What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-04-30 compared with 2020-10-29 · 173 added, 278 removed, 212 unchanged (68% of the section changed)

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These factors include, but are not limited to, (1) developments related to COVID-19,

including, without limitation, related to the length and severity of the pandemic;

including, without limitation, the length and severity of the pandemic and the spread of virus strains with new epidemiological characteristics;

the volume of canceled or rescheduled procedures and the volume of COVID-19

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measures we are taking to respond to the COVID-19

the impact and terms of government and administrative regulation and stimulus (including the Families First Coronavirus Response Act (“FFCRA”), the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, the Paycheck Protection Program and Health Care Enhancement Act and other enacted legislation);

changes in revenues due to declining patient volumes, changes in payor mix and deteriorating macroeconomic conditions (including increases in uninsured and underinsured patients);

the impact and terms of government and administrative regulation and stimulus (including the Families First Coronavirus Response Act, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, the Paycheck Protection Program and Health Care Enhancement Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021 and other enacted and potential future legislation);

changes in revenues due to declining patient volumes, changes in payer mix and deteriorating macroeconomic conditions (including increases in uninsured and underinsured patients);

potential increased expenses related to labor, supply chain or other expenditures;

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supply shortages and disruptions;

and the timing and availability of effective medical treatments and vaccines, (2) the impact of our substantial indebtedness and the ability to refinance such indebtedness on acceptable terms, as well as risks associated with disruptions in the financial markets and the business of financial institutions as the result of the COVID-19

pandemic which could impact us from a financial perspective, (3) the impact of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), including the effects of court challenges to, any repeal of, or changes to, the Affordable Care Act or additional changes to its implementation, the possible enactment of additional federal or state health care reforms and possible changes to other federal, state or local laws or regulations affecting the health care industry, including single-payer proposals (often referred to as “Medicare for All”), and also including any such laws or governmental regulations which are adopted in response to the COVID-19

pandemic, (4) the effects related to the continued implementation of the sequestration spending reductions required under the Budget Control Act of 2011, and related legislation extending these reductions, and the potential for future deficit reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or create additional spending reductions, (5) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (6) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (7) possible changes in Medicare, Medicaid and other state programs, including Medicaid supplemental payment programs or Medicaid waiver programs, that may impact reimbursements to health care providers and insurers and the size of the uninsured or underinsured population, (8) the highly competitive nature of the health care business, (9) changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under third-party payer agreements, the ability to enter into and renew third-party payer provider agreements on acceptable terms and the impact of consumer-driven health plans and physician utilization trends and practices, (10) the efforts of health insurers, health care providers, large employer groups and others to contain health care costs, (11) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (12) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel, (13) the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, (14) changes in accounting practices, (15) changes in general economic conditions nationally and regionally in our markets, including economic and business conditions (and the impact thereof on the financial markets and banking

and the timing, availability and adoption of effective medical treatments and vaccines, (2) the impact of our substantial indebtedness and the ability to refinance such indebtedness on acceptable terms, as well as risks associated with disruptions in the financial markets and the business of financial institutions as the result of the COVID-19

pandemic which could impact us from a financial perspective, (3) the impact of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), including the effects of court challenges to, any repeal of, or changes to, the Affordable Care Act or additional changes to its implementation, the possible enactment of additional federal or state health care reforms and possible changes to other federal, state or local laws or regulations affecting the health care industry, 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 also including any such laws or governmental regulations which are adopted in response to the COVID-19

pandemic, (4) the effects related to the implementation of sequestration spending reductions required under the Budget Control Act of 2011, related legislation extending these reductions, and those required under the Pay-As-You-Go Act of 2010 (“PAYGO Act”) as a result of the federal budget deficit impact of the American Rescue Plan Act of 2021, and the potential for future deficit reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or create additional spending reductions, (5) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (6) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (7) possible changes in Medicare, Medicaid and other state programs, including Medicaid supplemental payment programs or Medicaid waiver programs, that may impact reimbursements to health care providers and insurers and the size of the uninsured or underinsured population, (8) the highly competitive nature of the health care business, (9) changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under third-party payer agreements, the ability to enter into and renew third-party payer provider agreements on acceptable terms and the impact of consumer-driven health plans and physician utilization trends and practices, (10) the efforts of health insurers, health care providers, large employer groups and others to contain health care costs, (11) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (12) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel, (13) the availability and terms of capital to fund the expansion of our business and improvements to our existing

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Forward-Looking Statements (continued)

industry) resulting from the COVID-19

facilities, (14) changes in accounting practices, (15) changes in general economic conditions nationally and regionally in our markets, including economic and business conditions (and the impact thereof on the economy, financial markets and banking industry) resulting from the COVID-19

pandemic, (16) the emergence of and effects related to other pandemics, epidemics and infectious diseases, (17) future divestitures which may result in charges and possible impairments of long-lived assets, (18) changes in business strategy or development plans, (19) delays in receiving payments for services provided, (20) the outcome of pending and any future tax audits, disputes and litigation associated with our tax positions, (21) potential adverse impact of known and unknown government investigations, litigation and other claims that may be made against us, (22) the impact of potential cybersecurity incidents or security breaches, (23) our ongoing ability to demonstrate meaningful use of certified electronic health record (“EHR”) technology and the impact of interoperability requirements, (24) the impact of natural disasters, such as hurricanes and floods, or similar events beyond our control, (25) changes in the U.S.

federal, state, or foreign tax laws including interpretive guidance that may be issued by taxing authorities or other standard setting bodies, and (26) other risk factors described in our annual report on Form 10-K

for the year ended December 31, 2019, our quarterly report on Form 10-Q

for the quarter ended June 30, 2020 and our other filings with the Securities and Exchange Commission.

for the year ended December 31, 2020 and our other filings with the Securities and Exchange Commission.

As a consequence, current plans, anticipated actions and future financial position and results of operations may differ from those expressed in any forward-looking statements made by or on behalf of HCA.

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We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

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 and have continued to be impacted into the third quarter of 2020 as various policies were implemented by federal, state and local governments in response to the COVID-19

pandemic that have caused many people to remain at home and forced the closure of or limitations on certain businesses, as well as 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, some restrictions remain in place, and we are unable to predict the future impact of the pandemic on our operations.

During the nine months ended September 30, 2020, we received $4.449 billion of accelerated Medicare payments and $1.674 billion in general and targeted distributions from the Provider Relief Fund (net of amounts returned), both as provided for and established under the CARES Act.

The Provider Relief Fund distributions were accounted for as government grants, and recognized on a systematic and rational basis as other income, once there is reasonable assurance that the applicable terms and conditions required to retain the funds will be met.

Based on our analysis of the compliance and reporting requirements of the Provider Relief Fund and the impact of the pandemic on our operating results from the beginning of the pandemic in March through June 30, 2020, we recognized $822 million related to the general distribution funds during the quarter ended June 30, 2020.

During the quarter ended September 30, 2020, we continued to evaluate our operating results and gave consideration to the updated reporting guidelines issued in September by the U.S.

Department of Health and Human Services that significantly changed the measurement of Provider Relief Fund distributions providers are able to retain.

Based on our assessment of the likelihood of meeting the applicable terms and conditions of the Provider Relief Fund, during the quarter ended September 30, 2020 we reversed the $822 million of government stimulus income recognized during the quarter ended June 30, 2020.

On October 8, 2020, we announced our

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Pandemic and CARES Act Funding (continued)

decision to return, or repay early, all of our share of the Provider Relief Fund distributions of approximately $1.6 billion and the approximately $4.4 billion of Medicare accelerated payments.

The total accelerated Medicare payments and Provider Relief Fund distributions received are recorded under the caption “government stimulus refund liability” in our condensed consolidated balance sheet at September 30, 2020.

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 were implemented by federal, state and local governments in response to the COVID-19

pandemic, and the public remains wary of real or perceived opportunities for exposure to the virus.

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 scope and duration of stay-at-home

practices and business closures and restrictions, recommended suspensions of elective procedures, continued declines in patient volumes for an indeterminable length of time, increases in the number of uninsured and underinsured patients as a result of higher sustained rates of unemployment, incremental expenses required for supplies and personal protective equipment, and changes in professional and general liability exposure.

Because of these and other uncertainties, we cannot estimate the length or severity of the impact of the pandemic on our business.

If we incur 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.

During the third quarter of 2020, we believe COVID-19 cases at our hospitals contributed to an increase in patient acuity and had a positive impact on our average reimbursement per case.

However, the impact of COVID-19 in future periods may vary and could adversely impact our results of operations.

Third Quarter 2020 Operations Summary

Revenues increased to $13.311 billion in the third quarter of 2020 from $12.694 billion in the third quarter of 2019.

Because of these uncertainties, we cannot estimate how long or to what extent the pandemic will impact our operations.

First Quarter 2021 Operations Summary

Revenues increased to $13.977 billion in the first quarter of 2021 from $12.861 billion in the first quarter of 2020.

Net income attributable to HCA Healthcare, Inc.

totaled $668 million, or $1.95 per diluted share, for the quarter ended September 30, 2020, compared to $612 million, or $1.76 per diluted share, for the quarter ended September 30, 2019.

Third quarter results for 2020 include the reversal of $822 million, or $1.72 per diluted share, of government stimulus income recorded in the second quarter of 2020 related to general distribution funds from the Provider Relief Fund established by the CARES Act.

Third quarter results for 2020 also include gains on sales of facilities of $14 million, or $0.03 per diluted share.

Third quarter results for 2019 include losses on retirement of debt of $211 million, or $0.47 per diluted share.

totaled $1.423 billion, or $4.14 per diluted share, for the quarter ended March 31, 2021, compared to $581 million, or $1.69 per diluted share, for the quarter ended March 31, 2020.

First quarter results for 2020 include losses on retirement of debt of $295 million, or $0.66 per diluted share, and gains on sales of facilities of $7 million, or $0.02 per diluted share.

Our revenues for the quarter ended March 31, 2020 include $55 million, or $0.12 per diluted share, related to the settlement of Medicare outlier calculations for prior periods.

Our provisions for income taxes for the first quarters of 2021 and 2020 included tax benefits of $74 million, or $0.22 per diluted share, and $53 million, or $0.15 per diluted share, respectively, related to employee equity award settlements.

All “per diluted share” disclosures are based upon amounts net of the applicable income taxes.

Shares used for diluted earnings per share were 343.346 million shares for the quarter ended September 30, 2020 and 347.487 million shares for the quarter ended September 30, 2019.

During 2019 and the first nine months of 2020, we repurchased 7.949 million shares and 3.287 million shares of our common stock, respectively.

Due to the COVID-19

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 and have continued to be impacted into the third quarter of 2020 as various policies were implemented by federal, state and local governments in response to the COVID-19

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

Revenues increased 4.9% on a consolidated basis and 4.5% on a same facility basis for the quarter ended September 30, 2020, compared to the quarter ended September 30, 2019.

Revenues increased 8.7% on a consolidated basis and 9.0% on a same facility basis for the quarter ended March 31, 2021, compared to the quarter ended March 31, 2020.

The increase in consolidated revenues can be primarily attributed to the net impact of a 16.1% increase in revenue per equivalent admission offset by a 6.4% decline in equivalent admissions.

The same facility revenues increase primarily resulted from the net impact of a 14.8% increase in same facility revenue per equivalent admission offset by a 9.0% decline in same facility equivalent admissions.

The same facility revenues increase primarily resulted from the net impact of a

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Third Quarter 2020 Operations Summary (continued)

During the quarter ended September 30, 2020, consolidated admissions and same facility admissions declined 3.9% and 3.8%, respectively, compared to the quarter ended September 30, 2019.

Surgeries declined 6.7% on a consolidated basis and declined 6.5% on a same facility basis during the quarter ended September 30, 2020, compared to the quarter ended September 30, 2019.

Emergency department visits declined 20.1% and 20.3% on a consolidated basis and on a same facility basis, respectively, during the quarter ended September 30, 2020, compared to the quarter ended September 30, 2019.

Consolidated and same facility uninsured admissions declined 12.7% and 14.2%, respectively, for the quarter ended September 30, 2020, compared to the quarter ended September 30, 2019.

Cash flows from operating activities increased $591 million, from $2.126 billion for the third quarter of 2019 to $2.717 billion for the third quarter of 2020.

The increase in cash provided by operating activities was primarily related to the net effect of an increase in net income, excluding the government stimulus income reversal, gains on sales of facilities and losses on retirement of debt, of $488 million, receipt of an additional $302 million in Provider Relief Funds, and positive changes in working capital of $277 million, primarily from the increase in accounts payable and accrued expenses, offset by declines related to income taxes of $486 million.

First Quarter 2021 Operations Summary (continued)

16.6% increase in same facility revenue per equivalent admission offset by a 6.5% decline in same facility equivalent admissions.

During the quarter ended March 31, 2021, consolidated admissions and same facility admissions declined 4.1% and 4.2%, respectively, compared to the quarter ended March 31, 2020.

Surgeries declined 0.7% on a consolidated basis and declined 0.6% on a same facility basis during the quarter ended March 31, 2021, compared to the quarter ended March 31, 2020.

Emergency department visits declined 18.7% and 18.4% on a consolidated basis and on a same facility basis, respectively, during the quarter ended March 31, 2021, compared to the quarter ended March 31, 2020.

Consolidated and same facility uninsured admissions declined 15.8% and 15.7%, respectively, for the quarter ended March 31, 2021, compared to the quarter ended March 31, 2020.

Cash flows from operating activities increased $613 million, from $1.375 billion for the first quarter of 2020 to $1.988 billion for the first quarter of 2021.

The increase in cash provided by operating activities was primarily related to the net effect of an increase in net income, excluding gains on sales of facilities and losses on retirement of debt, of $659 million and an increase related to income taxes of $218 million, offset by negative changes in working capital of $311 million, primarily related to an increase in accounts receivable.

Results of Operations

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

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Revenue/Volume Trends (continued)

Revenues increased 4.9% from $12.694 billion in the third quarter of 2019 to $13.311 billion in the third quarter of 2020.

Revenues increased 8.7% from $12.861 billion in the first quarter of 2020 to $13.977 billion in the first quarter of 2021.

Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers.

Estimates of contractual allowances under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements.

Estimates of contractual adjustments under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements.

Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts).

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care, who have income at or below 400% of the federal poverty level, are eligible for charity care.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Revenue/Volume Trends (continued)

Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues.

Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters and nine months ended September 30, 2020 and 2019 are summarized in the following table (dollars in millions):

Managed Medicare

Managed Medicaid

Managed care and insurers

International (managed care and insurers)

Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters ended March 31, 2021 and 2020 are summarized in the following table (dollars in millions):

Managed Medicare

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International (managed care and insurers)

Consolidated and same facility revenue per equivalent admission increased 15.3% and 14.8%, respectively, in the third quarter of 2020, compared to the third quarter of 2019.

Consolidated and same facility equivalent admissions declined 9.1% and 9.0%, respectively, in the third quarter of 2020, compared to the third quarter of 2019.

Consolidated and same facility outpatient surgeries declined 6.7% and 6.3%, respectively, in the third quarter of 2020, compared to the third quarter of 2019.

Consolidated and same facility inpatient surgeries both declined 6.8% in the third quarter of 2020, compared to the third quarter of 2019.

Consolidated and same facility emergency department visits declined 20.1% and 20.3%, respectively, in the third quarter of 2020, compared to the third quarter of 2019.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Revenue/Volume Trends (continued)

Consolidated and same facility revenue per equivalent admission increased 16.1% and 16.6%, respectively, in the first quarter of 2021, compared to the first quarter of 2020.

Consolidated and same facility equivalent admissions declined 6.4% and 6.5%, respectively, in the first quarter of 2021, compared to the first quarter of 2020.

Consolidated and same facility outpatient surgeries increased 2.2% and 2.3%, respectively, in the first quarter of 2021, compared to the first quarter of 2020.

Consolidated and same facility inpatient surgeries declined 5.6% and 5.4%, respectively, in the first quarter of 2021, compared to the first quarter of 2020.

Consolidated and same facility emergency department visits declined 18.7% and 18.4%, respectively, in the first quarter of 2021, compared to the first quarter of 2020.

Our revenues increased, although our patient volumes declined, during the first quarter of 2021 compared to the first quarter of 2020 due to favorable changes in payer mix and higher acuity levels for patients treated during the first quarter of 2021, which resulted in an increase in revenue per equivalent admission.

We believe these trends have been impacted by the effect of the pandemic on our operations, including the patients diagnosed with COVID-19.

To quantify the total impact of the trends related to uninsured patient accounts, we believe it is beneficial to view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price concessions.

A summary of the estimated cost of total uncompensated care for the quarters and nine months ended September 30, 2020 and 2019 follows (dollars in millions):

A summary of the estimated cost of total uncompensated care for the quarters ended March 31, 2021 and 2020 follows (dollars in millions):

Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization)

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Estimated cost of total uncompensated care

Same facility uninsured admissions declined by 6,492 admissions, or 14.2%, in the third quarter of 2020 compared to the third quarter of 2019, primarily due to the reimbursement received as provided for under the FFCRA and subsequent legislation for uninsured patients diagnosed with COVID-19, and the resulting classification of those patients as an insured admission.

Same facility uninsured admissions declined 10.0%, in the second quarter of 2020 compared to the second quarter of 2019.

Same facility uninsured admissions increased 7.1%, in the first quarter of 2020 compared to the first quarter of 2019.

Same facility uninsured admissions in 2019, compared to 2018, increased 6.8% in the fourth quarter, increased 2.1% in the third quarter, increased 5.1% in the second quarter, and were flat in the first quarter.

The approximate percentages of our admissions related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers and the uninsured for the quarters and nine months ended September 30, 2020 and 2019 are set forth in the following table.

Managed Medicare

Managed Medicaid

Managed care and insurers

Same facility uninsured admissions declined by 6,564 admissions, or 15.7%, in the first quarter of 2021 compared to the first quarter of 2020.

Same facility uninsured admissions in 2020, compared to 2019, declined 9.1% in the fourth quarter, declined 14.2% in the third quarter, declined 10.0% in the second quarter, and increased 7.1% in the first quarter.

The declines in the first quarter of 2021, compared to the first quarter of 2020, and the last three quarters of 2020, compared to the last three quarters of 2019, were primarily due to the reimbursement received, as

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

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Revenue/Volume Trends (continued)

The approximate percentages of our inpatient revenues related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers for the quarters and nine months ended September 30, 2020 and 2019 are set forth in the following table.

provided for under the Families First Coronavirus Response Act and subsequent legislation, for uninsured patients diagnosed with COVID-19

and the resulting classification of those patients as an insured admission, as well as general declines in patient volumes resulting from the pandemic’s impact on our operations.

The approximate percentages of our admissions related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers and the uninsured for the quarters ended March 31, 2021 and 2020 are set forth in the following table.

Managed Medicare

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Managed care and insurers

At September 30, 2020, we had 91 hospitals in the states of Texas and Florida.

During the third quarter of 2020, 55% of our admissions and 49% of our revenues were generated by these hospitals.

Uninsured admissions in Texas and Florida represented 71% of our uninsured admissions during the third quarter of 2020.

The approximate percentages of our inpatient revenues related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers for the quarters ended March 31, 2021 and 2020 are set forth in the following table.

Managed Medicare

Managed Medicaid

Managed care and insurers

At March 31, 2021, we had 92 hospitals in the states of Texas and Florida.

During the quarter ended March 31, 2021, 56% of our admissions and 49% of our revenues were generated by these hospitals.

Uninsured admissions in Texas and Florida represented 73% of our uninsured admissions during the quarter ended March 31, 2021.

We receive a significant portion of our revenues from government health programs, principally Medicare and Medicaid, which are highly regulated and subject to frequent and substantial changes.

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In December 2017, CMS approved an extension of this waiver through September 30, 2022, but indicated that it will phase out some of the federal funding.

Our Texas Medicaid revenues included Medicaid supplemental payments of $154 million and $103 million during the third quarters of 2020 and 2019, respectively, and $455 million and $317 million during the first nine months of 2020 and 2019, respectively.

Our Texas Medicaid revenues included Medicaid supplemental payments of $138 million and $115 million during the first quarters of 2021 and 2020, respectively.

In addition, we receive supplemental payments in several other states.

We are aware these supplemental payment programs are currently being reviewed by certain state agencies and some states have made requests to CMS to replace their existing supplemental payment programs.

It is possible these reviews and requests will result in the restructuring of such supplemental payment programs and could result in the payment programs being reduced or eliminated.

It is possible these reviews and requests will result in the restructuring of such supplemental payment programs and could result in the payment programs

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Revenue/Volume Trends (continued)

being reduced or eliminated.

Because deliberations about these programs are ongoing, we are unable to estimate the financial impact the program structure modifications, if any, may have on our results of operations.

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We believe this information is useful to investors as it provides insight to how management evaluates operational performance and trends between reporting periods.

Information on how these metrics and statistical information are defined is provided in the following tables summarizing operating results and statistical data.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Information on how these metrics and statistical information are defined is provided in the following tables summarizing operating results and operating data.

Operating Results Summary

The following is a comparative summary of results of operations for the quarters and nine months ended September 30, 2020 and 2019 (dollars in millions):

The following is a comparative summary of results of operations for the quarters ended March 31, 2021 and 2020 (dollars in millions):

Salaries and benefits

Other operating expenses

Government stimulus income reversal

Equity in earnings of affiliates

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Revenue per equivalent admission

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.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

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Operating Results Summary (continued)

Salaries and benefits

Other operating expenses

Equity in earnings of affiliates

Depreciation and amortization

Interest expense

Losses (gains) on sales of facilities

Losses on retirement of debt

Income before income taxes

Provision for income taxes

Net income attributable to noncontrolling interests

Net income attributable to HCA Healthcare, Inc.

% changes from prior year:

Income before income taxes

Net income attributable to HCA Healthcare, Inc.

Admissions(a)

Equivalent admissions(b)

Revenue per equivalent admission

Same facility % changes from prior year(c):

Admissions(a)

Equivalent admissions(b)

Revenue per equivalent admission

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.

Equivalent admissions are used by management and certain investors as a general measure of combined inpatient and outpatient volume.

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Same facility information excludes the operations of hospitals and their related facilities which were either acquired or divested during the current and prior period.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Quarters Ended September 30, 2020 and 2019

Revenues increased to $13.311 billion in the third quarter of 2020 from $12.694 billion in the third quarter of 2019.

Quarters Ended March 31, 2021 and 2020

Revenues increased to $13.977 billion in the first quarter of 2021 from $12.861 billion in the first quarter of 2020.

Net income attributable to HCA Healthcare, Inc.

totaled $668 million, or $1.95 per diluted share, for the quarter ended September 30, 2020, compared to $612 million, or $1.76 per diluted share, for the quarter ended September 30, 2019.

Third quarter results for 2020 include the reversal of $822 million, or $1.72 per diluted share, of government stimulus income previously recorded in the second quarter of 2020 related to general distribution funds from the Provider Relief Fund established by the CARES Act.