HCA Holdings 2012 Annual Report Download - page 55

ICD-10 system is required beginning October 1, 2014. Transition to the new ICD-10 system requires significant
investment in coding technology and software as well as the training of staff involved in the coding and billing
process. In addition to these upfront costs of transition to ICD-10, it is possible that our hospitals could
experience disruption or delays in payment due to technical or coding errors or other implementation issues
involving our systems or the systems and implementation efforts of health plans and their business partners.
Further, the transition to the more detailed ICD-10 coding system could result in decreased reimbursement if the
use of ICD-10 codes results in conditions being reclassified to MS-DRGs or commercial payer payment
groupings with lower levels of reimbursement than assigned under the previous system.
State efforts to regulate the construction or expansion of health care facilities could impair our ability to
operate and expand our operations.
Some states, particularly in the eastern part of the country, require health care providers to obtain prior
approval, known as a CON, for the purchase, construction or expansion of health care facilities, to make certain
capital expenditures or to make changes in services or bed capacity. In giving approval, these states consider the
need for additional or expanded health care facilities or services. We currently operate health care facilities in a
number of states with CON laws. The failure to obtain any requested CON could impair our ability to operate or
expand operations. Any such failure could, in turn, adversely affect our ability to attract patients and physicians
to our facilities and grow our revenues, which would have an adverse effect on our results of operations.
We may encounter difficulty acquiring hospitals and other health care businesses, encounter challenges
integrating the operations of acquired hospitals and other health care businesses and become liable for
unknown or contingent liabilities as a result of acquisitions.
A component of our business strategy is acquiring hospitals and other health care businesses. We may
encounter difficulty acquiring new facilities as a result of competition from other purchasers that may be willing
to pay purchase prices that are higher than we believe are reasonable. Some states require CONs in order to
acquire a hospital or other facility or to expand facilities or services. In addition, the acquisition of health care
facilities often involves licensure approvals or reviews and complex change of ownership processes for Medicare
and other payers. Further, many states have laws that restrict the conversion or sale of not-for-profit hospitals to
for-profit entities. These laws may require prior approval from the state attorney general, advance notification of
the attorney general or other regulators and community involvement. Attorneys general in states without specific
requirements may exercise broad discretionary authority over transactions involving the sale of not-for-profits
under their general obligations to protect the use of charitable assets. These conversion legislative and
administrative efforts often focus on the appropriate valuation of the assets divested and the use of the proceeds
of the sale by the non-profit seller and may include consideration of commitments for capital improvements and
charity care by the purchaser. Also, the increasingly challenging regulatory and enforcement environment may
negatively impact our ability to acquire health care businesses if they are found to have material unresolved
compliance issues, such as repayment obligations. Resolving compliance issues as well as completion of
oversight, review or approval processes could seriously delay or even prevent our ability to acquire hospitals or
other businesses and increase our acquisition costs.
We may be unable to timely and effectively integrate hospitals and other businesses that we acquire with
our ongoing operations, or we may experience delays implementing operating procedures and systems. Hospitals
and other health care businesses that we acquire may have unknown or contingent liabilities, including liabilities
for failure to comply with health care and other laws and regulations, medical and general professional liabilities,
workers’ compensation liabilities and tax liabilities. Although we typically exclude significant liabilities from
our acquisition transactions and seek indemnification from the sellers for these matters, we could experience
difficulty enforcing those obligations, experience liability in excess of any indemnification obtained or otherwise
incur material liabilities for the pre-acquisition conduct of acquired businesses. Such liabilities and related legal
or other costs could harm our business and results of operations.
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