TENET HEALTHCARE CORP
For the period ended Mar 31, 2025. Filed Apr 29, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 29, 2025
THC$283.33-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-29.
0000070318-24-000052
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-29.
0000070318-25-000017
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 259 previous paragraphs and 172 current paragraphs.
73 unchanged; 65 reworded; 34 added; 116 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 35 previous and 27 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
In the Management Overview section of MD&A in our Annual Report on Form 10-K for the year ended December 31, 2024 (“Annual Report”), we describe several trends impacting the healthcare industry, as well as other factors affecting the environment in which we operate, including staffing and labor trends, supply chain operational challenges, general economic and geopolitical conditions, and the impact of potential changes in federal and state healthcare laws, regulations, funding policies and reimbursement practices. In addition, the potential for new or increased tariffs on various goods including, but not limited to, medical supplies, pharmaceuticals and capital equipment has created further uncertainty within the healthcare sector. While we closely monitor developments in international trade policy, including those related to tariffs imposed or proposed by the U.S. government and its trading partners, the scope, implementation timeline and duration of such measures remain unclear. As a result, we are unable to predict if or to what extent future tariff actions will materially impact our supply chain, capital expenditures or operating costs.
Current report
Recent advancements in technology and applications in healthcare, including Generative AI, are enabling our operations to accelerate the adoption of artificial intelligence (“AI”) enabled tools in areas such as clinical care coordination, medical documentation, revenue cycle management and administrative services. When used responsibly, we believe AI has the potential to enhance our business processes and support efficient delivery of high‑quality care.
Current report
Supplies expense for our Hospital Operations segment decreased by $65 million, or 9.9%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to the sales of the Divested Hospitals and our continued focus on cost‑efficiency measures, which include product standardization, contract management, improved utilization, bulk purchases, focused spending and operational improvements, among others. These factors were partially offset by an increase in our patient volumes and acuity. On a per adjusted admission basis, supplies expense increased by 2.8% in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.
Current report
•$173 million of capital expenditures;
Current report
•Interest payments of $99 million.
Current report
•Interest payments that were $63 million lower in the 2025 period; and
Current report
Potential Changes in Healthcare Policy
Current report
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), extended health coverage to millions of uninsured legal U.S. residents through a combination of private sector health insurance reforms and public program expansion. The expansion of Medicaid in 40 states (including four of the eight states in which we operate acute care hospitals) and the District of Columbia is currently financed through:
Current report
•negative “productivity adjustments” to the annual market basket updates, which began in 2011 and do not expire under current law; and
Current report
•reductions to Medicare and Medicaid disproportionate share hospital (“DSH”) payments, which began for Medicare payments in FFY 2014 and, under current law, are scheduled to commence for Medicaid payments on October 1, 2025.
Current report
Over the past several years, various laws and regulations lengthened the enrollment period, expanded income eligibility, and reduced premium caps for subsidies for individuals purchasing Affordable Care Act coverage through state and federal marketplaces – all of which led to increased enrollment numbers, particularly in states that have not expanded Medicaid. Certain of these provisions are set to expire at the end of 2025; if they are not extended, it could result in significant increases in premiums, potentially leading to decreased enrollment and a corresponding rise in the uninsured or a shift of individuals from commercial coverage to government program coverage beginning in 2026. In such a case, we could experience decreased patient volumes, reduced revenues and an increase in uncompensated care, which would adversely affect our results of operations and cash flows. We cannot predict whether or how Congress may extend or modify provisions of or relating to the Affordable Care Act or other laws affecting the healthcare industry generally, nor can we predict how the current administration will influence, promulgate or implement rules, regulations or executive orders that affect the healthcare industry directly or indirectly. We may also experience potential impacts on our business, in ways we cannot anticipate, from healthcare‑related policy changes at the state level. Some federal and state changes, initiatives and requirements could, among other things, negatively impact our patient volumes, case mix and revenue mix, increase our operating costs, adversely affect the reimbursement we receive for our services, impact our competitive position or require us to expend resources to modify certain aspects of our operations.
Current report
More specifically, we are also unable to predict the effect of future government healthcare funding policy changes on our business. The Medicare and Medicaid programs are subject to:
Current report
•statutory and regulatory changes, administrative and judicial rulings, executive orders, interpretations and determinations concerning eligibility requirements, funding levels and the method of calculating reimbursements, among other things;
Current report
•requirements for utilization review; and
Current report
•federal and state funding restrictions.
Current report
Any of these factors could materially increase or decrease payments from these government programs in the future, as well as affect the cost of providing services to our patients and the timing of payments to our facilities. If the rates paid by governmental payers are reduced, if the scope of services covered by governmental payers is limited, if eligibility or enrollment is further restricted, if there are changes to align payment rates for certain procedures across various care settings, or if we or one or more of our hospitals are excluded from participation in the Medicare or Medicaid program or any other government healthcare program, there could be a material adverse effect on our business, financial condition, results of operations or cash flows.
Current report
Regulatory and Legislative Updates
Current report
The amount of our managed care net patient service revenues, including Medicare and Medicaid managed care programs, from our hospitals and related outpatient facilities during the three months ended March 31, 2025 and 2024 was $2.400 billion and $2.656 billion, respectively. All Medicaid managed care patient service revenue is presented net of provider taxes or assessments paid by our hospitals.
Current report
Same‑hospital other operating expenses increased by $53 million, or 6.3%, in the three months ended March 31, 2025 compared to the same period in 2024. This increase was primarily attributable to higher medical fees and malpractice expense during the 2025 period. Other operating expenses as a percentage of net operating revenues for the three months ended March 31, 2025 was consistent with the same period in 2024.
Current report
Our Ambulatory Care segment’s net operating revenues increased by $199 million, or 20.0%, during the three months ended March 31, 2025 compared to the same period in 2024. The change was driven by a $114 million increase from acquisitions, net of the impact of facility closures, as well as an $85 million increase in same‑facility net operating revenues, reflecting higher net revenue per case.
Current report
Other operating expenses increased by $33 million, or 22.6%, during the three months ended March 31, 2025 compared to the same period in 2024. The change was driven by a $28 million increase from acquisitions, net of the impact of facility closures, and a $5 million increase in same‑facility other operating expenses. Other operating expenses as a percentage of net operating revenues for the three months ended March 31, 2025 did not change significantly from the three months ended March 31, 2024.
Current report
Litigation and investigation costs totaled $17 million during the three months ended March 31, 2025 and $4 million for the same period in 2024.
Current report
We recorded gains from the sale, consolidation and deconsolidation of facilities totaling $2.500 billion during the three months ended March 31, 2024. This activity included a pre‑tax gain of $1.673 billion related to our sale of the SC Hospitals, a pre‑tax gain of $529 million from the sale of the OCLA CA Hospitals, a pre‑tax gain of $278 million from our sale of the Central CA Hospitals and a gain of $23 million from the sale of two ASCs.
Current report
Interest expense for the three months ended March 31, 2025 was $204 million compared to $218 million for the same period in 2024.
Current report
The table below presents net income available to noncontrolling interests by segment for the periods indicated:
Current report
We made income tax payments, net of tax refunds, of $7 million during the three months ended March 31, 2025 and $5 million during the three months ended March 31, 2024. The current portion of our income tax payable was $149 million at March 31, 2025 and $18 million at December 31, 2024.
Current report
•Interest payments that were $63 million lower in the 2025 period; and
Current report
2025 period; and (3) lower capital expenditures of $67 million during the three months ended March 31, 2025 compared to the same period in 2024.
Current report
•Recognition of net operating revenues, including contractual allowances and implicit price concessions;
Current report
•Accruals for general and professional liability risks;
Current report
•Impairment of long‑lived assets;
Current report
•Impairment of goodwill; and
Current report
•Accounting for income taxes.
Current report
Additional discussion of our critical accounting estimates is provided in our Annual Report.
Removed paragraphs (116)
Previous report
During the three months ended December 31, 2023, we combined our Hospital Operations and other and Conifer segments into a single reporting segment named Hospital Operations and Services (“Hospital Operations”). This change was made to reflect updates to the organizational and management structure of our Conifer and Hospital Operations and other segments. All prior‑period data presented in this report has been adjusted to conform to our new reporting segment structure.
Previous report
The financial information provided throughout this report, including our Condensed Consolidated Financial Statements and the notes thereto, has been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, we use certain non‑GAAP financial measures, including Adjusted EBITDA (as defined below), in this report and in communications with investors, analysts, rating agencies, banks and others to assist such parties in understanding the impact of various items on our financial statements. We use this information in our analysis of the performance of our business, excluding items we do not consider relevant to the performance of our continuing operations. In addition, we use these measures to define certain performance targets under our compensation programs.
Previous report
“Adjusted EBITDA” is a non‑GAAP measure we define as net income available (loss attributable) to Tenet Healthcare Corporation common shareholders before (1) the cumulative effect of changes in accounting principle, (2) net loss attributable (income available) to noncontrolling interests, (3) income (loss) from discontinued operations, net of tax, (4) income tax benefit (expense), (5) gain (loss) from early extinguishment of debt, (6) other non‑operating income (expense), net, (7) interest expense, (8) litigation and investigation (costs) benefit, net of insurance recoveries, (9) net gains (losses) on sales, consolidation and deconsolidation of facilities, (10) impairment and restructuring charges and acquisition‑related costs, (11) depreciation and amortization, and (12) income (loss) from divested and closed businesses (i.e., health plan businesses). Litigation and investigation costs do not include ordinary course of business malpractice and other litigation and related expense.
Previous report
Staffing and Labor Trends—We compete with other healthcare providers in recruiting and retaining qualified personnel responsible for the operation of our facilities. There is limited availability of experienced medical support personnel nationwide, which drives up the wages and benefits required to recruit and retain employees. In particular, like others in the healthcare industry, we continue to experience shortages of advanced practice providers and critical‑care nurses in certain disciplines and geographic areas. Over the past several years, we have had to rely on higher-cost contract labor, which we compete with other healthcare providers to secure, and pay premiums above standard compensation for essential workers. Although we continue to incur a higher level of contract labor expense than we have historically, our recruitment and retention efforts drove a reduction in this expense during the nine months ended September 30, 2024 as compared to the same period in 2023.
Previous report
We also depend on the available labor pool of semi‑skilled and unskilled workers in the areas where we operate. In some of our communities, employers across various industries have increased their minimum wage, which has created more competition and, in some cases, higher labor costs for this sector of employees. Furthermore, we expect that state‑mandated minimum wage increases in California are likely to result in an increase in compensation costs for certain of our employees and vendors.
Previous report
Inflation, Other General Economic Conditions and Weather-Related Events—Our business has been impacted by the rise in inflation and its effects on salaries, wages and benefits, as well as other costs. Medical supply prices remain high due to current economic conditions and other factors. In addition, our Ambulatory Care segment continues to be impacted by shipment delays in construction materials and capital equipment with respect to its de novo facility development efforts, which are a key part of our portfolio expansion strategy. In general, supply chain operational challenges may continue or worsen in the future, whether due to geopolitical conflicts, inflationary pressures and the recessionary environment, climate change, weather events or other issues yet to emerge.
Previous report
In late September 2024, Hurricane Helene significantly damaged the North Carolina factory of the largest producer of sterile intravenous, or IV, fluids in the country. There is uncertainty regarding the timeline to resolve the resulting national shortage of IV fluids; if the shortage persists or regulators impose restrictions on the performance of elective procedures, we may experience an impact to our patient volumes or net operating revenues.
Previous report
Industry Trends—We believe that several key trends are continuing to shape the demand for healthcare services: (1) consumers, employers and insurers are actively seeking lower‑cost solutions and better value with respect to healthcare spending; (2) patient volumes are shifting from inpatient to outpatient settings due to technological advances and demand for care that is more convenient, affordable and accessible; (3) the growing aging population requires greater chronic disease management and higher‑acuity treatment; and (4) consolidation continues across the entire healthcare sector. Furthermore, the healthcare industry, in general, and the acute care hospital business, in particular, continue to be subject to significant regulatory uncertainty. Changes in federal or state healthcare laws, regulations, funding policies or reimbursement practices, especially those involving reductions to government payment rates, could have a significant impact on our future revenues and expenses.
Previous report
During the nine months ended September 30, 2024, we acquired controlling ownership interests in 49 ASCs and acquired noncontrolling ownership interests in two ASCs in which we did not have a previous investment. We also continue to prioritize increasing our investment in our unconsolidated facilities, acquiring controlling ownership interests in seven previously unconsolidated ASCs during the nine months ended September 30, 2024, which allowed us to consolidate their financial results. In addition, we opened 12 de novo ASCs during the nine months ended September 30, 2024; we hold controlling ownership interests in three of these centers and noncontrolling ownership interests in the remaining nine.
Previous report
From time to time, we capitalize on opportunities to refine our portfolio of hospitals and other healthcare facilities when we believe such refinements will help us improve profitability, allocate capital more effectively in areas where we have a stronger presence, deploy proceeds on higher-return investments across our business, enhance cash flow generation and reduce our debt, among other things. Transactions completed during the nine months ended September 30, 2024 included the following:
Previous report
•In September 2024, we completed the sale of our majority ownership interests in several entities that owned or leased five hospitals and certain related operations, all located in Alabama (collectively, the “AL Hospitals”).
Previous report
We also seek advantageous opportunities to grow our portfolio of hospitals and other healthcare facilities. We opened our newly constructed Westover Hills Hospital, a 92‑bed acute care hospital located in the Westover Hills area of San Antonio, Texas, in July 2024. In 2023, we broke ground on a new medical campus located in Port St. Lucie, Florida, which will include the 54‑bed Florida Coast Surgical Hospital, as well as medical office space. We expect to complete construction of the Port St. Lucie medical campus in late 2025.
Previous report
During the three months ended March 31, 2024, we redeemed all $2.100 billion aggregate principal amount outstanding of our 4.875% senior secured first lien notes due 2026 (the “2026 Senior Secured First Lien Notes”) in advance of their maturity date.
Previous report
The board had previously approved a $1.000 billion share repurchase program in October 2022 (the “2022 share repurchase program”). During the nine months ended September 30, 2024, we paid $548 million to repurchase 4,801 thousand shares, an average of $114.19 per share, of our common stock. Over the life of the 2022 share repurchase program, we repurchased $998 million of our common stock. We do not intend to make further repurchases under the 2022 share repurchase program.
Previous report
Repurchases under both the 2024 and the 2022 share repurchase programs were completed in open‑market or privately negotiated transactions, at management’s discretion subject to market conditions and other factors, and in a manner consistent with applicable securities laws and regulations.
Previous report
Our accounts receivable days outstanding (“AR Days”) from continuing operations were 52.6 days and 55.4 days at September 30, 2024 and December 31, 2023, respectively. Our AR Days target is less than 55 days. AR Days are calculated as our accounts receivable from continuing operations on the last date in the quarter divided by our net operating revenues for the quarter ended on that date divided by the number of days in the quarter. This calculation includes our Hospital Operations segment’s contract assets and excludes our California provider fee revenues and activity related to divested facilities.
Previous report
Salaries, wages and benefits expense for our Hospital Operations segment decreased by $146 million, or 7.1%, in the three months ended September 30, 2024 compared to the same period in 2023. This change was primarily attributable to the sales of the Divested Hospitals. After excluding the effects of these divestitures, salaries, wages and benefits expense for our Hospital Operations segment increased by $145 million, or 7.9%, during the three-month period in 2024 as compared to the same period in 2023. This increase was the result of annual merit increases for certain of our employees and increased employee benefits costs, partially offset by decreases in contract labor and premium pay.
Previous report
Supplies expense for our Hospital Operations segment decreased by $28 million, or 4.5%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to the sales of the Divested Hospitals. Excluding the impact of these sales, supplies expense increased by $35 million, or 6.3%, during the three months ended September 30, 2024 as compared to the same period in 2023. This increase was primarily due to higher patient acuity, partially offset by our cost‑efficiency measures.
Previous report
On a per adjusted admission basis, supplies expense increased by 3.5% in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to higher patient acuity during the 2024 period. Excluding the impact of the sales of the Divested Hospitals, supplies expense per adjusted admission increased 3.3% during the three‑month period in 2024 as compared to the same period in 2023.
Previous report
Other operating expenses for our Hospital Operations segment decreased by $22 million, or 2.3%, in the three months ended September 30, 2024 compared to the same period in 2023, primarily due to the sales of the Divested Hospitals. Excluding the effect of these divestitures, other operating expenses increased during the 2024 period by $75 million, or 8.6%. This increase was primarily attributable to net gains of $11 million recognized in the 2023 period, as well as increases of $27 million in medical fees and $7 million in legal and consulting costs. These changes were partially offset by lower malpractice expense of $16 million during the three months ended September 30, 2024.
Previous report
•Proceeds received from the sale of facilities and other assets totaling $917 million;
Previous report
•$216 million of capital expenditures;
Previous report
•Repayments of advances received from managed care payers totaling $160 million;
Previous report
•Interest payments of $96 million; and
Previous report
•$68 million of income tax payments.
Previous report
•Income tax payments that were $96 million higher in the 2024 period; and
Previous report
Our hospitals and outpatient facilities are subject to various factors that affect our service mix, revenue mix and patient volumes and, thereby, impact our net patient service revenues and results of operations. These factors include, among others, changes in federal, state and local healthcare and business regulations; changes in general economic conditions nationally and regionally, including inflation and other factors; the number of uninsured and underinsured individuals in local communities treated at our hospitals; cybersecurity incidents, including those targeting our vendors, and other unanticipated information technology outages; disease hotspots and seasonal cycles of illness; climate and weather conditions; physician recruitment, satisfaction, retention and attrition; advances in technology and treatments that reduce length of stay or permit procedures to be performed in an outpatient rather than an inpatient setting; local healthcare competitors; utilization pressure by managed care organizations, as well as managed care contract negotiations or terminations; performance data on quality measures and patient satisfaction, as well as standard charges for services; any unfavorable publicity about us, or our joint venture partners, that impacts our relationships with physicians and patients; and changing consumer behavior, including with respect to the timing of elective procedures.
Previous report
Several states in which we operate continue to face budgetary challenges that have resulted in reduced Medicaid funding levels to hospitals and other providers. Because most states must operate with balanced budgets, and the Medicaid program is generally a significant portion of a state’s budget, states can be expected to adopt or consider adopting future legislation designed to reduce or not increase their Medicaid expenditures. In addition, some states delay issuing Medicaid payments to providers to manage state expenditures. As an alternative means of funding provider payments, many of the states where we operate have adopted supplemental payment programs authorized under the Social Security Act. Continuing pressure on state budgets and other factors, including legislative and regulatory changes, could result in future reductions to Medicaid payments, payment delays or changes to Medicaid supplemental payment programs. Federal government denials or delayed approvals of waiver applications or extension requests by the states where we operate could also materially impact our Medicaid funding levels.
Previous report
Total Medicaid and Medicaid managed care net patient service revenues from continuing operations recognized by the hospitals and related outpatient facilities in our Hospital Operations segment were $703 million and $708 million for the three months ended September 30, 2024 and 2023, respectively, and $2.227 billion and $2.020 billion for the nine months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2024, Medicaid and Medicaid managed care revenues each comprised approximately 50% of our Medicaid‑related net patient service revenues from continuing operations recognized by the hospitals and related outpatient facilities in our Hospital Operations segment. All Medicaid and Medicaid managed care patient service revenues are presented net of provider taxes or assessments paid by our hospitals.
Previous report
Regulatory and Legislative Changes
Previous report
•A market basket increase of 3.4% for Medicare severity‑adjusted diagnosis‑related group (“MS‑DRG”) operating payments for hospitals reporting specified quality measure data and that are meaningful users of electronic health record (“EHR”) technology; CMS also finalized a 0.5% multifactor productivity reduction required by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), that results in a net operating payment update of 2.9% before budget neutrality adjustments;
Previous report
•An increase in the cost outlier threshold from $42,750 to $46,217;
Previous report
•A 1.65% net increase in the capital federal MS‑DRG rate;
Previous report
•Updates to the three factors used to determine the amount and distribution of Medicare uncompensated care disproportionate share hospital payments (“UC‑DSH Amounts”);
Previous report
•An increase to the performance-based scoring threshold for eligible hospitals and critical access hospitals reporting under the Medicare Promoting Interoperability Program from 60 points to 70 points beginning with the EHR reporting period in calendar year (“CY”) 2025;
Previous report
•An update to the hospital labor market area delineation based on the Office of Management and Budget Bulletin No. 23-01; and
Previous report
•Implementation of the Transforming Episode Accountability Model (“TEAM”) that will begin January 1, 2026 and end December 31, 2030 for certain episodic categories. TEAM will be mandatory, with limited exceptions, for all hospitals located within the CMS selected Core-Based Statistical Areas (“CBSAs”). Nine of our acute care hospitals and one surgical hospital are included in the CBSAs.
Previous report
According to CMS, the combined impact of the payment and policy changes in the Final IPPS Rule and IFC for operating costs will yield an average 2.9% increase in Medicare operating MS‑DRG FFS payments for hospitals in urban areas and an average 3.3% increase in such payments for proprietary hospitals in FFY 2025. We estimate that all of the payment and policy changes affecting operating MS‑DRG and UC‑DSH Amounts will result in a 2.8% increase in our annual Medicare FFS IPPS payments, which yields an estimated increase of $36 million. Because of the uncertainty associated with various factors that may influence our future IPPS payments by individual hospital, including legislative, regulatory or legal actions, admission volumes, length of stay and case mix, we cannot provide any assurances regarding our estimate of the impact of the payment and policy changes.
Previous report
Proposed Payment and Policy Changes to the Medicare Outpatient Prospective Payment and Ambulatory Surgery Center Payment Systems—In July 2024, CMS released the proposed policy changes and payment rates for the Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgical Center Payment System for CY 2025 (“Proposed OPPS/ASC Rule”). The Proposed OPPS/ASC Rule includes the following payment and policy changes, among others:
Previous report
•An estimated net increase of 2.6% for the OPPS rates based on a market basket increase of 3.0%, reduced by a multifactor productivity adjustment required by the Affordable Care Act of 0.4%; and
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Reworded paragraphs (65)
Previous wording
Our Hospital Operations segment is comprised of our acute care and specialty hospitals, a network of employed physicians and ancillary outpatient facilities. At September 30, 2024, our subsidiaries operated 49 hospitals serving primarily urban and suburban communities in eight states. Our Hospital Operations segment also included 142 outpatient facilities at September 30, 2024, including imaging centers, urgent care centers, ancillary emergency facilities and micro‑hospitals. In addition, our Hospital Operations segment provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients through our Conifer Health Solutions, LLC joint venture.
Current wording
Our business consists of our Hospital Operations and Services (“Hospital Operations”) segment and our Ambulatory Care segment. Our Hospital Operations segment is comprised of our acute care and specialty hospitals, a network of employed physicians and ancillary outpatient facilities. At March 31, 2025, our subsidiaries operated 49 hospitals serving primarily urban and suburban communities in eight states. Our Hospital Operations segment also included 134 outpatient facilities at March 31, 2025, including urgent care centers (each, a “UCC”), imaging centers, off‑campus hospital emergency departments and micro‑hospitals. In addition, our Hospital Operations segment provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients through our Conifer Health Solutions, LLC joint venture.
Previous wording
Our Ambulatory Care segment, through our USPI Holding Company, Inc. subsidiary (“USPI”), held ownership interests in 520 ambulatory surgery centers (each, an “ASC”), 376 of which are consolidated, and 24 surgical hospitals, seven of which are consolidated, in 37 states at September 30, 2024. USPI’s facilities offer a range of procedures and service lines, including, among other specialties: orthopedics, total joint replacement, and spinal and other musculoskeletal procedures; gastroenterology; and urology.
Current wording
Our Ambulatory Care segment, through our USPI Holding Company, Inc. subsidiary (“USPI”), held ownership interests in 520 ambulatory surgery centers (each, an “ASC”), 380 of which are consolidated, and 25 surgical hospitals, seven of which are consolidated, in 37 states at March 31, 2025. USPI’s facilities offer a range of procedures and service lines, including, among other specialties: orthopedics, total joint replacement, and spinal and other musculoskeletal procedures; gastroenterology; pain management; otolaryngology (ear, nose and throat); ophthalmology; and urology.
Previous wording
Unless otherwise indicated, all financial and statistical information included in MD&A relates to our continuing operations, with dollar amounts expressed in millions (except per adjusted admission and per adjusted patient day amounts). Continuing operations information includes the results of all hospitals operated for the entirety, or any portion of, the nine months ended September 30, 2024 and 2023, including Westover Hills Baptist Hospital (“Westover Hills Hospital”), the new acute care hospital we opened in Texas in July 2024. Continuing operations information excludes the results of our hospitals and other businesses classified as discontinued operations for accounting purposes. We believe this presentation is useful to investors because it includes the operations of all facilities in continuing operations for the entire time that we owned and operated them during the relevant period. In addition, continuing operations information reflects the impact of the addition or disposition of individual hospitals and other operations on our volumes, revenues and expenses.
Current wording
Unless otherwise indicated, all financial and statistical information included in MD&A relates to our continuing operations, with dollar amounts expressed in millions (except per adjusted admission and per adjusted patient day amounts). Continuing operations information includes the results of all facilities operated during any portion of the periods presented, and it reflects the performance of those facilities only for the time periods in which we operated them. Continuing operations information excludes the results of our hospitals and other businesses classified as discontinued operations for accounting purposes. We believe this presentation is useful to investors because continuing operations information reflects the impact of the addition or disposition of individual hospitals and other operations on our volumes, revenues and expenses.
Previous wording
In certain cases, information presented in MD&A for our Hospital Operations segment is described as presented on a same‑hospital basis, which includes hospitals we operated for the entire nine-month periods ended September 30, 2024 and 2023. Same‑hospital basis excludes the results of hospitals not operated for the full duration of both periods, such as our Westover Hills Hospital, as well as our discontinued operations. Same-hospital information includes the results of operations of the five Alabama hospitals and certain related operations that we divested, as described below, on September 30, 2024. We present same‑hospital data because we believe it provides investors with useful information regarding the performance of our current portfolio of hospitals and other operations that are comparable for the periods presented. Furthermore, same‑hospital data may more clearly reflect recent trends we are experiencing with respect to volumes, revenues and expenses exclusive of variations caused by the addition or disposition of individual hospitals and other operations.
Current wording
In certain cases, information presented in MD&A for our Hospital Operations segment is described as presented on a same‑hospital basis, which includes facilities we operated for the entirety of the periods presented. For the three-month periods ended March 31, 2025 and 2024, information presented on a same‑hospital basis includes the results of our same hospitals and those outpatient centers we operated throughout both periods, and excludes the results of: (1) Westover Hills Baptist Hospital, the acute care hospital we opened in Texas in July 2024; (2) a rehabilitation hospital in El Paso, Texas, in which we acquired a majority ownership interest in September 2024; (3) three hospitals located in South Carolina and certain related operations (the “SC Hospitals”) we sold in January 2024; (4) four hospitals and certain related operations located in Orange County and Los Angeles County, California (the “OCLA CA Hospitals”) we sold in March 2024; (5) two hospitals and certain related operations located in San Luis Obispo County, California (the “Central CA Hospitals”), which we also sold in March 2024; (6) five hospitals and certain related operations located in Alabama we divested in September 2024 (the “AL Hospitals”); and (7) businesses classified as discontinued operations for accounting purposes during those periods, along with other ancillary facilities acquired or divested during the reporting periods that have a limited financial or operational impact. We present same‑hospital data because we believe it provides investors with useful information regarding the performance of our current portfolio of hospitals and other operations that are comparable for the periods presented. Furthermore, same‑hospital data may more clearly reflect recent trends we are experiencing with respect to volumes, revenues and expenses exclusive of variations caused by the addition or disposition of individual hospitals and other operations.
Previous wording
We also present certain operational metrics and statistics in order to provide additional insight into our operational performance efficiency and to help investors better understand management’s view and strategic focus. We define these operational metrics and statistics as follows:
Current wording
We present certain operational metrics and statistics in order to provide additional insight into our operational performance efficiency and to help investors better understand management’s view and strategic focus. We define these operational metrics and statistics as follows:
Previous wording
We present certain metrics as a percentage of net operating revenues because a significant portion of our operating expenses are variable, and we present certain metrics on a per adjusted admission and per adjusted patient day basis to show trends other than volume.
Current wording
We also present certain metrics as a percentage of net operating revenues because a significant portion of our operating expenses are variable, and we present certain metrics on a per adjusted admission and per adjusted patient day basis to show trends other than volume.
Previous wording
While we do not record the revenues of unconsolidated facilities, we believe this information is important in understanding the financial performance of our Ambulatory Care segment because these revenues are the basis for calculating our management services revenues and, together with the expenses of our unconsolidated facilities, are the basis for our equity in earnings of unconsolidated affiliates.
Current wording
Our Ambulatory Care segment reports growth data on a same-facility systemwide basis, which includes both consolidated and unconsolidated facilities held at the end of the period, as well as facilities acquired during the period on a pro forma basis as if owned for the full period. Divested facilities are generally excluded; however, management may include facilities sold near the end of the period when, in its judgment, their inclusion provides financial statement users with a better understanding of the segment's performance. This approach offers insights into the performance of our current portfolio by excluding variations from facility acquisitions or dispositions. Although we do not record the revenues of unconsolidated facilities, this information is important for understanding the financial performance of our Ambulatory Care segment, as these revenues form the basis for calculating management services revenues and equity in earnings of unconsolidated affiliates. Additionally, this presentation enhances comparability across periods.
Previous wording
Expanding Our Ambulatory Care Segment—We continue to focus on opportunities to expand our Ambulatory Care segment through acquisitions, organic growth, construction of new outpatient centers and strategic partnerships. We believe USPI’s ASCs and surgical hospitals offer many advantages to patients and physicians, including greater affordability, predictability, flexibility and convenience. Moreover, due in part to advancements in surgical techniques, medical technology and anesthesia, as well as the lower cost structure and greater efficiencies that are attainable at a specialized outpatient site, we believe the volume and complexity of surgical cases performed in an outpatient setting will continue to increase over time. Historically, our outpatient services have generated significantly higher margins for us than inpatient services.
Current wording
Expanding Our Ambulatory Care Segment—We continue to focus on opportunities to expand our Ambulatory Care segment through acquisitions, organic growth in our physician relationships and service lines, construction of new outpatient centers and strategic partnerships. We believe USPI’s ASCs and surgical hospitals offer many advantages to patients and physicians, including greater affordability, predictability, flexibility and convenience. Moreover, we believe the volume and complexity of surgical cases performed in an outpatient setting will continue to increase over time. Historically, our outpatient services have generated significantly higher margins for us than inpatient services.
Previous wording
Driving Growth in Our Hospital Systems—We remain committed to better positioning our hospital systems and competing more effectively in the ever‑evolving healthcare environment by focusing on driving performance through operational effectiveness, increasing capital efficiency and margins, investing in our physician enterprise, particularly our specialist network, enhancing patient and physician satisfaction, growing our higher‑demand and higher‑acuity clinical service lines (including outpatient lines), expanding patient and physician access, and optimizing our portfolio of assets. Over the past several years, we have undertaken enterprise‑wide cost‑efficiency measures, and we continue to transition certain support operations to our Global Business Center (“GBC”) in the Philippines. We incurred restructuring charges in conjunction with these initiatives in the nine months ended September 30, 2024, and we could incur additional restructuring charges in the future.
Current wording
Driving Growth in Our Hospital Operations Segment—We remain committed to better positioning our hospitals and competing more effectively in the ever‑evolving healthcare environment by focusing on driving performance through operational effectiveness, investing in our physician enterprise, particularly our specialist network, enhancing patient and physician satisfaction, growing our higher‑demand and higher‑acuity clinical service lines (including outpatient lines), expanding patient and physician access, and optimizing our portfolio of assets. We believe our efforts in these areas improve the quality of care we deliver and enhance growth.
Previous wording
Improving the Customer Care Experience—As consumers continue to become more engaged in managing their health, we recognize that understanding what matters most to them and earning their loyalty is imperative to our success. As such, we have enhanced our focus on treating our patients as traditional customers by: (1) establishing networks of physicians and facilities that provide convenient access to services across the care continuum; (2) expanding service lines with growing community demand, including a focus on aging and chronic disease patients; (3) offering greater affordability and predictability, including simplified registration and discharge procedures, particularly in our outpatient centers; (4) improving our culture of service; and (5) creating health and benefit programs, patient education and health literacy materials that are customized to the needs of the communities we serve.
Current wording
Improving the Customer Care Experience—As consumers continue to become more engaged in managing their health, we recognize that understanding what matters most to them and earning their loyalty is imperative to our success. As such, we have enhanced our focus on treating our patients as traditional customers by broadening access to convenient, community‑focused services; expanding service lines aligned with growing community demand; offering greater affordability and predictability; improving our culture of service; and offering tailored health programs and education to better meet patient needs.
Previous wording
Improving Profitability—We continue to focus on growing patient volumes and effective cost management as a means to improve profitability. Our inpatient admissions have been constrained in recent years by increased competition, utilization pressure by managed care organizations, new delivery models that are designed to lower the utilization of acute care hospital services, the effects of higher patient co‑pays, co‑insurance amounts and deductibles, changing consumer behavior, and adverse economic conditions and demographic trends in certain areas where we operate. Our business has also been impacted by the rise in inflation and its effects on salaries, wages, benefits and other costs. However, we believe that emphasis on higher‑demand clinical service lines (including outpatient services), focus on expanding our ambulatory care business, cultivation of our culture of service, participation in Medicare Advantage health plans that have been experiencing higher growth rates than traditional Medicare, and contracting strategies that create shared value with payers should help us grow our patient volumes over time. We are also continuing to pursue new opportunities to enhance efficiency, including further integration of enterprise‑wide centralized support functions, outsourcing additional functions unrelated to direct patient care, and reducing clinical and vendor contract variation.
Current wording
Improving Profitability—We continue to focus on growing patient volumes and effective cost management as a means to improve profitability. We believe that emphasis on higher‑demand clinical service lines, focus on expanding our ambulatory care business, cultivation of our culture of service, participation in Medicare Advantage health plans and contracting strategies that create shared value with payers should help us grow our patient volumes over time. We are also continuing to pursue new opportunities to enhance efficiency, including further integration of enterprise‑wide centralized support functions, outsourcing additional functions unrelated to direct patient care, and reducing clinical and vendor contract variation.
Previous wording
Reducing Our Leverage Over Time—All of our long‑term debt has a fixed rate of interest, except for outstanding borrowings under our senior secured revolving credit facility (as amended to date, the “Credit Agreement”), of which we had none at September 30, 2024. In addition, the maturity dates of our notes are staggered from 2027 through 2031. We believe that our capital structure helps to minimize the near‑term impact of increased interest rates, and the staggered maturities of our debt allow us to retire or refinance our debt over time. It remains our long‑term objective to reduce our debt and lower our ratio of debt‑to‑Adjusted EBITDA, primarily through more efficient capital allocation and Adjusted EBITDA growth, which should lower our refinancing risk.
Current wording
Managing Our Capital Structure—All of our long‑term debt has a fixed rate of interest, except for outstanding borrowings under our senior secured revolving credit facility (as amended to date, the “Credit Agreement”), of which we had none at March 31, 2025. In addition, the maturity dates of our notes are staggered from 2027 through 2031. We believe that our capital structure helps to minimize the near‑term impact of increased interest rates, and the staggered maturities of our debt allow us to retire or refinance our debt over time.
Previous wording
Repurchasing Stock—In July 2024, our board of directors authorized the repurchase of up to $1.500 billion of our common stock through a new share repurchase program that has no expiration date (the “2024 share repurchase program”). This program does not obligate us to acquire any particular amount of common stock, and it may be suspended for periods or discontinued at any time. From the inception of the 2024 share repurchase program through September 30, 2024, we paid $124 million to repurchase 795 thousand shares of our common stock, an average of $155.95 per share.
Current wording
In the three months ended March 31, 2025, we repurchased $348 million of our common stock pursuant to a $1.500 billion share repurchase program our board of directors authorized in July 2024. This program has no expiration date, it does not obligate us to acquire any particular amount of common stock, and it may be suspended for periods or discontinued at any time. At March 31, 2025, there was $1.028 billion available under this program for future repurchases.
Previous wording
Our ability to execute on our strategies and respond to the aforementioned trends in the current operating environment is subject to numerous risks and uncertainties, all of which may cause actual results to be materially different from expectations. For information about risks and uncertainties that could affect our results of operations, see the Forward‑Looking Statements and Risk Factors sections in Part I of our Annual Report on Form 10‑K for the year ended December 31, 2023 (our “Annual Report”).
Current wording
Our ability to execute on our strategies and respond to the aforementioned trends in the current operating environment is subject to numerous risks and uncertainties, all of which may cause actual results to be materially different from expectations. For information about risks and uncertainties that could affect our results of operations, see the Forward‑Looking Statements and Risk Factors sections in Part I of our Annual Report.
Previous wording
Total admissions decreased by 7,910, or 5.9%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Total surgeries and emergency department visits decreased by 8,333, or 9.7%, and 63,141, or 11.6%, respectively, during the three-month period in 2024 as compared to the same period in 2023. The decreases in our volumes were primarily related to the sales of the SC Hospitals, the OCLA CA Hospitals and the Central CA Hospitals (together, the “Divested Hospitals”). Excluding the impact of these divestitures, total admissions increased by 6,546, or 5.4%, total surgeries increased by 543, or 0.7%, and emergency department visits decreased by 4,895, or 1.0%, during the three months ended September 30, 2024 compared to the same period in 2023.
Current wording
Total admissions decreased by 16,284, or 11.9%, total emergency department visits decreased by 77,512, or 12.0%, and total surgeries decreased by 15,718, or 19.2% in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decreases in our volumes were primarily related to the sales of the SC Hospitals, the OCLA CA Hospitals, the Central CA Hospitals and the AL Hospitals (together, the “Divested Hospitals”) in 2024.
Previous wording
The increase in our Ambulatory Care segment’s total consolidated cases of 19.0% in the three months ended September 30, 2024, as compared to the same period in 2023, was primarily attributable to incremental case volume from the ASCs we have acquired and same‑facility case growth, partially offset by the impact of the closure and deconsolidation of certain facilities.
Current wording
The 13.7% increase in our Ambulatory Care segment’s total consolidated cases in the three months ended March 31, 2025, as compared to the same period in 2024, was primarily attributable to incremental case volume from our newly acquired ASCs, net of the impact of the closure and deconsolidation of certain facilities.
Previous wording
Consolidated net operating revenues increased by $56 million, or 1.1%, in the three months ended September 30, 2024 compared to the same period in 2023. The decrease of $142 million, or 3.4%, in our Hospital Operations segment’s net operating revenues for the three‑month period in 2024 compared to the same period in 2023 was primarily due to the sales of the Divested Hospitals. Excluding the effect of these sales, net operating revenues during the three months ended
Current wording
Consolidated net operating revenues decreased by $145 million, or 2.7%, in the three months ended March 31, 2025 compared to the same period in 2024. The decrease of $344 million, or 7.9%, in our Hospital Operations segment’s net operating revenues for the three‑month period in 2025 compared to the same period in 2024 was primarily due to the sales of the Divested Hospitals, partially offset by the positive impact of a more favorable payer mix, higher patient volume and acuity, and negotiated commercial rate increases in the 2025 period.
Previous wording
Net operating revenues in our Ambulatory Care segment increased by $198 million, or 21.0%, in the three months ended September 30, 2024 compared to the same period in 2023. This change was primarily driven by the ASCs we have acquired, an increase in net revenue per case and higher patient acuity in the 2024 period, partially offset by the impact of the closure and deconsolidation of certain facilities.
Current wording
Net operating revenues in our Ambulatory Care segment increased by $199 million, or 20.0%, in the three months ended March 31, 2025 compared to the same period in 2024. This change was primarily driven by our newly acquired ASCs, net of the impact of the closure and deconsolidation of certain facilities, as well as higher net revenue per case in the 2025 period.
Previous wording
The following table provides information about selected operating expenses by segment on a continuing operations basis:
Current wording
The following table presents information about selected operating expenses by segment on a continuing operations basis:
Previous wording
The following table provides information about our Hospital Operations segment’s selected operating expenses per adjusted admission on a continuing operations basis:
Current wording
The following table presents information about our Hospital Operations segment’s selected operating expenses per adjusted admission on a continuing operations basis:
Previous wording
On a per adjusted admission basis, salaries, wages and benefits expense in our Hospital Operations segment increased by 0.8% in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Excluding the impact of the sales of the Divested Hospitals, salaries, wages and benefits expense per adjusted admission increased 0.7% during the 2024 period as compared to the 2023 period.
Current wording
Salaries, wages and benefits expense for our Hospital Operations segment decreased by $260 million, or 12.5%, in the three months ended March 31, 2025 compared to the same period in 2024. This decrease was primarily attributable to the sales of the Divested Hospitals and lower contract labor and premium pay costs, partially offset by annual merit increases for certain of our employees, an increase in incentive compensation expense, and higher recruiting and retention costs. On a per adjusted admission basis, salaries, wages and benefits expense in our Hospital Operations segment during the three months ended March 31, 2025 did not change significantly from the same period in 2024.
Previous wording
On a per adjusted admission basis, other operating expenses during the three months ended September 30, 2024 increased by 6.0% compared to the same period in 2023. Excluding the impact of the sales of the Divested Hospitals, other operating expenses per adjusted admission increased by 5.5%, primarily due to the factors discussed above.
Current wording
Other operating expenses for our Hospital Operations segment decreased by $97 million, or 9.6%, in the three months ended March 31, 2025 compared to the same period in 2024. This decrease was primarily attributable to the sales of the Divested Hospitals, partially offset by increases in medical fees and malpractice expense. On a per adjusted admission basis, other operating expenses during the three months ended March 31, 2025 increased by 3.3% compared to the same period in 2024, primarily due to the factors discussed above.
Previous wording
Cash and cash equivalents were $4.094 billion at September 30, 2024 compared to $2.880 billion at June 30, 2024. Significant cash flow items in the three months ended September 30, 2024 included:
Current wording
Cash and cash equivalents were $2.999 billion at March 31, 2025 compared to $3.019 billion at December 31, 2024. Significant cash flow items in the three months ended March 31, 2025 included:
Previous wording
•Net cash provided by operating activities before interest, taxes, impairment and restructuring charges, and acquisition‑related costs, and litigation costs and settlements of $1.264 billion;
Current wording
•Net cash provided by operating activities before interest, taxes, impairment and restructuring charges, and acquisition‑related costs, and litigation costs and settlements of $957 million;
Previous wording
•Distributions paid to noncontrolling interests totaling $173 million;
Current wording
•Distributions paid to noncontrolling interests totaling $189 million;
Previous wording
•$124 million of payments to purchase approximately 795 thousand shares of our common stock under our 2024 share repurchase program;
Current wording
•$348 million of payments to purchase approximately 2,629 thousand shares of our common stock; and
Previous wording
Net cash provided by operating activities was $2.378 billion in the nine months ended September 30, 2024 compared to $1.550 billion in the nine months ended September 30, 2023. Key factors contributing to the change between the 2024 and 2023 periods included the following:
Current wording
Net cash provided by operating activities was $815 million in the three months ended March 31, 2025 compared to $586 million in the three months ended March 31, 2024. Key factors contributing to the change between the 2025 and 2024 periods included the following:
Previous wording
•An increase in net income before interest, taxes, depreciation and amortization, impairment and restructuring charges, acquisition‑related costs, litigation costs and settlements, loss from early extinguishment of debt, other non-operating income or expense, and net gains on sales, consolidation and deconsolidation of facilities of $418 million;
Current wording
•An increase in net income before interest, taxes, depreciation and amortization, impairment and restructuring charges, acquisition‑related costs, litigation costs and settlements, loss from early extinguishment of debt, other non-operating income or expense, and net gains on sales, consolidation and deconsolidation of facilities of $139 million;
Previous wording
This report includes “forward‑looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. All statements, other than statements of historical or present facts, that address activities, events, outcomes, business strategies and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, target, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward‑looking statements, including (but not limited to) disclosures regarding (1) our future earnings, financial position, and operational and strategic initiatives, (2) developments in the healthcare industry, and (3) the anticipated impacts of economic and public health conditions on our business. Forward‑looking statements represent management’s expectations, based on currently available information, as to the outcome and timing of future events, but, by their nature, address matters that are indeterminate. They involve known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control, that may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward‑looking statements. Such factors include, but are not limited to, the risks described in the Forward‑Looking Statements and Risk Factors sections in Part I of our Annual Report.
Current wording
This report includes “forward‑looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. All statements, other than statements of historical or present facts, that address activities, events, outcomes, business strategies and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, target, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward‑looking statements, including (but not limited to) disclosures regarding (1) our future earnings, financial position, and operational and strategic initiatives, (2) developments in the healthcare industry, and (3) the anticipated impacts of economic and public health conditions and government actions on our business. Forward‑looking statements represent management’s expectations, based on currently available information, as to the outcome and timing of future events, but, by their nature, address matters that are indeterminate. They involve known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control, that may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward‑looking statements. Such factors include, but are not limited to, the risks described in the Forward‑Looking Statements and Risk Factors sections in Part I of our Annual Report.
Previous wording
SOURCES OF REVENUE FOR OUR HOSPITAL OPERATIONS AND SERVICES SEGMENT
Current wording
SOURCES OF REVENUE FOR OUR HOSPITAL OPERATIONS SEGMENT
Previous wording
The initial expansion of health insurance coverage under the Affordable Care Act resulted in an increase in the number of patients using our facilities with either private or public program coverage and a decrease in uninsured and charity care admissions, along with reductions in Medicare and Medicaid reimbursement to healthcare providers, including us. However, we continue to provide uninsured discounts and charity care due to the failure of certain states to expand Medicaid coverage and for persons living in the country who are not permitted to enroll in a health insurance exchange or government healthcare insurance program.
Current wording
The expansion of health insurance coverage under the Affordable Care Act resulted in an increase in the number of patients using our facilities with either private or public program coverage and a decrease in uninsured and charity care admissions. Although a substantial portion of our patient volumes and, as a result, our revenues have historically been derived from government healthcare programs, reductions to our reimbursement under the Medicare and Medicaid programs due to the Affordable Care Act have been partially offset by increased revenues from providing care to previously uninsured individuals.
Previous wording
Medicare offers its beneficiaries different ways to obtain their medical benefits. One option, the Original Medicare Plan (which includes “Part A” and “Part B”), is a fee‑for‑service (“FFS”) payment system. The other option, called Medicare Advantage (sometimes called “Part C” or “MA Plans”), includes health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”), private FFS Medicare special needs plans and Medicare medical savings account plans. Our total net patient service revenues from continuing operations of the hospitals and related outpatient facilities in our Hospital Operations segment for services provided to patients enrolled in the Original Medicare Plan were $504 million and $583 million for the three months ended September 30, 2024 and 2023, respectively, and $1.632 billion and $1.795 billion for the nine months ended September 30, 2024 and 2023, respectively. A general description of the types of payments we receive for services provided to patients enrolled in the Original Medicare Plan is provided in our Annual Report. Recent regulatory and legislative updates to the terms of these payment systems and their estimated effect on our revenues can be found under “Regulatory and Legislative Changes” below.
Current wording
Medicare offers its beneficiaries different ways to obtain their medical benefits. One option, the Original Medicare Plan (which includes “Part A” and “Part B”), is a fee‑for‑service (“FFS”) payment system. The other option, called Medicare Advantage (sometimes called “Part C” or “MA Plans”), includes health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”), private FFS Medicare special needs plans and Medicare medical savings account plans. Our total net patient service revenues from operation of the hospitals and related outpatient facilities in our Hospital Operations segment for services provided to patients enrolled in the Original Medicare Plan were $548 million and $610 million for the three months ended March 31, 2025 and 2024, respectively. A general description of the types of payments we receive for services provided to patients enrolled in the Original Medicare Plan is provided in our Annual Report. Recent regulatory and legislative updates to the terms of these payment systems and their estimated effect on our revenues can be found under “Regulatory and Legislative Updates” below.
Previous wording
Medicaid programs and the corresponding reimbursement methodologies vary from state‑to‑state and from year‑to‑year. Estimated revenues under various state Medicaid programs, including state‑funded Medicaid managed care programs, constituted approximately 21% and 19% of the total net patient service revenues of our hospitals and related outpatient facilities for the nine months ended September 30, 2024 and 2023, respectively. We also receive disproportionate share hospital (“DSH”) and other supplemental revenues under various state Medicaid programs. Our total Medicaid revenues attributable to DSH and other supplemental revenues were approximately $268 million and $240 million for the three months ended September 30, 2024 and 2023, respectively, and $893 million and $635 million for the nine months ended September 30, 2024 and 2023, respectively.
Current wording
Medicaid programs and the corresponding reimbursement methodologies vary from state‑to‑state and from year‑to‑year. In addition to traditional Medicaid programs, we also receive DSH and other supplemental revenues under various state Medicaid programs. All Medicaid patient service revenue is presented net of provider taxes or assessments paid by our hospitals. During the three months ended March 31, 2025 and 2024, revenue from Medicaid programs included $326 million and $339 million, respectively, of revenue attributable to DSH and other supplemental programs. During both of the three-month periods ended March 31, 2025 and 2024, revenue from Medicaid programs constituted approximately 11% of our total net patient services revenues.
Previous wording
Payment and Policy Changes to the Medicare Inpatient Prospective Payment Systems—Section 1886(d) of the Social Security Act requires CMS to update Medicare inpatient FFS payment rates for hospitals reimbursed under the inpatient prospective payment systems (“IPPS”) annually. The updates generally become effective October 1, the beginning of the FFY. In August 2024, CMS issued final changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2025 Rates (“Final IPPS Rule”). In the Final IPPS Rule, CMS deferred taking immediate action on its low wage index hospital policy in light of the U.S. Court of Appeals for the DC Circuit’s decision in Bridgeport Hospital v. Becerra. In September 2024, CMS issued an interim final action with comment period (“IFC”) to implement revisions to the FFY 2025 Medicare wage index values, establish a transitional payment exception for low wage hospitals, and make conforming changes to the FFY 2025 IPPS payment rates following the court decision. The Final IPPS Rule and IFC include the following payment and policy changes, among others:
Current wording
Proposed Payment and Policy Changes to the Medicare Inpatient Prospective Payment Systems—Section 1886(d) of the Social Security Act requires CMS to update Medicare inpatient FFS payment rates for hospitals reimbursed under the inpatient prospective payment systems (“IPPS”) annually. The updates generally become effective October 1, the beginning of the FFY. In April 2025, CMS issued proposed changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and Fiscal Year 2026 Rates (“Proposed IPPS Rule”). According to CMS, the combined impact of the proposed payment and policy changes in the Proposed IPPS Rule for operating costs will yield an average 3.4% increase in Medicare operating payments for propriety hospitals in FFY 2026.
Previous wording
The amount of our managed care net patient service revenues, including Medicare and Medicaid managed care programs, from our hospitals and related outpatient facilities during the three months ended September 30, 2024 and 2023 was $2.425 billion and $2.532 billion, respectively, and $7.464 billion and $7.600 billion during the nine months ended September 30, 2024 and 2023, respectively. Our top 10 managed care payers generated 69% of our managed care net patient service revenues for the nine months ended September 30, 2024. During the same period, national payers generated 48% of our managed care net patient service revenues; the remainder came from regional or local payers. At September 30, 2024 and December 31, 2023, 65% and 68%, respectively, of our Hospital Operations segment’s net accounts receivable were due from managed care payers.
Current wording
As described in detail in our Annual Report, in addition to payments from government programs, we receive revenue under contracts with commercial insurers, including both managed care arrangements with various HMOs and PPOs and indemnity‑based agreements. These contracts offer varying structures for patient access, utilization and reimbursement. Our top 10 managed care payers generated 69% of our managed care net patient service revenues for the three months ended March 31, 2025. During the same period, national payers generated 48% of our managed care net patient service revenues; the remainder came from regional or local payers.
Previous wording
Uninsured patients are patients who do not qualify for government programs payments, such as Medicare and Medicaid, do not have some form of private insurance and, therefore, are responsible for their own medical bills. A significant number of our uninsured patients are admitted through our hospitals’ emergency departments and often require high‑acuity treatment that is more costly to provide and, therefore, results in higher billings, which are the least collectible of all accounts.
Current wording
Uninsured patients are patients who do not qualify for government programs payments, such as Medicare and Medicaid, do not have some form of private insurance and, therefore, are responsible for their own medical bills. We provide financial assistance through our Compact with Uninsured Patients, which is designed to offer discounts to certain uninsured patients, and our charity and uninsured discount programs for uninsured patients who are unable to pay for the healthcare services they receive. The following table presents our estimated costs (based on selected operating expenses, which include salaries, wages and benefits, supplies and other operating expenses) of caring for our uninsured and charity patients:
Previous wording
The following tables present our consolidated net operating revenues, operating expenses and operating income, both in dollar amounts and as percentages of net operating revenues, on a continuing operations basis:
Current wording
The following table presents our consolidated net operating revenues, operating expenses and operating income, both in dollar amounts and as percentages of net operating revenues, on a continuing operations basis:
Previous wording
September 30, 2024 increased by $282 million, or 7.6%, compared to the three months ended September 30, 2023. This increase was attributable to the positive impact of a more favorable payer mix, higher patient volume and acuity, growth in our Medicaid supplemental revenue, and negotiated commercial rate increases.
Current wording
Same‑hospital net operating revenues increased by $246 million, or 6.5%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to the positive impact of a more favorable payer mix, higher patient volume and acuity, and negotiated commercial rate increases in the 2025 period.
Previous wording
Same‑hospital salaries, wages and benefits expense increased by $169 million, or 3.1%, in the nine months ended September 30, 2024 compared to the same period in 2023. The nine-month period in 2024 included the impact of annual merit increases for certain of our employees, higher incentive compensation expense, and increased employee recruiting and retention costs, partially offset by lower contract labor and premium pay. As a percentage of net operating revenues, same‑hospital salaries, wages and benefits decreased by 220 basis points to 47.4% in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Salaries, wages and benefits expense for the nine months ended September 30, 2024 and 2023 included stock‑based compensation expense of $46 million and $33 million, respectively.
Current wording
Same‑hospital salaries, wages and benefits expense increased by $23 million, or 1.3%, in the three months ended March 31, 2025 compared to the same period in 2024. This change was primarily attributable to annual merit increases for certain of our employees, an increase in incentive compensation expense, and higher recruiting and retention costs, partially offset by a decrease in contract labor and premium pay costs. Same‑hospital salaries, wages and benefits expense as a percentage of net operating revenues decreased by 230 basis points to 45.3% in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.
Previous wording
Same‑hospital supplies expense increased by $33 million, or 5.9%, in the three months ended September 30, 2024 compared to the same period in 2023. This increase was driven by higher patient volumes and acuity, partially offset by our cost‑efficiency measures. We strive to control supplies expense through product standardization, consistent contract terms and end‑to‑end contract management, improved utilization, bulk purchases, focused spending with a smaller number of vendors, and operational improvements. Same‑hospital supplies expense as a percentage of net operating revenues in the three months ended September 30, 2024 was comparable with the same period in 2023.
Current wording
Same‑hospital supplies expense increased by $30 million, or 5.4%, in the three months ended March 31, 2025 compared to the same period in 2024. This increase was driven by higher patient volumes and acuity, partially offset by our previously-discussed cost‑efficiency measures. Same‑hospital supplies expense as a percentage of net operating revenues in the three months ended March 31, 2025 was consistent with the same period in 2024.
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Previous report — wording carried elsewhere
•In January 2024, we completed the sale of three hospitals located in South Carolina and certain related operations (the “SC Hospitals”).
Previous report — wording carried elsewhere
•In March 2024, we completed the sale of four hospitals and certain related operations located in Orange County and Los Angeles County, California (the “OCLA CA Hospitals”).
Previous report — wording carried elsewhere
•Also in March 2024, we completed the sale of two hospitals and certain related operations located in San Luis Obispo County, California (the “Central CA Hospitals”).
Previous report — wording carried elsewhere
The following table presents our estimated costs (based on selected operating expenses, which include salaries, wages and benefits, supplies and other operating expenses) of caring for our uninsured and charity patients:
Previous report — wording carried elsewhere
•Hospital Operations, which is comprised of our acute care and specialty hospitals, a network of employed physicians and ancillary outpatient facilities, as well as the revenue cycle management and value-based care services that we provide to hospitals, health systems, physician practices, employers and other clients; and