COMMUNITY HEALTH SYSTEMS INC – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read this discussion together with our condensed consolidated
financial statements and the accompanying notes included herein.

Throughout this Form 10-Q, we refer to Community Health Systems, Inc., or the
Parent Company, and its consolidated subsidiaries in a simplified manner and on
a collective basis, using words like "we," "our," "us" and the "Company". This
drafting style is suggested by the Securities and Exchange Commission, or SEC,
and is not meant to indicate that the publicly traded Parent Company or any
particular subsidiary of the Parent Company owns or operates any asset, business
or property. The hospitals, operations and businesses described in this filing
are owned and operated by distinct and indirect subsidiaries of Community Health
Systems, Inc.

Executive Overview

We are one of the nation's largest healthcare companies. Our affiliates are
leading providers of healthcare services, developing and operating healthcare
delivery systems in 48 distinct markets across 16 states. As of June 30, 2022,
our subsidiaries own or lease 84 affiliated hospitals (inclusive of a de novo
hospital which commenced operations during the three months ended June 30,
2022), with approximately 13,000 beds, and operate more than 1,000 sites of
care, including physician practices, urgent care centers, freestanding emergency
departments, occupational medicine clinics, imaging centers, cancer centers and
ambulatory surgery centers. We generate revenues by providing a broad range of
general and specialized hospital healthcare services and outpatient services to
patients in the communities in which we are located. We are paid for our
services by governmental agencies, private insurers and directly by the patients
we serve.

Recent Developments and COVID-19 Pandemic

Economic conditions in the United States have been deteriorating in various
respects, and the United States economy continues to experience significant
inflationary pressures, an extremely competitive labor market, and disruptions
to supply networks. In this regard, we have incurred, and may continue to incur,
certain increased expenses arising from these economic conditions, including
additional labor, supply chain, capital and other expenditures. Moreover, taking
into account these developments, during the second quarter of 2022, we
experienced unfavorable changes in payor mix, declines in patient volumes, wage
inflation for permanent employees and increased rates for and greater
utilization of temporary contract labor (including contract nursing personnel).
These factors had a material unfavorable impact on our financial results during
the second quarter of 2022, and may have an unfavorable impact on our financial
results in future periods which could be material. While we have implemented
cost containment and other measures to try to counteract these developments, we
may continue to be unable to fully offset the impact of these factors on the
operation of our business.

In addition, as a provider of healthcare services, we have been and continue to
be affected by the public health and economic effects of the COVID-19 pandemic,
which has been declared a public health emergency by the Secretary of the U.S.
Department of Health and Human Services, or HHS. While we are not able to fully
quantify the impact that the COVID-19 pandemic will have on our future financial
results, developments related to COVID-19 may continue to affect our financial
performance. The ongoing impact of the pandemic on our financial results will
depend on, among other factors, the duration and severity of the pandemic, the
impact of the pandemic on economic conditions, the volume of canceled or
rescheduled procedures at our facilities, and the spread of potentially more
contagious and/or virulent forms of the virus, including any variants of the
virus that may be resistant to currently available vaccines.

If economic conditions in the United States further significantly deteriorate
and/ or public health conditions related to the COVID-19 pandemic significantly
worsen, any such developments could materially and adversely affect our results
of operations, financial position, and/or our cash flows.

Completed Divestiture and Acquisition Activity

No hospitals were divested during the six months ended June 30, 2022. On March
7, 2022, we entered into a definitive agreement for the sale of substantially
all of the assets of AllianceHealth Seminole (32 licensed beds) in Seminole,
Oklahoma, to affiliates of SSM Health Care of Oklahoma. The proceeds from this
sale were received at a preliminary closing on June 30, 2022, and the
disposition was completed on July 1, 2022.

During 2021, we completed the divestiture of five hospitals, including three
which closed effective January 1, 2021 (for these hospitals we received net
proceeds at a preliminary closing on December 31, 2020). These five hospitals
represented annual net operating revenues in 2020 of approximately $275 million
and, including the net proceeds for the three hospital divestitures that
preliminarily closed on December 31, 2020, we received total net proceeds of
approximately $28 million in connection with their disposition.

                                       23
--------------------------------------------------------------------------------

The following table provides a summary of hospitals that we divested during the
year ended December 31, 2021:

                                                                          Licensed   Effective
Hospital                     Buyer                       City, State        Beds        Date
Lea Regional Medical         Covenant Health System    Hobbs, NM             84      January 1,
Center                                                                               2021
Tennova Healthcare -         Vanderbilt University     Tullahoma, TN        135      January 1,
Tullahoma                    Medical Center                                          2021
Tennova Healthcare -         Vanderbilt University     Shelbyville, TN       60      January 1,
Shelbyville                  Medical Center                                          2021
Northwest Mississippi        Delta Health System       Clarksdale, MS       181      February
Medical Center                                                                       1, 2021
AllianceHealth Midwest       SSM Health Care of        Midwest City, OK     255      April 1,
                             Oklahoma                                                2021


We continue to receive interest from potential acquirers for certain of our
hospitals, and may, from time to time, consider selling additional hospitals if
we consider any such disposition to be in our best interests. We expect proceeds
from any such divestitures to be used for general corporate purposes and capital
expenditures.

During the six months ended June 30, 2022, we paid approximately $4 million to
acquire the operating assets and related businesses of certain physician
practices, clinics and other ancillary businesses that operate within the
communities served by our hospitals. We allocated the purchase price to property
and equipment, working capital, noncontrolling interests and goodwill.

Overview of Operating Results

Net operating revenues decreased from $3.0 billion for the three months ended
June 30, 2021 to $2.9 billion for the three months ended June 30, 2022. On a
same-store basis, net operating revenues for the three months ended June 30,
2022 decreased $79 million.

We had net loss of $(298) million during the three months ended June 30, 2022,
compared to net income of $37 million for the three months ended June 30, 2021.

Net income for the three months ended June 30, 2021 included the following:

• an after-tax charge of $23 million for loss from early extinguishment of debt,

    and


  • an after-tax charge of $1 million for the impairment of goodwill and

long-lived assets of divested businesses based on their estimated fair values.

There were no similar adjustments to net loss for the three months ended June
30, 2022.

Consolidated inpatient admissions for the three months ended June 30, 2022,
decreased 3.4%, compared to the three months ended June 30, 2021. Consolidated
adjusted admissions for the three months ended June 30, 2022, decreased 0.4%,
compared to the three months ended June 30, 2021. Same-store inpatient
admissions for the three months ended June 30, 2022, decreased 3.5%, compared to
the three months ended June 30, 2021, and same-store adjusted admissions for the
three months ended June 30, 2022, decreased 0.5%, compared to the three months
ended June 30, 2021.

Net operating revenues increased from $6.020 billion for the six months ended
June 30, 2021 to $6.044 billion for the six months ended June 30, 2022. On a
same-store basis, net operating revenues for the six months ended June 30, 2022
increased $34 million.

We had net loss of $(268) million during the six months ended June 30, 2022,
compared to net income of $2 million for the six months ended June 30, 2021. Net
loss for the six months ended June 30, 2022 included the following:

• an after-tax charge of $14 million for loss from early extinguishment of debt,

and

• an after-tax charge of $5 million for the impairment of long-lived assets of a

hospital that was subsequently sold at a sales price below carrying value.

Net income for the six months ended June 30, 2021 included the following:

• an after-tax charge of $116 million for loss from early extinguishment of

    debt, and


  • an after-tax charge of $18 million for the impairment of goodwill and

long-lived assets of divested businesses based on their estimated fair values.

                                       24
--------------------------------------------------------------------------------


Consolidated inpatient admissions for the six months ended June 30, 2022,
decreased 2.5%, compared to the six months ended June 30, 2021. Consolidated
adjusted admissions for the six months ended June 30, 2022, increased 0.8%,
compared to the six months ended June 30, 2021. Same-store inpatient admissions
for the six months ended June 30, 2022, decreased 1.9%, compared to the six
months ended June 30, 2021, and same-store adjusted admissions for the six
months ended June 30, 2022, increased 1.3%, compared to the six months ended
June 30, 2021.

Self-pay revenues represented approximately 0.4% and 0.9% of net operating
revenues for the three months ended June 30, 2022 and 2021, respectively, and
0.9% and 0.7% for the six months ended June 30, 2022 and 2021, respectively. The
amount of foregone revenue related to providing charity care services as a
percentage of net operating revenues was approximately 13.9% and 7.1% for the
three months ended June 30, 2022 and 2021, respectively, and 12.8% and 7.4% for
the six months ended June 30, 2022 and 2021, respectively. Direct and indirect
costs incurred in providing charity care services as a percentage of net
operating revenues was approximately 1.6% and 0.9% for the three months ended
June 30, 2022 and 2021, respectively, and 1.5% and 0.9% for the six months ended
June 30, 2022 and 2021, respectively.

Overview of Legislative and Other Governmental Developments

The U.S. Congress and certain state legislatures have introduced and passed a
large number of proposals and legislation designed to make major changes in the
healthcare system, including changes that have impacted access to health
insurance. The most prominent of these efforts, the Affordable Care Act,
regulates how healthcare services are covered, delivered and reimbursed. The
Affordable Care Act increased health insurance coverage through a combination of
public program expansion and private sector health insurance reforms. The
Affordable Care Act also made a number of changes to Medicare and Medicaid
reimbursement, such as a productivity offset to the Medicare market basket
update and reductions to Medicare and Medicaid disproportionate share hospital,
or DSH, payments. However, reductions to Medicaid DSH payments have been delayed
by the Consolidated Appropriations Act, or the CAA, through 2023 (to begin in
federal fiscal year 2024).

The Affordable Care Act has been subject to legislative and regulatory changes
and court challenges. For example, effective January 1, 2019, the financial
penalty associated with the mandate that most individuals enroll in a health
insurance plan was effectively eliminated. This change resulted in legal
challenges to the constitutionality of the individual mandate and validity of
the Affordable Care Act as a whole. However, in June 2021, the U.S. Supreme
Court determined that the plaintiffs lacked standing, allowing the law to remain
in place. Nonetheless, the elimination of the individual mandate penalty and
other changes may impact the number of individuals that elect to obtain public
or private health insurance or the scope of such coverage, if purchased. Some
states have imposed individual health insurance mandates, and other states have
explored or offer public health insurance options.

The current presidential administration has indicated that it generally intends
to protect and strengthen the Affordable Care Act and Medicaid programs. For
example, in January 2021, President Biden issued an executive order that
instructed certain governmental agencies to review and reconsider their existing
policies and rules that limit access to health insurance coverage. In a final
rule published in September 2021, HHS extended the annual open enrollment period
for coverage through federal marketplaces and granted state exchanges
flexibility to lengthen their open enrollment periods.

Of critical importance to us is the potential impact of any changes specific to
the Medicaid program, including the funding and expansion provisions of the
Affordable Care Act and subsequent legislation or agency initiatives.
Historically, the states with the greatest reductions in the number of uninsured
adult residents have expanded Medicaid. A number of states have opted out of the
Medicaid coverage expansion provisions, but could ultimately decide to expand
their programs at a later date. Of the 16 states in which we operated hospitals
as of June 30, 2022, nine states have taken action to expand their Medicaid
programs. At this time, the other seven states have not, including Florida,
Alabama, Tennessee, Mississippi and Texas, where we operated a significant
number of hospitals as of June 30, 2022. In addition, some states use, or have
applied to use, waivers granted by CMS to implement expansion, impose different
eligibility or enrollment conditions, or otherwise implement programs that vary
from federal standards.

                                       25
--------------------------------------------------------------------------------


There is uncertainty regarding the ongoing net effect of the Affordable Care Act
due to the potential for continued changes to the law's implementation and its
interpretation by government agencies and courts. There is also uncertainty
regarding the potential impact of other health reform efforts at the federal and
state levels. Some reforms may have a positive impact on our business, while
others may increase our operating costs, adversely impact the reimbursement we
receive, or require us to modify certain aspects of our operations. For example,
some members of Congress have proposed measures that would expand
government-sponsored health insurance coverage, including single-payor models,
and some states have implemented or are considering public health insurance
options. Legislative and executive branch efforts related to healthcare reform
could result in increased prices for consumers purchasing health insurance
coverage or destabilize insurance markets, among other effects. Some current
initiatives, requirements and proposals, including those aimed at price
transparency and out-of-network charges, may impact prices, our competitive
position and the relationships between hospitals, insurers and patients. For
example, the No Surprises Act currently requires providers to provide a good
faith estimate of expected charges to uninsured or self-pay individuals in
connection with scheduled items or services, upon request of the individual. It
also requires providers to send an insured patient's health plan a good faith
estimate of expected charges, including billing and diagnostic codes, prior to
when the patient is scheduled to receive the item or service. HHS is deferring
enforcement of the good faith estimate requirement for insured patients until it
issues additional regulations.

In recent years, a number of laws, including the Affordable Care Act and the
Medicare Access and CHIP Reauthorization Act, have promoted shifting from
traditional fee-for-service reimbursement models to alternative payment models
that tie reimbursement to quality and cost of care. For example, CMS currently
administers various accountable care organizations and bundled payment
demonstration projects. In October 2021, the CMS Innovation Center published an
outline of its strategy for the next decade, noting the need to accelerate the
movement to value-based care and drive broader system transformation. However,
the COVID-19 pandemic may impact provider performance and data reporting under
value-based care initiatives. CMS has temporarily modified requirements of
certain programs by, for example, implementing special scoring and payment
policies intended to mitigate negative impacts of the public health emergency on
hospitals participating in the Hospital Value-Based Purchasing Program and
similar programs.

In response to the COVID-19 pandemic, federal and state governments have passed
legislation, promulgated regulations, and taken other administrative actions
intended to assist healthcare providers in providing care to COVID-19 and other
patients during the public health emergency and to provide financial relief.
These measures include temporary relief from Medicare conditions of
participation requirements for healthcare providers, temporary relaxation of
licensure requirements for healthcare professionals, temporary relaxation of
privacy restrictions for telehealth remote communications, promoting use of
telehealth by temporarily expanding the scope of services for which Medicare
reimbursement is available, and limited waivers of fraud and abuse laws for
activities related to COVID-19 during the public health emergency period.

Primary legislative sources of COVID-19 relief include the Coronavirus Aid,
Relief and Economic Security Act, or the CARES Act, the Paycheck Protection
Program and Health Care Enhancement Act, or the PPPHCE Act, the CAA, and the
American Rescue Plan Act of 2021, or the ARPA. Together, these stimulus laws
authorize over $186 billion in funding to be distributed through the Public
Health and Social Services Emergency Fund, or the PHSSEF, to eligible providers,
including public entities and Medicare- and/or Medicaid-enrolled providers.
PHSSEF payments are intended to compensate healthcare providers for lost
revenues or incremental expenses incurred in response to the COVID-19 pandemic
and are not required to be repaid, provided that recipients attest to and comply
with certain terms and conditions, including limitations on balance billing, not
using PHSSEF funds to reimburse expenses or losses that other sources have been
or are obligated to reimburse and audit and reporting requirements.

In addition, the CARES Act expanded the Medicare Accelerated and Advance Payment
Program to increase cash flow to providers impacted by the COVID-19 pandemic.
Inpatient acute care hospitals were able to request accelerated payment of up to
100% of their Medicare payment amount for a six-month period. The Medicare
Accelerated and Advanced Payment Program payments are advances that providers
must repay. Providers are required to repay accelerated payments beginning one
year after the payment was issued. After such one-year period, Medicare payments
owed to providers will be recouped according to the repayment terms.

                                       26
--------------------------------------------------------------------------------


The CARES Act and related legislation include other provisions offering
financial relief, for example suspending the Medicare sequestration payment
adjustment from May 1, 2020 through December 31, 2021, which would have
otherwise reduced payments to Medicare providers by 2% as required by the Budget
Control Act of 2011 (but also extending sequestration through 2030). Congress
further delayed these sequestration cuts through March 31, 2022, and reduced the
sequestration adjustment to 1% from April 1 through June 30, 2022, but increased
the reductions set for 2030. The CARES Act and related legislation also delay
scheduled reductions to Medicaid DSH payments, provide a 20% add-on to the
inpatient prospective payment system diagnosis-related group, or PPS DRG, rate
for COVID-19 patients for the duration of the public health emergency, permitted
the deferral of payment of the employer portion of social security taxes between
March 27, 2020 and December 31, 2020, with 50% of the deferred amount due
December 31, 2021 and the remaining 50% due December 31, 2022, and provided
claims reimbursement to healthcare providers for the provision of COVID-19
testing, treatment, and vaccine administration to uninsured individuals by way
of the Health Resources & Services Administration, or HRSA, COVID-19 Uninsured
Program. However, in addition to providing funding for healthcare providers, the
ARPA increased the federal budget deficit in a manner that triggers an
additional statutorily mandated sequestration under the Pay-As-You-Go Act of
2010. As a result, an additional Medicare spending reduction of up to 4% was
required to take effect in January 2022. However, Congress has delayed
implementation of this payment reduction until 2023.

Through June 30, 2022, net of amounts that have been repaid to the respective
federal, state, and local agencies, we received approximately $815 million in
pandemic relief fund payments through various federal, state and local programs
on a cumulative basis since their enactment. Of the net amount received to-date,
approximately $52 million was received during the six months ended June 30, 2022
and the remainder was received during the years ended December 31, 2021 and
2020. Payments recognized to-date have not impacted net operating revenues, and
had a positive impact on net (loss) income attributable to Community Health
Systems, Inc. stockholders during the three months ended June 30, 2022 and 2021,
in the amount of $6 million and less than $1 million, respectively, and $41
million and $63 million during the six months ended June 30, 2022 and 2021,
respectively. Amounts received through various federal, state or local programs
that have not yet been recognized or otherwise have not been refunded to HHS are
included within accrued liabilities-other in the condensed consolidated balance
sheets, and such unrecognized amounts may be returned to HHS or the respective
state or local agency, as applicable, or may be recognized in future periods if
the underlying conditions for recognition are reasonably assured of being
met. We have satisfied all current reporting requirements for pandemic relief
funds received to-date, as applicable.

With respect to the Medicare Accelerated and Advanced Payment Program, we
received Medicare accelerated payments of approximately $1.2 billion in April
2020. No additional Medicare accelerated payments have been received by us since
such time and because CMS is no longer accepting new applications for
accelerated payments, we do not expect to receive additional Medicare
accelerated payments. CMS began recouping Medicare accelerated payments in April
2021. As of December 31, 2021, all Medicare accelerated payments received by us
were recouped or repaid to CMS or assumed by buyers related to hospitals we
divested. In this regard, approximately $1.1 billion and $77 million of Medicare
accelerated payments were recouped or repaid to CMS or assumed by buyers related
to hospitals we divested during the years ended December 31, 2021 and 2020,
respectively.

There is still uncertainty regarding the magnitude and timing of any future
payments or benefits that we may receive or realize under the CARES Act and
other stimulus legislation passed in response to the COVID-19 pandemic, although
we do not currently expect to receive the same level of payments or benefits in
future periods that we received or realized earlier in the pandemic. In
addition, the public health emergency continues to evolve. Some of the measures
allowing for flexibility in delivery of care and various financial supports for
healthcare providers are available only until funds expire or for the duration
of the public health emergency, and it is unclear whether or for how long the
public health emergency declaration will be extended. The current declaration
expires October 13, 2022. The HHS Secretary may choose to renew the declaration
for successive 90-day periods for as long as the emergency continues to exist
and may terminate the declaration whenever he determines that the public health
emergency no longer exists, but has indicated that HHS will provide states with
60 days' notice prior to termination of the declaration. The federal government
may consider additional stimulus and relief efforts, but we are unable to
predict whether additional stimulus measures will be enacted or their impact on
us. For example, the HRSA COVID-19 Uninsured Program has stopped accepting
claims for reimbursement for testing, treatment, and vaccinations, and we are
unable to predict whether this program will receive additional funding. There
can be no assurance as to the total amount of financial and other types of
assistance that we will receive under federal, state and local stimulus or
relief programs, and it is difficult to predict the impact of such measures on
our operations or how they will affect operations of our competitors. Further,
there can be no assurance that the terms of provider relief funding or other
programs will not change or be interpreted in ways that affect our funding or
eligibility to participate or our ability to comply with applicable requirements
and retain amounts received. We continue to assess the potential impact of the
CARES Act and other enacted stimulus legislation, the potential impact of future
stimulus measures, if any, and the impact of other laws, regulations, and
guidance related to COVID-19 on our business, results of operations, financial
condition and cash flows.

                                       27
--------------------------------------------------------------------------------


In June 2019, the U.S. Supreme Court ruled in Azar v. Allina Health
Services that HHS failed to comply with statutory notice and comment rulemaking
procedures before announcing an earlier policy related to DSH payments made
under Medicare to hospitals. In response to this adverse ruling, CMS proposed a
rule in August 2020 in an attempt to retroactively cure the underlying
procedural errors cited by the U.S. Supreme Court as the basis in their
decision. CMS's action has introduced uncertainty regarding the potential
outcomes from the Supreme Court ruling, and the proposed rule has resulted in
further litigation. If HHS or CMS are unsuccessful in their attempt to assert
the proposed rule or another legal basis for their policy, one potential outcome
is the federal government could be required to reimburse hospitals, including
our affiliated hospitals, for Medicare DSH payments which otherwise would have
been payable over certain prior time periods absent the enactment of this
policy. While the ruling in Allina was specific to the DSH payments calculated
for federal fiscal year 2012 for the plaintiff hospitals, the Allina precedent
could result in higher DSH payments for federal fiscal years 2005 to 2013. There
continues to be uncertainty regarding the extent to which, if any, Medicare DSH
payments would be remitted to our affiliated hospitals as the result of Allina
and subsequent litigation as well as litigation related to other Medicare DSH
issues, and, if so, the timing of any such payments. If it were ultimately
determined that our affiliated hospitals are entitled to receive such Medicare
DSH payments for these prior time periods, these payments could have a material
positive impact on a non-recurring basis in any future period in which net
income is recognized in respect thereof as well as on our cash flows from
operations in any future period in which these payments are received; however,
based on recent judicial developments, we believe the likelihood of our
affiliated hospitals receiving any Medicare DSH payments in respect of prior
periods as set forth above has decreased.

In June 2022, the U.S. Supreme Court ruled in American Hospital Association v.
Becerra, a case on the 340B Drug Pricing Program that could impact Medicare
reimbursement to us, both in respect of past periods and future periods. The
340B program allows certain non-profit healthcare organizations that care for
many uninsured and low-income patients to purchase outpatient drugs from
pharmaceutical manufacturers at discounted rates. Our hospitals do not
participate in the 340B program. In 2018, HHS implemented a payment policy that
reduced Medicare payments to 340B hospitals for most drugs obtained at
340B-discounted rates. These payment cuts resulted in increased payments for
non-340B hospitals, including our facilities. In Becerra, the U.S. Supreme Court
determined that HHS unlawfully reduced reimbursement rates for 340B hospitals.
The remedy in the case has not yet been determined. However, if it is determined
that budget neutrality applies to the remedy, companies or entities that operate
non-340B hospitals such as us may be required to repay previously received
payments, which could have a material adverse impact on our financial results in
any future reporting period in which such future repayments are recognized or
paid. In addition, depending on future Medicare payment policies, companies or
entities that operate non-340B hospitals such as us could receive decreased
reimbursement going forward for outpatient drugs, which would adversely impact
our results on a prospective basis.

As a result of our current levels of cash, pandemic relief fund payments we may
in the future receive under federal, state or local stimulus or relief programs,
available borrowing capacity, long-term outlook on our debt repayments, the
refinancing of certain of our notes, proceeds from any potential future
disposition of hospitals or other investments such as our minority equity
interests in various businesses, as applicable, and the continued projection of
our ability to generate cash flows, we anticipate that we will be able to invest
the necessary capital in our business over the next twelve months and for the
foreseeable future thereafter. We believe there continues to be ample
opportunity to strengthen our market share in substantially all of our markets
by decreasing the need for patients to travel outside their communities for
healthcare. Furthermore, we will continue to strive to improve operating
efficiencies and procedures in order to improve the performance of our
hospitals.

Sources of Revenue

The following table presents the approximate percentages of net operating
revenues by payor source for the periods indicated. The data for the periods
presented are not strictly comparable due to the effect that businesses
acquired, sold, closed or opened during each of the respective periods, as
applicable, have had on these statistics.

                                              Three Months Ended          Six Months Ended
                                                   June 30,                   June 30,
                                               2022          2021         2022         2021
Medicare                                          21.0 %       21.4 %        21.2 %      22.2 %
Medicaid                                          15.2         14.0          15.1        13.5
Managed Care and other third-party payors         63.4         63.7          62.8        63.6
Self-pay                                           0.4          0.9           0.9         0.7
Total                                            100.0 %      100.0 %       100.0 %     100.0 %



As shown above, we receive a substantial portion of our revenues from the
Medicare and Medicaid programs. Included in Managed Care and other third-party
payors is operating revenues from insurance companies with which we have
insurance provider contracts, Medicare managed care, insurance companies for
which we do not have insurance provider contracts, workers' compensation
carriers and non-patient service revenue, such as rental income and cafeteria
sales. In the future, we generally expect the portion of revenues

                                       28
--------------------------------------------------------------------------------

received from the Medicare and Medicaid programs to increase over the long-term
due to the general aging of the population and other factors, including health
reform initiatives. There has been a trend toward increased enrollment in
Medicare and Medicaid managed care, which may adversely affect our operating
revenue. We may also be impacted by regulatory requirements imposed on insurers,
such as minimum medical-loss ratios and specific benefit requirements.
Furthermore, in the normal course of business, managed care programs, insurance
companies and employers actively negotiate the amounts paid to hospitals. Our
relationships with payors may be impacted by price transparency initiatives and
out-of-network billing restrictions, including those in the No Surprises Act,
which took effect January 1, 2022. There can be no assurance that we will retain
our existing reimbursement arrangements or that third-party payors will not
attempt to further reduce the rates they pay for our services.

Net operating revenues include amounts estimated by management to be
reimbursable by Medicare and Medicaid under prospective payment systems and
provisions of cost-based reimbursement and other payment methods. In addition,
we are reimbursed by non-governmental payors using a variety of payment
methodologies. Amounts we receive for the treatment of patients covered by
Medicare, Medicaid and non-governmental payors are generally less than our
standard billing rates. We account for the differences between the estimated
program reimbursement rates and our standard billing rates as contractual
allowance adjustments, which we deduct from gross revenues to arrive at net
operating revenues. Final settlements under some of these programs are subject
to adjustment based on administrative review and audit by third parties. We
account for adjustments to previous program reimbursement estimates as
contractual allowance adjustments and report them in the periods that such
adjustments become known. Contractual allowance adjustments related to final
settlements and previous program reimbursement estimates impacted net operating
revenues and net (loss) income by an insignificant amount in each of the three
and six-month periods ended June 30, 2022 and 2021.

The payment rates under the Medicare program for hospital inpatient and
outpatient acute care services are based on prospective payment systems, which
depend upon a patient's diagnosis or the clinical complexity of services
provided to a patient, among other factors. These rates are indexed for
inflation annually, although increases have historically been less than actual
inflation. On August 13, 2021, CMS published the final rule to increase this
index by 2.7% for hospital inpatient acute care services that are reimbursed
under the prospective payment system for federal fiscal year 2022 (which began
October 1, 2021). Together with other changes to payment policies, payment rates
for hospital inpatient acute care services are expected to increase
approximately 2.5%. Hospitals that do not submit required patient quality data
are subject to a reduction in payments. We are complying with this data
submission requirement. Payments may also be affected by various other
adjustments, including those that depend on patient-specific or hospital
specific factors. For example, the "two midnight rule" establishes admission and
medical review criteria for inpatient services limiting when services to
Medicare beneficiaries are payable as inpatient hospital services. Reductions in
the rate of increase or overall reductions in Medicare reimbursement may cause a
decline in the growth of our net operating revenues.

Payment rates under the Medicaid program vary by state. In addition to the base
payment rates for specific claims for services rendered to Medicaid enrollees,
several states utilize supplemental reimbursement programs to make separate
payments that are not specifically tied to an individual's care, some of which
offset a portion of the cost of providing care to Medicaid and indigent
patients. These programs are designed with input from CMS and are funded with a
combination of state and federal resources, including, in certain instances,
fees or taxes levied on the providers. The programs are generally authorized for
a specified period of time and require CMS's approval to be extended. We are
unable to predict whether or on what terms CMS will extend the supplemental
programs in the states in which we operate. Under these supplemental programs,
we recognize revenue and related expenses in the period in which amounts are
estimable and payment is reasonably assured. Reimbursement under these programs
is reflected in net operating revenues and included as Medicaid revenue in the
table above, and fees, taxes or other program related costs are reflected in
other operating expenses.

Results of Operations

Our hospitals offer a broad variety of inpatient and outpatient medical and
surgical services. These include general acute care, emergency room, general and
specialty surgery, critical care, internal medicine, obstetrics, diagnostic
services, psychiatric and rehabilitation services. Historically, the strongest
demand for hospital services generally occurs during January through April and
the weakest demand for these services generally occurs during the summer months.
Accordingly, eliminating the effects of new acquisitions and/or divestitures,
our net operating revenues and earnings have generally been the highest during
the first quarter and lowest during the third quarter.

                                       29
--------------------------------------------------------------------------------


The following tables summarize, for the periods indicated, selected operating
data.

                                               Three Months Ended             Six Months Ended
                                                    June 30,                      June 30,
                                              2022            2021           2022           2021
Operating results, as a percentage of
net operating revenues:
Net operating revenues                          100.0 %         100.0 %        100.0 %        100.0 %
Operating expenses (a)                          (91.4 )         (85.1 )        (89.2 )        (84.5 )
Depreciation and amortization                    (4.5 )          (4.4 )         (4.3 )         (4.5 )
Impairment and (gain) loss on sale of
businesses, net                                     -            (0.1 )         (0.1 )         (0.4 )
Income from operations                            4.1            10.4            6.4           10.6
Interest expense, net                            (7.4 )          (7.2 )         (7.2 )         (7.5 )
Loss from early extinguishment of debt              -            (0.3 )            -           (1.3 )
Equity in earnings of unconsolidated
affiliates                                          -             0.1            0.1            0.2
(Loss) income before income taxes                (3.3 )           3.0           (0.7 )          2.0
Provision for income taxes                       (6.8 )          (1.8 )         (3.7 )         (2.0 )
Net (loss) income                               (10.1 )           1.2           (4.4 )            -
Less: Net income attributable to
noncontrolling interests                         (1.0 )          (1.0 )         (1.0 )         (1.0 )
Net (loss) income attributable to
Community Health
  Systems, Inc. stockholders                    (11.1 )%          0.2 %         (5.4 )%        (1.0 )%



                                                Three Months Ended June 30,             Six Months Ended June 30,
                                                  2022                 2021             2022                2021
Percentage (decrease) increase from prior
year:
Net operating revenues                                  (2.4 )%            19.4 %             0.4 %               8.6 %
Admissions (b)                                          (3.4 )              4.8              (2.5 )              (5.5 )
Adjusted admissions (c)                                 (0.4 )             15.7               0.8                (2.0 )
Average length of stay (d)                                 -                  -               2.1                 6.7
Net (loss) income attributable to
Community Health
  Systems, Inc. stockholders                        (5,533.3 )            (91.4 )          (463.8 )            (166.7 )
Same-store percentage (decrease) increase
from prior year (e):
Net operating revenues                                  (2.6 )%            30.2 %             0.6 %              19.2 %
Admissions (b)                                          (3.5 )             17.0              (1.9 )               5.1
Adjusted admissions (c)                                 (0.5 )             28.5               1.3                 8.7

(a) Operating expenses include salaries and benefits, supplies, other operating

expenses, and lease cost and rent, net of the reduction in operating expenses

through June 30, 2022 and 2021, resulting from the recognition of pandemic

relief funds.

(b) Admissions represents the number of patients admitted for inpatient

treatment.

(c) Adjusted admissions is a general measure of combined inpatient and outpatient

volume. We computed adjusted admissions by multiplying admissions by gross

patient revenues and then dividing that number by gross inpatient revenues.

(d) Average length of stay represents the average number of days inpatients stay

in our hospitals.

(e) Excludes information for businesses sold or closed during each of the

respective periods, as applicable, and one hospital opened in 2022.

Items (b) - (e) are metrics used to manage our performance. These metrics
provide useful insight to investors about the volume and acuity of services we
provide, which aid in evaluating our financial results.

                                       30
--------------------------------------------------------------------------------

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Net operating revenues decreased to $2.9 billion for the three months ended June
30, 2022 compared to $3.0 billion for the three months ended June 30, 2021. Net
operating revenues on a same-store basis from hospitals that were operated
throughout both periods decreased $79 million, or 2.6%, during the three months
ended June 30, 2022, as compared to the three months ended June 30, 2021. On a
period-over-period basis, the decrease in net operating revenues was primarily
attributable to decreased patient volumes, lower acuity of inpatient admissions
and a decline in non-patient revenue, partially offset by increased
reimbursement rates. Non-same-store net operating revenues increased $5 million
during the three months ended June 30, 2022, in comparison to the prior year
period. On a consolidated basis, inpatient admissions decreased by 3.4% and
adjusted admissions decreased by 0.4% during the three months ended June 30,
2022 as compared to the three months ended June 30, 2021. On a same-store basis,
net operating revenues per adjusted admission decreased 2.1%, while inpatient
admissions decreased by 3.5% and adjusted admissions decreased by 0.5% for the
three months ended June 30, 2022, compared to the three months ended June 30,
2021.

Operating costs and expenses, as a percentage of net operating revenues,
increased from 89.6% during the three months ended June 30, 2021 to 95.9% during
the three months ended June 30, 2022. Operating costs and expenses, excluding
depreciation and amortization and impairment and (gain) loss on sale of
businesses, as a percentage of net operating revenues, increased from 85.1% for
the three months ended June 30, 2021 to 91.4% for the three months ended June
30, 2022. Salaries and benefits, as a percentage of net operating revenues,
increased from 42.1% for the three months ended June 30, 2021 to 44.1% for the
three months ended June 30, 2022, primarily due to wage increases driven by
inflation and current competitive labor market conditions. Supplies, as a
percentage of net operating revenues, remained consistent at 16.6% for the three
months ended June 30, 2022 and 2021. Other operating expenses, as a percentage
of net operating revenues, increased from 23.8% for the three months ended June
30, 2021 to 28.3% for the three months ended June 30, 2022, primarily due to
higher rates for and greater utilization of contract labor. Lease cost and rent,
as a percentage of net operating revenues, increased from 2.6% for the three
months ended June 30, 2021 to 2.7% for the three months ended June 30, 2022.
Pandemic relief funds, as a percentage of net operating revenues, were (0.3)%
for the three months ended June 30, 2022, compared to less than (0.1)% for the
three months ended June 30, 2021.

Depreciation and amortization, as a percentage of net operating revenues,
increased to 4.5% for the three months ended June 30, 2022 from 4.4% for the
three months ended June 30, 2021.

There was no impairment and (gain) loss on sale of businesses, net for the three
months ended June 30, 2022, compared to impairment and (gain) loss on sale of
businesses, net, of $2 million for the three months ended June 30, 2021, which
related primarily to divestitures during the period.

Interest expense, net, decreased by $1 million to $218 million for the three
months ended June 30, 2022 compared to $219 million for the three months ended
June 30, 2021. This was primarily due to our debt refinancing activities in
2021.

There was no loss from early extinguishment of debt during the three months
ended June 30, 2022. Loss from early extinguishment of debt of $8 million was
recognized during the three months ended June 30, 2021, as a result of the
refinancing of certain of our outstanding notes.

Equity in earnings of unconsolidated affiliates, as a percentage of net
operating revenues, decreased to less than (0.1)% for the three months ended
June 30, 2022 from (0.1)% for the three months ended June 30, 2021, primarily
due to the sale of our unconsolidated equity interests in Macon Healthcare, LLC
during the three months ended September 30, 2021.

The net results of the above-mentioned changes resulted in (loss) income before
income taxes decreasing $189 million to a loss of $(98) million for the three
months ended June 30, 2022 from $91 million for the three months ended June 30,
2021.

Our provision for income taxes for the three months ended June 30, 2022 and 2021
was $200 million and $54 million, respectively, and the effective tax rates were
(204.1)% and 59.3% for the three months ended June 30, 2022 and 2021,
respectively. The increase in the provision for income taxes for the three
months ended June 30, 2022 compared to the three months ended June 30, 2021 was
primarily due to an increase in non-deductible interest as a result of a decline
in projected adjusted taxable income for 2022 compared to 2021, compounded by an
adverse change in the IRC Section 163(j) limit for deductible interest expense
beginning in 2022. The difference in our effective tax rate for the three months
ended June 30, 2022 compared to the three months ended June 30, 2021 was due to
an increase in the provision for income taxes and reporting loss before income
taxes in the current year period compared to income before income taxes in the
prior year period.

Net (loss) income, as a percentage of net operating revenues, was (10.1)% for
the three months ended June 30, 2022 compared to 1.2% for the three months ended
June 30, 2021.

                                       31
--------------------------------------------------------------------------------

Net income attributable to noncontrolling interests as a percentage of net
operating revenues remained consistent at 1.0% for the three months ended June
30, 2022 and 2021.

Net (loss) income attributable to Community Health Systems, Inc. stockholders
was $(326) million for the three months ended June 30, 2022, compared to $6
million for the three months ended June 30, 2021.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Net operating revenues increased to $6.044 billion for the six months ended June
30, 2022 compared to $6.020 billion for the six months ended June 30, 2021. Net
operating revenues on a same-store basis from hospitals that were operated
throughout both periods increased $34 million, or 0.6%, during the six months
ended June 30, 2022, as compared to the six months ended June 30, 2021. On a
period-over-period basis, the increase in net operating revenues was
attributable to increased reimbursement rates and outpatient service volume,
partially offset by decreased inpatient volume, less favorable payor mix and a
decline in non-patient revenue. Non-same-store net operating revenues decreased
$10 million during the six months ended June 30, 2022, in comparison to the
prior year period. On a consolidated basis, inpatient admissions decreased by
2.5% and adjusted admissions increased by 0.8% during the six months ended June
30, 2022 as compared to the six months ended June 30, 2021. On a same-store
basis, net operating revenues per adjusted admission decreased 0.7%, while
inpatient admissions decreased by 1.9% and adjusted admissions increased by 1.3%
for the six months ended June 30, 2022, compared to the six months ended June
30, 2021.

Operating costs and expenses, as a percentage of net operating revenues,
increased from 89.4% during the six months ended June 30, 2021 to 93.6% during
the six months ended June 30, 2022. Operating costs and expenses, excluding
depreciation and amortization and impairment and (gain) loss on sale of
businesses, as a percentage of net operating revenues, increased from 84.5% for
the six months ended June 30, 2021 to 89.2% for the six months ended June 30,
2022. Salaries and benefits, as a percentage of net operating revenues,
increased from 42.7% for the six months ended June 30, 2021 to 43.4% for the six
months ended June 30, 2022, primarily due to wage increases driven by inflation
and current competitive labor market conditions. Supplies, as a percentage of
net operating revenues, decreased from 16.5% for the six months ended June 30,
2021 to 16.3% for the six months ended June 30, 2022. Other operating expenses,
as a percentage of net operating revenues, increased from 24.1% for the six
months ended June 30, 2021 to 27.8% for the six months ended June 30, 2022,
primarily due to higher rates for and greater utilization of contract labor.
Lease cost and rent, as a percentage of net operating revenues remained
consistent at 2.6% for the six months ended June 30, 2022 and 2021. Pandemic
relief funds, as a percentage of net operating revenues, were (0.9)% for the six
months ended June 30, 2022, compared to (1.4)% for the six months ended June 30,
2021.

Depreciation and amortization, as a percentage of net operating revenues,
decreased to 4.3% for the six months ended June 30, 2022 from 4.5% for the six
months ended June 30, 2021.

Impairment and (gain) loss on sale of businesses, net was expense of $6 million
for the six months ended June 30, 2022, which related to a hospital held for
sale, compared to $23 million for the six months ended June 30, 2021, which
related primarily to divestitures during the period.

Interest expense, net, decreased by $14 million to $435 million for the six
months ended June 30, 2022 compared to $449 million for the six months ended
June 30, 2021. This was primarily due to our debt refinancing activities in
2021.

Loss from early extinguishment of debt of $5 million and $79 million was
recognized during the six months ended June 30, 2022 and 2021, respectively, as
a result of the refinancing of certain of our outstanding notes.

Equity in earnings of unconsolidated affiliates, as a percentage of net
operating revenues, decreased to (0.1)% for the six months ended June 30, 2022
from (0.2)% for the six months ended June 30, 2021, primarily due to the sale of
our unconsolidated equity interests in Macon Healthcare, LLC during the three
months ended September 30, 2021.

The net results of the above-mentioned changes resulted in (loss) income before
income taxes decreasing $170 million to a loss of $(45) million for the six
months ended June 30, 2022 from income of $125 million for the six months ended
June 30, 2021.

Our provision for income taxes for the six months ended June 30, 2022 and 2021
was $223 million and $123 million, respectively, and the effective tax rates
were (495.6)% and 98.4% for the six months ended June 30, 2022 and 2021,
respectively. The increase in the provision for income taxes for the six months
ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily
due to an increase in non-deductible interest as a result of a decline in
projected adjusted taxable income for 2022 compared to 2021, compounded by an
adverse change in the IRC Section 163(j) limit for deductible interest expense
beginning in 2022. The difference in our effective tax rate for the six months
ended June 30, 2022 compared to the six months ended June 30, 2021 was due to an
increase in the provision for income taxes and reporting loss before income
taxes in the current year period compared to income before income taxes in the
prior year period.

                                       32
--------------------------------------------------------------------------------


Net (loss) income, as a percentage of net operating revenues, was (4.4)% for the
six months ended June 30, 2022 compared to less than 0.1% for the six months
ended June 30, 2021.

Net income attributable to noncontrolling interests as a percentage of net
operating revenues remained consistent at 1.0% for the six months ended June 30,
2022 and 2021.

Net loss attributable to Community Health Systems, Inc. stockholders was $(327)
million for the six months ended June 30, 2022, compared to $(58) million for
the six months ended June 30, 2021.

Liquidity and Capital Resources

Net cash provided by operating activities decreased $126 million, from
approximately $280 million for the six months ended June 30, 2021, to
approximately $154 million for the six months ended June 30, 2022. Cash paid for
interest was $410 million during the six months ended June 30, 2022 compared to
$304 million for the six months ended June 30, 2021. Cash paid for income taxes,
net of refunds received, resulted in a net payment of $6 million and $1 million
during the six months ended June 30, 2022 and 2021, respectively.

Net cash used in investing activities was approximately $237 million for the six
months ended June 30, 2022, compared to approximately $255 million for the six
months ended June 30, 2021, a decrease of $18 million. Net cash used in
investing activities during the six months ended June 30, 2022 was primarily
impacted by a decrease of $21 million in cash used for the purchase of property
and equipment, an increase of $4 million in cash proceeds from the sale of
property and equipment, a decrease of $2 million in cash used to purchase other
investments, and a decrease of $1 million in cash used in the net impact of the
purchase and sale of available-for-sale debt and equity securities. These
decreases in cash used in investing activities were partially offset by an
increase of $6 million in cash used to purchase investments in unconsolidated
affiliates and a decrease of $4 million in cash proceeds from dispositions of
hospitals and other ancillary operations.

Our net cash used in financing activities was approximately $78 million for the
six months ended June 30, 2022, compared to approximately $451 million for the
six months ended June 30, 2021, a decrease of $373 million. This was primarily
due to the net effect of our debt repayments, refinancing activities, and cash
paid for deferred financing costs and other debt-related costs during the six
months ended June 30, 2022 and 2021.

Liquidity

Net working capital was approximately $1.0 billion at June 30, 2022 and $1.1
billion at December 31, 2021, respectively. Net working capital decreased by
approximately $81 million between December 31, 2021 and June 30, 2022. The
decrease is primarily due to the decrease in cash and cash equivalents as a
result of cash paid for interest, deferred financing costs and contract labor as
well as a decrease in patient accounts receivable, net, during the six months
ended June 30, 2022, partially offset by an increase in prepaid expenses and
taxes and decreases in accrued employee compensation and other accrued
liabilities.

In addition to cash flows from operations, available sources of capital include
amounts available under the asset-based loan (ABL) credit agreement, or the ABL
Credit Agreement, as amended and restated on November 22, 2021, and anticipated
access to public and private debt markets as well as proceeds from the
disposition of hospitals or other investments such as our minority equity
interests in various businesses, as applicable.

Pursuant to the ABL Credit Agreement, the lenders have extended to CHS/Community
Health Systems, Inc., or CHS, a revolving asset-based loan facility, or the ABL
Facility, in the maximum aggregate principal amount of $1.0 billion, subject to
borrowing base capacity. At June 30, 2022, the available borrowing base under
the ABL Facility was $978 million, of which $84 million was reserved for
outstanding letters of credit and $894 million represented excess availability.
Letters of credit were reduced during the six months ended June 30, 2022 by $19
million due to a reduction in an insurance-related letter of credit. We had no
outstanding borrowings as of June 30, 2022. The issued letters of credit were
primarily in support of potential insurance-related claims and certain bonds.
Principal amounts outstanding under the ABL Facility, if any, will be due and
payable in full on November 22, 2026.

2022 Financing Activity

On February 4, 2022, CHS completed a private offering of $1.535 billion
aggregate principal amount of 5¼% Senior Secured Notes due May 15, 2030, or the
5¼% Senior Secured Notes due 2030. The proceeds of the offering were used to
redeem the 6?% Senior Secured Notes due 2025 on February 4, 2022, and to pay
related fees and expenses. The 5¼% Senior Secured Notes due 2030 bear interest
at a rate of 5.250% per year payable semi-annually in arrears on May 15 and
November 15, commencing on November 15, 2022.

                                       33
--------------------------------------------------------------------------------

Additional Liquidity Information

Our ability to meet the restricted covenants and financial ratios and tests in
the ABL Facility and the indentures governing our outstanding notes can be
affected by events beyond our control, and we cannot assure you that we will
meet those tests. A breach of any of these covenants could result in a default
under the ABL Facility and/or the indentures that govern our outstanding notes.
Upon the occurrence of an event of default under the ABL Facility or indentures
that govern our outstanding notes, all amounts outstanding under the ABL
Facility and the indentures that govern our outstanding notes may become
immediately due and payable and all commitments under the ABL Facility to extend
further credit may be terminated.

As of June 30, 2022, approximately $32 million of our outstanding debt of $12.2
billion is due within the next 12 months.

As previously discussed, we may require an increased level of working capital if
we experience extended billing and collection cycles resulting from ongoing
negative economic conditions and/or factors arising from the COVID-19 pandemic,
which may impact service mix, revenue mix, payor mix and patient volumes, as
well as our ability to collect outstanding receivables. A material increase in
the amount or deterioration in the collectability of accounts receivable will
adversely affect our cash flows and results of operations, requiring an
increased level of working capital.

We believe that internally generated cash flows and current levels of
availability for additional borrowing under the ABL Facility, as well as our
continued access to the capital markets, will be sufficient to finance
acquisitions, capital expenditures, working capital requirements, and any debt
repurchases or other debt repayments we may elect to make or be required to make
through the next 12 months and the foreseeable future thereafter. Pandemic
relief funds that we have received and may continue to receive through various
federal, state and local stimulus or relief programs have been and will continue
to be used according to applicable terms and conditions as reimbursement for
lost revenues or incremental expenses attributable to COVID-19, including
working capital requirements and capital expenditures. In addition, ongoing
negative economic conditions and/or the COVID-19 pandemic have resulted in, and
may continue to result in, significant disruptions of financial and capital
markets, which could reduce our ability to access capital and negatively affect
our liquidity in the future. Additionally, while we have received and may
continue to receive pandemic relief funds and may continue to be able to utilize
pandemic relief funds which have been received, as noted above, there is no
assurance regarding the extent to which we will continue to benefit from these
payments or other stimulus measures. Moreover, we do not currently expect to
receive the same level of pandemic relief payments or benefits in future periods
that we received or realized earlier in the pandemic.

We may elect from time to time to continue to purchase our outstanding debt in
open market purchases, privately negotiated transactions or otherwise. Any such
debt repurchases will depend upon prevailing market conditions, our liquidity
requirements, contractual restrictions, applicable securities laws requirements,
and other factors.

There have been no material changes outside of the ordinary course of business
to our upcoming cash obligations during the six months ended June 30, 2022 from
those disclosed under "Capital Resources" in Management's Discussion and
Analysis of Financial Condition and Results of Operations in our Annual Report
on Form 10-K filed with the SEC on February 17, 2022, or 2021 Form 10-K, except
as discussed above related to debt refinancing activity during 2022.

Capital Resources

Cash expenditures for purchases of facilities and other related businesses were
approximately $4 million for both of the six-month periods ended June 30, 2022
and 2021. Our expenditures for the six months ended June 30, 2022 and 2021 were
primarily related to physician practices and other ancillary services.

Excluding the cost to construct replacement and de novo hospitals, our cash
expenditures for routine capital for the six months ended June 30, 2022 totaled
$144 million compared to $149 million for the six months ended June 30, 2021.
These capital expenditures related primarily to the purchase of additional
equipment, minor renovations and information systems infrastructure. Costs to
construct replacement hospitals totaled $13 million and $34 million for the six
months ended June 30, 2022 and 2021, respectively, primarily related to the
construction of a replacement facility in Fort Wayne, Indiana. During the six
months ended June 30, 2022 and 2021, we also had cash expenditures of $34
million and $29 million, respectively, that represent both planning and
construction costs primarily for one de novo hospital in the Tucson, Arizona
market. This de novo hospital was completed in the first half of 2022 and has 52
beds.

Pursuant to a hospital purchase agreement from our March 1, 2016 acquisition of
Northwest Health - Starke, formerly known as Starke Hospital, we committed to
build a replacement facility in Knox, Indiana. Construction of the replacement
facility for Northwest Health - Starke is required to be completed within five
years of the date we enter into a new lease with Starke County, Indiana, the
hospital lessor, or in the event we do not enter into a new lease with Starke
County, construction shall be completed by September 30, 2026. We have not
entered into a new lease with the lessor for Northwest Health - Starke and
currently anticipate completing

                                       34
--------------------------------------------------------------------------------


construction of the Northwest Health - Starke replacement facility in 2026. The
estimated construction costs, including equipment costs, for the construction of
this replacement facility in Knox, Indiana are currently estimated to be
approximately $15 million.

Reimbursement, Legislative and Regulatory Changes

Ongoing legislative and regulatory efforts, and judicial interpretations, could
reduce or otherwise adversely affect the payments we receive from Medicare and
Medicaid and other payors. Within the statutory framework of the Medicare and
Medicaid programs, there are substantial areas subject to administrative
rulings, interpretations and discretion, and which are at times subject to court
challenges, which may further affect payments made under those programs.
Further, the federal and state governments might, in the future, reduce the
funds available under those programs, require repayment of previously received
funds or require more stringent utilization and quality reviews of hospital
facilities. Additionally, there may be a continued rise in managed care programs
and additional restructuring of the financing and delivery of healthcare in the
United States. These events could cause our future financial results to be
adversely impacted. We cannot estimate the impact of Medicare and Medicaid
reimbursement changes that have been enacted or are under consideration. We
cannot predict whether additional reimbursement reductions will be made or
whether any such changes or other restructuring of the financing and delivery of
healthcare would have a material adverse effect on our business, financial
conditions, results of operations, cash flow, capital resources and liquidity.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations
are based upon our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America, or GAAP. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amount of
assets and liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities at the date of our condensed consolidated
financial statements. Actual results may differ from these estimates under
different assumptions or conditions.

Critical accounting policies are defined as those policies that involve a
significant level of estimation uncertainty and have had or are reasonably
likely to have a material impact on the financial condition or results of
operations of the registrant. We believe that our critical accounting policies
are limited to those described below. The following information should be read
in conjunction with our significant accounting policies included in Note 1 of
the Notes to the Consolidated Financial Statements included under Part II, Item
8 of our 2021 Form 10-K.

Revenue Recognition

Net operating revenues include amounts estimated by management to be
reimbursable by Medicare and Medicaid under prospective payment systems and
provisions of cost-reimbursement and other payment methods. In addition, we are
reimbursed by non-governmental payors using a variety of payment methodologies.
Amounts we receive for treatment of patients covered by these programs are
generally less than the standard billing rates. Explicit price concessions are
recorded for contractual allowances that are calculated and recorded through
internally-developed data collection and analysis tools to automate the monthly
estimation of required contractual allowances. Within this automated system,
payors' historical paid claims data are utilized to calculate the contractual
allowances. This data is automatically updated on a monthly basis. All hospital
contractual allowance calculations are subjected to monthly review by management
to ensure reasonableness and accuracy. We account for the differences between
the estimated program reimbursement rates and the standard billing rates as
contractual allowance adjustments, which is one component of the deductions from
gross revenues to arrive at net operating revenues. The process of estimating
contractual allowances requires us to estimate the amount expected to be
received based on payor contract provisions. The key assumption in this process
is the estimated contractual reimbursement percentage, which is based on payor
classification, historical paid claims data and, when applicable, application of
the expected managed care plan reimbursement based on contract terms.

Due to the complexities involved in these estimates, actual payments we receive
could be different from the amounts we estimate and record. If the actual
contractual reimbursement percentage under government programs and managed care
contracts differed by 1% at June 30, 2022 from our estimated reimbursement
percentage, net income for the six months ended June 30, 2022 would have changed
by approximately $87 million, and net accounts receivable at June 30, 2022 would
have changed by $112 million. Final settlements under some of these programs are
subject to adjustment based on administrative review and audit by third parties.
We account for adjustments to previous program reimbursement estimates as
contractual allowance adjustments and report them in the periods that such
adjustments become known. Contractual allowance adjustments related to final
settlements and previous program reimbursement estimates impacted net operating
revenues and net (loss) income by an insignificant amount for each of the three
and six-month periods ended June 30, 2022 and 2021.

                                       35
--------------------------------------------------------------------------------

Patient Accounts Receivable

Substantially all of our accounts receivable are related to providing healthcare
services to patients at our hospitals and affiliated businesses. Collection of
these accounts receivable is our primary source of cash and is critical to our
operating performance. Our primary collection risks relate to uninsured patients
and outstanding patient balances for which the primary insurance payor has paid
some but not all of the outstanding balance, with the remaining outstanding
balance (generally deductibles and co-payments) owed by the patient. For all
procedures scheduled in advance, our policy is to verify insurance coverage
prior to the date of the procedure. Insurance coverage is not verified in
advance of procedures for walk-in and emergency room patients.

We estimate any adjustments to the transaction price for implicit price
concessions by reserving a percentage of all self-pay accounts receivable
without regard to aging category, based on collection history, adjusted for
expected recoveries and any anticipated changes in trends. Our ability to
estimate the transaction price and any implicit price concessions is not
impacted by not utilizing an aging of our net accounts receivable as we believe
that substantially all of the risk exists at the point in time such accounts are
identified as self-pay. The percentage used to reserve for all self-pay accounts
is based on our collection history. We believe that we collect substantially all
of our third-party insured receivables, which include receivables from
governmental agencies.

Patient accounts receivable can be impacted by the effectiveness of our
collection efforts and, as described in our significant accounting policies
included in Note 1 of the Notes to Condensed Consolidated Financial Statements
included under Part I, Item 1 of this Form 10-Q, numerous factors may affect the
net realizable value of accounts receivable. If the actual collection percentage
differed by 1% at June 30, 2022 from our estimated collection percentage as a
result of a change in expected recoveries, net income for the six months ended
June 30, 2022 would have changed by $40 million, and net accounts receivable at
June 30, 2022 would have changed by $51 million. We also continually review our
overall reserve adequacy by monitoring historical cash collections as a
percentage of trailing net operating revenues, as well as by analyzing current
period net revenue and admissions by payor classification, days revenue
outstanding, the composition of self-pay receivables between pure self-pay
patients and the patient responsibility portion of third-party insured
receivables and the impact of recent acquisitions and dispositions.

Our policy is to write-off gross accounts receivable if the balance is under
$10.00 or when such amounts are placed with outside collection agencies. We
believe this policy accurately reflects our ongoing collection efforts and is
consistent with industry practices. We had approximately $1.8 billion at June
30, 2022, and $2.2 billion at December 31, 2021, being pursued by various
outside collection agencies. We expect to collect less than 4%, net of estimated
collection fees, of the amounts being pursued by outside collection agencies. As
these amounts have been written-off, they are not included in our accounts
receivable. Collections on amounts previously written-off are recognized as a
recovery of net operating revenues when received. However, we take into
consideration estimated collections of these future amounts written-off in
determining the implicit price concessions used to measure the transaction price
for the applicable portfolio of patient accounts receivable.

All of the following information is derived from our hospitals, excluding
clinics, unless otherwise noted.

Patient accounts receivable from our hospitals represent approximately 98% of
our total consolidated accounts receivable.

Days revenue outstanding, adjusted for the impact of receivables for state
Medicaid supplemental payment programs and divested facilities, was 58 days and
55 days at June 30, 2022 and December 31, 2021, respectively.

Total gross accounts receivable (prior to allowance for contractual adjustments
and implicit price concessions) was approximately $16.0 billion and $16.2
billion as of June 30, 2022 and December 31, 2021, respectively. The approximate
percentage of total gross accounts receivable (prior to allowance for
contractual adjustments and implicit price concessions) summarized by aging
categories is as follows:

As of June 30, 2022:
                                         % of Gross Receivables
                         0 - 90        90 - 180       180 - 365       Over 365
        Payor             Days           Days           Days            Days
Medicare                      12 %             - %             - %            - %
Medicaid                       7 %             1 %             1 %            1 %
Managed Care and Other        33 %             6 %             4 %            3 %
Self-Pay                       8 %             5 %             9 %           10 %




                                       36

--------------------------------------------------------------------------------

As of December 31, 2021:
                                           % of Gross Receivables
                           0 - 90        90 - 180       180 - 365       Over 365
         Payor              Days           Days           Days            Days
Medicare                        12 %             1 %             - %            - %
Medicaid                         7 %             1 %             1 %            1 %
Managed Care and Other          33 %             5 %             3 %            2 %
Self-Pay                         8 %             5 %             9 %           12 %

The approximate percentage of total gross accounts receivable (prior to
allowances for contractual adjustments and implicit price concessions)
summarized by payor is as follows:

                        June 30,      December 31,
                          2022            2021
Insured receivables          68.4 %            66.3 %
Self-pay receivables         31.6              33.7
Total                       100.0 %           100.0 %



The combined total at our hospitals and clinics for the estimated implicit price
concessions for self-pay accounts receivable and allowances for other self-pay
discounts and contractuals, as a percentage of gross self-pay receivables, was
approximately 91% at both June 30, 2022 and December 31, 2021. If the
receivables that have been written-off, but where collections are still being
pursued by outside collection agencies, were included in both the allowances and
gross self-pay receivables specified above, the percentage of combined
allowances to total self-pay receivables would have been 93% at both June 30,
2022 and December 31, 2021.

Goodwill

Taking into account recent developments as discussed below, we believe that our
accounting policies with respect to the impairment of goodwill and other
intangibles currently constitutes a critical accounting policy. Goodwill
represents the excess of the fair value of the consideration conveyed in an
acquisition over the fair value of net assets acquired. Goodwill is evaluated
for impairment annually and when an event occurs or circumstances change that,
more likely than not, reduce the fair value of the reporting unit below its
carrying value. We performed our last annual goodwill impairment evaluation
during the fourth quarter of 2021 using the October 31, 2021 measurement date,
which indicated no impairment.

The determination of fair value in our goodwill impairment analysis is based on
an estimate of fair value for the hospital operations reporting unit utilizing
known and estimated inputs at the evaluation date. Some of those inputs include,
but are not limited to, the most recent price of our common stock or fair value
of our long-term debt, our recent financial results, estimates of future revenue
and expense growth, estimated market multiples, expected capital expenditures,
income tax rates, and costs of invested capital.

At June 30, 2022, we had approximately $4.2 billion of goodwill recorded, all of
which resides at our hospital operations reporting unit. A detailed evaluation
of potential impairment indicators was performed as of June 30, 2022, which
specifically considered declines in the fair market value of our senior secured
and unsecured notes and common stock during the six months ended June 30, 2022
as well as macroeconomic conditions and our recent financial results, including
the effect of increased wage and contract labor expense. On the basis of
available evidence, as of June 30, 2022, we concluded that the fair value of the
reporting unit was not more likely than not reduced to an amount less than its
carrying value.

Future estimates of fair value could be adversely affected if the actual outcome
of one or more of the assumptions described above changes materially in the
future, including a decline in or volatility of our stock price and the fair
value of our long-term debt, lower than expected hospital volumes, higher market
interest rates, increased operating costs or other adverse impacts on our
financial results. Such changes impacting the calculation of our fair value
could result in a material impairment charge in the future. Moreover, the recent
developments described in the immediately preceding paragraph have increased our
risk of future goodwill impairment, which could be material.

                                       37
--------------------------------------------------------------------------------

Professional Liability Claims

As part of our business of providing healthcare services, we are subject to
legal actions alleging liability on our part. We accrue for losses resulting
from such liability claims, as well as loss adjustment expenses that are
out-of-pocket and directly related to such liability claims. These direct
out-of-pocket expenses include fees of outside counsel and experts. We do not
accrue for costs that are part of our corporate overhead, such as the costs of
our in-house legal and risk management departments. The losses resulting from
professional liability claims primarily consist of estimates for known claims,
as well as estimates for incurred but not reported claims. The estimates are
based on specific claim facts, our historical claim reporting and payment
patterns, the nature and level of our hospital operations, and actuarially
determined projections. The actuarially determined projections are based on our
actual claim data, including historic reporting and payment patterns which have
been gathered over an approximately 20-year period. As discussed below, since we
purchase excess insurance on a claims-made basis that transfers risk to
third-party insurers, the liability we accrue does include an amount for the
losses covered by our excess insurance. We also record a receivable for the
expected reimbursement of losses covered by our excess insurance. Since we
believe that the amount and timing of our future claims payments are reliably
determinable, we discount the amount we accrue for losses resulting from
professional liability claims using the risk-free interest rate corresponding to
the timing of our expected payments.

The net present value of the projected payments was discounted using a
weighted-average risk-free rate of approximately 3.4% and 1.8% at June 30, 2022
and December 31, 2021, respectively. This liability is adjusted for new claims
information in the period such information becomes known to us. Professional
malpractice expense includes the losses resulting from professional liability
claims and loss adjustment expense, as well as excess insurance premiums, and is
presented within other operating expenses in the accompanying condensed
consolidated statements of (loss) income.

Our processes for obtaining and analyzing claims and incident data are
standardized across all of our businesses and have been consistent for many
years. We monitor the outcomes of the medical care services that we provide and
for each reported claim, we obtain various information concerning the facts and
circumstances related to that claim. In addition, we routinely monitor current
key statistics and volume indicators in our assessment of utilizing historical
trends. The average lag period between claim occurrence and payment of a final
settlement is between three and four years, although the facts and circumstances
of individual claims could result in the timing of such payments being different
from this average. Since claims are paid promptly after settlement with the
claimant is reached, settled claims represent less than 1.0% of the total
liability at the end of any period.

For purposes of estimating our individual claim accruals, we utilize specific
claim information, including the nature of the claim, the expected claim amount,
the year in which the claim occurred and the laws of the jurisdiction in which
the claim occurred. Once the case accruals for known claims are determined,
information is stratified by loss layers and retentions, accident years,
reported years and geography. Several actuarial methods are used against this
data to produce estimates of ultimate paid losses and reserves for incurred but
not reported claims. Each of these methods uses our company-specific historical
claims data and other information. Company-specific data includes information
regarding our business, including historical paid losses and loss adjustment
expenses, historical and current case loss reserves, actual and projected
hospital statistical data, a variety of hospital census information, employed
physician information, professional liability retentions for each policy year,
geographic information and other data. Significant assumptions are made on the
basis of the aforementioned information in estimating reserves for incurred but
not reported claims. A 1% change in assumptions for either severity or frequency
as of June 30, 2022 would have increased or decreased the reserve between $10
million to $20 million.

Based on these analyses, we determine our estimate of the professional liability
claims. The determination of management's estimate, including the preparation of
the reserve analysis that supports such estimate, involves subjective judgment
of management. Changes in reserve data or the trends and factors that influence
reserve data may signal fundamental shifts in our future claim development
patterns or may simply reflect single-period anomalies. Even if a change
reflects a fundamental shift, the full extent of the change may not become
evident until years later. Moreover, since our methods and models use different
types of data and we select our liability from the results of all of these
methods, we typically cannot quantify the precise impact of such factors on our
estimates of the liability. Due to our standardized and consistent processes for
handling claims and the long history and depth of our company-specific data, our
methodologies have historically produced reliably determinable estimates of
ultimate paid losses. Management considers any changes in the amount and pattern
of its historical paid losses up through the most recent reporting period to
identify any fundamental shifts or trends in claim development experience in
determining the estimate of professional liability claims. However, due to the
subjective nature of this estimate and the impact that previously unforeseen
shifts in actual claim experience can have, future estimates of professional
liability could be adversely impacted when actual paid losses develop
unexpectedly based on assumptions and settlement events that were not previously
known or anticipated.

We are primarily self-insured for professional liability claims; however, we
obtain excess insurance that transfers the risk of loss to a third-party insurer
for claims in excess of our self-insured retentions. Our excess insurance is
underwritten on a claims-made basis. For claims reported prior to June 1, 2002,
substantially all of our professional and general liability risks were subject
to a less than $1 million per occurrence self-insured retention and for claims
reported from June 1, 2002 through June 1, 2003, these self-insured

                                       38
--------------------------------------------------------------------------------


retentions were $2 million per occurrence. Substantially all claims reported
after June 1, 2003 and before June 1, 2005 are self-insured up to $4 million per
claim. Substantially all claims reported on or after June 1, 2005 and before
June 1, 2014 are self-insured up to $5 million per claim. Substantially all
claims reported on or after June 1, 2014 and before June 1, 2018 are
self-insured up to $10 million per claim. Substantially all claims reported on
or after June 1, 2018 are self-insured up to $15 million per claim. Management,
on occasion, has selectively increased the insured risk at certain hospitals
based upon insurance pricing and other factors and may continue that practice in
the future.

Excess insurance for all hospitals has been purchased through commercial
insurance companies and generally covers us for liabilities in excess of the
self-insured retentions. The excess coverage consists of multiple layers of
insurance, the sum of which totals up to $95 million per occurrence and in the
aggregate for claims reported on or after June 1, 2003, up to $145 million per
occurrence and in the aggregate for claims reported on or after January 1, 2008,
up to $195 million per occurrence and in the aggregate for claims reported on or
after June 1, 2010, and up to at least $216 million per occurrence and in the
aggregate for claims reported on or after June 1, 2015. In addition, for
integrated occurrence malpractice claims, there is an additional $50 million of
excess coverage for claims reported on or after June 1, 2014 and an additional
$75 million of excess coverage for claims reported on or after June 1, 2015
through June 1, 2020. The $75 million in integrated occurrence coverage will
also apply to claims reported between June 1, 2020 and June 1, 2023 for events
that occurred prior to June 1, 2020 but which were not previously known or
reported. For certain policy years prior to June 1, 2014, if the first aggregate
layer of excess coverage becomes fully utilized, then the self-insured retention
will increase to $10 million per claim for any subsequent claims in that policy
year until our total aggregate coverage is met. Beginning June 1, 2018, this
drop-down provision in the excess policies attaches over the $15 million per
claim self-insured retention.

Effective June 1, 2014, the hospitals acquired from Health Management
Associates, Inc., or HMA, were insured on a claims-made basis as described above
and through commercial insurance companies as described above for substantially
all claims reported on or after June 1, 2014 except for physician-related claims
with an occurrence date prior to June 1, 2014. Prior to June 1, 2014, the former
HMA hospitals obtained insurance coverage through a wholly-owned captive
insurance subsidiary and a risk retention group subsidiary which are domiciled
in the Cayman Islands and South Carolina, respectively. Those insurance
subsidiaries, which are collectively referred to as the "Insurance
Subsidiaries," provided (i) claims-made coverage to all of the former HMA
hospitals and (ii) occurrence-basis coverage to most of the physicians employed
by the former HMA hospitals. The employed physicians not covered by the
Insurance Subsidiaries generally maintained claims-made policies with unrelated
third party insurance companies. To mitigate the exposure of the program
covering the former HMA hospitals and other healthcare facilities, the Insurance
Subsidiaries bought claims-made reinsurance policies from unrelated third
parties for claims above self-retention levels of $10 million or $15 million per
claim, depending on the policy year.

There were no significant changes in our estimate of the reserve for
professional liability claims during the six months ended June 30, 2022.

Income Taxes

We must make estimates in recording provision for income taxes, including
determination of deferred tax assets and deferred tax liabilities and any
valuation allowances that might be required against the deferred tax assets. We
believe that future income will enable us to realize certain deferred tax
assets, subject to the valuation allowance we have established.

The total amount of unrecognized benefit that would impact the effective tax
rate, if recognized, was less than $1 million as of June 30, 2022. A total of
less than $1 million of interest and penalties is included in the amount of
liability for uncertain tax positions at June 30, 2022. It is our policy to
recognize interest and penalties related to unrecognized benefits in our
condensed consolidated statements of (loss) income as income tax expense.

It is possible the amount of unrecognized tax benefit could change in the next
12 months as a result of a lapse of the statute of limitations and settlements
with taxing authorities; however, we do not anticipate the change will have a
material impact on our consolidated results of operations or consolidated
financial position.

Our federal income tax return for the 2018 tax year remains under examination by
the Internal Revenue Service. We believe the result of this examination will not
be material to our consolidated results of operations or consolidated financial
position. In addition, we have extended our federal statute of limitations
through December 31, 2023 for the tax period ended December 31, 2018.

                                       39
--------------------------------------------------------------------------------

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, Section 21E of the Securities
Exchange Act of 1934, as amended, and the Private Securities Litigation Reform
Act of 1995 that involve risks and uncertainties. Statements that are predictive
in nature, that depend upon or refer to future events or conditions or that
include words such as "expects," "anticipates," "intends," "plans," "believes,"
"estimates," "thinks," and similar expressions are forward-looking statements.
These statements involve known and unknown risks, uncertainties, and other
factors that may cause our actual results and performance to be materially
different from any future results or performance expressed or implied by these
forward-looking statements. A number of factors could affect the future results
of the Company or the healthcare industry generally and could cause the
Company's expected results to differ materially from those expressed in this
Form 10-Q. These factors include, among other things:

• developments related to COVID-19, including, without limitation, related to

the length and severity of the pandemic; the volume of canceled or rescheduled

procedures; and the spread of potentially more contagious and/or virulent

forms of the virus, including variants of the virus for which currently

available vaccines, treatments and tests may not be effective or authorized;

• uncertainty regarding the magnitude and timing of any future payments or

benefits we may receive or realize under the CARES Act, the PPPHCE Act, the

CAA, the ARPA and any other future stimulus measures related to COVID-19;

• general economic and business conditions, both nationally and in the regions

in which we operate, including inflationary pressures that have significantly

increased and may continue to significantly increase our expenses, the

extremely competitive labor market and labor shortages, and supply chain

shortages and disruptions, as well as the current and/or potential future

adverse impact of such economic conditions and other factors on our net

operating revenues (including our service mix, revenue mix, payor mix and/or

patient volumes) and our ability to collect outstanding receivables;

• the impact of current or future federal and state health reform initiatives,

including the Affordable Care Act, and the potential for changes to the

Affordable Care Act, its implementation or its interpretation (including

through executive orders and court challenges);

• the extent to and manner in which states support increases, decreases or

changes in Medicaid programs, implement health insurance exchanges or alter

the provision of healthcare to state residents through legislation, regulation

or otherwise;

• the future and long-term viability of health insurance exchanges and potential

changes to the beneficiary enrollment process;

• risks associated with our substantial indebtedness, leverage and debt service

    obligations, including our ability to refinance such indebtedness on
    acceptable terms or to incur additional indebtedness, and our ability to
    remain in compliance with debt covenants;


  • demographic changes;

• changes in, or the failure to comply with, federal, state or local laws or

governmental regulations affecting our business, including any such laws or

governmental regulations which are adopted in connection with the COVID-19

    pandemic;


  • potential adverse impact of known and unknown legal, regulatory and

governmental proceedings and other loss contingencies, including governmental

investigations and audits, and federal and state false claims act litigation;

• our ability, where appropriate, to enter into and maintain provider

arrangements with payors and the terms of these arrangements, which may be

further affected by the increasing consolidation of health insurers and

managed care companies and vertical integration efforts involving payors and

healthcare providers;

• changes in, or the failure to comply with, contract terms with payors and

changes in reimbursement policies or rates paid by federal or state healthcare

programs or commercial payors;

• any security breaches, cyber-attacks, loss of data, other cybersecurity

threats or incidents, and any actual or perceived failures to comply with

legal requirements governing the privacy and security of health information or

other regulated, sensitive or confidential information, or legal requirements

regarding data privacy or data protection;

• any potential impairments in the carrying value of goodwill, other intangible

assets, or other long-lived assets, or changes in the useful lives of other

intangible assets;

• changes in inpatient or outpatient Medicare and Medicaid payment levels and

methodologies;

• the effects related to the implementation of the sequestration spending

reductions pursuant to both the Budget Control Act of 2011 and the

Pay-As-You-Go Act of 2010 and the potential for future deficit reduction

legislation;

• increases in the amount and risk of collectability of patient accounts

receivable, including decreases in collectability which may result from, among

other things, self-pay growth and difficulties in recovering payments for

which patients are responsible, including co-pays and deductibles;

                                       40
--------------------------------------------------------------------------------

• the efforts of insurers, healthcare providers, large employer groups and

others to contain healthcare costs, including the trend toward value-based

    purchasing;


  • the impact of competitive labor market conditions and the shortage of

experienced nurses, including in connection with our ability to hire and

retain qualified nurses, physicians, other medical personnel and key

management, and increased labor expenses as a result of such competitive labor

market conditions, inflation and competition for such positions;

• any failure to obtain medical supplies or pharmaceuticals at favorable prices;

• liabilities and other claims asserted against us, including self-insured

    malpractice claims;


  • competition;

• trends toward treatment of patients in less acute or specialty healthcare

settings, including ambulatory surgery centers or specialty hospitals or via

    telehealth;


  • changes in medical or other technology;


  • changes in GAAP;

• the availability and terms of capital to fund any additional acquisitions or

replacement facilities or other capital expenditures;

• our ability to successfully make acquisitions or complete divestitures, our

ability to complete any such acquisitions or divestitures on desired terms or

at all, the timing of the completion of any such acquisitions or divestitures,

and our ability to realize the intended benefits from any such acquisitions or

divestitures;

• the impact that changes in our relationships with joint venture or syndication

    partners could have on effectively operating our hospitals or ancillary
    services or in advancing strategic opportunities;

• our ability to successfully integrate any acquired hospitals and/or outpatient

facilities, or to recognize expected synergies from acquisitions;

• the impact of seasonal severe weather conditions and climate change, as well

as the timing and amount of insurance recoveries in relation to severe weather

events;

• our ability to obtain adequate levels of insurance, including cyber, general

    liability, professional liability, and directors and officers liability
    insurance;

• timeliness of reimbursement payments received under government programs;

• effects related to pandemics, epidemics, or outbreaks of infectious diseases,

including the coronavirus causing the disease known as COVID-19;

• any failure to comply with our obligations under license or technology

agreements;

• challenging economic conditions in non-urban communities in which we operate;

• any developments with respect to the final auditing and reporting requirements

of, or other adverse developments with respect to, the Corporate Integrity

    Agreement to which we are subject;


  • the concentration of our revenue in a small number of states;

• our ability to realize anticipated cost savings and other benefits from our

current strategic and operational cost savings initiatives;

• any changes in or interpretations of income tax laws and regulations; and

• the risk factors set forth in our 2021 Form 10-K and our other public filings

with the SEC.

Although we believe that these forward-looking statements are based upon
reasonable assumptions, these assumptions are inherently subject to significant
regulatory, economic and competitive uncertainties and contingencies, which are
difficult or impossible to predict accurately and may be beyond our control.
Accordingly, we cannot give any assurance that our expectations will in fact
occur, and we caution that actual results may differ materially from those in
the forward-looking statements. Given these uncertainties, prospective investors
are cautioned not to place undue reliance on these forward-looking statements.
These forward-looking statements are made as of the date of this filing. We
undertake no obligation to revise or update any forward-looking statements, or
to make any other forward-looking statements, whether as a result of new
information, future events or otherwise.

                                       41

--------------------------------------------------------------------------------