Community Health Systems 2015 Annual Report Download

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Providing Healthcare Solutions
FOR OVER 30 YEARS
2015 Annual Report

Table of contents

  • Page 1
    Providing Healthcare Solutions FOR OVER 30 YEARS 2015 Annual Report

  • Page 2
    ... 197 affiliated hospitals in 29 states with an aggregate of approximately 30,000 licensed beds (as of March 1, 2016). The Company's headquarters are located in Franklin, Tennessee, a suburb south of Nashville. Shares in Community Health Systems, Inc. are traded on the New York Stock Exchange under...

  • Page 3
    2015 ANNUAL REPORT Community Health Systems, Inc. 1

  • Page 4
    ... Health Management Associates hospitals which were acquired in 2014. Some of these hospitals had large operational, capital and managerial issues that required our attention and resources before we could begin to focus on their growth. However, we expect progress over time and still see opportunity...

  • Page 5
    ... recruited to our hospitals and clinics. Of course, the strong foundation on which we've built a successful business is our acute­care hospitals. At the end of 2015, we operated 197 hospitals. The emergency care, diagnostic services, medical and 2015 ANNUAL REPORT Community Health Systems, Inc. 3

  • Page 6
    ... QUORUM HEALTH CORPORATION 84% of the hospitals that will become part of Quorum Health Corporation are sole community providers and 74% were recognized by The Joint Commission as Top Performers on Key Quality Measures® in 2014. 29 197 30,238 As of March 1, 2016 4 STATES HOSPITALS LICENSED BEDS...

  • Page 7
    ... physicians and mid­level providers, the nurses and other medical professionals, and all of the employees who support their work-they take great care of their patients and keep our business going day after day. Finally, I thank you, our stockholders, for your investment in Community Health Systems...

  • Page 8
    ... 860 physicians TENNESSEE Tennova Healthcare • 17 hospitals • 1,760 physicians WASHINGTON Rockwood Health System • 2 hospitals • 460 physicians 6 8 2 3 8 11 106 1,200 40,000 Hospitals Surgery Centers Home Health Agencies Urgent Care Centers Diagnostic Centers Physician Offices/Clinics...

  • Page 9
    ... CVR agreement, and related legal expenses. Net Operating Revenues (in billions) Adjusted EBITDA(2) (in billions) Adjusted EPS(2) $ $ . . (1) $ . $ . (1) $ . $ . $ $ . $ . . (1) 2013 2014 2015 2013 2014 2015 2013 2014 2015 2015 ANNUAL REPORT Community Health Systems...

  • Page 10
    ...- Acquisitions and Development W. Larry Cash President of Financial Services and Chief Financial Officer Martin G. Schweinhart Executive Vice President of Administration Rachel A. Seifert Executive Vice President, Secretary and General Counsel Sandra G. Hogston President-Home Care Division John...

  • Page 11
    ... no charge. Requests for the Annual Report on Form 10­K and other investor information should be directed to Investor Relations at the Company's corporate office or at www.chs.net. REGISTRAR AND TRANSFER AGENT American Stock Transfer & Trust Co., LLC Operations Center 6201 15th Avenue Brooklyn, NY...

  • Page 12
    ...number, including area code: (615) 465-7000 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Which Registered Title of Each Class Common Stock, $.01 par value Contingent Value Rights New York Stock Exchange The NASDAQ Stock Market LLC NO ' 13-3893191 (IRS Employer...

  • Page 13
    ...and Financial Disclosure ...Controls and Procedures ...Other Information ...PART III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder...

  • Page 14
    ...surgery centers and home health and hospice agencies. An integral part of providing these services is our relationship and network of affiliated physicians at our hospitals and affiliated businesses. As of December 31, 2015, we employed approximately 3,400 physicians and an additional 1,000 licensed...

  • Page 15
    ..., and management services provided, by distinct and indirect subsidiaries of Community Health Systems, Inc. On August 3, 2015, we announced a plan to spin off 38 hospitals and Quorum Health Resources into Quorum Health Corporation, or QHC, an independent, publicly-traded corporation. The transaction...

  • Page 16
    ... by providing a broader range of services in a more attractive care setting, as well as by supporting, recruiting and employing physicians. We identify the healthcare needs of the community by analyzing demographic data and patient referral trends. We also work with local hospital boards, management...

  • Page 17
    ... an acquisition in 2012, we agreed to build a replacement hospital in York, Pennsylvania by July 2017. The total cost of the replacement hospital in York, Pennsylvania is estimated to be $125 million. Managed Care Strategy. Managed care has seen growth across the U.S. as health plans expand service...

  • Page 18
    ..., laboratory, imaging, home care, skilled nursing, centralized outpatient scheduling and health information management. We work to identify and communicate best practices and monitor these improvements throughout the Company. • Internal Controls Over Financial Reporting. We have centralized...

  • Page 19
    ... programs to support our hospitals in an effort to ensure continuous improvement in patient safety and the quality of care provided. We have developed high reliability/safety and quality training programs for all senior hospital management, chief nursing officers, quality directors, physicians and...

  • Page 20
    ...we completed the merger with HMA, which at the time of acquisition owned or leased 71 hospitals. In addition to the HMA hospitals, during 2014 we acquired four other hospitals located in Ocala, Florida; Sharon, Pennsylvania; Natchez, Mississippi; and Gaffney, South Carolina. No hospital acquisitions...

  • Page 21
    ... the only provider of general healthcare services in these communities. Factors Affecting Performance. Among the many factors that can influence a hospital's financial and operating performance are: • facility size and location, • facility ownership structure (i.e., tax-exempt or investor owned...

  • Page 22
    ... of care in the healthcare market, will be among the main beneficiaries of this increase in demand. Based on data compiled for us, the populations of the service areas where our hospitals are located grew 3.2% from 2010 to 2015 and are expected to grow by 3.6% from 2015 to 2020. The number of...

  • Page 23
    ... for bad debts ...57.2 % Net income attributable to Community Health Systems, Inc...$ 158 Net income attributable to Community Health Systems, Inc. as a % of net operating revenues ...0.8 % Liquidity Data Adjusted EBITDA(8) ...$ Adjusted EBITDA as a % of net operating revenues(8) ...Net cash flows...

  • Page 24
    ... debt, impairment of long-lived assets, net income attributable to noncontrolling interests, acquisition and integration expenses from the acquisition of HMA, expenses incurred related to the planned spin-off of Quorum Health Corporation, expenses related to government legal settlements and related...

  • Page 25
    ... related to the acquisition and integration of HMA ...Expense from government settlement and related costs ...Expense (income) from fair value adjustments and legal expenses related to cases covered by the CVR ...Expenses related to the planned spin-off of Quorum Health Corporation ...Adjusted...

  • Page 26
    believes the information provides investors with useful information about the hospital admissions, adjusted admissions and net operating revenues had the HMA facilities been owned for the indicated periods. This same-store information for the hospitals acquired in the HMA merger for the period from ...

  • Page 27
    ...not attempt to further reduce the rates they pay for our services. For more information on the payment programs on which our revenues depend, see "Payment" on page 22. As of December 31, 2015, Florida, Texas, Pennsylvania and Indiana represented our only areas of significant geographic concentration...

  • Page 28
    ...and procedures; billing and coding for services; properly handling overpayments; classifications of levels of care provided; preparing and filing of cost reports; relationships with referral sources and referral recipients; maintenance of adequate records; hospital use; rate-setting; compliance with...

  • Page 29
    ... our hospitals participate in the first or second lowest cost silver plan networks (QHPs with a 70% actuarial value). We have conducted significant healthcare reform outreach efforts across all of our markets. Such efforts included the expanded use of eligibility screening services, select facility...

  • Page 30
    ... use of free or significantly discounted office space or equipment for physicians in facilities usually located close to the hospital, • provision of free or significantly discounted billing, nursing, or other staff services, • free training for a physician's office staff, including management...

  • Page 31
    ...to our hospitals. Physicians own interests in a number of our facilities. Physicians may also own our stock. We also have contracts with physicians providing for a variety of financial arrangements, including employment contracts, leases, management agreements and professional service agreements. We...

  • Page 32
    ...holds debt, stock or other types of investment in the hospital or in any owner of the hospital, excluding physician ownership through publicly-traded securities that meet certain conditions. If a hospital fails to comply with these regulations, the hospital could lose its Medicare provider agreement...

  • Page 33
    ... $5 million annually in Medicaid payments must have written policies for all employees, contractors and agents providing detailed information about false claims, false statements and whistleblower protections under certain federal laws, including the FCA, and similar state laws. A number of states...

  • Page 34
    ... This transition continues to involve a significant focus on our technology and information systems, as well as costs related to training of hospital employees and providers and corporate support staff involved with coding and billing. Use of the ICD10 code sets has required and continues to require...

  • Page 35
    ... fiscal year. The index used to adjust the DRG payment rates, known as the "market basket index," gives consideration to the inflation experienced by hospitals in purchasing goods and services. DRG payment rates were increased by the full "market basket index," for the federal fiscal years 2015 and...

  • Page 36
    ... to hospitals that do not submit required patient quality data. We are complying with this data submission requirement. The HHS also uses a PPS to reimburse providers of home health services (i.e., home care). The home health agency market basket percentage increased by 2.6% on January 1, 2015...

  • Page 37
    ... in audits and investigations into alleged abuses of the DRG outlier payment system. Commercial Insurance and Managed Care Companies. Our hospitals provide services to individuals covered by private healthcare insurance or by health plans administered by managed care companies. These payors pay our...

  • Page 38
    ... healthcare costs by improving quality and operational efficiency, ACOs are gaining traction in both the public and private sectors. An ACO is a network of providers and suppliers (including hospitals, physicians and other designated professionals) which work together to invest in infrastructure...

  • Page 39
    ... located in markets selected by CMS, including some of our facilities, will be required to participate in the Comprehensive Care for Joint Replacement model, a mandatory bundled payment initiative for specified joint replacement procedures. Participating hospitals will be evaluated against quality...

  • Page 40
    ... as employing physicians, acquiring physician practice groups, and participating in ACOs, or other clinical integration models. In most markets in which we are not the sole provider of general acute care health services, our primary competitor is a not-for-profit hospital. These hospitals are owned...

  • Page 41
    ... expected of our employees and business associates who work in the accounting, financial reporting and asset management areas of our Company. Our Code of Conduct is posted on our website at www.chs.net/company-overview/code-of-conduct. Corporate Integrity Agreement On August 4, 2014, we announced...

  • Page 42
    ... our employee relations to be good and have not experienced work stoppages that have materially, adversely affected our business or results of operations. Our hospitals, like most hospitals, have experienced rising labor costs. In some markets, nurse and medical support personnel availability...

  • Page 43
    ... results may differ materially from those predicted in any forward-looking statements we make in any public disclosures. Additional factors that could affect our business, results of operations and financial condition are discussed elsewhere in this Report (including in "Management's Discussion and...

  • Page 44
    .... If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, including those required for operating our existing hospitals, for integrating our historical acquisitions or for future acquisitions. We also...

  • Page 45
    ... in payment under the contingent value rights, or CVRs, issued in the HMA merger to HMA stockholders. In addition, in order to continue to obtain the benefits of the merger, we must achieve additional efficiencies through the integration of HMA's operations. Such integration may be complex and...

  • Page 46
    .... Other competitors include HCA Holdings, Inc., Universal Health Services, Inc., other non-public, for profit hospitals and local market hospitals. Some of our competition for acquisitions have greater financial resources than we have. Furthermore, some hospitals are sold through an auction process...

  • Page 47
    ... claims, including performance data related to quality measures and patient satisfaction surveys. Federal law provides for the future expansion of the number of quality measures that must be reported. Further, every hospital must establish and update annually a public listing of the hospital...

  • Page 48
    ..., our hospital operations reporting unit was at risk of goodwill impairment as of December 31, 2015, primarily due to a decline in our stock price during the fourth quarter and lower projections of future cash flows. If the carrying value of our goodwill is impaired, we may incur a material non-cash...

  • Page 49
    ... models. The ability of commercial payors to control healthcare costs using these measures may be enhanced by the increasing consolidation of insurance and managed care companies. In 2015, 52.4% of our operating revenues, net of contractual allowances and discounts (but before the provision for bad...

  • Page 50
    ... that may provide for lower reimbursement for our services along with higher co-pays and deductibles or even exclusion of our hospitals and employed physicians from coverage. We may be adversely affected by consolidation among health insurers. In recent years, a number of health insurers have merged...

  • Page 51
    ...our affiliated hospitals. See our discussion of this matter under the section "Business of Community Health Systems, Inc." in Part I, Item 1 of this Form 10-K and "Legal Proceedings" in Part II, Item 1 of our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 for further...

  • Page 52
    ...income and health insurance for a disproportionately large number of community residents who may depend on our hospitals for care. The failure of one or more large employers, or the closure or substantial reduction in the number of individuals employed at manufacturing or other facilities located in...

  • Page 53
    ... the number of and detail in the codes used by providers to bill for services. All of our hospitals have transitioned to the ICD-10 coding system, which continues to involve a significant capital investment in technology and coding of our information systems, as well as significant costs related to...

  • Page 54
    ... other healthcare providers in recruiting and retaining qualified management and support personnel responsible for the daily operations of our hospitals, including nurses and other non-physician healthcare professionals. In some markets, the availability of nurses and other medical support personnel...

  • Page 55
    ... or terms, or at all, and may not achieve the intended benefits. In August 2015, we announced a plan to spin off 38 of our hospitals and Quorum Health Resources into QHC, an independent, publicly-traded corporation. We expect to complete the spin-off in the first half of 2016, although there can be...

  • Page 56
    ...part of a plan or series of related transactions that included the spin-off. Item 1B. Unresolved Staff Comments None Item 2. Properties Corporate Headquarters We own our corporate headquarters building located in Franklin, Tennessee. Hospitals Our hospitals are general care hospitals offering a wide...

  • Page 57
    ... 31, 2015, the following table shows its location, the date of its acquisition or lease inception and the number of licensed beds: Licensed Beds(1) Date of Acquisition/Lease Inception Ownership Type Hospital City Alabama LV Stabler Memorial Hospital ...South Baldwin Regional Medical Center...

  • Page 58
    ... Center ...Vista Medical Center ...Vista Medical Center West (psychiatric and rehabilitation beds) ...Union County Hospital ...Indiana Porter Hospital ...Lutheran Health Network Bluffton Regional Medical Center ...Dupont Hospital ...Lutheran Hospital ...Lutheran Musculoskeletal Center ...Lutheran...

  • Page 59
    ...City Licensed Beds(1) Date of Acquisition/Lease Inception Ownership Type Kosciusko Community Hospital ...Kentucky Three Rivers Medical Center ...Kentucky River Medical Center ...Paul B. Hall Regional Medical Center ...Louisiana Byrd Regional Hospital ...Northern Louisiana Medical Center ...Lake...

  • Page 60
    ... Community Hospital ...Memorial Hospital ...Carlisle Regional Medical Center ...Heart of Lancaster Regional Medical Center ...Lancaster Regional Medical Center ...Sharon Regional Health System ...South Carolina Springs Memorial Hospital ...Mary Black Memorial Hospital ... Hamlet 64 January, 2014...

  • Page 61
    Hospital City Licensed Beds(1) Date of Acquisition/Lease Inception Ownership Type Carolinas Hospital System ...Carolinas Hospital System-Marion ...Chester Regional Medical Center ...Gaffney Medical Center ...Tennessee Tennova - Lakeway Regional Hospital ...Tennova - Regional Jackson ...Tennova ...

  • Page 62
    ... beds are the number of beds for which the appropriate state agency licenses a facility regardless of whether the beds are actually available for patient use. The real property of substantially all of our wholly-owned hospitals is also encumbered by mortgages to support obligations under our credit...

  • Page 63
    ..., 2015. Information on licensed beds was provided by the majority owner and manager of each joint venture. A subsidiary of HCA Holdings, Inc. is the majority owner of Macon Healthcare LLC, and a subsidiary of Universal Health Services, Inc. is the majority owner of Summerlin Hospital Medical Center...

  • Page 64
    ... with this investigation. Blue Island, Illinois - Patient Status. On October 9, 2015, our hospital in Blue Island, Illinois received a CID from the Office of the United States Attorney in Chicago, Illinois concerning allegations of upcoding observation and other outpatient services and improperly...

  • Page 65
    ...Community Health Systems Professional Services Corporation d/b/a Community Health Systems d/b/a Community Health Systems PSC, Inc. d/b/a Rockwood Clinic P.S. and Rockwood Clinic, P.S. (Superior Court, Spokane, Washington). This suit was filed on February 29, 2012, by a former chief financial officer...

  • Page 66
    ... identification data (such as patient names, addresses, birthdates, telephone numbers and social security numbers), but not including patient credit card, medical or clinical information. We continue to work closely with federal law enforcement authorities in connection with their investigation and...

  • Page 67
    ... individuals to federal healthcare programs in violation of the False Claims Act or that certain HMA hospitals had inappropriate financial relationships with physicians which violated the Stark law, the Anti-Kickback Statute, and the False Claims Act. Certain of these complaints also allege the same...

  • Page 68
    .... During the first quarter of 2015, we were informed the Criminal Division continues to investigate former executive-level employees of HMA and continues to consider whether any HMA entities should be held criminally liable for the acts of the former HMA employees. We are voluntarily cooperating...

  • Page 69
    ... reviews periodic reports of the Company's compliance with the Corporate Integrity Agreement, or CIA, that the Company entered into with the United States Department of Health and Human Services Office of the Inspector General during 2014. For the past several years, our Board of Directors has met...

  • Page 70
    ...per share of our common stock as reported by the New York Stock Exchange. High Low Year Ended December 31, 2014 First Quarter ...Second Quarter ...Third Quarter ...Fourth Quarter ...Year Ended December 31, 2015 First Quarter ...Second Quarter ...Third Quarter ...Fourth Quarter ... $ 44.48 46.66 57...

  • Page 71
    ... $50 $0 Community Health Systems, Inc. Dow Jones Health Care Index S&P 500 12/31/2010 $100.00 $100.00 $100.00 12/31/2011 $46.70 $111.75 $102.11 12/31/2012 $82.95 $133.27 $118.45 12/31/2013 $105.97 $189.21 $156.82 12/31/2014 $145.51 $237.95 $178.29 12/31/2015 $71...

  • Page 72
    .... On December 14, 2011, we adopted an open market repurchase program for up to 4,000,000 shares of our common stock, not to exceed $100 million in repurchases. This repurchase program expired on December 13, 2014. During the year ended December 31, 2014, we repurchased and retired 175,000 shares at...

  • Page 73
    ...Statements and "Selected Financial Data" included elsewhere in this Form 10-K. Executive Overview We are one of the largest publicly-traded hospital companies in the United States and a leading operator of general acute care hospitals in communities across the country. We provide healthcare services...

  • Page 74
    ... paid by the non-affiliated hospitals utilizing our services. On January 27, 2014, we and one of our wholly-owned subsidiaries completed the acquisition of Health Management Associates, Inc., or HMA, by acquiring through a merger all the outstanding shares of common stock of HMA, or HMA common stock...

  • Page 75
    ...-pay admissions and revenue was also experienced in non-expansion states, although to a lesser degree. The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 2.3% and 3.0% for the years ended December 31, 2015 and 2014...

  • Page 76
    ... the first or second lowest cost silver plan networks (QHPs with a 70% actuarial value). The Reform Legislation makes a number of changes to Medicare and Medicaid, such as reductions to the Medicare annual market basket update for federal fiscal years 2010 through 2019, a productivity offset to the...

  • Page 77
    ... are subject to a 1% per year cumulative reduction applied to the Medicare physician fee schedule amount for covered professional services, subject to a cap of 5%. Although we believe that our hospital facilities were in compliance with the meaningful use standards during 2015, there can be no...

  • Page 78
    .... Acquisitions and Divestitures On January 1, 2015, we sold Carolina Pines Regional Medical Center (116 licensed beds) in Hartsville, South Carolina and related outpatient services to Capella Healthcare for approximately $74 million in cash, which was received at the closing on December 31, 2014...

  • Page 79
    ... insurers to meet specific benefit requirements. Furthermore, in the normal course of business, managed care programs, insurance companies and employers actively negotiate the amounts paid to hospitals. The trend toward increased enrollment in managed care may adversely affect our operating revenue...

  • Page 80
    ... However, management believes the information provides investors with useful information about hospital admissions, adjusted admissions and net operating revenues had the HMA facilities been owned for the indicated periods. This same-store information for the hospitals acquired in the HMA merger for...

  • Page 81
    ... income attributable to Community Health Systems, Inc. stockholders ... 100.0 % (86.8) (6.0) (0.3) 6.9 (5.0) (0.1) 0.3 2.1 (0.6) 1.5 (0.2) 1.3 (0.5) 0.8 % Year Ended December 31, 2015 2014 Percentage increase (decrease) from same period prior year: Net operating revenues ...Admissions ...Adjusted...

  • Page 82
    ... to decreases in expenses related to achieving meaningful use compliance and acquisition and integration-related expenses, primarily related to the HMA merger. Government settlement and related costs, as a percentage of net revenues, was 0.5% for the year ended December 31, 2014. There was a nominal...

  • Page 83
    ... in projections of future cash flows and estimated fair values. During the year ended December 31, 2014, in connection with the HMA merger, we further analyzed our intangible assets related to internal-use software used in certain of our hospitals for patient and clinical systems, including software...

  • Page 84
    ...interests, as a percentage of net operating revenues, decreased from 0.6% for the year ended December 31, 2014 to 0.5% for the year ended December 31, 2015. Net income attributable to Community Health Systems, Inc. was $158 million for the year ended December 31, 2015 compared to $92 million for the...

  • Page 85
    ... to increases in expenses related to achieving meaningful use compliance and acquisition and integration-related expenses, primarily related to the HMA merger. Government settlement and related costs, as a percentage of net revenues, decreased from 0.8% in 2013 to 0.5% in 2014. Rent, as a percentage...

  • Page 86
    ...to noncontrolling interests, as a percentage of net operating revenues, remained consistent at 0.6% for the years ended December 31, 2014 and 2013. Net income attributable to Community Health Systems, Inc. was $92 million in 2014 compared to $141 million in 2013, a decrease of 34.8%. The decrease in...

  • Page 87
    ... primarily due to a decrease in cash paid for acquisitions of facilities and other related equipment of $3.0 billion as a result of the acquisition of HMA during the year ended December 31, 2014, compared to no hospital acquisitions during the year ended December 31, 2015, as well as an increase in...

  • Page 88
    ...% per annum. (2) Pursuant to hospital purchase agreements in effect as of December 31, 2015, we have commitments to build one replacement facility and the following capital commitments. As part of an acquisition in 2012, we agreed to build a replacement hospital in York, Pennsylvania, by July 2017...

  • Page 89
    ... to settle claims at our New Mexico hospitals and related costs. Cash from operating activities also had a decline in working capital items of approximately $22 million, net of the effect of acquired balances from the HMA merger and other acquisitions and divestitures. Total cash paid for interest...

  • Page 90
    ... related to the purchase price paid by us in the acquisition of HMA (which owned and operated 71 hospitals at the time of the completion of the HMA merger), the acquisition of four additional hospitals, and the purchase of several surgery centers, physician practices and other ancillary services...

  • Page 91
    ... All of our obligations under the Credit Facility are unconditionally guaranteed by Community Health Systems, Inc. and certain of its existing and subsequently acquired or organized domestic subsidiaries. All obligations under the Credit Facility and the related guarantees are secured by a perfected...

  • Page 92
    ... generated cash and continued access to the bank credit and capital markets, will be sufficient to finance future acquisitions, capital expenditures and working capital requirements during the next 12 months. In connection with the consummation of the HMA merger, CHS issued: (i) $1.0 billion...

  • Page 93
    ... these issuances were used to finance the purchase of approximately $1.85 billion aggregate principal amount of CHS' then outstanding 8 7⁄ 8% Senior Notes, to pay related fees and expenses and for general corporate purposes. On July 18, 2012, CHS completed an underwritten public offering under our...

  • Page 94
    or HIPAA. This transition continues to involve a significant focus on our technology and information systems, as well as costs related to training of hospital employees and providers and corporate support staff involved with coding and billing. As noted in the risk factors as previously set forth in...

  • Page 95
    ... to meet our fixed obligations related to our indebtedness. The following table shows the ratio of earnings to fixed charges for the periods indicated: Year Ended December 31, 2011 Ratio of earnings to fixed charges (1) 1.63x 2012 1.69x 2013 1.51x 2014 1.29x 2015 1.36x (1) Fixed charges include...

  • Page 96
    ... the minority ownership interests acquired in the HMA merger are material to our financial position or results of operations. In addition, effective November 1, 2014, we acquired from Novant Health, Inc. its 30% noncontrolling interest in Lake Norman Regional Medical Center for $150 million pursuant...

  • Page 97
    ... operating revenues and net income by an insignificant amount in each of the years ended December 31, 2015, 2014 and 2013. Allowance for Doubtful Accounts Substantially all of our accounts receivable are related to providing healthcare services to patients at our hospitals and affiliated businesses...

  • Page 98
    ... 31, 2014. Our target range for days revenue outstanding is from 60 to 65 days. The increase in days revenue outstanding is primarily due to growth in accounts receivable resulting from billing delays and lower business office productivity as we trained and implemented new coding procedures to...

  • Page 99
    ... our books, including approximately $4.5 billion of goodwill resulting from the acquisition of HMA. Substantially all of our goodwill resides at our hospital operations reporting unit. We performed our last annual goodwill evaluation during the fourth quarter of 2015. No impairment was indicated by...

  • Page 100
    ..., information is stratified by loss layers and retentions, accident years, reported years, geography, and claims relating to the acquired HMA hospitals versus claims relating to our other hospitals. Several actuarial methods are used against this data to produce estimates of ultimate paid losses...

  • Page 101
    ... December 31, 2015 Accrual for professional liability claims, beginning of year ...Liability for insured claims (1) ...Liability acquired through HMA merger: Gross liability acquired ...Discount of liability acquired ...Discounted liability acquired ...Expense (income) related to: Current accident...

  • Page 102
    ... Islands and South Carolina, respectively. Those insurance subsidiaries, which are collectively referred to as the "Insurance Subsidiaries," provided (i) claims-made coverage to all of the former HMA hospitals and (ii) occurrence-basis coverage to most of the physicians employed by the former HMA...

  • Page 103
    ... by the Internal Revenue Service. We believe the results of these examinations will not be material to our consolidated results of operations or consolidated financial position. We have extended the federal statute of limitations through December 31, 2016 for Community Health Systems, Inc. for the...

  • Page 104
    ...state false claims act litigation and other legal proceedings, our ability, where appropriate, to enter into and maintain provider arrangements with payors and the terms of these arrangements, which may be further impacted by the increasing consolidation of health insurers and managed care companies...

  • Page 105
    ... reasonable employment costs, qualified personnel, key management, physicians, nurses and other healthcare workers, trends toward treatment of patients in less acute or specialty healthcare settings, including ambulatory surgery centers or specialty hospitals, changes in medical or other technology...

  • Page 106
    ... statements, whether as a result of new information, future events or otherwise. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to interest rate changes, primarily as a result of our Credit Facility which bears interest based on floating rates. In order to manage...

  • Page 107
    Item 8. Financial Statements and Supplementary Data Index to Financial Statements Page Community Health Systems, Inc. Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm ...Consolidated Statements of Income for the Years Ended December 31, 2015, 2014 and 2013 ...

  • Page 108
    ... PUBLIC ACCOUNTING FIRM To The Board of Directors and Stockholders of Community Health Systems, Inc. Franklin, Tennessee We have audited the accompanying consolidated balance sheets of Community Health Systems, Inc. and subsidiaries (the "Company'') as of December 31, 2015 and 2014, and the related...

  • Page 109
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, 2015 2014 2013 (In millions, except share and per share data) 22,564 $ 21,561 $ 14,853 3,127 2,922 2,034 19,437 8,991 3,048 4,520 4 (160) 457 1,172 68 18,100 1,337 973 16 (63) 411 ...

  • Page 110
    ... (benefit) of $1, $(9) and $9 for the years ended December 31, 2015, 2014 and 2013, respectively ...Other comprehensive (loss) income ...Comprehensive income ...Less: Comprehensive income attributable to noncontrolling interests ...Comprehensive income attributable to Community Health Systems, Inc...

  • Page 111
    ...,538 shares outstanding at December 31, 2014 ...Additional paid-in capital ...Treasury stock, at cost, 975,549 shares at December 31, 2015 and 2014 ...Accumulated other comprehensive loss ...Retained earnings ...Total Community Health Systems, Inc. stockholders' equity ...Noncontrolling interests in...

  • Page 112
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Community Health Systems, Inc. Stockholders Redeemable Noncontrolling Interests Common Stock Shares (In millions, except share data) Shares Treasury Stock Additional Paid-in Amount Capital Accumulated ...

  • Page 113
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2014 2013 (In millions) 259 1,174 103 4 59 4 5 68 16 47 $ 203 1,187 107 101 54 50 41 73 13 $ 217 783 69 102 38 5 12 1 (7) 61 2015 Cash flows from operating activities: ...Net income ......

  • Page 114
    ... by distinct and indirect subsidiaries of Community Health Systems, Inc. The results of Health Management Associates, Inc. ("HMA") are included from January 27, 2014, the date of the HMA merger. As of December 31, 2015, Florida, Texas, Pennsylvania and Indiana represent the only areas of significant...

  • Page 115
    ... FINANCIAL STATEMENTS - (Continued) headquarters of HMA prior to the closing of the HMA merger), which collectively were $266 million, $281 million and $181 million for the years ended December 31, 2015, 2014 and 2013, respectively. During the year ended December 31, 2015, corporate office...

  • Page 116
    ... net operating revenues which was $3.0 billion, $2.8 billion and $1.3 billion for the years ended December 31, 2015, 2014 and 2013, respectively. In the ordinary course of business, the Company renders services to patients who are financially unable to pay for hospital care. The Company's policy is...

  • Page 117
    ... for the years ended December 31, 2015, 2014 and 2013, respectively, representing the value (at the Company's standard charges) of these charity care services that are excluded from net operating revenues. The estimated cost incurred by the Company to provide these charity care services to patients...

  • Page 118
    ... Information Technology for Economic and Clinical Health Act ("HITECH"), established requirements for a Medicare and Medicaid incentive payments program for eligible hospitals and professionals that adopt and meaningfully use certified EHR technology. The Company utilizes a gain contingency model...

  • Page 119
    ... 31, 2015, 2014 and 2013, respectively, of incentive reimbursement for HITECH incentives from Medicare and Medicaid related to certain of the Company's hospitals and for certain of the Company's employed physicians that have demonstrated meaningful use of certified EHR technology or have completed...

  • Page 120
    ... includes the Company's acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services) and the home care agencies operations (which provide in-home outpatient care). U.S. GAAP requires (1) that financial information be disclosed for operating segments...

  • Page 121
    ... financial statements. 2. ACCOUNTING FOR STOCK-BASED COMPENSATION Stock-based compensation awards have been granted under the Community Health Systems, Inc. Amended and Restated 2000 Stock Option and Award Plan, amended and restated as of March 20, 2013 (the "2000 Plan"), and the Community Health...

  • Page 122
    ... the fair value of the Company's common stock on the option grant date. The following table reflects the impact of total compensation expense related to stock-based equity plans on the reported operating results for the respective periods (in millions): Year Ended December 31, 2015 2014 2013 Effect...

  • Page 123
    ...CONSOLIDATED FINANCIAL STATEMENTS - (Continued) all option holders exercised their options on December 31, 2015. This amount changes based on the market value of the Company's common stock. The aggregate intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was...

  • Page 124
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Restricted stock units ("RSUs") have been granted to the Company's outside directors under the 2000 Plan and the 2009 Plan. On February 27, 2013, each of the Company's outside directors received ...

  • Page 125
    ... Munroe Regional Medical Center (421 licensed beds) in Ocala, Florida and its other outpatient and ancillary services through a joint venture arrangement with an affiliate of a regional not-for-profit healthcare system, which acquired the remaining 5% interest. The total cash consideration paid for...

  • Page 126
    ... hospital acquisitions in 2014 discussed above as if the transactions had occurred as of January 1, 2013 (in millions, except per share data): Year Ended December 31, 2014 2013 (Unaudited) Pro forma net operating revenues ...Pro forma net income (loss) attributable to Community Health Systems, Inc...

  • Page 127
    ... non-recurring costs related to the HMA merger and these other acquisitions such as cash expenditures for restructuring and integration activities. HMA Merger On January 27, 2014, the Company completed the HMA merger by acquiring all the outstanding shares of HMA's common stock for approximately...

  • Page 128
    ... FINANCIAL STATEMENTS - (Continued) The table below summarizes the calculation of consideration paid and allocations of the purchase price (including assumed liabilities and long-term debt assumed and repaid at closing) for the HMA merger (in millions): Cash paid ...Shares issued ...Contingent value...

  • Page 129
    ... Park Hospital (102 licensed beds) in Bennettsville, South Carolina and related outpatient services to M/C Healthcare, LLC for approximately $4 million in cash. Effective March 1, 2015 one or more subsidiaries of the Company sold Dallas Regional Medical Center (202 licensed beds) in Mesquite, Texas...

  • Page 130
    ... sell and began actively marketing several smaller hospitals, which are classified as held for sale at December 31, 2015. In addition, HMA entered into a definitive agreement to sell Williamson Memorial Hospital (76 licensed beds) located in Williamson, West Virginia prior to the HMA merger, and the...

  • Page 131
    ... during the fourth quarter of 2015. No impairment was indicated by this evaluation. The next annual goodwill evaluation will be performed during the fourth quarter of 2016. The Company estimates the fair value of the related reporting units using both a discounted cash flow model as well as...

  • Page 132
    ...and clinical systems, including software required to meet criteria for meaningful use attestation and ICD-10 compliance. This analysis resulted in management reassessing its usage of certain software products and rationalizing that, with the addition of the HMA hospitals in the first quarter of 2014...

  • Page 133
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 6. INCOME TAXES The provision for income taxes for income from continuing operations consists of the following (in millions): Year Ended December 31, 2015 2014 2013 Current: Federal ...State ......

  • Page 134
    ...'s business acquisitions is amortizable for income tax reporting purposes. However, for financial reporting purposes, there is no corresponding amortization allowed with respect to such purchased goodwill. The valuation allowance increased by $56 million during the year ended December 31, 2015 and...

  • Page 135
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) is included in the amount of the liability for uncertain tax positions at December 31, 2015. It is the Company's policy to recognize interest and penalties related to unrecognized benefits in its...

  • Page 136
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 7. LONG-TERM DEBT Long-term debt consists of the following (in millions): December 31, 2015 Credit Facility: Term A Loan ...Term D Loan ...Term E Loan ...Term F Loan ...Term G Loan ...Term H Loan...

  • Page 137
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The loans under the Credit Facility bear interest on the outstanding unpaid principal amount at a rate equal to an applicable percentage plus, at CHS' option, either (a) an Alternate Base Rate (...

  • Page 138
    ... $ As of December 31, 2015, the Company had letters of credit issued, primarily in support of potential insurance-related claims and certain bonds, of approximately $66 million. 8% Senior Notes due 2019 On November 22, 2011, CHS completed its offering of $1.0 billion aggregate principal amount of...

  • Page 139
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) On and after November 15, 2015, CHS is entitled, at its option, to redeem all or a portion of the 8% Senior Notes upon not less than 30 nor more than 60 days' notice, at the following redemption ...

  • Page 140
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 5 1⁄ 8% Senior Secured Notes due 2018 On August 17, 2012, CHS completed an underwritten public offering under its automatic shelf registration filed with the SEC of $1.6 billion aggregate ...

  • Page 141
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 2017, CHS is entitled, at its option, to redeem all or a portion of the 2021 Senior Secured Notes upon not less than 30 nor more than 60 days' notice, at the following redemption prices (...

  • Page 142
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) exchanged in October 2014 for new notes (the "6 7⁄ 8% Exchange Notes") having terms substantially identical in all material respects to the 6 7⁄ 8% Senior Notes (except that the exchange ...

  • Page 143
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Loss from Early Extinguishment of Debt The financing transactions discussed above resulted in a loss from the early extinguishment of debt of $16 million, $73 million and $1 million for the years...

  • Page 144
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 8. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of financial instruments has been estimated by the Company using available market information as of December 31, 2015 and December 31, 2014, ...

  • Page 145
    ... or credit risk, the Company has considered the impact of any netting features included in the agreements. The Company assesses the effectiveness of its hedge instruments on a quarterly basis. For the years ended December 31, 2015 and 2014, the Company completed an assessment of the cash flow...

  • Page 146
    ... are entered into to manage interest rate fluctuation risk associated with the term loans in the Credit Facility. Companies are required to recognize all derivative instruments as either assets or liabilities at fair value in the consolidated statement of financial position. The Company designates...

  • Page 147
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 9. FAIR VALUE Fair Value Hierarchy Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions ...

  • Page 148
    ... the financial assets and liabilities recorded at fair value on a recurring basis as of December 31, 2015 and December 31, 2014 (in millions): December 31, 2015 Available-for-sale securities ...Trading securities ...Total assets ...Contingent Value Right (CVR) . . CVR-related liability ...Fair value...

  • Page 149
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Supplemental information regarding the Company's ... Cost Gains Losses Values As of December 31, 2014: Debt securities and debt-based mutual funds Government and corporate ...Equity securities and...

  • Page 150
    ... Right (CVR) $ 2013 1 1 The CVR represents the estimate of the fair value for the contingent consideration paid to HMA shareholders as part of the HMA merger. The CVR is listed on the NASDAQ and the valuation at December 31, 2015 is based on the quoted trading price for the CVR on the last day...

  • Page 151
    ... observable market-based inputs, reducing the carrying value of those hospitals to their total fair value of approximately $202 million. 10. LEASES The Company leases hospitals, medical office buildings, and certain equipment under capital and operating lease agreements. During 2015, 2014 and 2013...

  • Page 152
    ...Health Management Associates, Inc. Retirement Savings Plan, a defined contribution plan covering substantially all of the employees formerly employed by HMA. Total expense to the Company under the 401(k) plans was $103 million, $99 million and $102 million for the years ended December 31, 2015, 2014...

  • Page 153
    ... Health Systems, Inc. Retirement Income Plan ("Pension Plan"), which is a defined benefit, non-contributory pension plan that covers certain employees at three of its hospitals. The Pension Plan provides benefits to covered individuals satisfying certain age and service requirements. Employer...

  • Page 154
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) December 1, 2015. During the year ended December 31, 2015, the Company repurchased and retired the maximum 5,000,000 shares of our common stock authorized for repurchase under this program at a ...

  • Page 155
    ...: Employee stock options and restricted stock awards ...255,564 472,570 - 14. EQUITY INVESTMENTS As of December 31, 2015, the Company owned equity interests of 27.5% in four hospitals in Las Vegas, Nevada, and 26.1% in one hospital in Las Vegas, Nevada, in which Universal Health Services...

  • Page 156
    ... 2015, 2014 and 2013, respectively. 15. SEGMENT INFORMATION The Company operates in two distinct operating segments, represented by hospital operations (which includes its general acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services) and home...

  • Page 157
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The distribution between reportable segments of the Company's net operating revenues, income from continuing operations before income taxes, expenditures for segment assets and total assets is ...

  • Page 158
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 16. OTHER COMPREHENSIVE INCOME The following tables present information about items reclassified out of accumulated other comprehensive income (loss) by component for the years ended December 31,...

  • Page 159
    ... Net of tax $ 17. COMMITMENTS AND CONTINGENCIES (1) Construction and Other Capital Commitments. Pursuant to a hospital purchase agreement in effect as of December 31, 2015, the Company has agreed to build a replacement facility in York, Pennsylvania. The estimated construction cost, including...

  • Page 160
    ... value of the projected payments was discounted using a weighted-average risk-free rate of 1.6%, 1.7% and 1.6% in 2015, 2014 and 2013, respectively. This liability is adjusted for new claims information in the period such information becomes known. The Company's estimated liability for professional...

  • Page 161
    ..., information is stratified by loss layers and retentions, accident years, reported years, geography and claims relating to the acquired HMA hospitals versus claims relating to the Company's other hospitals. Several actuarial methods are used against this data to produce estimates of ultimate paid...

  • Page 162
    ... FINANCIAL STATEMENTS - (Continued) Effective June 1, 2014, the hospitals acquired from HMA were insured on a claims-made basis as described above and through commercial insurance companies as described above for substantially all claims reported on or after June 1, 2014 except for physician-related...

  • Page 163
    ... claims are covered by insurance policies maintained by the Company, including professional liability and employer practices. In this regard, the Company will continue to be responsible for HMA Legal Matters (as defined below) covered by the CVR agreement that relate to the portion of our business...

  • Page 164
    ... liability for probable contingency claims underlying the CVR agreement that was previously recorded by HMA, and reflected in the purchase accounting for HMA as an acquired liability has been settled and was paid during the year ended December 31, 2015. In addition, although legal fees are not...

  • Page 165
    .... During the first quarter of 2015, the Company was informed that the Criminal Division continues to investigate former executive-level employees of HMA, and continues to consider whether any HMA entities should be held criminally liable for the acts of the former HMA employees. The Company is...

  • Page 166
    ... to CVR holders. CVR Related Liability at Fair Value Balance as of December 31, 2013 ...Assumed liabilities for HMA contingencies ...(Income) expense ...Cash payments ...Balance as of December 31, 2014 ...Expense (income) ...Cash payments ...Balance as of December 31, 2015 ...$ $ 284 (16) (3) 265...

  • Page 167
    ... of the Company sold Bartow Regional Medical Center (72 licensed beds) in Bartow, Florida, and related outpatient services to BayCare Health Systems, Inc. for approximately $60 million in cash, which was received at the preliminary closing on December 31, 2015. Effective February 1, 2016, one or...

  • Page 168
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 19. QUARTERLY FINANCIAL DATA (UNAUDITED) 1st Year ended December 31, 2015: Net operating revenues ...Income (loss) from continuing operations before income taxes ...Income (loss) from continuing ...

  • Page 169
    ... to the release of the guarantee when a subsidiary guarantor's capital stock is sold, or a sale of all of the subsidiary guarantor's assets used in operations. The following condensed consolidating financial statements present Community Health Systems, Inc. (as parent guarantor), CHS (as the issuer...

  • Page 170
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Condensed Consolidating Statement of Income Year Ended December 31, 2015 Parent Guarantor Issuer Other Guarantors Non Guarantors Eliminations Consolidated (In millions) Operating revenues (net ...

  • Page 171
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Condensed Consolidating Statement of Income Year Ended December 31, 2014 Parent Guarantor Issuer Other Guarantors Non Guarantors Eliminations Consolidated (In millions) Operating revenues (net ...

  • Page 172
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Condensed Consolidating Statement of Income Year Ended December 31, 2013 Parent Guarantor Issuer Other Guarantors (In millions) Non Guarantors Eliminations Consolidated Operating revenues (net ...

  • Page 173
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2015 Parent Guarantor Issuer Other Guarantors Non Guarantors Eliminations Consolidated (In millions) Net income...

  • Page 174
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2013 Parent Guarantor Issuer Other Guarantors Non Guarantors Eliminations Consolidated (In millions) Net income...

  • Page 175
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Condensed Consolidating Balance Sheet December 31, 2015 Parent Guarantor Issuer ASSETS Current assets: Cash and cash equivalents ...$ Patient accounts receivable, net of allowance for doubtful ...

  • Page 176
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Condensed Consolidating Balance Sheet December 31, 2014 Parent Guarantor Issuer ASSETS Current assets: Cash and cash equivalents ...$ Patient accounts receivable, net of allowance for doubtful ...

  • Page 177
    ... Statement of Cash Flows Year Ended December 31, 2015 Parent Guarantor Issuer Other Guarantors Non Guarantors Eliminations Consolidated (In millions) Net cash (used in) provided by operating activities ...$ Cash flows from investing activities: Acquisitions of facilities and other related...

  • Page 178
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2014 Parent Guarantor Issuer Other Guarantors Non Guarantors Eliminations Consolidated (In millions) Net cash provided by...

  • Page 179
    COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2013 Parent Guarantor Issuer Other Guarantors Non Guarantors Eliminations Consolidated (In millions) Net cash (used in) ...

  • Page 180
    ... and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. There have been no changes in internal control over financial reporting that occurred during the period that have materially affected or...

  • Page 181
    ... such as integrity and ethical values. Our internal control over financial reporting is supported by formal policies and procedures which are reviewed, modified and improved as changes occur in business conditions and operations. The Audit and Compliance Committee of the Board of Directors, which is...

  • Page 182
    ... REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Community Health Systems, Inc. Franklin, Tennessee We have audited the internal control over financial reporting of Community Health Systems, Inc. and subsidiaries (the "Company") as of December 31, 2015, based...

  • Page 183
    ... and discussed the Company's audited consolidated financial statements with management and with the independent registered public accounting firm, reviewed internal controls and accounting procedures and provided oversight review of the Company's corporate compliance program. In addition, the...

  • Page 184
    ... of management and the materials it received from the independent registered public accounting firm as described above, the Audit and Compliance Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company's Annual Report on...

  • Page 185
    ... Community Health Systems, Inc.'s Current Report on Form 8-K filed July 30, 2013 (No. 001-15925)) Amendment and Consent to Agreement and Plan of Merger, dated as of September 24, 2013, by and among Health Management Associates, Inc., Community Health Systems, Inc. and FWCT-2 Acquisition Corporation...

  • Page 186
    ... and the Initial Purchasers (incorporated by reference to Exhibit 4.8 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 filed February 23, 2012 (No. 001-15925)) First Supplemental Indenture relating to CHS/Community Health Systems, Inc.'s 8.000...

  • Page 187
    ... Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2014 filed February 25, 2014 (No. 001-15925)) Tenth Supplemental Indenture relating to CHS/Community Health Systems, Inc.'s 8.000% Senior Notes due 2019, dated as of March 31, 2015, by and among CHS/Community Health Systems...

  • Page 188
    ... party thereto and Regions Bank, as Trustee (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed August 1, 2014 (No. 001-15925)) Sixth Supplemental Indenture relating to CHS/Community Health Systems, Inc...

  • Page 189
    ...and Credit Suisse AG, as Collateral Agent (incorporated by reference to Exhibit 4.26 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 filed February 26, 2014 (No. 001-15925)) Fifth Supplemental Indenture relating to CHS/Community Health Systems, Inc...

  • Page 190
    ... Report on Form 10-Q for the quarter ended September 30, 2012 filed November 1, 2012 (No. 001-15925)) Senior Secured Notes Indenture relating to CHS/Community Health Systems, Inc.'s 5.125% Senior Secured Notes due 2021, dated as of January 27, 2014, by and among FWCT-2 Escrow Corporation, Regions...

  • Page 191
    ... thereto, Regions Bank, as Trustee and Credit Suisse AG, as Collateral Agent (incorporated by reference to Exhibit 4.4 to Community Health Systems, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed August 1, 2014 (No. 001-15925)) Third Supplemental Indenture relating to...

  • Page 192
    ... Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2014 filed February 25, 2014 (No. 001-15925)) Fourth Supplemental Indenture relating to CHS/Community Health Systems, Inc.'s 6.875% Senior Notes due 2022, dated as of March 31, 2015, by and among CHS/Community Health Systems...

  • Page 193
    ... party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.'s Current Report on Form 8-K filed May 18, 2015 (No. 001-15925)) Contingent Value Rights Agreement, dated as of January 27, 2014, by and...

  • Page 194
    ... Loan Agreement, dated as of March 21, 2012, among CHS Receivables Funding, LLC, the lenders party thereto, the managing agents party thereto, Crédit Agricole Corporate and Investment Bank, as Administrative Agent, and CHSPSC, LLC (formerly Community Health Systems Professional Services Corporation...

  • Page 195
    ... to Community Health Systems, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed October 28, 2011 (No. 001-15925)) Amendment No. 2, dated as of January 1, 2014, to the CHS/Community Health Systems, Inc. Amended and Restated Supplemental Executive Retirement Plan, as...

  • Page 196
    ... Form of Nonqualified Stock Option Agreement (Employee) for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.39 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 filed February 26, 2014 (No. 001...

  • Page 197
    ... Stock Award Agreement (Most Highly Compensated Executive Officers) for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.4 to Community Health Systems, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed July 31, 2013...

  • Page 198
    ... of 2002 Corporate Integrity Agreement, dated July 28, 2014, between Community Health Systems, Inc. and the Office of Inspector General of the United States Department of Health and Human Services (incorporated by referent to Exhibit 99.1 to Community Health Systems, Inc.'s Quarterly Report on Form...

  • Page 199
    ...by the undersigned, thereunto duly authorized. COMMUNITY HEALTH SYSTEMS, INC. By: /s/ Wayne T. Smith Wayne T. Smith Chairman of the Board and Chief Executive Officer Date: February 17, 2016 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 200
    ... FIRM To the Board of Directors and Stockholders of Community Health Systems, Inc. Franklin, Tennessee We have audited the consolidated financial statements of Community Health Systems, Inc. and subsidiaries (the "Company") as of December 31, 2015 and 2014, and for each of the three years in the...

  • Page 201
    Community Health Systems, Inc. and Subsidiaries Schedule II - Valuation and Qualifying Accounts Balance at Beginning of Year Acquisitions and Dispositions Charged to Costs and Expenses (In millions) Balance at End of Year Description Write-offs Year ended December 31, 2015 allowance for doubtful ...

  • Page 202
    ... Exhibit 4.6 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 filed February 23, 2012 (No. 001-15925)) Form of 8.000% Senior Note due 2019 (included in Exhibit 4.2) Registration Rights Agreement relating to CHS/Community Health Systems, Inc.'s 8.000...

  • Page 203
    ... (incorporated by reference to Exhibit 4.12 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 filed February 26, 2014 (No. 001-15925)) Eighth Supplemental Indenture relating to CHS/Community Health Systems, Inc.'s 8.000% Senior Notes due 2019, dated...

  • Page 204
    ... (incorporated by reference to Exhibit 4.19 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 filed February 26, 2014 (No. 001-15925)) Fifth Supplemental Indenture relating to CHS/Community Health Systems, Inc.'s 7.125% Senior Notes due 2020, dated...

  • Page 205
    ... Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2014 filed February 25, 2014 (No. 001-15925)) Seventh Supplemental Indenture relating to CHS/Community Health Systems, Inc.'s 7.125% Senior Notes due 2020, dated as of March 31, 2015, by and among CHS/Community Health...

  • Page 206
    ...and Credit Suisse AG, as Collateral Agent (incorporated by reference to Exhibit 4.26 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 filed February 26, 2014 (No. 001-15925)) Fifth Supplemental Indenture relating to CHS/Community Health Systems, Inc...

  • Page 207
    ... Report on Form 10-Q for the quarter ended September 30, 2012 filed November 1, 2012 (No. 001-15925)) Senior Secured Notes Indenture relating to CHS/Community Health Systems, Inc.'s 5.125% Senior Secured Notes due 2021, dated as of January 27, 2014, by and among FWCT-2 Escrow Corporation, Regions...

  • Page 208
    ..., Regions Bank, as Trustee and Credit Suisse AG, as Collateral Agent (incorporated by reference to Exhibit 4.4 to Community Health Systems, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed November 3, 2015 (No. 001-15925)) Seventh Supplemental Indenture relating to...

  • Page 209
    ...Indenture relating to CHS/Community Health Systems, Inc.'s 6.875% Senior Notes due 2022, dated as of December 31, 2015, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and Regions Bank, as Trustee Secured Notes Registration Rights Agreement, dated as of January 27, 2014...

  • Page 210
    ... party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.'s Current Report on Form 8-K filed May 18, 2015 (No. 001-15925)) Contingent Value Rights Agreement, dated as of January 27, 2014, by and...

  • Page 211
    .... 333-31790)) CHS/Community Health Systems, Inc. Amended and Restated Supplemental Executive Retirement Plan, as amended and restated as of January 1, 2009 (incorporated by reference to Exhibit 10.13 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008...

  • Page 212
    ... the quarter ended June 30, 2014 filed August 1, 2014 (No. 001-15925)) Community Health Systems, Inc. Directors' Fees Deferral Plan, as amended and restated as of December 10, 2008 (incorporated by reference to Exhibit 10.15 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year...

  • Page 213
    ... Stock Award Agreement (Most Highly Compensated Executive Officers) for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.4 to Community Health Systems, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed July 31, 2013...

  • Page 214
    ... Health Systems Professional Services Corporation and HealthTrust Purchasing Group, L.P. (incorporated by reference to Exhibit 10.36 to Community Health Systems, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2014 filed February 25, 2014 (No. 001-15925)) Consultancy Agreement...

  • Page 215
    ... effectiveness of Community Health Systems, Inc. and subsidiaries' internal control over financial reporting, appearing in this Annual Report on Form 10-K of Community Health Systems, Inc. and subsidiaries for the year ended December 31, 2015. /s/ Deloitte & Touche LLP Nashville, Tennessee February...

  • Page 216
    ...and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Wayne T. Smith Wayne T. Smith Chairman of the Board and Chief Executive Officer Date...

  • Page 217
    ...and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ W. Larry Cash W. Larry Cash President of Financial Services, Chief Financial Officer...

  • Page 218
    ...connection with the Annual Report of Community Health Systems, Inc. (the "Company") on Form 10-K for the period ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Wayne T. Smith, Chairman of the Board and Chief Executive Officer of the...

  • Page 219
    ... with the Annual Report of Community Health Systems, Inc. (the "Company") on Form 10-K for the period ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, W. Larry Cash, President of Financial Services and Chief Financial Officer of the...

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