What changed in this filing

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Item 1. Business

2026-02-10 compared with 2025-02-14 · 250 added, 248 removed, 722 unchanged (41% of the section changed)

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is one of the leading health care services companies in the United States.

At December 31, 2024, we operated 190 hospitals, comprised of 180 general, acute care hospitals;

six behavioral hospitals;

and four rehabilitation hospitals.

At December 31, 2025, we operated 190 hospitals, comprised of 179 general acute care hospitals, seven behavioral hospitals, and four rehabilitation hospitals.

In addition, we operated 121 freestanding ambulatory surgery centers (“ASCs”) and 31 freestanding endoscopy centers.

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Please note that our website address is provided throughout this report as an inactive textual reference only.

We make available free of charge, through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

We make available free of charge, through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

The information provided on our website is not part of this report, and is therefore not incorporated by reference unless such information is specifically referenced elsewhere in this report.

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

Our Code of Conduct is available free of charge upon request to our Investor Relations Department, HCA Healthcare, Inc., One Park Plaza, Nashville, Tennessee 37203, and is also available on the Governance Documents page within the Governance section of our investor relations website at investor.hcahealthcare.com.

Business Strategy

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• pursue a disciplined development strategy;

• advance our digital and artificial intelligence (“AI”) capabilities.

Our strategy also emphasizes investments that seek to advance our clinical systems and digital capabilities, transform care models with innovative care solutions, expand our workforce development programs and enhance our health care networks and partnerships.

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

At December 31, 2024, we operated six behavioral hospitals with 602 licensed beds.

At December 31, 2025, we operated seven behavioral hospitals with 714 licensed beds.

Our behavioral 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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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.

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

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

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• We have significant indebtedness and may incur further indebtedness in the future.

Our indebtedness 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.

Our indebtedness 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.

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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 sharing patient data and interoperability and artificial intelligence (“AI”), involve risks that may adversely affect our operations.

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

• Our operations could be impaired by a failure in or breach of our information systems or those of third parties on whose systems our business relies.

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

• Failure to effectively manage change associated with our technology, resiliency and other initiatives, including with respect to the implementation of a new electronic health record (“EHR”) platform, may adversely affect our business, services and results of operations.

Risks related to public health crises:

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• 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.

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

• Our business and operations are subject to risks related to hurricanes, extreme weather events or other natural disasters.

• 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 or recessions.

• Our overall business results may suffer during periods of significant inflation, general economic weakness or recessions or as a result of changing governmental policies.

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

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Sources of Revenue

Hospital revenues depend upon inpatient occupancy levels, the medical and ancillary services ordered by physicians and provided to patients, the volume of outpatient procedures and the charges or reimbursement rates for such services.

Reimbursement rates for inpatient and outpatient services vary significantly depending on the type of third-party payer, the type of service (e.g., medical/surgical, intensive care or psychiatric) and the geographic location of the hospital.

Health care facility revenues depend on many factors, some of which vary by provider type.

For example, hospital revenues depend upon inpatient occupancy levels, the medical and ancillary services ordered by physicians and other professionals and provided to patients, the volume of outpatient procedures and the charges or reimbursement rates for such services.

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

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Amounts received under Medicare and Medicaid programs are generally significantly less than established hospital gross charges for the services provided.

Our hospitals generally offer discounts from established charges to certain group purchasers of health care services, including private health insurers, employers, health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”) and other managed care plans, including health plans offered through the Exchanges.

Our facilities generally offer discounts from established charges to certain group purchasers of health care services, including private health insurers, employers, health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”) and other managed care plans, including health plans offered through the Exchanges.

These discount programs generally limit our ability to increase revenues in response to increasing costs.

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If an uninsured patient does not qualify for these programs, the uninsured discount is applied.

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, resulting in a uniform percentage reduction across all Medicare programs of 2% per fiscal year that extends through the first eight months of federal fiscal year 2032.

We anticipate that the federal deficit will continue to place pressure on government health care programs, and it is possible that future deficit reduction legislation will impose additional spending reductions.

We anticipate that the federal deficit will continue to place pressure on government health care programs, and it is possible that future legislation will impose additional spending reductions.

Inpatient Acute Care

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The policy had funded an increase to the wage index value for hospitals with low wage indexes by decreasing reimbursement for all other hospitals.

CMS addressed the impact of the decision prospectively in its final rule updating inpatient hospital payment rates and policies for federal fiscal year 2025, but it is not yet clear how the agency will address the impact the low wage policy had in 2020 through 2024.

CMS has discontinued the low wage index policy and addressed the impact of the court decision prospectively in its final rules updating inpatient hospital payment rates and policies for federal fiscal years 2025 and 2026, but it is not yet clear how the agency will address the impact the low wage policy had in 2020 through 2024.

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.

For example, hospitals that do not successfully participate in the Hospital Inpatient Quality Reporting Program are subject to a 25% reduction of the market basket update.

Hospitals that do not demonstrate meaningful use of electronic health records (“EHRs”) are subject to a 75% reduction of the market basket update.

Hospitals that do not demonstrate meaningful use of EHRs are subject to a 75% reduction of the market basket update.

Further, Medicare does not allow an inpatient hospital discharge to be assigned to a higher paying MS-DRG if certain designated hospital acquired conditions (“HACs”) were not present on admission and the identified HAC is the only condition resulting in the assignment of the higher paying MS-DRG.

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Hospitals that do not achieve the necessary level of quality performance receive reduced Medicare inpatient hospital payments.

Hospitals are scored on a number of individual measures that are categorized into four domains:

Hospitals are scored on a number of

individual measures that are categorized into four domains:

clinical outcomes;

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Supreme Court invalidated this 340B program payment policy.

In light of this U.S.

Supreme Court decision and to achieve budget neutrality, CMS reduced payment rates for non-drug services under the outpatient PPS for calendar year 2023, and lump sum payments were distributed to affected 340B hospitals as the remedy for calendar years 2018 through 2022.

As a result and to achieve budget neutrality, CMS reduced payment rates for non-drug services under the outpatient PPS for calendar year 2023, and lump sum payments were distributed to affected 340B hospitals as the remedy for calendar years 2018 through 2022.

In order to comply with budget neutrality requirements, the U.S.

Department of Health and Human Services (“HHS”) finalized a corresponding offset in future non-drug item and service payments for all outpatient PPS providers (except new providers) that will reduce the outpatient PPS conversion factor by 0.5% annually.

This adjustment will start in calendar year 2026 and continue for approximately 16 years.

In addition, CMS has implemented an expanded site-neutral payment policy for clinic visit services provided at all off-campus provider-based departments.

This 0.5% reduction began in calendar year 2026 and was expected to continue for approximately 16 years, but CMS has indicated that it may accelerate this timeline by implementing a larger reduction beginning in calendar year 2027.

In addition, CMS finalized a rule in November 2025 that, beginning in calendar year 2026, will phase out over three years the Medicare 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 become eligible for Medicare reimbursement if performed in outpatient settings.

Further, CMS has implemented an expanded site-neutral payment policy for clinic visit services provided at all off-campus provider-based departments.

Under the policy, clinic visit services provided at all off-campus provider-based departments are generally not covered as outpatient department services under the outpatient PPS, but rather are reimbursed at the Medicare Physician Fee Schedule (“Physician Fee Schedule”) rate, which is generally lower than the outpatient PPS rate.

Beginning in calendar year 2026, CMS expanded this policy by also applying the Physician Fee Schedule rate to drug administration services furnished in excepted off-campus provider-based departments.

Rehabilitation

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Each federal fiscal year, IPF payment rates are updated using a market basket index, which is reduced by a productivity adjustment based on the BLS 10-year moving average of changes in specified economy-wide productivity.

For federal fiscal year 2024, CMS increased IPF payment rates by an estimated 3.3%, which reflected a 3.5% IPF market basket increase with a negative 0.2 percentage point productivity adjustment.

For federal fiscal year 2025, CMS increased the IPF payment rates by 2.8%, which reflected a 3.3% IPF market basket increase, reduced by a 0.5 percentage point productivity adjustment.

For federal fiscal year 2026, CMS increased the IPF payment rates by 2.5%, which reflects a 3.2% IPF market basket increase, reduced by a 0.7 percentage point productivity adjustment.

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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, 2024, we had six behavioral hospitals and 43 hospital behavioral units.

As of December 31, 2025, we had seven behavioral hospitals and 41 hospital behavioral units.

Ambulatory Surgery Centers

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From time to time, CMS expands the services that may be performed in ASCs, which may result in more Medicare procedures that historically have been performed in hospitals being moved to ASCs, reducing surgical volume in our hospitals.

For example, as part of the November 2025 final rule that established a three-year phase-out of the Medicare inpatient-only list, CMS expanded the list of procedures reimbursable by Medicare in the ASC setting to include many procedures that were previously categorized as inpatient-only.

Also, more Medicare procedures that historically have been performed in ASCs may be moved to physicians’ offices.

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Historically, CMS updated reimbursement rates for ASCs based on changes to the consumer price index.

However, for calendar years through 2025, CMS updates to ASC reimbursement rates are based on the hospital market basket index, partly to promote site-neutrality between hospitals and ASCs.

However, since calendar year 2019, CMS has updated ASC reimbursement rates based on the hospital market basket index, partly to promote site-neutrality between hospitals and ASCs.

Unless CMS extends this approach or adopts another payment update mechanism, ASC payment rates will be adjusted based on the consumer price index beginning in calendar year 2027.

For each federal fiscal year, the ASC payment system update is reduced by a productivity adjustment based on the BLS 10-year moving average of changes in specified economy-wide productivity.

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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 market basket update.

CMS reimburses home health agencies under the Home Health PPS.

Home health agencies are paid a national, standardized 30-day period payment rate if a period of care meets a certain threshold of home health visits (periods of care that do not meet the visit threshold are paid a per-visit payment rate for the discipline providing care).

The daily home health payment rate is adjusted for case-mix and area wage levels.

An outlier adjustment may be paid for periods of care where costs exceed a specific threshold amount.

Each calendar year, home health payment rates are updated using a market basket index, which is reduced by a productivity adjustment based on the BLS 10-year moving average of changes in specified economy-wide productivity.

For calendar year 2024, CMS increased home health payment rates by 0.8%, based on a home health payment update percentage of 3.0%, which reflected a 3.3% market basket increase, reduced by a 0.3 percentage point productivity adjustment, among other changes.

For calendar year 2025, total Medicare payments to home health agencies are anticipated to increase by 0.5%.

This increase is based on a home health payment update percentage of 2.7%, which reflects a 3.2% market basket increase, reduced by a 0.5 percentage point productivity adjustment, among other adjustments.

Home health agencies that do not submit required quality data are subject to a 2.0 percentage point reduction to the market basket update.

In addition, home health agencies are required to submit a one-time Notice of Admission (“NOA”) for each patient that establishes that the beneficiary is under a Medicare home health period of care.

Failure to submit the NOA within five calendar days from the start of care results in a reduction to the 30-day period payment amount for each day from the start of care date until the date the NOA is submitted.

Under the nationwide Home Health Value-Based Purchasing (“HHVBP”) Model, home health agencies receive increases or reductions to their Medicare fee-for-service payments of up to 5%, based on performance against specific quality measures relative to the performance of other home health providers.

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

Payment of claims for home health services may be impacted by the Review Choice Demonstration, a program intended to identify and prevent home health services fraud, reduce the number of Medicare appeals, and improve provider compliance with Medicare program requirements.

The program currently applies only to home health agencies in certain states, including North Carolina, Florida and Texas.

Providers in these states may select either pre-claim review or post-payment review.

Home health agencies that maintain high levels of compliance are eligible for additional options that may be less burdensome.

Medicare beneficiaries who have a terminal illness and a life expectancy of six months or less may elect to receive hospice benefits (palliative care) instead of standard coverage of treatment for the terminal illness and related conditions.

Hospice services are paid under the Hospice PPS, under which CMS sets a daily rate for each day a patient is enrolled in the hospice benefit.

The daily rate depends on the level of care provided to a patient (routine home care, continuous home care, inpatient respite care, or general inpatient care).

Daily rates are adjusted for factors such as area wage levels.

Each federal fiscal year, hospice payment rates are updated using the hospital inpatient market basket index, which is reduced by a productivity adjustment based on the BLS 10-year moving average of changes in specified economy-wide productivity.

For federal fiscal year 2024, CMS increased hospice payment rates by 3.1%, which reflected a 3.3% market basket update, reduced by a 0.2 percentage point productivity adjustment.

For federal fiscal year 2025, CMS increased hospice payment rates by 2.9%, which reflects a 3.4% market basket update, reduced by a 0.5 percentage point productivity adjustment.

Hospices that fail to satisfy quality reporting requirements receive a 4.0 percentage point reduction to the market basket update.

Overall payments made by Medicare to each hospice are subject to an inpatient cap and an aggregate cap.

The inpatient cap limits the number of days of inpatient care (general inpatient and respite) for which Medicare will pay up to a maximum of 20% of total patient care days.

Days in excess of the limitation are paid at the routine home care rate.

The aggregate cap limits the amount of Medicare reimbursement a hospice may receive for an individual patient in a given year.

The aggregate cap is updated annually.

In federal fiscal year 2025, the aggregate cap is $34,465.34.

If a hospice’s Medicare payments exceed its inpatient or aggregate caps, it must repay Medicare for the excess amount.

Physician Services

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These three elements are each modified by a geographic adjustment factor to account for local practice costs and are then aggregated.

While RVUs for various services may change in a given year, any alterations are required by statute to be virtually budget neutral, such that total payments made under the Physician Fee Schedule may not differ by more than $20 million from what payments would have been if adjustments were not made.

for various services may change in a given year, any alterations are required by statute to be virtually budget neutral, such that total payments made under the Physician Fee Schedule may not differ by more than $20 million from what payments would have been if adjustments were not made.

CMS annually reviews resource inputs for select services as part of the potentially misvalued code initiative.

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

For calendar year 2024, CMS reduced the conversion factor by approximately 2.8%.

Average payment rates under the Physician Fee Schedule will be reduced by approximately 2.9% in calendar year 2025.

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

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

CMS has indicated an intention to transition increasing financial risk to providers as the QPP evolves.

Physicians and certain other health care clinicians are required to participate in one of two QPP tracks.

Under both tracks, performance data collected in each performance year affects Medicare payments two years later.

CMS expects to transition increasing financial risk to providers as the QPP evolves.

The Advanced Alternative Payment Model (“Advanced APM”) track encourages participation in specific innovative payment models approved by CMS through financial incentives, which are paid two years after the relevant performance period, if a provider has sufficient participation (based on percentage of payments or patients) in an Advanced APM.

The incentive payments were initially set to expire after the 2023 performance year (with associated payments in 2025), but were extended for one year at a lower rate.

After the 2024 performance year and associated payments in 2026, Advanced APM incentive payments will no longer be available.

Instead, qualifying providers will receive positive adjustments to their Physician Fee Schedule payment rates.

Providers participating in the Advanced APM track are exempt from the reporting requirements and payment adjustments imposed under the Merit-Based Incentive Payment System (“MIPS”),

the other QPP participation track.

The Advanced Alternative Payment Model (“APM”) track encourages participation in specific innovative payment models approved by CMS through financial incentives, which are paid two years after the relevant performance period.

These financial incentives are not available for calendar year 2027 but restart for calendar year 2028.

In addition, starting in calendar year 2026, APM qualifying providers receive positive adjustments to their Physician Fee Schedule payment rates through a conversion factor specific to qualifying APM participants.

As required by statute, beginning in calendar year 2026, CMS has established two separate conversion factors:

one for items and services furnished by qualifying APM participants, and another for non-qualifying practitioners.

For calendar year 2026, CMS increased the qualifying APM conversion factor by approximately 3.8% and increased the non-qualifying practitioner conversion factor by approximately 3.3%.

These positive updates are driven by, among other factors, adjustments mandated by statute, including a temporary 2.5% increase for calendar year 2026 required by the 2025 Federal Budget Act (the “FBA”) enacted on July 4, 2025.

Providers participating in the APM track are exempt from the reporting requirements and payment adjustments imposed under the Merit-Based Incentive Payment System (“MIPS”), the other QPP participation track.

Providers electing the MIPS option receive payment incentives or are 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.

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the maximum negative payment adjustment is 9%.

In addition to the payment changes above, CMS finalized an efficiency adjustment of negative 2.5% for calendar year 2026 that will apply to several thousand non-time-based billing codes for services that CMS believes are likely to have become more efficient over time, such as surgical procedures, diagnostic imaging interpretation, and orthopedic services.

Time-based codes, such as those for evaluation and management services, and other codes on an exemption list are not subject to the adjustment.

CMS intends to calculate and apply an efficiency adjustment every three years.

CMS uses fee schedules to pay for physical, occupational and speech therapies, durable medical equipment, clinical diagnostic laboratory services, nonimplantable orthotics and prosthetics, services provided by independent diagnostic testing facilities and ambulance services.

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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.

Home health and hospice providers are serviced across four MAC jurisdictions.

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

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Quality Improvement Organizations, for example, are groups of physicians and other health care quality experts that work on behalf of CMS to ensure that Medicare pays only for goods and services that are reasonable and necessary, and that are provided in the most appropriate setting.

Under the Recovery Audit Contractor (“RAC”) program, CMS contracts with RACs on a contingency basis to conduct post-payment reviews to detect and correct improper payments in the fee-for-service Medicare program.

Under the Recovery Audit Contractor (“RAC”) program, CMS contracts with RACs on a contingency basis to conduct reviews of claims, generally post-payment, to detect and correct improper payments in the fee-for-service Medicare program.

The compensation for RACs is based on their review of claims submitted to Medicare for billing compliance, including correct coding and medical necessity, and the amount of overpayments and underpayments they identify.

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

CMS is implementing a new payment and service delivery model, the Wasteful and Inappropriate Service Reduction (“WISeR”) model, in six states in 2026, including Texas.

Under the WISeR model, CMS will contract with technology vendors tasked with using enhanced technologies, including AI, to address compliance with Medicare coverage criteria for selected items and services, which are generally lower acuity procedures, under traditional fee-for-service Medicare.

Providers will be required to submit prior authorization requests for the selected items and services or claims will be subject to post-service, pre-payment medical review.

Participating technology vendors will receive a percentage of the cost savings resulting from their reviews, adjusted based on performance measures.

The model will run for six performance years.

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.

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Managed Medicare plans can be structured as HMOs, PPOs or private fee-for-service plans.

In addition to covering Part A and Part B benefits, the health insurers may choose to offer supplemental benefits and impose higher premiums and

plan costs on beneficiaries.

In addition to covering Part A and Part B benefits, the health insurers may choose to offer supplemental benefits and impose higher premiums and plan costs on beneficiaries.

CMS makes fee payment adjustments based on service benchmarks and quality ratings and publishes star ratings to assist beneficiaries with plan selection.

According to CMS data, approximately half of all Medicare enrollees participate in managed Medicare plans.

Starting January 1, 2024, managed Medicare plans must adhere to the two-midnight rule, which requires managed Medicare plans provide coverage for an inpatient admission when the admitting physician expects the patient to require hospital care that crosses over two midnights.

The implementation of the two-midnight rule had a modest impact on our 2024 admissions growth.

Medicare Advantage enrollment is projected to continue to increase over the next decade.

Starting January 1, 2024, managed Medicare plans must adhere to the two-midnight rule, which requires managed Medicare plans to provide coverage for an inpatient admission when the admitting physician expects the patient to require hospital care that crosses over two midnights.

Medicare Advantage enrollment is generally projected to continue to increase over the next decade.

Medicaid programs are funded jointly by the federal government and the states.

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The number of individuals enrolled in Medicaid declined in 2025 in comparison to 2024.

This decline reversed a trend of increased enrollment that occurred as a result of COVID-19 relief legislation that authorized a temporary increase in federal funds for certain Medicaid expenditures in states that maintained continuous Medicaid enrollment, among other requirements.

This continued decline follows a period of increased enrollment that occurred through mid-2023 as a result of COVID-19 relief legislation that authorized a temporary increase in federal funds in states that maintained continuous Medicaid enrollment, among other requirements.

The end of the continuous enrollment requirement in 2023, including the resumption of redeterminations for Medicaid enrollees, resulted in significant coverage disruptions and dis-enrollments of Medicaid beneficiaries.

To increase state compliance with renewal, redetermination and reporting requirements, CMS has issued guidance to states and published an interim final rule establishing an enforcement framework, including potential monetary penalties for states that fail to comply.

Because most states must operate with balanced budgets and because the Medicaid program is often a state’s largest budget expenditure, many states have adopted or may consider adopting various strategies to reduce their Medicaid expenditures.

Budgetary pressures have historically resulted and likely will continue to result in decreased spending, or decreased spending growth, for Medicaid programs in many states.

Most states in which we operate have adopted statewide provider taxes to fund the non-federal share of Medicaid programs within the state.

Most states have completed the process of unwinding the continuous enrollment provision.

Significant changes are expected in state Medicaid programs as a result of the FBA, including anticipated decreases in Medicaid enrollment.

Among other changes, the law limits eligibility for Medicaid by imposing work or community engagement requirements for adults under age 65 in the Medicaid expansion states, including states with waiver-based expansions, subject to limited exceptions.

State compliance is required by December 31, 2026, but states may choose to implement the mandate earlier.

In addition, the FBA increases the frequency of eligibility redeterminations to every six months for adults in Medicaid expansion states, including waiver-based expansion states, starting for redeterminations scheduled on or after December 31, 2026, and increases cost-sharing obligations for enrollees in those states beginning in federal fiscal year 2029.

The FBA is expected to decrease federal Medicaid spending, including as a result of changes to Medicaid eligibility policies and changes to Medicaid financing mechanisms, such as limitations on provider tax arrangements.

Currently, most states in which we operate have adopted statewide provider taxes to fund the non-federal share of Medicaid programs within the state.

Some states that use provider taxes, including Florida and Texas, rely on local provider taxes that are administered by local governments.

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

For states to be able to draw down federal Medicaid matching funds based on the revenues from provider taxes, the taxes must satisfy federal requirements, including that the taxes be broad-based, uniform and not hold taxpayers “harmless,” subject to limited exceptions.

The FBA includes restrictions on provider tax arrangements intended to reduce the federal matching funds received by state Medicaid programs, with greater restrictions in states that have expanded Medicaid, including states with waiver-based expansions.

Anticipated CMS rulemaking is expected to bring increased clarity to implementation and subsequent revenue impacts.

The FBA prohibits states from establishing new provider taxes or increasing rates of existing provider taxes for state fiscal years beginning on or after October 1, 2026.

Beginning in fiscal year 2028, the law reduces the 6% safe harbor limit by 0.5% annually in Medicaid expansion states until the safe harbor limit in those states reaches 3.5% in federal fiscal year 2032, subject to exceptions.

In addition, the FBA limits the structure and applicability of provider taxes, such that some taxes on managed care organizations and providers permitted prior to the enactment of the FBA are no longer permissible, subject to transition periods.

The FBA also impacts state directed payment arrangements, as further discussed below.

Many states are facing increasing or evolving budgetary pressures, including as a result of the FBA and other recent federal actions.

Because most states must operate with balanced budgets and because the Medicaid program may be a state’s largest budget expenditure, many states have adopted or may consider adopting various strategies to reduce their Medicaid expenditures, such as legislation designed to reduce coverage or enroll Medicaid recipients in managed care programs or policies decreasing provider reimbursement.

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

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In recent years, aspects of existing or proposed Medicaid programs have been subject to legal challenge, resulting in uncertainty.

Additionally, federal legislation and administrative policies that shape administration of the Medicaid programs at the state level are subject to change, including as a result of changes in the presidential administration.

For example, a federal court permitted Georgia to impose work and community engagement requirements under a Medicaid demonstration program that launched in mid-2023, and CMS administrators may in the future allow states to impose such conditions on enrollment or permit other eligibility restrictions.

Changes to the federal funding formula for Medicaid could also have a significant impact on Medicaid programs and enrollment, particularly if federal contributions for Medicaid expansion populations decrease and those states are unable to offset the reductions.

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

Additionally, federal legislation and administrative policies that shape administration of the Medicaid programs at the state level are subject to change.

For example, CMS is expected to issue additional rulemaking and guidance regarding implementation of the FBA, and CMS administrators may in the future allow states to impose additional eligibility or enrollment restrictions.

Reductions in federal Medicaid funds and increases to state administrative burdens could have a significant impact on Medicaid programs, such as limitations on eligibility or coverage, particularly if states are unable to offset federal funding reductions.

Further, some Medicaid expansion states have trigger laws that would end their Medicaid expansion or require other changes if the federal funding match rate is reduced or similar funding restrictions are imposed for Medicaid expansion.

These trigger laws vary and most are not directly implicated by the FBA, but some states nonetheless may consider or make changes to Medicaid expansion programs due to related budgetary pressures.

These issues are further discussed in Item 1A, “Risk Factors.”

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For example, federal funds under the Medicaid program may not be used to reimburse providers for treatment of certain provider-preventable conditions.

Each state Medicaid program must deny payments to providers for the treatment of health care-acquired conditions designated by CMS as well as other provider-preventable conditions that may be designated by the state.

Each state Medicaid program must deny payments to providers for the treatment of health

care-acquired conditions designated by CMS as well as other provider-preventable conditions that may be designated by the state.

Congress has expanded the federal government’s involvement in fighting fraud, waste and abuse in the Medicaid program through the Medicaid Integrity Program.

CMS employs UPICs to perform post-payment audits of Medicaid

claims, identify overpayments and perform other program integrity activities.

CMS employs UPICs to perform post-payment audits of Medicaid claims, identify overpayments and perform other program integrity activities.

The UPICs collaborate with states and coordinate provider investigations across the Medicare and Medicaid programs.

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Managed Medicaid

Enrollment in managed Medicaid plans has increased in recent years, as state governments seek to control the cost of Medicaid programs.

Enrollment in managed Medicaid plans has decreased following the end of the Medicaid continuous enrollment policy established under COVID-19 relief legislation, but the plans remain a common strategy as state governments seek to control the cost of Medicaid programs.

Managed Medicaid programs enable states to contract with one or more entities for patient enrollment, care management and claims adjudication.

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Certain states may direct managed care plans to pass through supplemental payments to designated providers, independent of services rendered, to ensure consistent funding of providers that serve large numbers of low-income patients.

In an effort to more closely tie funds to delivery and outcomes, CMS is limiting these “pass-through payments” that are paid by states under managed Medicaid plan contracts and will generally prohibit such payments by 2027.

However, CMS permits new pass-throughs of supplemental provider payments for up to a three-year period when states are transitioning Medicaid populations or services from a fee-for-service system to a managed care system.

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Some states make additional payments to providers through the Medicaid program that are separate from base payments and not specifically tied to an individual’s care.

Medicaid supplemental payments may be in the form of payments, such as upper payment limit payments, that are intended to address the difference between Medicaid fee-for-service payments and Medicare reimbursement rates, or payments under other programs that vary by state under Section 1115 waivers.

These supplemental reimbursement programs are generally authorized by CMS for a specified period of time and require CMS’ approval to be extended.

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If a state is unable to obtain future CMS approvals of these programs, our revenues could be negatively impacted.

In addition, the use and nature of SDP arrangements are subject to policy changes.

For example, CMS published a rule (the “Medicaid Managed Care Rule”) in May 2024 that addresses access, financing and quality within Medicaid managed care programs.

The rule includes new and updated requirements for SDP arrangements intended to ensure a more consistent and transparent approach for participating states.

The rule removes regulatory barriers to help states use SDP arrangements to implement value-based purchasing payment arrangements and include non-network providers in SDP arrangements.

The rule also requires provider payment levels for SDPs for certain services, including inpatient and outpatient hospital services, to not exceed the average commercial rate.

The use and nature of SDP arrangements are subject to policy changes.

For example, the FBA directs HHS to revise regulations governing SDP arrangements by tying caps on total payment rates paid by Medicaid managed care organizations for specified services, including hospital services, to Medicare payment rates instead of average commercial rates.

Several states in which we operate currently tie caps on total payment rates paid by managed care organizations to average commercial rates.

Under the revised regulations, rates will generally be capped at 100% of the total published Medicare payment rate in Medicaid expansion states, including states with waiver-based expansions, and at 110% of the total published Medicare payment rate in non-expansion states.

The revised regulations will apply to SDP arrangements made for services furnished in the rating periods beginning on or after July 4, 2025.

However, the FBA temporarily grandfathers certain SDP arrangements, including those for which an application was submitted to CMS prior to July 4, 2025, for the rating period occurring within 180 days of July 4, 2025, and those that received approval or made a good faith effort to receive approval from CMS prior to May 1, 2025.

Beginning with the rating period on or after January 1, 2028, grandfathered SDP arrangements will be reduced by 10 percentage points annually until they reach the allowable payment limits.

Certain states in which we operate have submitted applications to CMS for approval where the grandfathered payments we receive could be impacted and, in some instances, increased.

Some states have received preliminary grandfathering determinations with application approvals, but we are unable to predict the timing or extent of any additional approvals by CMS and the resulting recognition of the

related revenues.

In addition, CMS issued a final rule in May 2024 that revised SDP arrangement requirements, including removing regulatory barriers to help states use SDP arrangements to implement value-based purchasing payment arrangements and include non-network providers in SDP arrangements.

Further, the rule requires states to ensure each provider receiving an SDP attest by January 1, 2028, that they do not participate in any arrangement that holds taxpayers harmless for the cost of a tax.

The various elements of the rule take effect between issuance and early 2028.

It is possible that these developments and program reviews will result in the restructuring of or other significant changes to supplemental payment programs and SDP arrangements.

Medicaid supplemental payment programs and arrangements continue to evolve, and it is possible that these and other developments and program reviews will result in the restructuring of or other significant changes to supplemental payment programs and SDP arrangements.

We are unable to estimate the financial impact that program structure modifications and other program changes, if any, may have on our results of operations.

Over the last three years, states in which the majority of our hospitals operate have implemented or enhanced their Medicaid supplemental payment programs and SDP arrangements.

Revenues from these programs totaled approximately $4.9 billion and $3.9 billion in 2024 and 2023, respectively.

Revenues from these programs totaled approximately $6.2 billion, $5.5 billion and $4.4 billion in 2025, 2024 and 2023, respectively.

Disproportionate Share Hospital Payments

Separate from the state-administered programs outlined above, the federal Medicare program makes additional payments to hospitals that treat a disproportionately large number of low-income patients (Medicaid and Medicare patients eligible to receive Supplemental Security Income (“SSI”)).

Separate from the state-administered programs outlined above, the federal Medicare program makes additional payments to hospitals that treat a disproportionately large number of low-income patients.

Disproportionate Share Hospital (“DSH”) payment adjustments are determined annually based on certain statistical information required by HHS and are paid as a percentage addition to MS-DRG payments.

The methodology for calculating DSH payment adjustments is affected by shifts in payment policy and is also subject to ongoing litigation.

For example, in August 2023, CMS finalized changes to the

treatment of patient days paid under demonstrations authorized under Section 1115 of the Social Security Act (“Section 1115”) (including through demonstration-authorized uncompensated and undercompensated care pools) in the Medicaid fraction of the DSH payment formula in a manner that will effectively lower DSH payments for many hospitals.

However, in August 2024, a district court in Texas vacated the regulation, determining that CMS’ exclusion of patient days paid under such demonstrations was unlawful.

Separately, in November 2024, the U.S.

Supreme Court heard oral arguments in a dispute focused on whether all patients enrolled in SSI assistance, even if no SSI payments were made during the month of a patient’s hospital admission, should be counted in the DSH methodology.

These and other regulatory changes and court rulings could adversely impact our results of operations.

The methodology for calculating DSH payment adjustments is affected by shifts in payment policy and is also subject to frequent, ongoing litigation.

For example, CMS published a final rule in August 2023 that has been the subject of litigation and that will affect the treatment of patient days paid under demonstrations authorized under Section 1115 of the Social Security Act (including through demonstration-authorized uncompensated and undercompensated care pools) in the Medicaid fraction of the DSH payment formula.

Implementation of the 2023 final rule is expected to result in lower DSH payments for hospitals.

Separately, lawsuits filed in April 2025 allege that the Medicare DSH calculation inappropriately reduces hospital reimbursement by counting only fee-for-service Medicare patients who received Supplemental Security Income (“SSI”) cash assistance during the inpatient stay, excluding beneficiaries covered under Medicare Advantage and other Medicare and SSI categories.

The plaintiffs argue this policy resembles rulemaking previously vacated by the U.S.

Supreme Court.

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

Under current law, Medicaid DSH payments will be reduced by $8 billion for the period from April 1, 2025, through September 30, 2025, and in federal fiscal years 2026 and 2027.

Under current law, Medicaid DSH payments will be reduced by $8 billion in federal fiscal year 2028.

Value-Based Care Arrangements

CMS has indicated that promoting value-based, person-centered care is among its top priorities, and commercial payers are also increasingly using value-based care arrangements.

Governmental and commercial payers have made efforts to promote value-based purchasing of health care services across the health care industry in recent years.

Generally, value-based care aims to hold providers accountable for delivering efficient, effective care, tying provider reimbursement to patient outcomes or related measures.

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Conversely, under some MSSP payment tracks, ACOs may be required to pay shared losses if expenditures exceed an established benchmark.

Failure to meet quality performance standards may result in an ACO’s termination from the MSSP.

Failure to meet quality performance

standards may result in an ACO’s termination from the MSSP.

CMS continues to explore strategies to accelerate the growth of and access to ACOs.

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Hospitals may receive supplemental Medicare payments or owe repayments to CMS depending on whether overall CMS spending per episode exceeds or falls below a target specified by CMS and whether quality standards are met.

The CMS Innovation Center has implemented bundled payment models, including the Bundled Payment Care Improvement Advanced program, which is voluntary and expected to run through December 2025.

Participation in bundled payment programs is generally voluntary, but CMS required hospitals in selected geographic areas to participate in a mandatory bundled payment program for specified orthopedic procedures, which ended December 31, 2024.

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

By 2030, the CMS Innovation Center aims to have all fee-for-service Medicare beneficiaries and most Medicaid beneficiaries in a care relationship with accountability for quality and total cost of care.

CMS also indicated it will streamline its payment model portfolio and consider how to ensure broad provider participation, including by

implementing more mandatory models.

The CMS Innovation Center has implemented bundled payment models in recent years, including the Bundled Payment Care Improvement Advanced program, which ran through December 2025.

Participation in bundled payment programs is generally voluntary, but some models are mandatory.

For example, beginning in January 2026, CMS requires hospitals in selected geographic areas to participate in a new mandatory bundled payment program, Transforming Episode Accountability Model (“TEAM”), that is focused on five specified surgical procedure episodes.

An additional mandatory bundled payment program, the Ambulatory Specialty Model, will begin in January 2027.

Participation in this model will be mandatory for specialists treating heart failure and low back pain Medicare beneficiaries in outpatient settings in selected geographic areas.

The CMS Innovation Center released a new strategic direction in 2025, which continues to support the transition from Medicare fee-for-service models to value-based payment and care delivery models.

The new strategy is based on three pillars:

promoting disease prevention, empowering individuals through information and processes, and driving choice and competition in health care markets.

The CMS Innovation Center indicated it will update existing value-based models and release new models consistent with these pillars.

Model reviews and new model designs may require that all alternative payment models involve downside risk and that a growing proportion of Medicare and Medicaid beneficiaries are in global downside risk arrangements, among other requirements.

The CMS Innovation Center also indicated that it plans to test improvements in Medicare Advantage and Medicaid.

Several private third-party payers are increasingly employing alternative payment models, which may increasingly shift financial risk to providers.

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Providers also have rights of appeal, and it is common to contest issues raised in audits of cost reports.

Managed Care and Other Discounted Plans

Managed Care and Other Private Health Insurance Plans

Health insurance coverage offered by private-sector insurance companies is the most common form of health coverage in the United States.

Consumers generally obtain private coverage through an employer or by purchasing directly from an insurer, including through the Exchanges.

Some individuals who purchase through the Exchanges are eligible for federal financial assistance for coverage, including premium tax credits.

Most private plans have a managed care approach, involving a limited network of providers and attempting to control costs and utilization with strategies such as financial incentives and utilization management.

Private health insurance is subject to a complex regulatory framework at both the federal and state levels, often involving multiple governmental entities with overlapping authority.

The federal government has taken an increasingly significant regulatory role in recent years, including by establishing various consumer protections

applicable to health insurance and through the administration of the federally-facilitated Exchanges.

Many recent health care reform efforts have been focused on access to health insurance.

For example, CMS issued a final rule in June 2025 that standardizes and shortens the open enrollment period for individual market coverage, both on and off the Exchanges, imposes limitations on eligibility for enrollment through the Exchanges and for premium tax credits, and requires stricter income verification measures, among other changes.

However, this rule is currently the subject of legal challenges and, in August 2025, a federal district court issued a nationwide stay of several provisions.

In addition, the FBA includes health care policy changes that are expected to impact insurance coverage obtained through the Exchanges by effectively ending automatic renewals of enrollment by requiring pre-enrollment verification and annual re-verification of tax credit eligibility, among other measures.

The provisions directly impacting Exchanges under the FBA and the final rule take effect at various times over the next three years.

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.

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HHS is delaying enforcement with regard to good faith estimates to uninsured individuals that do not include expected charges for co-providers or co-facilities until the agency issues additional regulations.

If the actual charges to the uninsured or self-pay patient exceed the good faith estimate by an amount deemed to be substantial by regulation (which is currently $400) or the provider furnishes an item or service that was not included in the estimate, the patient can invoke a patient-provider dispute resolution process to challenge the higher amount.

If the actual charges to the uninsured or self-pay patient exceed the good faith estimate by an amount deemed to be substantial by regulation (which is currently $400), the patient can invoke a patient-provider 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, federal and some state laws require health insurers to reimburse hospitals for emergency services provided to enrollees without prior authorization and without regard to whether a participating provider contract is in place.

Hospital Utilization

Health Care Facility Utilization

We believe the most important factors relating to the overall utilization of a hospital are the quality and market position of the hospital and the number and quality of physicians and other health care professionals providing patient care within the facility.

Generally, we believe the ability of a hospital to be a market leader is determined by its breadth of services, level of technology, quality and condition of the facilities, emphasis on quality of care and convenience for patients and physicians.

Other factors that impact utilization include the growth in local population, local economic conditions and market penetration of managed care programs.

Other factors that impact utilization include shifts in local population size, local economic conditions and market penetration of managed care programs.

The following table sets forth certain operating statistics for our health care facilities.

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.

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

Number of hospitals at end of period

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

Psychiatric hospitals frequently attract patients from areas outside their immediate locale and, therefore, our behavioral hospitals and units compete with both local and regional hospitals, including the behavioral units of general, acute care hospitals.

Trends toward clinical and pricing transparency may impact our competitive position, ability to obtain or maintain favorable contract terms and patient volumes in ways that may be difficult to predict.

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Accordingly, we strive to maintain and provide quality facilities, technology, equipment, employees and services for physicians and patients.

As part of these efforts, we are implementing a new EHR platform across our facilities that is designed to help improve care coordination, enhance data integrity and interoperability, and drive operating efficiencies and cost savings.

Our hospitals face competitors that are implementing physician alignment strategies, such as employing physicians, acquiring physician practice groups and participating in ACOs or other clinical integration models.

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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 who obtain services from providers in a disfavored tier.

The importance of obtaining contracts with group purchasers of health care services varies by purchaser and by community, depending on the market position of such

organizations.

The importance of obtaining contracts with group purchasers of health care services varies by

purchaser and by community, depending on the market position of such organizations.

In addition, changes in the payer contracts of our competitors may impact the payer mix and patient volume of our hospitals and other facilities.

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Each hospital or clinic must hold a DEA registration at each location and may be subject to similar state registration requirements.

In addition, we are subject to a variety of federal and state statutes and regulations that govern operational issues related to pharmaceuticals and controlled substances, such as those related to packaging, storing, and dispensing of pharmaceutical drugs, inventory

control and recordkeeping requirements for controlled substances, and other standards intended to prevent diversion of controlled substances.

pharmaceutical drugs, inventory control and recordkeeping requirements for controlled substances, and other standards intended to prevent diversion of controlled substances.

The DEA, the Department of Justice (“DOJ”), HHS, and state boards of pharmacy have broad enforcement powers, may conduct audits and investigations and can impose substantial fines and other penalties, including revocation of registration.

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Certificates of Need

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.

In some states where we operate hospitals and other health care providers, the construction or expansion of health care facilities, the transfer or change of ownership of existing facilities, 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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The OIG has identified several incentive arrangements that constitute suspect practices, including:

(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 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.

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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Sanctions for violating the Stark Law include denial of payment, substantial civil monetary penalties per claim submitted and exclusion from the federal health care programs.

Failure to refund amounts received as a result of a prohibited referral on a timely basis may constitute a false or fraudulent claim and may result in civil penalties and additional penalties under the FCA.

Failure to refund amounts received as a result of a prohibited referral on a timely basis may constitute a false or fraudulent claim and

may result in civil penalties and additional penalties under the FCA.

The statute also provides for a penalty for a circumvention scheme.

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

Civil penalties may be imposed for the failure to report and return an overpayment within 60 days of identifying the overpayment or by the date a corresponding cost report is due, whichever is later.

Civil penalties may be imposed for the failure to report and return an overpayment within 60 days of identifying, or obtaining actual knowledge of, the overpayment or by the date a corresponding cost report is due, whichever is later.

To avoid liability, providers must, among other things, carefully and accurately code claims for reimbursement, promptly return overpayments and accurately prepare cost reports.

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Many states in which we operate also have laws intended to prevent fraud and abuse within the health care industry.

Some of these laws are similar to the Anti-kickback Statute, prohibiting payments to physicians for patient referrals, and to the Stark Law, prohibiting certain self-referrals.

Some of these laws are similar to the Anti-kickback Statute, prohibiting payments to physicians for patient

referrals, and to the Stark Law, prohibiting certain self-referrals.

These state laws often apply regardless of the source of payment for care, and little precedent exists for their interpretation or enforcement.

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

HIPAA Administrative Simplification, Privacy and Security Standards 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 transaction standards and code sets for certain health care claims and payment transactions submitted or received electronically.

In addition, HIPAA requires each provider to use a National Provider Identifier.

These provisions are intended to encourage electronic commerce in the health care industry.

The privacy and security regulations promulgated pursuant to HIPAA extensively regulate the use and disclosure of individually identifiable health information, known as “protected health information,” and require covered entities, including health plans and most health care providers, to implement administrative, physical and technical safeguards to protect the security of such information.

Health Information Privacy, Security and Interoperability

The Administrative Simplification Provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and implementing regulations require covered entities, including health plans and most health care providers, to protect the privacy and security of individually identifiable health information, known as “protected health information,” facilitate individual rights with respect to protected health information, including the right to access such information, and use uniform electronic data transaction standards and code sets for certain health care claims and payment transactions submitted or received electronically.

Certain provisions of the security and privacy regulations apply to business associates (entities that handle protected health information on behalf of covered entities), and business associates are subject to direct liability for violation of these provisions.

In addition, a covered entity may be subject to penalties as a result of a business associate violating HIPAA, if the business associate is found to be an agent of the covered entity.

A covered entity may be subject to penalties as a result of a business associate violating HIPAA, if the business associate is found to be an agent of the covered entity.

Covered entities must report breaches of unsecured protected health information to affected individuals without unreasonable delay but not to exceed 60 days after discovery of the breach by a covered entity or its agents.

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All non-permitted uses or disclosures of unsecured protected health information are presumed to be breaches unless the covered entity or business associate establishes that there is a low probability the information has been compromised.

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

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

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

enforces the regulations and performs compliance audits.

HHS enforces the regulations and performs compliance audits.

In addition to enforcement by HHS, state attorneys general are authorized to bring civil actions seeking either injunction or damages in response to violations that threaten the privacy of state residents.

HHS may resolve HIPAA violations through informal means, such as allowing a covered entity to implement a corrective action plan, but HHS has the discretion to move directly to impose monetary penalties and is required to impose penalties for violations resulting from willful neglect.

We enforce compliance in accordance with HIPAA privacy and security regulations.

The Privacy and Information Protection and Security Departments monitor our compliance with the HIPAA privacy and security regulations.

The HIPAA privacy regulations and security regulations have and will continue to impose significant costs on our facilities in order to comply with these standards.

In addition to HIPAA, we are subject to many other federal and state laws and regulations that apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal information, some of which are more restrictive than HIPAA or apply to other types of information.

For example, the Federal Trade Commission uses its consumer protection authority to initiate enforcement actions in response to data breaches, and various state laws and regulations require us to notify affected individuals in the event of a data breach involving individually identifiable information.

Several states in which we operate have passed comprehensive privacy legislation, and several states, including Florida and Texas, have adopted or are considering “offshoring prohibitions,” which restrict the transfer, storage and access of patient data outside of the United States or North America.

Providers subject to these statutes may not be able to rely on outside vendors who operate overseas to store or handle such records.

State laws and regulations often provide for civil penalties for violations and some provide a private right of action for data breaches, which may increase the likelihood or impact of data breach litigation.

Privacy and security-related laws and regulations continue to evolve, often have far-reaching effects and may require us to incur substantial expenses to comply.

Our Privacy and Information Protection and Security Departments monitor our compliance with HIPAA and other federal and state privacy and security laws and regulations.

Privacy and security requirements have and will continue to impose significant costs on our facilities in order to comply with these standards.

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.

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The government has expressed its intent to investigate and enforce EMTALA violations actively.

Hospitals may face conflicting interpretations of EMTALA’s requirements with respect to state laws that limit access to abortion or other reproductive health services.

For example, HHS has provided guidance regarding EMTALA obligations specific to patients who are pregnant or are experiencing pregnancy loss and the preemption of state law.

This guidance has been the subject of legal challenges, including a pending case in Idaho under which the state is currently enjoined from enforcing its state law restricting abortion to the extent the state law conflicts with EMTALA.

The final ruling from a Texas case limits application of the HHS guidance in Texas.

Hospitals may face conflicting interpretations by courts and federal and state law enforcement agencies regarding EMTALA’s requirements in relation to state laws that limit access to abortion or other reproductive health services.

in May 2025, CMS rescinded EMTALA guidance issued to hospitals under the prior presidential administration regarding the preemption of state laws restricting abortion.

Corporate Practice of Medicine/Fee Splitting

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Both federal and state government agencies have increased their focus on and coordination of civil and criminal enforcement efforts in the health care area.

For example, in July 2025, HHS and the DOJ announced the establishment of the DOJ-HHS False Claims Act Working Group, which is focused on coordinating FCA investigations and enforcement actions between the two agencies.

Through the national Health Care Fraud and Abuse Control Program, the OIG and the DOJ coordinate federal, state and local law enforcement activities with respect to health care fraud against both public and private health plans.

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The health care industry is subject to various federal and state initiatives and requirements related to price transparency and out-of-network charges.

For example, federal regulations require hospitals to publish a list of their standard charges for all items and services, including gross charges, discounted cash prices and payer-specific and de-identified minimum and maximum negotiated charges, in a machine-readable, publicly accessible online file.

Hospitals are required to publish a consumer-friendly list of standard charges for certain “shoppable” services (i.e., services that can be scheduled by a patient in advance) and associated ancillary services or, alternatively, maintain an online price estimator tool.

For example, federal regulations require hospitals to publish a list of their

standard charges for all items and services, including gross charges, discounted cash prices and payer-specific and de-identified minimum and maximum negotiated charges, in a machine-readable, publicly accessible online file.

The current presidential administration has signaled its commitment to advancing price transparency initiatives, including through an executive order issued in February 2025 and a final rule issued in November 2025 that update the requirements for data elements in the machine-readable file, among other changes.

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

CMS may impose civil monetary penalties for noncompliance with these price transparency requirements.

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The No Surprises Act also impacts the payment received by an out-of-network provider from a health plan for items and services to which the prohibitions on balance billing apply.

For items and services for which balance billing is prohibited (even

when no balance billing occurs), the No Surprises Act establishes an independent dispute resolution (“IDR”) process for providers and payers to handle payment disputes that cannot be resolved through direct negotiations.

The final rule establishing the IDR process is currently the subject of legal challenges, and government agencies have proposed various changes, creating uncertainty and resulting in delays in claims resolution.

For items and services for which balance billing is prohibited (even when no balance billing occurs), the No Surprises Act establishes an independent dispute resolution (“IDR”) process for providers and payers to handle payment disputes that cannot be resolved through direct negotiations.

There are ongoing legal challenges relating to the IDR process, and government agencies have proposed various changes, creating uncertainty and resulting in delays in claims resolution.

The No Surprises Act also requires providers to provide a good faith estimate of expected charges to uninsured or self-pay individuals in connection with scheduled items or services, in advance of the date of the scheduled item or service, or upon request of the individual.

If the actual charges to an uninsured or self-pay patient exceed the good faith estimate by an amount deemed to be substantial by regulation (which is currently $400) or the provider furnishes an item or service that was not included in the good faith estimate, the patient may invoke a patient-provider dispute resolution process established by regulation to challenge the higher amount.

If the actual charges to an uninsured or self-pay patient exceed the good faith estimate by an amount deemed to be substantial by regulation (which is currently $400), the patient may invoke a patient-provider dispute resolution process established by regulation to challenge the higher amount.

Medical Technology Regulation and Developments

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The legal framework for AI (particularly in patient care) is rapidly developing and uncertain.

In 2023, HHS finalized transparency requirements for AI and other predictive algorithms used in certified health information technology, such as decision support interventions.

HHS imposes transparency requirements for AI and other predictive algorithms used in certified health information technology, such as decision support interventions.

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

Medical devices are subject to extensive regulation by the FDA under the FDCA.

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

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

In January 2026, the FDA issued revised non-binding final guidance that describes the types of clinical decision support software that the FDA regulates as a medical device.

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

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

For example, California enacted Assembly Bill 3030, known as the Artificial Intelligence in Health Care Services Bill (“AB 3030”), which requires that any health care facility using generative AI to create patient communications pertaining to patient clinical information ensure that the communications include (i) a disclaimer that the communication was generated by generative AI and (ii) clear instructions describing how a patient may contact a human health care provider or other appropriate person at the health care facility.

Further, Utah enacted the Artificial Intelligence Policy Act (“AIPA”), which requires physicians, nurses and other regulated health care providers to disclose to individuals if they are interacting with generative AI while receiving regulated services.

Additionally, Colorado has passed the Colorado Artificial Intelligence Act (“CAIA”), which will impose significant disclosure, documentation, and risk management requirements on developers of and companies that deploy “high-risk” AI systems, including systems used to recommend certain health care decisions.

Further, Utah’s Artificial Intelligence Policy Act (as amended by SB 226) (“AIPA”) requires physicians, nurses and other regulated health care providers to disclose to individuals if they are engaging in a “high-risk” interaction with generative AI, including if the interaction involves the collection of health data or the provision of medical advice or services.

Additionally, the Colorado Artificial Intelligence Act (“CAIA”) will impose significant disclosure, documentation, and risk management requirements on developers of and companies that deploy “high-risk” AI systems, including systems used to recommend certain health care decisions.

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

Any failure or perceived failure by us or our third-party providers to comply with AI laws and regulations could result in legal proceedings or investigations, which could result in significant legal costs and potential liability, as well as reputational harm.

Any failure or perceived failure by us or our

third-party providers to comply with AI laws and regulations could result in legal proceedings or investigations, which could result in significant legal costs and potential liability, as well as reputational harm.

Further, we expect additional AI-related laws and regulations to come into effect, which could affect our business and financial condition.

We also perform clinical laboratory testing, and some of the tests performed are considered “laboratory developed tests” (“LDTs”).

On May 6, 2024, the FDA published a final rule to increase regulatory oversight of LDTs as medical devices, classifying the tests as in vitro diagnostic products.

The rule is currently the subject of legal challenges.

The requirements imposed by the FDA under this rule will, over a four-year phase-in period that starts May 6, 2025, require our clinical laboratories to make significant adjustments and implement processes to comply with certain FDA medical device laws and regulations and may require FDA review or approval for LDTs used in patient care that are either newly marketed or modified after May 6, 2024.

Further uncertainty with respect to state AI laws has been prompted by the Executive Order issued on December 11, 2025, entitled “Ensuring a National Policy Framework for Artificial Intelligence,” which directs federal regulators to challenge and preempt state laws that the administration views as obstructive to AI innovation.

As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and it is difficult to anticipate the impact future laws, regulations, standards, or market perception of their requirements may have on our business and the nature and effectiveness of our responses, if any, to these developments.

Failure to obtain necessary approvals for regulated technologies or noncompliance with other applicable regulatory requirements could result in penalties or require us to make changes to our operations, including changes to services currently rendered.

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Developments in Health Care Public Policy

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

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

Supreme Court that affect review of federal agency actions and the outcome of the 2024 federal election.

The Supreme Court decisions increase judicial scrutiny of agency authority, shift greater responsibility for statutory interpretation to courts and expand the timeline in which a plaintiff can sue regulators.

In Loper Bright Enterprises v.

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

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

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

Supreme Court are expected to have significant impacts on government agency regulation, particularly within the heavily regulated health care industry, in part through an increase in legal challenges to health care regulations and agency guidance and decisions.

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

The recent Supreme Court decisions may also result in inconsistent judicial interpretations and delays in and other impacts to agency rulemaking and legislative processes.

The outcome of the 2024 federal election may increase regulatory uncertainty and the potential for significant policy changes.

Recent presidential executive orders have been issued that impact or may impact the health care industry, including an order establishing a presidential advisory commission focused on restructuring and streamlining government agencies and reducing or eliminating regulations and federal government programs and other expenditures.

The health care industry is heavily regulated.

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

Several executive orders have been issued that impact or may impact the health care industry, including measures aimed at restructuring government agencies and eliminating government expenditures and resulting in holds on or cancellations of congressionally authorized spending.

In March 2025, HHS announced a significant agency restructuring intended to reduce the HHS workforce and consolidate divisions of the agency.

HHS also announced a change in its policy on public participation in rulemaking that may limit the ability of industry participants to receive advance notice of and offer feedback on some policy changes.

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

Supreme Court that affect review of federal agency actions, including Loper Bright Enterprises v.

These Supreme Court decisions increase judicial scrutiny of agency authority, shift greater responsibility for statutory interpretation to courts and expand the timeline in which a plaintiff can sue regulators.

These decisions may increase legal challenges to health care regulations and agency guidance and decisions, and may also result in inconsistent judicial interpretations and delays in and other impacts to agency rulemaking and legislative processes.

The health care industry has been and continues to be impacted by health care reform efforts at the federal and state levels.

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For example, the Affordable Care Act increased health insurance coverage through a combination of private sector health insurance requirements, public program expansion and other reforms.

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

For example, the American Rescue Plan of 2021 (“ARPA”) temporarily enhanced premium tax credits available for purchasing coverage through the Exchanges by lowering premiums and raising income eligibility thresholds.

Subsequent legislation extended these enhanced premium tax credits through 2025.

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

However, changes in the law’s implementation, subsequent legislation and regulations, state initiatives and other factors have affected and may continue to affect the number of individuals that elect or are able to obtain public or private health insurance and the scope of such coverage, if obtained.

For example, COVID-19 relief legislation temporarily enhanced the premium tax credits available for purchasing coverage through the Exchanges by lowering premiums and raising income eligibility thresholds, but these enhanced premium tax credits expired at the end of 2025.

Their expiration is expected to adversely impact Exchange enrollment and increase the uninsured rate.

To address anticipated increases in health insurance premiums for consumers, CMS announced in September 2025 expanded eligibility for high-deductible catastrophic health insurance plans.

The FBA also includes several health care policy changes that are expected to impact insurance coverage obtained through the Exchanges, and a final rule issued by CMS in June 2025 makes other changes intended to address affordability, consumer protections and integrity of the Exchanges.

The June 2025 rule is the subject of legal challenges and, in August 2025, a federal district court issued a nationwide stay of several provisions.

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

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Changes at the federal level may impact funding for, or the structure of, the Medicaid program and may shape administration of the program at the state level.

The Affordable Care Act expands the categories of individuals eligible for Medicaid coverage, permits individuals with relatively higher incomes to qualify and provides states with enhanced funding for expansion populations.

The majority of states adopted Medicaid expansion;

however, a number of states, including Texas and Florida, have opted out of the Medicaid expansion provisions of the Affordable Care Act.

Changes to the federal funding formula for Medicaid could have a particularly significant impact in states that expanded Medicaid, especially if federal contributions for Medicaid expansion populations decrease and states are unable to offset the reductions.

Further, some states have trigger laws that would end their Medicaid expansion if federal funding is reduced.

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

For example, as further discussed in Item 1, “Business – Sources of Revenue – Medicaid,” the FBA includes significant health care policy reforms that are expected to result in Medicaid spending reductions and changes in administration of state Medicaid programs.

Among other changes, the law limits eligibility for Medicaid, including by imposing work or community engagement requirements for adults in Medicaid expansion states, and limits some Medicaid financing mechanisms, including through restrictions intended to reduce the federal matching funds received

by state Medicaid programs.

Reductions in federal matching funds and increased state obligations and administrative burden could have significant effects, such as resulting in state limitations on eligibility or coverage or changes to Medicaid expansion programs, particularly if states are unable to offset reductions.

In addition to implementing changes mandated through legislation, CMS administrators may make changes to Medicaid payment models and may impose new restrictions or grant states additional flexibility in the administration of state Medicaid programs.

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

The Medicaid landscape is constantly evolving as the federal and state governments consider and test various models of delivery and payment system reform.

In addition, there is uncertainty regarding the potential impact of other reform efforts at the federal and state levels.

For example, some members of Congress have proposed measures intended to accelerate the shift from traditional Medicare to Medicare Advantage or eliminating some or all of the consumer protections established by the Affordable Care Act.

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

For example, some members of Congress have proposed measures intended to accelerate the shift from traditional Medicare to Medicare Advantage or eliminate some or all of the consumer protections established by the Affordable Care Act.

Other recent initiatives and proposals include those aimed at price transparency and out-of-network charges, which may impact prices and the relationships between health care providers, insurers and patients.

Reform efforts could also include changes to Medicare reimbursement, such as new or expanded site-neutral payment policies that may reduce payments received or further attempt to equate rates of reimbursement for outpatient hospital services with payment for similar services provided in other patient care settings.

Reform efforts could also include changes to Medicare reimbursement, such as new or expanded site-neutral payment policies that may reduce payments received or further attempts to equate rates of reimbursement for outpatient hospital services with payment for similar services provided in other patient care settings.

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

For example, in recent

years, there have been trends influenced by private and/or public payers toward enrollment in managed care programs, favoring outpatient care over inpatient care, and provider consolidation.

For example, in recent years, there have been trends influenced by private and/or public payers toward enrollment in managed care programs, favoring outpatient care over inpatient care, and provider consolidation.

These issues are further discussed in Item 1A, “Risk Factors.”

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population, among other factors, will continue to place pressure on government health care programs.

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

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

Compliance Program

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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 as presently in effect.

Regulations limiting greenhouse gas emissions and energy inputs may increase in coming years, which may increase our costs associated with compliance, disrupt and adversely affect our operations and could materially, adversely affect our financial performance.

Our environmental strategy is designed to complement our mission of the care and improvement of human life, which extends to the environment.

This strategy is centered on incorporating the following four pillars into our operations:

• Managing energy and water responsibly,

• Preparing for weather impacts,

• Sourcing and consuming efficiently, and

• Managing the environmental impact of our capital programs.

Our initiatives contemplate operational changes intended to reduce energy consumption, including by accelerating related capital investments, new technology pilots, energy contracting and investments, and medical gas initiatives.

We have also integrated climate-related risk assessment into our established enterprise risk management function.

those associated with efforts to transition to a low-carbon economy, may increase costs associated with compliance, the operation of our facilities and supplies.

While we currently believe that compliance with existing environmental laws and regulations does not have a material impact on our operations, changes in consumer preference and legislation or regulatory requirements may affect our costs associated with compliance, the operation of our facilities and supplies and our financial performance.

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 insurance subsidiary for losses up to $110 million per occurrence.

Subject, in most cases, to a $15 million per occurrence self-insured retention, our facilities are insured by one of our insurance subsidiaries for losses up to $120 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 cybersecurity incidents, directors and officers liability and property loss in amounts we believe are reasonable and subject to terms of coverage we believe to be reasonable.

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

Human Capital Resources

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Culture and Values

We believe HCA Healthcare’s culture helps drive our success.

We believe HCA Healthcare’s culture, grounded in our mission and values, helps drive our success.

We strive to foster a culture of compassion and respect, across our system, to provide high-quality care for our patients, unlock opportunities for our colleagues and improve the health of our communities.

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We are dedicated to being an employer of choice and seek to recruit candidates through a variety of venues and programs.

We continue to invest in expanding access to high-quality health care and addressing nursing and physician shortages through Galen College of Nursing and graduate medical education.

We continue to invest in expanding access to high-quality health care, addressing nursing and physician shortages through Galen College of Nursing and graduate medical education.

Additionally, we are developing enterprise-wide, colleague-facing upskilling programs as well as partnering with academic institutions to create training programs that bolster the allied health talent pipeline.

Engagement, Retention and Talent Development

We believe that excellent people make excellence happen and are committed to selecting and supporting colleagues who can bring our mission to life.

We believe that excellent people make excellence happen and are committed to helping our leaders and colleagues consistently bring our mission to life.

We regularly connect with our colleagues, capturing their feedback through rounding, advisory groups, governance councils and surveys, and strive to take appropriate action on identified opportunities.

We also have programs designed to support our colleagues throughout their career journey.

We also have programs designed to support our colleagues throughout their career journeys.

By providing education, training and benefits like tuition reimbursement and student loan repayment assistance, we help our colleagues fully realize their potential.

We are committed to developing leaders who support our culture and help us work to grow our business and lead the industry.

Through the award-winning HCA Healthcare Leadership Institute, we seek to develop the capabilities of our leaders, building and strengthening our talent pipeline.

Our commitment to leadership development and succession planning is a foundation from which we seek to expand our impact on the communities we serve.

Strong leadership is central to our commitment to advancing care and creating healthier tomorrows.

By empowering colleagues to lead with confidence and purpose, we strengthen our culture, elevate the quality of care delivered to patients, and position our organization for continued growth.

Through the award-winning HCA Healthcare Leadership Institute and enterprise learning resources, we build critical capabilities and strengthen our talent pipeline.

Our focus on leadership development and succession planning prepares today’s leaders and the next generation to guide our organization forward and expand our impact on the communities we serve.

Compensation and Benefits

To recruit and retain a highly qualified workforce, we design competitive compensation and benefits programs to attract, retain, recognize and reward the performance of our employees.

These programs (which vary by location) include incentive programs, an employee stock purchase plan, a 401(k) plan, health care and insurance benefits, flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, employee assistance and well-being programs, volunteer opportunities, and tuition and student loan payment assistance.

To recruit and retain a highly qualified and engaged workforce, we offer a comprehensive and competitive mix of compensation and benefits programs designed to attract, retain, recognize and reward performance and meet the varying needs of our employees.

In addition to competitive wages, we offer short- and long-term incentive programs, an employee stock purchase plan, a 401(k) plan that offers matching Company contributions, health care and insurance benefits, flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, employee assistance and well-being programs, volunteer opportunities, and tuition and student loan payment assistance—all tailored to market conditions, local laws and regulations and other factors as needed across our employee base to meet our employees’ needs and further our business objectives.

Health, Safety and Wellness

We focus on supporting colleagues in ways that we believe have a positive impact on their physical, mental and financial health so they can take care of themselves, their families, their patients and each other.

We focus on supporting colleagues in ways that are designed to have a positive impact on their physical, mental and financial health so they can take care of themselves, their families, their patients and each other.

These resources and programs include counseling, fertility and menopause care, financial and retirement planning, consumer discounts and insurance, and family benefits.

Serving the Community

We strive to provide not only the quality health care that our patients deserve, but also to address needs in the communities we serve.

We provide opportunities for our colleagues to get involved and be a part of something bigger than our organization.

By joining forces with other leading organizations, we believe our collective talents and work have an impact that is only possible when we work together.

We believe our collective talents can better help the communities we serve when we join forces with other leading organizations.

Through research, partnerships, leadership and investments, we are tackling problems in our communities and throughout the health care industry.

We also support the HCA Healthcare Foundation in promoting health and wellbeing in the communities HCA Healthcare serves through leadership, service and financial support to non-profit organizations.

We also support the HCA Healthcare Foundation in promoting health and well-being in the communities HCA Healthcare serves through leadership, service and financial support to non-profit organizations.

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, 2024, certain employees at 35 of our domestic hospitals are represented by various labor unions.

Three elections were held in 2024 that resulted in the addition of a number of employees to existing bargaining units at three of our facilities in California and Nevada.

One election was held in 2024 that resulted in our employees choosing not to unionize at one of our facilities in Colorado, and there was another election in 2024 to remove union representation at one of our facilities in Texas.

There are no elections scheduled to be held in 2025.

As of December 31, 2025, certain employees at 35 of our domestic hospitals are represented by various labor unions.

It is possible that employees at additional hospitals may unionize in the future, or employees currently represented by labor unions may choose to reject that representation.

We have not experienced work stoppages that have materially, adversely affected our business or results of operations.

We have not experienced work stoppages that have materially or adversely affected our business or operational results.

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

Physicians are an integral part of the success of our hospitals in delivering quality care to our patients.

Our hospitals are staffed by licensed physicians, including both employed physicians and physicians who are not employees of our hospitals.

Some physicians provide services in our hospitals under contracts, which generally describe a term of service, provide and establish the duties and obligations of such physicians, require the maintenance of certain performance criteria and set compensation for such services.

Any licensed physician may apply to be accepted to the medical staff of any of our hospitals, but the hospital’s medical staff and the appropriate governing board of the hospital, in accordance with established credentialing criteria, must approve acceptance to the staff.

Members of the medical staffs of our hospitals often also serve on the medical staffs of other hospitals and may terminate their affiliation with one of our hospitals at any time.

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

Our facilities, like most health care facilities, have experienced challenges related to labor costs and turnover.

Nurse and medical support personnel availability and retention can present significant operating issues for our hospitals and other facilities, including capacity and growth constraints, reduced patient satisfaction, reduced physician satisfaction, impact on services offered and increased costs.

To address these challenges, we implemented several initiatives to improve retention, recruiting, compensation programs and productivity.

While these efforts alleviated some of the competitive pressures our hospitals and facilities faced in 2024, there can be no assurance we will not experience operating issues due to the costs and availability of nurse and medical support personnel in the future.

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

Many hospitals and health care systems across the nation, including our own, have experienced challenges related to labor costs and turnover.

Nurse and medical support personnel availability and retention can present significant operational issues for our hospitals and other facilities, including capacity and growth constraints, reduced patient satisfaction, reduced physician satisfaction, impacts on services offered and increased costs.

To address these challenges, we have implemented several initiatives to improve retention, recruitment, compensation and productivity.

While these efforts alleviated some of the competitive pressures we faced in 2025, there can be no

assurance we will not experience operational impacts due to the costs and availability of nurse and medical support personnel in the future.

We may be required to enhance wages and benefits to recruit and retain nurses and other medical support personnel.

Additionally, we may need to utilize more expensive temporary or contract personnel.

As a result, our labor costs could increase at rates in excess of historical levels.

We also depend on the available labor pool of employees in each of the markets in which we operate

to fill other necessary positions.

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

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

In addition, we operate in states that have adopted mandatory nurse-staffing ratios or mandate staffing committees to develop staffing plans.

If these states reduce mandatory nurse to patient ratios or additional states in which we operate adopt mandatory nurse to patient ratios or other measures to regulate staffing, our compliance with such measures could significantly affect labor costs and have an adverse impact on revenues if we are required to limit patient admissions to comply.

The inability to attract, retain and utilize sufficient, quality clinical and non-clinical personnel could impair our capacity, ability to grow and results of operations.

In addition, we operate in states that have adopted mandatory nurse staffing ratios or that have mandated staffing committees to develop staffing plans.

If these, or any, states reduce mandatory nurse-to-patient ratios or mandate other measures to regulate staffing, our compliance with such measures could significantly affect labor costs and have an adverse impact on revenues if we are required to limit patient admissions to comply.

Employed and Affiliated Physicians

Physicians are integral to the success of our hospitals in delivering quality care to our patients.

Our hospitals are staffed by licensed physicians, including both employed and affiliated physicians.

Members of the medical staff of our hospitals often also serve on the medical staff of other hospitals.

They may terminate their affiliation with one of our hospitals at any time.

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

Information about our Executive Officers

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He also served Duke University School of Medicine as Vice Dean for Medical Affairs from June 2008 to March 2011, Deputy Chair of the Department of Medicine from August 2009 to August 2010 and Associate Professor of Medicine from March 2005 to October 2011.

Prior that time, Dr.

Prior to that time, Dr.

Cuffe served in various leadership roles with the Duke Clinical Research Institute, Duke University Medical Center and Duke University School of Medicine.

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Prior to joining HCA, Mr.

McAlevey served in senior legal and executive roles at General Electric, most recently as Vice President, General Counsel and Business Development Leader for GE

Healthcare since 2018.

McAlevey served in senior legal and executive roles at General Electric, most recently as Vice President, General Counsel and Business Development Leader for GE Healthcare since 2018.

Prior to that, he served as General Counsel and Business Development Leader for GE Aerospace from 2011 to 2018 and Chief Corporate, Securities and Finance Counsel for GE from 2003 to 2011.

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McAlevey served as Deputy Director of the United States Securities and Exchange Commission’s Division of Corporation Finance from 1998 to 2002.

Mosier was appointed Senior Vice President and Chief Nurse Executive effective December 1, 2021.

Mosier joined HCA in 1996 as a medical-surgical bedside nurse at Frankfort Regional Medical Center and has held progressive leadership roles, including as Vice President and Assistant Chief Nursing Executive — Clinical Services Group from 2019 to 2021.

Rossitto was appointed Senior Vice President and Chief Nurse Executive, effective February 1, 2026.

She previously served as Senior Vice President and Assistant Chief Nurse Executive from December 2023 through January 2026.

Prior to that time, Ms.

Rossitto served as Vice President and Group Chief Nurse Executive — American Group & Atlantic Group from April 2022 to November 2023 and Vice President and Group Chief Nurse Executive — American Group, Clinical Operations Group from September 2020 to March 2022.

Rossitto joined HCA in 2000 as a nurse at HCA HealthONE Swedish.

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What changed 10-K

Item 1. Business