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JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
JP Morgan Presentation 15-Feb-2008
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JP Morgan Presentation 15-Feb-2008

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  • 1. Milton Johnson Executive Vice President & Chief Financial Officer David Anderson Senior Vice President, Finance & Treasurer Vic Campbell Senior Vice President Mark Kimbrough Vice President, Investor Relations 0
  • 2. Introduction to HCA Today Leading investor-owned provider Western Group International Anchorage Central Group Central of acute care services, primarily London Eastern Group focused in urban and suburban settings (~2.4x next largest investor-owned provider) Western W Western C Northeast Idaho Idaho W Idaho Falls Idaho Falls Accounted for approximately 5% of inpatient admissions in U.S. last Kansas City No. VA W Terre Haute C Utah Utah year Terre W Denver Wichita C C Richmond Haute Kansas City San Jose San Jose C SWSW VA VA Frankfort Frankfort W Wichita W Company operates 170 Chattanooga Las Vegas C W W W Nashville Augusta Grand Strand Oklahoma City Southern hospitals(1) and 107 freestanding Oklahoma City NW GANW GA California Central Atlanta Trident/Charleston Louisiana Atlanta E El Paso Dallas/FtW W Columbus surgery centers(1) in 20 states, and Dallas/FW Middle GA Columbus Palmyra E Austin W Jacksonville Panhandle** Austin England Antonio W Houston San San AntonioHouston North Central Florida Panhandle W W Treasure Coast Tallahassee Lafayette Palm Beach W Corpus Christi EBITDA in 2006 was $4.5B and Tampa McAllen W Broward New Orleans Brownsville September 2007 YTD is $3.4B Dade REVENUE BY REVENUE BY GEOGRAPHY PATIENT MIX ~ 183,000 employees International and Other 5% ~ 35,000 affiliated physicians Central 23% Outpatient Eastern 37% 30% More than 40,000 licensed beds Inpatient Western 63% 42% (1) Includes 8 nonconsolidated hospitals and 9 nonconsolidated surgery centers managed under joint ventures 1
  • 3. Local Market Leadership with Extensive Geographic Diversity HCA maintains the #1 or #2 inpatient market position with 25% to 40% market share in most geographies, which provides additional negotiating leverage Geographically diverse portfolio of markets insulates the company from market-level fluctuations Dallas/Ft. Dallas/Ft. Dallas/Ft. Worth Worth Worth 18.0% 1,4 20.4%1,4 20.4%1,4 International El Paso El Paso El Paso 32.0%2,5 32.0%2,5 34.2% 1,4 Austin Austin Austin 39.8% 1,4 47.2%2,5 47.2%2,5 Western W C San Idaho Houston San Houston San Houston W Idaho Falls Denver 20.0%1,5 Antonio Denver 20.0%1,5 Antonio 18.2% 1,4 Antonio Denver 32.2% 2,4 Kansas City Kansas City Kansas City 32.5%1,9 34.6%1,5 32.5%1,9 34.6%1,5 29.1% 1,4 24.7%1,6 Utah 22.9% 24.7%1,6 3,4 Utah Utah W Terre Haute 19.6% 2,6 20.1% 3,4 20.1%2,6 C Utah W Richmond Richmond Richmond C C Kansas City San Jose 44.0%3,6 C 39.4% 2,4 44.0%3,6 SW VA Frankfort W Wichita W Jacksonville Jacksonville Jacksonville Nashville Nashville Las Vegas Nashville Las Vegas C Las Vegas 20.7% 2,3 W W 23.0% 1,4 23.0%2,3 32.5% 30.1%1,6 W 30.1%1,6 2,4 32.2%1,7 Panhandle 31.5% Panhandle 32.2%1,71,4 Panhandle Oklahoma City 30.2% 2,4 34.7%2,3 34.7%2,3 Oklahoma CityCity Oklahoma2,6 Oklahoma City Southern E Southern Southern 19.7% 19.7%2,6 15.3% 3,4 Ft. Pierce Ft Pierce California Ft. Pierce California NC Florida Californi NC Florida E NC Florida 19.1%2,5,8 54.1%2,3 19.1%2,5,8 49.5% 2,3 Charleston 34.9%2,3 54.1% 2,4 Charleston a 13.6% 34.3% 2,4 34.9%2,3 Charleston 29.1% 2,10 3,4 28.0% 3,4 28.0%2,10 Tampa Bay Tampa Bay Western Group Tampa 2,3 27.7%2,3 27.7% 2,4 26.4% Central Group Broward Broward Broward 22.6% 2,3 23.1% 2,4 23.1%2,3 Eastern Group Source: Notes: 1. 2006 1st Quarter data Dade 4. Medstat Dade 15.6%2,3 2. 2006 3rd Quarter data 15.6%2,3 5. South Carolina Office of research & Statistics 13.9% 3. 2005 2,4 2
  • 4. Inpatient and Outpatient Service Demand 3
  • 5. Obesity is catching up to tobacco as the leading cause of death in America Number of Deaths in 2000 (in 000s) 440 400 435 33% 8% 220 15% 5% 25% 17% 5% 33% 95 85 29 20 17 55 0 Firearms Alcohol Pneumonia/ Toxic Illicit Drug Tobacco Sexual Obesity Consumption influenza Agents Use Behavior 4 Source: CDC, Trends in the Health of Americans, 2006; Washington Post
  • 6. Where Are They? 5
  • 7. Obesity Trends* Among U.S. Adults 1985 BMI*- Adult’s weight in relation in height BMI ≥ 30, or ~ 30 lbs. overweight for 5’4” person No Data <10% 10%–14% 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 *Body Mass Index (BMI): A measure of an adult’s weight in relation to his or her Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor height, specifically the adult’s weight in kilograms divided by the square of his 6 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect or her height in meters. data through a series of monthly telephone interviews with U.S. adults.
  • 8. Obesity Trends* Among U.S. Adults 1986 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 7 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 9. Obesity Trends* Among U.S. Adults 1987 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 8 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 10. Obesity Trends* Among U.S. Adults 1988 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 9 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 11. Obesity Trends* Among U.S. Adults 1989 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 10 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 12. Obesity Trends* Among U.S. Adults 1990 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 11 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 13. Obesity Trends* Among U.S. Adults 1991 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 12 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 14. Obesity Trends* Among U.S. Adults 1992 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 13 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 15. Obesity Trends* Among U.S. Adults 1993 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 14 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 16. Obesity Trends* Among U.S. Adults 1994 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 15 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 17. Obesity Trends* Among U.S. Adults 1995 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 16 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 18. Obesity Trends* Among U.S. Adults 1996 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 17 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 19. Obesity Trends* Among U.S. Adults 1997 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% ≥20% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 18 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 20. Obesity Trends* Among U.S. Adults 1998 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% ≥20% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 19 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 21. Obesity Trends* Among U.S. Adults 1999 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% ≥20% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 20 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 22. Obesity Trends* Among U.S. Adults 2000 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% ≥20% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 21 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 23. Obesity Trends* Among U.S. Adults 2001 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 20%–24% ≥25% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 22 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 24. Obesity Trends* Among U.S. Adults 2002 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 20%–24% ≥25% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 23 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 25. Obesity Trends* Among U.S. Adults 2003 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 20%–24% ≥25% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 24 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 26. Obesity Trends* Among U.S. Adults 2004 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 20%–24% ≥25% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 25 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 27. Obesity Trends* Among U.S. Adults 2005 (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 26 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect data through a series of monthly telephone interviews with U.S. adults.
  • 28. Obesity Trends* Among U.S. Adults 2006 22 US states experienced an increase for the 2nd year in a row (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Trust for America’s Health August 2007 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 27 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect report data through a series of monthly telephone interviews with U.S. adults.
  • 29. Obesity Trends* Among U.S. Adults 2006 Southern states experience higher rates than the rest of the nation (*BMI ≥ 30, or ~ 30 lbs. overweight for No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30% 5’ 4” person) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Trust for America’s Health August 2007 Source: The data shown in these maps were collected through CDC’s Behavioral Risk Factor 28 Surveillance System (BRFSS). Each year, state health departments use standard procedures to collect report data through a series of monthly telephone interviews with U.S. adults.
  • 30. Key Initiatives 29
  • 31. Leading Provider of Outpatient Services Integrated delivery model created through establishing leading outpatient services in local markets Among the largest outpatient surgery businesses in the industry with 107 freestanding ambulatory surgery centers (1) Other outpatient facilities include 53 freestanding diagnostic treatment facilities, 79 provider based imaging facilities and 6 oncology centers HCA Surgery Centers 30
  • 32. Denton Regional Medical Center Medical City Dallas Hospital North Hills Hospital Medical Center of Plano Plaza Medical Center of Ft. Worth Medical Center of McKinney
  • 33. Rose Medical Center North Suburban Medical Center Sky Ridge Medical Center Presbyterian/St. Luke’s Medical Center Medical Center of Aurora Swedish Medical Center
  • 34. Capex Discipline and Flexibility Portfolio of hospitals is well-capitalized Portions of both “routine capital” as well as “new” and “expansion / renovation” capital could be delayed to increase cash flow if needed CAPITAL EXPENDITURES ($ in billions) $1.9B $1.6B $1.5B $1.5B* 33 * Preliminary estimate
  • 35. As Reported EBITDA ($ in millions) September 2007 Ratio Prior Year YTD Ratio Revenues $19,975 100.0% $18,988 100.0% Salaries & Benefits 8,002 7,816 40.1% 41.2% Supplies 3,284 3,251 16.4% 17.1% Provision for Doubtful Accounts 2,218 1,950 11.1% 10.3% Gains on Investments (6) (140) 0.0% -0.7% All Other Operating Expenses 3,038 2,912 15.2% 15.3% Total Operating Expenses 16,536 15,789 82.8% 83.2% 3,439 3,199 EBITDA 17.2% 16.8% Depreciation & Amortization 1,072 1,045 5.4% 5.4% Interest 1,674 582 8.4% 3.1% Gains on Sales of Facilities (332) (46) -1.7% -0.2% Impairment of Long-Lived Assets 24 - 0.1% 0.0% Transaction Costs - 9 0.0% 0.0% Minority Interest 160 145 0.8% 0.8% Income Before Taxes 841 1,464 4.2% 7.7% Net Income $596 $914 3.0% 4.8% 34 Certain prior year amounts have been reclassified to conform to current year presentation.
  • 36. Same Facility Volume Highlights Admissions by Payer 2nd Quarter 1st Quarter 3rd Quarter Mix % Change Sept YTD Admissions -1.6% -2.7% Medicare 41.5% -0.2% Medicaid 15.4% Sept YTD Admissions Adjusted -2.2% -1.0% Managed/ Discounted 36.4% +5.2% Uninsured 6.7% 3rd Quarter 2007 Source: QMIRS Excl Las Vegas Market Mix % Change Sept YTD Admissions -1.1% -2.4% Medicare 42.8% -0.9% Medicaid 15.0% Sept YTD Admissions -2.6% Managed/ -0.7% Adjusted Discounted 36.0% +8.9% Uninsured 6.2% 35 September 2007 YTD Source: QMIRS
  • 37. Same Facility Outpatient Services ER Visits by Payer 2nd Quarter 1st Quarter 3rd Quarter same store to include “new” ASCs which cannibalized existing hospital *Restating Mix % Change based outpatient surgeries Sept YTD Outpatient Surgeries -1.2% +2.4% +0.1%* Medicare 20.5% -0.8% Medicaid 20.1% -1.6% Excl Las Vegas Mrkt Sept YTD Managed/ +0.3% Discounted 34.8% -2.2% ASC Based Outpatient Surgeries +1.2% Uninsured 24.6% +6.6% 3rd Quarter 2007 Source: QMIRS Excl Las Vegas Mrkt Mix % Change Hospital Based +1.3% Outpatient Surgeries Medicare 20.8% 20.7% Sept YTD Medicaid -4.1% -2.2% Managed/ Discounted 35.1% ER Visits -2.7% Uninsured 23.4% +7.0% Sept YTD -0.1% September 2007 YTD 36 Source: QMIRS
  • 38. Same Facility Net Revenue 1st Quarter 2nd Quarter 3rd Quarter Sept YTD +7.4% NR/AA +6.1% Cash Excluding UPL Revenue Mix - QTD Revenue Mix - YTD Same Facility Same Facility NR Mix NR Mix NR/AA % change NR/AA % change 8.9% +12.9% 9.5% Uninsured Uninsured +10.9% 28.8% 29.5% Medicare 28.8% Medicare +4.5% +4.6% 8.1% 8.1% 8.1% Medicaid Medicaid +25.2% +22.3% Managed/ Managed/ 47.7% 47.7% 47.6% +7.4% Discounted Discounted +6.2% Other 3rd Quarter 2007 Other Sept 2007 YTD 5.9% 5.9% Source: QMIRS Source: QMIRS 37
  • 39. Same Facility Expense Management Supply Cost by Category 2nd Quarter 1st Quarter 3rd Quarter Sept YTD Op.Exp./AA % Total Per AA % change +6.3% +5.0% Cash Medical +5.3% Devices 34.7% Pharmacy Excluding UPL +1.0% 20.1% Sept YTD +5.4% Commodity Wage +8.2% Rate 39.7% Blood +20.8% 5.5% East, West & Central Hospital Operations – 3rd Quarter 2007 Including rebates Sept YTD -0.7% EEOB Medical +6.1% Devices 34.9% Pharmacy +1.4% As Reported 20.4% Sept YTD Supplies Commodity +4.5% +5.8% /AA 39.3% Blood +14.3% 5.4% 38 East, West & Central Hospital Operations – September 2007 YTD Including rebates
  • 40. As Reported ($ in millions) Other Operating Expenses Marketing and Advertising Travel and Entertainment 57% 28% September YTD September YTD Malpractice Expense Legal 21% 15% September YTD September YTD 39
  • 41. Corporate Office and IT&S ( $ in millions) September 2007 YTD Prior Year Actual Prior Year Variance Total Administrative $122 $133 ($11) Total IT&S $253 $282 ($29) Total Shared Services $592 $590 $2 *Excludes Gains on Sale of Investments, 123R, Malpractice Reserves and Sponsor Fees 40
  • 42. Leverage the Scale of the Company Currently serves over 4,000 members, including more than 1,200 acute care hospitals Over $13 billion in annual purchasing volume with expected 58% growth over prior year Group Purchasing Generates significant annual profits from administrative fees from suppliers for performing GPO services; Organization significantly lowered the Company's supply costs Per-unit cost advantage over competitors Invested $100 million to build regional service centers Revenue Creates efficiencies in billing and collection process, particularly re payment disputes with managed care Cycle Management Results: incremental cash collections annually, compared to baseline, as well as a reduction in operating costs OVERALL SETTLED CLAIMS – PER 1,000 OCCUPIED BED Intense focus on patient safety and tort EQUIVALENTS 16 reform have significantly reduced settled Captive 14.5 claims 15 14.5 Insurance 14.1 13.6 14 13.2 Subsidiary 13 12.1 11.9 12 11.6 11 10.0 9.7 9.6 10 9 8 41 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
  • 43. Debt Repayment $ in millions Decrease/ 12/31/2006 9/30/2007 Increase Bank Revolver $ 40 $ - $ 40 Asset-Based Revolver 1,830 1,500 330 Term Loan A 2,750 2,666 84 Term Loan B 8,800 8,734 66 European Term Loan 1,320 1,003 317 Total Bank Debt 14,740 13,903 837 Other First Lien Debt 445 419 26 Second Lien Cash Pay Notes 4,200 4,200 - Second Lien Toggle Notes 1,500 1,500 - Total Senior Secured Debt 20,885 20,022 863 Rollover Debt - Unsecured Notes, net 7,523 7,523 - Total Debt $ 28,408 $ 27,545 $ 863 Debt/EBITDA 6.36x 5.85x 42
  • 44. Debt Rollforward $ in millions Total Debt as of 12/31/06 $28,408 2007 Activity Adjusted EBITDA, less Minority Interest (3,279) Interest Paid 1,522 Taxes Paid 348 Capital Expenditures 997 Asset Sales, net of Acquisitions (463) Sponsor/Employee Equity Contribution (100) All other, including Working Capital 112 Net change (863) Total Debt as of 9/30/07 $27,545 43
  • 45. Capitalization Table & Credit Statistics Sep 30, Dec 31, 2007 2006 Senior Secured Debt Cash Flow Revolver ($2.0 billion) - $40 ABL Facility ($2.0 billion) 1,500 1,830 Term Loan A 2,666 2,750 Term Loan B 8,734 8,800 European Term Loan 1,003 1,320 Total Senior Secured Bank Debt 13,903 14,740 Other First Lien Debt 419 445 Second Lien Cash Pay Notes 4,200 4,200 Second Lien Toggle Notes 1,500 1,500 Total Senior Secured Debt 20,022 20,885 Unsecured Notes 7,540 7,542 Unamortized Discounts (17) (19) Total Debt $27,545 $28,408 Floating Rate Debt % 21.5% 23.7% Total Debt/Adjusted EBITDA 5.85x 6.36x Adjusted EBITDA/Interest 2.27x 2.16x 44
  • 46. Financial Policies & Objectives Operations – Focus on core operations Physician recruitment and service line expansion Maintain target managed care mid- to high-single digit rate increase Manage operating expenses by leveraging scale and systems Consider divesting non-core assets, where appropriate HCI malpractice funding cash flow benefits Leverage Goal to reduce debt and improve credit quality over time Manage floating rate interest exposure ($8 billion in 5-yr interest rate hedges) Capital Expenditures – Maintain disciplined approach to deploying capital Only target high ROIC investments Deploy capital to enhance operations, competitive position and market share Manage discretionary capex based on strength of cash flows 45
  • 47. Conclusion Favorable Industry Fundamentals Well-Capitalized Assets With Leading Market Positions in High Growth Markets Management Team’s Experience, Discipline and Industry Leadership Financial Structure that Provides Significant Liquidity and Flexibility Disciplined Approach to Capital Deployment Significant Cash Flow From Operations Significant Equity Commitment by Sponsors and Management 46
  • 48. Milton Johnson Executive Vice President & Chief Financial Officer David Anderson Senior Vice President, Finance & Treasurer Vic Campbell Senior Vice President Mark Kimbrough Vice President, Investor Relations 47

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