What changed in this filing

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Item 1. Business

2021-02-19 compared with 2020-02-20 · 301 added, 126 removed, 737 unchanged (37% of the section changed)

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At December 31, 2020, we operated 185 hospitals, comprised of 178 general, acute care hospitals;

three psychiatric hospitals;

five psychiatric hospitals;

and two rehabilitation hospitals.

In addition, we operated 123 freestanding surgery centers.

In addition, we operated 121 freestanding surgery centers and 21 freestanding endoscopy centers.

Our facilities are located in 20 states and England.

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Our Code of Conduct is available free of charge upon request to our Corporate Secretary, HCA Healthcare, Inc., One Park Plaza, Nashville, Tennessee 37203, and is also available on the Ethics and Compliance and Corporate Governance portion of our website at www.hcahealthcare.com.

Index to Financial Statements

Business Strategy

We are committed to providing the communities we serve with high quality, cost-effective health care while growing our business and creating long-term value for our stockholders.

We strive to be the provider system of choice in the communities we serve and to support our operations with unique enterprise capabilities and best in class economies of scale.

To achieve these objectives, we align our efforts around the following growth agenda:

grow our presence in existing markets;

achieve industry-leading performance in clinical and satisfaction measures;

achieve industry-leading performance in clinical, operational and satisfaction measures;

recruit and employ physicians to meet the need for high quality health services;

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Each hospital has an organized medical staff and a local board of trustees or governing board, made up of members of the local community.

At December 31, 2019, we operated three psychiatric hospitals with 412 licensed beds.

At December 31, 2020, we operated five psychiatric hospitals with 593 licensed beds.

Our psychiatric hospitals provide therapeutic programs, including child, adolescent and adult psychiatric care and adolescent and adult alcohol and drug abuse treatment and counseling.

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Certain of our affiliates provide a variety of management services to our health care facilities, including patient safety programs, ethics and compliance programs, national supply contracts, equipment purchasing and leasing contracts, accounting, financial and clinical systems, governmental reimbursement assistance, construction planning and coordination, information technology systems and solutions, legal counsel, human resources services and internal audit services.

Pandemic and CARES Act Funding

On March 11, 2020, the World Health Organization designated COVID-19

as a global pandemic.

Patient volumes and the related revenues for most of our services were significantly impacted during the latter portion of the first quarter and the first half of the second quarter of 2020 and have continued to be impacted as various policies that were implemented by federal, state and local governments in response to the COVID-19

Index to Financial Statements

including policies that have caused many people to remain at home, forced the closure of or limitations on certain businesses, and suspended elective surgical procedures by health care facilities.

While many of these restrictions have been eased across the U.S.

and most states have lifted moratoriums on non-emergent

procedures, restrictions remain in place or may be adopted or re-imposed,

and the possibility exists that the public, particularly segments with a high mortality risk, could remain wary of real or perceived opportunities for exposure to the virus.

We are unable to predict the future impact of the pandemic on our operations.

During 2020, we received approximately $4.4 billion of accelerated Medicare payments and approximately $1.8 billion in general and targeted distributions from the Provider Relief Fund, both as provided for and established under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

During October 2020,

we announced our decision to return, or repay early, all of our share of the Provider Relief Fund distributions and all of the Medicare accelerated payments.

During the fourth quarter of 2020, we returned, or repaid early, approximately $6.1 billion of these funds.

We believe the extent of the COVID-19

pandemic’s impact on our operating results and financial condition has been and will continue to be driven by many factors, most of which are beyond our control and ability to forecast.

Such factors include, but are not limited to:

the severity or duration of the pandemic, including whether there will be additional periods of increases in the number of COVID-19 cases in the areas in which we operate, the rollout and availability of effective medical treatments and vaccines, the efficacy of public health controls, including vaccines, and the impact of any mutations of the virus;

the scope and duration of stay-at-home

practices and business closures and restrictions;

recommended or required suspensions of elective procedures;

continued declines in patient volumes for an indeterminable length of time;

increases in the number of uninsured and underinsured patients as a result of higher sustained rates of unemployment;

incremental expenses required for supplies and personal protective equipment (“PPE”);

and changes in professional and general liability exposure.

Because of these and other uncertainties, we cannot estimate how long or how severely the pandemic will impact our business.

If we experience declines in cash flows and results of operations, such declines could have an impact on the inputs and assumptions used in significant accounting estimates, including estimated implicit price concessions related to uninsured patient accounts, professional and general liability reserves, and potential impairments of goodwill and long-lived assets.

Summary Risk Factors

You should carefully read and consider the risk factors set forth under Item 1A, “Risk Factors,” as well as all other information contained in this annual report on Form 10-K.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect us.

If any of these risks occur, our business, financial position, results of operations, cash flows or prospects could be materially, adversely affected.

Our business is subject to the following principal risks and uncertainties:

Risks related to the COVID-19

pandemic and other potential pandemics:

The COVID-19 pandemic is significantly affecting our operations, business and financial condition.

Our liquidity could also be negatively impacted by the COVID-19 pandemic, particularly if the U.S.

economy remains unstable for a significant amount of time.

There is a high degree of uncertainty regarding the implementation and impact of the CARES Act and other existing or future stimulus legislation, if any.

There can be no assurance as to the total amount of financial assistance or types of assistance we will receive, that we will be able to comply with the applicable terms and conditions to retain such assistance, that we will be able to benefit from provisions intended to increase access to resources and ease regulatory burdens for health care providers or that additional stimulus legislation will be enacted.

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

Index to Financial Statements

Risks related to our indebtedness:

Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations.

We may not be able to generate sufficient cash to service all of our indebtedness and may not be able to refinance our indebtedness on favorable terms.

If we are unable to do so, we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our debt agreements contain restrictions that limit our flexibility in operating our business.

Discontinuation, reform or replacement of LIBOR may adversely affect our business.

Risks related to governmental regulation and other legal matters:

Our results of operations may be adversely affected by health care reform efforts, including court challenges to, and efforts to repeal, replace or otherwise significantly change the Affordable Care Act.

We are unable to predict what, if any, and when such changes will be made in the future.

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

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.

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

We may incur additional tax liabilities.

We have been and could become the subject of government investigations, claims and litigation.

We may be subject to liabilities from claims brought against our facilities.

Risks related to human capital:

Our labor costs may be adversely affected by competition for staffing, the shortage of experienced nurses and labor union activity.

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

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

Risks related to technology, data privacy and cybersecurity:

We may not be reimbursed for the cost of expensive, new technology.

A cybersecurity incident could result in the compromise of our facilities, confidential data or critical data systems.

A cybersecurity incident 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.

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

Our operations could be impaired by a failure of our information systems.

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

Index to Financial Statements

Risks related to operations, strategy, demand and competition:

Our hospitals face competition for patients from other hospitals and health care providers.

A deterioration in the collectability of uninsured and patient due accounts could adversely affect our results of operations.

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

Changes to physician utilization practices and treatment methodologies, third-party payer controls designed to reduce inpatient services or surgical procedures and other factors outside our control that impact demand for medical services may reduce our revenues.

We may encounter difficulty acquiring hospitals and other health care businesses and challenges integrating the operations of acquired hospitals and other health care businesses and become liable for unknown or contingent liabilities as a result of acquisitions.

Our facilities are heavily concentrated in Florida and Texas, which makes us sensitive to regulatory, economic, public health, environmental and competitive conditions and changes in those states.

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

Risks related to macroeconomic conditions:

Our overall business results may suffer during periods of general economic weakness.

We are exposed to market risk related to changes in the market values of securities and interest rates.

Risks related to ownership of our common stock:

There can be no assurance that we will continue to pay dividends.

Certain of our investors may continue to have influence over us.

Sources of Revenue

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Inpatient occupancy levels fluctuate for various reasons, many of which are beyond our control.

Index to Financial Statements

We receive payments for patient services from the federal government under the Medicare program, state governments under their respective Medicaid or similar programs, managed care plans (including plans offered through the American Health Benefit Exchanges (“Exchanges”)), private insurers and directly from patients.

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In addition to the reimbursement reductions and adjustments discussed below, the Budget Control Act of 2011 (the “BCA”) requires automatic spending reductions to reduce the federal deficit, including Medicare spending reductions of up to 2% per fiscal year, with a uniform percentage reduction across all Medicare programs.

In 2013, the Centers for Medicare & Medicaid Services (“CMS”) began imposing a 2.0% reduction on Medicare payments, and these reductions have been extended through 2029.

In 2013, the Centers for Medicare & Medicaid Services (“CMS”) began imposing a 2.0% reduction on Medicare payments.

The CARES Act temporarily suspended these reductions through December 31, 2020 and extended the reductions through 2030.

The Consolidated Appropriations Act, 2021 (“CAA”) further extended the suspension through March 31, 2021.

Inpatient Acute Care

Under the Medicare program, we receive reimbursement under a prospective payment system (“PPS”) for general, acute care hospital inpatient services.

Under the hospital inpatient PPS, fixed payment amounts per inpatient discharge are established based on the patient’s assigned Medicare severity diagnosis-related group

Under the hospital inpatient PPS, fixed payment amounts per

Index to Financial Statements

inpatient discharge are established based on the patient’s assigned Medicare severity diagnosis-related group (“MS-DRG”).

classify treatments for illnesses according to the estimated intensity of hospital resources necessary to furnish care for each principal diagnosis.

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This increase reflected a market basket update of 3.0%, adjusted by the following percentage points:

a 0.75 reduction required by the Affordable Care Act, a negative 0.8 productivity adjustment, and a positive 0.5 adjustment in accordance with the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”).

a negative 0.4 productivity adjustment and a positive 0.5 adjustment in accordance with the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”).

For federal fiscal year 2021, CMS increased the MS-DRG

rate by approximately 2.9%.

This increase reflects a market basket update of 3.0%, adjusted by the following percentage points:

a negative 0.4 productivity adjustment and a positive 0.5 adjustment required by MACRA.

This increase reflects a market basket update of 2.4%, adjusted by a positive 0.5 adjustment required by MACRA.

Additional adjustments may apply, depending on patient-specific or hospital-specific factors.

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In addition, under the post-acute care transfer policy, Medicare reimbursement rates may be reduced when an inpatient hospital discharges a patient in a specified MS-DRG

to certain post-acute care settings, including, effective October 1, 2018, hospice care.

to certain post-acute care settings.

CMS has implemented and is implementing a number of programs and requirements intended to transform Medicare from a passive payer to an active purchaser of quality goods and services.

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Hospitals with what CMS defines as excess readmissions for these conditions or procedures receive reduced payments for

Index to Financial Statements

all inpatient discharges, not just discharges relating to the conditions or procedures subject to the excess readmission standard.

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Previously, this rate did not apply to “excepted” provider-based departments.

However, in September 2019, a federal judge invalidated the expansion of the site-neutral payment policy for 2019.

CMS is appealing this decision, but it is reprocessing the 2019 claims paid at the lower rates.

In September 2019, a federal judge invalidated the expansion of the site-neutral payment policy for 2019.

CMS appealed this decision and won, but had begun reprocessing the 2019 claims paid at the lower rates.

For calendar year 2020, CMS issued a final rule implementing year two of the policy phase-in.

Hospitals have also challenged the policy for 2020, but the case has not yet been decided.

For calendar year 2021 and beyond, CMS is continuing the payment policy.

CMS is considering how to address reprocessed claims from this litigation.

In conjunction with these efforts aimed at increasing site neutrality, CMS also finalized a rule in December 2020 that will begin phasing out over three years the Inpatient Only List, which is a list of procedures eligible to be reimbursed by Medicare only if performed in an inpatient setting.

As a result, these procedures will also be eligible to be reimbursed by Medicare if performed in outpatient settings.

Hospital outpatient services paid under PPS are classified into groups called ambulatory payment classifications (“APCs”).

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For calendar year 2020, CMS increased APC payment rates by an estimated 2.6%.

This increase reflected a market basket increase of 2.9% with a negative 0.8 percentage point productivity adjustment and a negative 0.75 percentage point adjustment required by the Affordable Care Act.

This increase reflected a market basket increase of 3.0% with a negative 0.4 percentage point productivity adjustment.

For calendar year 2021, CMS increased APC payment rates by an estimated 2.4%.

This increase reflects a market basket increase of 3.0% with a negative 0.4 percentage point productivity adjustment.

This increase reflects a market basket increase of 2.4%.

Together with other policy changes, CMS estimates that the calendar year 2021 rates will increase Medicare outpatient PPS payments by 2.4%.

CMS requires hospitals to submit quality data relating to outpatient care to avoid receiving a 2.0 percentage point reduction in the annual payment update under the outpatient PPS.

Index to Financial Statements

The 340B program allows participating hospitals to purchase certain outpatient drugs from manufacturers at discounted rates.

These hospitals are reimbursed for the discounted drugs under the same Medicare payment

methodology and rates as are applied to non-340B-discounted

These hospitals are reimbursed for the discounted drugs under the same Medicare payment methodology and rates as are applied to non-340B-discounted

In a final rule effective January 1, 2018, the U.S.

Department of Health and Human Services (“HHS”) reduced the Medicare payments under the outpatient PPS for most drugs obtained at the 340B-discounted rates.

HHS continued to apply the reduced rates in 2019.

On May 6, 2019, the United States District Court for the District of Columbia reaffirmed its ruling that the adoption of the 2018 rule had exceeded HHS’ statutory authority and reached the same conclusion with respect to a final rule for the 2019 rates.

The court has remanded to the agency to craft appropriate remedies to implement the holding.

HHS is appealing the decision but has also announced its intent to survey hospitals for drug acquisition cost data, which it may use to craft a remedy.

This payment policy has been heavily litigated.

In 2020, HHS prevailed at the circuit court level, with the court upholding its authority to implement this policy.

Depending upon the remedy and the outcome of any appeal, this case could result in a decrease to the Company’s outpatient Medicare reimbursement.

For calendar year 2020, HHS will continue to pay the reduced rates that took effect in 2018, although this is also the subject of ongoing litigation.

For calendar year 2021, HHS will continue to pay the reduced rates that took effect beginning in 2018.

Rehabilitation

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The case mix groups are based upon impairment, age, functional motor and cognitive scores, and comorbidities (additional diseases or disorders from which the patient suffers).

IRFs are paid a predetermined amount per discharge that reflects the patient’s case mix group and is adjusted for facility-specific factors, such as area wage levels, proportion of low-income

IRFs are paid a predetermined amount per discharge that reflects the patient’s case mix group that is adjusted for facility-specific factors, such as area wage levels, proportion of low-income

patients, and location in a rural area.

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moving average of changes in specified economy-wide productivity.

For federal fiscal year 2019, CMS increased IRF payment rates by an estimated 1.3%, reflecting an IRF market basket update of 2.9% with a negative 0.8 percentage point productivity adjustment and a 0.75 percentage point reduction required by the Affordable Care Act, among other payment adjustments.

For federal fiscal year 2020, CMS increased IRF payment rates by an estimated 2.5%, reflecting an IRF market basket update of 2.9% with a negative 0.4 percentage point productivity adjustment.

For federal fiscal year 2021, CMS increased IRF payment rates by an estimated 2.4%, reflecting an IRF market basket update of 2.4%.

In addition, CMS requires IRFs to report quality measures to avoid receiving a reduction of 2.0 percentage points to the market basket update.

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moving average of changes in specified economy-wide productivity.

For federal fiscal year 2019, CMS increased IPF payment rates by an estimated 1.1%, which reflects a 2.9% IPF market basket update with a negative 0.8 percentage point productivity adjustment, a negative 0.75 percentage point adjustment as required by the Affordable Care Act, and other payment adjustments.

For federal fiscal year 2020, CMS increased IPF payment

rates by an estimated 1.75%, which reflects a 2.9% IPF market basket increase with a negative 0.4 percentage point productivity adjustment and a 0.75 percentage point reduction required by statute, among other payment adjustments.

For federal fiscal year 2020, CMS increased IPF payment rates by an estimated 1.75%, which reflects a 2.9% IPF market basket update with a negative 0.4 percentage point productivity adjustment and a negative 0.75 percentage point adjustment required by law.

For federal fiscal year 2021, CMS increased IPF payment rates by an estimated 2.2%, which reflects a 2.2% IPF market basket increase.

Inpatient psychiatric facilities are required to report quality measures to CMS to avoid receiving a 2.0 percentage point reduction to the market basket update.

As of December 31, 2019, we had three psychiatric hospitals and 55 hospital psychiatric units.

As of December 31, 2020, we had five psychiatric hospitals and 50 hospital psychiatric units.

Index to Financial Statements

Ambulatory Surgery Centers

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moving average of changes in specified economy-wide productivity.

For calendar year 2019, CMS increased ASC payment rates by 2.1%, which reflected a market basket increase of 2.9%, less a 0.8 percentage point productivity adjustment.

For calendar year 2020, CMS increased ASC payment rates by 2.6%, which reflects a market basket increase of 3.0% and a negative 0.4 percentage point productivity adjustment.

For calendar year 2020, CMS increased ASC payment rates by 2.6%, which reflected a market basket increase of 3.0% and a negative 0.4 percentage point productivity adjustment.

For calendar year 2021, CMS increased ASC payment rates by 2.4%, which reflects a market basket increase of 2.4%.

In addition, CMS has established a quality reporting program for ASCs under which ASCs that fail to report on specified quality measures receive a 2.0 percentage point reduction to the consumer price index update.

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To determine the payment rate for a particular service, the sum of the geographically adjusted RVUs is multiplied by a conversion factor.

For 2020, CMS updated the conversion factor based on a budget neutrality adjustment of 0.14%.

For 2021, CMS updated the conversion factor based on a budget neutrality adjustment of negative 10.20%.

However, the CAA provides for a 3.75% payment increase under the Physician Fee Schedule, which will partially offset this reduction.

Medicare payments are adjusted based on participation in the Quality Payment Program (“QPP”), a payment methodology intended to reward high-quality patient care.

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The Advanced Alternative Payment Model (“APM”) track makes incentive payments available for participation in specific innovative payment models approved by CMS.

Providers may earn a 5% Medicare incentive payment between 2019 and 2024 and will be exempt from the reporting

requirements and payment adjustments imposed under the Merit-Based Incentive Payment System (“MIPS”) if the provider has sufficient participation (based on percentage of payments or patients) in an Advanced APM.

Providers may earn a 5% Medicare incentive payment through 2024 and will be exempt from the reporting requirements and payment adjustments imposed under the Merit-Based Incentive Payment System (“MIPS”) if the provider has sufficient participation (based on percentage of payments or patients) in an Advanced APM.

Alternatively, providers may participate in the MIPS track.

Currently, providers electing this option may receive payment incentives or be subject to payment reductions based on their performance with respect to clinical quality, resource use, clinical improvement activities, and meeting Promoting Interoperability standards related to the meaningful use of EHRs.

Currently, providers electing this option may receive payment incentives or be subject to payment reductions based on their performance with respect to clinical quality,

Index to Financial Statements

resource use, clinical improvement activities, and meeting Promoting Interoperability standards related to the meaningful use of EHRs.

Performance data collected in 2021 will result in payment adjustments of up to 9% in 2023.

CMS will continue to offer the Extreme and Uncontrollable Circumstances Policy for 2021 performance data.

This policy is an exception providers must apply for, which allows reweighting for any or all MIPS performance categories for providers impacted by the COVID-19

MIPS consolidates components of three previously established physician incentive programs:

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CMS has implemented contractor reform whereby CMS competitively bids the Medicare fiscal intermediary and Medicare carrier functions to Medicare Administrative Contractors (“MACs”), which are geographically assigned across 12 jurisdictions to service both Part A and Part B providers.

While providers with operations across multiple geographies had the option of having all hospitals use one home office MAC, we chose to use the MACs assigned to the geographic areas in which our hospitals are located.

While providers with operations across multiple geographies had the option of having all hospitals use one home office MAC, we chose, in most cases, to use the MACs assigned to the geographic areas in which our hospitals are located.

CMS periodically re-solicits

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Depending upon changes to and the growth of the RAC program and other Medicare integrity programs and our success in appealing claims in future periods, our cash flows and results of operations could be negatively impacted.

Medicare reimburses teaching hospitals for portions of the direct and indirect costs of graduate medical education (“GME”) through statutory formulas that are generally based on the number of medical residents and which take into account patient volume or the number of hospital beds.

Index to Financial Statements

which take into account patient volume or the number of hospital beds.

Accrediting organizations review GME programs for compliance with educational standards.

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Some states use, or have applied to use, waivers granted by CMS to implement expansion, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards.

The presidential administration and a number of members of Congress have indicated their intent to increase state flexibility in the administration of Medicaid programs, including allowing states to condition enrollment on work or other community engagement.

Previously, certain members of Congress and the prior presidential administration indicated their intent to increase state flexibility in the administration of Medicaid programs, including allowing states to condition enrollment on work or other community engagement.

However, President Biden has issued executive orders directing agencies to re-examine measures that reduce coverage or undermine Medicaid programs, including work requirements.

Because most states must operate with balanced budgets and because the Medicaid program is often the state’s largest program, states can be expected to adopt or consider adopting legislation designed to reduce their Medicaid expenditures.

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These programs vary by state in design and operation.

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Managed Medicaid

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The CMMI has implemented bundled payment models, including the Bundled Payment Care Improvement Advanced (“BPCI Advanced”) program, which is voluntary and expected to run through December 2023.

Participation in bundled payment programs is generally voluntary, but CMS has required providers in selected geographic areas to participate in a mandatory bundled program for specified orthopedic procedures, which is scheduled to run through December 2020.

CMS will require hospitals in selected markets to participate in bundled payment initiatives for end-stage renal disease treatment, which began January 1, 2021, and radiation oncology, beginning as early as January 1, 2022.

HHS has indicated that it plans to implement additional bundled payment programs, some of which will be mandatory.

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CMS also distributes a payment to each DSH hospital that is allocated according to the hospital’s proportion of uncompensated care costs relative to the uncompensated care amount of other DSH hospitals.

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Some states make additional payments to providers through the Medicaid program for certain specific claims.

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The Affordable Care Act and subsequent legislation provide for reductions to the Medicaid DSH hospital program.

Under the budget bill signed into law in February 2018, Medicaid DSH payments will be reduced by $4 billion in 2020 and by $8 billion per year from 2021 through 2025.

However, Congress has delayed the implementation of these reductions until May 23, 2020.

Under the budget bill signed into law in February 2018, Medicaid DSH payments would have been reduced by $4 billion in 2020 and by $8 billion per year from 2021 through 2025.

However, Congress has delayed the implementation of these reductions through 2023, but added additional reductions for 2026 and 2027.

TRICARE is the Department of Defense’s health care program for members of the armed forces.

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Most of our hospitals offer discounts from established charges to certain large group purchasers of health care services, including managed care plans and private health insurers.

Admissions reimbursed by commercial managed care and other insurers were 28% of our total admissions for each of the years ended December 31, 2019, 2018 and 2017, respectively.

Admissions reimbursed by commercial managed care and other insurers were 29%, 28% and 28% of our total admissions for the years ended December 31, 2020, 2019 and 2018, respectively.

Managed care contracts are typically negotiated for terms between one and three years.

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Price transparency initiatives may impact our ability to obtain or maintain favorable contract terms.

Further, it is not clear what impact, if any, health reform efforts at the federal and state levels, consolidation within the third-party payer industry and vertical integration among third-party payers and health care providers will have on our ability to negotiate reimbursement rates.

Effective January 1, 2022, the No Surprises Act (enacted as part of the CAA) will require providers to send to a patient’s health plan good faith estimates of the expected charges for furnishing scheduled items or services, including any item or service that is reasonably expected to be provided in conjunction with the scheduled item or service or that is reasonably expected to be delivered by another provider, before the services are delivered.

The No Surprises Act will also prohibit providers from charging patients an amount beyond the in-network

cost sharing amount for services rendered by out-of-network

providers, subject to limited exceptions.

It is not clear what impact, if any, these or future health reform efforts at the federal and state levels, consolidation within the third-party payer industry and vertical integration among third-party payers and health care providers will have on our ability to negotiate reimbursement rates.

Index to Financial Statements

Uninsured and Self-Pay

Self-pay revenues are derived from providing health care services to patients without health insurance coverage and from the patient responsibility portion of payments for our health care services that are not covered by an individual’s health plan.

revenues are derived from providing health care services to patients without health insurance coverage and from the patient responsibility portion of payments for our health care services that are not covered by an individual’s health plan.

Collection of amounts due from individuals is typically more difficult than collection of amounts due from government health care programs or private third-party payers.

Any increases in uninsured individuals, changes to the payer mix or greater adoption of health plan structures that result in higher patient responsibility amounts could increase amounts due from individuals.

Effective January 1, 2022, the No Surprises Act will require providers to send uninsured patients a good faith estimate of the expected charges for furnishing scheduled items or services, including any item or service that is reasonably expected to be provided in conjunction with the scheduled item or service or that is reasonably expected to be delivered by another provider, before the services are delivered.

If the actual charges are substantially higher than the estimate, the patient can invoke a dispute resolution process to challenge the higher amount.

A high percentage of our uninsured patients are initially admitted through our emergency rooms.

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In addition, health insurers are required to reimburse hospitals for emergency services provided to enrollees without prior authorization and without regard to whether a participating provider contract is in place.

The financial impact of the obligation to screen for and stabilize emergency medical conditions has been offset, in part, by provisions of the Affordable Care Act that decrease the number of uninsured individuals.

However, effective January 1, 2019, Congress eliminated the financial penalty associated with the individual mandate.

Further, final rules issued in 2018 expand the availability of association health plans and allow the sale of short-term, limited-duration health plans, neither of which are required to cover all of the essential health benefits mandated by the Affordable Care Act.

It is difficult to predict the impact of these changes, but they may result in fewer individuals electing to obtain public or private health insurance or affect the scope of such coverage, if purchased.

Index to Financial Statements

Hospital Utilization

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Health care facility operations are subject to certain seasonal fluctuations, including decreases in patient utilization during holiday periods and increases in the cold weather months.

Years Ended December 31,

Number of hospitals at end of period

Number of freestanding outpatient surgery centers at end of period

Number of licensed beds at end of period(a)

Weighted average licensed beds(b)

Admissions(c)

Equivalent admissions(d)

Average length of stay (days)(e)

Average daily census(f)

Occupancy rate(g)

Emergency room visits(h)

Outpatient surgeries(i)

Inpatient surgeries(j)

Number of freestanding outpatient surgery centers at end of period(a)

Number of licensed beds at end of period(b)

Weighted average beds in service(c)

Admissions(d)

Equivalent admissions(e)

Average length of stay (days)(f)

Average daily census(g)

Occupancy rate(h)

Emergency room visits(i)

Outpatient surgeries(j)

Inpatient surgeries(k)

Days revenues in accounts receivable(l)

Outpatient revenues as a % of patient revenues(m)

Excludes freestanding endoscopy centers (21 at December 31, 2020;

20 at December 31, 2019 and 19 at December 31, 2018).

Licensed beds are those beds for which a facility has been granted approval to operate from the applicable state licensing agency.

Represents the average number of licensed beds, weighted based on periods owned.

Represents the average number of beds in service, weighted based on periods owned.

Represents the total number of patients admitted to our hospitals and is used by management and certain investors as a general measure of inpatient volume.

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Represents the average number of patients in our hospital beds each day.

Represents the percentage of hospital licensed beds occupied by patients.

Represents the percentage of hospital beds in service that are occupied by patients.

Both average daily census and occupancy rate provide measures of the utilization of inpatient rooms.

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Pain management and endoscopy procedures are not included in inpatient surgeries.

Revenues per day is calculated by dividing the revenues for the fourth quarter of each year by the days in the quarter.

Days revenues in accounts receivable is then calculated as accounts receivable at the end of the period divided by revenues per day.

Represents the percentage of patient revenues related to patients who are not admitted to our hospitals.

Index to Financial Statements

Generally, other hospitals in the communities we serve provide services similar to those offered by our hospitals.

Additionally, in recent years the number of freestanding specialty hospitals, surgery centers, emergency departments, urgent care centers and diagnostic and imaging centers in the geographic areas in which we operate has increased significantly.

Additionally, the number of freestanding specialty hospitals, surgery centers, emergency departments, urgent care centers and diagnostic and imaging centers in the geographic areas in which we operate continues to increase.

As a result, most of our hospitals operate in a highly competitive environment.

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entities an advantage in funding capital expenditures.

certain localities there are large teaching hospitals that provide highly specialized facilities, equipment and services that may not be available at most of our hospitals.

In certain localities there are large teaching hospitals that provide highly specialized facilities, equipment and services that may not be available at most of our hospitals.

We also face competition from specialty hospitals and from both our own and unaffiliated freestanding ASCs for market share in certain high margin services.

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For example, hospitals are currently required to publish online a list of their standard charges for items and services.

In 2019, CMS issued a final rule that, beginning in 2021, will require hospitals to publish additional types of standard charges for all items and services, including discounted cash prices and payer-specific and de-identified

In 2019, CMS issued a final rule that, beginning January 2021, requires hospitals to publish additional types of standard charges for all items and services, including discounted cash prices and payer-specific and de-identified

negotiated charges, in a publicly accessible online file.

Hospitals will also be required to publish a consumer-friendly list of charges for certain “shoppable” services (i.e., services that can be scheduled by a patient in advance) and associated ancillary services.

The 2019 rule is the subject of ongoing court challenges.

Hospitals are also required to publish a consumer-friendly list of charges for certain “shoppable” services (i.e., services that can be scheduled by a patient in advance) and associated ancillary services.

Court challenges to the 2019 rule in both the District Court for the District of Columbia and the D.C.

Circuit Court of Appeals were unsuccessful.

It is not yet known whether the Biden administration will take any action regarding the rule or whether the matter will be appealed to the U.S.

Supreme Court.

CMS plans to begin auditing hospitals for compliance with transparency requirements and may impose civil monetary penalties for noncompliance.

In addition, the No Surprises Act creates additional price transparency requirements beginning on January 1, 2022, including the requirement that providers send patients and health plans a good faith estimate of the expected charges and diagnostic codes prior to a patient’s appointment.

Our strategies are designed to ensure our hospitals are competitive.

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We focus on operating outpatient services with accessibility and convenient service for patients and predictability and efficiency for physicians.

Two of the most significant factors to the competitive position of a hospital are the number and quality of physicians affiliated with or employed by the hospital.

Two of the most significant factors that impact the competitive position of a hospital are the number and quality of physicians affiliated with or employed by the hospital.

Although physicians may at any time terminate their relationship with a hospital we operate, our hospitals seek to retain physicians with varied specialties on the hospitals’ medical staffs and to attract other qualified physicians.

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Managed care plans attempt to direct and control the use of hospital services and obtain discounts from hospitals’ established gross charges.

Similarly, employers and traditional health insurers continue to attempt to contain costs through negotiations with hospitals for managed care programs and discounts from established gross charges.

Similarly, employers and

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traditional health insurers continue to attempt to contain costs through negotiations with hospitals for managed care programs and discounts from established gross charges.

Generally, hospitals compete for service contracts with group purchasers of health care services on the basis of price, market reputation, geographic location, quality and range of services, quality of the medical staff and convenience.

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Health plans increasingly utilize narrow networks that restrict the number of participating providers or tiered networks that impose significantly higher cost sharing obligations on patients that obtain services from providers in a disfavored tier.

These trends may continue regardless of potential repeal or replacement of, or changes to, the

Affordable Care Act, or other health reform efforts.

These trends may continue regardless of potential repeal or replacement of, or changes to, the Affordable Care Act, or other health reform efforts.

The importance of obtaining contracts with group purchasers of health care services varies from community to community, depending on the market strength of such organizations.

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Health care facility construction and operation are subject to numerous federal, state and local regulations relating to the adequacy of medical care, equipment, personnel, operating policies and procedures, maintenance of adequate records, fire prevention, rate-setting, building codes and environmental protection.

Facilities are subject to periodic inspection by governmental and other authorities to assure continued compliance with the various standards necessary for licensing and accreditation.

Facilities are subject to periodic inspection by governmental and other authorities to assure continued compliance with the

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various standards necessary for licensing and accreditation.

We believe our health care facilities are properly licensed under applicable state laws.

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Certificates of Need

expenditures and the addition of new beds or services may be subject to review by and prior approval of, or notifications to, state regulatory agencies under a CON program.

In some states where we operate hospitals and other health care providers, the construction or expansion of health care facilities, the acquisition of existing facilities, the transfer or change of ownership, capital expenditures and the addition of new beds or services may be subject to review by and prior approval of, or notifications to, state regulatory agencies under a CON program.

Such laws generally require the reviewing state agency to determine the public need for additional or expanded health care facilities and services or other change.

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Furthermore, the Affordable Care Act provides that knowledge of the law or the intent to violate the law is not required.

Violations of the Anti-kickback Statute may be punished by criminal fines of up to $100,000 per violation, imprisonment, substantial civil monetary penalties per violation that are subject to annual adjustment based on updates to the consumer price index and damages of up to three times the total amount of the remuneration and/or exclusion from participation in federal health care programs, including Medicare and Medicaid.

Violations of the Anti-

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kickback Statute may be punished by criminal fines of up to $100,000 per violation, imprisonment, substantial civil monetary penalties per violation that are subject to annual adjustment based on updates to the consumer price index and damages of up to three times the total amount of the remuneration and/or exclusion from participation in federal health care programs, including Medicare and Medicaid.

In addition, submission of a claim for services or items generated in violation of the Anti-kickback Statute may be subject to additional penalties under the federal False Claims Act (“FCA”) as a false or fraudulent claim.

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(a) payment of any incentive by a hospital each time a physician refers a patient to the hospital, (b) the use of free or significantly discounted office space or equipment in facilities usually located close to the hospital, (c) provision of free or significantly discounted billing, nursing or other staff services, (d) free training for a physician’s office staff in areas such as management techniques and laboratory techniques, (e) guarantees which provide, if the physician’s income fails to reach a predetermined level, the hospital will pay any portion of the remainder, (f) low-interest

or interest-free loans, or loans which may be forgiven if a physician refers patients to the hospital, (g) payment of

the costs of a physician’s travel and expenses for conferences, (h) coverage on the hospital’s group health insurance plans at an inappropriately low cost to the physician, (i) payment for services (which may include consultations at the hospital) which require few, if any, substantive duties by the physician, (j) purchasing goods or services from physicians at prices in excess of their fair market value, (k) rental of space in physician offices, at other than fair market value terms, by persons or entities to which physicians refer, and (l) physician-owned entities (frequently referred to as physician-owned distributorships or PODs) that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use on procedures that physician-owners perform on their own patients at hospitals or ASCs.

or interest-free loans, or loans which may be forgiven if a physician refers patients to the hospital, (g) payment of the costs of a physician’s travel and expenses for conferences or payments to a physician for speaking engagements, (h) coverage on the hospital’s group health insurance plans at an inappropriately low cost to the physician, (i) payment for services (which may include consultations at the hospital) which require few, if any, substantive duties by the physician, (j) purchasing goods or services from physicians at prices in excess of their fair market value, (k) rental of space in physician offices, at other than fair market value terms, by persons or entities to which physicians refer, and (l) physician-owned entities (frequently referred to as physician-owned distributorships or PODs) that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use on procedures that physician-owners perform on their own patients at hospitals or ASCs.

The OIG has encouraged persons having information about hospitals who offer the above types of incentives to physicians to report such information to the OIG.

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Currently, there are statutory exceptions and safe harbors for various activities, including the following:

certain investment interests, space rental, equipment rental, practitioner recruitment, personnel services and management contracts, sale of practice, referral services, warranties, discounts, employees, group purchasing organizations, waiver of beneficiary coinsurance and deductible amounts, managed care arrangements, obstetrical malpractice insurance subsidies, investments in group practices, freestanding surgery centers, ambulance replenishing, and referral agreements for specialty services.

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CMS-sponsored

model arrangements, cybersecurity technology and related services, and value-based arrangements.

The fact that conduct or a business arrangement does not fall within a safe harbor or is identified in a Special Fraud Alert, Special Advisory Bulletin or other guidance does not necessarily render the conduct or business arrangement illegal under the Anti-kickback Statute.

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These penalties are updated annually based on changes to the consumer price index.

There are exceptions to the self-referral prohibition for many of the customary financial arrangements between physicians and providers, including employment contracts, leases and recruitment agreements.

Unlike safe harbors under the Anti-kickback Statute with which compliance is voluntary, a financial relationship must comply with every requirement of a Stark Law exception or the arrangement is in violation of the Stark Law.

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Through a series of rulemakings, CMS has issued final regulations implementing the Stark Law.

While these regulations were intended to clarify the requirements of the exceptions to the Stark Law, it is unclear how the government will interpret many of these exceptions for enforcement purposes.

While these regulations were intended to clarify the requirements of the exceptions to the Stark Law, it is unclear how

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the government will interpret many of these exceptions for enforcement purposes.

Further, we do not always have the benefit of significant regulatory or judicial interpretation of the Stark Law and its implementing regulations.

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Federal enforcement officials have the ability to exclude from Medicare and Medicaid any business entities and any investors, officers and managing employees associated with business entities that have committed health care fraud, even if the officer or managing employee had no knowledge of the fraud.

Criminal and civil penalties may be imposed for a number of other prohibited activities, including failure

to return known overpayments, certain gainsharing arrangements, billing Medicare amounts that are substantially in excess of a provider’s usual charges, offering remuneration to influence a Medicare or Medicaid beneficiary’s selection of a health care provider, contracting with an individual or entity known to be excluded from a federal health care program, making or accepting a payment to induce a physician to reduce or limit services, and soliciting or receiving any remuneration in return for referring an individual for an item or service payable by a federal health care program.

Criminal and civil penalties may be imposed for a number of other prohibited activities, including failure to return known overpayments, certain gainsharing arrangements, billing Medicare amounts that are substantially in excess of a provider’s usual charges, offering remuneration to influence a Medicare or Medicaid beneficiary’s selection of a health care provider, contracting with an individual or entity known to be excluded from a federal health care program, making or accepting a payment to induce a physician to reduce or limit services, and soliciting or receiving any remuneration in return for referring an individual for an item or service payable by a federal health care program.

Like the Anti-kickback Statute, these provisions are very broad.

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The government may use the FCA to prosecute Medicare and other government program fraud in areas such as coding errors, billing for services not provided and submitting false cost reports.

In addition, the FCA covers payments made in connection with the Exchanges created under the Affordable Care Act, if those payments include any federal funds.

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addition, the FCA covers payments made in connection with the Exchanges created under the Affordable Care Act, if those payments include any federal funds.

When a private party brings a qui tam

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Every entity that receives at least $5 million annually in Medicaid payments must have written policies for all employees, contractors or agents, providing detailed information about false claims, false statements and whistleblower protections under certain federal laws, including the FCA, and similar state laws.

federal law provides an incentive to states to enact false claims laws comparable to the FCA.

In addition, federal law provides an incentive to states to enact false claims laws comparable to the FCA.

A number of states in which we operate have adopted their own false claims provisions as well as their own whistleblower provisions under which a private party may file a civil lawsuit in state court.

We have adopted and distributed policies pertaining to the FCA and relevant state laws.

HIPAA Administrative Simplification and Privacy and Security Requirements

HIPAA Administrative Simplification and Privacy, Security and Interoperability Requirements

The Administrative Simplification Provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and implementing regulations require the use of uniform electronic data transmission standards and code sets for certain health care claims and payment transactions submitted or received electronically.

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Various state laws and regulations may also require us to notify affected individuals in the event of a data breach involving individually identifiable information.

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Violations of the HIPAA privacy and security regulations may result in criminal penalties and in substantial civil penalties per violation.

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The California Consumer Privacy Act of 2018 (the “CCPA”) affords consumers expanded privacy protections effective January 1, 2020.

The potential effects of this legislation are far-reaching

and may require us to modify our data processing practices and policies and to incur substantial costs and expenses to comply.

For example, the CCPA gives California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing and

receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches.

Moreover, the California Privacy Rights Act (“CPRA”) takes effect January 1, 2022, and significantly modifies the CCPA.

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 to comply.

For example, the CCPA and CPRA give California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.

The CCPA and CPRA provide for civil penalties for violations, as well as a private right of action for data breaches.

Health care providers and industry participants are also subject to a growing number of requirements intended to promote the interoperability and exchange of patient health information.

For example, beginning April 5, 2021, health care providers and certain other entities will be subject to information blocking restrictions pursuant to the 21 st

Century Cures Act that prohibit practices that are 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.

Violations may result in penalties or other disincentives.

Many foreign data privacy regulations (including the European Union’s General Data Protection Regulation (the “GDPR”)) are more stringent than those in the United States.

In the case of non-compliance with a material provision of the GDPR (such as non-adherence to the core principles of processing personal data), regulators have the authority to levy a fine in an amount that is up to the greater of €

20 million or 4% of global annual turnover in the prior year.

If it is determined that non-compliance is related to a non-material provision (such as failure to comply with technical measures), regulators may impose a fine in an amount that is up to the greater of €

10 million or 2% of the global annual turnover from the prior year.

In the case of non-compliance

with a material provision of the GDPR (such as non-adherence

to the core principles of processing personal data), regulators have the authority to levy a fine in an amount that is up to the greater of €20 million or 4% of global annual turnover in the prior year.

If it is determined that non-compliance

is related to a non-material

provision (such as failure to comply with technical measures), regulators may impose a fine in an amount that is up to the greater of €10 million or 2% of the global annual turnover from the prior year.

These administrative fines are discretionary and based, in each case, on a multi-factored approach.

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Penalties for violations of EMTALA include exclusion from participation in the Medicare program and civil monetary penalties.

These civil monetary penalties are adjusted annually based on updates to the consumer price index.

These civil monetary penalties are

Index to Financial Statements

adjusted annually based on updates to the consumer price index.

In addition, an injured individual, the individual’s family or a medical facility that suffers a financial loss as a direct result of a hospital’s violation of the law can bring a civil suit against the hospital.

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Except as may be disclosed in our SEC filings, we are not aware of any material investigations of the Company under federal or state health care laws or regulations.

It is possible that governmental entities could initiate investigations or litigation in the future at facilities we operate and that such matters could result in

significant penalties, as well as adverse publicity.

It is possible that governmental entities could initiate investigations or litigation in the future at facilities we operate and that such matters could result in significant penalties, as well as adverse publicity.

It is also possible that our executives and managers could be included in governmental investigations or litigation or named as defendants in private litigation.

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The OIG and the Department of Justice (“DOJ”) have, from time to time, established national enforcement initiatives, targeting all hospital providers that focus on specific billing practices or other suspected areas of abuse.

The Affordable Care Act includes additional federal funding of $350 million over 10 years to fight health care fraud, waste and abuse, including $10 million in federal fiscal year 2020.

The Affordable Care Act included additional federal funding of $350 million over 10 years to fight health care fraud, waste and abuse, which expired in 2020.

In addition, governmental agencies and their agents, such as MACs, fiscal intermediaries and carriers, may conduct audits of our health care operations.

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

Index to Financial Statements

In addition to national enforcement initiatives, federal and state investigations have addressed a wide variety of routine health care operations such as:

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The law has been subject to legislative and regulatory changes and court challenges.

The presidential administration and a number of members of Congress have stated their intent to repeal or make additional significant changes to the Affordable Care Act, its implementation or interpretation.

For example, final rules issued in 2018 expand the availability of association health plans and allow the sale of short-term, limited-duration health plans, neither of which are required to cover all of the essential health benefits mandated by the Affordable Care Act.

Further, the President of the United States signed an executive order that directs agencies to minimize “economic and regulatory burdens” of the Affordable Care Act, which may result in additional changes

in how the law is implemented.

A number of members of Congress have stated their desire to repeal or make additional significant changes to the Affordable Care Act, its implementation or interpretation.

Effective January 1, 2019, the penalty associated with the individual mandate to maintain health insurance was eliminated.

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In December 2019, the Fifth Circuit Court of Appeals upheld this decision with respect to the individual mandate, but remanded for further consideration of how this affects the rest of the law.

Pending the appeals process, the law remains in place.

On November 10, 2020, the U.S.

Supreme Court heard oral arguments regarding this case, and the law remains in place pending the appeals process.

The elimination of the individual mandate penalty and other changes may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased.

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For example, some states have proposed public health insurance options, and some states have passed or are considering legislation to address out-of-network

The Affordable Care Act has had a net positive effect on the Company to date, before considering the impact of Medicare reductions that began in 2010, and it is expected that the law, as presently implemented, will continue to have a positive contribution to the Company’s results of operations.

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continue to have a positive contribution to the Company’s results of operations.

However, there is uncertainty regarding the ongoing net effect of the Affordable Care Act due to efforts to change, repeal or replace the Affordable Care Act, court challenges, and the development of agency guidance, among other factors.

There is also uncertainty regarding the potential impact of other reform efforts at the federal and state levels.

For example, some presidential candidates and members of Congress have proposed measures that would expand government-sponsored coverage, including single-payer proposals (often referred to as “Medicare for All”), and some states are considering similar measures.

For example, 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”), and some states are considering similar measures.

Further, the impact of the 2020 federal election on health reform efforts is unknown, although President Biden has indicated through executive orders that his administration intends to protect and strengthen the Affordable Care Act and Medicaid programs.

Other initiatives and proposals, including those aimed at price transparency and out-of-network

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The health care industry is impacted by the overall United States economy.

The COVID-19 pandemic has led, and may continue to lead, to a general worsening of economic conditions.

Budget deficits at federal, state and local government entities have had a negative impact on spending for many health and human service programs, including Medicare, Medicaid and similar programs, which represent significant payer sources for our hospitals and other providers.

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We do not believe that we will be required to expend any material amounts in order to comply with these laws and regulations.

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As is typical in the health care industry, we are subject to claims and legal actions by patients in the ordinary course of business.

Subject, in most cases, to a $15 million per occurrence self-insured retention, our facilities are insured by our 100% owned insurance subsidiary for losses up to $50 million per occurrence.

The insurance subsidiary has obtained reinsurance for professional liability risks generally above a retention level of $25 million per occurrence.

The insurance subsidiary has obtained reinsurance for professional liability risks generally above a retention level of either $25 million or $35 million per occurrence, depending on the jurisdiction for the related claim.

We also maintain professional liability insurance with unrelated commercial carriers for losses in excess of amounts insured by our insurance subsidiary.

We purchase, from unrelated insurance companies, coverage for cyber security incidents, directors and officers liability and property loss in amounts we believe are adequate.

The cyber security and directors and officers liability coverage each include a $5 million corporate deductible.

In addition, we will continue to purchase coverage for our directors and officers on an ongoing basis.

The property coverage includes varying deductibles depending on the cause of the property damage.

These deductibles range from 2% to 5% of the affected property values for certain flood and wind and earthquake related incidents.

Employees and Medical Staffs

At December 31, 2019, we had approximately 280,000 employees, including approximately 70,000 part-time employees.

References herein to “employees” refer to employees of our affiliates.

We purchase, from unrelated insurance companies, coverage for cyber security incidents, directors and officers liability and property loss in amounts we believe are adequate and subject to terms of coverage we believe to be reasonable.

Human Capital Resources

Our workforce is comprised of approximately 275,000 employees (as of December 31, 2020), including approximately 80,000 part-time employees (references herein to “employees” refer to employees of our affiliates).

Our Board of Directors and its committees oversee human capital matters through regular reporting from management and advisors.

Diversity, Equity and Inclusion

We are committed to fostering a culture of inclusion that embraces and supports our patients, colleagues, partners, physicians and communities.

Our workforce is comprised of approximately 80% women and 41% people of color.

Our policies prohibit discrimination on the basis of age, gender, disability, race, color, ancestry, citizenship, religion, pregnancy, sexual orientation, gender identity or expression, national origin, medical condition, marital status, veteran status, payment source or ability, or any other basis prohibited by federal, state or local law.

We are dedicated to being an employer of choice.

We seek to recruit diverse candidates at all stages of their careers and through a variety of venues and programs.

We recently launched a data-driven diversity, equity and inclusion strategy based on internal and external research to support the advancement of women and people of color into leadership roles.

We also partner with national organizations which promote diversity in leadership positions.

Our Chief Diversity Officer leads a 20-person team that is responsible for advancing diversity, inclusion, equity and cultural competence initiatives across the Company.

We encourage you to review the “Inclusion, Compassion and Respect” section of our website, as well as the “Excellent People Make Excellence Happen” section of our 2020 Impact Report (located on our website) for more detailed information regarding our diversity, equity, inclusion and pay equity programs and initiatives.

Nothing on our website, including our 2020 Impact Report or sections thereof, shall be deemed incorporated by reference into this annual report on Form 10-K.

Compensation and Benefits

We provide competitive compensation and benefits programs to help meet the needs of our employees.

In addition to salaries, these programs (which vary by location) include an Employee Stock Purchase Plan, a 401(k) Plan, health care and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, employee assistance programs, tuition and student loan assistance and on-site services, such as cafeterias and fitness centers, among many others.

Serving the Community

We provide our colleagues with opportunities to learn, serve, lead and give in their communities.

By joining forces with other leading organizations, we maximize our ability to provide care for patients and populations.

Index to Financial Statements

Through research, partnerships, policies and investments, we are tackling problems in our communities, from disaster relief to environmental sustainability.

We also support the HCA Healthcare Foundation, whose mission is to promote health and well-being and strive to make a positive impact in all the communities HCA Healthcare serves by providing leadership, service and financial support to effective non-profit organizations.

Culture and Talent Development

HCA Healthcare’s culture is critical to our success.

We seek to instill a culture across our system that includes making a positive impact on our patients, communities and each other.

We seek to nurture a collaborative culture built on inclusion, compassion and respect.

To assess and improve employee retention and engagement, we conduct colleague pulse surveys and take action to address areas of concern.

During 2020, we hosted routine surveys as well as an innovative pandemic survey to gauge the pulse of our teams as we pivoted to respond to the needs of our communities during the pandemic.

We also seek to support our colleagues throughout their career journey, providing education, training, and opportunities to grow as clinicians and leaders.

We also support our colleagues’ development through programs such as tuition reimbursement, clinical training and certification, loan forgiveness and award-winning programs offered through the HCA Healthcare Leadership Institute.

Health, Safety and Wellness

We provide our employees and their families with access to a variety of health and wellness programs.

In response to the COVID-19 pandemic, we implemented changes to address the interests of our patients, employees, medical staff members and contractors, as well as the communities in which we operate, such as providing PPE, COVID-19 screening for patients and certain hospital staff, and scrub laundering.

Over 36,000 quarantined caregivers unable to work received 100% of base pay through our Quarantine Pay Program;

More than 127,000 full-time/part-time care or support facility colleagues with reduced hours due to COVID-19 received 70% of base pay through our Pandemic Pay Program;

3,500 caregivers were supported through company-paid hotel stays to protect their families from exposure;

More than 25,000 calls were placed to the HCA Nurse Care line, a free, confidential 24-hour phone counseling support program for nurses;

$10.6 million in assistance provided by the HCA Healthcare Hope Fund to HCA Healthcare colleagues, including more than $3 million provided to colleagues to help with the loss of household income, childcare costs or other unexpected financial challenges related to the COVID-19 pandemic.

Labor Matters

We are subject to various state and federal laws that regulate wages, hours, benefits and other terms and conditions relating to employment.

At December 31, 2020, certain employees at 37 of our domestic hospitals are represented by various labor unions.

One election was held in January 2020 that resulted in the addition of a number of employees to an existing bargaining unit at one of our facilities in California.

Two elections were held in January 2020 that resulted in the addition of a number of employees to existing bargaining units at one of our facilities in California and one facility in Missouri.

During September 2020, an election was held that resulted in the creation of a new bargaining unit at one of our facilities in North Carolina, and a decertification election was held that resulted in the elimination of a bargaining unit at a facility in Virginia.

While no other elections are scheduled in 2021, it is possible that employees at additional hospitals may unionize in the future.

We consider our employee relations to be good and have not experienced work stoppages that have materially, adversely affected our business or results

of operations.

We consider our employee relations to be good and have not experienced work stoppages that have materially, adversely affected our business or results of operations.

However, it is possible that a material work stoppage at one or more of our hospitals may occur in the

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Our hospitals, like most hospitals, have experienced rising labor costs.

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We also depend on the available labor pool of semi-skilled and unskilled employees in each of the markets in which we operate.

If there is additional union organizing activity and to the extent a significant portion of our employee base unionizes, our costs could increase materially.

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

In addition, the states in which we operate could adopt mandatory nurse-staffing ratios or could reduce mandatory nurse-staffing ratios already in place.

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Senior Vice President and Chief Information Officer

President — Clinical Services Group and Chief Medical Officer

President — Clinical Operations Group and Chief Medical Officer

Senior Vice President — Marketing and Communications

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Hazen served as the Company’s President and Chief Operating Officer.

Prior to that, he served as Chief Operating Officer of the Company from

January 2015 to November 2016 and as President — Operations of the Company from 2011 to 2015.

He also served as President — Western Group from 2001 to 2011 and as Chief Financial Officer — Western Group of the Company from 1995 to 2001.

Prior to that, he served as Chief Operating Officer of the Company from January 2015 to November 2016 and as President — Operations of the Company from 2011 to 2015.

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served as President — Western Group from 2001 to 2011 and as Chief Financial Officer — Western Group of the Company from 1995 to 2001.

Prior to that time, Mr.

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Moore had served as President — Outpatient Services Group since January 2006.

Moore served as Senior Vice President and as Chief Operating Officer — Outpatient Services Group from July 2004 to

January 2006 and as Senior Vice President — Operations Administration from July 1999 until July 2004.

Moore served as Senior Vice President and as Chief Operating Officer — Outpatient Services Group from July 2004 to January 2006 and as Senior Vice President — Operations Administration from July 1999 until July 2004.

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Moore served as Vice President — Operations Administration of the Company from September 1997 to July 1999, as Vice President — Benefits from October 1996 to September 1997, and as Vice President — Compensation from March 1995 until October 1996.

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Paslick joined the Company in 1985.

was appointed President — Clinical Services Group and Chief Medical Officer in November 2007.

was appointed President — Clinical Operations Group (f/k/a Clinical Services Group) and Chief Medical Officer in November 2007.

Perlin had served as Chief Medical Officer and Senior Vice President — Quality of the Company from August 2006 to November 2007.

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From 1987 to 1996 and again from 1999 to 2009, Mr.

Sowell was a partner at the law firm of Waller Lansden Dortch & Davis where he specialized in the areas of health care law, mergers and acquisitions, joint

ventures, private equity financing, tax law and general corporate law.

Sowell was a partner at the law firm of Waller Lansden Dortch & Davis where he specialized in the areas of health care law, mergers and acquisitions, joint ventures, private equity financing, tax law and general corporate law.

He also co-managed

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Sowell served as the head of development, and later as the Chief Operating Officer of Arcon Healthcare.

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was appointed Senior Vice President — Payer Contracting and Alignment (formerly Senior Vice President — Employer and Payer Engagement) in July 2016.

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Christopher F.

was appointed Senior Vice President and Controller in April 2016.

Wyatt was appointed Senior Vice President and Controller in April 2016.

Prior to that time, Mr.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business