HCA Holdings 2011 Annual Report Download - page 38

obtained reinsurance for professional liability risks generally above a retention level of $15 million per
occurrence. We also maintain professional liability insurance with unrelated commercial carriers for losses in
excess of amounts insured by our insurance subsidiary.
We purchase, from unrelated insurance companies, coverage for directors and officers liability and property
loss in amounts we believe are adequate. The directors and officers liability coverage includes a $25 million
corporate deductible for the period prior to November 2006, a $1 million corporate deductible for the period
subsequent to November 2006 until our initial public offering in March 2011 and a $5 million corporate
deductible subsequent to our initial public offering in March 2011. In addition, we will continue to purchase
coverage for our directors and officers on an ongoing basis. The property coverage includes varying deductibles
depending on the cause of the property damage. These deductibles range from $500,000 per claim up to 5% of
the affected property values for certain flood and wind and earthquake related incidents.
Employees and Medical Staffs
At December 31, 2011, we had approximately 199,000 employees, including approximately 49,000 part-
time employees. References herein to “employees” refer to employees of our affiliates. We are subject to various
state and federal laws that regulate wages, hours, benefits and other terms and conditions relating to employment.
At December 31, 2011, employees at 38 of our hospitals are represented by various labor unions. While no
elections are expected in 2012, it is possible additional hospitals may unionize in the future. We consider 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 has become a significant operating issue to
health care providers. To address this challenge, we have implemented several initiatives to improve retention,
recruiting, compensation programs and productivity.
Our hospitals are staffed by licensed physicians, including both employed physicians and physicians who
are not employees of our hospitals. Some physicians provide services in our hospitals under contracts, which
generally describe a term of service, provide and establish the duties and obligations of such physicians, require
the maintenance of certain performance criteria and fix compensation for such services. Any licensed physician
may apply to be accepted to the medical staff of any of our hospitals, but the hospital’s medical staff and the
appropriate governing board of the hospital, in accordance with established credentialing criteria, must approve
acceptance to the staff. Members of the medical staffs of our hospitals often also serve on the medical staffs of
other hospitals and may terminate their affiliation with one of our hospitals at any time.
We may be required to continue to enhance wages and benefits to recruit and retain nurses and other
medical support personnel or to hire more expensive temporary or contract personnel. As a result, our labor costs
could increase. We also depend on the available labor pool of semi-skilled and unskilled employees in each of
the markets in which we operate. Certain proposed changes in federal labor laws and the National Labor
Relations Board’s (the “NLRB”) modification of its election procedures could increase the likelihood of
employee unionization attempts. To the extent a significant portion of our employee base unionizes, our costs
could increase materially. In addition, the states in which we operate could adopt mandatory nurse-staffing ratios
or could reduce mandatory nurse-staffing ratios already in place. State-mandated nurse-staffing ratios could
significantly affect labor costs, and have an adverse impact on revenues if we are required to limit patient
admissions in order to meet the required ratios.
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