HCA Holdings 2012 Annual Report Download - page 69

HCA HOLDINGS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Business Strategy (continued)
Business Solutions, to leverage key components of our support infrastructure, including revenue cycle
management, health care group purchasing, supply chain management and staffing functions and are offering
these services to other hospital companies.
Selectively Pursue a Disciplined Development Strategy. We continue to believe there are significant growth
opportunities in our markets. We will continue to provide financial and operational resources to analyze and
develop our in-market opportunities. To complement our in-market growth agenda, we intend to focus on
selectively developing and acquiring new hospitals, outpatient facilities and other health care service providers.
We believe the challenges faced by the hospital industry may spur consolidation and we believe our size, scale,
national presence and access to capital will position us well to participate in any such consolidation. We have a
strong record of successfully acquiring and integrating hospitals and entering into joint ventures and intend to
continue leveraging this experience.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and
the reported amounts of revenues and expenses. Our estimates are based on historical experience and various
other assumptions we believe are reasonable under the circumstances. We evaluate our estimates on an ongoing
basis and make changes to the estimates and related disclosures as experience develops or new information
becomes known. Actual results may differ from these estimates.
We believe the following critical accounting policies affect our more significant judgments and estimates
used in the preparation of our consolidated financial statements.
Revenues
Revenues are recorded during the period the health care services are provided, based upon the estimated
amounts due from payers. Estimates of contractual allowances under managed care health plans are based upon
the payment terms specified in the related contractual agreements. Laws and regulations governing the Medicare
and Medicaid programs are complex and subject to interpretation. The estimated reimbursement amounts are
made on a payer-specific basis and are recorded based on the best information available regarding management’s
interpretation of the applicable laws, regulations and contract terms. Management continually reviews the
contractual estimation process to consider and incorporate updates to laws and regulations and the frequent
changes in managed care contractual terms resulting from contract renegotiations and renewals. We have
invested significant resources to refine and improve our computerized billing systems and the information system
data used to make contractual allowance estimates. We have developed standardized calculation processes and
related training programs to improve the utility of our patient accounting systems.
The Emergency Medical Treatment and Labor Act (“EMTALA”) requires any hospital participating in the
Medicare program to conduct an appropriate medical screening examination of every person who presents to the
hospital’s emergency room for treatment and, if the individual is suffering from an emergency medical condition,
to either stabilize the condition or make an appropriate transfer of the individual to a facility able to handle the
condition. The obligation to screen and stabilize emergency medical conditions exists regardless of an
individual’s ability to pay for treatment. Federal and state laws and regulations, including but not limited to
EMTALA, require, and our commitment to providing quality patient care encourages, the provision of services to
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