent Supreme Court decisions could require us to make changes to our operations and have a material negative impact on our business.

The health care industry has been and continues to be impacted by health care reform efforts.

For example, the Affordable Care Act affects how health care services are covered, delivered and reimbursed, and expanded health insurance coverage through a combination of public program expansion and private sector health insurance reforms.

Changes in the law’s implementation, subsequent legislation and regulations, state initiatives and other factors have affected and may continue to affect the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased, and may impact our payer mix.

Reductions in the number of insured individuals or the scope of insurance coverage, or an increase in patients covered under governmental health programs or other health plans with lower reimbursement levels, may have an adverse effect on our business.

For example, the ARPA temporarily enhanced premium tax credits available for purchasing coverage through the Exchanges by lowering premiums and raising income eligibility thresholds.

Subsequent legislation extended these enhanced premium tax credits through 2025.

However, further extension is uncertain, and we believe the expiration of these enhanced premium tax credits would adversely impact Exchange enrollment and significantly increase the uninsured rate.

Other legislative and executive branch initiatives related to health insurance, such as permitting the sale of insurance plans that lack currently required consumer protections, could increase rates of uninsured and underinsured individuals and destabilize insurance markets.

In addition, the Medicare and Medicaid programs are subject to change, including as a result of changes from the 2024 federal election.

For example, some members of Congress have proposed changes intended to accelerate the shift from traditional Medicare to Medicare Advantage, repealing the Affordable Care Act or eliminating some of its consumer protections.

The outcome of the 2024 federal election increases regulatory uncertainty.

Changes in governmental administration, including changes in agency structures and staffing, such as reduction or elimination of personnel and agencies, may result in changes to established rulemaking conventions and timelines, including for regularly issued reimbursement rules, among other effects.

Legislation and administrative actions at the federal level may also impact funding for, or the structure of, the Medicaid program and may shape administration of the Medicaid program at the state level.

Changes to the federal funding formula for Medicaid could significantly impact states that expanded Medicaid under the Affordable Care Act, especially if federal contributions for Medicaid expansion populations decrease and states are unable to offset the reductions.

Further, some states have trigger laws that would end their Medicaid expansion or

require other changes if federal funding is reduced.

CMS may make changes to Medicaid payment models and grant states additional flexibility in the administration of state Medicaid programs, including by allowing additional states to condition Medicaid enrollment on work or other community engagement or permitting other eligibility restrictions.

Other health reform initiatives and proposals at the federal and state levels include those focused on price transparency and out-of-network charges, which may impact prices, our relationships with patients, payers or ancillary providers (such as anesthesiologists, radiologists and pathologists) and our competitive position, and site-neutral payment policies, which may reduce the reimbursement we receive.

Some states are considering or have imposed rate-setting measures, including limits on hospital rates.

Other industry participants, such as private payers and large employer groups and their affiliates, may also introduce financial or delivery system reforms.

We are unable to predict the nature and success of such initiatives.

Health care reform initiatives may have an adverse effect on our business, results of operations, cash flow, capital resources and liquidity.

Changes in government health care programs may adversely affect our revenues.

There is uncertainty regarding whether, when, and what other public policy initiatives will be adopted by federal and state governments and/or the private sector, the timing and implementation of any such efforts and the impact of those efforts on providers and other health care industry participants.

These may include changes to trade policy and new or increased tariffs, which may impact our supply chain operations.

It is difficult to predict the nature and/or success of current and future public policy changes, any of which may have an adverse effect on our business, results of operations, cash flow, capital resources and liquidity.

Changes in government health care programs may adversely affect our revenues and business.

A significant portion of our patient volume is derived from government health care programs, principally Medicare and Medicaid.

Specifically, we derived 44.5% of our revenues from the Medicare and Medicaid programs in 2024.

Changes in government health care programs, including as a result of health reform efforts, may reduce the reimbursement we receive and could adversely affect our business and results of operations.

In addition, in some cases, private third-party payers rely on all or portions of Medicare payment systems to determine payment rates.

Changes to government health care programs that reduce payments under these programs may negatively impact payments from private third-party payers.

However, federal and state governments have made, and continue to make, significant modifications to the Medicare and Medicaid programs through statutory and regulatory changes, administrative rulings and other interpretations and determinations.

These changes may include, for example, reductions to reimbursement levels and to supplemental payment programs, funding restrictions, limitations on scope of coverage or patient eligibility, and changes affecting utilization review.

These and other changes may impact the scale and scope of the Medicare and Medicaid programs, may reduce the reimbursement we receive, may affect the cost of providing services to patients and could otherwise adversely affect our business and results of operations.

In addition, delays or issues implementing reimbursement-related rules, including periodic payment updates for government programs, and interruptions in the distribution of governmental funds could have an adverse impact on our business.

In recent years, legislative and regulatory changes have resulted in limitations on and, in some cases, reductions in levels of payments to health care providers for certain services under the Medicare program.

For example, Congress established automatic spending reductions, referred to as sequestration, under the BCA, resulting in a 2% reduction in Medicare payments that extends through the first seven months of federal fiscal year 2032.

In addition, as a result of the ARPA, an additional Medicare payment reduction of up to 4% was required to take effect in January 2022;

however, Congress has delayed implementation of this reduction until 2025.

These reductions are in addition to reductions mandated by other laws.

It is difficult to predict whether, when or what other deficit reduction initiatives may be proposed by Congress, but future legislation may include additional Medicare spending reductions.

It is difficult to predict whether, when or what other deficit reduction initiatives may be proposed by Congress, but we anticipate that efforts to address the federal budget deficit will continue to place pressures on government health care programs and that future legislation may include additional Medicare spending reductions.

From time to time, CMS revises the reimbursement systems used to reimburse health care providers, including changes to the inpatient hospital MS-DRG system and other payment systems, which may result in reduced Medicare payments.

For example, under a site neutrality policy, clinic visit services provided by off-campus provider-based departments that were formerly paid under the outpatient PPS are now paid under the Physician Fee Schedule.

For example, under a site neutrality policy, clinic visit services provided by off-campus provider-based departments are generally not covered as outpatient department services under the outpatient PPS, but instead are paid at the Physician Fee Schedule rate, which is generally substantially lower than the outpatient PPS rate.

Further, to address past changes to the 340B Drug Pricing Program that were invalidated by the U.S.

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Congress and/or CMS may implement further changes to reimbursement for items or services that result in payment reductions for other items or services or that otherwise affect our business and operations.

In some cases, private third-party payers rely on all or portions of Medicare payment systems to determine payment rates.

Changes to government health care programs that reduce payments under these programs may negatively impact payments from private third-party payers.

In addition, several states in which we operate face budgetary challenges that have resulted, and likely will continue to result, in reduced Medicaid funding levels to hospitals and other providers.

Because most states must operate with balanced budgets and the Medicaid program is often a state’s largest program, some states have enacted or may consider enacting legislation designed to reduce their Medicaid expenditures.

Further, many states have also adopted, or are considering, legislation designed to reduce coverage, enroll Medicaid recipients in managed care programs, and/or impose additional taxes on hospitals to help finance or expand the states’ Medicaid systems.

Many states have also adopted, or are considering, legislation designed to reduce coverage, change patient eligibility requirements, enroll Medicaid recipients in managed

care programs, and/or impose additional taxes on hospitals to help finance or expand the states’ Medicaid systems.

Periods of economic weakness may increase the budgetary pressures on many states, and these budgetary pressures may result in decreased spending, or decreased spending growth, for Medicaid programs and the Children’s Health Insurance Program in many states.

Some states that provide Medicaid supplemental payments are reviewing these programs or have filed requests with CMS to replace these programs, and CMS has performed and continues to perform compliance reviews of some states’ programs and is considering changes to the requirements for such programs, which could result in Medicaid supplemental payments being reduced or eliminated.

We may also be impacted by SDP arrangements, which allow states to direct certain Medicaid managed plan expenditures, particularly as funding may be diverted from other payment programs, and we may not satisfy applicable criteria when payments are directed to a specific subset of providers.

Further, we may be impacted by developments at the federal and state levels related to Medicaid supplemental payments, which are state payments that are separate from fee-for-service base payments, and SDP arrangements, which allow states to direct certain Medicaid managed plan expenditures.

Structural and other changes to these programs could result in such payments being reduced or eliminated, for example if funding for SDP arrangements is diverted from other payment programs, and if we do not satisfy applicable criteria when payments are directed to a specific subset of providers.

Further, legislation and administrative actions at the federal level may impact the funding for, or structure of, the Medicaid program, and may shape the administration of the Medicaid program at the state level.

Federal Medicaid policies are subject to change, including as a result of changes in the presidential administration.

For example, where states had previously been permitted to condition Medicaid enrollment on work or other community engagement, the approvals of waivers permitting these conditions have been rescinded.

However, a federal court is permitting Georgia to impose work and community engagement requirements under a Medicaid demonstration program that launched in mid-2023.

Some members of Congress are also reexamining block grant funding structures.

Current or future health care reform and deficit reduction efforts, changes in laws or regulations regarding government health care programs, other changes in the administration of government health care programs and changes by private third-party payers in response to health care reform and other changes to government health care programs could have a material, adverse effect on our financial position and results of operations.

Changes to the federal funding formula for Medicaid could have a particularly significant impact on coverage and reimbursement in states that expanded Medicaid under the Affordable Care Act, as states might not be able to offset decreases in federal funding for expansion populations.

In addition, CMS administrators may make changes to Medicaid payment models and may grant states additional flexibility in the administration of state Medicaid programs, including by allowing states to impose eligibility restrictions such as work and community engagement requirements.

Current or future health care reform and deficit reduction efforts, changes or delays in laws or regulations regarding government health care programs, other changes in the administration of government health care programs and changes by private third-party payers in response to health care reform and other changes to government health care programs could have a material, adverse effect on our financial position and results of operations.

If we fail to comply with extensive laws and government regulations, we could suffer penalties or be required to make significant changes to our operations.

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• relationships with physicians and other referral sources and referral recipients;

• necessity and adequacy of medical care;

• necessity, appropriateness and adequacy of medical care;

• quality of medical equipment and services;

• qualifications of medical and support personnel;

• the confidentiality, maintenance, interoperability, exchange, data breach, identity theft and security of health-related and personal information and medical records;

• the development and use of artificial intelligence and other predictive algorithms, including those used in clinical decision support tools;

• qualifications and supervision of medical and support personnel;

• patient, workforce and public safety;

• the confidentiality, maintenance, interoperability, exchange and security of health-related and personal information and medical records, including data breach, ransomware and identity theft issues;

• the provision of services via telehealth, including technological standards and coverage restrictions or other limitations on reimbursement;

• the development and use of AI and other predictive algorithms, including those used in clinical decision support tools;

• screening, stabilization and transfer of individuals who have emergency medical conditions;

• restrictions on the provision of medical care, including with respect to reproductive care;

• licensure, certification and enrollment with government programs;

• the distribution, maintenance and dispensing of pharmaceuticals and controlled substances;

• debt collection, limits or prohibitions on balance billing and billing for out of network services;

• facility and personnel licensure, certification and accreditation and enrollment standards and requirements for participation in government programs;

• the manufacture, distribution, maintenance and dispensing of pharmaceuticals, controlled substances and medical devices;

• debt collection, balance billing and billing for out of network services;

• consumer disclosures and price transparency;

• communications with patients and consumers;

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• activities regarding competitors;

• the addition of facilities and services;

• environmental protection.

• addition of facilities and services;

• environmental protection, including disposal of regulated materials.

Among these laws are the federal Anti-kickback Statute, EKRA, the federal Stark Law, the FCA, the No Surprises Act and similar state laws.

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Allegations of violations of the Anti-kickback Statute may be brought under the federal Civil Monetary Penalty Law, which requires a lower burden of proof than other fraud and abuse laws, including the Anti-kickback Statute.

Our financial relationships with referring physicians and their immediate family members must comply with the Stark Law by meeting an exception.

We attempt to structure our relationships to meet an exception to the Stark Law, but the regulations implementing the exceptions are detailed and complex and are subject to continuing legal and regulatory change.

Our financial relationships with physicians who make referrals for designated health services and their immediate family members must comply with the Stark Law by meeting an exception.

We attempt to structure our relationships to meet an exception to the Stark Law, but the regulations implementing the exceptions are detailed and complex.

We do not always have the benefit of significant regulatory or judicial interpretations of the Stark Law and its implementing regulations.

Thus, we cannot provide assurance that every relationship complies fully with the Stark Law.

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See Item 1, “Business — Regulation and Other Factors.”

We develop software programs utilizing machine learning/artificial intelligence for use within our network to improve care and may also use similar technologies in other capacities.

Jurisdictions worldwide are proposing laws and regulations on the use of artificial intelligence and machine learning applications and tools, particularly on the use of artificial intelligence to facilitate health care, employment, or hiring decisions.

For example, in 2023, HHS finalized transparency requirements for artificial intelligence and other predictive algorithms used in certified health information technology, such as decision support interventions.

In some cases, software can be considered a medical device under the federal Food, Drug, and Cosmetic Act (“FDCA”).

Medical devices are subject to extensive regulation by the Food and Drug Administration (“FDA”) under the FDCA.

In September 2022, FDA issued non-binding final guidance that describes the types of clinical decision support software that FDA will regulate as a medical device, potentially including software programs that were not previously treated as medical devices.

Application of the new guidance may result in our current and/or future software programs providing clinical decision support being subject to FDA regulation.

If FDA determines that any of our software programs are medical devices under the FDCA, the distribution and/or use of those software programs may require premarket approval or clearance, and we may be required to cease distribution and/or use of such programs until we obtain any required premarket approval or clearance, which could adversely affect our

Failure to seek FDA approval or clearance or noncompliance with other applicable FDA requirements could adversely affect our business, financial condition or results of operations.

We also operate health care facilities in the United Kingdom and have operations and commercial relationships with companies in other foreign jurisdictions and, as a result, are subject to certain U.S.

and foreign laws applicable to businesses generally, including anti-corruption and anti-bribery laws.

The Foreign Corrupt Practices Act regulates U.S.

companies in their dealings with foreign officials, prohibiting bribes and similar practices, and requires that they maintain records that fairly and accurately reflect transactions and appropriate internal accounting controls.

In addition, the United Kingdom Bribery Act has wide jurisdiction over certain activities occurring within the United Kingdom.

A variety of state, national, foreign and international laws and regulations apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal information.

Various states, including California, Colorado, Connecticut, Utah and Virginia, have passed privacy laws and regulations that impose restrictive requirements on the use and disclosure of personal information, and many other state and federal privacy laws have been proposed.

In many cases, these laws are more restrictive or impose more obligations than, and may not be preempted by, the HIPAA privacy and security regulations, may apply to employees and business contacts in addition to patients, and may be subject to new and varying interpretations by courts and government agencies, creating complex compliance issues and potentially exposing us to additional expense, adverse publicity and liability.

The potential effects of these laws are far-reaching and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in order to comply.

Failure to comply with these and any other comprehensive privacy laws passed at the state or federal level may result in regulatory enforcement action and damage to our reputation.

In the United Kingdom, we are subject to the UK Data Protection Legislation, which contains stricter privacy restrictions than laws and regulations in the United States and provides for significant fines in the event of violations.

Various states in which we operate have passed privacy laws and regulations that impose restrictive requirements on the use and disclosure of personal information, and many other state and federal privacy laws have been proposed.

The potential effects of these laws are far-reaching and may require us to incur substantial expenses, including costs associated with modifying our data processing practices and policies.

Failure to comply with these and any other comprehensive privacy laws passed at the state or federal level may result in regulatory enforcement actions, penalties and damage to our reputation.

As a result of our operations in the United Kingdom, we are subject to the UK Data Protection Act, which contains stricter privacy restrictions than laws and regulations in the United States and provides for significant fines in the event of violations.

These administrative fines are based on a multi-factored approach.

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In addition, we must ensure that our SMS texting practices comply with regulations and agency guidance under the Telephone Consumer Protection Act (the “TCPA”), a federal statute that protects consumers from unwanted telephone calls, faxes and text messages.

While we strive to adhere to strict policies and procedures that comply with the TCPA, the Federal Communications Commission, as the agency that implements and enforces the TCPA, may disagree with our interpretation of the TCPA and subject us to penalties and other consequences for noncompliance.

While we strive to adhere to strict policies and procedures that comply with the TCPA, the

Federal Communications Commission, as the agency that implements and enforces the TCPA, may disagree with our interpretation of the TCPA and subject us to penalties and other consequences for noncompliance.

Determination by a court or regulatory agency that our SMS texting practices violate the TCPA could subject us to civil penalties and could require us to change some portions of our business.

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Many states impose additional limitations or requirements on debt collection and credit reporting practices, and some of those requirements are more stringent than the federal requirements.

Finally, we are subject to various federal, state and local statutes and ordinances regulating the discharge of materials into the environment.

We are also subject to various international, federal, state and local statutes and ordinances regulating the discharge of materials into the environment.

For example, our health care operations generate medical waste, such as pharmaceuticals, biological materials and disposable medical instruments that must be handled, stored, transported, treated and disposed of in compliance with federal, state and local environmental laws and regulations.

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If we are found not to be in compliance with such laws and regulations, we may be liable for significant investigation and clean-up costs or be subject to enforcement actions by governmental authorities or lawsuits by private plaintiffs.

Moreover, any changes in the environmental regulatory framework (including legislative or regulatory efforts designed to address climate change) could have a material, adverse effect on our business.

Moreover, any changes in the environmental regulatory framework (including legislative or regulatory efforts designed to address changing global weather patterns) could have a material, adverse effect on our business.

We are also subject to various federal and state antitrust laws that, for example, restrict exclusive contracting relationships with health care providers, restrict sharing of cost and pricing data, prohibit competitors from taking collective action to set commercial payer reimbursement rates and establish integration requirements for joint ventures to contract with payers.

and foreign laws applicable to businesses generally, including anti-corruption and anti-bribery laws.

The Foreign Corrupt Practices Act regulates U.S.

In addition, the United Kingdom Bribery Act has wide jurisdiction over certain activities occurring within the United Kingdom.

If we fail to comply with these or other applicable laws and regulations, which are subject to change, we could be subject to liabilities, including civil penalties, money damages, lapses in reimbursement, the loss of our licenses to operate one or more facilities, exclusion of one or more facilities from participation in the Medicare, Medicaid and other federal and state health care programs, civil lawsuits and criminal penalties.

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We may also face audits or investigations by one or more domestic or foreign government agencies relating to our compliance with these regulations.

An adverse outcome under any such investigation or audit, a determination that we have violated these or other laws or a public announcement that we are being investigated for possible violations could result in liability, could result in negative publicity and could adversely affect our business, financial condition, results of operations or prospects.

An adverse outcome under any such investigation or audit, a determination that we have violated these or other laws or a public announcement that we are being investigated for possible violations could result in liability, could result in negative publicity and an adverse impact on our reputation and could adversely affect our business, financial condition, results of operations or prospects.

State efforts to regulate the construction or expansion of health care facilities could impair our ability to operate and expand our operations.

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We currently operate health care facilities in a number of states with CON laws or that require other types of approvals for the establishment or expansion of certain facility types or services.

The failure to obtain any required CON or other required approval could impair our ability to operate or expand operations.

The failure to obtain any required CON or other required approval could impair our ability to operate or expand

Any such failure could, in turn, adversely affect our ability to attract patients and physicians to our facilities and grow our revenues, which would have an adverse effect on our results of operations.

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We are subject to tax in the United States as well as those states and foreign jurisdictions in which we do business.

Changes in tax laws, including increases in tax rates, or interpretations of tax laws by taxing authorities or other standard setting bodies could increase our tax obligations and have a material, adverse impact on our results of operations.

Changes in tax laws, including increases in tax rates, interpretations of tax laws by taxing authorities, other standard setting bodies or judicial decisions, could increase our tax obligations and have a material, adverse impact on our results of operations.

We are also subject to examination by federal, state and foreign taxing authorities.

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RAC denials are appealable.

however, in recent years, there have been significant delays in the Medicare appeals process.

Although HHS has improved efficiency and effectively eliminated a years-long backlog, we may nevertheless experience delays in appealing RAC payment denials.

However, the RAC audit and appeals processes can impose a significant administrative burden on providers, and we may experience delays in appealing RAC payment denials.

Private third-party payers may conduct similar post-payment audits, and we also perform internal audits and monitoring.

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Generally, other hospitals and health care facilities in the communities we serve provide services similar to those we offer.

Trends toward transparency and value-based purchasing may have an impact on our competitive position, ability to obtain and maintain favorable contract terms and patient volumes in ways that are difficult to predict.

CMS publicizes on its Care Compare website performance data related to quality measures and data on patient satisfaction surveys that hospitals, home health agencies, hospices and various other types of Medicare-certified facilities submit in connection with their Medicare reimbursement.

The Care Compare website provides an overall rating that synthesizes various quality measures into a star rating for each hospital, home health agency and hospice.

Trends toward transparency and value-based purchasing may have an impact on our competitive position, ability to obtain and maintain favorable contract terms and patient volumes in ways

that are difficult to predict.

On its websites, CMS publicizes performance data related to quality measures and data on patient satisfaction surveys that hospitals, home health agencies, hospices and various other types of Medicare-certified facilities submit in connection with their Medicare reimbursement.

Its Care Compare website provides an overall rating that synthesizes various quality measures into a star rating for each hospital, home health agency and hospice, among other provider types.

If any of our hospitals or other provider types achieve poor results (or results that are lower than our competitors) on quality measures or on patient satisfaction surveys, our competitive position could be negatively affected.

Further, hospitals are required to publish online a list of their standard charges for all items and services, including discounted cash prices and payer-specific and de-identified negotiated charges, and must also publish a consumer-friendly list of standard charges for certain “shoppable” services or, alternatively, maintain an online price estimator tool for the shoppable services.

Further, hospitals are required to publish online a list of their standard charges for all items and services, including gross charges, discounted cash prices and payer-specific and de-identified minimum and maximum negotiated charges, and must also publish a consumer-friendly list of standard charges for certain “shoppable” services or, alternatively, maintain an online price estimator tool for the shoppable services.

HHS also requires health insurers to publish online charges negotiated with providers for health care services, and health insurers must provide online price comparison tools to help individuals get personalized cost estimates for covered items and services.

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Changes in licensure or other regulations and recognition of new provider types or payment models could also impact our competitive position.

If our competitors are better able to attract patients, make capital expenditures and maintain modern and technologically upgraded facilities and equipment, recruit physicians, expand services or obtain favorable third-party payer contracts at their facilities than our hospitals and other providers, we may experience an overall decline in patient volume.

If our competitors are better able to attract patients, make capital expenditures and maintain modern and technologically upgraded facilities and equipment, recruit physicians, expand services or obtain more favorable third-party payer contracts at their facilities than our hospitals and other providers, we may experience an overall decline in patient volume.

See Item 1, “Business — Competition.”

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In addition, federal and state legislatures have in recent years considered or passed various proposals impacting the size of the uninsured or underinsured population.

For example, under early COVID-19-related legislation, states that maintained continuous Medicaid enrollment were eligible for a temporary increase in federal funds for state Medicaid expenditures.

The resumption of redeterminations for Medicaid enrollees in 2023 resulted in significant coverage disruptions and dis-enrollments of Medicaid enrollees, and Medicaid enrollment is generally expected to continue to decline through mid-year 2024.

It is difficult to predict what, if any, and when legislative and regulatory changes may be made in the future.

For example, the ARPA temporarily enhanced premium tax credits available for purchasing coverage through the Exchanges by lowering premiums and raising income eligibility thresholds.

These premium tax credits were extended through 2025.

However, further extension is uncertain, and we believe their expiration would adversely impact Exchange enrollment and significantly increase the uninsured rate.

In addition, under early COVID-19-related legislation, states that maintained continuous Medicaid enrollment were eligible for a temporary increase in federal funds for state Medicaid expenditures.

The resumption of redeterminations for Medicaid enrollees in 2023 resulted in significant coverage disruptions and dis-enrollments of Medicaid enrollees, and the number of individuals enrolled in Medicaid declined in 2024 in comparison to 2023.

Medicaid enrollment may be further affected by potential changes to the federal funding formula for Medicaid.

For example, some states have trigger laws that would end their Medicaid expansion or require other changes if federal funding for expansion populations is reduced.

Further, if federal contributions for Medicaid expansion populations decrease, states that expanded Medicaid might not be able to offset such funding reductions.

Other legislative and executive branch initiatives related to health insurance, such as permitting the sale of insurance plans that lack currently required consumer protections, could also increase rates of uninsured and underinsured individuals.

It is difficult to predict what, whether, and when legislative and regulatory changes may be made in the future.

We provide uninsured discounts and charity care for individuals, including for those residing in states that choose not to implement the Medicaid expansion or that modify the terms of the program, for undocumented aliens who are not permitted to enroll in an Exchange plan or government health care programs and for certain others who may not have insurance.

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If our volume of patients with private health insurance coverage declines or we are unable to retain and negotiate favorable contracts with private third-party payers, including managed care plans, our revenues may be adversely affected.

Broad economic factors, including inflationary pressures, supply chain disruptions, labor shortages, recessions, increased unemployment and underemployment rates and reduced consumer spending and confidence, the continued shift of care to an outpatient setting and the aging population may impact our revenue mix.

Private third-party payers, including HMOs, PPOs and other managed care plans, typically reimburse health care providers at a higher rate than Medicare, Medicaid or other government health care programs.

Reimbursement rates are set forth by contract when our facilities are in-network, and payers utilize plan structures to encourage or require the use of in-network providers.

Revenues derived

from private third-party payers (domestic only) accounted for 49.0%, 48.3% and 51.6% of our revenues for 2023, 2022 and 2021, respectively.

Our ability to maintain or increase patient volumes covered by private third-party payers and to maintain and obtain favorable contracts with private third-party payers significantly affects the revenues and operating results of our facilities.

Revenues derived from private third-party payers (domestic only) accounted for 49.5%, 49.0% and 48.3% of our revenues for 2024, 2023 and 2022, respectively.

Private third-party payers, including HMOs, PPOs and other managed care plans, typically reimburse health care providers at a higher rate than Medicare, Medicaid, other government health care programs or uninsured, self-pay patients.

If we experience reductions in the volume of patients with private health insurance coverage, our revenues may be reduced.

Factors that may cause enrollment in private health insurance to decrease include economic factors, such as increased unemployment and underemployment rates and inflationary pressures, and legislative or regulatory changes that increase barriers to and costs associated with obtaining or maintaining comprehensive coverage, including changes affecting insurance brokers and Exchange navigators, limiting automatic re-enrollment in plans purchased through the Exchanges, or expanding short-term insurance options.

Reimbursement rates are set forth by contract when our facilities are in-network, and payers utilize plan structures to encourage or require the use of in-network providers.

Private third-party payers, including managed care plans and payers participating in the Exchanges, continue to demand discounted fee structures, and the ongoing trend toward consolidation among payers tends to increase their bargaining power over fee structures.

Payers may utilize plan structures such as narrow networks and tiered networks that limit beneficiary provider choices, impose significantly higher cost sharing obligations when care is obtained from providers in a disfavored tier or otherwise shift greater financial responsibility for care to individuals.

responsibility for care to individuals.

Legislative and regulatory initiatives may accelerate or otherwise impact these trends.

Other health care providers may impact our ability to enter into managed care contracts or negotiate increases in our reimbursement and other favorable terms and conditions.

Cost-reduction strategies by large employer groups and their affiliates, such as directly contracting with a limited number of providers, may also limit our ability to negotiate favorable terms in our contracts and otherwise intensify competitive pressure.

Our ability to retain and renew our third-party payer contracts and enter into new contracts on terms favorable to us may be impacted by other health care providers.

For example, some of our competitors may negotiate exclusivity provisions with managed care plans or otherwise restrict the ability of managed care plans to contract with us.

In addition to increasing negotiating leverage of private third-party payers, alignment efforts between third-party payers and health care providers may result in other competitive advantages, such as greater access to performance and pricing data.

Our future success will depend, in part, on our ability to retain and renew our third-party payer contracts and enter into new contracts on terms favorable to us, which may be impacted by price transparency initiatives.

For example, the No Surprises Act requires providers to send health plans of insured patients a good faith estimate of the expected charges and diagnostic codes prior to the scheduled date of the service or item.

Further, hospitals are required to publish online payer-specific negotiated charges and de-identified minimum and maximum charges.

Further, shifts in the payer contracts held by our competitors may impact our patient mix, which could negatively impact our revenues.

Trends toward greater price transparency may also negatively impact our ability to negotiate favorable contracts with payers.

For example, hospitals are required to publish online payer-specific and de-identified minimum and maximum negotiated charges.

In addition, health insurers are required to provide online price comparison tools to help individuals get personalized cost estimates for covered items and services.

It is not clear what impact, if any, these and future health reform efforts will have on our ability to negotiate reimbursement increases and participate in third-party payer networks on favorable terms.

If we are unable to retain and negotiate favorable contracts with third-party payers or experience reductions in payment increases or amounts received from third-party payers, our revenues may be reduced.

Our revenues may be reduced if we experience growth in self-pay volume.

In recent years, federal and state legislatures have considered or passed various proposals potentially impacting the size of the uninsured population.

The number and identity of states that choose to expand or otherwise modify Medicaid programs and the terms of expansion and other program modifications continue to evolve.

Some states have imposed individual health insurance mandates with financial penalties for noncompliance.

Other states have explored or offer public health insurance options.

These variables, among others, make it difficult to predict the number of uninsured individuals.

In addition, alignment efforts between third-party payers and health care providers and transparency requirements provide payers with increased access to performance and pricing data, which may increase payer bargaining power.

Changes to physician utilization practices and treatment methodologies and other factors outside our control that impact demand for medical services may reduce our revenues.

Volume, admission and case-mix trends may be impacted by factors beyond our control, such as changes in volume of certain high acuity services, variations in the prevalence and severity of outbreaks of influenza and other illnesses, such as COVID-19, and medical conditions, seasonal and severe weather conditions, changes in treatment regimens and medical technology and other advances.

Volume, admission and case-mix trends may be impacted by factors beyond our control, such as changes in volume of certain high acuity services, variations in the prevalence and severity of outbreaks of influenza and other illnesses and medical conditions, seasonal and severe weather conditions, changes in treatment regimens and medical technology and other advances.

Further, trends in physician treatment protocols and health plan design, such as health plans that shift increased costs and accountability for care to patients, could reduce our surgical volumes and admissions in favor of lower intensity and lower cost treatment methodologies or result in patients seeking care from other providers.

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Third-party payer controls designed to reduce costs and other payer practices intended to decrease inpatient services, surgical procedure volumes or reimbursement for services rendered may reduce our revenues.

Controls imposed by Medicare, managed Medicare, Medicaid, managed Medicaid and private third-party payers designed to reduce admissions, intensity of services, surgical volumes and lengths of stay, in some instances referred to as “utilization review,” have affected and are expected to increasingly affect our facilities.

Controls imposed by Medicare, managed Medicare, Medicaid, managed Medicaid and private third-party payers designed to reduce admissions, intensity of services, surgical procedure volumes and lengths of stay, in some instances referred to as “utilization review,” have affected and are expected to increasingly affect our facilities.

Utilization review entails the review of the admission and course of treatment of a patient by third-party payers and may involve prior authorization requirements.

The Medicare program also issues national or local coverage determinations that restrict the circumstances

under which Medicare pays for certain services.

Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by third-party payers’ preadmission authorization requirements, coverage restrictions, utilization review and by pressure to maximize outpatient and alternative health care delivery services for less acutely ill patients.

Cost control efforts have resulted in an increase in reimbursement denials and delays by governmental and commercial payers, which may increase costs and administrative burden for providers and decrease the reimbursement we receive.

The Medicare program also issues national or local coverage determinations that restrict the circumstances under which Medicare pays for certain services.

Inpatient and outpatient service utilization and inpatient occupancy rates and average lengths of stay continue to be negatively affected by third-party payers’ prior authorization requirements, coverage restrictions, utilization review and by pressure to maximize outpatient and alternative health care delivery services for less acutely ill patients.

Cost control efforts have resulted in an increase in reimbursement denials and delays by both governmental and commercial payers, which may decrease the reimbursement we receive and may increase our costs and administrative burden, as additional resources are devoted to collection and documentation efforts.

Additionally, the reimbursement we receive may decline as a result of site-neutrality initiatives, which aim to align payment for services across care settings.

Efforts to impose more stringent cost controls are expected to continue and may have a material, adverse effect on our business, financial condition and results of operations.

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We may encounter difficulty acquiring new facilities or other businesses due to a lack of attractive opportunities or as a result of competition from other purchasers that may be willing to pay purchase prices that are higher than we believe are reasonable.

Antitrust enforcement in the health care industry is currently a priority of the Federal Trade Commission and the DOJ, including with respect to hospital and physician practice acquisitions.

enforcement in the health care industry is currently a priority of the Federal Trade Commission and the DOJ, including with respect to hospital and physician practice acquisitions.

States also are increasingly enacting laws modeled after the federal Hart-Scott-Rodino Act, requiring pre-notification of covered transactions.

These laws may specifically target health care transactions and may have broad impacts on closing timetables and approvals.

Some states require CONs in order to acquire a hospital or other facility, or to expand facilities or services.

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This geographic concentration makes us particularly sensitive to regulatory, economic, public health, environmental and competitive conditions in those states.

Any material change in the current payment programs or regulatory, economic, public health, environmental or competitive conditions in those states could have a disproportionate effect on our overall business results.

Our business and operations are subject to risks related to climate change.

Global climate change presents both immediate and long-term physical risks (such as potential increases in the intensity or frequency of hurricanes, extreme weather conditions or other natural disasters) and risks associated with the transition to a low-carbon economy (such as regulatory or technology changes).

Any material changes in the current payment programs or regulatory, economic, public health, environmental or competitive conditions in those states could have a significant and disproportionate effect on our overall business results.

Our business and operations are subject to risks related to changing global weather patterns.

Changing global weather patterns present both immediate and long-term physical risks (such as potential increases in the intensity or frequency of hurricanes, extreme weather conditions or other natural disasters) and risks associated with the transition to a low-carbon economy (such as regulatory or technology changes).

These changes could result in, for example, temporary declines in the number of patients seeking our services, closures of our hospitals and related facilities, supply chain disruptions, increased costs of products, commodities and energy (including utilities) and disruptions in our information systems, which in turn could negatively impact our business and results of operations.

In addition, our hospitals and other facilities in Florida, Texas and other coastal states are located in regions that may be impacted by hurricanes.

In the past, hurricanes have had a disruptive effect on the operations of our hospitals and other facilities in Florida, Texas and other coastal states and the patient populations in those states.

Global climate change could also increase the intensity or frequency of hurricanes, extreme weather conditions or other natural disasters.

Our business activities could be harmed by a particularly active hurricane season or even a single storm.

In the past, hurricanes have had a disruptive effect on the operations of our hospitals and other facilities in Florida, Texas and other coastal states and the patient populations in those states, including Hurricanes Helene and Milton, which made landfall in September and October 2024, respectively.

Changing global weather patterns could also increase the intensity or frequency of hurricanes, extreme weather conditions or other natural disasters.

Our business assets and activities and the communities we serve have been and could in the future be harmed by a particularly active hurricane season or even a single storm.

We face the risk of losses incurred as a result of physical damage to our hospitals and related facilities and business interruptions caused by such events.

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However, such insurance coverage may be insufficient to cover our losses in excess of what we self-insure, and we may experience a material, adverse effect on our results of operations that is not recoverable through our insurance policies.

Additionally, if we experience a significant increase in climate-related events that result in material losses we may be unable to obtain similar levels of property insurance coverage in the future.

In addition, changes in consumer preferences and additional legislation and regulatory requirements, including those associated with the transition to a low-carbon economy, may increase costs associated with compliance, the operation of our facilities and supplies.

Regulations limiting greenhouse gas emissions and energy inputs may also increase in coming years, which may adversely impact us through increased compliance costs for us and our suppliers and vendors.

Our response to climate change, our climate change strategies, policies, objectives, commitments and disclosure, our ability to achieve our climate-related objectives and commitments (which are subject to risks and uncertainties, many of which are outside of our control) and/or any perception that our response is ineffective or inefficient, or conversely, not in the best interests of the Company could result in reputational harm as a result of negative public sentiment, regulatory scrutiny, litigation and reduced investor and stakeholder confidence.

We may be adversely affected if we are not able to achieve our environmental, social and governance (“ESG”) objectives or otherwise meet the expectations of our stakeholders with respect to ESG matters.

We strive to deliver shared value through our business, and our diverse stakeholders expect us to make significant progress with respect to certain ESG-related matters.

From time to time, we announce certain aspirations and objectives relevant to our priority ESG matters.

We periodically publish information about our ESG priorities, strategies, objectives and progress on our corporate website and update our ESG reporting.

For example, we publish our Annual Sustainability Report, which has information about our climate-related objectives and initiatives and progress made during the prior year.

Achievement of these aspirations, plans and objectives is subject to risks and uncertainties, many of which are outside of our control, and it is possible that we may not achieve, or be perceived to have not achieved, our ESG objectives or that certain of our stakeholders might not be satisfied or agree with our efforts, which could result in reputational harm as a result of negative public sentiment, regulatory scrutiny, litigation and reduced investor and stakeholder confidence.

Standards for tracking and reporting ESG matters continue to evolve.

Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others.

This may result in a lack of consistent or meaningful comparative data from period to period or between us and other companies in the same industry.

In addition, our processes and controls may not always comply with evolving standards for identifying, measuring and reporting ESG metrics, including ESG-related disclosures that may be required of public companies by the SEC, and such standards may change over time, which could result in significant revisions to our current objectives, reported progress in achieving such objectives, or ability to achieve such objectives in the future.

A delay or inability to meet our objectives and aspirations, comply with international, federal

or state ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could adversely affect public perception of our business, employee morale or patient or shareholder support;

necessitate the expenditure of additional corporate resources;

result in substantial costs and expenses;

give rise to legal or regulatory proceedings against the Company and negatively impact our financial condition and results of operations.

Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting, including the Annual Sustainability Report, which is not incorporated by reference into and does not form any part of this Annual Report on Form 10-K or our other filings with the SEC.

Additionally, if we experience a significant

increase in climate-related events that result in material losses we may be unable to obtain similar levels of property insurance coverage in the future.

In addition, changes in consumer preferences and legislation and regulatory requirements regarding sustainability matters, including those associated with the transition to a low-carbon economy, may increase costs associated with compliance, the operation of our facilities and supplies.

Sustainability-related laws and regulations, including those limiting greenhouse gas emissions and energy inputs may also increase in coming years, which may adversely impact us through increased compliance costs for us and our suppliers and vendors.

Our stakeholders may have differing expectations regarding sustainability matters, and certain stakeholders may not be satisfied or agree with our efforts which may result in reputational harm.

Additionally, the varied timing of sustainability-related laws and regulations and disparate regulatory approaches in various jurisdictions could complicate our compliance efforts.

Our response to changing global weather patterns, our related strategies, policies, objectives, commitments and disclosure, our ability to achieve our climate-related and other sustainability objectives and commitments (which are subject to risks and uncertainties, many of which are outside of our control) and/or any perception that our response is ineffective or inefficient, or conversely, not in the best interests of the Company could result in reputational harm as a result of negative public sentiment, regulatory scrutiny, litigation and reduced investor and stakeholder confidence.

The industry trend toward value-based purchasing may negatively impact our revenues.

There is a trend in the health care industry toward value-based purchasing of health care services.

These value-based purchasing programs include both public reporting of quality data and preventable adverse events tied to the quality and efficiency of care provided by facilities.

There is a trend toward value-based purchasing of health care services across the health care industry among both governmental and commercial payers.

Generally, value-based purchasing initiatives tie payment to the quality and efficiency of care.

For example, Medicare requires hospitals, ASCs, home health agencies, hospices and other providers to report certain quality data to receive full reimbursement updates.

In addition, Medicare does not reimburse for care related to certain preventable adverse events (also called “never events”), and federal law prohibits the use of federal funds under the Medicaid program to reimburse providers for medical assistance provided to treat HACs.

In addition, Medicare does not reimburse for care related to certain preventable adverse events (also called “never events”) or care related to HACs, and federal law prohibits the use of federal funds under the Medicaid program to reimburse providers for medical assistance provided to treat HACs.

The 25% of hospitals with the worst risk-adjusted HAC scores in the designated performance period receive a 1% reduction in their inpatient PPS Medicare payments in the applicable federal fiscal year.

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Data collected in each performance year affects Medicare payments two years later.

CMS has developed several alternative payment models that are intended to reduce costs and improve quality of care for Medicare beneficiaries and has signaled its intent to have states apply similar strategies in the Medicaid context.

CMS has developed several alternative payment models that are intended to reduce costs and improve quality of care for Medicare beneficiaries.

Examples of alternative payment models include bundled payment models in which, depending on whether overall CMS spending per episode exceeds or falls below a target specified by CMS and whether quality standards are met, hospitals may receive supplemental Medicare payments or owe repayments to CMS.

Generally, participation in bundled payment programs is voluntary, but CMS currently requires hospitals in selected markets to participate in a bundled payment initiative for specified orthopedic procedures and in a model for end-stage renal disease treatment.

In addition, a mandatory radiation oncology model was expected to begin January 1, 2023, but CMS has indefinitely delayed its implementation.

CMS has indicated that it is developing more voluntary and mandatory bundled payment models.

Generally, participation in bundled payment programs is voluntary, but CMS required hospitals in selected markets to participate in a bundled payment initiative for specified orthopedic procedures, which ended December 31, 2024.

Hospitals in selected markets will be required to participate in a new model focused on five specified surgical episodes beginning January 2026.

CMS has indicated that it is evaluating the development of more voluntary and mandatory bundled payment models.

Participation in mandatory or voluntary demonstration projects, particularly demonstrations with the potential to affect payment, may negatively impact our results of operations.

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For example, some states have aligned quality metrics across payers through legislation or regulation.

Some private third-party payers are also transitioning toward alternative payment models or implementing other value-based care strategies.

For example, many large private third-party payers currently require hospitals to report quality data, and several private third-party payers do not reimburse

hospitals for certain preventable adverse events.

CMS has signaled its intent to support value-based initiatives in the Medicaid context.

For example, a final rule issued in May 2024 reduces state burdens for implementing some SDP arrangements, with the intent of helping states use such arrangements to implement value-based initiatives.

In addition, private third-party payers are also transitioning toward alternative payment models or implementing other value-based care strategies.

For example, many large private third-party payers currently require hospitals to report quality data, and several private third-party payers do not reimburse hospitals for certain preventable adverse events.

Further, we have implemented a policy pursuant to which we do not bill patients or third-party payers for fees or expenses incurred due to certain preventable adverse events.

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Our business is impacted by economic conditions in the United States, including periods of significant inflation, higher interest rates or economic weakness or recessions.

Also, budget deficits at the federal level and within some state and local government entities have had a negative impact on spending and may continue to negatively impact spending for health and human service programs, including Medicare, Medicaid and similar programs, which represent significant third-party payer sources for our hospitals.

We anticipate that the federal deficit, the growing magnitude of Medicare and Medicaid expenditures and the aging of the U.S.

Also, budget deficits at the federal level and within some state and local government entities have had, and may continue to have, a negative impact on spending for health and human service programs, including Medicare, Medicaid and similar programs, which represent significant third-party payer sources for our hospitals.

We anticipate that the federal deficit, the growing magnitude of Medicare and Medicaid expenditures and the aging and health status trends of the U.S.

population will continue to place pressure on government health care programs, and it is possible that future deficit reduction legislation will mandate additional Medicare spending reductions.

There is uncertainty regarding the impact of any failure to increase the “debt ceiling,” and any U.S.

government default on its debt could have broad macroeconomic effects.

Further, any shutdown of the federal government, failure to enact annual appropriations, hold on congressionally authorized spending or interruptions in the distribution of governmental funds could adversely affect our financial results.

Other risks we face during periods of economic weakness and high unemployment include potential declines in the population covered under managed care agreements, increased patient decisions to postpone or cancel elective and nonemergency health care procedures (including delaying surgical procedures), which may lead to poorer health and higher acuity interventions, potential increases in the uninsured and underinsured populations, increased adoption of health plan structures that shift financial responsibility to patients and further difficulties in collecting patient receivables for copayment and deductible receivables.

Further, inflationary pressures may increase operating expenses faster than reflected in updates to the reimbursement systems of governmental and private payers.

General economic conditions, including inflation, when worsening or remaining volatile for an extended period of time, have and could continue to have, a negative impact on our results of operations, liquidity, ability to repay our outstanding debt and trading price of our common stock.

Further, inflationary pressures may increase operating expenses to a greater degree and faster than reflected in updates to the reimbursement systems of governmental and private payers.

General economic conditions, including inflation, when worsening or remaining volatile for an extended period of time, have and may continue to have, a negative impact on our results of operations, liquidity, ability to repay our outstanding debt and trading price of our common stock.

These factors may affect the availability, terms or timing on which we may obtain any additional funding and our ability to access our cash.

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Should the insurance subsidiaries require significant amounts of cash in excess of normal cash requirements to pay claims and other expenses on short notice, we may have difficulty selling these investments in a timely manner or be forced to sell them at a price less than what we might otherwise have been able to in a normal market environment.

We may be required to recognize credit-related impairments on long-term investments in future periods should issuers default on interest payments or should the fair market valuations of the securities deteriorate due to ratings downgrades or other issue specific factors.

We may be required to recognize credit-related impairments on long-term

investments in future periods should issuers default on interest payments or should the fair market valuations of the securities deteriorate due to ratings downgrades or other issue specific factors.

We are also exposed to market risk related to changes in interest rates that impact the amount of the interest expense we incur with respect to our floating rate obligations as well as the value of certain investments.

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Through their investment in Hercules Holding II and other holdings, certain of the Frist-affiliated investors continue to hold a significant interest in our outstanding common stock (approximately 28% as of January 31, 2025).

In addition, pursuant to a shareholders agreement we entered into with Hercules Holding II and the Frist-affiliated investors, certain representatives of these investors have the continued right to nominate certain of the members of our Board of Directors.

In addition, pursuant to a stockholders' agreement we entered into with Hercules Holding II and the Frist-affiliated investors, certain representatives of these investors have the continued right to nominate certain of the members of our Board of Directors.

As a result, certain of these investors potentially have the ability to influence our decisions to enter into corporate transactions (and the terms thereof) and prevent changes in the composition of our Board of Directors or any transaction that requires stockholder approval.

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What changed 10-K

Item 1A. Risk Factors