HCA Holdings 2012 Annual Report Download - page 121

HCA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — ACCOUNTING POLICIES (continued)
Goodwill and Other Intangible Assets (continued)
business segment level, and our impairment testing is performed at the operating division or market level. We
compare the fair value of the reporting unit assets to the carrying amount, on at least an annual basis, to
determine if there is potential impairment. If the fair value of the reporting unit assets is less than their carrying
value, we compare the fair value of the goodwill to its carrying value. If the fair value of the goodwill is less than
its carrying value, an impairment loss is recognized. Fair value of goodwill is estimated based upon internal
evaluations of the related long-lived assets for each reporting unit that include quantitative analyses of revenues
and cash flows and reviews of recent sales of similar facilities. No goodwill impairments were recognized during
2012 and 2011, and we recognized goodwill impairments of $14 million during 2010.
During 2012, goodwill increased by $288 million related to acquisitions, declined by $3 million related to
facility sales and increased by $3 million related to foreign currency translation and other adjustments. During
2011, goodwill increased by $2.329 billion related to acquisitions, declined by $24 million related to facility
sales, and declined by $16 million related to foreign currency translation and other adjustments.
Since January 1, 2000, we have recognized total goodwill impairments of $102 million in the aggregate.
None of the goodwill impairments related to evaluations of goodwill at the reporting unit level, as all recognized
goodwill impairments during this period related to goodwill allocated to asset disposal groups.
During 2012 and 2010, there were no changes in other intangible assets. During 2011, other intangible
assets increased by $269 million. Other intangible assets are not amortized, but are subject to annual impairment
tests.
Deferred Loan Costs
Debt issuance costs are amortized based upon the terms of the respective debt obligations. The gross
carrying amount of deferred loan costs at December 31, 2012 and 2011 was $571 million and $638 million,
respectively, and accumulated amortization was $281 million and $348 million, respectively. Amortization of
deferred loan costs is included in interest expense and was $62 million, $70 million and $81 million for 2012,
2011 and 2010, respectively.
Physician Recruiting Agreements
In order to recruit physicians to meet the needs of our hospitals and the communities they serve, we enter
into minimum revenue guarantee arrangements to assist the recruited physicians during the period they are
relocating and establishing their practices. A guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the stand-ready obligation undertaken in issuing the guarantee. We expense the total
estimated guarantee liability amount at the time the physician recruiting agreement becomes effective as we are
not able to justify recording a contract-based asset based upon our analysis of the related control, regulatory and
legal considerations.
The physician recruiting liability amount of $15 million at both December 31, 2012 and 2011 represents the
amount of expense recognized in excess of payments made through December 31, 2012 and 2011. At
December 31, 2012 the maximum amount we could have to pay under all effective minimum revenue guarantees
was $37 million.
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