TENET HEALTHCARE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

INTRODUCTION TO MANAGEMENT'S DISCUSSION AND ANALYSIS
The purpose of this section, Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A"), is to provide a narrative
explanation of our financial statements that enables investors to better
understand our business, to enhance our overall financial disclosures, to
provide the context within which our financial information may be analyzed, and
to provide information about the quality of, and potential variability of, our
financial condition, results of operations and cash flows. MD&A, which should be
read in conjunction with the accompanying Condensed Consolidated Financial
Statements, includes the following sections:

•Management Overview
•Forward-Looking Statements
•Sources of Revenue for Our Hospital Operations Segment
•Results of Operations
•Liquidity and Capital Resources
•Off-Balance Sheet Arrangements
•Critical Accounting Estimates

Our business consists of our Hospital Operations and other ("Hospital
Operations") segment, our Ambulatory Care segment and our Conifer segment. Our
Hospital Operations segment is comprised of acute care and specialty hospitals,
ancillary outpatient facilities, micro-hospitals, imaging centers, physician
practices, and other care sites and clinics. At June 30, 2021, our subsidiaries
operated 65 hospitals serving primarily urban and suburban communities in nine
states. In April 2021, our Hospital Operations segment completed the sale of the
majority of its urgent care centers to an unaffiliated urgent care provider. As
described in Note 4 to the accompanying Condensed Consolidated Financial
Statements, certain of the facilities in our Hospital Operations segment were
classified as held for sale at June 30, 2021. Our Ambulatory Care segment is
comprised of the operations of USPI Holding Company, Inc. ("USPI"), in which we
own a 95% interest. At June 30, 2021, USPI had interests in 317 ambulatory
surgery centers and 24 surgical hospitals in 31 states. At the beginning of the
three months ended June 30, 2021, our Ambulatory Care segment also included 24
imaging centers, which were transferred to our Hospital Operations segment in
April 2021. In addition, at December 31, 2020, our Ambulatory Care segment
included 40 urgent care centers that were classified as held for sale. We
completed the divestiture of these urgent care centers in April 2021. Our
Conifer segment provides revenue cycle management and value-based care services
to hospitals, health systems, physician practices, employers and other clients,
through our Conifer Holdings, Inc. ("Conifer") subsidiary. At June 30, 2021,
Conifer provided services to approximately 640 Tenet and non-Tenet hospitals and
other clients nationwide. At June 30, 2021, we owned 76% of Conifer Health
Solutions, LLC, which is Conifer's principal subsidiary. Unless otherwise
indicated, all financial and statistical information included in MD&A relates to
our continuing operations, with dollar amounts expressed in millions (except per
adjusted patient admission and per adjusted patient day amounts). Continuing
operations information includes the results of our same 65 hospitals operated
throughout the six months ended June 30, 2021 and 2020. Continuing operations
information excludes the results of our hospitals and other businesses that have
been classified as discontinued operations for accounting purposes.

MANAGEMENT OVERVIEW
RECENT DEVELOPMENTS
Definitive Agreement to Sell Five Hospitals and Related Operations in the Miami
Area-In June 2021, we entered into a definitive agreement to sell five hospitals
and related operations in the Miami area. This sale, which is subject to
customary closing conditions, including regulatory approvals, is expected to be
completed in the third quarter of 2021. For additional details, see Note 4 to
the accompanying Condensed Consolidated Financial Statements.

IMPACT OF THE COVID-19 PANDEMIC
The spread of COVID-19 and the ensuing response of federal, state and local
authorities beginning in March 2020 resulted in a material reduction in our
patient volumes and also adversely affected our net operating revenues in the
year ended December 31, 2020. Restrictive measures, including travel bans,
social distancing, quarantines and shelter­in­place orders, reduced the number
of procedures performed at our facilities, as well as the volume of emergency
room and physician office visits. We began experiencing gradual and continued
improvement in patient volumes in May 2020 as various states eased stay­at­home
restrictions and our facilities were permitted to resume elective surgeries and
other procedures; however, the COVID-19 pandemic continues to impact all three
segments of our business, as well as our patients, communities and employees.
Broad economic factors resulting from the pandemic, including increased
unemployment rates and reduced
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consumer spending, continue to impact our patient volumes, service mix and
revenue mix. The pandemic has also continued to have an adverse effect on our
operating expenses to varying degrees in 2021. In some of our markets, we have
been required to utilize higher-cost temporary labor and pay premiums above
standard compensation for essential workers. In addition, we have experienced
significant price increases in medical supplies, particularly for personal
protective equipment ("PPE"), and we have encountered supply chain disruptions,
including shortages and delays.

As described in the Management's Discussion and Analysis of Financial Condition
and Results of Operations section in Part II of our Annual Report on Form 10-K
for the year ended December 31, 2020 ("Annual Report") and below under "Sources
of Revenue for Our Hospital Operations Segment," various legislative actions
have mitigated some of the economic disruption caused by the COVID-19 pandemic
on our business. Additional funding for the Public Health and Social Services
Emergency Fund ("Provider Relief Fund" or "PRF") was among the provisions of the
COVID-19 relief legislation. In the six months ended June 30, 2021 and 2020, we
received cash payments of $63 million and $712 million, we recognized
approximately $50 million and $511 million as grant income, and we recognized
$11 million and $12 million in equity in earnings of unconsolidated affiliates,
respectively, in our accompanying Condensed Consolidated Statements of
Operations due to grants from the Provider Relief Fund and other state and local
grant programs.

Throughout MD&A, we have provided additional information on the impact of the
COVID-19 pandemic on our results of operations and the steps we have taken, and
are continuing to take, in response. The ultimate extent and scope of the
pandemic remains unknown. For information about risks and uncertainties related
to COVID-19 that could affect our results of operations, financial condition and
cash flows, see the Risk Factors section in Part I of our Annual Report.

TRENDS AND STRATEGIES
As described above and throughout MD&A, we experienced a significant disruption
to our business in 2020 due to the COVID-19 pandemic. Although we have seen
gradual and continued improvement in our patient volumes, we continue to
experience negative impacts of the pandemic on our business in varying degrees,
the length and extent of which are currently unknown. While demand for our
services is expected to further rebound in the future, we have taken, and
continue to take, various actions to increase our liquidity and mitigate the
impact of reductions in our patient volumes and operating revenues from the
pandemic. Since the COVID-19 pandemic began to disrupt our business in March
2020, we have issued new senior notes and senior secured first lien notes,
redeemed existing senior notes, including those with the highest interest rate
and nearest maturity date of all of our long-term debt, and amended our
revolving credit facility. We also decreased our employee headcount throughout
the organization, and we deferred certain operating expenses that were not
expected to impact our response to the COVID-19 pandemic. In addition, we
reduced certain variable costs across the enterprise. We believe these actions,
together with government relief packages, to the extent available to us, will
help us to continue operating during the uncertainty caused by the COVID-19
pandemic. For further information on our liquidity, see "Liquidity and Capital
Resources" below.

In recent years, the healthcare industry, in general, and the acute care
hospital business, in particular, have experienced significant regulatory
uncertainty based, in large part, on administrative, legislative and judicial
efforts to significantly modify or repeal and potentially replace the Patient
Protection and Affordable Care Act, as amended by the Health Care and Education
Reconciliation Act of 2010 ("Affordable Care Act" or "ACA"). It is difficult to
predict the full impact of regulatory uncertainty on our future revenues and
operations. In addition, we believe that several key trends have shaped the
demand for healthcare services in recent years: (1) consumers, employers and
insurers are actively seeking lower-cost solutions and better value as they
focus more on healthcare spending; (2) patient volumes are shifting from
inpatient to outpatient settings due to technological advancements and demand
for care that is more convenient, affordable and accessible; (3) the growing
aging population requires greater chronic disease management and higher-acuity
treatment; and (4) consolidation continues across the entire healthcare sector.

Driving Growth in Our Hospital Systems-We are committed to better positioning
our hospital systems and competing more effectively in the ever-evolving
healthcare environment by focusing on driving performance through operational
effectiveness, increasing capital efficiency and margins, investing in our
physician enterprise, particularly our specialist network, enhancing patient and
physician satisfaction, growing our higher-demand and higher-acuity clinical
service lines (including outpatient lines), expanding patient and physician
access, and optimizing our portfolio of assets. Over the past several years, we
have undertaken enterprise-wide cost-reduction measures, comprised primarily of
workforce reductions (including streamlining corporate overhead and centralized
support functions), the renegotiation of contracts with suppliers and vendors,
and the consolidation of office locations. Moreover, we established offshore
support operations in the Philippines. In conjunction with these initiatives and
our cost-saving efforts in response to the COVID-19 pandemic, we incurred
restructuring charges related to employee severance payments of $10 million in
the six months ended June 30, 2021, and we expect to incur additional such
restructuring charges throughout 2021.
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We also continue to exit service lines, businesses and markets that we believe
are no longer a core part of our long­term growth strategy. In April 2021, we
divested the majority of our urgent care centers operated under the MedPost and
CareSpot brands by our Hospital Operations and Ambulatory Care segments. In
addition, in June 2021, we entered into a definitive agreement to sell five of
our Miami-area hospitals and certain related operations. We intend to continue
to further refine our portfolio of hospitals and other healthcare facilities
when we believe such refinements will help us improve profitability, allocate
capital more effectively in areas where we have a stronger presence, deploy
proceeds on higher-return investments across our business, enhance cash flow
generation, reduce our debt and lower our ratio of debt­to­Adjusted EBITDA.

Improving the Customer Care Experience-As consumers continue to become more
engaged in managing their health, we recognize that understanding what matters
most to them and earning their loyalty is imperative to our success. As such, we
have enhanced our focus on treating our patients as traditional customers by:
(1) establishing networks of physicians and facilities that provide convenient
access to services across the care continuum; (2) expanding service lines
aligned with growing community demand, including a focus on aging and chronic
disease patients; (3) offering greater affordability and predictability,
including simplified registration and discharge procedures, particularly in our
outpatient centers; (4) improving our culture of service; and (5) creating
health and benefit programs, patient education and health literacy materials
that are customized to the needs of the communities we serve. Through these
efforts, we intend to improve the customer care experience in every part of our
operations.

Expansion of Our Ambulatory Care Segment-We continue to focus on opportunities
to expand our Ambulatory Care segment through organic growth, building new
outpatient centers, corporate development activities and strategic partnerships.
In December 2020, we acquired controlling ownership interests in 45 ambulatory
surgery centers from SurgCenter Development (the "SCD Centers"), which
significantly increased USPI's presence in the musculoskeletal surgery market, a
high-demand clinical service line, particularly for an aging population. In the
six months ended June 30, 2021, we acquired controlling ownership interests in
four ambulatory surgery centers in Maryland, two in Georgia and one in Florida.
We also opened two new ambulatory surgery centers - one in Nevada and one in
Montana. We believe USPI's surgery centers and surgical hospitals offer many
advantages to patients and physicians, including greater affordability,
predictability, flexibility and convenience. Moreover, due in part to
advancements in medical technology, and due to the lower cost structure and
greater efficiencies that are attainable at a specialized outpatient site, we
believe the volume and complexity of surgical cases performed in an outpatient
setting will continue to increase following the containment of the COVID-19
pandemic. Historically, our outpatient services have generated significantly
higher margins for us than inpatient services.

Driving Conifer's Growth While Pursuing a Tax-Free Spin-Off-We previously
announced a number of actions to support our goals of improving financial
performance and enhancing shareholder value, including the exploration of
strategic alternatives for Conifer. In July 2019, we announced our intention to
pursue a tax-free spin-off of Conifer as a separate, independent, publicly
traded company. Completion of the proposed spin-off is subject to a number of
conditions, including, among others, assurance that the separation will be
tax-free for U.S. federal income tax purposes, finalization of Conifer's capital
structure, the effectiveness of appropriate filings with the Securities and
Exchange Commission ("SEC"), and final approval from our board of directors.
Although in March 2021 we entered into a month-to-month agreement amending and
updating certain terms and conditions related to the revenue cycle management
services Conifer provides to Tenet hospitals ("Amended RCM Agreement"), the
execution of a comprehensive amendment to and restatement of the master services
agreement between Conifer and Tenet remains an additional prerequisite to the
spin-off of Conifer. We are continuing to pursue the Conifer spin-off; however,
there can be no assurance regarding the timeframe for completion, the allocation
of assets and liabilities between Tenet and Conifer, that the other conditions
of the spin-off will be met, or that it will be completed at all.

Conifer serves approximately 640 Tenet and non-Tenet hospitals and other clients
nationwide. In addition to providing revenue cycle management services to health
systems and physicians, Conifer provides support to both providers and
self­insured employers seeking assistance with clinical integration, financial
risk management and population health management. Conifer remains focused on
driving growth by continuing to market and expand its revenue cycle management
and value-based care solutions businesses. We believe that our success in
growing Conifer and increasing its profitability depends in part on our success
in executing the following strategies: (1) attracting hospitals and other
healthcare providers that currently handle their revenue cycle management
processes internally as new clients; (2) generating new client relationships
through opportunities from USPI and Tenet's acute care hospital acquisition and
divestiture activities; (3) expanding revenue cycle management and value-based
care service offerings through organic development and small acquisitions; and
(4) leveraging data from tens of millions of patient interactions for continued
enhancement of the value-based care environment to drive competitive
differentiation.

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Improving Profitability-As we return to more normal operations, we will continue
to focus on growing patient volumes and effective cost management as a means to
improve profitability. We believe our inpatient admissions have been constrained
in recent years (prior to the COVID-19 pandemic) by increased competition,
utilization pressure by managed care organizations, new delivery models that are
designed to lower the utilization of acute care hospital services, the effects
of higher patient co-pays, co-insurance amounts and deductibles, changing
consumer behavior, and adverse economic conditions and demographic trends in
certain of our markets. However, we also believe that emphasis on higher-demand
clinical service lines (including outpatient services), focus on expanding our
ambulatory care business, cultivation of our culture of service, participation
in Medicare Advantage health plans that have been experiencing higher growth
rates than traditional Medicare, and contracting strategies that create shared
value with payers should help us grow our patient volumes over time. We are also
continuing to explore new opportunities to enhance efficiency, including further
integration of enterprise-wide centralized support functions, outsourcing
additional functions unrelated to direct patient care, and reducing clinical and
vendor contract variation.

Reducing Our Leverage Over Time-All of our outstanding long-term debt has a
fixed rate of interest, except for outstanding borrowings under our revolving
credit facility, and the maturity dates of our notes are staggered from 2023
through 2031. We believe that our capital structure minimizes the near-term
impact of increased interest rates, and the staggered maturities of our debt
allow us to refinance our debt over time. It is our long­term objective to
reduce our debt and lower our ratio of debt-to-Adjusted EBITDA, primarily
through more efficient capital allocation and Adjusted EBITDA growth, which
should lower our refinancing risk. During the six months ended June 30, 2021, we
retired approximately $1.888 billion aggregate principal amount of certain of
our senior unsecured and senior secured second lien notes. These notes were
retired using proceeds from the June 2021 sale of $1.400 billion aggregate
principal amount of 4.250% senior secured first lien notes, which will mature on
June 1, 2029 (the "2029 Senior Secured First Lien Notes"), and cash on hand.
These transactions reduced future annual cash interest expense payments by
approximately $46 million.

Our ability to execute on our strategies and respond to the aforementioned
trends is subject to the extent and scope of the impact on our operations of the
COVID-19 pandemic, as well as a number of other risks and uncertainties, all of
which may cause actual results to be materially different from expectations. For
information about risks and uncertainties that could affect our results of
operations, see the Forward-Looking Statements section in this report, as well
as the Forward-Looking Statements and Risk Factors sections in Part I of our
Annual Report.

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RESULTS OF OPERATIONS-OVERVIEW
We have provided below certain selected operating statistics for the three
months ended June 30, 2021 and 2020 on a continuing operations basis. The
following tables also show information about facilities in our Ambulatory Care
segment that we control and, therefore, consolidate. We believe this information
is useful to investors because it reflects our current portfolio of operations
and the recent trends we are experiencing with respect to volumes, revenues and
expenses. We present certain metrics on a per adjusted patient admission basis
to show trends other than volume.
                                                                      Continuing Operations
                                                                   Three Months Ended June 30,                           Increase
Selected Operating Statistics                                   2021                         2020                       (Decrease)
Hospital Operations - hospitals and related
outpatient facilities:
Number of hospitals (at end of period)                                  65                           65                         -    (1)
Total admissions                                                   153,319                      134,898                      13.7  %
Adjusted patient admissions(2)                                     273,824                      221,159                      23.8  %
Paying admissions (excludes charity and
uninsured)                                                         143,864                      125,792                      14.4  %
Charity and uninsured admissions                                     9,455                        9,106                       3.8  %
Admissions through emergency department                            114,911                       98,193                      17.0  %
Emergency department visits, outpatient                            541,417                      388,038                      39.5  %
Total emergency department visits                                  656,328                      486,231                      35.0  %
Total surgeries                                                    101,023                       73,722                      37.0  %
Patient days - total                                               757,003                      687,883                      10.0  %
Adjusted patient days(2)                                         1,328,952                    1,094,208                      21.5  %
Average length of stay (days)                                         4.94                         5.10                      (3.1) %
Average licensed beds                                               17,170                       17,219                      (0.3) %
Utilization of licensed beds(3)                                       48.4  %                      43.9  %                    4.5  % (1)
Total visits                                                     1,653,430                      983,321                      68.1  %
Paying visits (excludes charity and uninsured)                   1,540,577                      908,197                      69.6  %
Charity and uninsured visits                                       112,853                       75,124                      50.2  %
Ambulatory Care:
Total consolidated facilities (at end of period)                       232                          243                       (11)   (1)
Total cases                                                        352,972                      364,196                      (3.1) %

(1) The change is the difference between the 2021 and 2020 amounts shown. (2) Adjusted patient admissions/days represents actual patient admissions/days adjusted to

include outpatient services provided by facilities in our Hospital Operations segment

by multiplying actual patient admissions/days by the sum of gross inpatient revenues

and outpatient revenues and dividing the results by gross inpatient revenues. (3) Utilization of licensed beds represents patient days divided by number of days in the

period divided by average licensed beds.

Total admissions increased by 18,421, or 13.7%, in the three months ended
June 30, 2021 compared to the three months ended June 30, 2020, and total
surgeries increased by 27,301, or 37.0%, in the 2021 period compared to the 2020
period. Total emergency department visits increased 35.0% in the three months
ended June 30, 2021 compared to the same period in the prior year. The increase
in our patient volumes from continuing operations in the three months ended
June 30, 2021 compared to the three months ended June 30, 2020 reflects the
gradual and continued recovery from the COVID-19 pandemic. Patient and surgical
volumes during the three months ended June 30, 2020 were negatively impacted by
shelter-in-place orders, the mandated suspension of many elective procedures at
our hospitals due to the COVID-19 pandemic, and the closure or reduction of
operating hours at our ambulatory surgery centers and other outpatient centers
that specialize in elective procedures, all of which began in March 2020. The
decrease of Ambulatory Care total cases of 3.1% in the three months ended
June 30, 2021 compared to the 2020 period is primarily due to the divestiture of
the urgent care centers and the realignment of the imaging centers under our
Hospital Operations segment.
                                                                 Continuing Operations
                                                              Three Months Ended June 30,                 Increase
Revenues                                                       2021                  2020                (Decrease)
Net operating revenues:
Hospital Operations prior to inter-segment
eliminations                                             $        4,095          $    3,088                      32.6  %
Ambulatory Care                                                     664                 368                      80.4  %
Conifer                                                             319                 305                       4.6  %
Inter-segment eliminations                                         (124)               (113)                      9.7  %
Total                                                    $        4,954          $    3,648                      35.8  %



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Net operating revenues increased by $1.306 billion, or 35.8%, in the three
months ended June 30, 2021 compared to the same period in 2020, primarily due to
growth in patient volumes, continued high patient acuity, USPI's acquisition of
the SCD Centers in December 2020 and negotiated commercial rate increases.
During the three months ended June 30, 2021 and 2020, we recognized grant income
of $19 million and $511 million, respectively, which amounts are not included in
net operating revenues.

Our accounts receivable days outstanding ("AR Days") from continuing operations
were 55.2 days at June 30, 2021 and 55.6 days at December 31, 2020, compared to
our target of less than 55 days. AR Days are calculated as our accounts
receivable from continuing operations on the last date in the quarter divided by
our net operating revenues from continuing operations for the quarter ended on
that date divided by the number of days in the quarter. This calculation
includes our Hospital Operations segment's contract assets, as well as the
accounts receivable of our Miami-area hospitals that have been classified in
assets held for sale on our Condensed Consolidated Balance Sheet at June 30,
2021. The AR Days calculation excludes (i) urgent care centers operated under
the MedPost and CareSpot brands, which we divested effective April 30, 2021, and
(ii) our California provider fee revenues.
                                            Continuing Operations
                                         Three Months Ended June 30,              Increase
Selected Operating Expenses                   2021                   2020        (Decrease)
Hospital Operations:
Salaries, wages and benefits      $        1,941                   $ 1,580           22.8  %
Supplies                                     689                       531           29.8  %
Other operating expenses                     901                       842            7.0  %
Total                             $        3,531                   $ 2,953           19.6  %
Ambulatory Care:
Salaries, wages and benefits      $          169                   $   119           42.0  %
Supplies                                     169                        79          113.9  %
Other operating expenses                      95                        75           26.7  %
Total                             $          433                   $   273           58.6  %
Conifer:
Salaries, wages and benefits      $          170                   $   165            3.0  %
Supplies                                       1                         1              -  %
Other operating expenses                      58                        66          (12.1) %
Total                             $          229                   $   232           (1.3) %
Total:
Salaries, wages and benefits      $        2,280                   $ 1,864           22.3  %
Supplies                                     859                       611           40.6  %
Other operating expenses                   1,054                       983            7.2  %
Total                             $        4,193                   $ 3,458           21.3  %
Rent/lease expense(1):
Hospital Operations               $           75                   $    67           11.9  %
Ambulatory Care                               24                        20           20.0  %
Conifer                                        3                         3              -  %
Total                             $          102                   $    90           13.3  %


(1)    Included in other operating expenses.


                                                                                     Continuing Operations
                                                                                  Three Months Ended June 30,                 Increase
Selected Operating Expenses per Adjusted Patient Admission                         2021                  2020                (Decrease)
Hospital Operations:
Salaries, wages and benefits per adjusted patient admission(1)               $        7,090          $    7,147                      (0.8) %
Supplies per adjusted patient admission(1)                                            2,519               2,396                       5.1  %
Other operating expenses per adjusted patient admission(1)                            3,289               3,811                     (13.7) %
Total per adjusted patient admission                                         $       12,898          $   13,354                      (3.4) %

(1) Adjusted patient admissions represents actual patient admissions adjusted to include

outpatient services provided by facilities in our Hospital Operations segment by

multiplying actual patient admissions by the sum of gross inpatient revenues and

outpatient revenues and dividing the results by gross inpatient revenues.

Salaries, wages and benefits for our Hospital Operations segment increased $361
million, or 22.8%, in the three months ended June 30, 2021 compared to the same
period in 2020. This change was primarily attributable to increased contract
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labor costs, higher patient volumes, increased incentive compensation, annual
merit increases for certain of our employees and a greater number of employed
physicians. On a per adjusted patient admission basis, salaries, wages and
benefits decreased 0.8% in the three months ended June 30, 2021 compared to the
three months ended June 30, 2020, reflecting our continued focus on
cost­reduction measures and corporate efficiencies.

Supplies expense for our Hospital Operations segment increased $158 million, or
29.8%, in the three months ended June 30, 2021 compared to the same period in
2020. The increase was primarily due to the continued recovery of patient
volumes and the increased costs for certain supplies as a result of the COVID-19
pandemic. On a per adjusted patient admission basis, supplies expense increased
5.1% in the three months ended June 30, 2021 compared to the three months ended
June 30, 2020 primarily due to increased costs for certain supplies as a result
of the COVID-19 pandemic and growth in our higher­acuity, supply­intensive
surgical services.

Other operating expenses for our Hospital Operations segment increased $59
million, or 7.0%, in the three months ended June 30, 2021 compared to the same
period in 2020. The increase was primarily due to higher software costs,
increased malpractice expense, increased repair and maintenance costs, and
higher rent and lease expense. On a per adjusted patient admission basis, other
operating expenses decreased 13.7% in the three months ended June 30, 2021
compared to the three months ended June 30, 2020 due to the increase in patient
volumes and the fact that there is a high level of fixed costs (e.g., rent
expense) in other operating expenses.

LIQUIDITY AND CAPITAL RESOURCES OVERVIEW Cash and cash equivalents were $2.194 billion at June 30, 2021 compared to $2.141 billion at March 31, 2021.

Significant cash flow items in the three months ended June 30, 2021 included:

•Net cash provided by operating activities before interest, taxes, discontinued
operations and restructuring charges, acquisition-related costs, and litigation
costs and settlements of $607 million (including $5 million from federal, state
and local grants);

•Proceeds from the sale of facilities and other assets of $111 million;

•Capital expenditures of $122 million;

•$93 million of distributions paid to noncontrolling interests;

•Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements of $34 million;

•Purchases of businesses and joint venture interests of $39 million;

•Proceeds from sale of marketable securities, long-term investments and other assets of $12 million;

•Purchases of marketable securities and equity investments of $8 million;

•Debt issuance costs of $15 million;

•Interest payments of $296 million, which included $9 million of accelerated interest payments due in November 2021 and paid in the three months ended June 30, 2021 in connection with our redemption of debt;

•Debt payments of $1.471 billion, including $1.428 billion of cash to retire our
$1.410 billion aggregate principal amount of 5.125% senior secured second lien
notes due 2025 ("2025 Senior Secured Second Lien Notes"); and

•$1.400 billion of proceeds from the issuance of $1.400 billion aggregate principal amount of our 2029 Senior Secured First Lien Notes.

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Net cash provided by operating activities was $779 million in the six months
ended June 30, 2021 compared to $2.368 billion in the six months ended June 30,
2020. Key factors contributing to the change between the 2021 and 2020 periods
include the following:

•An increase in net income before interest, taxes, discontinued operations and
restructuring charges, acquisition­related costs, and litigation costs and
settlements of $755 million (excluding $50 million and $511 million of income
recognized from federal, state and local grants in the 2021 and 2020 periods,
respectively);

•$152 million of recoupment of cash advances received from Medicare pursuant to
COVID-19 stimulus legislation in the three months ended June 30, 2021 compared
to $1.378 billion of cash advances received from Medicare pursuant to COVID-19
stimulus legislation in the three months ended June 30, 2020;

•$36 million of cash received from federal and state grants in the 2021 period compared to $674 million received in the 2020 period;

•Higher interest payments of $21 million in the 2021 period;

•Higher income tax payments of $29 million in the 2021 period;

•A decrease of $29 million in payments on reserves for restructuring charges, acquisition-related costs, and litigation costs and settlements; and

•The timing of other working capital items.

FORWARD-LOOKING STATEMENTS
This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, each as amended. All statements, other than statements of
historical or present facts, that address activities, events, outcomes, business
strategies and other matters that we plan, expect, intend, assume, believe,
budget, predict, forecast, project, target, estimate or anticipate (and other
similar expressions) will, should or may occur in the future are forward-looking
statements, including (but not limited to) disclosure regarding (i) the impact
of the COVID-19 pandemic, (ii) our future earnings, financial position, and
operational and strategic initiatives, and (iii) developments in the healthcare
industry. Forward-looking statements represent management's expectations, based
on currently available information, as to the outcome and timing of future
events, but, by their nature, address matters that are indeterminate. They
involve known and unknown risks, uncertainties and other factors, many of which
we are unable to predict or control, that may cause our actual results,
performance or achievements to be materially different from those expressed or
implied by forward-looking statements. Such factors include, but are not limited
to, the risks described in the Forward­Looking Statements and Risk Factors
sections in Part I of our Annual Report.

When considering forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in our Annual Report and in this report.
Should one or more of the risks and uncertainties described in these reports
occur, or should underlying assumptions prove incorrect, our actual results and
plans could differ materially from those expressed in any forward-looking
statement. We specifically disclaim any obligation to update any information
contained in a forward-looking statement or any forward-looking statement in its
entirety except as required by law.

All forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary information.

SOURCES OF REVENUE FOR OUR HOSPITAL OPERATIONS SEGMENT
We earn revenues for patient services from a variety of sources, primarily
managed care payers and the federal Medicare program, as well as state Medicaid
programs, indemnity-based health insurance companies and uninsured patients
(that is, patients who do not have health insurance and are not covered by some
other form of third-party arrangement).

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The following table shows the sources of net patient service revenues less
implicit price concessions for our hospitals and related outpatient facilities,
expressed as percentages of net patient service revenues less implicit price
concessions from all sources:
                                                Three Months Ended                                                   Six Months Ended
Net Patient Service Revenues Less                    June 30,                          Increase                          June 30,                       

Increase

Implicit Price Concessions from:             2021                2020               (Decrease)(1)                2021                2020               (Decrease)(1)
Medicare                                       18.4  %             21.1  %                    (2.7) %              18.6  %             20.4  %                    (1.8) %
Medicaid                                        7.6  %              9.2  %                    (1.6) %               7.4  %              8.5  %                    (1.1) %
Managed care(2)                                67.3  %             64.5  %                     2.8  %              67.6  %             65.1  %                     2.5  %
Uninsured                                       1.6  %              0.8  %                     0.8  %               1.4  %              1.0  %                     0.4  %
Indemnity and other                             5.1  %              4.4  %                     0.7  %               5.0  %              5.0  %                       -  %

(1) The change is the difference between the 2021 and 2020 percentages shown. (2) Includes Medicare and Medicaid managed care programs.

Our payer mix on an admissions basis for our hospitals and related outpatient
facilities, expressed as a percentage of total admissions from all sources, is
shown below:
                                                              Three Months Ended                                                   Six Months Ended
                                                                   June 30,                          Increase                          June 30,                          Increase
Admissions from:                                           2021                2020               (Decrease)(1)                2021                2020               (Decrease)(1)
Medicare                                                     20.7  %             22.5  %                    (1.8) %              21.1  %             23.6  %                    (2.5) %
Medicaid                                                      5.7  %              6.4  %                    (0.7) %               5.7  %              6.2  %                    (0.5) %
Managed care(2)                                              64.3  %             61.5  %                     2.8  %              64.0  %             61.0  %                     3.0  %
Charity and uninsured                                         6.2  %              6.8  %                    (0.6) %               6.1  %              6.4  %                    (0.3) %
Indemnity and other                                           3.1  %              2.8  %                     0.3  %               3.1  %              2.8  %                     0.3  %

(1) The change is the difference between the 2021 and 2020 percentages shown. (2) Includes Medicare and Medicaid managed care programs.

GOVERNMENT PROGRAMS
The Centers for Medicare and Medicaid Services ("CMS"), an agency of the U.S.
Department of Health and Human Services ("HHS"), is the single largest payer of
healthcare services in the United States. Approximately 61 million individuals
rely on healthcare benefits through Medicare, and approximately 81 million
individuals are enrolled in Medicaid and the Children's Health Insurance Program
("CHIP"). These three programs are authorized by federal law and administered by
CMS. Medicare is a federally funded health insurance program primarily for
individuals 65 years of age and older, as well as some younger people with
certain disabilities and conditions, and is provided without regard to income or
assets. Medicaid is co-administered by the states and is jointly funded by the
federal government and state governments. Medicaid is the nation's main public
health insurance program for people with low incomes and is the largest source
of health coverage in the United States. The CHIP, which is also co-administered
by the states and jointly funded, provides health coverage to children in
families with incomes too high to qualify for Medicaid, but too low to afford
private coverage. Unlike Medicaid, the CHIP is limited in duration and requires
the enactment of reauthorizing legislation. Funding for the CHIP has been
reauthorized through federal fiscal year ("FFY") 2027.

Medicare

Medicare offers its beneficiaries different ways to obtain their medical
benefits. One option, the Original Medicare Plan (which includes "Part A" and
"Part B"), is a fee-for-service ("FFS") payment system. The other option, called
Medicare Advantage (sometimes called "Part C" or "MA Plans"), includes health
maintenance organizations ("HMOs"), preferred provider organizations ("PPOs"),
private FFS Medicare special needs plans and Medicare medical savings account
plans. Our total net patient service revenues from continuing operations of the
hospitals and related outpatient facilities in our Hospital Operations segment
for services provided to patients enrolled in the Original Medicare Plan were
$697 million and $597 million for the three months ended June 30, 2021 and 2020,
respectively, and $1.385 billion and $1.302 billion for the six months ended
June 30, 2021 and 2020, respectively.

A general description of the types of payments we receive for services provided
to patients enrolled in the Original Medicare Plan is provided in our Annual
Report. Recent regulatory and legislative updates to the terms of these payment
systems and their estimated effect on our revenues can be found under
"Regulatory and Legislative Changes" below.

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Medicaid
Medicaid programs and the corresponding reimbursement methodologies vary from
state-to-state and from year­to­year. Even prior to the COVID-19 pandemic,
several states in which we operate faced budgetary challenges that resulted in
reduced Medicaid funding levels to hospitals and other providers. Because most
states must operate with balanced budgets, and the Medicaid program is generally
a significant portion of a state's budget, states can be expected to adopt or
consider adopting future legislation designed to reduce or not increase their
Medicaid expenditures. In addition, some states delay issuing Medicaid payments
to providers to manage state expenditures. As an alternative means of funding
provider payments, many of the states in which we operate have adopted
supplemental payment programs authorized under the Social Security Act.
Continuing pressure on state budgets and other factors could adversely affect
the Medicaid supplemental payments our hospitals receive.

Estimated revenues under various state Medicaid programs, including state-funded
Medicaid managed care programs, constituted approximately 17.3% and 18.2% of
total net patient service revenues less implicit price concessions of our acute
care hospitals and related outpatient facilities for the six months ended
June 30, 2021 and 2020, respectively. We also receive disproportionate share
hospital ("DSH") and other supplemental revenues under various state Medicaid
programs. For the six months ended June 30, 2021 and 2020, our total Medicaid
revenues attributable to DSH and other supplemental revenues were approximately
$392 million and $363 million, respectively. The 2021 period included
$107 million related to the California provider fee program, $129 million
related to the Michigan provider fee program, $17 million related to the Texas
Section 1115 waiver program, $69 million related to Medicaid DSH programs in
multiple states, and $70 million from a number of other state and local
programs.

Total Medicaid and Managed Medicaid net patient service revenues from continuing
operations recognized by the hospitals and related outpatient facilities in our
Hospital Operations segment from Medicaid-related programs in the states in
which our facilities are located, as well as from Medicaid programs in
neighboring states, for the six months ended June 30, 2021 and 2020 were
$1.287 billion and $1.161 billion, respectively. Medicaid and Managed Medicaid
revenues comprised 43% and 57%, respectively, of our Medicaid-related net
patient service revenues from continuing operations recognized by the hospitals
and related outpatient facilities in our Hospital Operations segment for the six
months ended June 30, 2021. These revenues are presented net of provider taxes
or assessments paid by our hospitals, which are reported as an offset reduction
to FFS Medicaid revenue.

Because we cannot predict what actions the federal government or the states may
take under existing or future legislation and/or regulatory changes to address
budget gaps, deficits, Medicaid expansion, provider fee programs or Medicaid
Section 1115 waivers, we are unable to assess the effect that any such
legislation or regulatory action might have on our business; however, the impact
on our future financial position, results of operations or cash flows could be
material.

Regulatory and Legislative Changes
Material updates to the information set forth in our Annual Report about the
Medicare and Medicaid payment systems, as well as other government programs
impacting our business, are provided below.

Proposed Payment and Policy Changes to the Medicare Inpatient Prospective
Payment Systems-Section 1886(d) of the Social Security Act requires CMS to
update inpatient FFS payment rates for hospitals reimbursed under the inpatient
prospective payment systems ("IPPS") annually. The updates generally become
effective October 1, the beginning of the federal fiscal year. In April 2021,
CMS issued proposed changes to the Hospital Inpatient Prospective Payment
Systems for Acute Care Hospitals and Fiscal Year 2022 Rates ("Proposed IPPS
Rule"). The Proposed IPPS Rule includes the following proposed payment and
policy changes:

•A market basket increase of 2.5% for Medicare severity-adjusted
diagnosis-related group ("MS-DRG") operating payments for hospitals reporting
specified quality measure data and that are meaningful users of electronic
health record technology; CMS also proposed a 0.2% multifactor productivity
reduction required by the ACA and a 0.5% increase required by the Medicare
Access and CHIP Reauthorization Act that collectively result in a net operating
payment update of 2.8% before budget neutrality adjustments;

•Updates to the three factors used to determine the amount and distribution of Medicare uncompensated care disproportionate share ("UC-DSH") payments;

•A 1.22% net increase in the capital federal MS-DRG rate;

•An increase in the cost outlier threshold from $29,064 to $30,967;

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•An extension of the New COVID-19 Treatments Add-on Payment for certain eligible products through the end of the FFY in which the public health emergency as declared by the Secretary of HHS ends; and

•The establishment of new requirements and the revision of existing requirements
for the Hospital Value-Based Purchasing, Hospital Readmissions Reduction and
Hospital Acquired Condition Reduction programs.

According to CMS, the combined impact of the proposed payment and policy changes
in the Proposed IPPS Rule for operating costs will yield an average 2.7%
increase in Medicare operating MS-DRG FFS payments for hospitals in urban areas
and an average 2.8% increase in such payments for proprietary hospitals in FFY
2022. We estimate that all of the proposed payment and policy changes affecting
operating MS-DRG and UC-DSH payments will result in an estimated 1.6% increase
in our annual Medicare FFS IPPS payments, which yields an estimated increase of
approximately $32 million. Because of the uncertainty associated with various
factors that may influence our future IPPS payments by individual hospital,
including legislative, regulatory or legal actions, admission volumes, length of
stay and case mix, as well as potential changes to the Proposed IPPS Rule, we
cannot provide any assurances regarding our estimates of the impact of the
proposed payment and policy changes.

Proposed Payment and Policy Changes to the Medicare Outpatient Prospective
Payment and Ambulatory Surgery Center Payment Systems-In July 2021, CMS released
proposed policy changes and payment rates for the Hospital Outpatient
Prospective Payment System ("OPPS") and Ambulatory Surgical Center ("ASC")
Payment System for calendar year ("CY") 2022 ("Proposed OPPS/ASC Rule"). The
Proposed OPPS/ASC Rule includes the following payment and policy changes:

•An estimated net increase of 2.3% for the OPPS rates based on an estimated
market basket increase of 2.5%, reduced by a multifactor productivity adjustment
required by the ACA of 0.2%;

•Continuation of the current policy of paying an adjusted amount of average
sales price ("ASP") minus 22.5% for drugs acquired under the 340B program (which
program is the subject of litigation discussed in greater detail below);

•Cessation of the elimination of the Inpatient Only List ("IPO List") (which is
the list of procedures that must be performed on an inpatient basis); efforts to
eliminate the IPO List commenced in CY 2021 and were scheduled to be completed
over a transitional period ending in CY 2024; in addition, CMS is proposing to
reinstate the 298 services removed from the IPO List in CY 2021 to the IPO List
beginning in CY 2022;

•Various modifications to the hospital price transparency requirements that took
effect on January 1, 2021, including significant increases to the civil monetary
penalty for noncompliance, as well as prohibitions to specific barriers to
accessing machine-readable price transparency files;

•A 2.3% increase to the ASC payment rates; and

•Re-adoption of the ASC Covered Procedures List ("ASC CPL") criteria in effect
in CY 2020 and removal of 258 of the 267 procedures that were added to the ASC
CPL in CY 2021.

CMS projects that the combined impact of the proposed payment and policy changes
in the Proposed OPPS/ASC Rule will yield an average 1.8% increase in Medicare
FFS OPPS payments for hospitals in urban areas and an average 2.0% increase in
Medicare FFS OPPS payments for proprietary hospitals. Based on CMS' estimates,
the projected annual impact of the payment and policy changes in the Proposed
OPPS/ASC Rule on our hospitals is an increase to Medicare FFS hospital
outpatient revenues of approximately $14 million, which represents an increase
of approximately 2.0%. Because of the uncertainty associated with various
factors that may influence our future OPPS payments, including legislative or
legal actions, volumes and case mix, as well as potential changes to the
proposed rule, we cannot provide any assurances regarding our estimate of the
impact of the proposed payment and policy changes.

Proposed Payment and Policy Changes to the Medicare Physician Fee Schedule-In
July 2021, CMS released the CY 2022 Medicare Physician Fee Schedule ("MPFS")
Proposed Rule ("MPFS Proposed Rule"). The MPFS Proposed Rule updates payment
policies, payment rates and other provisions for services reimbursed under the
MPFS on and after January 1, 2022. Under the MPFS Proposed Rule, the CY 2022
conversion factor, which is the base rate that is used to convert relative units
into payment rates, would be reduced from $34.89 to $33.58, due in part to the
expiration of the one-time 3.75% MPFS payment increase provided for in CY 2021
by the Consolidated Appropriations Act, 2021, as well as budget neutrality
rules. This change would result in an annual reduction of approximately $7
million to our FFS MPFS revenues. Because of the
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uncertainty associated with various factors that may influence our future MPFS
payments, including legislative, regulatory or legal actions, volumes and case
mix, as well as potential changes to the MPFS Proposed Rule, we cannot provide
any assurances regarding our estimate of the impact of the proposed payment and
policy changes.

Public Health and Social Services Emergency Fund-During the three months ended
June 30, 2021, our Hospital Operations and Ambulatory Care segments recognized
approximately $14 million of Provider Relief Fund grant income associated with
lost revenues and COVID-related costs. We recognized an additional $5 million of
Provider Relief Fund grant income from our unconsolidated affiliates during this
period. During the six months ended June 30, 2021, our Hospital Operations and
Ambulatory Care segments recognized approximately $38 million of Provider
Relief Fund grant income associated with lost revenues and COVID-related costs.
We recognized an additional $11 million of Provider Relief Fund grant income
from our unconsolidated affiliates during this period. Our Hospital Operations
and Ambulatory Care segments also recognized $5 million and $12 million of grant
income from state and local grant programs during the three and six months ended
June 30, 2021, respectively. Grant income recognized by our Hospital Operations
and Ambulatory Care segments is presented in grant income and grant income
recognized through our unconsolidated affiliates is presented in equity in
earnings of unconsolidated affiliates in our accompanying Condensed Consolidated
Statement of Operations for the three and six months ended June 30, 2021. Based
on the uncertainty regarding future estimates of lost revenues and COVID-related
costs or the impact of further updates to HHS guidance, if any, we cannot
provide any assurances regarding the amount of grant income to be recognized in
the future.

Medicare and Medicaid Payment Policy Changes-The 2% sequestration reduction on
Medicare FFS and Medicare Advantage payments to hospitals, physicians and other
providers was suspended effective May 1, 2020. It was scheduled to resume on
April 1, 2021; however, on April 14, 2021, President Biden signed H.R. 1868,
which included an extension of the suspension of the 2% sequestration reduction
through December 31, 2021. The impact of the suspension on our operations was an
increase of approximately $38 million of revenues in the six months ended
June 30, 2021. We expect the suspension to result in an increase of
approximately $80 million of revenues for the year ending December 31, 2021.
Because of the uncertainty associated with various factors that may influence
our future Medicare and Medicaid payments, including future legislative, legal
or regulatory actions, or changes in volumes and case mix, there is a risk that
actual payments received under, or the ultimate impact of, these programs will
differ materially from our expectations.

The American Rescue Plan Act of 2021-In March 2021, President Biden signed into
law the American Rescue Plan Act of 2021 ("ARPA"), a $1.9 trillion COVID-19
relief package, which includes a number of provisions that affect hospitals and
health systems, specifically:

•Additional funding for rural health care providers for COVID-19 relief;

•An incentive for states that have not already done so to expand Medicaid by temporarily increasing each respective state's Federal Medical Assistance Percentage for their base program by five percentage points for two years;

•Federal subsidies valued at 100% of the health insurance premium for eligible individuals and families to remain on their employer-based coverage through September 30, 2021;

•Additional COVID-19 funding for vaccines, treatment, PPE, testing, contact tracing and workforce development; and

•Funding to the Department of Labor for worker protection activities.

Significant Litigation
340B Litigation
The 340B program allows certain hospitals (i.e., only nonprofit organizations
with specific federal designations and/or funding) ("340B Hospitals") to
purchase drugs at discounted rates from drug manufacturers. In the final rule
regarding OPPS payment and policy changes for CY 2018, CMS reduced the payment
for 340B Drugs from the ASP plus 6% to ASP minus 22.5% and made a corresponding
budget­neutral increase to payments to all hospitals for other drugs and
services reimbursed under the OPPS (the "340B Payment Adjustment"). In the final
rules regarding OPPS payment and policy changes for CYs 2019, 2020 and 2021, CMS
continued the 340B Payment Adjustment. Certain hospital associations and
hospitals commenced litigation challenging CMS' authority to impose the 340B
Payment Adjustment for CYs 2018, 2019 and 2020. Previously, the U.S. District
Court for the District of Columbia (the "District Court") held that the adoption
of the 340B Payment Adjustment in the CYs 2018 and 2019 OPPS Final Rules
exceeded CMS' statutory authority by reducing drug
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reimbursement rates for 340B Hospitals. In July 2020, the U.S. Court of Appeals
for the District of Columbia Circuit (the "Appeals Court") reversed the District
Court's holding, finding that HHS' decision to reduce the payment rate for
340B Drugs was based on a reasonable interpretation of the Medicare statute. The
Appeals Court subsequently denied the 340B Hospital's petition for a rehearing.
The 340B Hospitals filed a timely petition asking the U.S. Supreme Court
("Supreme Court") to reverse the Appeals Court's decision and, on July 2, 2021,
the Supreme Court agreed to review the case. We cannot predict what further
actions the Supreme Court, CMS or Congress might take with respect to the 340B
program; however, a reversal of the current payment policy and return to the
prior 340B payment methodology could have an adverse effect on our net operating
revenues and cash flows.

PRIVATE INSURANCE
Managed Care
We currently have thousands of managed care contracts with various HMOs and
PPOs. HMOs generally maintain a full-service healthcare delivery network
comprised of physician, hospital, pharmacy and ancillary service providers that
HMO members must access through an assigned "primary care" physician. The
member's care is then managed by his or her primary care physician and other
network providers in accordance with the HMO's quality assurance and utilization
review guidelines so that appropriate healthcare can be efficiently delivered in
the most cost-effective manner. HMOs typically provide reduced benefits or
reimbursement (or none at all) to their members who use non-contracted
healthcare providers for non-emergency care.

PPOs generally offer limited benefits to members who use non-contracted
healthcare providers. PPO members who use contracted healthcare providers
receive a preferred benefit, typically in the form of lower co-pays,
co-insurance or deductibles. As employers and employees have demanded more
choice, managed care plans have developed hybrid products that combine elements
of both HMO and PPO plans, including high-deductible healthcare plans that may
have limited benefits, but cost the employee less in premiums.

The amount of our managed care net patient service revenues, including Medicare
and Medicaid managed care programs, from our hospitals and related outpatient
facilities during the six months ended June 30, 2021 and 2020 was $5.025 billion
and $4.145 billion, respectively. Our top 10 managed care payers generated 61%
of our managed care net patient service revenues for the six months ended
June 30, 2021. During the same period, national payers generated 43% of our
managed care net patient service revenues. The remainder came from regional or
local payers. At June 30, 2021 and December 31, 2020, 64% and 66%, respectively,
of our net accounts receivable for our Hospital Operations segment were due from
managed care payers.

Revenues under managed care plans are based primarily on payment terms involving
predetermined rates per diagnosis, per-diem rates, discounted FFS rates and/or
other similar contractual arrangements. These revenues are also subject to
review and possible audit by the payers, which can take several years before
they are completely resolved. The payers are billed for patient services on an
individual patient basis. An individual patient's bill is subject to adjustment
on a patient­by­patient basis in the ordinary course of business by the payers
following their review and adjudication of each particular bill. We estimate the
discounts for contractual allowances at the individual hospital level utilizing
billing data on an individual patient basis. At the end of each month, on an
individual hospital basis, we estimate our expected reimbursement for patients
of managed care plans based on the applicable contract terms. We believe it is
reasonably likely for there to be an approximately 3% increase or decrease in
the estimated contractual allowances related to managed care plans. Based on
reserves at June 30, 2021, a 3% increase or decrease in the estimated
contractual allowance would impact the estimated reserves by approximately $17
million. Some of the factors that can contribute to changes in the contractual
allowance estimates include: (1) changes in reimbursement levels for procedures,
supplies and drugs when threshold levels are triggered; (2) changes in
reimbursement levels when stop-loss or outlier limits are reached; (3) changes
in the admission status of a patient due to physician orders subsequent to
initial diagnosis or testing; (4) final coding of in-house and
discharged­not­final­billed patients that change reimbursement levels;
(5) secondary benefits determined after primary insurance payments; and
(6) reclassification of patients among insurance plans with different coverage
and payment levels. Contractual allowance estimates are periodically reviewed
for accuracy by taking into consideration known contract terms, as well as
payment history. We believe our estimation and review process enables us to
identify instances on a timely basis where such estimates need to be revised. We
do not believe there were any adjustments to estimates of patient bills that
were material to our revenues. In addition, on a corporate-wide basis, we do not
record any general provision for adjustments to estimated contractual allowances
for managed care plans. Managed care accounts, net of contractual allowances
recorded, are further reduced to their net realizable value through implicit
price concessions based on historical collection trends for these payers and
other factors that affect the estimation process.

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We expect managed care governmental admissions to continue to increase as a
percentage of total managed care admissions over the near term. However, the
managed Medicare and Medicaid insurance plans typically generate lower yields
than commercial managed care plans, which have been experiencing an improved
pricing trend. Although we have benefited from solid year-over-year aggregate
managed care pricing improvements for some time, we have seen these improvements
moderate in recent years, and we believe this moderation could continue into the
future. In the six months ended June 30, 2021, our commercial managed care net
inpatient revenue per admission from the hospitals in our Hospital Operations
segment was approximately 84% higher than our aggregate yield on a per admission
basis from government payers, including managed Medicare and Medicaid insurance
plans.

Indemnity

An indemnity-based agreement generally requires the insurer to reimburse an insured patient for healthcare expenses after those expenses have been incurred by the patient, subject to policy conditions and exclusions. Unlike an HMO member, a patient with indemnity insurance is free to control his or her utilization of healthcare and selection of healthcare providers.

UNINSURED PATIENTS
Uninsured patients are patients who do not qualify for government programs
payments, such as Medicare and Medicaid, do not have some form of private
insurance and, therefore, are responsible for their own medical bills. A
significant number of our uninsured patients are admitted through our hospitals'
emergency departments and often require high-acuity treatment that is more
costly to provide and, therefore, results in higher billings, which are the
least collectible of all accounts.

Self-pay accounts receivable, which include amounts due from uninsured patients,
as well as co-pays, co-insurance amounts and deductibles owed to us by patients
with insurance, pose significant collectability problems. At both June 30, 2021
and December 31, 2020, approximately 4% of our net accounts receivable for our
Hospital Operations segment was self-pay. Further, a significant portion of our
implicit price concessions relates to self-pay amounts. We provide revenue cycle
management services through Conifer, which is subject to various statutes and
regulations regarding consumer protection in areas including finance, debt
collection and credit reporting activities. For additional information, see
Item 1, Business - Regulations Affecting Conifer's Operations, of Part I of our
Annual Report.

Conifer has performed systematic analyses to focus our attention on the drivers
of bad debt expense for each hospital. While emergency department use is the
primary contributor to our implicit price concessions in the aggregate, this is
not the case at all hospitals. As a result, we have increased our focus on
targeted initiatives that concentrate on non-emergency department patients as
well. These initiatives are intended to promote process efficiencies in
collecting self-pay accounts, as well as co-pay, co-insurance and deductible
amounts owed to us by patients with insurance, that we deem highly collectible.
We leverage a statistical-based collections model that aligns our operational
capacity to maximize our collections performance. We are dedicated to modifying
and refining our processes as needed, enhancing our technology and improving
staff training throughout the revenue cycle process in an effort to increase
collections and reduce accounts receivable.

Over the longer term, several other initiatives we have previously announced
should also help address the challenges associated with serving uninsured
patients. For example, our Compact with Uninsured Patients ("Compact") is
designed to offer managed care-style discounts to certain uninsured patients,
which enables us to offer lower rates to those patients who historically had
been charged standard gross charges. Under the Compact, the discount offered to
uninsured patients is recognized as a contractual allowance, which reduces net
operating revenues at the time the self-pay accounts are recorded. The uninsured
patient accounts, net of contractual allowances recorded, are further reduced to
their net realizable value through implicit price concessions based on
historical collection trends for self-pay accounts and other factors that affect
the estimation process.

We also provide financial assistance through our charity and uninsured discount
programs to uninsured patients who are unable to pay for the healthcare services
they receive. Our policy is not to pursue collection of amounts determined to
qualify for financial assistance; therefore, we do not report these amounts in
net operating revenues. Most states include an estimate of the cost of charity
care in the determination of a hospital's eligibility for Medicaid DSH payments.
These payments are intended to mitigate our cost of uncompensated care. Some
states have also developed provider fee or other supplemental payment programs
to mitigate the shortfall of Medicaid reimbursement compared to the cost of
caring for Medicaid patients.

The initial expansion of health insurance coverage under the Affordable Care Act
resulted in an increase in the number of patients using our facilities with
either health insurance exchange or government healthcare insurance program
coverage. However, we continue to have to provide uninsured discounts and
charity care due to the failure of states to expand Medicaid coverage and for
persons living in the country who are not permitted to enroll in a health
insurance exchange or government healthcare insurance program.
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The following table shows our estimated costs (based on selected operating expenses, which include salaries, wages and benefits, supplies and other operating expenses) of caring for our uninsured and charity patients in the three and six months ended June 30, 2021 and 2020:

                                 Three Months Ended                 Six Months Ended
                                      June 30,                          June 30,
                                   2021             2020            2021            2020
Estimated costs for:
Uninsured patients         $      158              $ 145      $     326            $ 301
Charity care patients              29                 43             49               83
Total                      $      187              $ 188      $     375            $ 384



RESULTS OF OPERATIONS
The following two tables summarize our consolidated net operating revenues,
operating expenses and operating income from continuing operations, both in
dollar amounts and as percentages of net operating revenues, for the three and
six months ended June 30, 2021 and 2020. We present metrics as a percentage of
net operating revenues because a significant portion of our costs are variable.
                                                                  Three Months Ended                  Six Months Ended
                                                                       June 30,                           June 30,
                                                                 2021              2020             2021             2020
Net operating revenues:
Hospital Operations                                          $   4,095          $ 3,088          $ 8,042          $ 6,922
Ambulatory Care                                                    664              368            1,310              858
Conifer                                                            319              305              629              637
Inter-segment eliminations                                        (124)            (113)            (246)            (249)
Net operating revenues                                           4,954            3,648            9,735            8,168
Grant income                                                        19              511               50              511
Equity in earnings of unconsolidated affiliates                     54               31               96               59
Operating expenses:
Salaries, wages and benefits                                     2,280            1,864            4,481            4,051
Supplies                                                           859              611            1,663            1,374
Other operating expenses, net                                    1,054              983            2,126            1,996
Depreciation and amortization                                      221              206              445              409
Impairment and restructuring charges, and
acquisition-related costs                                           20               54               40              109
Litigation and investigation costs                                  22                2               35                4
Net gains on sales, consolidation and deconsolidation of
facilities                                                         (15)              (1)             (15)              (3)
Operating income                                             $     586          $   471          $ 1,106          $   798

                                                                  Three Months Ended                  Six Months Ended
                                                                       June 30,                           June 30,
                                                                 2021              2020             2021             2020
Net operating revenues                                           100.0  %         100.0  %         100.0  %         100.0  %
Grant income                                                       0.4  %          14.0  %           0.5  %           6.2  %
Equity in earnings of unconsolidated affiliates                    1.1  %           0.8  %           1.0  %           0.7  %
Operating expenses:
Salaries, wages and benefits                                      46.0  %          51.1  %          46.0  %          49.6  %
Supplies                                                          17.4  %          16.7  %          17.1  %          16.8  %
Other operating expenses, net                                     21.3  %          26.9  %          21.8  %          24.4  %
Depreciation and amortization                                      4.5  %           5.6  %           4.6  %           5.0  %
Impairment and restructuring charges, and
acquisition-related costs                                          0.4  %           1.5  %           0.4  %           1.3  %
Litigation and investigation costs                                 0.4  %           0.1  %           0.4  %             -  %
Net gains on sales, consolidation and deconsolidation of
facilities                                                        (0.3) %             -  %          (0.2) %             -  %
Operating income                                                  11.8  %          12.9  %          11.4  %           9.8  %



Total net operating revenues increased by $1.306 billion and $1.567 billion, or
35.8% and 19.2%, for the three and six months ended June 30, 2021, respectively,
compared to the three and six months ended June 30, 2020, respectively. Hospital
Operations net operating revenues net of inter-segment eliminations increased by
$996 million and $1.123 billion, or 33.5% and 16.8%, for the three and six
months ended June 30, 2021, respectively, compared to the same three and
six-month periods in 2020. These increases were primarily due to increased
patient volumes, higher patient acuity and negotiated commercial rate
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increases. Our Hospital Operations segment also recognized income from federal,
state and local grants totaling $4 million and $28 million during the three and
six months ended June 30, 2021, respectively, which was not included in net
operating revenues.

Ambulatory Care net operating revenues increased by $296 million and
$452 million, or 80.4% and 52.7%, for the three and six months ended June 30,
2021, respectively, compared to the three and six months ended June 30, 2020,
respectively. The change in 2021 revenues for the three-month period was driven
by an increase in same-facility net operating revenues of $200 million due
primarily to higher patient volumes and acuity, incremental revenue from new
service lines and negotiated commercial rate increases, as well as an increase
from acquisitions of $123 million. These increases were partially offset by a
decrease of $27 million due primarily to the sale of our urgent care centers and
the transfer of imaging centers to the Hospital Operations segment. The change
in 2021 revenues for the six-month period was driven by an increase in
same-facility net operating revenues of $244 million due primarily to higher
patient volumes and acuity, incremental revenue from new service lines and
negotiated commercial rate increases, as well as an increase from acquisitions
of $241 million. These increases were partially offset by a decrease of
$33 million due to the sale of our urgent care centers, the transfer of imaging
centers to the Hospital Operations segment and the deconsolidation of a
facility. Our Ambulatory Care segment also recognized income from federal grants
totaling $15 million and $22 million during the three and six months ended
June 30, 2021, respectively, which was not included in net operating revenues.

Conifer's total net operating revenues increased by $14 million, or 4.6%, for
the three months ended June 30, 2021 compared to the three months ended June 30,
2020. The portion of Conifer's revenues from third-party customers, which are
not eliminated in consolidation, increased $3 million, or 1.6%, for the three
months ended June 30, 2021 as compared to the three months ended June 30, 2020.
This increase was primarily due to volumes related to new services with existing
customers, along with customer incentives. Conifer's total net operating
revenues decreased by $8 million, or 1.3%, for the six months ended
June 30, 2021 compared to the same period in 2020 due to the revised terms in
the Amended RCM Agreement and expected client attrition. These impacts were
partially offset by client volume improvement in the 2021 period as compared to
the 2020 period, which was adversely affected by the COVID-19 pandemic, as well
as new business expansion. The portion of Conifer's revenues from third-party
customers, which are not eliminated in consolidation, decreased $5 million, or
1.3%, for the six months ended June 30, 2021 compared to the six months ended
June 30, 2020. This decrease was primarily attributable to expected client
attrition, partially offset by new business expansion.

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The following table shows selected operating expenses of our three reportable
business segments. Information for our Hospital Operations segment is presented
on a same-hospital basis, which includes the results of our same 65 hospitals
operated throughout the three and six months ended June 30, 2021 and 2020 and
excludes the urgent care centers that we divested effective April 30, 2021. We
present same-hospital data because we believe it provides investors with useful
information regarding the performance of our hospitals and other operations that
are comparable for the periods presented.
                                                                   Three Months Ended                                             Six Months Ended
                                                                        June 30,                        Increase                      June 30,                      Increase
Selected Operating Expenses                                       2021                2020             (Decrease)               2021              2020             (Decrease)
Hospital Operations - Same-Hospital:
Salaries, wages and benefits                                $    1,928             $ 1,567                    23.0  %       $   3,772          $ 3,397                    11.0  %
Supplies                                                           688                 529                    30.1  %           1,333            1,178                    13.2  %
Other operating expenses                                           888                 836                     6.2  %           1,798            1,699                     5.8  %
Total                                                       $    3,504             $ 2,932                    19.5  %       $   6,903          $ 6,274                    10.0  %
Ambulatory Care:
Salaries, wages and benefits                                $      169             $   119                    42.0  %       $     343          $   281                    22.1  %
Supplies                                                           169                  79                   113.9  %             326              191                    70.7  %
Other operating expenses                                            95                  75                    26.7  %             198              161                    23.0  %
Total                                                       $      433             $   273                    58.6  %       $     867          $   633                    37.0  %
Conifer:
Salaries, wages and benefits                                $      170             $   165                     3.0  %       $     340          $   344                    (1.2) %
Supplies                                                             1                   1                       -  %               2                2                       -  %
Other operating expenses                                            58                  66                   (12.1) %             111              131                   (15.3) %
Total                                                       $      229             $   232                    (1.3) %       $     453          $   477                    (5.0) %

Rent/lease expense(1):
Hospital Operations                                         $       72             $    64                    12.5  %       $     147          $   127                    15.7  %
Ambulatory Care                                                     24                  20                    20.0  %              51               43                    18.6  %
Conifer                                                              3                   3                       -  %               6                6                       -  %
Total                                                       $       99             $    87                    13.8  %       $     204          $   176                    15.9  %


(1)    Included in other operating expenses.



RESULTS OF OPERATIONS BY SEGMENT
Our operations are reported in three segments:

•Hospital Operations, which is comprised of acute care and specialty hospitals,
ancillary outpatient facilities, micro-hospitals, imaging centers, physician
practices, and other care sites and clinics. Certain of the facilities in our
Hospital Operations segment were classified as held for sale in the accompanying
Condensed Consolidated Balance Sheet at June 30, 2021.

•Our Ambulatory Care segment is comprised of USPI's ambulatory surgery centers and surgical hospitals.

•Conifer, which provides revenue cycle management and value-based care services to hospitals, health systems, physician practices, employers and other clients.

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Hospital Operations Segment
The following tables show operating statistics of our continuing operations
hospitals and related outpatient facilities on a same-hospital basis, unless
otherwise indicated, which includes the results of our same 65 hospitals
operated throughout the six months ended June 30, 2021 and 2020 and excludes the
urgent care centers that we divested effective April 30, 2021. We present
same-hospital data because we believe it provides investors with useful
information regarding the performance of our hospitals and other operations that
are comparable for the periods presented. We present certain metrics on a
per­adjusted­patient­admission and per-adjusted-patient-day basis to show trends
other than volume. We present certain metrics as a percentage of net operating
revenues because a significant portion of our operating expenses are variable.
                                                                                                               Same-Hospital                                                                                      Same-Hospital
                                                                                                           Continuing Operations                                                                              Continuing Operations
                                                                                                             Three Months Ended                                                                                  Six Months Ended
                                                                                                                  June 30,                                         Increase                                          June 30,                                         Increase
Admissions, Patient Days and Surgeries                                                               2021                              2020                       (Decrease)                            2021                              2020                       (Decrease)
Number of hospitals (at end of period)                                                                            65                           65                        -    (1)                                    65                           65                        -    (1)
Total admissions                                                                                             153,319                      134,898                     13.7  %                                   300,993                      300,633                      0.1  %
Adjusted patient admissions(2)                                                                               273,824                      220,947                     23.9  %                                   524,663                      511,554                      2.6  %
Paying admissions (excludes charity and uninsured)                                                           143,864                      125,792                     14.4  %                                   282,620                      281,612                      0.4  %
Charity and uninsured admissions                                                                               9,455                        9,106                      3.8  %                                    18,373                       19,021                     (3.4) %
Admissions through emergency department                                                                      114,911                       98,193                     17.0  %                                   227,641                      220,484                      3.2  %
Paying admissions as a percentage of total admissions                                                           93.8  %                      93.2  %                   0.6  % (1)                                  93.9  %                      93.7  %                   0.2  % (1)

Charity and uninsured admissions as a percentage of total admissions

                                      6.2  %                       6.8  %                  (0.6) % (1)                                   6.1  %                       6.3  %                  (0.2) % (1)

Emergency department admissions as a percentage of total admissions

                                    74.9  %                      72.8  %                   2.1  % (1)                                  75.6  %                      73.3  %                   2.3  % (1)
Surgeries - inpatient                                                                                         40,074                       34,973                     14.6  %                                    76,861                       76,935                     (0.1) %
Surgeries - outpatient                                                                                        60,949                       38,749                     57.3  %                                   114,126                       92,139                     23.9  %
Total surgeries                                                                                              101,023                       73,722                     37.0  %                                   190,987                      169,074                     13.0  %
Patient days - total                                                                                         757,003                      687,883                     10.0  %                                 1,554,492                    1,498,362                      3.7  %
Adjusted patient days(2)                                                                                   1,328,952                    1,093,144                     21.6  %                                 2,649,850                    2,477,423                      7.0  %
Average length of stay (days)                                                                                   4.94                         5.10                     (3.1) %                                      5.16                         4.98                      3.6  %
Licensed beds (at end of period)                                                                              17,164                       17,219                     (0.3) %                                    17,164                       17,219                     (0.3) %
Average licensed beds                                                                                         17,170                       17,219                     (0.3) %                                    17,174                       17,219                     (0.3) %
Utilization of licensed beds(3)                                                                                 48.4  %                      43.9  %                   4.5  % (1)                                  50.0  %                      47.8  %                   2.2  % (1)

(1) The change is the difference between the 2021 and 2020 amounts shown. (2) Adjusted patient admissions/days represents actual patient admissions/days adjusted to

include outpatient services provided by facilities in our Hospital Operations segment

by multiplying actual patient admissions/days by the sum of gross inpatient revenues

and outpatient revenues and dividing the results by gross inpatient revenues. (3) Utilization of licensed beds represents patient days divided by number of days in the

       period divided by average licensed beds.


                                                                              Same-Hospital                                                                                Same-Hospital
                                                                          Continuing Operations                                                                        Continuing Operations
                                                                            Three Months Ended                                                                            Six Months Ended
                                                                                 June 30,                                      Increase                                       June 30,                                       Increase
Outpatient Visits                                                     2021                           2020                     (Decrease)                          2021                            2020                      (Decrease)
Total visits                                                               1,478,354                  866,436                    70.6  %                               2,748,407                  2,308,383                    19.1  %
Paying visits (excludes charity and uninsured)                             1,371,155                  796,028                    72.2  %                               2,560,377                  2,130,454                    20.2  %
Charity and uninsured visits                                                 107,199                   70,408                    52.3  %                                 188,030                    177,929                     5.7 

%

Emergency department visits                                                  541,417                  388,038                    39.5  %                                 992,247                  1,029,320                    (3.6) %
Surgery visits                                                                60,949                   38,749                    57.3  %                                 114,126                     92,139                    23.9  %
Paying visits as a percentage of total visits                                   92.7  %                  91.9  %                  0.8  % (1)                                93.2  %                    92.3  %                  0.9  % (1)
Charity and uninsured visits as a percentage of
total visits                                                                     7.3  %                   8.1  %                 (0.8) % (1)                                 6.8  %                     7.7  %                 (0.9) % (1)


(1)   The change is the difference between the 2021 and 2020 amounts shown.


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                                                             Same-Hospital                                                        Same-Hospital
                                                         Continuing Operations                                                Continuing Operations
                                                          Three Months Ended                                                    Six Months Ended
                                                               June 30,                           Increase                          June 30,                           Increase
Revenues                                                2021                  2020               (Decrease)                  2021                  2020               (Decrease)
Total segment net operating revenues(1)          $      3,937              $  2,961                     33.0  %       $      7,744              $  6,637                     16.7  %
Selected revenue data - hospitals and
related outpatient facilities:
Net patient service revenues(1)(2)               $      3,749              $  2,816                     33.1  %       $      7,381              $  6,334                     16.5  %
Net patient service revenue per adjusted
patient admission(1)(2)                          $     13,691              $ 12,745                      7.4  %       $     14,068              $ 12,382                     13.6  %
Net patient service revenue per adjusted
patient day(1)(2)                                $      2,821              $  2,576                      9.5  %       $      2,785              $  2,557                      8.9  %

(1) Revenues are net of implicit price concessions. (2) Adjusted patient admissions/days represents actual patient admissions/days adjusted to

include outpatient services provided by facilities in our Hospital Operations segment

by multiplying actual patient admissions/days by the sum of gross inpatient revenues

       and outpatient revenues and dividing the results by gross inpatient revenues.


                                                                                       Same-Hospital                                                                              Same-Hospital
                                                                                   Continuing Operations                                                                      Continuing Operations
                                                                                    Three Months Ended                                                                          Six Months Ended
                                                                                         June 30,                                      Increase                                     June 30,                                     

Increase

Total Segment Selected Operating Expenses                                       2021                          2020                    (Decrease)                           2021                          2020                    

(Decrease)

Salaries, wages and benefits as a percentage of net operating revenues

                                                                        49.0  %                52.9  %                 (3.9) % (1)                                 48.7  %                51.2  %                 (2.5) %    (1)
Supplies as a percentage of net operating revenues                                        17.5  %                17.9  %                 (0.4) % (1)                                 17.2  %                17.7  %                 (0.5) %    (1)
Other operating expenses as a percentage of net operating
revenues                                                                                  22.6  %                28.2  %                 (5.6) % (1)                                 23.2  %                25.6  %                 (2.4) %    (1)


(1)   The change is the difference between the 2021 and 2020 amounts shown.

Revenues

Same-hospital net operating revenues increased $976 million, or 33.0%, during
the three months ended June 30, 2021 compared to the three months ended June 30,
2020, primarily due to increased patient volumes, higher patient acuity and
negotiated commercial rate increases. Our Hospital Operations segment also
recognized income from federal, state and local grants totaling $4 million in
the three months ended June 30, 2021, which is not included in net operating
revenues. Same­hospital admissions increased 13.7% in the three months ended
June 30, 2021 compared to the same period in 2020. Same­hospital outpatient
visits increased 70.6% in the three months ended June 30, 2021 compared to the
prior-year period.

Same-hospital net operating revenues increased $1.107 billion, or 16.7%, during
the six months ended June 30, 2021 compared to the six months ended June 30,
2020, primarily due to the same factors that impacted the three-month period
ended June 30, 2021. Our Hospital Operations segment also recognized income from
federal, state and local grants totaling $28 million in the six months ended
June 30, 2021, which is not included in net operating revenues. Same-hospital
admissions increased 0.1% in the six months ended June 30, 2021 compared to the
same period in 2020. Same-hospital outpatient visits increased 19.1% in the six
months ended June 30, 2021 compared to the prior-year period.

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The following table shows the consolidated net accounts receivable by payer at
June 30, 2021 and December 31, 2020:
                                                                                                 December 31,
                                                                          June 30, 2021              2020
Medicare                                                                $          149          $        152
Medicaid                                                                            45                    49
Net cost report settlements receivable and valuation allowances                     55                    34
Managed care                                                                     1,513                 1,567
Self-pay uninsured                                                                  24                    32
Self-pay balance after insurance                                                    75                    74
Estimated future recoveries                                                        139                   156
Other payers                                                                       354                   318
Total Hospital Operations                                                        2,354                 2,382
Ambulatory Care                                                                    288                   307
Total discontinued operations                                                        1                     1
                                                                        $        2,643          $      2,690



Collection of accounts receivable has been a key area of focus, particularly
over the past several years. At June 30, 2021, our Hospital Operations segment
collection rate on self-pay accounts was approximately 25.4%. Our self­pay
collection rate includes payments made by patients, including co-pays,
co-insurance amounts and deductibles paid by patients with insurance. Based on
our accounts receivable from uninsured patients and co-pays, co-insurance
amounts and deductibles owed to us by patients with insurance at June 30, 2021,
a 10% decrease or increase in our self-pay collection rate, or approximately 3%,
which we believe could be a reasonably likely change, would result in an
unfavorable or favorable adjustment to patient accounts receivable of
approximately $9 million. There are various factors that can impact collection
trends, such as changes in the economy, which in turn have an impact on
unemployment rates and the number of uninsured and underinsured patients, the
volume of patients through our emergency departments, the increased burden of
co-pays and deductibles to be made by patients with insurance, and business
practices related to collection efforts. These factors, many of which have been
affected by the COVID-19 pandemic, continuously change and can have an impact on
collection trends and our estimation process.

Payment pressure from managed care payers also affects the collectability of our
accounts receivable. We typically experience ongoing managed care payment delays
and disputes; however, we continue to work with these payers to obtain adequate
and timely reimbursement for our services. Our estimated Hospital Operations
segment collection rate from managed care payers was approximately 97.0% at
June 30, 2021.

We manage our implicit price concessions using hospital-specific goals and
benchmarks such as (1) total cash collections, (2) point-of-service cash
collections, (3) AR Days and (4) accounts receivable by aging category. The
following tables present the approximate aging by payer of our net accounts
receivable from the continuing operations of our Hospital Operations segment of
$2.299 billion and $2.348 billion at June 30, 2021 and December 31, 2020,
respectively, excluding cost report settlements receivable and valuation
allowances of $55 million and $34 million, respectively, at June 30, 2021 and
December 31, 2020:
                                             June 30, 2021
                                                              Indemnity,
                                                 Managed       Self-Pay
                    Medicare       Medicaid       Care        and Other       Total
0-60 days                91  %         40  %        55  %           24  %      50  %
61-120 days               5  %         27  %        17  %           14  %      16  %
121-180 days              2  %         14  %        10  %            8  %       9  %
Over 180 days             2  %         19  %        18  %           54  %      25  %
Total                   100  %        100  %       100  %          100  %     100  %


                                             December 31, 2020
                                                                  Indemnity,
                                                     Managed       Self-Pay
                      Medicare         Medicaid       Care        and Other       Total
0-60 days                    91  %         33  %        58  %           24  %      52  %
61-120 days                   5  %         31  %        15  %           13  %      14  %
121-180 days                  2  %         14  %         8  %            8  %       8  %
Over 180 days                 2  %         22  %        19  %           55  %      26  %
Total                       100  %        100  %       100  %          100  %     100  %


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Conifer continues to implement revenue cycle initiatives to improve our cash
flow. These initiatives are focused on standardizing and improving patient
access processes, including pre-registration, registration, verification of
eligibility and benefits, liability identification and collections at
point-of-service, and financial counseling. These initiatives are intended to
reduce denials, improve service levels to patients and increase the quality of
accounts that end up in accounts receivable. Although we continue to focus on
improving our methodology for evaluating the collectability of our accounts
receivable, we may incur future charges if there are unfavorable changes in the
trends affecting the net realizable value of our accounts receivable.

At June 30, 2021, we had a cumulative total of patient account assignments to
Conifer of $2.2 billion related to our continuing operations. These accounts
have already been written off and are not included in our receivables or in the
allowance for doubtful accounts; however, an estimate of future recoveries from
all the accounts assigned to Conifer is determined based on our historical
experience and recorded in accounts receivable.

Patient advocates from Conifer's Medicaid Eligibility Program ("MEP") screen
patients in the hospital to determine whether those patients meet eligibility
requirements for financial assistance programs. They also expedite the process
of applying for these government programs. Receivables from patients who are
potentially eligible for Medicaid are classified as Medicaid pending, under the
MEP, with appropriate contractual allowances recorded. Based on recent trends,
approximately 97% of all accounts in the MEP are ultimately approved for
benefits under a government program, such as Medicaid.

The following table shows the approximate amount of accounts receivable in the
MEP still awaiting determination of eligibility under a government program at
June 30, 2021 and December 31, 2020 by aging category:
                    June 30, 2021       December 31, 2020
0-60 days          $           77      $               91
61-120 days                    12                      24
121-180 days                    2                       6
Over 180 days                   7                       6
Total              $           98      $              127



Salaries, Wages and Benefits
Same-hospital salaries, wages and benefits increased $361 million, or 23%, in
the three months ended June 30, 2021 compared to the same period in 2020. This
change was primarily attributable to increased contract labor costs, higher
patient volumes, increased incentive compensation, annual merit increases for
certain of our employees and a greater number of employed physicians. This
increase was partially offset by our continued focus on cost­reduction measures
and corporate efficiencies. Same-hospital salaries, wages and benefits as a
percentage of net operating revenues decreased by 390 basis points to 49.0% in
the three months ended June 30, 2021 compared to the three months ended
June 30, 2020, primarily due to the same factors described above. Salaries,
wages and benefits expense for the three months ended June 30, 2021 and 2020
included stock-based compensation expense of $12 million and $8 million,
respectively.

Same-hospital salaries, wages and benefits increased $375 million, or 11.0%, in
the six months ended June 30, 2021 compared to the same period in 2020. This
increase was primarily attributable to the same factors that impacted the
three­month period ended June 30, 2021. Same-hospital salaries, wages and
benefits as a percentage of net operating revenues decreased by 250 basis points
to 48.7% in the six months ended June 30, 2021 compared to the six months ended
June 30, 2020, primarily due to the same factors that impacted the three­month
period ended June 30, 2021. Salaries, wages and benefits expense for the six
months ended June 30, 2021 and 2020 included stock-based compensation expense of
$22 million and $15 million, respectively.

Supplies

Same-hospital supplies expense increased $159 million, or 30.1%, in the three
months ended June 30, 2021 compared to the same period in 2020. The increase was
primarily due to increased patient volumes, the increased cost of certain
supplies as a result of the COVID-19 pandemic and growth in our higher-acuity,
supply-intensive surgical services. Same-hospital supplies expense as a
percentage of net operating revenues decreased by 40 basis points to 17.5% in
the three months ended June 30, 2021 compared to the three months ended June 30,
2020, primarily due to the same factors described above.

Same-hospital supplies expense increased $155 million, or 13.2%, in the six
months ended June 30, 2021 compared to the same period in 2020. The increase was
primarily due to the same factors that impacted the three-month period ended
June 30, 2021. Same-hospital supplies expense as a percentage of net operating
revenues decreased by 50 basis points to 17.2%
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in the six months ended June 30, 2021 compared to the six months ended June 30,
2020 primarily due to the same factors that impacted the three-month period
ended June 30, 2021.

We strive to control supplies expense through product standardization,
consistent contract terms and end­to­end contract management, improved
utilization, bulk purchases, focused spending with a smaller number of vendors
and operational improvements. The items of current cost-reduction focus include
PPE, cardiac stents and pacemakers, orthopedics, implants, and high-cost
pharmaceuticals.

Other Operating Expenses, Net
Same-hospital other operating expenses increased by $52 million, or 6.2%, in the
three months ended June 30, 2021 compared to the same period in 2020.
Same-hospital other operating expenses as a percentage of net operating revenues
decreased by 560 basis points to 22.6% for the three months ended June 30, 2021
compared to 28.2% for the three months ended June 30, 2020, primarily due to
increased patient volumes and the fact that there is a high level of fixed costs
(e.g., rent expense) in other operating expenses. The changes in other operating
expenses included:

•increased software costs of $22 million;

•increased malpractice expense of $15 million;

•increased rent and lease expense of $8 million;

•increased repair and maintenance costs of $13 million; and

•a gain on sale and leaseback of a medical office building of $12 million, which is classified as a reduction of other operating expenses, net.

Same-hospital other operating expenses increased by $99 million, or 5.8%, in the
six months ended June 30, 2021 compared to the same period in 2020.
Same-hospital other operating expenses as a percentage of net operating revenues
decreased by 240 basis points to 23.2% in the six months ended June 30, 2021
compared to 25.6% for the six months ended June 30, 2020, primarily due to
increased patient volumes and the fact that there is a high level of fixed costs
(e.g., rent expense) in other operating expenses. The changes in other operating
expenses included:

•increased software costs of $34 million;

•increased malpractice expense of $32 million;

•increased rent and lease expense of $20 million;

•increased repair and maintenance costs of $12 million; and

•a gain on sale and leaseback of a medical office building of $12 million, which is classified as a reduction of other operating expenses, net.

Ambulatory Care Segment
Our Ambulatory Care segment is comprised of USPI's ambulatory surgery centers
and surgical hospitals. USPI operates its surgical facilities in partnership
with local physicians and, in many of these facilities, a health system partner.
We hold an ownership interest in each facility, with each being operated through
a separate legal entity in most cases. USPI operates facilities on a day-to-day
basis through management services contracts. Our sources of earnings from each
facility consist of:

•management and administrative services revenues, computed as a percentage of each facility's net revenues (often net of implicit price concessions); and

•our share of each facility's net income (loss), which is computed by multiplying the facility's net income (loss) times the percentage of each facility's equity interests owned by USPI.

Our role as an owner and day-to-day manager provides us with significant
influence over the operations of each facility. For many of the facilities our
Ambulatory Care segment operates (109 of 341 facilities at June 30, 2021), this
influence
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does not represent control of the facility, so we account for our investment in
the facility under the equity method for an unconsolidated affiliate. USPI
controls 232 of the facilities our Ambulatory Care segment operates, and we
account for these investments as consolidated subsidiaries. Our net earnings
from a facility are the same under either method, but the classification of
those earnings differs. For consolidated subsidiaries, our financial statements
reflect 100% of the revenues and expenses of the subsidiaries, after the
elimination of intercompany amounts. The net profit attributable to owners other
than USPI is classified within "net income available to noncontrolling
interests."

For unconsolidated affiliates, our statements of operations reflect our earnings in two line items:

•equity in earnings of unconsolidated affiliates-our share of the net income
(loss) of each facility, which is based on the facility's net income (loss) and
the percentage of the facility's outstanding equity interests owned by USPI; and

•management and administrative services revenues, which is included in our net operating revenues-income we earn in exchange for managing the day-to-day operations of each facility, usually quantified as a percentage of each facility's net revenues less implicit price concessions.

Our Ambulatory Care segment operating income is driven by the performance of all
facilities USPI operates and by USPI's ownership interests in those facilities,
but our individual revenue and expense line items contain only consolidated
businesses, which represent 68% of those facilities. This translates to trends
in consolidated operating income that often do not correspond with changes in
consolidated revenues and expenses, which is why we disclose certain statistical
and financial data on a pro forma systemwide basis that includes both
consolidated and unconsolidated (equity method) facilities.

Results of Operations
The following table summarizes certain statement of operations items for the
periods indicated:
                                                    Three Months Ended                                             Six Months Ended
                                                         June 30,                      Increase                        June 30,                       Increase
Ambulatory Care Results of Operations              2021              2020             (Decrease)                 2021               2020             (Decrease)
Net operating revenues                         $      664          $  368                    80.4  %       $    1,310             $  858                    52.7  %
Grant income                                   $       15          $   37                   (59.5) %       $       22             $   37                   (40.5) %
Equity in earnings of unconsolidated
affiliates                                     $       49          $   35                    40.0  %       $       87             $   61                    42.6  %
Salaries, wages and benefits                   $      169          $  119                    42.0  %       $      343             $  281                    22.1  %
Supplies                                       $      169          $   79                   113.9  %       $      326             $  191                    70.7  %
Other operating expenses, net                  $       95          $   75                    26.7  %       $      198             $  161                    23.0  %



Our Ambulatory Care net operating revenues increased by $296 million, or 80.4%,
during the three months ended June 30, 2021 as compared to the same period in
2020. The change was driven by an increase in same-facility net operating
revenues of $200 million due primarily to higher patient volumes and acuity,
incremental revenue from new service lines and negotiated commercial rate
increases, as well as an increase from acquisitions of $123 million. These
increases were partially offset by a decrease of $27 million due primarily to
the sale of our urgent care centers and the transfer of imaging centers to the
Hospital Operations segment. Our Ambulatory Care segment also recognized income
from federal grants totaling $15 million during the three months ended
June 30, 2021, which is not included in net operating revenues. Our Ambulatory
Care net operating revenues increased by $452 million, or 52.7%, during the six
months ended June 30, 2021 as compared to the same period in 2020. The change
was driven by an increase in same-facility net operating revenues of $244
million due primarily to higher patient volumes and acuity, incremental revenue
from new service lines and negotiated commercial rate increases, as well as an
increase from acquisitions of $241 million, partially offset by a decrease of
$33 million due to the sale of our urgent care centers, the transfer of imaging
centers to the Hospital Operations segment and the deconsolidation of a
facility. Our Ambulatory Care segment also recognized income from federal grants
totaling $22 million during the six months ended June 30, 2021, which is not
included in net operating revenues.

Salaries, wages and benefits expense increased by $50 million, or 42.0%, during
the three months ended June 30, 2021 as compared to the same period in 2020.
Salaries, wages and benefits expense was impacted by an increase from
acquisitions of $22 million, as well as an increase in same-facility salaries,
wages and benefits expense of $36 million due primarily to higher patient
volumes, partially offset by a decrease of $8 million due primarily to the sale
of our urgent care centers and the transfer of imaging centers to the Hospital
Operations segment. Salaries, wages and benefits expense for three months ended
June 30, 2021 and 2020 included stock-based compensation expense of $3 million
and $5 million, respectively. Salaries, wages and benefits expense increased by
$62 million, or 22.1%, during the six months ended June 30, 2021 as compared to
the same
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period in 2020. Salaries, wages and benefits expense was impacted by an increase
from acquisitions of $41 million, an increase in same­facility salaries, wages
and benefits expense of $31 million due primarily to higher patient volumes,
partially offset by a decrease of $10 million due to the sale of our urgent care
centers, the transfer of imaging centers to the Hospital Operations segment and
the deconsolidation of a facility. Salaries, wages and benefits expense for six
months ended June 30, 2021 and 2020 included stock-based compensation expense
of $6 million and $10 million, respectively.

Supplies expense increased by $90 million, or 113.9%, during the three months
ended June 30, 2021 as compared to the same period in 2020. The change was
driven by an increase from acquisitions of $37 million, as well as an increase
in same­facility supplies expense of $55 million due primarily to an increase in
cases at our consolidated centers, higher costs driven by the higher level of
patient acuity, and higher pricing of certain supplies as a result of the
COVID-19 pandemic, partially offset by a decrease of $2 million due to the sale
of our urgent care centers and the transfer of imaging centers to the Hospital
Operations segment. Supplies expense increased by $135 million, or 70.7%, during
the six months ended June 30, 2021 as compared to the same period in 2020. The
change was driven by an increase from acquisitions of $74 million, as well as an
increase in same-facility supplies expense of $65 million due primarily to an
increase in cases at our consolidated centers, higher costs driven by the higher
level of patient acuity, and higher pricing of certain supplies as a result of
the COVID-19 pandemic, partially offset by a decrease of $4 million due to the
sale of our urgent care centers, the transfer of imaging centers to the Hospital
Operations segment and the deconsolidation of a facility.

Other operating expenses increased by $20 million, or 26.7%, during the three
months ended June 30, 2021 as compared to the same period in 2020. The change
was driven by an increase from acquisitions of $13 million, as well as an
increase in same-facility other operating expenses of $16 million, partially
offset by a decrease of $9 million due to the sale of our urgent care centers
and the transfer of imaging centers to the Hospital Operations segment. Other
operating expenses increased by $37 million, or 23.0%, during the six months
ended June 30, 2021 as compared to the same period in 2020. The change was
driven by an increase from acquisitions of $26 million, as well as an increase
in same-facility other operating expenses of $21 million, partially offset by a
decrease of $10 million due to the sale of our urgent care centers and the
transfer of imaging centers to the Hospital Operations segment.

Facility Growth
The following table summarizes the changes in our same-facility revenue
year-over-year on a pro forma systemwide basis, which includes both consolidated
and unconsolidated (equity method) facilities. While we do not record the
revenues of unconsolidated facilities, we believe this information is important
in understanding the financial performance of our Ambulatory Care segment
because these revenues are the basis for calculating our management services
revenues and, together with the expenses of our unconsolidated facilities, are
the basis for our equity in earnings of unconsolidated affiliates.
                                           Three Months Ended       Six Months Ended
Ambulatory Care Facility Growth              June 30, 2021           June 30, 2021
Net revenues                                     50.1%                   25.9%
Cases                                            68.2%                   29.1%
Net revenue per case                            (10.7)%                  (2.5)%



Joint Ventures with Health System Partners
USPI's business model is to jointly own its facilities with local physicians
and, in many of these facilities, a not­for­profit health system partner.
Accordingly, as of June 30, 2021, the majority of facilities in our Ambulatory
Care segment are operated in this model.
                                                            Six Months Ended
Ambulatory Care Facilities                                   June 30, 2021
Facilities:
With a health system partner                                       191
Without a health system partner                                    150
Total facilities operated                                          341

Change from December 31, 2020:
Acquisitions                                                         8
De novo                                                              2
Dispositions/Mergers                                               (65)
Total decrease in number of facilities operated                    (55)



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During the six months ended June 30, 2021, we acquired controlling interests in
four ambulatory surgery centers in Maryland, two in Georgia and one in Florida.
We paid cash totaling approximately $63 million for these acquisitions. Other
than the ambulatory surgery center located in Florida, all of the facilities
acquired are jointly owned with physicians. The Florida facility is jointly
owned with a health system partner and physicians. During the six months ended
June 30, 2021, we transferred all 24 imaging centers held in our Ambulatory Care
segment to our Hospital Operations segment. We also divested 40 urgent care
centers during the six months ended June 30, 2021.

During the six months ended June 30, 2021, we acquired noncontrolling interests
in one ambulatory surgery center in New Mexico. We paid cash totaling
approximately $1 million for this acquisition, which is jointly owned with
physicians and a hospital partner. Also during the six months ended June 30,
2021, we sold a portion of our ownership in two ambulatory surgery centers in
which we previously had a controlling interest to a health system for
approximately $12 million, resulting in the deconsolidation of these facilities.

We also regularly engage in the purchase of equity interests with respect to our
investments in unconsolidated affiliates and consolidated facilities that do not
result in a change in control. These transactions are primarily the acquisitions
of equity interests in ambulatory surgery centers and the investment of
additional cash in facilities that need capital for new acquisitions, new
construction or other business growth opportunities. During the six months ended
June 30, 2021, we invested approximately $6 million in such transactions.

Conifer Segment
Our Conifer segment generated net operating revenues of $319 million and $305
million during the three months ended June 30, 2021 and 2020, respectively, a
portion of which was eliminated in consolidation as described in Note 18 to the
accompanying Condensed Consolidated Financial Statements. Conifer revenues from
third-party customers, which are not eliminated in consolidation, increased $3
million, or 1.6%, for the three months ended June 30, 2021 compared to the same
period in 2020. Our Conifer segment generated net operating revenues of $629
million and $637 million during the six months ended June 30, 2021 and 2020,
respectively. The decline in Conifer's net operating revenues of $8 million, or
1.3%, was primarily due to the revised terms in the Amended RCM Agreement and
expected client attrition. These impacts were partially offset by client volume
improvement in the 2021 period as compared to the 2020 period, which was
adversely affected by the COVID­19 pandemic, as well as new business expansion.
Conifer revenues from third-party customers, which are not eliminated in
consolidation, decreased $5 million, or 1.3%, for the six months ended June 30,
2021 compared to the same period in 2020. This decrease was primarily
attributable to expected client attrition, partially offset by new business
expansion. The remainder of the decrease in Conifer's total net operating
revenues was primarily driven by the revised terms in the Amended RCM Agreement.

Salaries, wages and benefits expense for Conifer increased $5 million, or 3.0%,
in the three months ended June 30, 2021 compared to the same period in 2020, and
decreased $4 million, or 1.2%, in the six months ended June 30, 2021 compared to
the same period in 2020. Salaries, wages and benefits expense included
stock-based compensation expense of $1 million in both of the three-month
periods ended June 30, 2021 and 2020, and $2 million in both of the six-month
periods ended June 30, 2021 and 2020.

Other operating expenses for Conifer decreased $8 million, or 12.1%, in the three months ended June 30, 2021 compared to the same period in 2020. Other operating expenses for Conifer decreased $20 million, or 15.3%, in the six months ended June 30, 2021 compared to the same period in 2020.

In March 2021, we entered into the Amended RCM Agreement effective January 1,
2021. The Amended RCM Agreement updates certain terms and conditions related to
the revenue cycle management services Conifer provides to Tenet hospitals.
Conifer's contract with Tenet represented 39.1% of the net operating revenues
Conifer recognized in the six months ended June 30, 2021.

Consolidated

Impairment and Restructuring Charges, and Acquisition-Related Costs
During the three months ended June 30, 2021, we recorded impairment and
restructuring charges and acquisition­related costs of $20 million, consisting
of $18 million of restructuring charges, $1 million of impairment charges and
$1 million of acquisition-related costs. Restructuring charges consisted of $6
million of employee severance costs, $6 million related to the transition of
various administrative functions to our Global Business Center ("GBC") in the
Philippines and $6 million of other restructuring costs. Acquisition-related
costs consisted of $1 million of transaction costs. Our impairment and
restructuring charges and acquisition-related costs for the three months ended
June 30, 2021 were comprised of
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$10 million from our Hospital Operations segment, $4 million from our Ambulatory
Care segment and $6 million from our Conifer segment.

During the three months ended June 30, 2020, we recorded impairment and
restructuring charges and acquisition­related costs of $54 million, consisting
of $49 million of restructuring charges and $5 million of impairment charges.
Restructuring charges consisted of $27 million of employee severance costs, $10
million related to the transition of various administrative functions to our GBC
and $12 million of other restructuring costs. Our impairment and restructuring
charges and acquisition-related costs for the three months ended June 30, 2020
were comprised of $32 million from our Hospital Operations segment, $7 million
from our Ambulatory Care segment and $15 million from our Conifer segment.

During the six months ended June 30, 2021, we recorded impairment and
restructuring charges and acquisition­related costs of $40 million, consisting
of $34 million of restructuring charges, $1 million of impairment charges and
$5 million of acquisition-related costs. Restructuring charges consisted of
$10 million of employee severance costs, $12 million related to the transition
of various administrative functions to our GBC and $12 million of other
restructuring costs. Acquisition­related costs consisted of $5 million of
transaction costs. Our impairment and restructuring charges and
acquisition-related costs for the six months ended June 30, 2021 were comprised
of $20 million from our Hospital Operations segment, $8 million from our
Ambulatory Care segment and $12 million from our Conifer segment.

During the six months ended June 30, 2020, we recorded impairment and
restructuring charges and acquisition­related costs of $109 million, consisting
of $103 million of restructuring charges, $5 million of impairment charges and
$1 million of acquisition-related costs. Restructuring charges consisted of
$37 million of employee severance costs, $25 million related to the transition
of various administrative functions to our GBC, $23 million of charges due to
the termination of USPI's previous management equity plan, $1 million of
contract and lease termination fees, and $17 million of other restructuring
costs. Acquisition-related costs consisted of $1 million of transaction costs.
Our impairment and restructuring charges and acquisition­related costs for the
six months ended June 30, 2020 were comprised of $50 million from our Hospital
Operations segment, $31 million from our Ambulatory Care segment and $28 million
from our Conifer segment.

Litigation and Investigation Costs
Litigation and investigation costs for the three months ended June 30, 2021 and
2020 were $22 million and $2 million, respectively. Litigation and investigation
costs for the six months ended June 30, 2021 and 2020 were $35 million and
$4 million, respectively. In all periods, these amounts are primarily related to
costs associated with significant legal proceedings and governmental
investigations.

Net Gains on Sales, Consolidation and Deconsolidation of Facilities During the three and six months ended June 30, 2021, we recorded net gains on sales, consolidation and deconsolidation of facilities of approximately $15 million, primarily related to the sale of our urgent care centers in April 2021.

During the three months ended June 30, 2020, we recorded net gains on sales,
consolidation and deconsolidation of facilities of approximately $1 million,
primarily due to a post-closing adjustment on the 2019 sale of three of our
hospitals in the Chicago-area.

During the six months ended June 30, 2020, we recorded net gains on sales,
consolidation and deconsolidation of facilities of approximately $3 million,
primarily comprised of gains of $11 million related to consolidation changes of
certain USPI businesses due to ownership changes, partially offset by a loss of
$5 million related to post-closing adjustments on the 2019 sale of three of our
hospitals in the Chicago area and a loss of $3 million related to post-closing
adjustments on the 2018 sale of MacNeal Hospital.

Interest Expense
Interest expense for the three months ended June 30, 2021 was $235 million
compared to $255 million for the same period in 2020. Interest expense for the
six months ended June 30, 2021 was $475 million compared to $498 million for the
same period in 2020.

Loss from Early Extinguishment of Debt
Loss from early extinguishment of debt was $31 million and $54 million for the
three and six months ended June 30, 2021, respectively. These losses related to
our retirement of approximately $1.888 billion aggregate principal amount of
certain of our senior unsecured and senior secured second lien notes in advance
of their maturity dates in the three and six
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Loss from early extinguishment of debt was $4 million for both the three and six
month periods ended June 30, 2020. The loss in the 2020 period included $8
million due to debt repurchase transactions partially offset by $4 million of
gains on the extinguishment of mortgage notes.

Income Tax Expense
During the three months ended June 30, 2021, we recorded income tax expense of
$61 million in continuing operations on a pre-tax income of $319 million
compared to income tax expense of $45 million on pre-tax income of $214 million
during the three months ended June 30, 2020. During the six months ended
June 30, 2021, we recorded income tax expense of $106 million in continuing
operations on a pre-tax income of $586 million compared to an income tax benefit
of $30 million on pre-tax income of $299 million during the six months ended
June 30, 2020.

The reconciliation between the amount of recorded income tax expense (benefit)
and the amount calculated at the statutory federal tax rate is shown in the
following table:
                                                              Three Months Ended                      Six Months Ended
                                                                   June 30,                               June 30,
                                                            2021               2020                2021                 2020
Tax expense at statutory federal rate of 21%            $       67          $    45          $     123               $    63
State income taxes, net of federal income tax
benefit                                                         14               10                 26                    15
Tax benefit attributable to noncontrolling
interests                                                      (28)             (16)               (53)                  (30)
Nondeductible goodwill                                           7                -                  7                     -

Nontaxable gains                                                 -                -                  -                     3

Stock-based compensation                                        (2)               -                 (3)                    -
Change in valuation allowance                                    -                2                  -                   (88)

Other items                                                      3                4                  6                     7
Income tax expense (benefit)                            $       61          $    45          $     106               $   (30)



Net Income Available to Noncontrolling Interests
Net income available to noncontrolling interests was $138 million for the three
months ended June 30, 2021 compared to $81 million for the three months ended
June 30, 2020. Net income available to noncontrolling interests for the 2021
period was comprised of $8 million related to our Hospital Operations segment,
$113 million related to our Ambulatory Care segment and $17 million related to
our Conifer segment. Of the portion related to our Ambulatory Care segment,
$5 million related to the minority interests in USPI.

Net income available to noncontrolling interests was $263 million for the six
months ended June 30, 2021 compared to $147 million for the six months ended
June 30, 2020. Net income available to noncontrolling interests for the six
months ended June 30, 2021 was comprised of $25 million related to our Hospital
Operations segment, $205 million related to our Ambulatory Care segment and
$33 million related to our Conifer segment. Of the portion related to our
Ambulatory Care segment, $9 million related to the minority interests in USPI.

ADDITIONAL SUPPLEMENTAL NON-GAAP DISCLOSURES
The financial information provided throughout this report, including our
Condensed Consolidated Financial Statements and the notes thereto, has been
prepared in conformity with accounting principles generally accepted in the
United States of America ("GAAP"). However, we use certain non-GAAP financial
measures defined below in communications with investors, analysts, rating
agencies, banks and others to assist such parties in understanding the impact of
various items on our financial statements, some of which are recurring or
involve cash payments. We use this information in our analysis of the
performance of our business, excluding items we do not consider relevant to the
performance of our continuing operations. In addition, we use these measures to
define certain performance targets under our compensation programs.

"Adjusted EBITDA" is a non-GAAP measure we define as net income available (loss
attributable) to Tenet Healthcare Corporation common shareholders before (1) the
cumulative effect of changes in accounting principle, (2) net loss attributable
(income available) to noncontrolling interests, (3) income (loss) from
discontinued operations, net of tax, (4) income tax benefit (expense), (5) gain
(loss) from early extinguishment of debt, (6) other non-operating income
(expense), net, (7) interest expense, (8) litigation and investigation (costs)
benefit, net of insurance recoveries, (9) net gains (losses) on sales,
consolidation
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and deconsolidation of facilities, (10) impairment and restructuring charges and
acquisition-related costs, (11) depreciation and amortization, and (12) income
(loss) from divested and closed businesses. Litigation and investigation costs
do not include ordinary course of business malpractice and other litigation and
related expense.

We believe the foregoing non-GAAP measure is useful to investors and analysts
because it presents additional information about our financial performance.
Investors, analysts, company management and our board of directors utilize this
non-GAAP measure, in addition to GAAP measures, to track our financial and
operating performance and compare that performance to peer companies, which
utilize similar non­GAAP measures in their presentations. The human resources
committee of our board of directors also uses certain non­GAAP measures to
evaluate management's performance for the purpose of determining incentive
compensation. We believe that Adjusted EBITDA is a useful measure, in part,
because certain investors and analysts use both historical and projected
Adjusted EBITDA, in addition to GAAP and other non-GAAP measures, as factors in
determining the estimated fair value of shares of our common stock. Company
management also regularly reviews the Adjusted EBITDA performance for each
operating segment. We do not use Adjusted EBITDA to measure liquidity, but
instead to measure operating performance. The non-GAAP Adjusted EBITDA
measure we utilize may not be comparable to similarly titled measures reported
by other companies. Because this measure excludes many items that are included
in our financial statements, it does not provide a complete measure of our
operating performance. Accordingly, investors are encouraged to use GAAP
measures when evaluating our financial performance.

The following table shows the reconciliation of Adjusted EBITDA to net income
available to Tenet Healthcare Corporation common shareholders (the most
comparable GAAP term) for the three and six months ended June 30, 2021 and 2020:
                                                                                Three Months Ended                  Six Months Ended
                                                                                     June 30,                           June 30,
                                                                               2021              2020             2021             2020

Net income available to Tenet Healthcare Corporation common shareholders

$ 119 $ 88 $ 216 $ 181 Less: Net income available to noncontrolling interests

                          (138)             (81)            (263)            (147)
Loss from discontinued operations, net of tax                                     (1)               -               (1)              (1)
Income from continuing operations                                                258              169              480              329
Income tax benefit (expense)                                                     (61)             (45)            (106)              30
Loss from early extinguishment of debt                                           (31)              (4)             (54)              (4)
Other non-operating income (expense), net                                         (1)               2                9                3
Interest expense                                                                (235)            (255)            (475)            (498)
Operating income                                                                 586              471            1,106              798
Litigation and investigation costs                                               (22)              (2)             (35)              (4)

Net gains on sales, consolidation and deconsolidation of facilities

       15                1               15                3

Impairment and restructuring charges, and acquisition-related costs

      (20)             (54)             (40)            (109)
Depreciation and amortization                                                   (221)            (206)            (445)            (409)

Adjusted EBITDA                                                            $     834          $   732          $ 1,611          $ 1,317

Net operating revenues                                                     $   4,954          $ 3,648          $ 9,735          $ 8,168

Net income available to Tenet Healthcare Corporation common shareholders as a % of net operating revenues

                                    2.4  %           2.4  %           2.2  %           2.2  %

Adjusted EBITDA as % of net operating revenues
(Adjusted EBITDA margin)                                                        16.8  %          20.1  %          16.5  %          16.1  %



LIQUIDITY AND CAPITAL RESOURCES
CASH REQUIREMENTS
There have been no material changes to our obligations to make future cash
payments under contracts, such as debt and lease agreements, and under
contingent commitments, such as standby letters of credit and minimum revenue
guarantees, as disclosed in our Annual Report, except for additional lease
obligations and the long-term debt transactions disclosed in Notes 1 and 6,
respectively, to our accompanying Condensed Consolidated Financial Statements.

At June 30, 2021, using the last 12 months of Adjusted EBITDA, our ratio of total long-term debt, net of cash and cash equivalent balances, to Adjusted EBITDA was 3.79x, or 4.17x if adjusted to include outstanding obligations arising from cash advances received from Medicare pursuant to COVID-19 stimulus legislation. We anticipate this ratio will fluctuate from

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quarter to quarter based on earnings performance and other factors, including
the use of our revolving credit facility as a source of liquidity and
acquisitions that involve the assumption of long-term debt. We seek to manage
this ratio and increase the efficiency of our balance sheet by following our
business plan and managing our cost structure, including through possible asset
divestitures, and through other changes in our capital structure. As part of our
long-term objective to manage our capital structure, we may seek to retire,
purchase, redeem or refinance some of our outstanding debt or issue equity or
convertible securities, in each case subject to prevailing market conditions,
our liquidity requirements, operating results, contractual restrictions and
other factors. Our ability to achieve our leverage and capital structure
objectives is subject to numerous risks and uncertainties, many of which are
described in the Forward-Looking Statements and Risk Factors sections in Part I
of our Annual Report.

Our capital expenditures primarily relate to the expansion and renovation of
existing facilities (including amounts to comply with applicable laws and
regulations), equipment and information systems additions and replacements,
introduction of new medical technologies, design and construction of new
buildings, and various other capital improvements, as well as commitments to
make capital expenditures in connection with acquisitions of businesses. Capital
expenditures were $243 million and $288 million in the six months ended June 30,
2021 and 2020, respectively. We anticipate that our capital expenditures for
continuing operations for the year ending December 31, 2021 will total
approximately $700 million to $750 million, including $93 million that was
accrued as a liability at December 31, 2020.

Interest payments, net of capitalized interest, were $486 million and $465 million in the six months ended June 30, 2021 and 2020, respectively.

Income tax payments, net of tax refunds, were $34 million in the six months ended June 30, 2021 compared to $5 million in the six months ended June 30, 2020.

SOURCES AND USES OF CASH
Our liquidity for the six months ended June 30, 2021 was primarily derived from
net cash provided by operating activities, cash on hand and borrowings under our
revolving credit facility. During the six months ended June 30, 2021, we also
received supplemental funds from federal, state and local grants provided under
COVID-19 relief legislation. We had $2.194 billion of cash and cash equivalents
on hand at June 30, 2021 to fund our operations and capital expenditures, and
our borrowing availability under our credit facility was $1.900 billion based on
our borrowing base calculation at June 30, 2021.

When operating under normal conditions, our primary source of operating cash is the collection of accounts receivable. As such, our operating cash flow is impacted by levels of cash collections, as well as levels of implicit price concessions, due to shifts in payer mix and other factors.

Net cash provided by operating activities was $779 million in the six months
ended June 30, 2021 compared to $2.368 billion in the six months ended June 30,
2020. Key factors contributing to the change between the 2021 and 2020 periods
include the following:

•An increase in net income before interest, taxes, discontinued operations and
restructuring charges, acquisition­related costs, and litigation costs and
settlements of $755 million (excluding $50 million and $511 million of income
recognized from federal, state and local grants in the 2021 and 2020 periods,
respectively);

•$152 million of recoupment of cash advances received from Medicare pursuant to
COVID-19 stimulus legislation in the three months ended June 30, 2021 compared
to $1.378 billion of cash advances received from Medicare pursuant to COVID-19
stimulus legislation in the three months ended June 30, 2020;

•$36 million of cash received from federal and state grants in the 2021 period compared to $674 million received in the 2020 period;

•Higher interest payments of $21 million in the 2021 period;

•Higher income tax payments of $29 million in the 2021 period;

•A decrease of $29 million in payments on reserves for restructuring charges, acquisition-related costs, and litigation costs and settlements; and

•The timing of other working capital items.

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Net cash used in investing activities was $195 million for the six months ended
June 30, 2021 compared to $289 million for the six months ended June 30, 2020.
The 2021 activity included an increase in proceeds from the sale of facilities
and other assets of $112 million, primarily related to the sale of the majority
of our urgent care centers in April 2021, as compared to the 2020 period.
Capital expenditures were $243 million and $288 million in the six months ended
June 30, 2021 and 2020, respectively.

Net cash used in financing activities was $836 million for the six months ended
June 30, 2021 compared to net cash provided by financing activities of
$1.173 billion for the six months ended June 30, 2020. The 2021 amount included
total payments of $2.012 billion to retire approximately $1.888 billion
aggregate principal amount of certain of our senior unsecured and senior secured
second lien notes and to fund distributions to noncontrolling interests of $212
million. These decreases were partially offset by proceeds from the issuance of
our 2029 Senior Secured First Lien Notes. The 2020 amount included proceeds from
the issuance of $700 million aggregate principal amount of 7.500% senior secured
first lien notes due 2025 and $600 million aggregate principal amount of 4.625%
senior secured first lien notes due 2028. The 2020 amount also included $104
million of cash advances from Medicare and $38 million of stimulus grants
received by our Ambulatory Care segment's unconsolidated affiliates, as well as
$142 million of payments for our purchases of $135 million aggregate principal
amount of our outstanding 8.125% senior unsecured notes due 2022.

We record our equity securities and our debt securities classified as
available-for-sale at fair market value. The majority of our investments are
valued based on quoted market prices or other observable inputs. We have no
investments that we expect will be negatively affected by the current economic
conditions such that they will materially impact our financial condition,
results of operations or cash flows.

DEBT INSTRUMENTS, GUARANTEES AND RELATED COVENANTS
Credit Agreement-We have a senior secured revolving credit facility that, at
June 30, 2021, provided for revolving loans in an aggregate principal amount of
up to $1.900 billion with a $200 million subfacility for standby letters of
credit. At June 30, 2021, we had no cash borrowings outstanding under the
revolving credit facility, and we had less than $1 million of standby letters of
credit outstanding. Based on our eligible receivables, $1.900 billion was
available for borrowing under the revolving credit facility at June 30, 2021. At
June 30, 2021, we were in compliance with all covenants and conditions in our
senior secured revolving credit facility.

On April 24, 2020, we amended our credit agreement (as amended to date, the
"Credit Agreement") to, among other things, (i) increase the aggregate revolving
credit commitments from $1.500 billion to $1.900 billion (the "Increased
Commitments"), subject to borrowing availability, and (ii) increase the advance
rate and raise limits on certain eligible accounts receivable in the calculation
of the borrowing base, in each case, for an incremental period of 364 days. In
April 2021, we further amended the Credit Agreement to, among other things,
extend the availability of the Increased Commitments through April 22, 2022 and
reduce the interest rate margins. See Note 6 to the accompanying Condensed
Consolidated Financial Statements for additional information about our Credit
Facility and related amendments.

Letter of Credit Facility-In March 2020, we amended our letter of credit
facility (as amended, the "LC Facility") to extend the scheduled maturity date
of the LC Facility from March 7, 2021 to September 12, 2024 and to increase the
aggregate principal amount of standby and documentary letters of credit that
from time to time may be issued thereunder from $180 million to $200 million. On
July 29, 2020, we further amended the LC Facility to incrementally increase the
maximum secured debt covenant from 4.25 to 1.00 on a quarterly basis up to 6.00
to 1.00 for the quarter ended March 31, 2021, which maximum ratio will step down
incrementally on a quarterly basis through the quarter ending December 31, 2021.
At June 30, 2021, the effective maximum secured debt covenant was 5.50 to 1.00.
Obligations under the LC Facility are guaranteed and secured by a first­priority
pledge of the capital stock and other ownership interests of certain of our
wholly owned domestic hospital subsidiaries on an equal ranking basis with our
senior secured first lien notes. At June 30, 2021, we were in compliance with
all covenants and conditions in the LC Facility. At June 30, 2021, we had
$149 million of standby letters of credit outstanding under the LC Facility.

Senior Unsecured and Senior Secured Notes-On June 2, 2021, we issued
$1.400 billion aggregate principal amount of our 2029 Senior Secured First Lien
Notes. We will pay interest on the 2029 Senior Secured First Lien Notes
semi-annually in arrears on June 1 and December 1 of each year, commencing on
December 1, 2021. The proceeds from the sale of the 2029 Senior Secured First
Lien Notes were used, after payment of fees and expenses, together with cash on
hand, to finance the redemption of all $1.410 billion aggregate principal amount
then outstanding of our 2025 Senior Secured Second Lien Notes in advance of
their maturity date for approximately $1.428 billion. In connection with the
redemption, we recorded a loss from early extinguishment of debt of
approximately $31 million in the three months ended June 30, 2021, primarily
related to the
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difference between the purchase price and the par value of the 2025 Senior
Secured Second Lien Notes, as well as the write-off of associated unamortized
issuance costs.

In March 2021, we retired approximately $478 million aggregate principal amount
of our 7.000% senior unsecured notes due 2025 in advance of their maturity date.
We paid approximately $495 million from cash on hand to retire the notes. In
connection with the retirement, we recorded a loss from early extinguishment of
debt of $23 million in the three months ended March 31, 2021, primarily related
to the difference between the purchase price and the par value of the notes, as
well as the write-off of associated unamortized issuance costs.

For additional information regarding our long-term debt, see Note 6 to the accompanying Condensed Consolidated Financial Statements and Note 8 to the Consolidated Financial Statements included in our Annual Report.

LIQUIDITY

Broad economic factors resulting from the COVID-19 pandemic, including increased
unemployment rates and reduced consumer spending, are impacting our service mix,
revenue mix and patient volumes. Business closings and layoffs in the areas we
operate have led to increases in the uninsured and underinsured populations and
adversely affect demand for our services, as well as the ability of patients to
pay for services as rendered. Any increase in the amount of or deterioration in
the collectability of patient accounts receivable could adversely affect our
cash flows and results of operations. If general economic conditions continue to
deteriorate or remain uncertain for an extended period of time, our liquidity
and ability to repay our outstanding debt may be impacted.

While demand for our services is expected to further rebound in the future, we
have taken, and continue to take, various actions to increase our liquidity and
mitigate the impact of reductions in our patient volumes and operating revenues
from the pandemic. These actions included the sale and redemption of various
senior unsecured and senior secured notes, which eliminated any significant debt
maturities until June 2023 and will reduce our future annual cash interest
expense payments. In April 2021, we further amended our Credit Agreement to
extend the availability of the Increased Commitments through April 22, 2022. In
addition, we have continued to focus on cost­reduction measures and corporate
efficiencies to substantially offset incremental costs, including temporary
staffing and premium pay, as well as higher supply costs for PPE. We have also
sought to compensate for the COVID-19 pandemic's disruption of our patient
volumes and mix by growing our services for which demand has been more
resilient, including our higher-acuity service lines. While the length of time
that will be required for our patient volumes and mix to return to pre-pandemic
levels is unknown, especially demand for lower-acuity services, we believe
demand for our higher-acuity service lines will continue to grow. We believe
these actions, together with government relief packages, to the extent available
to us, will help us to continue operating during the uncertainty caused by the
COVID­19 pandemic.

From time to time, we expect to engage in additional capital markets, bank credit and other financing activities depending on our needs and financing alternatives available at that time. We believe our existing debt agreements provide flexibility for future secured or unsecured borrowings.

Our cash on hand fluctuates day-to-day throughout the year based on the timing
and levels of routine cash receipts and disbursements, including our book
overdrafts, and required cash disbursements, such as interest payments and
income tax payments, as well as cash disbursements required to respond to the
COVID-19 pandemic. These fluctuations result in material intra-quarter net
operating and investing uses of cash that have caused, and in the future will
cause, us to use our Credit Agreement as a source of liquidity. We believe that
existing cash and cash equivalents on hand, borrowing availability under our
Credit Agreement, anticipated future cash provided by our operating activities
and possible additional government relief packages should be adequate to meet
our current cash needs. These sources of liquidity, in combination with any
potential future debt incurrence, should also be adequate to finance planned
capital expenditures, payments on the current portion of our long-term debt,
payments to joint venture partners, including those related to put and call
arrangements and other presently known operating needs.

Long-term liquidity for debt service and other purposes will be dependent on the
amount of cash provided by operating activities and, subject to favorable market
and other conditions, the successful completion of future borrowings and
potential refinancings. However, our cash requirements could be materially
affected by the use of cash in acquisitions of businesses, repurchases of
securities, the exercise of put rights or other exit options by our joint
venture partners, and contractual commitments to fund capital expenditures in,
or intercompany borrowings to, businesses we own. In addition, liquidity could
be adversely affected by a deterioration in our results of operations, including
our ability to generate sufficient cash from operations, as well as by the
various risks and uncertainties discussed in this section, other sections of
this report and in our Annual Report, including any costs associated with legal
proceedings and government investigations.
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We do not rely on commercial paper or other short-term financing arrangements
nor do we enter into repurchase agreements or other short-term financing
arrangements not otherwise reported in our balance sheet. In addition, we do not
have significant exposure to floating interest rates given that all of our
current long-term indebtedness has fixed rates of interest except for borrowings
under our Credit Agreement.

OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that may have a current or future
material effect on our financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources, except for
$257 million of standby letters of credit outstanding and guarantees at
June 30, 2021.

CRITICAL ACCOUNTING ESTIMATES
In preparing our Condensed Consolidated Financial Statements in conformity with
GAAP, we must use estimates and assumptions that affect the amounts reported in
our Condensed Consolidated Financial Statements and accompanying notes. We
regularly evaluate the accounting policies and estimates we use. In general, we
base the estimates on historical experience and on assumptions that we believe
to be reasonable, given the particular circumstances in which we operate. Actual
results may vary from those estimates.

We consider our critical accounting estimates to be those that (1) involve
significant judgments and uncertainties, (2) require estimates that are more
difficult for management to determine, and (3) may produce materially different
outcomes under different conditions or when using different assumptions.

Our critical accounting estimates have not changed from the description provided in our Annual Report.

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