What changed in this filing

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Item 1A. Risk Factors

2021-04-30 compared with 2020-10-29 · 2 added, 129 removed, 3 unchanged (98% of the section changed)

2 unchanged sentences

for the year ended December 31, 2020, which are incorporated herein by reference.

The following disclosures supplement the risk factors previously disclosed in our annual report on Form 10-K

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

for the quarter ended June 30, 2020.

The COVID-19 pandemic

is significantly affecting our operations, business and financial condition.

Our liquidity could also be negatively impacted, particularly if the U.S.

economy remains unstable for a significant amount of time.

On January 31, 2020, the Secretary of U.S.

Department of Health and Human Services (“HHS”) declared a national public health emergency (“PHE”) due to a novel coronavirus.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19,

a disease caused by this novel coronavirus, a pandemic.

This disease continues to spread throughout the United States and other parts of the world.

The COVID-19 pandemic

is significantly affecting our employees, patients, hospitals, communities and business operations, as well as the U.S.

economy and financial markets.

As the COVID-19 crisis

continues to evolve, the full extent to which the COVID-19 outbreak

will impact our business, results of operations, financial condition and liquidity will depend on future developments that are highly uncertain and cannot be accurately predicted.

For example, we are not able to predict or control the severity or duration of the pandemic, including whether there will be additional periods of increases in the number of COVID-19

cases in areas in which we operate, the timing and availability of effective medical treatments and vaccines or the efficacy of public health controls.

Florida and Texas, our two largest markets, are and may continue to be “hot spots” of the COVID-19

Due to the concentration of our hospitals in Texas and Florida, we are particularly sensitive to the increase in COVID-19

cases in those states where the pandemic could have a disproportionate effect on our business.

We have been working with federal, state and local health authorities to respond to COVID-19 cases

in the markets we serve and continue to take and support measures to try to limit the spread of the virus and to mitigate the burden on the health care system.

For example, we are subject to COVID-19

data reporting requirements, and some states are requiring hospitals to maintain a reserve of personal protective equipment (“PPE”) and mandating COVID-19

screening for new patients and certain hospital staff.

CMS has made COVID-19 data reporting requirements a Medicare condition of participation for hospitals, such that noncompliance with these requirements could result in termination from the Medicare program.

We have incurred and will continue to incur additional costs related to protecting the health and well-being and meeting the needs of our patients, employees, medical staff members and contractors, including pandemic pay programs, hoteling our staff and additional scrub laundering.

We expect to continue to incur additional costs, which may be significant, as we continue to implement operational changes in response to this pandemic.

Further, our management is focused on mitigating the impact of the COVID-19

pandemic, which has required and will continue to require a substantial investment of time and resources across our enterprise.

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

Although we are implementing considerable safety measures, treatment of COVID-19 patients

has associated risks to our employees, patients and physicians.

These risks, and how clinical staff perceive and respond to them, may adversely affect our operating capacity.

Despite considerable efforts to source vital supplies, we have experienced and may continue to experience supply chain disruptions, including delays and price increases in equipment, pharmaceuticals and medical supplies, particularly PPE, and we may experience shortages.

Our current PPE inventory is satisfactory, but we cannot be certain that our supplies will remain sufficient in the future.

In addition, restrictive measures taken to address the COVID-19

pandemic may impact the availability of employed and contract labor staffing for corporate support services, including, but not limited to, coding, billing, collection and other business office functions, which could adversely affect our execution of established control procedures that may not be sufficiently mitigated through execution of our business continuity plans.

Staffing, equipment, and pharmaceutical and medical supplies shortages may impact our ability to schedule, admit and treat patients.

The combined impact of these factors,

despite our efforts to mitigate their effect, could result in reduced employee morale and increased exposure to labor unrest, work stoppages or other workforce disruptions.

Restrictions on elective procedures, travel bans, social distancing, quarantines and stay-at-home

and shelter-in-place

orders, and other restrictive measures have reduced, and may in the future reduce, the volume of procedures performed at our facilities, as well as the volume of emergency room and physician office visits unrelated to COVID-19.

In the last two weeks of March 2020 and in the second quarter of 2020, we cancelled a substantial amount of elective procedures at our facilities and closed or reduced operating hours at a significant number of our surgery centers that specialize in elective procedures, resulting in significantly reduced patient volumes and operating revenues.

Some state and local governments are limiting hospital volume by requiring a minimum percentage of vacant beds in case of a surge in COVID-19

Although social contact restrictions have eased across the U.S.

and most states have lifted moratoriums on non-emergent

procedures, some restrictions remain in place.

Further closings and restrictions on hours and services may be imposed or re-imposed

for an unpredictable amount of time in connection with increasing or fluctuating COVID-19

We are currently selectively suspending elective procedures at certain facilities based upon the local COVID-19

volume trends, bed capacity and staffing levels.

It is unclear whether certain markets, such as Florida and Texas, will continue to experience periods of increases or spikes in the number of COVID-19

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 reimbursement.

However, the impacts of COVID-19

in future periods may vary, could exert unpredictable and potentially negative effects on clinical performance metrics that impact reimbursement levels and could adversely affect our results of operations.

Some individuals may choose to postpone medical care for an undetermined period of time even in the absence of government or industry-adopted restrictions.

At this time, we believe that certain of the patient volume declines we are experiencing reflect a deferral of health care services utilization to a later period, rather than a permanent reduction in demand for our services;

however, we cannot provide assurances as to the recovery of pre-pandemic patient

volumes or the ultimate impact on demand.

Further, our patient volumes may be adversely impacted by the expanded use of telehealth services from other providers as a result of reduced regulatory barriers on the use and reimbursement of telehealth services and individuals becoming more comfortable with receiving remote care.

Broad economic factors resulting from the current COVID-19 pandemic,

including high unemployment and underemployment rates and reduced consumer spending and confidence, also affect our service mix, revenue mix payer mix and patient volumes, as well as our ability to collect outstanding receivables.

Business closings and layoffs in the areas where we operate may lead to increases in the uninsured and underinsured populations and adversely affect demand for our services, as well as the ability of patients and other payers to pay for services rendered.

Any increase in the amount or deterioration in the collectability of patient accounts receivable will adversely affect our cash flows and results of operations, requiring an increased level of working capital.

In addition, our results and financial condition may be adversely affected by federal, state or local laws, regulations, orders, or other governmental or regulatory actions addressing the current COVID-19 pandemic

health care system, which could result in direct or indirect restrictions to our business, financial condition, results of operations and cash flow.

We may also be subject to claims from patients, employees and others exposed to COVID-19 at

our facilities.

Such actions may involve large demands, as well as substantial defense costs, though there is no certainty at this time whether any such claims will be filed or the outcome of such claims if filed.

Our professional and general liability insurance, a portion of which is provided through a 100% owned insurance subsidiary, may not cover all claims against us.

If general economic conditions continue to deteriorate or remain uncertain for an extended period of time, our liquidity and ability to repay our outstanding debt may be harmed and the trading price of our common stock could decline.

Furthermore, the current COVID-19 pandemic

may cause disruption in the financial markets and banking industry.

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

There can be no assurance that we will be able to raise additional funds on terms acceptable to us, if at all.

The foregoing and other continued disruptions to our business as a result of the COVID-19 pandemic

could heighten the risks in certain of the other risk factors described in our Annual Report on Form 10-K for

the year ended December 31, 2019, any of which could have a material adverse effect on our results of operations and financial position.

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 CARES Act is a $2 trillion economic stimulus package signed into law on March 27, 2020, in response to the COVID-19 pandemic.

In an effort to stabilize the U.S.

economy, the CARES Act provides for cash payments to individuals and loans and grants to small businesses, among other measures.

The Paycheck Protection Program and Health Care Enhancement (“PPPHCE”) Act, an expansion of the CARES Act that includes additional emergency appropriations, was signed into law on April 24, 2020.

Together, the CARES Act and the PPPHCE Act authorize $175 billion in funding to be distributed to hospitals and other health care providers through the Public Health and Social Services Emergency Fund (“PHSSEF”), also known as the Provider Relief Fund.

These funds are intended to reimburse eligible providers and suppliers for healthcare-related expenses or lost revenues attributable to COVID-19.

Recipients are not required to repay PHSSEF funds, provided that they attest to and comply with certain terms and conditions, including limitations on balance billing and not using PHSSEF funds to reimburse expenses or losses that other sources are obligated to reimburse.

HHS allocated $50 billion of the CARES Act provider relief funding for general distribution to Medicare providers impacted by COVID-19,

to be distributed proportional to providers’ share of 2018 net patient revenue.

HHS distributed $18 billion to eligible Medicaid and CHIP providers that did not receive a payment from the general distribution allocation and $14.4 billion to safety net hospitals.

In addition, HHS has made targeted distributions for providers in areas particularly impacted by COVID-19,

rural providers, providers of services with lower shares of Medicare reimbursement or who predominantly serve the Medicaid population, and providers requesting reimbursement for treatment of uninsured Americans, among others.

A portion of the available funding is being distributed to reimburse health care providers that submit claims requests for COVID-19-related treatment

of uninsured patients at Medicare rates.

HHS has not yet announced the precise method by which all future payments from the PHSSEF will be determined or allocated, so the potential impact to us is not currently known.

We have received $1.674 billion in grants from the PHSSEF (net of amounts returned), including $931 million of general distributions and $743 million for targeted distributions.

However, as previously disclosed, we plan to return, or repay early, all of the Company’s share of these funds from available cash and future cash flows from operations.

The CARES Act also makes other forms of financial assistance available to health care providers, including Medicare and Medicaid payments adjustments and an expansion of the Medicare Accelerated and Advance Payment Program, which makes available advance payments of Medicare funds in order to increase cash flow to providers.

During the quarter ended June 30, 2020, we received approximately $4.4 billion in accelerated Medicare payments, which are required to be repaid or recouped by CMS.

However, CMS is no longer accepting applications from hospitals and other Medicare Part A providers for accelerated payments and has suspended the advance payment program for physicians and other Medicare Part B providers.

Recoupment of accelerated payments was due to begin in August, but CMS has delayed the recoupment process for these payments, based on amended repayment terms imposed by the Continuing Appropriations Act, 2021 and Other Extensions Act, enacted October 1, 2020, until one year after payment was issued.

However, repayments can be made at any time, and, as previously disclosed, we plan to repay early all of the Company’s share of these funds from available cash and future cash flows from operations.

In addition to financial assistance, the CARES Act and related legislation include provisions intended to increase access to medical supplies and equipment and ease financial, legal and regulatory burdens on health care

For example, the CARES Act and related legislation suspend the Medicare sequestration payment adjustment from May 1, 2020 through December 31, 2020 (but extend sequestration through 2030), provide for a 20% add-on

payment under the hospital inpatient PPS for care provided to patients with COVID-19,

expand access to and payment for telehealth services under Medicare, prioritize review of drug applications to help with shortages of emergency drugs, delay Medicaid DSH reductions, and provide funding to reimburse providers for conducting COVID-19

testing for the uninsured.

HHS and CMS have announced other flexibilities for health care providers in response to COVID-19,

such as extensions for and relief from data submission requirements for providers participating in certain quality reporting programs.

It is unclear how changes to these and other value-based programs will affect our financial condition.

Due to the recent enactment of the CARES Act, the PPPHCE Act and other enacted legislation, there is still a high degree of uncertainty surrounding their implementation, and the COVID-19

pandemic continues to evolve.

Some of the measures allowing for flexibility in delivery of care and various financial supports for health care providers are available only for the duration of the PHE, and it is unclear whether or for how long the PHE declaration will be extended.

The current PHE determination expires January 21, 2021.

The HHS Secretary may choose to renew the PHE declaration for successive 90-day

periods for as long as the emergency continues to exist and may terminate the declaration whenever he determines that the PHE no longer exists.

The federal government may consider additional stimulus and relief efforts, but we are unable to predict whether additional stimulus measures will be enacted or their impact.

There can be no assurance as to the total amount of financial and other types of assistance we will receive under the CARES Act, PPPHCE Act or future legislation, if any, or whether we shall retain, return or repay any such assistance, and it is difficult to predict the impact of such legislation on our operations.

Further, there can be no assurance that the terms and conditions of provider relief funding or other relief programs will not change or be interpreted in ways that affect our ability to comply with such terms and conditions in the future (which could affect our ability or willingness to retain assistance), the amount of total stimulus funding we will receive or our eligibility to participate in such stimulus funding.

For time periods prior to returning Provider Relief Funds, with respect to future assistance, if any, we do not return, and in those cases where our partners retain such assistance, we will continue to monitor our compliance with the terms and conditions of the Provider Relief Fund, including demonstrating that the distributions received have been used for healthcare-related expenses or lost revenue attributable to COVID-19.

If we are unable to attest to or comply with current or future terms and conditions with respect to any assistance not voluntarily returned, our ability to retain some or all of the distributions received may be impacted.

We will continue to assess the potential impact of COVID-19 and

government responses to the pandemic on our business, results of operations, financial condition and cash flows.

There have not been any material changes to the risk factors previously disclosed in our annual report on Form 10-K

for the year ended December 31, 2020.

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-Q

Item 1A. Risk Factors