hospitals in the communities | My Assignment Tutor

2018 Annual Reportto ShareholdersHCAhealthcare.comCompetitionGenerally, other hospitals in the communities we serve provide services similar to those offered by ourhospitals. Additionally, in recent years the number of freestanding specialty hospitals, surgery centers,emergency departments, urgent care centers and diagnostic and imaging centers in the geographic areas in whichwe operate has increased significantly. As a result, most of our hospitals operate in a highly competitiveenvironment. In some cases, competing hospitals are more established than our hospitals. Some competingfacilities are physician-owned or are owned by tax-supported government agencies and many others are ownedby not-for-profit entities that may be supported by endowments, charitable contributions and/or tax revenues andare exempt from sales, property and income taxes. Such exemptions and support are not available to our hospitalsand may provide the tax-supported or not-for-profit entities an advantage in funding capital expenditures. Incertain localities there are large teaching hospitals that provide highly specialized facilities, equipment andservices that may not be available at most of our hospitals. We also face competition from specialty hospitals andfrom both our own and unaffiliated freestanding ASCs for market share in certain high margin services.Psychiatric hospitals frequently attract patients from areas outside their immediate locale and, therefore, ourpsychiatric hospitals and units compete with both local and regional hospitals, including the psychiatric units ofgeneral, acute care hospitals.Our strategies are designed to ensure our hospitals are competitive. We believe our hospitals compete withinlocal communities on the basis of many factors, including the quality of care, ability to attract and retain qualityphysicians, skilled clinical personnel and other health care professionals, location, breadth of services,technology offered, quality and condition of the facilities and prices charged. Hospitals must publish online a listof their standard charges for items and services. We have increased our focus on operating outpatient serviceswith improved accessibility and more convenient service for patients and increased predictability and efficiencyfor physicians.Two of the most significant factors to the competitive position of a hospital are the number and quality ofphysicians affiliated with or employed by the hospital. Although physicians may at any time terminate theirrelationship with a hospital we operate, our hospitals seek to retain physicians with varied specialties on thehospitals’ medical staffs and to attract other qualified physicians. We believe physicians refer patients to ahospital on the basis of the quality and scope of services it renders to patients and physicians, the quality ofphysicians on the medical staff, the location of the hospital and the quality of the hospital’s facilities, equipmentand employees. Accordingly, we strive to maintain and provide quality facilities, equipment, employees andservices for physicians and patients. Our hospitals face competition from competitors that are implementingphysician alignment strategies, such as employing physicians, acquiring physician practice groups andparticipating in ACOs or other clinical integration models.Another major factor in the competitive position of our hospitals is our ability to negotiate service contractswith group purchasers of health care services. Managed care plans attempt to direct and control the use ofhospital services and obtain discounts from hospitals’ established gross charges. Similarly, employers andtraditional health insurers continue to attempt to contain costs through negotiations with hospitals for managedcare programs and discounts from established gross charges. Generally, hospitals compete for service contractswith group purchasers of health care services on the basis of price, market reputation, geographic location,quality and range of services, quality of the medical staff and convenience. Our future success will depend, inpart, on our ability to retain and renew our contracts with third-party payers and enter into new contracts onfavorable terms. Other health care providers may impact our ability to enter into contracts with third-party payersor negotiate increases in our reimbursement and other favorable terms and conditions. For example, some of ourcompetitors may negotiate exclusivity provisions with managed care plans or otherwise restrict the ability ofmanaged care companies to contract with us. Increasing vertical integration efforts involving third-party payersand health care providers may increase these challenges. Moreover, the trend toward consolidation among privatethird-party payers tends to increase payer bargaining power over fee structures.16Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesThe following table lists, by state, the number of hospitals (general, acute care, psychiatric andrehabilitation) directly or indirectly owned and operated by us as of December 31, 2018:State Hospitals BedsAlaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 250California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1,858Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2,415Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 12,057Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2,459Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 468Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 278Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1,374Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 384Louisiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1,049Mississippi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 130Missouri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1,030Nevada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1,283New Hampshire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 295South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 941Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2,544Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 13,252Utah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1,011Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3,284InternationalEngland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 837179 47,199In addition to the hospitals listed in the above table, we directly or indirectly operate 123 freestandingsurgery centers. We also operate medical office buildings in conjunction with some of our hospitals. These officebuildings are primarily occupied by physicians who practice at our hospitals. Fourteen of our general, acute carehospitals and two of our other properties have been mortgaged to support our obligations under our seniorsecured cash flow credit facility and first lien secured notes.We maintain our headquarters in approximately 2,129,000 square feet of space in the Nashville, Tennesseearea. In addition to the headquarters in Nashville, we maintain regional service centers related to our sharedservices initiatives. These service centers are located in markets in which we operate hospitals.We believe our headquarters, hospitals and other facilities are suitable for their respective uses and are, ingeneral, adequate for our present needs. Our properties are subject to various federal, state and local statutes andordinances regulating their operation. Management does not believe that compliance with such statutes andordinances will materially affect our financial position or results of operations.47Item 6. Selected Financial DataHCA HEALTHCARE, INC.SELECTED FINANCIAL DATAAS OF AND FOR THE YEARS ENDED DECEMBER 31(Dollars in millions, except per share amounts)2018 2017 2016 2015 2014Summary of Operations:Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $46,677 $43,614 $41,490 $39,678 $36,918Salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,42520,05918,89718,11516,6417,7247,3166,9336,6386,2628,608(29)2,2788,051(45)2,1317,496(54)1,9667,056(46)1,9046,630(43)1,8201,7551,6901,7071,6651,743 Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Losses (gains) on sales of facilities . . . . . . . . . . . . . . . . (428) (8) (23) 5 (29)Losses on retirement of debt . . . . . . . . . . . . . . . . . . . . . 9 39 4 135 335Legal claim (benefits) costs . . . . . . . . . . . . . . . . . . . . . . — — (246) 249 7841,342 39,233 36,680 35,721 33,437Income before income taxes . . . . . . . . . . . . . . . . . . . . . . 5,335 4,381 4,810 3,957 3,481Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . 946 1,638 1,378 1,261 1,108Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,389 2,743 3,432 2,696 2,373Net income attributable to noncontrolling interests . . . . 602 527 542 567 498Net income attributable to HCA Healthcare,Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,787 $ 2,216 $ 2,890 $ 2,129 $ 1,875Per common share data:Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.90 $ 6.12 $ 7.53 $ 5.14 $ 4.30Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . $ 10.66 $ 5.95 $ 7.30 $ 4.99 $ 4.16Cash dividends declared per share . . . . . . . . . . . . . . . . . $ 1.40 — — — —Financial Position:Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $39,207 $36,593 $33,758 $32,744 $30,980Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,644 3,819 3,252 3,716 3,450Long-term debt, net, including amounts due within oneyear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,82133,05831,37630,48829,4262,032(2,918)1,811(4,995)1,669(5,633)1,553(6,046)1,396(6,498) Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . Stockholders’ deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash Flow Data:Cash provided by operating activities . . . . . . . . . . . . . . $ 6,761 $ 5,426 $ 5,653 $ 4,734 $ 4,448Cash used in investing activities . . . . . . . . . . . . . . . . . . (3,901)(3,573)(3,075)(4,279)(3,015)(1,061)(3,240)(2,760)(2,508)(2,583)(2,375)(1,976)(2,918)(2,176)(1,378) Purchase of property and equipment . . . . . . . . . . . . . . . Cash used in financing activities . . . . . . . . . . . . . . . . . . 512018 2017 2016 2015 2014Operating Data:Number of hospitals at end of period . . . . . . . 179 179 170 168 166Number of freestanding outpatient surgicalcenters at end of period . . . . . . . . . . . . . . . . 123 120 118 116 113Number of licensed beds at end ofperiod(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,19946,73844,29043,77143,35646,85745,38044,07743,62043,1322,003,753 1,936,613 1,891,831 1,868,789 1,795,3123,420,406 3,286,432 3,191,519 3,122,746 2,958,6744.926,66357%4.926,00057%4.925,34058%4.925,08458%4.823,83555%8,764,431 8,624,137 8,378,340 8,050,159 7,450,748971,537941,231*932,213909,386891,633 Weighted average licensed beds(b) . . . . . . . . . Admissions(c) . . . . . . . . . . . . . . . . . . . . . . . . . Equivalent admissions(d) . . . . . . . . . . . . . . . . Average length of stay (days)(e) . . . . . . . . . . . Average daily census(f) . . . . . . . . . . . . . . . . . . Occupancy(g) . . . . . . . . . . . . . . . . . . . . . . . . . Emergency room visits(h) . . . . . . . . . . . . . . . . Outpatient surgeries(i) . . . . . . . . . . . . . . . . . . . Inpatient surgeries(j) . . . . . . . . . . . . . . . . . . . . 548,220 540,304* 537,306 529,900 518,881Days revenues in accounts receivable(k) . . . . 51 52 50 53 54Outpatient revenues as a % of patientrevenues(l) . . . . . . . . . . . . . . . . . . . . . . . . . . 38% 38% 38% 40% 38%(a) Licensed beds are those beds for which a facility has been granted approval to operate from the applicablestate licensing agency.(b) Represents the average number of licensed beds, weighted based on periods owned.(c) Represents the total number of patients admitted to our hospitals and is used by management and certaininvestors as a general measure of inpatient volume.(d) Equivalent admissions are used by management and certain investors as a general measure of combinedinpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatientvolume) by the sum of gross inpatient revenue and gross outpatient revenue and then dividing the resultingamount by gross inpatient revenue. The equivalent admissions computation “equates” outpatient revenue tothe volume measure (admissions) used to measure inpatient volume, resulting in a general measure ofcombined inpatient and outpatient volume.(e) Represents the average number of days admitted patients stay in our hospitals.(f) Represents the average number of patients in our hospital beds each day.(g) Represents the percentage of hospital licensed beds occupied by patients. Both average daily census andoccupancy rate provide measures of the utilization of inpatient rooms.(h) Represents the number of patients treated in our emergency rooms.(i) Represents the number of surgeries performed on patients who were not admitted to our hospitals. Painmanagement and endoscopy procedures are not included in outpatient surgeries.(j) Represents the number of surgeries performed on patients who have been admitted to our hospitals. Painmanagement and endoscopy procedures are not included in inpatient surgeries.(k) Revenues per day is calculated by dividing the revenues for the fourth quarter of each year by the days inthe quarter. Days revenues in accounts receivable is then calculated as accounts receivable at the end of theperiod divided by revenues per day.(l) Represents the percentage of patient revenues related to patients who are not admitted to our hospitals.* Reclassifications between inpatient surgery cases and outpatient surgery cases for 2017 have been made toconform to the 2018 presentation.52HCA HEALTHCARE, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS (Continued)Critical Accounting Policies and Estimates (continued)Revenues (continued)The estimates for implicit price concessions are based upon management’s assessment of historicalwriteoffs and expected net collections, business and economic conditions, trends in federal, state and privateemployer health care coverage and other collection indicators. Management relies on the results of detailedreviews of historical writeoffs and collections at facilities that represent a majority of our revenues and accountsreceivable (the “hindsight analysis”) as a primary source of information in estimating the collectability of ouraccounts receivable. We perform the hindsight analysis quarterly, utilizing rolling twelve-months accountsreceivable collection and writeoff data. We believe our quarterly updates to the estimated implicit priceconcession amounts at each of our hospital facilities provide reasonable estimates of our revenues and valuationsof our accounts receivable. These routine, quarterly changes in estimates have not resulted in materialadjustments to the valuations of our accounts receivable or period-to-period comparisons of our results ofoperations. At December 31, 2018 and December 31, 2017, estimated implicit price concessions of $6.280 billionand $5.488 billion, respectively, had been recorded as reductions to our accounts receivable balances to enable usto record our revenues and accounts receivable at the estimated amounts we expect to collect.To quantify the total impact of and trends related to uninsured accounts, we believe it is beneficial to viewtotal uncompensated care, which is comprised of charity care, uninsured discounts and implicit priceconcessions. A summary of the estimated cost of total uncompensated care for the years ended December 31,follows (dollars in millions):2018 2017 2016Patient care costs (salaries and benefits, supplies, other operating expenses anddepreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,035 $37,557 $35,304Cost-to-charges ratio (patient care costs as percentage of gross patientcharges) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4% 12.9% 13.5%Total uncompensated care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,757 $23,420 $20,455Multiply by the cost-to-charges ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4% 12.9% 13.5%Estimated cost of total uncompensated care . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,318 $ 3,021 $ 2,761Total uncompensated care as a percentage of the sum of revenues and total uncompensated care was 36.4%for 2018, 34.9% for 2017 and 33.0% for 2016. Days revenues in accounts receivable were 51 days, 52 days and50 days at December 31, 2018, 2017 and 2016, respectively. Management expects a continuation of thechallenges related to the collection of the patient due accounts. Adverse changes in the percentage of our patientshaving adequate health care coverage, increases in patient responsibility amounts under certain health carecoverages, general economic conditions, patient accounting service center operations, payer mix, or trends infederal, state, and private employer health care coverage could affect the collection of accounts receivable, cashflows and results of operations.Professional Liability ClaimsWe, along with virtually all health care providers, operate in an environment with professional liabilityrisks. Our facilities are insured by our 100% owned insurance subsidiary for losses up to $50 million peroccurrence, subject, in most cases, to a $15 million per occurrence self-insured retention. The insurancesubsidiary has obtained reinsurance for professional liability risks generally above a retention level.58HCA HEALTHCARE, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS (Continued)Results of Operations (continued)Revenue/Volume Trends (continued)In addition, we receive supplemental payments in several other states. We are aware these supplementalpayment programs are currently being reviewed by certain state agencies and some states have made waiverrequests to CMS to replace their existing supplemental payment programs. It is possible these reviews andwaiver requests will result in the restructuring of such supplemental payment programs and could result in thepayment programs being reduced or eliminated. Because deliberations about these programs are ongoing, we areunable to estimate the financial impact the program structure modifications, if any, may have on our results ofoperations.Operating Results SummaryThe following are comparative summaries of operating results for the years ended December 31, 2018, 2017and 2016 (dollars in millions):2018 2017 2016Amount Ratio Amount Ratio Amount RatioRevenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $46,67721,425100.045.97,72416.58,608(29)2,27818.5(0.1)4.91,7553.8 $43,614 100.0 $41,490 100.0Salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,059 46.0 18,897 45.5Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,316 16.8 6,933 16.7Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,051 18.4 7,496 18.1Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (45) (0.1) (54) (0.1)Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,131 4.9 1,966 4.8Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,690 3.9 1,707 4.1Gain on sales of facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (428)9—(0.9)—— (8) — (23) (0.1)Losses on retirement of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 0.1 4 —Legal claim benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (246) (0.6)41,342 88.6 39,233 90.0 36,680 88.4Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,335 11.4 4,381 10.0 4,810 11.6Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 946 2.0 1,638 3.7 1,378 3.3Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,389 9.4 2,743 6.3 3,432 8.3Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . 602 1.3 527 1.2 542 1.3Net income attributable to HCA Healthcare, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,787 8.1 $ 2,216 5.1 $ 2,890 7.0% changes from prior year:Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0% 5.1% 4.6%Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.8 (8.9) 21.6Net income attributable to HCA Healthcare, Inc. . . . . . . . . . . . . . . . . . . . . . 70.9 (23.3) 35.8Admissions(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 2.4 1.2Equivalent admissions(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 3.0 2.2Revenue per equivalent admission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 2.1 2.3Same facility % changes from prior year(c):Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 3.8 4.1Admissions(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 1.1 1.1Equivalent admissions(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 1.5 1.9Revenue per equivalent admission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 2.2 2.2(a) Represents the total number of patients admitted to our hospitals and is used by management and certain investors as a general measureof inpatient volume.(b) Equivalent admissions are used by management and certain investors as a general measure of combined inpatient and outpatient volume.Equivalent admissions are computed by multiplying admissions (inpatient volume) by the sum of gross inpatient revenue and grossoutpatient revenue and then dividing the resulting amount by gross inpatient revenue. The equivalent admissions computation “equates”outpatient revenue to the volume measure (admissions) used to measure inpatient volume, resulting in a general measure of combinedinpatient and outpatient volume.(c) Same facility information excludes the operations of hospitals and their related facilities that were either acquired, divested or removedfrom service during the current and prior year.63HCA HEALTHCARE, INC.CONSOLIDATED INCOME STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016(Dollars in millions, except per share amounts)2018 2017 2016Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,677 $ 43,614 $ 41,490Salaries and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,425 20,059 18,897Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,724 7,316 6,933Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,608 8,051 7,496Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29) (45) (54)Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,278 2,131 1,966Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,755 1,690 1,707Gains on sales of facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (428) (8) (23)Losses on retirement of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 39 4Legal claim benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (246)41,342 39,233 36,680Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,335 4,381 4,810Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 946 1,638 1,378Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,389 2,743 3,432Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . 602 527 542Net income attributable to HCA Healthcare, Inc. . . . . . . . . . . . . . . . . . . . $ 3,787 $ 2,216 $ 2,890Per share data:Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.90 $$6.125.95 $$7.537.30 Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.66 Shares used in earnings per share calculations (in millions):Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347.297 362.305 383.591Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355.303 372.221 395.851The accompanying notes are an integral part of the consolidated financial statements.F-3HCA HEALTHCARE, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)NOTE 1 — ACCOUNTING POLICIES (continued)Revenues (continued)To quantify the total impact of the trends related to uninsured accounts, we believe it is beneficial to viewtotal uncompensated care, which is comprised of charity care, uninsured discounts and implicit priceconcessions. A summary of the estimated cost of total uncompensated care for the years ended December 31,follows (dollars in millions):2018 2017 2016Patient care costs (salaries and benefits, supplies, other operating expenses anddepreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,035 $37,557 $35,304Cost-to-charges ratio (patient care costs as percentage of gross patientcharges) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4% 12.9% 13.5%Total uncompensated care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,757 $23,420 $20,455Multiply by the cost-to-charges ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4% 12.9% 13.5%Estimated cost of total uncompensated care . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,318 $ 3,021 $ 2,761Total uncompensated care as a percentage of the sum of revenues and total uncompensated care was 36.4%for 2018, 34.9% for 2017 and 33.0% for 2016. The total uncompensated care amounts include charity care of$8.611 billion, $4.861 billion and $4.151 billion, and the related estimated costs of charity care were$1.068 billion, $627 million and $560 million for the years ended December 31, 2018, 2017 and 2016,respectively.Recent PronouncementsIn February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (“ASU 2016-02”), whichrequires lessees to recognize assets and liabilities for most leases. ASU 2016-02 is effective for public businessentities for annual and interim periods beginning after December 15, 2018. We plan to adopt ASU 2016-02effective January 1, 2019 applying a modified retrospective approach in which we will not adjust comparableprior period information and disclosures. We expect to utilize the practical expedients being made available,including the package of practical expedients to not reassess whether a contract is or contains a lease, the leaseclassification and initial direct costs. We believe the primary effect of adopting the new standard will be to recordright-of-use assets and obligations for our leases currently classified as operating leases, and we expect theamount of right-of-use assets and obligations resulting from the adoption of ASU 2016-02 to be approximately$1.6 billion.In February 2018, the FASB issued Accounting Standards Update 2018-02, Reclassification of Certain TaxEffects from Accumulated Other Comprehensive Income (“ASU 2018-02”). In implementing the provisions ofthe Tax Cuts and Jobs Act of 2017 (the “Tax Act”), the remeasurement of our deferred tax assets and liabilitieswas recorded as a component of our provision for income taxes. For deferred tax amounts that were originallyrecorded through accumulated other comprehensive income (“AOCI”), the remeasurement of deferred tax assetsand liabilities through the provision for income taxes resulted in these amounts becoming “stranded” in AOCI.ASU 2018-02 permits companies to reclassify the stranded tax amounts recorded in AOCI to retained earnings,and we reclassified $95 million of stranded tax effects from AOCI to retained earnings effective October 1, 2018.Cash and Cash EquivalentsCash and cash equivalents include highly liquid investments with a maturity of three months or less whenpurchased. Our insurance subsidiaries’ cash equivalent investments in excess of the amounts required to payF-11One Park Plaza Nashville,Tennessee 37203www.hcahealthcare.comCorporate InformationTransfer Agent and RegistrarEQ Shareowner ServicesP.O. Box 64874St. Paul, Minnesota 55164-0874Toll free: 800-468-9716Certified/Overnight MailEQ Shareowner Services1110 Centre Pointe Curve, Suite 101Mendota Heights, Minnesota 55120Independent Registered PublicAccounting FirmErnst & Young LLPNashville, TennesseeCorporate HeadquartersOne Park PlazaNashville, Tennessee 37203615-344-9551Form 10-KThe Company has filed an annualreport on Form 10-K for the yearended December 31, 2018 with theUnited States Securities and ExchangeCommission (SEC). Shareholders mayobtain a copy of this report, withoutcharge, by writing:Investor Relations, HCA Healthcare,Inc., One Park Plaza, Nashville, TN37203 or by visiting the Company’swebsite at www.hcahealthcare.com.Common Stock and DividendInformationThe Common Stock of HCAHealthcare, Inc. is listed on the NewYork Stock Exchange (NYSE) underthe symbol “HCA”. On March 7, 2019,the Company had approximately 380shareholders of record. On January 29,2019, the Company’s Board of Directorsdeclared a quarterly dividend of$0.40 per share on our commonstock payable on March 29, 2019 toshareholders of record on March 1,2019. Future declarations of quarterlydividends and the establishment offuture record and payment dates aresubject to the final determination ofthe Company’s Board of Directors.Annual Meeting of ShareholdersThe annual meeting of shareholders willbe held on April 26, 2019, at 2:00 pmlocal time at the HCA corporate officeslocated at One Park Plaza, Nashville,Tennessee 37203. Shareholders ofrecord as of March 7, 2019, are invitedto attend.

QUALITY: 100% ORIGINAL PAPER – NO PLAGIARISM – CUSTOM PAPER

Leave a Reply

Your email address will not be published. Required fields are marked *