HCA HEALTHCARE, INC. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations

The accompanying consolidated financial statements present certain information
with respect to the financial position, results of operations and cash flows of
HCA Healthcare, Inc. which should be read in conjunction with the following
discussion and analysis. The terms "HCA," "Company," "we," "our," or "us," as
used herein, refer to HCA Healthcare, Inc. and its affiliates. The term
"affiliates" means direct and indirect subsidiaries of HCA Healthcare, Inc. and
partnerships and joint ventures in which such subsidiaries are partners.

Forward-Looking Statements

This annual report on Form 10-K includes certain disclosures that contain
"forward-looking statements," within the meaning of the federal securities laws,
which involve risks and uncertainties. Forward-looking statements include
statements regarding expected share-based compensation expense, expected capital
expenditures, expected dividends, expected share repurchases, expected net claim
payments, expected inflationary pressures and all other statements that do not
relate solely to historical or current facts, and can be identified by the use
of words like "may," "believe," "will," "expect," "project," "estimate,"
"anticipate," "plan," "initiative" or "continue." These forward-looking
statements are based on our current plans and expectations and are subject to a
number of known and unknown uncertainties and risks, many of which are beyond
our control, which could significantly affect current plans and expectations and
our future financial position and results of operations. These factors include,
but are not limited to, (1) developments related to COVID-19, including, without
limitation, the length and severity of its impact and the spread of virus
strains with new epidemiological characteristics; the volume of canceled or
rescheduled procedures and the volume and acuity of COVID-19 patients cared for
across our health systems; measures we are taking to respond to COVID-19; the
impact and terms (including the termination or expiration) of government and
administrative regulation and stimulus and relief measures (including the
Families First Coronavirus Response Act, the Coronavirus Aid, Relief, and
Economic Security ("CARES") Act, the Paycheck Protection Program and Health Care
Enhancement Act, the Consolidated Appropriations Act, 2021, the American Rescue
Plan Act of 2021 ("ARPA") and other enacted and potential future legislation)
and whether various stimulus and relief programs continue or new similar
programs are enacted in the future; changes in revenues due to declining patient
volumes, changes in payer mix, deteriorating macroeconomic conditions (including
increases in uninsured and underinsured patients) and capacity constraints;
potential increased expenses related to inflation or labor, supply chain or
other expenditures; supply shortages and disruptions; and the timing,
availability and adoption of effective medical treatments and vaccines
(including boosters), (2) the impact of our substantial indebtedness and the
ability to refinance such indebtedness on acceptable terms, (3) the impact of
current and future federal and state health reform initiatives and possible
changes to other federal, state or local laws and regulations affecting the
health care industry, including but not limited to, the Patient Protection and
Affordable Care Act, as amended by the Health Care and Education Reconciliation
Act of 2010 (collectively, the "Affordable Care Act"), additional changes to the
Affordable Care Act, its implementation, or interpretation (including through
executive orders and court challenges), and proposals to expand coverage of
federally-funded insurance programs as an alternative to private insurance or
establish a single-payer system (such reforms often referred to as "Medicare for
All"), (4) the effects related to the implementation of sequestration spending
reductions required under the Budget Control Act of 2011, related legislation
extending these reductions and those required under the Pay-As-You-Go Act of
2010 ("PAYGO Act") as a result of the federal budget deficit impact of the ARPA,
and the potential for future deficit reduction legislation that may alter these
spending reductions, which include cuts to Medicare payments, or create
additional spending reductions, (5) increases in the amount and risk of
collectability of uninsured accounts and deductibles and copayment amounts for
insured accounts, (6) the ability to achieve operating and financial targets,
and attain expected levels of patient volumes and control the costs of providing
services, (7) possible changes in Medicare, Medicaid and other state programs,
including Medicaid supplemental payment programs or Medicaid waiver programs,
that may impact reimbursements to health care providers and insurers and the
size of the uninsured or underinsured population, (8) personnel related capacity
constraints; increases in wages and the ability to attract, utilize and retain
qualified management and other personnel, including affiliated physicians,
nurses and medical and technical support personnel; and workforce disruptions,
(9) the highly competitive nature of the health care business, (10) changes in
service mix, revenue mix and surgical volumes, including potential declines in
the population covered under third-party payer agreements, the ability to enter
into and renew third-party payer provider agreements on acceptable terms and the
impact of consumer-driven health plans and physician utilization trends and
practices, (11) the efforts of health insurers, health care providers, large
employer groups and others to contain health care costs, (12) the outcome of our
continuing efforts to monitor, maintain and comply with appropriate laws,
regulations, policies and procedures, (13) the availability and terms of capital
to fund the expansion of our business and improvements to our existing
facilities, (14) changes in accounting practices, (15) changes in general
economic conditions nationally and regionally in our markets, including
inflation and economic and business conditions (and the impact thereof on the
economy and financial markets), (16) the emergence of and effects related to
pandemics, epidemics and infectious diseases, (17) future divestitures which may
result in charges and possible impairments of long-lived assets, (18) changes in
business strategy or development plans, (19) delays in receiving payments for

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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Forward-Looking Statements (continued)

services provided, (20) the outcome of pending and any future tax audits,
disputes and litigation associated with our tax positions, (21) potential
adverse impact of known and unknown government investigations, litigation and
other claims that may be made against us, (22) the impact of potential
cybersecurity incidents or security breaches, (23) our ongoing ability to
demonstrate meaningful use of certified electronic health record ("EHR")
technology and the impact of interoperability requirements, (24) the impact of
natural disasters, such as hurricanes and floods, physical risks from climate
change or similar events beyond our control, (25) changes in U.S. federal,
state, or foreign tax laws including interpretive guidance that may be issued by
taxing authorities or other standard setting bodies, and (26) other risk factors
described in this annual report on Form 10-K. As a consequence, current plans,
anticipated actions and future financial position and results of operations may
differ from those expressed in any forward-looking statements made by or on
behalf of HCA. You are cautioned not to unduly rely on such forward-looking
statements when evaluating the information presented in this report, which
forward-looking statements reflect management's views only as of the date of
this report. We undertake no obligation to revise or update any forward-looking
statements, whether as a result of new information, future events or otherwise.

COVID-19

We believe the extent of COVID-19's impact on our operating results and
financial condition has been and could continue to be driven by many factors,
most of which are beyond our control and ability to forecast. Because of these
uncertainties, we cannot estimate how long or to what extent COVID-19 will
impact our operations.

2022 Operations Summary

Net income attributable to HCA Healthcare, Inc. totaled $5.643 billion, or
$19.15 per diluted share, for 2022, compared to $6.956 billion, or $21.16 per
diluted share, for 2021. The 2022 results include gains on sales of facilities
of $1.301 billion, or $2.46 per diluted share, and losses on retirement of debt
of $78 million, or $0.20 per diluted share. The 2021 results include gains on
sales of facilities of $1.620 billion, or $3.69 per diluted share, and losses on
retirement of debt of $12 million, or $0.03 per diluted share. Our provisions
for income taxes for 2022 and 2021 include tax benefits of $77 million, or $0.26
per diluted share, and $119 million, or $0.36 per diluted share, respectively,
related to employee equity award settlements. All "per diluted share"
disclosures are based upon amounts net of the applicable income taxes. Shares
used for diluted earnings per share were 294.666 million shares and 328.752
million shares for the years ended December 31, 2022 and 2021, respectively.
During 2022 and 2021, we repurchased 30.747 million and 37.812 million shares,
respectively, of our common stock.

Revenues increased to $60.233 billion for 2022 from $58.752 billion for 2021.
Revenues increased 2.5% and 3.2%, respectively, on a consolidated basis and on a
same facility basis for 2022, compared to 2021. The consolidated revenues
increase can be attributed to the combined impact of a 0.4% increase in revenue
per equivalent admission and a 2.1% increase in equivalent admissions. The same
facility revenues increase resulted from the net impact of a 3.3% increase in
equivalent admissions and a 0.1% decline in revenue per equivalent admission.

During 2022, consolidated admissions declined 0.7% and same facility admissions
increased 0.5%, compared to 2021. Inpatient surgical volumes were flat on a
consolidated basis and increased 0.9% on a same facility basis during 2022,
compared to 2021. Outpatient surgical volumes increased 1.5% on a consolidated
basis and increased 1.8% on a same facility basis during 2022, compared to 2021.
Emergency room visits increased 5.9% on a consolidated basis and increased 7.6%
on a same facility basis during 2022, compared to 2021.

The estimated cost of total uncompensated care increased $141 million for 2022,
compared to 2021. Consolidated and same facility uninsured admissions declined
6.0% and 4.6%, respectively, and consolidated and same facility uninsured
emergency room visits increased 4.4% and 6.6%, respectively, for 2022, compared
to 2021.

Interest expense totaled $1.741 billion for 2022, compared to $1.566 billion for
2021. The $175 million increase in interest expense for 2022 was primarily due
to an increase in the average debt balance, which was partially offset by a
decline in the average effective interest rate.

Cash flows from operating activities declined $437 million, from $8.959 billion
for 2021 to $8.522 billion for 2022. The decline in cash flows from operating
activities was related primarily to a negative change in working capital items
of $649 million, mainly from a decline in accounts payable and accrued expenses,
and a decline in net income of $687 million, excluding gains on sales of
facilities and losses on retirement of debt, offset by a decline in cash
payments for interest and income taxes of $847 million for 2022 compared to
2021.
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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Business Strategy

We are committed to providing the communities we serve with high quality,
convenient and cost-effective health care while growing our business and
creating long-term value for our stockholders. We strive to be the health care
system of choice in the communities we serve by developing comprehensive
networks locally and supporting these networks with enterprise expertise and
economies of scale. Our strategy is organized around a framework that seeks to
drive sustained growth by delivering operational excellence, attracting
exceptional physicians and other health care professionals, developing
comprehensive services, creating greater access, and coordinating higher quality
care for patients. To achieve these objectives, we align our efforts around the
following growth agenda:

Grow Our Presence in Existing Markets. We believe we are well positioned in a
number of large and growing markets that will allow us the opportunity to
generate long-term, attractive growth through the expansion of our presence in
these markets. We plan to continue recruiting and strategically collaborating
with the physician community and developing comprehensive service lines such as
cardiology, neurology, oncology, orthopedics and women's services. Additional
components of our growth strategy include providing access and convenience
through developing various outpatient facilities, including, but not limited to
surgery centers, urgent care clinics, freestanding emergency care facilities,
imaging centers and home health and hospice services, as well as seeking to
improve coordination of care and patient retention across our markets.

Achieve Industry-Leading Performance in Clinical, Operational and Satisfaction
Measures. Achieving high levels of patient safety, patient satisfaction and
clinical quality are central goals of our business. To achieve these goals, we
have implemented a number of initiatives including infection reduction
initiatives, hospitalist programs, advanced health information technology and
evidence-based medicine programs. We routinely analyze operational practices
from our best-performing hospitals to identify ways to implement
organization-wide performance improvements and reduce clinical variation. We
believe these initiatives will continue to improve patient care, help us achieve
cost efficiencies and favorably position us in an environment where our
constituents are increasingly focused on quality, efficacy and efficiency.

Recruit and Retain Physicians and Other Health Care Professionals to Meet the
Need for High Quality Health Services. We depend on the quality and dedication
of the health care providers and other team members who serve at our facilities.
We believe a critical component of our growth strategy is our ability to
successfully recruit and strategically collaborate with physicians and other
health care professionals to provide high quality care. We attract and retain
physicians and other health care professionals by providing high quality,
convenient facilities with advanced technology, by expanding our specialty
services and by building our outpatient operations. We believe our continued
investment in the employment, recruitment and retention of physicians and other
health care professionals will improve the quality of care at our facilities.

Continue to Utilize Economies of Scale to Grow the Company. We believe there is
significant opportunity to continue to grow our company by fully utilizing the
scale and scope of our organization. We continue to invest in initiatives such
as care navigators, clinical data exchange and centralized patient transfer
operations, which will enable us to improve coordination of care and patient
retention across our markets. We believe our centrally managed business
processes and ability to leverage cost-saving practices across our extensive
network will enable us to continue to manage costs effectively. We continue to
invest in our Parallon subsidiary group to deploy key components of our support
infrastructure, including revenue cycle management, health care group
purchasing, supply chain management and staffing functions.

Pursue a Disciplined Development Strategy. We continue to believe there are
significant growth opportunities in our markets. We will continue to provide
financial and operational resources to analyze and develop our in-market
opportunities. To complement our in-market growth agenda and achieve cost
savings and other benefits for the patients and communities we serve, we intend
to focus on selectively developing and acquiring new hospitals, outpatient
facilities and other health care service providers.

Our strategy also emphasizes investments that advance our clinical systems and
digital capabilities, transform care models with innovative care solutions,
expand our workforce development programs and enhance our health care networks
and partnerships.

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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent liabilities and the reported amounts
of revenues and expenses. Our estimates are based on historical experience and
various other assumptions we believe are reasonable under the circumstances. We
evaluate our estimates on an ongoing basis and make changes to the estimates and
related disclosures as experience develops or new information becomes known.
Actual results may differ from these estimates.

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

Revenues

Revenues are recorded during the period the health care services are provided,
based upon the estimated amounts due from payers. Estimates of contractual
allowances under managed care health plans are based upon the payment terms
specified in the related contractual agreements. Laws and regulations governing
the Medicare and Medicaid programs are complex and subject to interpretation.
The estimated reimbursement amounts are made on a payer-specific basis and are
recorded based on the best information available regarding management's
interpretation of the applicable laws, regulations and contract terms.
Management continually reviews the contractual estimation process to consider
and incorporate updates to laws and regulations and the frequent changes in
managed care contractual terms resulting from contract renegotiations and
renewals. We have invested significant resources to refine and improve our
billing systems and the information system data used to make contractual
allowance estimates. We have developed standardized calculation processes and
related employee training programs to improve the utility of our patient
accounting systems.

Patients treated at hospitals for non-elective care, who have income at or below
400% of the federal poverty level, are eligible for charity care, and we limit
the patient responsibility amounts for these patients to a percentage of their
annual household income, computed on a sliding scale based upon their annual
income and the applicable percentage of the federal poverty level. Patients
treated at hospitals for non-elective care, who have income above 400% of the
federal poverty level, are eligible for certain other discounts which limit the
patient responsibility amounts for these patients to a percentage of their
annual household income, computed on a sliding scale based upon their annual
income and the applicable percentage of the federal poverty level. We apply
additional discounts to limit patient responsibility for certain emergency
services. The federal poverty level is established by the federal government and
is based on income and family size. Because we do not pursue collection of
amounts determined to qualify as charity care, they are not reported in
revenues. We provide discounts to uninsured patients who do not qualify for
Medicaid or charity care. We may attempt to provide assistance to uninsured
patients to help determine whether they may qualify for Medicaid, other federal
or state assistance, or charity care. If an uninsured patient does not qualify
for these programs, the uninsured discount is applied.

Implicit price concessions relate primarily to amounts due directly from
patients. Estimated implicit price concessions are recorded for all uninsured
accounts, regardless of the age of those accounts. Accounts are written off when
all reasonable collection efforts have been performed. The estimates for
implicit price concessions are based upon management's assessment of historical
writeoffs and expected net collections, business and economic conditions, trends
in federal, state and private employer health care coverage and other collection
indicators. Management relies on the results of detailed reviews of historical
writeoffs and collections at facilities that represent a majority of our
revenues and accounts receivable (the "hindsight analysis") as a primary source
of information in estimating the collectability of our accounts receivable. We
perform the hindsight analysis quarterly, utilizing rolling twelve-months
accounts receivable collection and writeoff data. We believe our quarterly
updates to the estimated implicit price concession amounts at each of our
hospital facilities provide reasonable estimates of our revenues and valuations
of our accounts receivable. These routine, quarterly changes in estimates have
not resulted in material adjustments to the valuations of our accounts
receivable or period-to-period comparisons of our revenues.

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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Critical Accounting Policies and Estimates (Continued)

Revenues (continued)

To quantify the total impact of and trends related to uninsured patient
accounts, we believe it is beneficial to view total uncompensated care, which is
comprised of charity care, uninsured discounts and implicit price concessions. A
summary of the estimated cost of total uncompensated care for the years ended
December 31, follows (dollars in millions):

                                                       2022          2021   

2020

Patient care costs (salaries and benefits,
supplies, other operating
  expenses and depreciation and amortization)        $  51,180     $  49,074     $  44,271
Cost-to-charges ratio (patient care costs as
percentage of gross
  patient charges)                                        11.0 %        11.3 %        12.0 %
Total uncompensated care                             $  31,734     $  29,642     $  29,029
Multiply by the cost-to-charges ratio                     11.0 %        11.3 %        12.0 %
Estimated cost of total uncompensated care           $   3,491     $   

3,350 $ 3,483

Management expects a continuation of the challenges related to the collection of
the patient due accounts. Adverse changes in the percentage of our patients
having adequate health care coverage, increases in patient responsibility
amounts under certain health care coverages, general economic conditions,
patient accounting service center operations, payer mix, or trends in federal,
state, and private employer health care coverage could affect the collection of
accounts receivable, cash flows and results of operations.

Professional Liability Claims

We, along with virtually all health care providers, operate in an environment
with professional liability risks. Our facilities are insured by our insurance
subsidiary for losses up to $75 million per occurrence, subject, in most cases,
to a $15 million per occurrence self-insured retention. The insurance subsidiary
has obtained reinsurance for professional liability risks generally above a
retention level of either $25 million or $35 million per occurrence, depending
on the jurisdiction for the related claim. We purchase excess insurance on an
occurrence reported basis for losses in excess of amounts insured by our
insurance subsidiary. Provisions for losses related to professional liability
risks were $517 million, $453 million and $435 million for the years ended
December 31, 2022, 2021 and 2020, respectively. During 2022, 2021 and 2020, we
recorded reductions to the provision for professional liability risks of $55
million, $87 million and $112 million, respectively, due to the receipt of
updated actuarial information.

Reserves for professional liability risks represent the estimated ultimate cost
of all reported and unreported losses incurred through the respective
consolidated balance sheet dates. The estimated ultimate cost includes estimates
of direct expenses and fees paid to outside counsel and experts, but does not
include the general overhead costs of our insurance subsidiary or corporate
office. Individual case reserves are established based upon the particular
circumstances of each reported claim and represent our estimates of the future
costs that will be paid on reported claims. Case reserves are reduced as claim
payments are made and are adjusted upward or downward as our estimates regarding
the amounts of future losses are revised. Once the case reserves for known
claims are determined, information is stratified by loss layers and retentions,
accident years, reported years, and geographic location of our hospitals.
Several actuarial methods are employed to utilize this data to produce estimates
of ultimate losses and reserves for incurred but not reported claims, including:
paid and incurred extrapolation methods utilizing paid and incurred loss
development to estimate ultimate losses; frequency and severity methods
utilizing paid and incurred claims development to estimate ultimate average
frequency (number of claims) and ultimate average severity (cost per claim); and
Bornhuetter-Ferguson methods which add expected development to actual paid or
incurred experience to estimate ultimate losses. These methods use our
company-specific historical claims data and other information. Company-specific
claim reporting and payment data collected over an approximate 20-year period is
used in our reserve estimation process. This 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, professional liability retentions for each
policy year, geographic information and other data.

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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Critical Accounting Policies and Estimates (Continued)

Professional Liability Claims (continued)

Reserves and provisions for professional liability risks are based upon
actuarially determined estimates. The estimated reserve ranges, net of amounts
receivable under reinsurance contracts, were $1.802 billion to $2.159 billion at
December 31, 2022 and $1.752 billion to $2.098 billion at December 31, 2021. Our
estimated reserves for professional liability claims may change significantly if
future claims differ from expected trends. We perform sensitivity analyses which
model the volatility of key actuarial assumptions and monitor our reserves for
adequacy relative to all our assumptions in the aggregate. Based on our
analysis, we believe the estimated professional liability reserve ranges
represent the reasonably likely outcomes for ultimate losses. We consider the
number and severity of claims to be the most significant assumptions in
estimating reserves for professional liabilities. A 2.5% change in the expected
frequency trend could be reasonably likely and would increase the reserve
estimate by $29 million or reduce the reserve estimate by $28 million. A 2.5%
change in the expected claim severity trend could be reasonably likely and would
increase the reserve estimate by $135 million or reduce the reserve estimate by
$123 million. We believe adequate reserves have been recorded for our
professional liability claims; however, due to the complexity of the claims, the
extended period of time to resolve the claims and the wide range of potential
outcomes, our ultimate liability for professional liability claims could change
by more than the estimated sensitivity amounts and could change materially from
our current estimates.

The reserves for professional liability risks cover approximately 2,000 and
2,100 individual claims at December 31, 2022 and 2021, respectively, and
estimates for unreported potential claims. The time period required to resolve
these claims can vary depending upon the jurisdiction and whether the claim is
settled or litigated. The average time period between the occurrence and final
resolution for our professional liability claims is approximately five years,
although the facts and circumstances of each individual claim can result in an
occurrence-to-resolution timeframe that varies from this average. The estimation
of the timing of payments beyond a year can vary significantly.

Reserves for professional liability risks were $2.043 billion and $2.022 billion
at December 31, 2022 and 2021, respectively. The current portion of these
reserves, $515 million and $508 million at December 31, 2022 and 2021,
respectively, is included in "other accrued expenses." Obligations covered by
reinsurance and excess insurance contracts are included in the reserves for
professional liability risks, as we remain liable to the extent reinsurers and
excess insurance carriers do not meet their obligations. Reserves for
professional liability risks (net of $60 million and $55 million receivable
under reinsurance and excess insurance contracts at December 31, 2022 and 2021,
respectively) were $1.983 billion and $1.967 billion at December 31, 2022 and
2021, respectively. The estimated total net reserves for professional liability
risks at December 31, 2022 and 2021 are comprised of $793 million and $874
million, respectively, of case reserves for known claims and $1.190 billion and
$1.093 billion, respectively, of reserves for incurred but not reported claims.

Changes in our professional liability reserves, net of reinsurance recoverable,
for the years ended December 31, are summarized in the following table (dollars
in millions):

                                                       2022         2021          2020
Net reserves for professional liability claims,
January 1                                            $   1,967     $ 1,924  

$ 1,781

Provision for current year claims                          538         530  

519

Favorable development related to prior years'
claims                                                     (21 )       (77 )         (84 )
Total provision                                            517         453           435

Payments for current year claims                             4           5             5
Payments for prior years' claims                           493         379  

287

Total claim payments                                       497         384  

292

Effect of new retroactive reinsurance contracts             (4 )       (26 )           -
Net reserves for professional liability claims,
December 31                                          $   1,983     $ 1,967      $  1,924




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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Critical Accounting Policies and Estimates (Continued)

Income Taxes

We calculate our provision for income taxes using the asset and liability
method, under which deferred tax assets and liabilities are recognized by
identifying the temporary differences that arise from the recognition of items
in different periods for tax and accounting purposes. Deferred tax assets
generally represent the tax effects of amounts expensed in our income statement
for which tax deductions will be claimed in future periods. Interest and
penalties payable to taxing authorities are included as a component of our
provision for income taxes. We have elected to treat taxes incurred on global
intangible low-taxed income as a period expense.

Although we believe we have properly reported taxable income and paid taxes in
accordance with applicable laws, federal, state or foreign taxing authorities
may challenge our tax positions upon audit. Significant judgment is required in
determining and assessing the impact of uncertain tax positions. We report a
liability for unrecognized tax benefits from uncertain tax positions taken or
expected to be taken in our income tax returns. During each reporting period, we
assess the facts and circumstances related to uncertain tax positions. If the
realization of unrecognized tax benefits is deemed probable based upon new facts
and circumstances, the estimated liability and the provision for income taxes
are reduced in the current period. Final audit results may vary from our
estimates.

Results of Operations

Revenue/Volume Trends

Our revenues depend upon inpatient occupancy levels, the ancillary services and
therapy programs ordered by physicians and provided to patients, the volume of
outpatient procedures and the charge and negotiated payment rates for such
services. Patient volumes and the related revenues were negatively impacted by
COVID-19 beginning in the first half of 2020, and subsequent periods through the
first half of 2022 have experienced fluctuations in COVID-19 volumes and
revenues through the various surges, impacting comparisons for most of our
patient volume and revenues operating statistics. Gross charges typically do not
reflect what our facilities are actually paid. Our facilities have entered into
agreements with third-party payers, including government programs and managed
care health plans, under which the facilities are paid based upon the cost of
providing services, predetermined rates per diagnosis, fixed per diem rates or
discounts from gross charges. We do not pursue collection of amounts related to
patients who meet our guidelines to qualify for charity care; therefore, they
are not reported in revenues. We provide discounts to uninsured patients who do
not qualify for Medicaid or charity care.

Revenues increased 2.5% to $60.233 billion for 2022 from $58.752 billion for
2021 and increased 14.0% for 2021 from $51.533 billion for 2020. The increase in
revenues in 2022 can be attributed to the combined impact of a 0.4% increase in
revenue per equivalent admission and a 2.1% increase in equivalent admissions
compared to the prior year. The increase in revenues in 2021 can be primarily
attributed to the combined impact of a 6.8% increase in revenue per equivalent
admission and a 6.8% increase in equivalent admissions compared to the prior
year.

Same facility revenues increased 3.2% for the year ended December 31, 2022
compared to the year ended December 31, 2021 and increased 14.4% for the year
ended December 31, 2021 compared to the year ended December 31, 2020. The 3.2%
increase for 2022 can be attributed to the net impact of a 3.3% increase in
equivalent admissions and a 0.1% decline in revenue per equivalent admission.
The 14.4% increase for 2021 can be primarily attributed to the combined impact
of a 6.3% increase in revenue per equivalent admission and a 7.6% increase in
equivalent admissions.

Consolidated admissions declined 0.7% during 2022 compared to 2021 and increased
4.0% during 2021 compared to 2020. Consolidated surgeries increased 1.0% during
2022 compared to 2021 and increased 8.9% during 2021 compared to 2020.
Consolidated emergency room visits increased 5.9% during 2022 compared to 2021
and increased 13.8% during 2021 compared to 2020.

Same facility admissions increased 0.5% during 2022 compared to 2021 and
increased 4.8% during 2021 compared to 2020. Same facility surgeries increased
1.5% during 2022 compared to 2021 and increased 9.0% during 2021 compared to
2020. Same facility emergency room visits increased 7.6% during 2022 compared to
2021 and increased 15.1% during 2021 compared to 2020.

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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Revenue/Volume Trends (continued)

Same facility uninsured emergency room visits increased 6.6% and same facility
uninsured admissions declined 4.6% during 2022 compared to 2021. Same facility
uninsured emergency room visits declined 6.3% and same facility uninsured
admissions declined 3.5% during 2021 compared to 2020.

The approximate percentages of our admissions related to Medicare, managed
Medicare, Medicaid, managed Medicaid, managed care and insurers and the
uninsured for the years ended December 31, 2022, 2021 and 2020 are set forth
below.
                                Years Ended December 31,
                              2022           2021       2020
Medicare                          22 %           23 %      26 %
Managed Medicare                  23             21        20
Medicaid                           4              5         5
Managed Medicaid                  14             13        12
Managed care and insurers         30             31        29
Uninsured                          7              7         8
                                 100 %          100 %     100 %

The approximate percentages of our inpatient revenues related to Medicare,
managed Medicare, Medicaid, managed Medicaid, and managed care and insurers for
the years ended December 31, 2022, 2021 and 2020 are set forth below.

                                Years Ended December 31,
                              2022           2021       2020
Medicare                          23 %           23 %      27 %
Managed Medicare                  17             16        15
Medicaid                           7              6         5
Managed Medicaid                   8              6         6
Managed care and insurers         45             49        47
                                 100 %          100 %     100 %




At December 31, 2022, we owned and operated 46 hospitals and 30 surgery centers
in the state of Florida. Our Florida facilities' revenues totaled $13.812
billion, $13.670 billion and $11.442 billion for the years ended December 31,
2022, 2021 and 2020, respectively. At December 31, 2022, we owned and operated
45 hospitals and 37 surgery centers in the state of Texas. Our Texas facilities'
revenues totaled $16.450 billion, $15.344 billion and $13.528 billion for the
years ended December 31, 2022, 2021 and 2020, respectively. During 2022, 2021
and 2020, 58%, 56% and 56%, respectively, of our admissions and 50%, 49% and
49%, respectively, of our revenues were generated by our Florida and Texas
facilities. Uninsured admissions in Florida and Texas represented 74%, 72% and
72%, respectively, of our uninsured admissions each year during 2022, 2021 and
2020.

We receive a significant portion of our revenues from government health
programs, principally Medicare and Medicaid, which are highly regulated and
subject to frequent and substantial changes. Some state Medicaid programs use,
or have applied to use, waivers granted by CMS to implement Medicaid expansion,
impose different eligibility or enrollment restrictions, or otherwise implement
programs that vary from federal standards. We receive supplemental payments in
several states. We are aware these supplemental payment programs are currently
being reviewed by certain state agencies and some states have made requests to
CMS to replace their existing supplemental payment programs. It is possible
these reviews and requests will result in the restructuring of such supplemental
payment programs and could result in the payment programs being reduced or
eliminated. Because deliberations about these programs are ongoing, we are
unable to estimate the financial impact the program structure modifications, if
any, may have on our results of operations.
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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Key Performance Indicators

We present certain metrics and statistical information that management uses when
assessing our results of operations. We believe this information is useful to
investors as it provides insight to how management evaluates operational
performance and trends between reporting periods. Information on how these
metrics and statistical information are defined is provided in the following
tables summarizing operating results and operating data.

Operating Results Summary

The following are comparative summaries of operating results and certain
operating data for the years ended December 31, 2022, 2021 and 2020 (dollars in
millions):

                                         2022                       2021                       2020
                                  Amount        Ratio        Amount        Ratio        Amount        Ratio
Revenues                        $   60,233       100.0     $   58,752       100.0     $   51,533       100.0

Salaries and benefits               27,685        46.0         26,779        45.6         23,874        46.3
Supplies                             9,371        15.6          9,481        16.1          8,369        16.2
Other operating expenses            11,155        18.5          9,961        17.0          9,307        18.1
Equity in earnings of
affiliates                             (45 )      (0.1 )         (113 )      (0.2 )          (54 )      (0.1 )
Depreciation and amortization        2,969         5.0          2,853         4.9          2,721         5.3
Interest expense                     1,741         2.9          1,566         2.7          1,584         3.1
Losses (gains) on sales of
facilities                          (1,301 )      (2.2 )       (1,620 )      (2.8 )            7           -
Losses on retirement of debt            78         0.1             12           -            295         0.6
                                    51,653        85.8         48,919        83.3         46,103        89.5
Income before income taxes           8,580        14.2          9,833        16.7          5,430        10.5
Provision for income taxes           1,746         2.9          2,112         3.6          1,043         2.0
Net income                           6,834        11.3          7,721        13.1          4,387         8.5
Net income attributable to
noncontrolling interests             1,191         1.9            765         1.3            633         1.2
Net income attributable to
HCA Healthcare, Inc.            $    5,643         9.4     $    6,956        11.8     $    3,754         7.3

% changes from prior year:
Revenues                               2.5 %                     14.0 %                      0.4 %
Income before income taxes           (12.7 )                     81.1                        3.6
Net income attributable to
HCA Healthcare, Inc.                 (18.9 )                     85.3                        7.1
Admissions(a)                         (0.7 )                      4.0                       (4.7 )
Equivalent admissions(b)               2.1                        6.8                       (9.2 )
Revenue per equivalent
admission                              0.4                        6.8                       10.5
Same facility % changes from
prior year(c):
Revenues                               3.2                       14.4                       (0.1 )
Admissions(a)                          0.5                        4.8                       (4.8 )
Equivalent admissions(b)               3.3                        7.6                       (9.3 )
Revenue per equivalent
admission                             (0.1 )                      6.3                       10.1




(a)
Represents the total number of patients admitted to our hospitals and is used by
management and certain investors as a general measure of inpatient volume.
(b)
Equivalent admissions are used by management and certain investors as a general
measure of combined inpatient and outpatient volume. Equivalent admissions are
computed by multiplying admissions (inpatient volume) by the sum of gross
inpatient revenue and gross outpatient revenue and then dividing the resulting
amount by gross inpatient revenue. The equivalent admissions computation
"equates" outpatient revenue to the volume measure
                                       64
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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

(admissions) used to measure inpatient volume, resulting in a general measure of
combined inpatient and outpatient volume.
(c)
Same facility information excludes the operations of hospitals and their related
facilities that were either acquired, divested or removed from service during
the current and prior year.

Results of Operations (continued)

Operating Results Summary (continued)

Operating Data:

                                                      2022            2021  

2020

Number of hospitals at end of period                       182             182             185
Number of freestanding outpatient surgical
centers at end of period(a)                                126             125             121
Number of licensed beds at end of period(b)             49,281          48,803          49,265
Weighted average beds in service(c)                     41,982          42,148          42,246
Admissions(d)                                        2,075,459       2,089,975       2,009,909
Equivalent admissions(e)                             3,611,299       3,536,238       3,312,330
Average length of stay (days)(f)                           5.1             5.2             5.1
Average daily census(g)                                 28,778          29,752          27,734
Occupancy(h)                                                72 %            74 %            69 %
Emergency room visits(i)                             8,971,951       8,475,345       7,450,307
Outpatient surgeries(j)                              1,023,239       1,008,236         882,483
Inpatient surgeries(k)                                 522,151         522,069         522,385
Days revenues in accounts receivable(l)                     53              49              45
Outpatient revenues as a % of patient
revenues(m)                                                 38 %            37 %            35 %




(a)
Excludes freestanding endoscopy centers (21 at December 31, 2022, 2021 and
2020).
(b)
Licensed beds are those beds for which a facility has been granted approval to
operate from the applicable state licensing agency.
(c)
Represents the average number of beds in service, weighted based on periods
owned.
(d)
Represents the total number of patients admitted to our hospitals and is used by
management and certain investors as a general measure of inpatient volume.
(e)
Equivalent admissions are used by management and certain investors as a general
measure of combined inpatient and outpatient volume. Equivalent admissions are
computed by multiplying admissions (inpatient volume) by the sum of gross
inpatient revenue and gross outpatient revenue and then dividing the resulting
amount by gross inpatient revenue. The equivalent admissions computation
"equates" outpatient revenue to the volume measure (admissions) used to measure
inpatient volume, resulting in a general measure of combined inpatient and
outpatient volume.
(f)
Represents the average number of days admitted patients stay in our hospitals.
(g)
Represents the average number of admitted patients in our hospital beds each
day.
(h)
Represents the percentage of hospital beds in service that are occupied by
patients (admitted and observations). Both average daily census and occupancy
rate provide measures of the utilization of inpatient rooms.
(i)
Represents the number of patients treated in our emergency rooms.
(j)
Represents the number of surgeries performed on patients who were not admitted
to our hospitals. Pain management and endoscopy procedures are not included in
outpatient surgeries.
(k)
Represents the number of surgeries performed on patients who have been admitted
to our hospitals. Pain management and endoscopy procedures are not included in
inpatient surgeries.
(l)
Revenues per day is calculated by dividing the revenues for the fourth quarter
of each year by the days in the quarter. Days revenues in accounts receivable is
then calculated as accounts receivable at the end of the period divided by
revenues per day.
(m)
Represents the percentage of patient revenues related to patients who are not
admitted to our hospitals.

                                       65
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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Years Ended December 31, 2022 and 2021

Net income attributable to HCA Healthcare, Inc. totaled $5.643 billion, or
$19.15 per diluted share, for 2022, compared to $6.956 billion, or $21.16 per
diluted share, for 2021. The 2022 results include gains on sales of facilities
of $1.301 billion, or $2.46 per diluted share, and losses on retirement of debt
of $78 million, or $0.20 per diluted share. The 2022 results include additional
expenses and lost revenues estimated at approximately $85 million associated
with the impact of Hurricane Ian primarily on our Florida facilities. This
amount is prior to any insurance recoveries. Revenues for 2022 include $244
million and other operating expenses include $90 million from provider tax
assessments related to the period September through December 2021 for the Texas
directed payment program that was approved by CMS in March 2022 for the program
year that began September 1, 2021. The 2021 results include gains on sales of
facilities of $1.620 billion, or $3.69 per diluted share, and losses on
retirement of debt of $12 million, or $0.03 per diluted share. Our provisions
for income taxes for 2022 and 2021 include tax benefits of $77 million, or $0.26
per diluted share, and $119 million, or $0.36 per diluted share, respectively,
related to employee equity award settlements. All "per diluted share"
disclosures are based upon amounts net of the applicable income taxes. Shares
used for diluted earnings per share were 294.666 million shares and 328.752
million shares for the years ended December 31, 2022 and 2021, respectively.
During 2022 and 2021, we repurchased 30.747 million and 37.812 million shares,
respectively, of our common stock.

During 2022, consolidated admissions declined 0.7% and same facility admissions
increased 0.5% compared to 2021. Consolidated inpatient surgeries were flat and
same facility inpatient surgeries increased 0.9% during 2022 compared to 2021.
Emergency room visits increased 5.9% on a consolidated basis and increased 7.6%
on a same facility basis during 2022 compared to 2021.

Revenues increased 2.5% to $60.233 billion for 2022 from $58.752 billion for
2021. The increase in revenues was due to the combined impact of a 0.4% increase
in revenue per equivalent admission and a 2.1% increase in equivalent admissions
compared to 2021. Same facility revenues increased 3.2% due primarily to the net
impact of a 3.3% increase in equivalent admissions and a 0.1% decline in revenue
per equivalent admission compared to 2021.

Salaries and benefits, as a percentage of revenues, were 46.0% in 2022 and 45.6%
in 2021. Salaries and benefits per equivalent admission increased 1.2% in 2022
compared to 2021. Same facility salaries and benefits per full time equivalent
increased 3.3% for 2022 compared to 2021 as inflation has impacted our labor
costs and as we continue to utilize certain contract, overtime and other premium
rate labor costs to support our clinical staff and patients. We expect
inflationary pressures will continue to impact our labor costs in the future. We
intend to continue reducing our utilization of and rates paid for premium rate
labor, but our ability to mitigate labor cost challenges may be affected by
labor market conditions and other factors. Share-based compensation expense was
$341 million in 2022 and $440 million in 2021.

Supplies, as a percentage of revenues, were 15.6% in 2022 and 16.1% in 2021.
Supply costs per equivalent admission declined 3.2% in 2022 compared to 2021.
Supply costs per equivalent admission increased 2.4% for medical devices, but
declined 18.8% for pharmacy supplies and 1.6% for general medical and surgical
items in 2022 compared to 2021. The decline in pharmacy supplies is primarily
related to higher utilization of certain COVID-19 therapies during 2021.

Other operating expenses, as a percentage of revenues, were 18.5% in 2022 and
17.0% in 2021. Other operating expenses are primarily comprised of contract
services, professional fees, repairs and maintenance, rents and leases,
utilities, insurance (including professional liability insurance) and nonincome
taxes. The 1.5% increase in other operating expenses, as a percentage of
revenues for 2022 compared to 2021, was primarily related to increased costs for
supplemental payment programs in certain states, as well as increased
professional fees, utilities and insurance premiums. We have seen inflation have
a negative impact on certain of these expenses and expect inflationary pressures
will continue to impact operating expenses in 2023. Provisions for losses
related to professional liability risks were $517 million and $453 million for
2022 and 2021, respectively. During 2022 and 2021, we recorded reductions of $55
million, or $0.14 per diluted share, and $87 million, or $0.20 per diluted
share, respectively, to our provision for professional liability risks related
to the receipt of updated actuarial information.

Equity in earnings of affiliates was $45 million for 2022 and $113 million for
2021. The decline of $68 million is primarily related to the sale of an equity
investment during 2021.
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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Years Ended December 31, 2022 and 2021 (continued)

Depreciation and amortization, as a percentage of revenues, were 5.0% in 2022
and 4.9% in 2021. Depreciation expense was $2.941 billion for 2022 and $2.826
billion for 2021. The increase of $115 million in depreciation expense relates
primarily to capital expenditures at our existing facilities (same facility
depreciation expense increased $134 million).

Interest expense increased to $1.741 billion for 2022 from $1.566 billion for
2021. The $175 million increase in interest expense was due to an increase in
the average debt balance, which was partially offset by a decline in the average
effective interest rate. Our average debt balance was $37.363 billion for 2022
compared to $32.109 billion for 2021. The average effective interest rate for
our long-term debt was 4.7% for 2022 and 4.9% for 2021.

Gains on sales of facilities were $1.301 billion and $1.620 billion for 2022 and
2021, respectively. The gains on sales of facilities for 2022 are primarily
related to the sales of controlling interests in a subsidiary of our group
purchasing organization and subsidiaries of our research entities. The gains on
sales of facilities for 2021 are primarily related to the sales of five
hospitals in Georgia and other health care entity investments.

During 2022, we issued $6.000 billion aggregate principal amount of senior
notes. We used a portion of the net proceeds to pay down our revolving credit
facilities, and we redeemed all $1.250 billion outstanding aggregate principal
amount of our 4.75% senior notes due 2023 and all $1.250 billion outstanding
aggregate principal amount of our 5.875% senior notes due 2023. The pretax loss
on retirement of debt for these two redemptions was $78 million. During 2021, we
issued $2.350 billion aggregate principal amount of senior notes. We also
amended and restated our senior secured revolving credit facility and our senior
secured asset-based revolving credit facility, including increasing availability
under the asset-based revolving credit facility to $4.500 billion, extending the
maturity date on both facilities to June 30, 2026 and entering into a new $1.500
billion term loan A facility and a new $500 million term loan B facility (the
"Credit Agreement Transactions"). We used the net proceeds from the senior notes
issuance and the Credit Agreement Transactions to retire $3.657 billion of term
loan facilities. The pretax loss on retirement of debt was $12 million.

The effective income tax rates were 23.6% and 23.3% for 2022 and 2021,
respectively. The effective tax rate computations exclude net income
attributable to noncontrolling interests as it relates to consolidated
partnerships.

Net income attributable to noncontrolling interests increased from $765 million
for 2021 to $1.191 billion for 2022. The increase in net income attributable to
noncontrolling interests related primarily to the gain on the sale of a
controlling interest in a subsidiary of our group purchasing organization and
the partnership operations of two of our Texas markets.

For results of operations comparisons relating to years ending December 31, 2021
and 2020, refer to our annual report on Form 10-K, Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
year ended December 31, 2021, filed with the Securities and Exchange Commission
("SEC") on February 18, 2022.

Liquidity and Capital Resources

Our primary cash requirements are paying our operating expenses, servicing our
debt, capital expenditures on our existing properties, acquisitions of hospitals
and health care entities, repurchases of our common stock, dividends to
stockholders and distributions to noncontrolling interests. Our primary cash
sources are cash flows from operating activities, issuances of debt and equity
securities and sales of hospitals and health care entities.

Cash provided by operating activities totaled $8.522 billion in 2022 compared to
$8.959 billion in 2021 and $9.232 billion in 2020. The $437 million decline in
cash provided by operating activities for 2022, compared to 2021, was related
primarily to a negative change in working capital items of $649 million, mainly
from a decline in accounts payable and accrued expenses, and a decline in net
income of $687 million, excluding gains on sales of facilities and losses on
retirement of debt, offset by a decline in cash payments for interest and income
taxes of $847 million for 2022 compared to 2021. The $273 million decline in
cash provided by operating activities for 2021, compared to 2020, was related to
a negative change in working capital items of $1.781 billion, primarily from an
increase in accounts receivable, offset by the increase in net income, excluding
the non-cash impact of losses and gains on sales of facilities, losses on
retirement of debt and depreciation and amortization. Cash payments for interest
and income taxes increased $1.075 billion for 2021 compared to 2020. During
2020, we deferred $688 million of Social Security taxes as allowed for under the
CARES Act. Half of these taxes were paid in January 2022 and the remainder was
paid in January 2023. Working capital totaled $3.741 billion at December 31,
2022 and $3.960 billion at December 31, 2021.
                                       67
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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)

Cash used in investing activities was $3.389 billion, $2.643 billion and $3.393
billion in 2022, 2021 and 2020, respectively. Excluding acquisitions, capital
expenditures were $4.395 billion in 2022, $3.577 billion in 2021 and $2.835
billion in 2020. In response to the risks COVID-19 presented to our business, we
reduced certain planned projects and capital expenditures during 2020. Planned
capital expenditures are expected to approximate $4.3 billion in 2023. At
December 31, 2022, there were projects under construction which had an estimated
additional cost to complete and equip over the next five years of approximately
$4.707 billion. We expect to finance capital expenditures with internally
generated and borrowed funds. We expended $224 million, $1.105 billion and $568
million for acquisitions of hospitals and health care entities during 2022, 2021
and 2020, respectively. Cash flows from sales of hospitals and health care
entities declined from $2.160 billion for 2021 (primarily related to the
proceeds from our sales of five hospitals in Georgia and other health care
entity investments) to $1.237 billion of net proceeds for 2022 (primarily
related to proceeds from our sales of other health care entities).

Cash used in financing activities totaled $5.656 billion in 2022, $6.655 billion
in 2021 and $4.677 billion in 2020. During 2022, we had a net increase of $3.287
billion in our indebtedness, paid dividends of $653 million and paid $7.000
billion for repurchases of common stock. During 2021, we had a net increase of
$3.255 billion in our indebtedness, paid dividends of $624 million and paid
$8.215 billion for repurchases of common stock. During 2020, we made net
payments of $3.217 billion related to our indebtedness, paid dividends of $153
million and paid $441 million for repurchases of our common stock. During 2022,
2021 and 2020, we made distributions to noncontrolling interests of $1.025
billion, $749 million and $626 million, respectively. The increase in
distributions in 2022 is related to the sale of a controlling interest in a
subsidiary of our group purchasing organization.

We, or our affiliates, may in the future repurchase portions of our debt or
equity securities, subject to certain limitations, from time to time in either
the open market or through privately negotiated transactions, in accordance with
applicable SEC and other legal requirements. The timing, prices, and sizes of
purchases depend upon prevailing trading prices, general economic and market
conditions, and other factors, including applicable securities laws.

During February 2021, January 2022 and January 2023, our Board of Directors
authorized $6 billion, $8 billion and $3 billion, respectively, for share
repurchases of the Company's outstanding common stock. The February 2021
authorization was completed during 2022, and at December 31, 2022, there was
$1.586 billion of share repurchase authorization that remained available under
the January 2022 authorization. Funds for the repurchase of debt or equity
securities have, and are expected to, come primarily from cash generated from
operations and borrowed funds.

During 2022, our Board of Directors declared four quarterly dividends of $0.56
per share, or $2.24 per share in the aggregate, on our common stock. On January
26, 2023, our Board of Directors declared a quarterly dividend of $0.60 per
share on our common stock payable on March 31, 2023 to stockholders of record at
the close of business on March 17, 2023. The timing and amount of future cash
dividends will vary based on a number of factors, including future capital
requirements for strategic transactions, share repurchases and investing in our
existing markets, the availability of financing on acceptable terms, debt
service requirements, changes to applicable tax laws or corporate laws, changes
to our business model and periodic determinations by our Board of Directors that
cash dividends are in the best interest of stockholders and are in compliance
with all applicable laws and agreements of the Company.

In addition to cash flows from operations, available sources of capital include
amounts available under our senior secured credit facilities ($3.535 billion as
of December 31, 2022 and $4.445 billion as of January 31, 2023) and anticipated
access to public and private debt and equity markets. Effective in January 2023,
availability under our senior secured revolving credit facility was increased by
$1.500 billion to total $3.500 billion.

Investments of our insurance subsidiaries, held to maintain statutory equity
levels and to provide liquidity to pay claims, totaled $473 million and $541
million at December 31, 2022 and 2021, respectively. The insurance subsidiary
maintained net reserves for professional liability risks of $147 million and
$154 million at December 31, 2022 and 2021, respectively. Our facilities are
insured by our insurance subsidiary for losses up to $75 million per occurrence;
however, this coverage is subject, in most cases, to a $15 million per
occurrence self-insured retention. Net reserves for the self-insured
professional liability risks retained were $1.836 billion and $1.813 billion at
December 31, 2022 and 2021, respectively. Claims payments, net of reinsurance
recoveries, during the next 12 months are expected to approximate $503 million.
We estimate that approximately $459 million of the expected net claim payments
during the next 12 months will relate to claims subject to the self-insured
retention.
                                       68
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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)

Financing Activities

We are a highly leveraged company with significant debt service requirements.
Our debt totaled $38.084 billion and $34.579 billion at December 31, 2022 and
2021, respectively. Our interest expense was $1.741 billion for 2022 and $1.566
billion for 2021.

During 2022, we issued $6.000 billion aggregate principal amount of senior notes
comprised of (i) $1.000 billion aggregate principal amount of 3 1/8% senior
notes due 2027, (ii) $500 million aggregate principal amount of 3 3/8% senior
notes due 2029, (iii) $2.000 billion aggregate principal amount of 3 5/8% senior
notes due 2032, (iv) $500 million aggregate principal amount of 4 3/8% senior
notes due 2042 and (v) $2.000 billion aggregate principal amount of 4 5/8%
senior notes due 2052. We used a portion of the net proceeds to pay down our
revolving credit facilities, and we redeemed all $1.250 billion outstanding
aggregate principal amount of our 4.75% senior notes due 2023 and all $1.250
billion outstanding aggregate principal amount of our 5.875% senior notes due
2023.

Management believes that cash flows from operations, amounts available under our
senior secured credit facilities and our anticipated access to public and
private debt markets will be sufficient to meet expected liquidity needs for the
foreseeable future.

HCA Inc., a direct wholly-owned subsidiary of HCA Healthcare, Inc., is the
primary obligor under a substantial portion of our indebtedness, including our
senior secured credit facilities and senior notes. The senior secured credit
facilities are fully and unconditionally guaranteed on a senior secured basis by
substantially all existing and future, direct and indirect, 100% owned material
domestic subsidiaries that are "Unrestricted Subsidiaries" under our Indenture
dated December 16, 1993 (except for certain special purpose subsidiaries that
only guarantee and pledge their assets under our senior secured asset-based
revolving credit facility). On May 25, 2022, Standard & Poor's Rating Services
("S&P") announced it had issued an investment grade rating with respect to the
issuer credit rating of HCA Healthcare, Inc. and its subsidiaries. S&P's
announcement, in conjunction with previously disclosed events, constituted an
"Investment Grade Rating Event" or a "Ratings Event," as applicable, under the
terms of the indentures governing HCA Inc.'s outstanding senior secured notes
and, as a result, the conditions in the senior secured indentures to permit the
permanent release of the subsidiary guarantees and all collateral securing the
senior secured notes were met. The subsidiary guarantees and collateral securing
our senior secured credit facilities are not affected. Following this release of
the subsidiary guarantees and collateral securing the senior secured notes, the
subsidiary guarantors deregistered with the SEC. As a result, summarized
financial information for HCA Healthcare, Inc., HCA Inc. and the subsidiary
guarantors, and information about the subsidiary guarantees and affiliates whose
securities were pledged as collateral will no longer be presented.

All of the senior notes issued by HCA Inc. in 2014 or later continue to be fully
and unconditionally guaranteed on an unsecured basis by HCA Healthcare, Inc. The
combined assets, liabilities, and results of operations of HCA Healthcare, Inc.
and HCA Inc. are not materially different than the corresponding amounts
presented in the consolidated financial statements of HCA Healthcare, Inc. As a
result, summarized financial information of HCA Healthcare, Inc. and HCA Inc. is
not required to be presented under Rule 13-01 of Regulation S-X.

Market Risk

We are exposed to market risk related to changes in market values of securities.
Our insurance subsidiaries held $473 million of investment securities at
December 31, 2022. These investments are carried at fair value, with changes in
unrealized gains and losses being recorded as adjustments to other comprehensive
income. At December 31, 2022, we had unrealized losses of $38 million on the
insurance subsidiaries' investment securities.

We are exposed to market risk related to market illiquidity. Investments in debt
and equity securities of our insurance subsidiaries could be impaired by the
inability to access the capital markets. Should the insurance subsidiaries
require significant amounts of cash in excess of normal cash requirements to pay
claims and other expenses on short notice, we may have difficulty selling these
investments in a timely manner or be forced to sell them at a price less than
what we might otherwise have been able to in a normal market environment. We may
be required to recognize credit-related impairments on our investment securities
in future periods should issuers default on interest payments or should the fair
market valuations of the securities deteriorate due to ratings downgrades or
other issue-specific factors.

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                              HCA HEALTHCARE, INC.

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)

Market Risk (continued)

We are also exposed to market risk related to changes in interest rates. With
respect to our interest-bearing liabilities, approximately $4.780 billion of
long-term debt at December 31, 2022 was subject to variable rates of interest,
while the remaining balance in long-term debt of $33.304 billion at December 31,
2022 was subject to fixed rates of interest. Both the general level of interest
rates and, for the senior secured credit facilities, our leverage affect our
variable interest rates. Our variable debt is comprised primarily of amounts
outstanding under the senior secured credit facilities. The average effective
interest rate for our long-term debt was 4.7% for 2022 and 4.9% for 2021.

The estimated fair value of our total long-term debt was $35.555 billion at
December 31, 2022. The estimates of fair value are based upon the quoted market
prices for the same or similar issues of long-term debt with the same
maturities. Based on a hypothetical 1% increase in interest rates, the potential
annualized reduction to future pretax earnings would be approximately $48
million. To mitigate the impact of fluctuations in interest rates, we generally
target a majority of our debt portfolio to be maintained at fixed rates.

We are exposed to currency translation risk related to our foreign operations.
We currently do not consider the market risk related to foreign currency
translation to be material to our consolidated financial statements or our
liquidity.

Tax Examinations

The Internal Revenue Service ("IRS") was conducting an examination of the
Company's 2016, 2017 and 2018 federal income tax returns and the 2019 return for
one affiliated partnership at December 31, 2022. We are also subject to
examination by state and foreign taxing authorities. Management believes HCA
Healthcare, Inc., its predecessors, subsidiaries and affiliates properly
reported taxable income and paid taxes in accordance with applicable laws and
agreements established with the IRS, state and foreign taxing authorities, and
final resolution of any disputes will not have a material, adverse effect on our
results of operations or financial position. However, if payments due upon final
resolution of any issues exceed our recorded estimates, such resolutions could
have a material, adverse effect on our results of operations or financial
position.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Information with respect to this Item is provided under the caption "Market
Risk" under Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

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