UNIVERSAL HEALTH SERVICES INC

Previous wording

As of March 31, 2024, we owned and/or operated 360 inpatient facilities and 47 outpatient and other facilities, including the following, located in 39 states, Washington, D.C., the United Kingdom and Puerto Rico:

Current wording

As of June 30, 2024, we owned and/or operated 359 inpatient facilities and 48 outpatient and other facilities, including the following, located in 39 states, Washington, D.C., the United Kingdom and Puerto Rico:

Previous wording

9 outpatient centers & 1 surgical hospital.

Current wording

10 outpatient centers & 1 surgical hospital.

Previous wording

Behavioral health care facilities (333 inpatient facilities and 10 outpatient facilities):

Current wording

Behavioral health care facilities (332 inpatient facilities and 10 outpatient facilities):

Previous wording

Net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 57% of our consolidated net revenues during each of the three-month periods ended March 31, 2024 and 2023. Net revenues from our behavioral health care facilities and commercial health insurer accounted for 43% of our consolidated net revenues during each of the three-month periods ended March 31, 2024 and 2023.

Current wording

Net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 56% of our consolidated net revenues during each of the three and six-month periods ended June 30, 2024, and 57% during each of the three and six-month periods ended June 30, 2023. Net revenues from our behavioral health care facilities and commercial health insurer accounted for 44% of our consolidated net revenues during each of the three and six-month periods ended June 30, 2024, and 43% during each of the three and six-month periods ended June 30, 2023.

Previous wording

Our behavioral health care facilities located in the U.K. generated net revenues of approximately $208 million and $168 million during the three-month periods ended March 31, 2024 and 2023, respectively. Total assets at our U.K. behavioral health care facilities were approximately $1.336 billion as of March 31, 2024 and $1.327 billion as of December 31, 2023.

Current wording

Our behavioral health care facilities located in the U.K. generated net revenues of approximately $213 million and $190 million during the three-month periods ended June 30, 2024 and 2023, respectively, and $421 million and $358 million during the six-month periods ended June 30, 2024 and 2023, respectively. Total assets at our U.K. behavioral health care facilities were approximately $1.36 billion as of June 30, 2024 and $1.327 billion as of December 31, 2023.

Previous wording

in our acute care segment, we have experienced a significant increase in hospital based physician related expenses, especially in the areas of emergency room care and anesthesiology. Although we have implemented various initiatives to mitigate the increased expense, to the degree possible, increases in these physician related expenses could continue to have an unfavorable material impact on our results of operations for the foreseeable future;

Current wording

in our acute care segment, we have experienced a significant increase in hospital based physician related expenses, especially in the areas of emergency room care and anesthesiology. We have implemented various initiatives to mitigate the increased expense, to the degree possible, which has moderated the rate of increase. However, significant increases in these physician related expenses could have a material unfavorable impact on our future results of operations;

Previous wording

the rapid increase in interest rates has increased our interest expense significantly increasing our expenses and reducing our free cash flow and our ability to access the capital markets on favorable terms. As such, the effects of inflation and increased borrowing rates may adversely impact our results of operations, financial condition and cash flows;

Current wording

the increase in interest rates during the past few years has increased our interest expense significantly increasing our expenses and reducing our free cash flow and our ability to access the capital markets on favorable terms. As such, the effects of increased borrowing rates have adversely impacted our results of operations, financial condition and cash flows. We cannot predict future changes to interest rates, however, significant increases in our borrowing rates could have a material unfavorable impact on our future results of operations;

Previous wording

the impact of the COVID-19 pandemic, which began in March, 2020, has had a material effect on our operations and financial results, at various times, since that time. We cannot predict if there will be future disruptions caused by COVID-19. On December 29, 2022, the Consolidated Appropriations Act, 2023, was signed into law phasing out the enhanced federal medical assistance percentage rate that states received during the COVID-19 public health emergency and fully eliminated the increase on December 31, 2023. States were also permitted to begin Medicaid eligibility redeterminations on March 31, 2023, which has resulted in a decrease in Medicaid enrollment;

Current wording

on December 29, 2022, the Consolidated Appropriations Act, 2023, was signed into law phasing out the enhanced federal medical assistance percentage rate that states received during the COVID-19 public health emergency and fully eliminated the increase on December 31, 2023. States were also permitted to begin Medicaid eligibility redeterminations on March 31, 2023, which has resulted in a decrease in Medicaid enrollment;

Previous wording

an increasing number of legislative initiatives have been passed into law that may result in major changes in the health care delivery system on a national or state level. For example, Congress has reduced to $0 the penalty for failing to maintain health coverage that was part of the original Patient Protection and Affordable Care Act, as amended by the Health and Education Reconciliation Act (collectively, the "Legislation") as part of the Tax Cuts and Jobs Act. President Biden has undertaken and is expected to undertake additional executive actions that will strengthen the Legislation and reverse the policies of the prior administration. To date, the Biden administration has issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the Legislation or the Medicaid program. The Inflation Reduction Act of 2022 (“IRA”) was passed on August 16, 2022, which among other things, allows for CMS to negotiate prices for certain single-source drugs reimbursed under Medicare Part B and Part D. The American Rescue Plan Act’s expansion of subsidies to purchase coverage through a Legislation exchange, which the IRA continued through 2025, is anticipated to increase exchange enrollment. However, if the subsidies are not extended beyond 2025, exchange enrollment may be adversely impacted;

Current wording

an increasing number of legislative initiatives have been passed into law that may result in major changes in the health care delivery system on a national or state level. For example, Congress has reduced to $0 the penalty for failing to maintain health coverage that was part of the original Patient Protection and Affordable Care Act, as amended by the Health and Education Reconciliation Act (collectively, the "Legislation") as part of the Tax Cuts and Jobs Act. To date, the Biden administration has issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the Legislation or the Medicaid program. The Inflation Reduction Act of 2022 (“IRA”) was passed on August 16, 2022, which among other things, allows for the Centers for Medicare and Medicaid Services ("CMS") to negotiate prices for certain single-source drugs reimbursed under Medicare Part B and Part D. The American Rescue Plan Act’s expansion of subsidies to purchase coverage through a Legislation exchange, which the IRA continued through 2025, is anticipated to increase exchange enrollment. However, if the subsidies are not extended beyond 2025, exchange enrollment may be adversely impacted;

Previous wording

there have been numerous political and legal efforts to expand, repeal, replace or modify the Legislation, since its enactment, some of which have been successful, in part, in modifying the Legislation, as well as court challenges to the constitutionality of the Legislation. The U.S. Supreme Court held in California v. Texas that the plaintiffs lacked standing to challenge the Legislation’s requirement to obtain minimum essential health insurance coverage, or the individual mandate. The Court dismissed the case without specifically ruling on the constitutionality of the Legislation. As a result, the Legislation will continue to remain law, in its entirety, likely for the foreseeable future. On September 7, 2022, the Legislation faced its most recent challenge when a Texas Federal District Court judge, in the case of Braidwood Management v. Becerra, ruled that a requirement that certain health plans cover services without cost sharing violates the Appointments Clause of the U.S. Constitution and that the coverage of certain HIV prevention medication violates the Religious Freedom Restoration Act. The government has appealed the decision to the U.S. Circuit Court of Appeals for the Fifth Circuit. Any future efforts to challenge, replace or replace the Legislation or expand or substantially amend its provision is unknown. See below in Sources of Revenues and Health Care Reformfor additional disclosure;

Current wording

there have been numerous political and legal efforts to expand, repeal, replace or modify the Legislation, since its enactment, some of which have been successful, in part, in modifying the Legislation, as well as court challenges to the constitutionality of the Legislation. The U.S. Supreme Court held in California v. Texas that the plaintiffs lacked standing to challenge the Legislation’s requirement to obtain minimum essential health insurance coverage, or the individual mandate. The Court dismissed the case without specifically ruling on the constitutionality of the Legislation. As a result, the Legislation will continue to remain law, in its entirety, likely for the foreseeable future. On September 7, 2022, the Legislation faced its most recent challenge when a Texas Federal District Court judge, in the case of Braidwood Management v. Becerra, ruled that a requirement that certain health plans cover services without cost sharing violates the Appointments Clause of the U.S. Constitution and that the coverage of certain HIV prevention medication violates the Religious Freedom Restoration Act. The decision was appealed to the U.S. Court of Appeals for the Fifth Circuit, which on June 21, 2024, affirmed the District Court’s ruling regarding preventive services recommended by United States Preventive Services Task Force being unconstitutional. However, the Fifth Circuit overturned the nationwide injunction imposed by the District Court, preserving access to the majority of preventive services in dispute for now. The matter is expected to be the subject of additional litigation, having been remanded in part to the District Court. The outcome and impacts of this litigation cannot be predicted. Any future efforts to challenge, replace or replace the Legislation or expand or substantially amend its provision is unknown. See below in Sources of Revenues and Health Care Reformfor additional disclosure;

Previous wording

as part of the Consolidated Appropriations Act of 2021 (the "CAA"), Congress passed legislation aimed at preventing or limiting patient balance billing in certain circumstances. The CAA addresses surprise medical bills stemming from emergency services, out-of-network ancillary providers at in-network facilities, and air ambulance carriers. The CAA prohibits surprise billing when out-of-network emergency services or out-of-network services at an in-network facility are provided, unless informed consent is received. In these circumstances providers are prohibited from billing the patient for any amounts that exceed in-network cost-sharing requirements. HHS, the Department of Labor and the Department of the Treasury have issued interim final rules, which begin to implement the legislation. The rules have limited the ability of our hospital-based physicians to receive payments for services at usually higher out-of-network rates in certain circumstances, and, as a result, have caused us to increase subsidies to these physicians or to replace their services at a higher cost level. On February 28, 2022, a district judge in the Eastern District of Texas invalidated portions of the rule governing aspects of the Independent Dispute Resolution (“IDR”) process. In light of this decision, the government issued a final rule on August 19, 2022 eliminating the rebuttable presumption in favor of the qualifying payment amount (“QPA”) by the IDR entity and providing additional factors the IDR entity should consider when choosing between two competing offers. On September 22, 2022, the Texas Medical Association filed a lawsuit challenging the IDR process provided in the updated final rule and alleging that the final rule unlawfully elevates the QPA above other factors the IDR entity must consider. On February 6, 2023, a federal judge vacated parts of the rule, including provisions related to considerations of the QPA. The government's appeal of the district court's order is pending in the U.S. Court of Appeals for the Fifth Circuit;

Current wording

as part of the Consolidated Appropriations Act of 2021 (the "CAA"), Congress passed legislation aimed at preventing or limiting patient balance billing in certain circumstances. The CAA addresses surprise medical bills stemming from emergency services, out-of-network ancillary providers at in-network facilities, and air ambulance carriers. The CAA prohibits surprise billing when out-of-network emergency services or out-of-network services at an in-network facility are provided, unless informed consent is received. In these circumstances providers are prohibited from billing the patient for any amounts that exceed in-network cost-sharing requirements. HHS, the Department of Labor and the Department of the Treasury have issued rules to implement the legislation. The rules have limited the ability of our hospital-based physicians to receive payments for services at usually higher out-of-network rates in certain circumstances, and, as a result, have caused us to increase subsidies to these physicians or to replace their services at a higher cost level;

Previous wording

the outcome of known and unknown litigation, government investigations, inquiries, false claims act allegations, and liabilities and other claims asserted against us and other matters, and the effects of adverse publicity relating to such matters, including, but not limited to, the March 28, 2024, jury verdict (of compensatory damages of $60 million and punitive damages of $475 million) returned against The Pavilion Behavioral Health System (the “Pavilion”), an indirect subsidiary of the Company, as disclosed in Note 6 to the Consolidated Financial Statements - Commitments and Contingencies, Legal Proceedings. We are uncertain as to the ultimate financial exposure related to the Pavilion matter (which relates to an occurrence in 2020) and we can make no assurances regarding its outcome, or the amount of damages that may be ultimately held recoverable after post-judgment proceedings and appeal. While the Pavilion has general and professional liability insurance to cover a portion of these amounts, the resolution of this matter may have a material adverse effect on the Company. As of March 31, 2024, without reduction for any potential amounts related to the above-mentioned Pavilion matter, the Company and its subsidiaries have aggregate insurance coverage of approximately $221 million remaining under commercial policies for matters applicable to the 2020 policy year (in excess of the applicable self-insured retention amounts of $10 million per occurrence for professional liability claims and $3 million per occurrence for general liability claims). In the event the resolution of the Pavilion matter exhausts all or a significant portion of the remaining commercial insurance coverage available to the Company and its subsidiaries related to other matters that occurred in 2020, or the Pavilion matter causes the posting of a large bond or other collateral during an appeal process, our future results of operations and capital resources could be materially adversely impacted;

Current wording

the outcome of known and unknown litigation, government investigations, inquiries, false claims act allegations, and liabilities and other claims asserted against us and other matters, and the effects of adverse publicity relating to such matters, including, but not limited to, the March 28, 2024, jury verdict (of compensatory damages of $60 million and punitive damages of $475 million) returned against The Pavilion Behavioral Health System (the “Pavilion”), one of our indirect subsidiaries, as disclosed in Note 6 to the Condensed Consolidated Financial Statements - Commitments and Contingencies, Legal Proceedings. The Pavilion has filed post-trial motions, a portion of which were heard on August 1, 2024, with the remainder scheduled to be heard on August 23, 2024. The Pavilion will pursue an appeal as appropriate depending on the court's resolution of post-trial motions. We are uncertain as to the ultimate financial exposure related to the Pavilion matter (which relates to an occurrence in 2020) and we can make no assurances regarding timing or substance of its outcome, or the amount of damages that may be ultimately held recoverable after post-judgment proceedings and appeal. While the Pavilion has professional liability insurance to cover a portion of these amounts, the resolution of this matter may have a material adverse effect on the Company. As of June 30, 2024, without reduction for any potential amounts related to the above-mentioned Pavilion matter, the Company and its subsidiaries have aggregate insurance coverage of approximately $221 million remaining under commercial policies for matters applicable to the 2020 policy year (in excess of the applicable self-insured retention amounts of $10 million per occurrence for professional liability claims and $3 million per occurrence for general liability claims). In the event the resolution of the Pavilion matter exhausts all or a significant portion of the remaining commercial insurance coverage available to the Company and its subsidiaries related to other matters that occurred in 2020, or the Pavilion matter causes the posting of a large bond or other collateral during an appeal process, our future results of operations and capital resources could be materially adversely impacted;

Previous wording

as discussed below in Sources of Revenue, we receive revenues from various state and county-based programs, including Medicaid in all the states in which we operate. We receive annual Medicaid revenues of approximately $100 million, or greater, from each of Texas, Nevada, California, Illinois, Pennsylvania, Kentucky, Washington, D.C., Massachusetts, Florida, Mississippi and Virginia. We also receive Medicaid disproportionate share hospital ("DSH") payments in certain states including, most significantly, Texas. We are therefore particularly sensitive to potential reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in those states;

Current wording

as discussed below in Sources of Revenue, we receive revenues from various state and county-based programs, including Medicaid in all the states in which we operate. We receive annual Medicaid revenues of approximately $100 million, or greater, from each of Texas, Nevada, California, Illinois, Pennsylvania, Washington, D.C., Kentucky, Massachusetts, Mississippi, Virginia and Florida,. We also receive Medicaid DSH payments in certain states including, most significantly, Texas. We are therefore particularly sensitive to potential reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in those states;

Previous wording

the Budget Control Act of 2011 (the “2011 Act”) imposed annual spending limits for most federal agencies and programs aimed at reducing budget deficits by $917 billion between 2012 and 2021, according to a report released by the Congressional Budget Office. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Select Committee on Deficit Reduction (the “Joint Committee”), which was tasked with making recommendations aimed at reducing future federal budget deficits by an additional $1.5 trillion over 10 years. The Joint Committee was unable to reach an agreement by the November 23, 2011 deadline and, as a result, across-the-board cuts to discretionary, national defense and Medicare spending were implemented on March 1, 2013 resulting in Medicare payment reductions of up to 2% per fiscal year with a uniform percentage reduction across all Medicare programs. The Bipartisan Budget Act of 2015, enacted on November 2, 2015, continued the 2% reductions to Medicare reimbursement imposed under the 2011 Act. Recent legislation suspended payment reductions through December 31, 2021 in exchange for extended cuts through 2030. Subsequent legislation extended the payment reduction suspension through March 31, 2022, with a 1% payment reduction from then until June 30, 2022 and the full 2% payment reduction thereafter. The most recent legislation extended these reductions through 2032. We cannot predict whether Congress will restructure the implemented Medicare payment reductions or what other federal budget deficit reduction initiatives may be proposed by Congress going forward;

Current wording

the Budget Control Act of 2011 (the “2011 Act”) imposed annual spending limits for most federal agencies and programs aimed at reducing budget deficits by $917 billion between 2012 and 2021, according to a report released by the Congressional Budget Office. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Select Committee on Deficit Reduction (the “Joint Committee”), which was tasked with making recommendations aimed at reducing future federal budget deficits by an additional $1.5 trillion over 10 years. The Joint Committee was unable to reach an agreement by the November 23, 2011 deadline and, as a result, across-the-board cuts to discretionary, national defense and Medicare spending were implemented on March 1, 2013 resulting in Medicare payment reductions of up to 2% per fiscal year with a uniform percentage reduction across all Medicare programs. Current legislation has extended these reductions through 2032. We cannot predict whether Congress will restructure the implemented Medicare payment reductions or what other federal budget deficit reduction initiatives may be proposed by Congress going forward;

Previous wording

the healthcare industry is labor intensive and salaries, wages and benefits are subject to inflationary pressures, as are supplies expense and other operating expenses. In addition, the nationwide shortage of nurses and other clinical staff and support personnel experienced by healthcare providers in the past has been a significant operating issue facing us and other healthcare providers. In the past, the staffing shortage has, at times, required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, there have been occasions when we were unable to fill all vacant positions and, consequently, we were required to limit patient volumes. The staffing shortage has required us to enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel or required us to hire expensive temporary personnel. We have also experienced general inflationary cost increases related to medical supplies as well as certain of our other operating expenses. Many of these factors, which had a material unfavorable impact on our results of operations in prior years, moderated to a certain degree more recently;

Current wording

The healthcare industry is labor intensive and salaries, wages and benefits are subject to inflationary pressures, as are supplies expense and other operating expenses. In the past, staffing shortages have, at times, required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, there have been occasions when we were unable to fill all vacant positions and, consequently, we were required to limit patient volumes. We have also experienced general inflationary cost increases related to certain of our other operating expenses. Many of these factors, which had a material unfavorable impact on our results of operations in prior years, have moderated more recently. However, we cannot predict future inflationary increases, which if significant, could have a material unfavorable impact on our future results of operations.

Previous wording

in 2021, the rate of inflation in the United States began to increase and has since risen to levels not experienced in over 40 years. We are experiencing inflationary pressures, primarily in personnel costs, and we anticipate continuing impacts on other cost areas within the next twelve months. The extent of any future impacts from inflation on our business and our results of operations will be dependent upon how long the elevated inflation levels persist and the extent to which the rate of inflation further increases, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, our expenses could increase faster than anticipated and we may utilize our capital resources sooner than expected. Further, given the complexities of the reimbursement landscape in which we operate, our ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited due to various federal, state and local laws, which in certain circumstances, limit our ability to increase prices. In addition, although we have been requesting and negotiating increased rates from commercial payers to defray our increased cost of providing patient care, commercial payers may be unwilling or unable to increase reimbursement rates commensurate with the inflationary impacts on our costs;

Current wording

We have experienced inflationary pressures, primarily in personnel costs, although those pressures have moderated more recently. The extent of any future impacts from inflation on our business and our results of operations will be dependent upon how long the elevated inflation levels persist and the extent to which the rate of inflation further increases, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, our expenses could increase faster than anticipated and we may utilize our capital resources sooner than expected. Further, given the complexities of the reimbursement landscape in which we operate, our ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited due to various federal, state and local laws, which in certain circumstances, limit our ability to increase prices

Previous wording

In our acute care segment, we have experienced a significant increase in hospital-based physician related expenses, especially in the areas of emergency room care and anesthesiology. Although we have implemented various initiatives to mitigate the increased expense, to the degree possible, increases in these physician related expenses could continue to have an unfavorable material impact on our results of operations for the foreseeable future.

Current wording

In our acute care segment, we have experienced a significant increase in hospital-based physician related expenses, especially in the areas of emergency room care and anesthesiology. We have implemented various initiatives to mitigate the increased expense, to the degree possible, which has moderated the rate of increase. However, significant increases in these physician related expenses could have a material unfavorable impact on our future results of operations.

Previous wording

Although our ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited due to various federal, state and local laws which, in certain circumstances, limit our ability to increase prices, we have been requesting and negotiating increased rates from commercial insurers to defray our increased cost of providing patient care. In addition, we have implemented various productivity enhancement programs and cost reduction initiatives including, but not limited to, the following: team-based patient care initiatives designed to optimize the level of patient care services provided by our licensed nurses/clinicians; efforts to reduce utilization of, and rates paid for, premium pay labor; consolidation of medical supply vendors to increase purchasing discounts; review and reduction of clinical variation in connection with the utilization of medical supplies, and; various other efforts to increase productivity and/or reduce costs including investments in new information technology applications.

Current wording

Although our ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited, as discussed above, we have been requesting and negotiating increased rates from commercial insurers to defray our increased cost of providing patient care. In addition, we have implemented various productivity enhancement programs and cost reduction initiatives including, but not limited to, the following: team-based patient care initiatives designed to optimize the level of patient care services provided by our licensed nurses/clinicians; efforts to reduce utilization of, and rates paid for, premium pay labor; consolidation of medical supply vendors to increase purchasing discounts; review and reduction of clinical variation in connection with the utilization of medical supplies, and; various other efforts to increase productivity and/or reduce costs including investments in new information technology applications.

Previous wording

Income before income taxes (before income attributable to noncontrolling interests) increased by $122 million, or 57%, to $336 million during the three-month period ended March 31, 2024 as compared to $214 million during the first quarter of 2023. The net increase was due to:

Current wording

Income before income taxes (before income attributable to noncontrolling interests) increased by $157 million, or 70%, to $382 million during the three-month period ended June 30, 2024 as compared to $225 million during the second quarter of 2023. The net increase was due to:

Previous wording

an increase of $72 million at our acute care facilities, as discussed below in Acute Care Hospital Services;

Current wording

an increase of $81 million at our acute care facilities, as discussed below in Acute Care Hospital Services;

Previous wording

an increase of $54 million at our behavioral health care facilities, as discussed below in Behavioral Health Care Services, and;

Current wording

an increase of $97 million at our behavioral health care facilities, as discussed below in Behavioral Health Care Services, and;

Previous wording

Net income attributable to UHS increased by $99 million, or 61%, to $262 million during the three-month period ended March 31, 2024 as compared to $163 million during the first quarter of 2023. This increase was attributable to:

Current wording

Net income attributable to UHS increased by $118 million, or 69%, to $289 million during the three-month period ended June 30, 2024 as compared to $171 million during the second quarter of 2023. This increase was attributable to:

Previous wording

a decrease of $5 million due to an unfavorable change in income/loss attributable to noncontrolling interests, and;

Current wording

a decrease of $7 million due to an unfavorable change in income/loss attributable to noncontrolling interests, and;

Previous wording

a decrease of $19 million resulting from an increase in the provision for income taxes resulting primarily from: (i) the increase in the provision for income taxes resulting from the $117 million increase in pre-tax income, partially offset by; (ii) a $9 million decrease in the provision for income taxes during the first quarter of 2024 from the impact of ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09").

Current wording

a decrease of $32 million resulting from an increase in the provision for income taxes resulting primarily from: (i) the increase in the provision for income taxes resulting from the $150 million increase in pre-tax income, partially offset by; (ii) a $2 million decrease in the provision for income taxes during the second quarter of 2024 from the impact of ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09").

Previous wording

Net revenues increased by 10.8%, or $376 million, to $3.844 billion during the three-month period ended March 31, 2024, as compared to $3.468 billion during the first quarter of 2023. The net increase was primarily attributable to: (i) a $338 million, or 10.0%, increase in net revenues generated from our acute care hospital services and behavioral health services operated during both periods (which we refer to as “Same Facility”), and; (ii) an other combined net increase of $38 million, including a $56 million increase in provider tax assessments (which increased net revenues and other operating expenses but had no impact on income before income taxes), partially offset by a $19 million decrease in net revenues generated at Desert Springs Hospital Medical Center ("Desert Springs") located in Las Vegas, Nevada, which discontinued all inpatient operations during the first quarter of 2023.

Current wording

Net revenues increased by 10.5%, or $736 million, to $7.751 billion during the six-month period ended June 30, 2024, as compared to $7.016 billion during the first six months of 2023. The net increase was primarily attributable to: (i) a $635 million, or 9.2%, increase in net revenues generated from our acute care hospital services and behavioral health services, on a same facility basis, and; (ii) an other combined net increase of $121 million, including a $115 million increase in provider tax assessments (which increased net revenues and other operating expenses but had no impact on income before income taxes), partially offset by a $20 million decrease in net revenues generated at Desert Springs Hospital Medical Center ("Desert Springs") located in Las Vegas, Nevada, which discontinued all inpatient operations during the first quarter of 2023.

Previous wording

Adjustments to self-insured professional and general liability and workers' compensation liability reserves:

Current wording

Adjustments to self-insured professional and general liability reserves:

Previous wording

As a result of unfavorable trends experienced during the past several years, included in our results of operations during the first three months of 2024, was a $7 million increase to our reserves for self-insured professional and general liability claims, of which approximately $5 million is included in our same facility basis acute care hospitals services’ results and approximately $2 million is included in our behavioral health services’ results.

Current wording

As a result of unfavorable trends experienced during the past several years, included in our results of operations were increases to our reserves for self-insured professional and general liability claims amounting to approximately $7 million and $14 million during the three and six-month periods ended June 30, 2024, respectively. Approximately $5 million and $10 million of the increase is included in our same facility basis acute care hospital services' results during the three and six-month periods ended June 30, 2024, respectively, and approximately $2 million and $4 million is included in our same facility basis behavioral health services' results during the three and six-month periods ended June 30, 2024, respectively

Previous wording

The following table sets forth certain operating statistics for our acute care hospital services for the three-month periods ended March 31, 2024 and 2023.

Current wording

The following table sets forth certain operating statistics for our acute care hospital services for the three and six-month periods ended June 30, 2024 and 2023.

Previous wording

Our Same Facility basis results reflected on the table below also exclude from net revenues and other operating expenses, provider tax assessments incurred in each period as discussed below Sources of Revenue-Various State Medicaid Supplemental Payment Programs. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table below under All Acute Care Hospital Services. The provider tax assessments had no impact on the income before income taxes as reflected on the tables below since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with U.S. GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in this Quarterly Report on Form 10-Q.

Current wording

Our Same Facility basis results reflected on the table below also exclude from net revenues and other operating expenses, provider tax assessments incurred in each period as discussed below Sources of Revenue-Summary of Various State Medicaid Supplemental Payment Programs. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table below under All Acute Care Hospital Services. The provider tax assessments had no impact on the income before income taxes as reflected on the tables below since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with U.S. GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in this Quarterly Report on Form 10-Q.

Previous wording

The following table summarizes the results of operations for our acute care facilities on a Same Facility basis and is used in the discussion below for the three-month periods ended March 31, 2024 and 2023 (dollar amounts in thousands):

Current wording

The following table summarizes the results of operations for our acute care facilities on a Same Facility basis and is used in the discussion below for the three and six-month periods ended June 30, 2024 and 2023 (dollar amounts in thousands):

Previous wording

During the three-month period ended March 31, 2024, as compared to the comparable prior year quarter, net revenues from our acute care hospital services, on a Same Facility basis, increased by $185 million or 9.6%. Income before income taxes (and before income attributable to noncontrolling interests) increased by $65 million, or 45%, amounting to $207 million, or 9.8% of net revenues during the first quarter of 2024, as compared to $143 million, or 7.4% of net revenues during the first quarter of 2023. Included in our Same Facility basis' net revenues and income before income taxes, during the first quarter of 2024, was approximately $38 million of net reimbursements (net of related provider taxes) recorded in connection with the Nevada state directed payment program which was approved by the Centers for Medicare and Medicaid Services in December, 2023. Please see additional disclosure below in Sources of Revenue-Nevada State Directed Payment Program.

Current wording

During the three-month period ended June 30, 2024, as compared to the comparable prior year quarter, net revenues from our acute care hospital services, on a Same Facility basis, increased by $130 million or 6.6%. Income before income taxes (and before income attributable to noncontrolling interests) increased by $83 million, or 62%, amounting to $215 million, or 10.2% of net revenues during the second quarter of 2024, as compared to $132 million, or 6.7% of net revenues during the second quarter of 2023. Included in our Same Facility basis' net revenues and income before income taxes, during the second quarter of 2024, was approximately $38 million of net reimbursements (net of related provider taxes) recorded in connection with the Nevada state directed payment program which was approved by the Centers for Medicare and Medicaid Services in December, 2023. Please see additional disclosure below in Sources of Revenue-Nevada State Directed Payment Program ("SDP").

Previous wording

During the three-month period ended March 31, 2024, net revenue per adjusted admission increased by 4.6% while net revenue per adjusted patient day increased 5.8%, as compared to the comparable quarter of 2023. During the three-month period ended March 31, 2024, as compared to the comparable prior year quarter, inpatient admissions to our acute care hospitals increased by 5.7% while adjusted admissions (adjusted for outpatient activity) increased by 4.5%. Patient days at these facilities increased by 4.4% and adjusted patient days increased by 3.4% during the three-month period ended March 31, 2024, as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 5.0 days during each of the three-month periods ended March 31, 2024 and 2023. The occupancy rate, based on the average available beds at these facilities, was 70% and 69% during the three-month periods ended March 31, 2024 and 2023, respectively.

Current wording

During the three-month period ended June 30, 2024, net revenue per adjusted admission increased by 3.5% while net revenue per adjusted patient day increased 5.3%, as compared to the comparable quarter of 2023. During the three-month period ended June 30, 2024, as compared to the comparable prior year quarter, inpatient admissions to our acute care hospitals increased by 3.5% while adjusted admissions (adjusted for outpatient activity) increased by 3.4%. Patient days and adjusted patient days at these facilities each increased by 1.6% during the three-month period ended June 30, 2024, as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 4.8 days and 4.9 days during the three-month periods ended June 30, 2024 and 2023, respectively. The occupancy rate, based on the average available beds at these facilities, was 66% during each of the three-month periods ended June 30, 2024 and 2023.

Previous wording

On a Same Facility basis during the three-month period ended March 31, 2024, as compared to the comparable quarter of 2023, salaries, wages and benefits expense increased by $34 million, or 4.1%. Although our acute care facilities experienced an increase in patient volumes during the first quarter of 2024, as compared to the comparable quarter of 2023, the related incremental staffing cost increase was offset by the following: (i) a reduction in premium pay (overtime paid to employees and external temporary resources' expense) which decreased by approximately $18 million during the first quarter of 2024, as compared to the first quarter of 2023, and; (ii) a restructuring, during the first quarter of 2024, at certain of our acute care hospitals that reduced the number of employees in positions that were not directly related to the delivery of patient care. As a percentage of net revenues, salaries, wages and benefits expense decreased to 40.8% during the first quarter of 2024 as compared to 43.0% during the first quarter of 2023.

Current wording

On a Same Facility basis during the three-month period ended June 30, 2024, as compared to the comparable quarter of 2023, the increase to salaries, wages and benefits expense moderated to $20 million, or 2.3%. Although our acute care facilities experienced an increase in patient volumes during the second quarter of 2024, as compared to the comparable quarter of 2023, the related incremental staffing cost increase was offset by the following: (i) a reduction in premium pay (overtime paid to employees and external temporary resources' expense) which decreased by approximately $14 million during the second quarter of 2024, as compared to the second quarter of 2023, and; (ii) a restructuring, that occurred in early 2024, at certain of our acute care hospitals that reduced the number of employees in positions that were not directly related to the delivery of patient care. As a percentage of net revenues, salaries, wages and benefits expense decreased to 40.7% during the second quarter of 2024 as compared to 42.4% during the second quarter of 2023.

Previous wording

Other operating expenses increased $72 million, or 14.4%, during the first quarter of 2024, as compared to the comparable quarter of 2023. The increase during the first quarter of 2024, as compared to the comparable quarter of 2023, was due, in part, to the following: (i) an $18 million, or 12.7%, increase in physician-related expenses (as discussed above in Results of Operations - Clinical Staffing, Physician Related Expenses, Effects of Inflation;(ii) a $13 million, or 12.4%, increase in the operating expenses incurred by our commercial health insurer, and; (iii) the expenses related to the increase in patient volumes.

Current wording

Other operating expenses increased $96 million, or 9.0%, during the first six months of 2024, as compared to the comparable period of 2023. The increase during the first six months of 2024, as compared to the comparable period of 2023, was due, in part, to the following: (i) a $30 million, or 10.4%, increase in physician-related expenses (as discussed above in Results of Operations - Clinical Staffing, Physician Related Expenses and Effects of Inflation;(ii) a $15 million, or 6.8%, increase in the operating expenses incurred by our commercial health insurer, and; (iii) the expenses related to the increase in patient volumes. As a percentage of net revenues, other operating expenses increased to 27.5% during the first six months of 2024, as compared to 27.2% during the comparable period of 2023.

Previous wording

Supplies expense increased $22 million, or 6.7%, during the first quarter of 2024, as compared to the first quarter of 2023. The increase was due, in part, to the increase in patient volumes experienced during the first quarter of 2024, as compared to the comparable quarter of 2023. As a percentage of net revenues, supplies expense decreased to 16.5% during the three-month period ended March 31, 2024, as compared to 16.9% during the first quarter of 2023.

Current wording

Supplies expense increased $26 million, or 3.9%, during the first six months of 2024, as compared to the comparable period of 2023. The increase was due, in part, to the increase in patient volumes experienced during the first six months of 2024, as compared to the comparable period of 2023. As a percentage of net revenues, supplies expense decreased to 16.1% during the six-month period ended June 30, 2024, as compared to 16.8% during the comparable period of 2023.

Previous wording

The following table summarizes the results of operations for all our acute care operations during the three-month periods ended March 31, 2024 and 2023. These amounts include: (i) our acute care results on a Same Facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including, if applicable, the results of recently acquired/opened facilities and businesses as well as the operating results for Desert Springs which discontinued all inpatient operations during the first quarter of 2023. Dollar amounts below are reflected in thousands.

Current wording

The following table summarizes the results of operations for all our acute care operations during the three and six-month periods ended June 30, 2024 and 2023. These amounts include: (i) our acute care results on a Same Facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including, if applicable, the results of recently acquired/opened facilities and businesses as well as the operating results for Desert Springs which discontinued all inpatient operations during the first quarter of 2023. Dollar amounts below are reflected in thousands.

Previous wording

During the three-month period ended March 31, 2024, as compared to the comparable prior year quarter, net revenues from our acute care hospital services increased by $212 million, or 10.7%, due to: (i) the $185 million, or 9.6% increase in Same Facility revenues, as discussed above; (ii) a $47 million increase in provider tax assessments (which had no impact on income before income taxes since the amounts offset between net revenues and other operating expenses), and; (iii) $20 million of other combined net decreases consisting primarily of decreased revenues at Desert Springs.

Current wording

During the six-month period ended June 30, 2024, as compared to the comparable prior year period, net revenues from our acute care hospital services increased by $382 million, or 9.6%, due to: (i) the $315 million, or 8.1% increase in Same Facility revenues, as discussed above; (ii) an $88 million increase in provider tax assessments (which had no impact on income before income taxes since the amounts offset between net revenues and other operating expenses), and; (iii) $21 million of other combined net decreases consisting primarily of decreased revenues at Desert Springs.

Previous wording

Income before income taxes increased by $72 million, or 54%, to $205 million, or 9.4% of net revenues during the first quarter of 2024, as compared to $133 million, or 6.8% of net revenues during the first quarter of 2023. The $72 million increase in income before income taxes from our acute care hospital services resulted primarily from the $65 million Same Facility basis' increase in income before income taxes from our acute care hospital services, as discussed above, and an $8 million favorable change in the pre-tax income/loss related to Desert Springs.

Current wording

Income before income taxes increased by $153 million, or 58%, to $417 million, or 9.6% of net revenues during the first six months of 2024, as compared to $264 million, or 6.6% of net revenues during the first six months of 2023. The $153 million increase in income before income taxes from our acute care hospital services resulted primarily from the $147 million Same Facility basis' increase in income before income taxes from our acute care hospital services, as discussed above, and $6 million of other combined favorable changes consisting primarily of a favorable change in the pre-tax income/loss related to Desert Springs.

Previous wording

During the three-month period ended March 31, 2024, as compared to the comparable quarter of 2023, salaries, wages and benefits expense increased by $18 million, or 2.1%. The increase was due primarily to the above-mentioned $34 million increase related to our acute care hospital services, on a Same Facility basis, partially offset by the decreased salaries, wages and benefits expense incurred at Desert Springs.

Current wording

During the six-month period ended June 30, 2024, as compared to the comparable period of 2023, salaries, wages and benefits expense increased by $37 million, or 2.2%. The increase was due primarily to the above-mentioned $53 million increase related to our acute care hospital services, on a Same Facility basis, offset by the decreased salaries, wages and benefits expense incurred at Desert Springs.

Previous wording

Other operating expenses increased $111 million, or 20.3%, during the first quarter of 2024, as compared to the comparable quarter of 2023. The increase was due primarily to the $72 million above-mentioned increase related to our acute care hospital services, on a Same Facility basis, the $47 million above-mentioned increase in provider tax assessments, partially offset by decreased operating expenses incurred at Desert Springs.

Current wording

Other operating expenses increased $175 million, or 15.4%, during the first six months of 2024, as compared to the comparable period of 2023. The increase was due primarily to the $96 million above-mentioned increase related to our acute care hospital services, on a Same Facility basis, the $88 million above-mentioned increase in provider tax assessments, partially offset by decreased operating expenses incurred at Desert Springs.