TENET HEALTHCARE CORP, 10-Q filed on 5/2/2016
Quarterly Report
v3.4.0.3
Document and Entity Information - shares
 3 Months Ended
Mar. 31, 2016
Apr. 27, 2016
Document and Entity Information    
Entity Registrant Name TENET HEALTHCARE CORP  
Entity Central Index Key 0000070318  
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   99,304,410
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
v3.4.0.3
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Current assets:    
Cash and cash equivalents $ 728 $ 356
Accounts receivable, less allowance for doubtful accounts ($901 at March 31, 2016 and $887 at December 31, 2015) 2,807 2,704
Inventories of supplies, at cost 312 309
Income tax receivable   7
Assets held for sale 2 550
Other current assets 1,280 1,245
Total current assets 5,129 5,171
Investments and other assets 1,142 1,175
Deferred income taxes 726 776
Property and equipment, at cost, less accumulated depreciation and amortization ($4,538 at March 31, 2016 and $4,323 at December 31, 2015) 7,961 7,915
Goodwill 7,122 6,970
Other intangible assets, at cost, less accumulated amortization ($701 at March 31, 2016 and $659 at December 31, 2015) 1,686 1,675
Total assets 23,766 23,682
Current liabilities:    
Current portion of long-term debt 172 127
Accounts payable 1,228 1,380
Accrued compensation and benefits 772 880
Professional and general liability reserves 161 177
Accrued interest payable 307 205
Liabilities held for sale   101
Accrued legal settlement costs 423 294
Other current liabilities 1,205 1,144
Total current liabilities 4,268 4,308
Long-term debt, net of current portion 14,350 14,383
Professional and general liability reserves 623 578
Defined benefit plan obligations 593 595
Other long-term liabilities 625 594
Total liabilities $ 20,459 $ 20,458
Commitments and contingencies
Redeemable noncontrolling interests in equity of consolidated subsidiaries $ 2,381 $ 2,266
Shareholders' equity:    
Common stock, $0.05 par value; authorized 262,500,000 shares; 147,692,493 shares issued at March 31, 2016 and 146,920,454 shares issued at December 31, 2015 7 7
Additional paid-in capital 4,804 4,815
Accumulated other comprehensive loss (160) (164)
Accumulated deficit (1,609) (1,550)
Common stock in treasury, at cost, 48,424,273 shares at March 31, 2016 and 48,425,298 shares at December 31, 2015 (2,417) (2,417)
Total shareholders' equity 625 691
Noncontrolling interests 301 267
Total equity 926 958
Total liabilities and equity $ 23,766 $ 23,682
v3.4.0.3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
CONDENSED CONSOLIDATED BALANCE SHEETS    
Accounts receivable, allowance for doubtful accounts (in dollars) $ 901 $ 887
Property and equipment, accumulated depreciation and amortization (in dollars) 4,538 4,323
Other intangible assets, accumulated amortization (in dollars) $ 701 $ 659
Common stock, par value (in dollars per share) $ 0.05 $ 0.05
Common stock, authorized shares 262,500,000 262,500,000
Common stock, shares issued 147,692,493 146,920,454
Common stock in treasury, shares 48,424,273 48,425,298
v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Net operating revenues:    
Net operating revenues before provision for doubtful accounts $ 5,420 $ 4,787
Less: Provision for doubtful accounts 376 363
Net operating revenues 5,044 4,424
Equity in earnings of unconsolidated affiliates 24 4
Operating expenses:    
Salaries, wages and benefits 2,402 2,125
Supplies 811 687
Other operating expenses, net 1,242 1,093
Electronic health record incentives   (6)
Depreciation and amortization 212 207
Impairment and restructuring charges, and acquisition-related costs 28 29
Litigation and investigation costs 173 3
Gains on sales, consolidation and deconsolidation of facilities (147)  
Operating income 347 290
Interest expense (243) (199)
Investment earnings 1  
Net income from continuing operations, before income taxes 105 91
Income tax benefit (expense) (67) (16)
Net income from continuing operations, before discontinued operations 38 75
Discontinued operations:    
Loss from operations (5) (1)
Litigation and investigation costs   3
Income tax benefit (expense) 1 (1)
Net income (loss) from discontinued operations (4) 1
Net income 34 76
Less: Net income attributable to noncontrolling interests 93 29
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders (59) 47
Amounts available (attributable) to Tenet Healthcare Corporation common shareholders    
Net income from continuing operations, net of tax (55) 46
Net income (loss) from discontinued operations, net of tax (4) 1
Net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ (59) $ 47
Basic    
Continuing operations (in dollars per share) $ (0.56) $ 0.47
Discontinued operations (in dollars per share) (0.04) 0.01
Total loss per share, Basic (in dollars per share) (0.60) 0.48
Diluted    
Continuing operations (in dollars per share) (0.56) 0.46
Discontinued operations (in dollars per share) (0.04) 0.01
Total loss per share, Diluted (in dollars per share) $ (0.60) $ 0.47
Weighted average shares and dilutive securities outstanding (in thousands):    
Basic (in shares) 98,768 98,699
Diluted (in shares) 98,768 100,872
v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME    
Net income $ 34 $ 76
Other comprehensive income:    
Amortization of net actuarial loss included in net periodic benefit costs   3
Unrealized gains on securities held as available-for-sale 3 1
Foreign currency translation adjustments 2  
Other comprehensive income before income taxes 5 4
Income tax expense related to items of other comprehensive income (1) (1)
Total other comprehensive income, net of tax 4 3
Comprehensive net income 38 79
Less: Comprehensive income attributable to noncontrolling interests 93 29
Comprehensive net income available (loss attributable) to Tenet Healthcare Corporation common shareholders $ (55) $ 50
v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    
Net income $ 34 $ 76
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation and amortization 212 207
Provision for doubtful accounts 376 363
Deferred income tax expense 31 12
Stock-based compensation expense 16 15
Impairment and restructuring charges, and acquisition-related costs 28 29
Litigation and investigation costs 173 3
Gains on sales, consolidation and deconsolidation of facilities (147)  
Equity in earnings of unconsolidated affiliates, net of distributions received 12 (4)
Amortization of debt discount and debt issuance costs 10 7
Pre-tax loss (income) from discontinued operations 5 (2)
Other items, net 2 (4)
Changes in cash from operating assets and liabilities:    
Accounts receivable (453) (484)
Inventories and other current assets (18) (74)
Income taxes 28 8
Accounts payable, accrued expenses and other current liabilities (114) (200)
Other long-term liabilities 24 28
Payments for restructuring charges, acquisition-related costs, and litigation costs and settlements (69) (33)
Net cash used in operating activities from discontinued operations, excluding income taxes (3) (4)
Net cash provided by (used in) operating activities 147 (57)
Cash flows from investing activities:    
Purchases of property and equipment - continuing operations (208) (184)
Purchases of businesses or joint venture interests, net of cash acquired (29) (11)
Proceeds from sales of facilities and other assets 573  
Proceeds from sales of marketable securities, long-term investments and other assets 12 6
Purchases of equity investments (18)  
Other long-term assets (10) 2
Net cash provided by (used in) investing activities 320 (187)
Cash flows from financing activities:    
Repayments of borrowings under credit facility (995) (690)
Proceeds from borrowings under credit facility 995 820
Repayments of other borrowings (38) (32)
Proceeds from other borrowings 1 401
Debt issuance costs   (4)
Distributions paid to noncontrolling interests (44) (11)
Contributions from noncontrolling interests   2
Purchase of noncontrolling interest   (254)
Proceeds from exercise of stock options   7
Other items, net (14) (3)
Net cash provided by (used in) financing activities (95) 236
Net increase (decrease) in cash and cash equivalents 372 (8)
Cash and cash equivalents at beginning of period 356 193
Cash and cash equivalents at end of period 728 185
Supplemental disclosures:    
Interest paid, net of capitalized interest (132) (117)
Income tax payments, net $ (6) $ 1
v3.4.0.3
BASIS OF PRESENTATION
 3 Months Ended
Mar. 31, 2016
BASIS OF PRESENTATION  
BASIS OF PRESENTATION

NOTE 1. BASIS OF PRESENTATION

 

Description of Business and Basis of Presentation

 

Tenet Healthcare Corporation (together with our subsidiaries, referred to herein as “Tenet,” “we” or “us”) is a diversified healthcare services company. At March 31, 2016, we operated 84 hospitals, 20 short-stay surgical hospitals, over 475 outpatient centers, nine facilities in the United Kingdom and six health plans through our subsidiaries, partnerships and joint ventures, including USPI Holding Company, Inc. (“USPI joint venture”). The results of 142 of these facilities, in which we hold noncontrolling interests, are recorded using the equity method of accounting. Our Conifer Holdings, Inc. (“Conifer”) subsidiary provides healthcare business process services in the areas of revenue cycle management and technology-enabled performance improvement and health management solutions to health systems, as well as individual hospitals, physician practices, self-insured organizations and health plans.

 

This quarterly report supplements our Annual Report on Form 10-K for the year ended December 31, 2015 (“Annual Report”). As permitted by the Securities and Exchange Commission for interim reporting, we have omitted certain notes and disclosures that substantially duplicate those in our Annual Report. For further information, refer to the audited Consolidated Financial Statements and notes included in our Annual Report. Unless otherwise indicated, all financial and statistical data included in these notes to our Condensed Consolidated Financial Statements relate to our continuing operations, with dollar amounts expressed in millions (except per-share amounts).  Certain prior-year amounts have been reclassified to conform to the current-year presentation.

 

Although the Condensed Consolidated Financial Statements and related notes within this document are unaudited, we believe all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. In preparing our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), we are required to make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements and these accompanying notes. We regularly evaluate the accounting policies and estimates we use. In general, we base the estimates on historical experience and on assumptions that we believe to be reasonable given the particular circumstances in which we operate. Actual results may vary from those estimates. Financial and statistical information we report to other regulatory agencies may be prepared on a basis other than GAAP or using different assumptions or reporting periods and, therefore, may vary from amounts presented herein. Although we make every effort to ensure that the information we report to those agencies is accurate, complete and consistent with applicable reporting guidelines, we cannot be responsible for the accuracy of the information they make available to the public.

 

Operating results for the three month period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the full year. Reasons for this include, but are not limited to: overall revenue and cost trends, particularly the timing and magnitude of price changes; fluctuations in contractual allowances and cost report settlements and valuation allowances; managed care contract negotiations, settlements or terminations and payer consolidations; changes in Medicare and Medicaid regulations; Medicaid and other supplemental funding levels set by the states in which we operate; the timing of approval by the Centers for Medicare and Medicaid Services of Medicaid provider fee revenue programs; trends in patient accounts receivable collectability and associated provisions for doubtful accounts; fluctuations in interest rates; levels of malpractice insurance expense and settlement trends; the number of covered lives managed by our health plans and the plans’ ability to effectively manage medical costs; the timing of when we meet the criteria to recognize electronic health record incentives; impairment of long-lived assets and goodwill; restructuring charges; losses, costs and insurance recoveries related to natural disasters and other weather-related occurrences; litigation and investigation costs; acquisitions and dispositions of facilities and other assets; income tax rates and deferred tax asset valuation allowance activity; changes in estimates of accruals for annual incentive compensation; the timing and amounts of stock option and restricted stock unit grants to employees and directors; gains or losses from early extinguishment of debt; and changes in occupancy levels and patient volumes. Factors that affect patient volumes and, thereby, the results of operations at our hospitals and related healthcare facilities include, but are not limited to: the business environment, economic conditions and demographics of local communities in which we operate; the number of uninsured and underinsured individuals in local communities treated at our hospitals; seasonal cycles of illness; climate and weather conditions; physician recruitment, retention and attrition; advances in technology and treatments that reduce length of stay; local healthcare competitors; managed care contract negotiations or terminations; the number of patients with high-deductible health insurance plans; any unfavorable publicity about us, or our joint venture partners, that impacts our relationships with physicians and patients; changes in healthcare regulations and the participation of individual states in federal programs; and the timing of elective procedures. These considerations apply to year-to-year comparisons as well.

 

Translation of Foreign Currencies

 

The accounts of European Surgical Partners, Limited (“Aspen”) were measured in its local currency (the pound sterling) and then translated into U.S. dollars. All assets and liabilities were translated using the current rate of exchange at the balance sheet date. Results of operations were translated using the average rates prevailing throughout the period of operations. Translation gains or losses resulting from changes in exchange rates are accumulated in shareholders’ equity.

 

Net Operating Revenues Before Provision for Doubtful Accounts

 

We recognize net operating revenues before provision for doubtful accounts in the period in which our services are performed. Net operating revenues before provision for doubtful accounts primarily consist of net patient service revenues that are recorded based on established billing rates (i.e., gross charges), less estimated discounts for contractual and other allowances, principally for patients covered by Medicare, Medicaid, managed care and other health plans, as well as certain uninsured patients under our Compact with Uninsured Patients (“Compact”) and other uninsured discount and charity programs.

 

The table below shows the sources of net operating revenues before provision for doubtful accounts from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31, 

 

 

    

2016

    

2015

 

General Hospitals:

 

 

 

 

 

 

 

Medicare

 

$
859

 

$
898

 

Medicaid

 

 
373

 

 
385

 

Managed care

 

 
2,626

 

 
2,405

 

Indemnity, self-pay and other

 

 
437

 

 
414

 

Acute care hospitals — other revenue

 

 
7

 

 
15

 

Other:

 

 

 

 

 

 

 

Other operations

 

 
1,118

 

 
670

 

Net operating revenues before provision for doubtful accounts 

 

$
5,420

 

$
4,787

 

 

Cash and Cash Equivalents

 

We treat highly liquid investments with original maturities of three months or less as cash equivalents. Cash and cash equivalents were approximately $728 million and $356 million at March 31, 2016 and December 31, 2015, respectively. At March 31, 2016 and December 31, 2015, our book overdrafts were approximately $256 million and $301 million, respectively, which were classified as accounts payable.

 

At March 31, 2016 and December 31, 2015, approximately $175 million and $171 million, respectively, of total cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets were intended for the operations of our captive insurance subsidiaries and our health plans.

 

Also at March 31, 2016 and December 31, 2015, we had $110 million and $133 million, respectively, of property and equipment purchases accrued for items received but not yet paid. Of these amounts, $63 million and $95 million, respectively, were included in accounts payable.

During the three months ended March 31, 2016 and 2015, we entered into non-cancellable capital leases of approximately $31 million and $33 million, respectively, primarily for buildings and equipment.

 

Other Intangible Assets

 

The following tables provide information regarding other intangible assets, which are included in the accompanying Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

    

Gross

    

 

 

    

 

 

 

 

Carrying

 

Accumulated

 

Net Book

 

 

Amount

 

Amortization

 

Value

At March 31, 2016:

 

 

 

 

 

 

 

 

 

Capitalized software costs

 

$
1,495

 

$
(625)

 

$
870

Trade names

 

 
106

 

 

 —

 

 
106

Contracts

 

 
669

 

 
(30)

 

 
639

Other

 

 
117

 

 
(46)

 

 
71

Total 

 

$
2,387

 

$
(701)

 

$
1,686

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Gross

    

 

 

    

 

 

 

 

Carrying

 

Accumulated

 

Net Book

 

 

Amount

 

Amortization

 

Value

At December 31, 2015:

 

 

 

 

 

 

 

 

 

Capitalized software costs

 

$
1,456

 

$
(594)

 

$
862

Trade names

 

 
106

 

 

 —

 

 
106

Contracts

 

 
653

 

 
(26)

 

 
627

Other

 

 
119

 

 
(39)

 

 
80

Total 

 

$
2,334

 

$
(659)

 

$
1,675

 

Estimated future amortization of intangibles with finite useful lives at March 31, 2016 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ending December 31, 

 

Later

 

 

    

Total

    

2016

    

2017

    

2018

    

2019

    

2020

    

Years

 

Amortization of intangible assets

 

$
1,207

 

$
141

 

$
174

 

$
146

 

$
122

 

$
89

 

$
535

 

 

Investments in Unconsolidated Affiliates

We control 213 of the facilities operated by our Ambulatory Care segment and, therefore, consolidate their results (211 are consolidated within our Ambulatory Care segment and two are consolidated within our Hospital Operations and other segment). We account for many of the facilities our Ambulatory Care segment operates (122 of 335 at March 31, 2016) and four of the hospitals our Hospital Operations and other segment operates under the equity method as investments in unconsolidated affiliates and report only our share of net income attributable to the investee as equity in earnings of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Operations. Summarized financial information for these equity method investees is included in the following table.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

March 31, 2016

Net operating revenues

 

$
578

Net income

 

$
105

Net income attributable to the investees

 

$
69

 

v3.4.0.3
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
 3 Months Ended
Mar. 31, 2016
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS  
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

NOTE 2. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

 

The principal components of accounts receivable are shown in the table below:

 

 

 

 

 

 

 

 

 

    

March 31, 

    

December 31, 

 

 

2016

 

2015

Continuing operations:

 

 

 

 

 

 

Patient accounts receivable

 

$
3,606

 

$
3,486

Allowance for doubtful accounts

 

 
(901)

 

 
(887)

Estimated future recoveries from accounts assigned to our Conifer subsidiary

 

 
146

 

 
144

Net cost reports and settlements payable and valuation allowances

 

 
(47)

 

 
(42)

 

 

 
2,804

 

 
2,701

Discontinued operations

 

 
3

 

 
3

Accounts receivable, net 

 

$
2,807

 

$
2,704

 

At March 31, 2016 and December 31, 2015, our allowance for doubtful accounts was 25.0% and 25.4%, respectively, of our patient accounts receivable. Accounts that are pursued for collection through Conifer’s regional business offices are maintained on our hospitals’ books and reflected in patient accounts receivable with an allowance for doubtful accounts established to reduce the carrying value of such receivables to their estimated net realizable value. Generally, we estimate this allowance based on the aging of our accounts receivable by hospital, our historical collection experience by hospital and for each type of payer, and other relevant factors. At March 31, 2016 and December 31, 2015, our allowance for doubtful accounts for self-pay was 81.2% and 80.6%, respectively, of our self-pay patient accounts receivable, including co-pays and deductibles owed by patients with insurance. At March 31, 2016 and December 31, 2015, our allowance for doubtful accounts for managed care was 8.4% and 7.5%, respectively, of our managed care patient accounts receivable.

 

We also provide charity care to patients who are financially unable to pay for the healthcare services they receive. Most patients who qualify for charity care are charged a per-diem amount for services received, subject to a cap. Except for the per-diem amounts, our policy is not to pursue collection of amounts determined to qualify as charity care; therefore, we do not report these amounts in net operating revenues. Most states include an estimate of the cost of charity care in the determination of a hospital’s eligibility for Medicaid disproportionate share hospital (“DSH”) payments. These payments are intended to mitigate our cost of uncompensated care, as well as reduced Medicaid funding levels. The table below shows our estimated costs (based on selected operating expenses, which include salaries, wages and benefits, supplies and other operating expenses) of caring for our self-pay patients and charity care patients, and revenues attributable to Medicaid DSH and other supplemental revenues we recognized in three months ended March 31, 2016 and 2015.

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31, 

 

 

    

2016

    

2015

    

Estimated costs for:

 

 

 

 

 

 

 

Self-pay patients

 

$
165

 

$
164

 

Charity care patients

 

$
44

 

$
36

 

Medicaid DSH and other supplemental revenues

 

$
227

 

$
247

 

 

At March 31, 2016 and December 31, 2015, we had approximately $450 million and $387 million, respectively, of receivables recorded in other current assets and approximately $174 million and $139 million, respectively, of payables recorded in other current liabilities in the accompanying Condensed Consolidated Balance Sheets related to California’s provider fee program.

v3.4.0.3
ASSETS AND LIABILITIES HELD FOR SALE
 3 Months Ended
Mar. 31, 2016
ASSETS AND LIABILITIES HELD FOR SALE  
ASSETS AND LIABILITIES HELD FOR SALE

NOTE 3. ASSETS AND LIABILITIES HELD FOR SALE

 

Our hospitals, physician practices and related assets in Georgia met the criteria to be classified as assets held for sale in the three months ended June 30, 2015. In accordance with the guidance in the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment,” we classified $549 million of our assets in Georgia as “assets held for sale” in current assets and $101 million of our liabilities in Georgia as “liabilities held for sale” in current liabilities in the accompanying Condensed Consolidated Balance Sheet at December 31, 2015. We completed the sale of our Georgia assets on March 31, 2016 at a transaction price of approximately $575 million and recognized a gain on sale of approximately $113 million. Because we did not sell the related accounts receivable related to the pre-closing period, net receivables of approximately $141 million are included in accounts receivable, less allowance for doubtful accounts in the accompanying Condensed Consolidated Balance Sheet at March 31, 2016.

 

v3.4.0.3
IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION-RELATED COSTS
 3 Months Ended
Mar. 31, 2016
IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION-RELATED COSTS  
IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION-RELATED COSTS

 

NOTE 4. IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION-RELATED COSTS

 

During the three months ended March 31, 2016, we recorded impairment and restructuring charges and acquisition-related costs of $28 million primarily related to our Hospital Operations and other segment, consisting of approximately $2 million to write-down other intangible assets, $10 million of employee severance costs, $1 million of restructuring costs, $1 million of contract and lease termination fees, and $14 million in acquisition-related costs, which include $5 million of transaction costs and $9 million of acquisition integration charges.

 

During the three months ended March 31, 2015, we recorded impairment and restructuring charges and acquisition-related costs of $29 million, consisting of $6 million of employee severance costs, $3 million of restructuring costs, and $20 million in acquisition-related costs, which include $7 million of transaction costs and $13 million of acquisition integration charges.

 

Our impairment tests presume stable, improving or, in some cases, declining operating results in our facilities, which are based on programs and initiatives being implemented that are designed to achieve the facility’s most recent projections. If these projections are not met, or if in the future negative trends occur that impact our future outlook, impairments of long-lived assets and goodwill may occur, and we may incur additional restructuring charges, which could be material.

 

At March 31, 2016, our continuing operations consisted of three reportable segments, Hospital Operations and other, Ambulatory Care and Conifer. Within our Hospital Operations and other segment, our regions and markets are reporting units used to perform our goodwill impairment analysis and are one level below our reportable business segment level. Our Ambulatory Care segment consists of the operations of our USPI joint venture and our Aspen facilities.

 

Our Hospital Operations and other segment was structured as follows at March 31, 2016:

 

·

Our Florida region included all of our hospitals and other operations in Florida;

 

·

Our Northeast region included all of our hospitals and other operations in Illinois, Massachusetts and Pennsylvania;

 

·

Our Southern region included all of our hospitals and other operations in Alabama, Georgia, South Carolina and Tennessee;

 

·

Our Texas region included all of our hospitals and other operations in Missouri, New Mexico and Texas;

 

·

Our Western region included all of our hospitals and other operations in Arizona and California; and

 

·

Our Detroit market included all of our hospitals and other operations in the Detroit, Michigan area.

 

We periodically incur costs to implement restructuring efforts for specific operations, which are recorded in our statement of operations as they are incurred. Our restructuring plans focus on various aspects of operations, including aligning our operations in the most strategic and cost-effective structure. Certain restructuring and acquisition-related costs are based on estimates. Changes in estimates are recognized as they occur.

 

v3.4.0.3
LONG-TERM DEBT AND LEASE OBLIGATIONS
 3 Months Ended
Mar. 31, 2016
LONG-TERM DEBT AND LEASE OBLIGATIONS  
LONG-TERM DEBT AND LEASE OBLIGATIONS

NOTE 5. LONG-TERM DEBT AND LEASE OBLIGATIONS

 

The table below shows our long-term debt at March 31, 2016 and December 31, 2015:

 

 

 

 

 

 

 

 

 

 

    

March 31, 

    

December 31, 

 

 

 

2016

 

2015

 

Senior notes:

 

 

 

 

 

 

 

5%, due 2019

 

$
1,100

 

$
1,100

 

51/2%, due 2019

 

 
500

 

 
500

 

63/4%, due 2020

 

 
300

 

 
300

 

8%, due 2020

 

 
750

 

 
750

 

81/8%, due 2022

 

 
2,800

 

 
2,800

 

63/4%, due 2023

 

 
1,900

 

 
1,900

 

67/8%, due 2031

 

 
430

 

 
430

 

Senior secured notes:

 

 

 

 

 

 

 

61/4%, due 2018

 

 
1,041

 

 
1,041

 

43/4%, due 2020

 

 
500

 

 
500

 

6%, due 2020

 

 
1,800

 

 
1,800

 

Floating % due 2020

 

 
900

 

 
900

 

41/2%, due 2021

 

 
850

 

 
850

 

43/8%, due 2021

 

 
1,050

 

 
1,050

 

Capital leases and mortgage notes

 

 
853

 

 
852

 

Unamortized issue costs, note discounts and premium

 

 
(252)

 

 
(263)

 

Total long-term debt 

 

 
14,522

 

 
14,510

 

Less current portion

 

 
172

 

 
127

 

Long-term debt, net of current portion 

 

$
14,350

 

$
14,383

 

 

Credit Agreement

 

On December 4, 2015, we entered into an amendment to our existing senior secured revolving credit facility (as amended, “Credit Agreement”) in order to, among other things, extend the scheduled maturity date of the facility, reduce the rates of certain interest and fees payable under the facility, and remove certain restrictions with respect to the borrowing base eligibility of certain accounts receivable. The Credit Agreement provides, subject to borrowing availability, for revolving loans in an aggregate principal amount of up to $1 billion, with a $300 million subfacility for standby letters of credit. The Credit Agreement, which has a scheduled maturity date of December 4, 2020, is collateralized by patient accounts receivable of substantially all of our domestic wholly owned hospitals. In addition, borrowings under the Credit Agreement are guaranteed by substantially all of our wholly owned domestic hospital subsidiaries. Outstanding revolving loans accrue interest at a base rate plus a margin ranging from 0.25% to 0.75% per annum or the London Interbank Offered Rate (“LIBOR”) plus a margin ranging from 1.25% to 1.75% per annum, in each case based on available credit. An unused commitment fee payable on the undrawn portion of the revolving loans ranges from 0.25% to 0.375% per annum based on available credit. Our borrowing availability is based on a specified percentage of eligible accounts receivable, including self-pay accounts. At March 31, 2016, we had no cash borrowings outstanding under the Credit Agreement, and we had approximately $4 million of standby letters of credit outstanding. Based on our eligible receivables, approximately $996 million was available for borrowing under the Credit Agreement at March 31, 2016.

 

Letter of Credit Facility

 

On March 7, 2014, we entered into a letter of credit facility agreement (“LC Facility”) that provides for the issuance of standby and documentary letters of credit (including certain letters of credit issued under our prior credit agreement, which we transferred to the LC Facility (the “Preexisting Letters of Credit”)), from time to time, in an aggregate principal amount of up to $180 million (subject to increase to up to $200 million). The LC Facility has a scheduled maturity date of March 7, 2017, and obligations thereunder are guaranteed by and secured by a first priority pledge of the capital stock and other ownership interests of certain of our domestic hospital subsidiaries on an equal ranking basis with our existing senior secured notes.

 

Drawings under any letter of credit issued under the LC Facility (including the Preexisting Letters of Credit) that we have not reimbursed within three business days after notice thereof will accrue interest at a base rate plus a margin equal to 0.875% per annum. An unused commitment fee is payable at an initial rate of 0.50% per annum with a step down to 0.375% per annum based on the secured debt to EBITDA ratio of 3.00 to 1.00. A per annum fee on the aggregate outstanding amount of issued but undrawn letters of credit (including the Preexisting Letters of Credit) will accrue at a rate of 1.875% per annum. An issuance fee equal to 0.125% per annum of the aggregate face amount of each outstanding letter of credit is payable to the account of the issuer of the related letter of credit. At March 31, 2016, we had approximately $139 million of standby letters of credit outstanding under the LC Facility.

 

v3.4.0.3
GUARANTEES
 3 Months Ended
Mar. 31, 2016
GUARANTEES  
GUARANTEES

NOTE 6. GUARANTEES

 

At March 31, 2016, the maximum potential amount of future payments under our income guarantees to certain physicians who agree to relocate and revenue collection guarantees to hospital-based physician groups providing certain services at our hospitals was $89 million. We had a total liability of $75 million recorded for these guarantees included in other current liabilities at March 31, 2016.

 

At March 31, 2016, we also had issued guarantees of the indebtedness and other obligations of our investees to third parties, the maximum potential amount of future payments under which was approximately $35 million. Of the total, $17 million relates to the obligations of consolidated subsidiaries, which obligations are recorded in the accompanying Condensed Consolidated Balance Sheet at March 31, 2016.

 

v3.4.0.3
EMPLOYEE BENEFIT PLANS
 3 Months Ended
Mar. 31, 2016
EMPLOYEE BENEFIT PLANS  
EMPLOYEE BENEFIT PLANS

NOTE 7. EMPLOYEE BENEFIT PLANS

 

At March 31, 2016, approximately 1.7 million shares of common stock were available under our 2008 Stock Incentive Plan for future stock option grants and other incentive awards, including restricted stock units. Options have an exercise price equal to the fair market value of the shares on the date of grant and generally expire 10 years from the date of grant. A restricted stock unit is a contractual right to receive one share of our common stock or the equivalent value in cash in the future. Options and time-based restricted stock units typically vest one-third on each of the first three anniversary dates of the grant; however, certain special retention awards may have longer vesting periods. In addition, we grant performance-based restricted stock units (and, in prior years, have granted performance-based options) that vest subject to the achievement of specified performance goals within a specified timeframe.

 

Our Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015 include $14 million and $18 million, respectively, of pretax compensation costs related to our stock-based compensation arrangements recorded in salaries, wages and benefits.

 

Stock Options

 

The following table summarizes stock option activity during the three months ended March 31, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Weighted Average

    

 

 

    

 

 

 

 

 

 

 

Exercise Price

 

Aggregate

 

Weighted Average

 

 

 

Options

 

Per Share

 

Intrinsic Value

 

Remaining Life

 

 

 

 

 

 

 

 

 

(In Millions)

 

 

 

 

Outstanding at December 31, 2015

 
1,606,842

 

$
22.87

 

 

 

 

 

 

 

Granted

 

 —

 

 

 —

 

 

 

 

 

 

 

Exercised

 
(3,950)

 

 
4.56

 

 

 

 

 

 

 

Forfeited/Expired

 
(29,392)

 

 
4.56

 

 

 

 

 

 

 

Outstanding at March 31, 2016

 
1,573,500

 

 
22.75

 

$
13

 
2.9

years

 

Vested and expected to vest at March 31, 2016

 
1,573,500

 

$
22.75

 

$
13

 
2.9

years

 

Exercisable at March 31, 2016

 
1,573,500

 

$
22.75

 

$
13

 
2.9

years

 

 

There were 3,950 stock options exercised during the three months ended March 31, 2016 with an aggregate intrinsic value of less than $1 million, and 77,658 stock options exercised during the same period in 2015 with a less than $1 million aggregate intrinsic value.

 

At March 31, 2016, there were no unrecognized compensation costs related to stock options. Also, there were no stock options granted in the three months ended March 31, 2016 or 2015.

 

The following table summarizes information about our outstanding stock options at March 31, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding

 

Options Exercisable

 

 

    

 

    

Weighted Average

    

 

 

    

 

    

 

 

 

 

 

Number of

 

Remaining

 

Weighted Average

 

Number of

 

Weighted Average

 

Range of Exercise Prices 

 

Options

 

Contractual Life

 

Exercise Price

 

Options

 

Exercise Price

 

$0.00 to $4.569 

 
202,152

 
2.9

years

 

$
4.56

 
202,152

 

$
4.56

 

$4.57 to $25.089 

 
910,897

 
3.6

years

 

 
20.99

 
910,897

 

 
20.99

 

$25.09 to $32.569 

 
182,000

 
0.9

years

 

 
26.40

 
182,000

 

 
26.40

 

$32.57 to $42.529

 
278,451

 
1.8

years

 

 
39.31

 
278,451

 

 
39.31

 

 

 
1,573,500

 
2.9

years

 

$
22.75

 
1,573,500

 

$
22.75

 

 

Restricted Stock Units

 

The following table summarizes restricted stock unit activity during the three months ended March 31, 2016:

 

 

 

 

 

 

 

 

 

    

Restricted Stock

    

Weighted Average Grant

 

 

 

Units

 

Date Fair Value Per Unit

 

Unvested at December 31, 2015

 
3,627,232

 

$
44.69

 

Granted

 
1,231,727

 

 
31.08

 

Vested

 
(1,223,015)

 

 
43.68

 

Forfeited

 
(23,639)

 

 
45.05

 

Unvested at March 31, 2016

 
3,612,305

 

$
40.38

 

 

In the three months ended March 31, 2016, we granted 474,052 restricted stock units subject to time-vesting, of which 458,379 will vest and be settled ratably over a three-year period from the grant date, and 15,673 will vest and be settled on the third anniversary of the grant date. In January 2016, following the appointment of two new members of our Board of Directors, we also made initial grants totaling 5,084 restricted stock units to these directors, as well as prorated annual grants totaling 5,614 restricted stock units. Both the initial grants and the annual grants vested immediately, however the initial grants will not settle until the directors’ separation from the Board, while the annual grants settle on the third anniversary of the grant date. In addition, we granted 455,437 performance-based restricted stock units to certain of our senior officers; the vesting of these restricted stock units is contingent on our achievement of specified three-year performance goals for the years 2016 to 2018. Provided the goals are achieved, the performance-based restricted stock units will vest and settle on the third anniversary of the grant date. The actual number of performance-based restricted stock units that could vest will range from 0% to 200% of the 455,437 units granted, depending on our level of achievement with respect to the performance goals. Moreover, in the three months ended March 31, 2016, we granted 291,540 restricted stock units as a result of our level of achievement with respect to prior-year target performance goals.

 

At March 31, 2016, there were $117 million of total unrecognized compensation costs related to restricted stock units. These costs are expected to be recognized over a weighted average period of 2.3 years.

v3.4.0.3
EQUITY
 3 Months Ended
Mar. 31, 2016
EQUITY  
EQUITY

NOTE 8. EQUITY

 

Changes in Shareholders’ Equity

 

The following table shows the changes in consolidated equity during the three months ended March 31, 2016 and 2015 (dollars in millions, share amounts in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenet Healthcare Corporation Shareholders’ Equity

 

 

 

 

 

 

 

   

 

   

 

 

   

 

 

   

Accumulated

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Common Stock

 

Additional

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Issued Par

 

Paid-in

 

Comprehensive

 

Accumulated

 

Treasury

 

Noncontrolling

 

 

 

 

 

Outstanding

 

Amount

 

Capital

 

Loss

 

Deficit

 

Stock

 

Interests

 

Total Equity

Balances at December 31, 2015

 
98,495

 

$
7

 

$
4,815

 

$
(164)

 

$
(1,550)

 

$
(2,417)

 

$
267

 

$
958

Net income  (loss)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
(59)

 

 

 —

 

 
13

 

 
(46)

Distributions paid to noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
(10)

 

 
(10)

Contributions from noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
10

 

 
10

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 
4

 

 

 —

 

 

 —

 

 

 —

 

 
4

Purchases (sales) of businesses and noncontrolling interests

 

 —

 

 

 —

 

 
(7)

 

 

 —

 

 

 —

 

 

 —

 

 
21

 

 
14

Stock-based compensation expense, tax benefit and issuance of common stock

 
773

 

 

 —

 

 
(4)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
(4)

Balances at March 31, 2016

 
99,268

 

$
7

 

$
4,804

 

$
(160)

 

$
(1,609)

 

$
(2,417)

 

$
301

 

$
926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2014

 
98,382

 

$
7

 

$
4,614

 

$
(182)

 

$
(1,410)

 

$
(2,378)

 

$
134

 

$
785

Net income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
47

 

 

 —

 

 
8

 

 
55

Distributions paid to noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
(10)

 

 
(10)

Contributions from noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
1

 

 
1

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 
3

 

 

 —

 

 

 —

 

 

 —

 

 
3

Purchases (sales) of businesses and noncontrolling interests

 

 —

 

 

 —

 

 
129

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
129

Stock-based compensation expense and issuance of common stock

 
782

 

 

 —

 

 
8

 

 

 —

 

 

 —

 

 
1

 

 

 —

 

 
9

Balance at March 31, 2015

 
99,164

 

$
7

 

$
4,751

 

$
(179)

 

$
(1,363)

 

$
(2,377)

 

$
133

 

$
972

 

v3.4.0.3
PROPERTY AND PROFESSIONAL AND GENERAL LIABILITY INSURANCE
 3 Months Ended
Mar. 31, 2016
PROPERTY AND PROFESSIONAL AND GENERAL LIABILITY INSURANCE  
PROPERTY AND PROFESSIONAL AND GENERAL LIABILITY INSURANCE

NOTE 9. PROPERTY AND PROFESSIONAL AND GENERAL LIABILITY INSURANCE

 

Property Insurance

 

We have property, business interruption and related insurance coverage to mitigate the financial impact of catastrophic events or perils that is subject to deductible provisions based on the terms of the policies. These policies are on an occurrence basis.

 

Professional and General Liability Reserves

 

At March 31, 2016 and December 31, 2015, the aggregate current and long-term professional and general liability reserves in our accompanying Condensed Consolidated Balance Sheets were approximately $784 million and $755 million, respectively. These reserves include the reserves recorded by our captive insurance subsidiaries and our self-insured retention reserves recorded based on modeled estimates for the portion of our professional and general liability risks, including incurred but not reported claims, for which we do not have insurance coverage. We estimated the reserves for losses and related expenses using expected loss-reporting patterns discounted to their present value under a risk-free rate approach using a Federal Reserve seven-year maturity rate of 1.54% at March 31, 2016 and 2.09% at December 31, 2015.

 

If the aggregate limit of any of our professional and general liability policies is exhausted, in whole or in part, it could deplete or reduce the limits available to pay any other material claims applicable to that policy period.

 

Included in other operating expenses, net, in the accompanying Condensed Consolidated Statements of Operations is malpractice expense of $93 million and $89 million for the three months ended March 31, 2016 and 2015, respectively.

 

v3.4.0.3
CLAIMS AND LAWSUITS
 3 Months Ended
Mar. 31, 2016
CLAIMS AND LAWSUITS  
CLAIMS AND LAWSUITS

NOTE 10. CLAIMS AND LAWSUITS

 

We operate in a highly regulated and litigious industry. As a result, we commonly become involved in disputes, litigation and regulatory matters incidental to our operations, including governmental investigations, personal injury lawsuits, employment claims and other matters arising out of the normal conduct of our business.

 

We record accruals for estimated losses relating to claims and lawsuits when available information indicates that a loss is probable and we can reasonably estimate the amount of the loss or a range of loss. Significant judgment is required in both the determination of the probability of a loss and the determination as to whether a loss is reasonably estimable. These determinations are updated at least quarterly and are adjusted to reflect the effects of negotiations, settlements, rulings, advice of legal counsel and technical experts, and other information and events pertaining to a particular matter. If a loss on a material matter is reasonably possible and estimable, we disclose an estimate of the loss or a range of loss. In cases where we have not disclosed an estimate, we have concluded that the loss is either not reasonably possible or the loss, or a range of loss, is not reasonably estimable, based on available information.

 

Governmental Reviews and Lawsuits

 

Healthcare companies are subject to numerous investigations by various governmental agencies. Further, private parties have the right to bring qui tam or “whistleblower” lawsuits against companies that allegedly submit false claims for payments to, or improperly retain overpayments from, the government and, in some states, private payers. We and our subsidiaries have received inquiries in recent years from government agencies, and we may receive similar inquiries in future periods. The following matters are pending.

 

·

Clinica de la Mama Qui Tam Action and Criminal Investigation—As previously disclosed, we and four of our hospital subsidiaries are defendants in civil qui tam litigation (United States of America, ex rel. Ralph D. Williams v. Health Management Associates, Inc., et al.) that alleges that the contractual arrangements entered into by the hospital subsidiaries with Hispanic Medical Management, Inc. (“HMM”) violated the federal and state anti-kickback statutes and false claims acts. HMM owned and operated clinics that provided, among other things, prenatal care predominantly to uninsured patients. Beginning in 2000, the hospital subsidiaries contracted with HMM for translation, marketing, management and Medicaid eligibility determination services. Subsequently, the Georgia Attorney General’s Office and the U.S. Attorney’s Office intervened in the qui tam action. Effective March 31, 2016, we sold the operating assets of three of the four hospital subsidiaries; however, we retained any potential liabilities arising from the litigation or the U.S. Department of Justice (“DOJ”) investigation discussed below.

 

If the plaintiff in the pending civil litigation were to prevail, the potential sanctions could include up to three times the reimbursement of relevant government program payments received by the four hospital subsidiaries for uninsured HMM patients treated at the hospitals, the assessment of civil penalties and potential exclusion from participation in federal healthcare programs.

 

Also as previously disclosed, the DOJ has been conducting a criminal investigation of us, certain of our subsidiaries and former employees with respect to the contractual arrangements between HMM and the four hospitals. We are cooperating in the investigation and have responded, and continue to respond, to document and other requests pursuant to subpoenas issued to us and the four subsidiaries.

 

In January 2016, we commenced discussions with the DOJ and the State of Georgia regarding potential resolution of the qui tam action and criminal investigation. In the three months ended March 31, 2016, we increased the aggregate accrual for these matters from $238 million to $407 million to reflect the most recent  offer we made on April 25, 2016 to resolve the criminal investigation and civil litigation. The offer was not accepted, but the parties continue to engage in discussions to resolve these matters. There can be no assurance that ongoing discussions will lead to a resolution. The terms of a final resolution of these matters may require us to pay significant fines and penalties and give rise to other costs or adverse consequences that materially exceed the accrual we have established. Based on the ongoing uncertainties and potentially wide range of outcomes associated with any potential resolution, we cannot estimate the amount of potential loss or range of reasonably possible loss in excess of the amount accrued that we may face.

 

In addition to the payment of a monetary penalty, the final terms of any resolution of these matters could include: (i) the execution by the Company of a Corporate Integrity Agreement or a non-prosecution agreement, which may provide for the appointment of a corporate monitor and ongoing compliance audits; (ii) a deferred prosecution agreement by an intermediate subsidiary of the Company; and (iii) a commitment that one or more of the hospital subsidiaries subject to the investigation and proceedings enter into a guilty plea. The non-monetary terms of any resolution could expose us to increased operating costs, reputational harm, administrative burdens, and diminished profits and revenues.

 

If our efforts to negotiate a settlement ultimately are unsuccessful, and we or our subsidiaries are determined to have violated the federal anti-kickback statute, the sanctions could include fines, which could be significant, and mandatory exclusion from participation in federal healthcare programs.

 

To the extent that either the civil or criminal matter discussed above is determined adversely to our interests, such determination could have a material adverse effect on our business, financial condition, results of operations or cash flows. 

 

Antitrust Class Action Lawsuit Filed by Registered Nurses in San Antonio

 

In Maderazo, et al. v. VHS San Antonio Partners, L.P. d/b/a Baptist Health Systems, et al., filed in June 2006 in the U.S. District Court for the Western District of Texas, a purported class of registered nurses employed by three unaffiliated San Antonio-area hospital systems allege those hospital systems, including Baptist Health System, and other unidentified San Antonio regional hospitals violated Section §1 of the federal Sherman Act by conspiring to depress nurses’ compensation and exchanging compensation-related information among themselves in a manner that reduced competition and suppressed the wages paid to such nurses. The suit seeks unspecified damages (subject to trebling under federal law), interest, costs and attorneys’ fees. The case had been stayed since 2008; however, in July 2015, the court lifted the stay and re-opened discovery. Because these proceedings are at an early stage, it is impossible at this time to predict their outcome with any certainty; however, we believe that the ultimate resolution of this matter will not have a material effect on our business, financial condition or results of operations. We will continue to seek to defeat class certification and vigorously defend ourselves against the plaintiffs’ allegations.

 

Ordinary Course Matters

 

We are also subject to other claims and lawsuits arising in the ordinary course of business, including potential claims related to, among other things, the care and treatment provided at our hospitals and outpatient facilities, the application of various federal and state labor laws, tax audits and other matters. Although the results of these claims and lawsuits cannot be predicted with certainty, we believe that the ultimate resolution of these ordinary course claims and lawsuits will not have a material effect on our business or financial condition.

 

New claims or inquiries may be initiated against us from time to time. These matters could (1) require us to pay substantial damages or amounts in judgments or settlements, which, individually or in the aggregate, could exceed amounts, if any, that may be recovered under our insurance policies where coverage applies and is available, (2) cause us to incur substantial expenses, (3) require significant time and attention from our management, and (4) cause us to close or sell hospitals or otherwise modify the way we conduct business.

 

The table below presents reconciliations of the beginning and ending liability balances in connection with legal settlements and related costs recorded during the three months ended March 31, 2016 and 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

Balances at

   

Litigation and

   

 

 

   

Balances at

 

 

 

Beginning

 

Investigation

 

Cash

 

End of

 

 

 

of Period

 

Costs

 

Payments

 

Period

 

Three Months Ended March 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$
299

 

$
173

 

$
(45)

 

$
427

 

Discontinued operations

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 

$
299

 

$
173

 

$
(45)

 

$
427

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$
73

 

$
3

 

$
(15)

 

$
61

 

Discontinued operations

 

 
10

 

 
(3)

 

 

 —

 

 
7

 

 

 

$
83

 

$

 —

 

$
(15)

 

$
68

 

 

For the three months ended March 31, 2016 and 2015, we recorded costs of $173 million and $3 million, respectively, in continuing operations in connection with significant legal proceedings and governmental reviews. During the three months ended March 31, 2015, we reduced a previously established reserve for a legal matter in discontinued operations by approximately $3 million based on updated claims information.

v3.4.0.3
REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES
 3 Months Ended
Mar. 31, 2016
REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES  
REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES

NOTE 11. REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES

 

The following table shows the changes in redeemable noncontrolling interests in equity of consolidated subsidiaries during the three months ended March 31, 2016 and 2015:

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

    

2016

    

2015

Balances at beginning of period 

 

$
2,266

 

$
401

Net income

 

 
80

 

 
21

Distributions paid to noncontrolling interests

 

 
(34)

 

 
(1)

Contributions from noncontrolling interests

 

 
6

 

 
1

Purchases and sales of businesses and noncontrolling interests, net

 

 
63

 

 
(214)

Balances at end of period 

 

$
2,381

 

$
208

 

v3.4.0.3
INCOME TAXES
 3 Months Ended
Mar. 31, 2016
INCOME TAXES  
INCOME TAXES

NOTE 12. INCOME TAXES

 

During the three months ended March 31, 2016, we recorded income tax expense of $67 million in continuing operations on pre-tax earnings of $105 million. The recorded income tax differs from taxes calculated at the statutory rate primarily due to state income tax expense of approximately $13 million, tax benefits of $21 million related to net income attributable to noncontrolling partnership interests, which is excluded from the computation of the provision for income taxes, tax expense of $29 million related to nondeductible goodwill, tax benefits of $17 million related to nontaxable gains and related changes in deferred taxes, and tax expense of $26 million related to nondeductible litigation.

 

During the three months ended March 31, 2016, we decreased our estimated liabilities for uncertain tax positions by $3 million, net of related deferred tax assets. The total amount of unrecognized tax benefits at March 31, 2016 was $37 million, of which $34 million, if recognized, would impact our effective tax rate and income tax expense (benefit) from continuing operations.

 

Our practice is to recognize interest and penalties related to income tax matters in income tax expense in our consolidated statements of operations. Total accrued interest and penalties on unrecognized tax benefits at March 31, 2016 were $5 million, all of which related to continuing operations.

 

At March 31, 2016, approximately $6 million of unrecognized federal and state tax benefits, as well as reserves for interest and penalties, may decrease in the next 12 months as a result of the settlement of audits, the filing of amended tax returns or the expiration of statutes of limitations.

 

v3.4.0.3
EARNINGS (LOSS) PER COMMON SHARE
 3 Months Ended
Mar. 31, 2016
EARNINGS (LOSS) PER COMMON SHARE  
EARNINGS (LOSS) PER COMMON SHARE

NOTE 13. EARNINGS (LOSS) PER COMMON SHARE

 

The table below is a reconciliation of the numerators and denominators of our basic and diluted earnings (loss) per common share calculations for our continuing operations for three months ended March 31, 2016 and 2015. Net income available (loss attributable) to our common shareholders is expressed in millions and weighted average shares are expressed in thousands.

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Available

 

 

 

 

 

 

 

 

(Loss Attributable)

 

 

 

 

 

 

 

 

to Common

 

Weighted

 

 

 

 

 

 

Shareholders

 

Average Shares

 

Per-Share

 

 

 

(Numerator)

 

(Denominator)

 

Amount

 

Three Months Ended March 31, 2016

 

 

 

 

 

 

 

 

 

Net loss attributable to Tenet Healthcare Corporation common shareholders for basic loss per share

 

$
(55)

 
98,768

 

$
(0.56)

 

Effect of dilutive stock options, restricted stock units and deferred compensation units

 

 

 —

 

 —

 

 

 —

 

Net loss attributable to Tenet Healthcare Corporation common shareholders for diluted loss per share

 

$
(55)

 
98,768

 

$
(0.56)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2015

 

 

 

 

 

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders for basic earnings per share

 

$
46

 
98,699

 

$
0.47

 

Effect of dilutive stock options, restricted stock units and deferred compensation units

 

 

 —

 
2,173

 

 
(0.01)

 

Net income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share

 

$
46

 
100,872

 

$
0.46

 

 

All potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2016 because we did not report income from continuing operations available to common shareholders in that period. In circumstances where we do not have income from continuing operations available to common shareholders, the effect of stock options and other potentially dilutive securities is anti-dilutive, that is, a loss from continuing operations attributable to common shareholders has the effect of making the diluted loss per share less than the basic loss per share. Had we generated income from continuing operations available to common shareholders in the three months ended March 31, 2016, the effect (in thousands) of employee stock options, restricted stock units and deferred compensation units on the diluted shares calculation would have been an increase of 1,567 shares.

 

v3.4.0.3
FAIR VALUE MEASUREMENTS
 3 Months Ended
Mar. 31, 2016
FAIR VALUE MEASUREMENTS  
FAIR VALUE MEASUREMENTS

NOTE 14. FAIR VALUE MEASUREMENTS

 

Our financial assets and liabilities recorded at fair value on a recurring basis primarily relate to investments in available-for-sale securities held by our captive insurance subsidiaries. The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis. The following tables also indicate the fair value hierarchy of the valuation techniques we utilized to determine such fair values. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. We consider a security that trades at least weekly to have an active market. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are

unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Quoted Prices

    

 

 

    

 

 

 

 

 

 

 

 in Active

 

 

 

 

Significant

 

 

 

 

 

Markets for

 

Significant Other

 

Unobservable

 

 

 

 

 

Identical Assets

 

Observable Inputs

 

Inputs

Investments

 

March 31, 2016

 

(Level 1)

 

(Level 2)

 

(Level 3)

Marketable debt securities — noncurrent

 

$
60

 

$
25

 

$
35

 

$

 —

 

 

$
60

 

$
25

 

$
35

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Quoted Prices

    

 

 

    

 

 

 

 

 

 

 

 in Active

 

 

 

 

Significant

 

 

 

 

 

Markets for

 

Significant Other

 

Unobservable

 

 

 

 

 

Identical Assets

 

Observable Inputs

 

Inputs

Investments

 

December 31, 2015

 

(Level 1)

 

(Level 2)

 

(Level 3)

Marketable debt securities — noncurrent

 

$
59

 

$
24

 

$
35

 

$

 —

 

 

$
59

 

$
24

 

$
35

 

$

 —

 

The fair value of our long-term debt (except for borrowings under the Credit Agreement) is based on quoted market prices (Level 1). The inputs used to establish the fair value of the borrowings outstanding under the Credit Agreement are considered to be Level 2 inputs, which include inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly. At March 31, 2016 and December 31, 2015, the estimated fair value of our long-term debt was approximately 99.1% and 96.2%, respectively, of the carrying value of the debt. 

v3.4.0.3
ACQUISITIONS
 3 Months Ended
Mar. 31, 2016
ACQUISITIONS  
ACQUISITIONS

NOTE 15. ACQUISITIONS

 

Preliminary purchase price allocations (representing the fair value of the consideration conveyed) for all acquisitions made during the three months ended March 31, 2016 are as follows:

 

 

 

 

 

 

Current assets

    

$
30

    

Property and equipment

 

 
24

 

Other intangible assets

 

 
5

 

Goodwill

 

 
114

 

Other long-term assets

 

 
6

 

Current liabilities

 

 
(9)

 

Other long-term liabilities

 

 
(13)

 

Redeemable noncontrolling interests in equity of consolidated subsidiaries

 

 
(62)

 

Noncontrolling interests

 

 
(37)

 

Cash paid, net of cash acquired

 

 
(29)

 

Gains on consolidations

 

$
29

 

 

The goodwill generated from these transactions, the majority of which will not be deductible for income tax purposes, was recorded in our Ambulatory Care segment and can be attributed to the benefits that we expect to realize from operating efficiencies and growth strategies. Approximately $5 million in transaction costs related to prospective and closed acquisitions were expensed during the three months ended March 31, 2016, and are included in impairment and restructuring charges, and acquisition-related costs in the accompanying Condensed Consolidated Statement of Operations.

 

We are required to allocate the purchase prices of acquired businesses to assets acquired or liabilities assumed and, if applicable, noncontrolling interests based on their fair values. The excess of the purchase price allocation over those fair values is recorded as goodwill. We are in process of finalizing the purchase price allocations, including valuations of the acquired property and equipment, other intangible assets, investments in affiliates and noncontrolling interests for our 2016 and 2015 acquisitions; therefore, those purchase price allocations are subject to adjustment once the valuations are completed.

 

During the three months ended March 31, 2016,  we recognized gains totaling $29 million, associated with stepping up our ownership interests in previously held equity investments, which we began consolidating after we acquired controlling interests.

 

Pro Forma Information – Unaudited

 

The following table provides 2016 actual results compared to 2015 pro forma information for Tenet as if the USPI joint venture and Aspen acquisition had occurred at the beginning of the year ended December 31, 2015. 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

    

March 31,

 

 

2016

 

2015

Net operating revenues

 

$
5,044

 

$
4,629

Equity in earnings of unconsolidated affiliates

 

$
24

 

$
25

Net income available (loss attributable) to common shareholders

 

$
(59)

 

$
28

Earnings (loss) per share available (attributable) to common shareholders

 

$
(0.60)

 

$
0.28

 

v3.4.0.3
SEGMENT INFORMATION
 3 Months Ended
Mar. 31, 2016
SEGMENT INFORMATION  
SEGMENT INFORMATION

NOTE 16. SEGMENT INFORMATION

 

Our business consists of our Hospital Operations and other segment, our Ambulatory Care segment and our Conifer segment. The factors for determining the reportable segments include the manner in which management evaluates operating performance combined with the nature of the individual business activities.

 

Our core business is Hospital Operations and other, which is focused on operating acute care hospitals, ancillary outpatient facilities, freestanding emergency departments, physician practices and health plans. We also own various related healthcare businesses. At March 31, 2016, our subsidiaries operated 84 hospitals, with a total of 21,529 licensed beds, primarily serving urban and suburban communities in 13 states, and six health plans, as well as hospital-based outpatient centers, freestanding emergency departments and freestanding urgent care centers.

 

Our Ambulatory Care segment is comprised of the operations of our USPI joint venture and our nine Aspen facilities in the United Kingdom. At March 31, 2016, our USPI joint venture had interests in 250 ambulatory surgery centers, 35 urgent care centers, 21 imaging centers and 20 short-stay surgical hospitals in 28 states.

 

Our Conifer segment provides healthcare business process services in the areas of revenue cycle management and technology-enabled performance improvement and health management solutions to health systems, as well as individual hospitals, physician practices, self-insured organizations and health plans. At March 31, 2016, Conifer provided services to more than 800 Tenet and non-Tenet hospitals and other clients nationwide. Our Conifer subsidiary and our Hospital Operations and other segment entered into formal agreements documenting terms and conditions of various services provided by Conifer to Tenet hospitals, as well as certain administrative services provided by our Hospital Operations and other segment to Conifer. The services provided by both parties under these agreements are charged to the other party based on estimated third-party pricing terms.

 

The following tables include amounts for each of our reportable segments and the reconciling items necessary to agree to amounts reported in the accompanying Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations:

 

 

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31,

 

 

    

2016

    

2015

    

Assets:

 

 

 

 

 

 

 

Hospital Operations and other

 

$
17,131

 

$
17,353

 

Ambulatory Care

 

 
5,467

 

 
5,159

 

Conifer

 

 
1,168

 

 
1,170

 

Total 

 

$
23,766

 

$
23,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

March 31, 

 

    

2016

    

2015

Capital expenditures:

 

 

 

 

 

 

Hospital Operations and other

 

$
191

 

$
176

Ambulatory Care

 

 
12

 

 
4

Conifer

 

 
5

 

 
4

Total 

 

$
208

 

$
184

 

 

 

 

 

 

 

Net operating revenues:

 

 

 

 

 

 

Hospital Operations and other

 

$
4,397

 

$
4,151

Ambulatory Care

 

 
429

 

 
91

Conifer

 

 

 

 

 

 

Tenet

 

 
167

 

 
160

Other customers

 

 
218

 

 
182

Total Conifer revenues

 

 
385

 

 
342

Intercompany eliminations

 

 
(167)

 

 
(160)

Total 

 

$
5,044

 

$
4,424

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

Hospital Operations and other

 

$
414

 

$
418

Ambulatory Care

 

 
136

 

 
29

Conifer

 

 
63

 

 
82

Total 

 

$
613

 

$
529

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

Hospital Operations and other

 

$
174

 

$
192

Ambulatory Care

 

 
25

 

 
4

Conifer

 

 
13

 

 
11

Total 

 

$
212

 

$
207

 

 

 

 

 

 

 

Adjusted EBITDA 

 

$
613

 

$
529

Depreciation and amortization

 

 
(212)

 

 
(207)

Impairment and restructuring charges, and acquisition-related costs

 

 
(28)

 

 
(29)

Litigation and investigation costs

 

 
(173)

 

 
(3)

Interest expense

 

 
(243)

 

 
(199)

Gains on sales, consolidation and deconsolidation of facilities

 

 
147

 

 

 —

Investment earnings

 

 
1

 

 

 —

Net income from continuing operations before income taxes

 

$
105

 

$
91

 

v3.4.0.3
RECENTLY ISSUED ACCOUNTING STANDARDS
 3 Months Ended
Mar. 31, 2016
RECENTLY ISSUED ACCOUNTING STANDARDS  
RECENTLY ISSUED ACCOUNTING STANDARDS

 

 

 

 

NOTE 17. RECENT ACCOUNTING STANDARDS

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which affects any entity that enters into a lease (as that term is defined in ASU 2016-02), with some specified scope exceptions. The main difference between the guidance in ASU 2016-02 and previous GAAP is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. We are currently evaluating the potential impact of this guidance, which will be effective for us beginning in 2019.

 

In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which affects all entities that issue share-based payment awards to their employees. The guidance in ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Some of the areas of simplification apply only to nonpublic entities. We are currently evaluating the potential impact of this guidance, which will be effective for us beginning in 2017.

 

v3.4.0.3
SUBSEQUENT EVENTS
 3 Months Ended
Mar. 31, 2016
SUBSEQUENT EVENTS  
SUBSEQUENT EVENTS

NOTE 18. SUBSEQUENT EVENTS

 

As previously disclosed, as part of the formation of our USPI joint venture in 2015, we entered into a put/call agreement (the “Put/Call Agreement”) with respect to the equity interests in the joint venture held by our joint venture partners. Each year starting in 2016, our joint venture partners must put to us at least 12.5%, and may put up to 25%, of the equity held by them in the joint venture immediately after the closing. In January 2016, Welsh, Carson, Anderson & Stowe, on behalf of our joint venture partners, delivered a put notice for the minimum number of shares they are required to put to us in 2016 according to the Put/Call Agreement. In April 2016, we paid approximately $127 million to purchase these shares, which increased our ownership interest in the USPI joint venture to approximately 56.3%.

 

 

 

v3.4.0.3
BASIS OF PRESENTATION (Policies)
 3 Months Ended
Mar. 31, 2016
BASIS OF PRESENTATION  
Basis of Presentation

Description of Business and Basis of Presentation

 

Tenet Healthcare Corporation (together with our subsidiaries, referred to herein as “Tenet,” “we” or “us”) is a diversified healthcare services company. At March 31, 2016, we operated 84 hospitals, 20 short-stay surgical hospitals, over 475 outpatient centers, nine facilities in the United Kingdom and six health plans through our subsidiaries, partnerships and joint ventures, including USPI Holding Company, Inc. (“USPI joint venture”). The results of 142 of these facilities, in which we hold noncontrolling interests, are recorded using the equity method of accounting. Our Conifer Holdings, Inc. (“Conifer”) subsidiary provides healthcare business process services in the areas of revenue cycle management and technology-enabled performance improvement and health management solutions to health systems, as well as individual hospitals, physician practices, self-insured organizations and health plans.

 

This quarterly report supplements our Annual Report on Form 10-K for the year ended December 31, 2015 (“Annual Report”). As permitted by the Securities and Exchange Commission for interim reporting, we have omitted certain notes and disclosures that substantially duplicate those in our Annual Report. For further information, refer to the audited Consolidated Financial Statements and notes included in our Annual Report. Unless otherwise indicated, all financial and statistical data included in these notes to our Condensed Consolidated Financial Statements relate to our continuing operations, with dollar amounts expressed in millions (except per-share amounts).  Certain prior-year amounts have been reclassified to conform to the current-year presentation.

 

Although the Condensed Consolidated Financial Statements and related notes within this document are unaudited, we believe all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. In preparing our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), we are required to make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements and these accompanying notes. We regularly evaluate the accounting policies and estimates we use. In general, we base the estimates on historical experience and on assumptions that we believe to be reasonable given the particular circumstances in which we operate. Actual results may vary from those estimates. Financial and statistical information we report to other regulatory agencies may be prepared on a basis other than GAAP or using different assumptions or reporting periods and, therefore, may vary from amounts presented herein. Although we make every effort to ensure that the information we report to those agencies is accurate, complete and consistent with applicable reporting guidelines, we cannot be responsible for the accuracy of the information they make available to the public.

 

Operating results for the three month period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the full year. Reasons for this include, but are not limited to: overall revenue and cost trends, particularly the timing and magnitude of price changes; fluctuations in contractual allowances and cost report settlements and valuation allowances; managed care contract negotiations, settlements or terminations and payer consolidations; changes in Medicare and Medicaid regulations; Medicaid and other supplemental funding levels set by the states in which we operate; the timing of approval by the Centers for Medicare and Medicaid Services of Medicaid provider fee revenue programs; trends in patient accounts receivable collectability and associated provisions for doubtful accounts; fluctuations in interest rates; levels of malpractice insurance expense and settlement trends; the number of covered lives managed by our health plans and the plans’ ability to effectively manage medical costs; the timing of when we meet the criteria to recognize electronic health record incentives; impairment of long-lived assets and goodwill; restructuring charges; losses, costs and insurance recoveries related to natural disasters and other weather-related occurrences; litigation and investigation costs; acquisitions and dispositions of facilities and other assets; income tax rates and deferred tax asset valuation allowance activity; changes in estimates of accruals for annual incentive compensation; the timing and amounts of stock option and restricted stock unit grants to employees and directors; gains or losses from early extinguishment of debt; and changes in occupancy levels and patient volumes. Factors that affect patient volumes and, thereby, the results of operations at our hospitals and related healthcare facilities include, but are not limited to: the business environment, economic conditions and demographics of local communities in which we operate; the number of uninsured and underinsured individuals in local communities treated at our hospitals; seasonal cycles of illness; climate and weather conditions; physician recruitment, retention and attrition; advances in technology and treatments that reduce length of stay; local healthcare competitors; managed care contract negotiations or terminations; the number of patients with high-deductible health insurance plans; any unfavorable publicity about us, or our joint venture partners, that impacts our relationships with physicians and patients; changes in healthcare regulations and the participation of individual states in federal programs; and the timing of elective procedures. These considerations apply to year-to-year comparisons as well.

Foreign Currency Transactions and Translations Policy

Translation of Foreign Currencies

 

The accounts of European Surgical Partners, Limited (“Aspen”) were measured in its local currency (the pound sterling) and then translated into U.S. dollars. All assets and liabilities were translated using the current rate of exchange at the balance sheet date. Results of operations were translated using the average rates prevailing throughout the period of operations. Translation gains or losses resulting from changes in exchange rates are accumulated in shareholders’ equity.

Net Operating Revenues before Provision for Doubtful Accounts

Net Operating Revenues Before Provision for Doubtful Accounts

 

We recognize net operating revenues before provision for doubtful accounts in the period in which our services are performed. Net operating revenues before provision for doubtful accounts primarily consist of net patient service revenues that are recorded based on established billing rates (i.e., gross charges), less estimated discounts for contractual and other allowances, principally for patients covered by Medicare, Medicaid, managed care and other health plans, as well as certain uninsured patients under our Compact with Uninsured Patients (“Compact”) and other uninsured discount and charity programs.

 

The table below shows the sources of net operating revenues before provision for doubtful accounts from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31, 

 

 

    

2016

    

2015

 

General Hospitals:

 

 

 

 

 

 

 

Medicare

 

$
859

 

$
898

 

Medicaid

 

 
373

 

 
385

 

Managed care

 

 
2,626

 

 
2,405

 

Indemnity, self-pay and other

 

 
437

 

 
414

 

Acute care hospitals — other revenue

 

 
7

 

 
15

 

Other:

 

 

 

 

 

 

 

Other operations

 

 
1,118

 

 
670

 

Net operating revenues before provision for doubtful accounts 

 

$
5,420

 

$
4,787

 

 

Cash and Cash Equivalents

Cash and Cash Equivalents

 

We treat highly liquid investments with original maturities of three months or less as cash equivalents. Cash and cash equivalents were approximately $728 million and $356 million at March 31, 2016 and December 31, 2015, respectively. At March 31, 2016 and December 31, 2015, our book overdrafts were approximately $256 million and $301 million, respectively, which were classified as accounts payable.

 

At March 31, 2016 and December 31, 2015, approximately $175 million and $171 million, respectively, of total cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets were intended for the operations of our captive insurance subsidiaries and our health plans.

 

Also at March 31, 2016 and December 31, 2015, we had $110 million and $133 million, respectively, of property and equipment purchases accrued for items received but not yet paid. Of these amounts, $63 million and $95 million, respectively, were included in accounts payable.

During the three months ended March 31, 2016 and 2015, we entered into non-cancellable capital leases of approximately $31 million and $33 million, respectively, primarily for buildings and equipment.

 

Other Intangible Assets

Other Intangible Assets

 

The following tables provide information regarding other intangible assets, which are included in the accompanying Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

    

Gross

    

 

 

    

 

 

 

 

Carrying

 

Accumulated

 

Net Book

 

 

Amount

 

Amortization

 

Value

At March 31, 2016:

 

 

 

 

 

 

 

 

 

Capitalized software costs

 

$
1,495

 

$
(625)

 

$
870

Trade names

 

 
106

 

 

 —

 

 
106

Contracts

 

 
669

 

 
(30)

 

 
639

Other

 

 
117

 

 
(46)

 

 
71

Total 

 

$
2,387

 

$
(701)

 

$
1,686

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Gross

    

 

 

    

 

 

 

 

Carrying

 

Accumulated

 

Net Book

 

 

Amount

 

Amortization

 

Value

At December 31, 2015:

 

 

 

 

 

 

 

 

 

Capitalized software costs

 

$
1,456

 

$
(594)

 

$
862

Trade names

 

 
106

 

 

 —

 

 
106

Contracts

 

 
653

 

 
(26)

 

 
627

Other

 

 
119

 

 
(39)

 

 
80

Total 

 

$
2,334

 

$
(659)

 

$
1,675

 

Estimated future amortization of intangibles with finite useful lives at March 31, 2016 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ending December 31, 

 

Later

 

 

    

Total

    

2016

    

2017

    

2018

    

2019

    

2020

    

Years

 

Amortization of intangible assets

 

$
1,207

 

$
141

 

$
174

 

$
146

 

$
122

 

$
89

 

$
535

 

 

Investments in Unconsolidated Affiliates

Investments in Unconsolidated Affiliates

We control 213 of the facilities operated by our Ambulatory Care segment and, therefore, consolidate their results (211 are consolidated within our Ambulatory Care segment and two are consolidated within our Hospital Operations and other segment). We account for many of the facilities our Ambulatory Care segment operates (122 of 335 at March 31, 2016) and four of the hospitals our Hospital Operations and other segment operates under the equity method as investments in unconsolidated affiliates and report only our share of net income attributable to the investee as equity in earnings of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Operations. Summarized financial information for these equity method investees is included in the following table.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

March 31, 2016

Net operating revenues

 

$
578

Net income

 

$
105

Net income attributable to the investees

 

$
69

 

v3.4.0.3
BASIS OF PRESENTATION (Tables)
 3 Months Ended
Mar. 31, 2016
BASIS OF PRESENTATION  
Schedule of sources of net operating revenues before provision for doubtful accounts

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31, 

 

 

    

2016

    

2015

 

General Hospitals:

 

 

 

 

 

 

 

Medicare

 

$
859

 

$
898

 

Medicaid

 

 
373

 

 
385

 

Managed care

 

 
2,626

 

 
2,405

 

Indemnity, self-pay and other

 

 
437

 

 
414

 

Acute care hospitals — other revenue

 

 
7

 

 
15

 

Other:

 

 

 

 

 

 

 

Other operations

 

 
1,118

 

 
670

 

Net operating revenues before provision for doubtful accounts 

 

$
5,420

 

$
4,787

 

 

Schedule of other intangible assets

 

 

 

 

 

 

 

 

 

 

 

    

Gross

    

 

 

    

 

 

 

 

Carrying

 

Accumulated

 

Net Book

 

 

Amount

 

Amortization

 

Value

At March 31, 2016:

 

 

 

 

 

 

 

 

 

Capitalized software costs

 

$
1,495

 

$
(625)

 

$
870

Trade names

 

 
106

 

 

 —

 

 
106

Contracts

 

 
669

 

 
(30)

 

 
639

Other

 

 
117

 

 
(46)

 

 
71

Total 

 

$
2,387

 

$
(701)

 

$
1,686

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Gross

    

 

 

    

 

 

 

 

Carrying

 

Accumulated

 

Net Book

 

 

Amount

 

Amortization

 

Value

At December 31, 2015:

 

 

 

 

 

 

 

 

 

Capitalized software costs

 

$
1,456

 

$
(594)

 

$
862

Trade names

 

 
106

 

 

 —

 

 
106

Contracts

 

 
653

 

 
(26)

 

 
627

Other

 

 
119

 

 
(39)

 

 
80

Total 

 

$
2,334

 

$
(659)

 

$
1,675

 

Schedule of estimated future amortization of intangibles with finite useful lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ending December 31, 

 

Later

 

 

    

Total

    

2016

    

2017

    

2018

    

2019

    

2020

    

Years

 

Amortization of intangible assets

 

$
1,207

 

$
141

 

$
174

 

$
146

 

$
122

 

$
89

 

$
535

 

 

Schedule of equity method investments

 

 

 

 

 

 

Three Months Ended 

 

 

March 31, 2016

Net operating revenues

 

$
578

Net income

 

$
105

Net income attributable to the investees

 

$
69

 

v3.4.0.3
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables)
 3 Months Ended
Mar. 31, 2016
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS  
Schedule Of Components Of Accounts Receivable

 

 

 

 

 

 

 

 

    

March 31, 

    

December 31, 

 

 

2016

 

2015

Continuing operations:

 

 

 

 

 

 

Patient accounts receivable

 

$
3,606

 

$
3,486

Allowance for doubtful accounts

 

 
(901)

 

 
(887)

Estimated future recoveries from accounts assigned to our Conifer subsidiary

 

 
146

 

 
144

Net cost reports and settlements payable and valuation allowances

 

 
(47)

 

 
(42)

 

 

 
2,804

 

 
2,701

Discontinued operations

 

 
3

 

 
3

Accounts receivable, net 

 

$
2,807

 

$
2,704

 

Schedule of estimated costs for charity care and self-pay patients

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

 

March 31, 

 

 

    

2016

    

2015

    

Estimated costs for:

 

 

 

 

 

 

 

Self-pay patients

 

$
165

 

$
164

 

Charity care patients

 

$
44

 

$
36

 

Medicaid DSH and other supplemental revenues

 

$
227

 

$
247

 

 

v3.4.0.3
LONG-TERM DEBT AND LEASE OBLIGATIONS (Tables)
 3 Months Ended
Mar. 31, 2016
LONG-TERM DEBT AND LEASE OBLIGATIONS  
Summary of long-term debt

 

 

 

 

 

 

 

 

 

    

March 31, 

    

December 31, 

 

 

 

2016

 

2015

 

Senior notes:

 

 

 

 

 

 

 

5%, due 2019

 

$
1,100

 

$
1,100

 

51/2%, due 2019

 

 
500

 

 
500

 

63/4%, due 2020

 

 
300

 

 
300

 

8%, due 2020

 

 
750

 

 
750

 

81/8%, due 2022

 

 
2,800

 

 
2,800

 

63/4%, due 2023

 

 
1,900

 

 
1,900

 

67/8%, due 2031

 

 
430

 

 
430

 

Senior secured notes:

 

 

 

 

 

 

 

61/4%, due 2018

 

 
1,041

 

 
1,041

 

43/4%, due 2020

 

 
500

 

 
500

 

6%, due 2020

 

 
1,800

 

 
1,800

 

Floating % due 2020

 

 
900

 

 
900

 

41/2%, due 2021

 

 
850

 

 
850

 

43/8%, due 2021

 

 
1,050

 

 
1,050

 

Capital leases and mortgage notes

 

 
853

 

 
852

 

Unamortized issue costs, note discounts and premium

 

 
(252)

 

 
(263)

 

Total long-term debt 

 

 
14,522

 

 
14,510

 

Less current portion

 

 
172

 

 
127

 

Long-term debt, net of current portion 

 

$
14,350

 

$
14,383

 

 

v3.4.0.3
EMPLOYEE BENEFIT PLANS (Tables)
 3 Months Ended
Mar. 31, 2016
EMPLOYEE BENEFIT PLANS  
Summary of stock option activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Weighted Average

    

 

 

    

 

 

 

 

 

 

 

Exercise Price

 

Aggregate

 

Weighted Average

 

 

 

Options

 

Per Share

 

Intrinsic Value

 

Remaining Life

 

 

 

 

 

 

 

 

 

(In Millions)

 

 

 

 

Outstanding at December 31, 2015

 
1,606,842

 

$
22.87

 

 

 

 

 

 

 

Granted

 

 —

 

 

 —

 

 

 

 

 

 

 

Exercised

 
(3,950)

 

 
4.56

 

 

 

 

 

 

 

Forfeited/Expired

 
(29,392)

 

 
4.56

 

 

 

 

 

 

 

Outstanding at March 31, 2016

 
1,573,500

 

 
22.75

 

$
13

 
2.9

years

 

Vested and expected to vest at March 31, 2016

 
1,573,500

 

$
22.75

 

$
13

 
2.9

years

 

Exercisable at March 31, 2016

 
1,573,500

 

$
22.75

 

$
13

 
2.9

years

 

 

Summary of information about stock options by range of exercise prices

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding

 

Options Exercisable

 

 

    

 

    

Weighted Average

    

 

 

    

 

    

 

 

 

 

 

Number of

 

Remaining

 

Weighted Average

 

Number of

 

Weighted Average

 

Range of Exercise Prices 

 

Options

 

Contractual Life

 

Exercise Price

 

Options

 

Exercise Price

 

$0.00 to $4.569 

 
202,152

 
2.9

years

 

$
4.56

 
202,152

 

$
4.56

 

$4.57 to $25.089 

 
910,897

 
3.6

years

 

 
20.99

 
910,897

 

 
20.99

 

$25.09 to $32.569 

 
182,000

 
0.9

years

 

 
26.40

 
182,000

 

 
26.40

 

$32.57 to $42.529

 
278,451

 
1.8

years

 

 
39.31

 
278,451

 

 
39.31

 

 

 
1,573,500

 
2.9

years

 

$
22.75

 
1,573,500

 

$
22.75

 

 

Summary of restricted stock unit activity

 

 

 

 

 

 

 

 

    

Restricted Stock

    

Weighted Average Grant

 

 

 

Units

 

Date Fair Value Per Unit

 

Unvested at December 31, 2015

 
3,627,232

 

$
44.69

 

Granted

 
1,231,727

 

 
31.08

 

Vested

 
(1,223,015)

 

 
43.68

 

Forfeited

 
(23,639)

 

 
45.05

 

Unvested at March 31, 2016

 
3,612,305

 

$
40.38

 

 

v3.4.0.3
EQUITY (Tables)
 3 Months Ended
Mar. 31, 2016
EQUITY  
Schedule Of Changes In Consolidated Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenet Healthcare Corporation Shareholders’ Equity

 

 

 

 

 

 

 

   

 

   

 

 

   

 

 

   

Accumulated

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Common Stock

 

Additional

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Issued Par

 

Paid-in

 

Comprehensive

 

Accumulated

 

Treasury

 

Noncontrolling

 

 

 

 

 

Outstanding

 

Amount

 

Capital

 

Loss

 

Deficit

 

Stock

 

Interests

 

Total Equity

Balances at December 31, 2015

 
98,495

 

$
7

 

$
4,815

 

$
(164)

 

$
(1,550)

 

$
(2,417)

 

$
267

 

$
958

Net income  (loss)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
(59)

 

 

 —

 

 
13

 

 
(46)

Distributions paid to noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
(10)

 

 
(10)

Contributions from noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
10

 

 
10

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 
4

 

 

 —

 

 

 —

 

 

 —

 

 
4

Purchases (sales) of businesses and noncontrolling interests

 

 —

 

 

 —

 

 
(7)

 

 

 —

 

 

 —

 

 

 —

 

 
21

 

 
14

Stock-based compensation expense, tax benefit and issuance of common stock

 
773

 

 

 —

 

 
(4)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
(4)

Balances at March 31, 2016

 
99,268

 

$
7

 

$
4,804

 

$
(160)

 

$
(1,609)

 

$
(2,417)

 

$
301

 

$
926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2014

 
98,382

 

$
7

 

$
4,614

 

$
(182)

 

$
(1,410)

 

$
(2,378)

 

$
134

 

$
785

Net income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
47

 

 

 —

 

 
8

 

 
55

Distributions paid to noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
(10)

 

 
(10)

Contributions from noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
1

 

 
1

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 
3

 

 

 —

 

 

 —

 

 

 —

 

 
3

Purchases (sales) of businesses and noncontrolling interests

 

 —

 

 

 —

 

 
129

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
129

Stock-based compensation expense and issuance of common stock

 
782

 

 

 —

 

 
8

 

 

 —

 

 

 —

 

 
1

 

 

 —

 

 
9

Balance at March 31, 2015

 
99,164

 

$
7

 

$
4,751

 

$
(179)

 

$
(1,363)

 

$
(2,377)

 

$
133

 

$
972

 

v3.4.0.3
CLAIMS AND LAWSUITS (Tables)
 3 Months Ended
Mar. 31, 2016
CLAIMS AND LAWSUITS  
Reconciliations Of Legal Settlements And Related Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

Balances at

   

Litigation and

   

 

 

   

Balances at

 

 

 

Beginning

 

Investigation

 

Cash

 

End of

 

 

 

of Period

 

Costs

 

Payments

 

Period

 

Three Months Ended March 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$
299

 

$
173

 

$
(45)

 

$
427

 

Discontinued operations

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 

$
299

 

$
173

 

$
(45)

 

$
427

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$
73

 

$
3

 

$
(15)

 

$
61

 

Discontinued operations

 

 
10

 

 
(3)

 

 

 —

 

 
7

 

 

 

$
83

 

$

 —

 

$
(15)

 

$
68

 

 

v3.4.0.3
REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES (Tables)
 3 Months Ended
Mar. 31, 2016
REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES  
Schedule of changes in redeemable noncontrolling interests in equity of consolidated subsidiaries

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

    

2016

    

2015

Balances at beginning of period 

 

$
2,266

 

$
401

Net income

 

 
80

 

 
21

Distributions paid to noncontrolling interests

 

 
(34)

 

 
(1)

Contributions from noncontrolling interests

 

 
6

 

 
1

Purchases and sales of businesses and noncontrolling interests, net

 

 
63

 

 
(214)

Balances at end of period 

 

$
2,381

 

$
208

 

v3.4.0.3
EARNINGS (LOSS) PER COMMON SHARE (Tables)
 3 Months Ended
Mar. 31, 2016
EARNINGS (LOSS) PER COMMON SHARE  
Schedule of reconciliation of numerators and denominators of our basic and diluted loss per common share

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Available

 

 

 

 

 

 

 

 

(Loss Attributable)

 

 

 

 

 

 

 

 

to Common

 

Weighted

 

 

 

 

 

 

Shareholders

 

Average Shares

 

Per-Share

 

 

 

(Numerator)

 

(Denominator)

 

Amount

 

Three Months Ended March 31, 2016

 

 

 

 

 

 

 

 

 

Net loss attributable to Tenet Healthcare Corporation common shareholders for basic loss per share

 

$
(55)

 
98,768

 

$
(0.56)

 

Effect of dilutive stock options, restricted stock units and deferred compensation units

 

 

 —

 

 —

 

 

 —

 

Net loss attributable to Tenet Healthcare Corporation common shareholders for diluted loss per share

 

$
(55)

 
98,768

 

$
(0.56)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2015

 

 

 

 

 

 

 

 

 

Net income available to Tenet Healthcare Corporation common shareholders for basic earnings per share

 

$
46

 
98,699

 

$
0.47

 

Effect of dilutive stock options, restricted stock units and deferred compensation units

 

 

 —

 
2,173

 

 
(0.01)

 

Net income available to Tenet Healthcare Corporation common shareholders for diluted earnings per share

 

$
46

 
100,872

 

$
0.46

 

 

v3.4.0.3
FAIR VALUE MEASUREMENTS (Tables)
 3 Months Ended
Mar. 31, 2016
FAIR VALUE MEASUREMENTS  
Schedule of assets and liabilities measured at fair value on a recurring basis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Quoted Prices

    

 

 

    

 

 

 

 

 

 

 

 in Active

 

 

 

 

Significant

 

 

 

 

 

Markets for

 

Significant Other

 

Unobservable

 

 

 

 

 

Identical Assets

 

Observable Inputs

 

Inputs

Investments

 

March 31, 2016

 

(Level 1)

 

(Level 2)

 

(Level 3)

Marketable debt securities — noncurrent

 

$
60

 

$
25

 

$
35

 

$

 —

 

 

$
60

 

$
25

 

$
35

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Quoted Prices

    

 

 

    

 

 

 

 

 

 

 

 in Active

 

 

 

 

Significant

 

 

 

 

 

Markets for

 

Significant Other

 

Unobservable

 

 

 

 

 

Identical Assets

 

Observable Inputs

 

Inputs

Investments

 

December 31, 2015

 

(Level 1)

 

(Level 2)

 

(Level 3)

Marketable debt securities — noncurrent

 

$
59

 

$
24

 

$
35

 

$

 —

 

 

$
59

 

$
24

 

$
35

 

$

 —

 

v3.4.0.3
ACQUISITIONS (Tables)
 3 Months Ended
Mar. 31, 2016
Business Acquisition  
Schedule of pro forma financial information as if USPI joint venture and Aspen acquisition had occurred at the beginning of the year

 

 

 

 

 

 

 

 

 

Three Months Ended

 

    

March 31,

 

 

2016

 

2015

Net operating revenues

 

$
5,044

 

$
4,629

Equity in earnings of unconsolidated affiliates

 

$
24

 

$
25

Net income available (loss attributable) to common shareholders

 

$
(59)

 

$
28

Earnings (loss) per share available (attributable) to common shareholders

 

$
(0.60)

 

$
0.28

 

Series of individual business acquisitions  
Business Acquisition  
Schedule of Preliminary purchase price allocation

 

 

 

 

 

Current assets

    

$
30

    

Property and equipment

 

 
24

 

Other intangible assets

 

 
5

 

Goodwill

 

 
114

 

Other long-term assets

 

 
6

 

Current liabilities

 

 
(9)

 

Other long-term liabilities

 

 
(13)

 

Redeemable noncontrolling interests in equity of consolidated subsidiaries

 

 
(62)

 

Noncontrolling interests

 

 
(37)

 

Cash paid, net of cash acquired

 

 
(29)

 

Gains on consolidations

 

$
29

 

 

v3.4.0.3
SEGMENT INFORMATION (Tables)
 3 Months Ended
Mar. 31, 2016
SEGMENT INFORMATION  
Reconciliation of assets by reportable segment to consolidated assets

 

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31,

 

 

    

2016

    

2015

    

Assets:

 

 

 

 

 

 

 

Hospital Operations and other

 

$
17,131

 

$
17,353

 

Ambulatory Care

 

 
5,467

 

 
5,159

 

Conifer

 

 
1,168

 

 
1,170

 

Total 

 

$
23,766

 

$
23,682

 

 

Reconciliation of other significant reconciling items from segments to consolidated

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

March 31, 

 

    

2016

    

2015

Capital expenditures:

 

 

 

 

 

 

Hospital Operations and other

 

$
191

 

$
176

Ambulatory Care

 

 
12

 

 
4

Conifer

 

 
5

 

 
4

Total 

 

$
208

 

$
184

 

 

 

 

 

 

 

Net operating revenues:

 

 

 

 

 

 

Hospital Operations and other

 

$
4,397

 

$
4,151

Ambulatory Care

 

 
429

 

 
91

Conifer

 

 

 

 

 

 

Tenet

 

 
167

 

 
160

Other customers

 

 
218

 

 
182

Total Conifer revenues

 

 
385

 

 
342

Intercompany eliminations

 

 
(167)

 

 
(160)

Total 

 

$
5,044

 

$
4,424

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

Hospital Operations and other

 

$
414

 

$
418

Ambulatory Care

 

 
136

 

 
29

Conifer

 

 
63

 

 
82

Total 

 

$
613

 

$
529

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

Hospital Operations and other

 

$
174

 

$
192

Ambulatory Care

 

 
25

 

 
4

Conifer

 

 
13

 

 
11

Total 

 

$
212

 

$
207

 

 

 

 

 

 

 

Adjusted EBITDA 

 

$
613

 

$
529

Depreciation and amortization

 

 
(212)

 

 
(207)

Impairment and restructuring charges, and acquisition-related costs

 

 
(28)

 

 
(29)

Litigation and investigation costs

 

 
(173)

 

 
(3)

Interest expense

 

 
(243)

 

 
(199)

Gains on sales, consolidation and deconsolidation of facilities

 

 
147

 

 

 —

Investment earnings

 

 
1

 

 

 —

Net income from continuing operations before income taxes

 

$
105

 

$
91

 

v3.4.0.3
BASIS OF PRESENTATION (Details)
 3 Months Ended
Mar. 31, 2016
plan
Institution
Business Acquisition  
Number of acute care hospitals operated by subsidiaries 84
Number of short-stay surgical hospitals 20
Number of outpatient centers 475
Number of outpatient centers recorded using equity method 142
Number of facilities owned by subsidiaries 9
Number of health plans | plan 6
United Surgical Partners International  
Business Acquisition  
Number of short-stay surgical hospitals 20
v3.4.0.3
BASIS OF PRESENTATION - Revenues (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Supplemental payments and net operating revenues    
Net operating revenues before provision for doubtful accounts $ 5,420 $ 4,787
Medicare    
Supplemental payments and net operating revenues    
Net operating revenues before provision for doubtful accounts 859 898
Medicaid    
Supplemental payments and net operating revenues    
Net operating revenues before provision for doubtful accounts 373 385
Managed care    
Supplemental payments and net operating revenues    
Net operating revenues before provision for doubtful accounts 2,626 2,405
Indemnity, self-pay and other    
Supplemental payments and net operating revenues    
Net operating revenues before provision for doubtful accounts 437 414
Acute care hospitals - other revenue    
Supplemental payments and net operating revenues    
Net operating revenues before provision for doubtful accounts 7 15
Other operations    
Supplemental payments and net operating revenues    
Net operating revenues before provision for doubtful accounts $ 1,118 $ 670
v3.4.0.3
BASIS OF PRESENTATION - Cash and Cash Equivalents (Details) - USD ($)
$ in Millions
 3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Dec. 31, 2014
Cash and Cash Equivalents        
Cash and cash equivalents $ 728 $ 185 $ 356 $ 193
Accrued property and equipment purchases for items received but not yet paid 110   133  
Non-cancellable capital leases primarily for buildings and equipment 31 $ 33    
Accounts payable        
Cash and Cash Equivalents        
Book overdrafts classified as accounts payable 256   301  
Accrued property and equipment purchases for items received but not yet paid 63   95  
Captive insurance subsidiaries        
Cash and Cash Equivalents        
Cash and cash equivalents $ 175   $ 171  
v3.4.0.3
BASIS OF PRESENTATION - Intangible Assets Summary (Details) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Other intangible assets    
Gross Carrying Amount $ 2,387 $ 2,334
Accumulated Amortization (701) (659)
Net Book Value 1,686 1,675
Capitalized software costs    
Other intangible assets    
Gross Carrying Amount 1,495 1,456
Accumulated Amortization (625) (594)
Net Book Value 870 862
Trade names    
Other intangible assets    
Gross Carrying Amount 106 106
Net Book Value 106 106
Contracts    
Other intangible assets    
Gross Carrying Amount 669 653
Accumulated Amortization (30) (26)
Net Book Value 639 627
Other    
Other intangible assets    
Gross Carrying Amount 117 119
Accumulated Amortization (46) (39)
Net Book Value $ 71 $ 80
v3.4.0.3
BASIS OF PRESENTATION - Amortization of Intangible Assets (Details)
$ in Millions
Mar. 31, 2016
USD ($)
Estimated future amortization of intangibles with finite useful lives  
Total $ 1,207
2016 141
2017 174
2018 146
2019 122
2020 89
Later Years $ 535
v3.4.0.3
BASIS OF PRESENTATION - Investments in Unconsolidated Affiliates (Details)
$ in Millions
 3 Months Ended
Mar. 31, 2016
USD ($)
Institution
Schedule of Equity Method Investments [Line Items]  
Net operating revenues | $ $ 578
Net income | $ 105
Net income attributable to the investee | $ $ 69
Number of outpatient centers 475
Number of outpatient centers recorded using equity method 142
Number of outpatient centers recorded not using equity method 213
Ambulatory Care  
Schedule of Equity Method Investments [Line Items]  
Number of outpatient centers 335
Number of outpatient centers recorded using equity method 122
Number of outpatient centers recorded not using equity method 211
Hospital operations and other  
Schedule of Equity Method Investments [Line Items]  
Number of hospitals recorded using equity method 4
Number of outpatient centers recorded not using equity method 2
v3.4.0.3
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS - Components (Details) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Accounts receivable and allowance for doubtful accounts    
Accounts receivable, net $ 2,807 $ 2,704
Continuing operations    
Accounts receivable and allowance for doubtful accounts    
Patient accounts receivable 3,606 3,486
Allowance for doubtful accounts (901) (887)
Estimated future recoveries from accounts assigned to our Conifer subsidiary 146 144
Net cost reports and settlements payable and valuation allowances (47) (42)
Accounts receivable, net 2,804 2,701
Discontinued operations    
Accounts receivable and allowance for doubtful accounts    
Accounts receivable, net $ 3 $ 3
v3.4.0.3
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS - Allowance (Details) - USD ($)
$ in Millions
 3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Accounts receivable and allowance for doubtful accounts      
Allowance for doubtful accounts as a percent of patients accounts receivable 25.00%   25.40%
Self-Pay Patients      
Accounts receivable and allowance for doubtful accounts      
Allowance for doubtful accounts as a percent of patients accounts receivable 81.20%   80.60%
Estimated costs of caring $ 165 $ 164  
Managed Care Patients      
Accounts receivable and allowance for doubtful accounts      
Allowance for doubtful accounts as a percent of patients accounts receivable 8.40%   7.50%
Charity Care Patients      
Accounts receivable and allowance for doubtful accounts      
Estimated costs of caring $ 44 36  
Medicai DSH and other supplemental revenues      
Accounts receivable and allowance for doubtful accounts      
Estimated costs of caring $ 227 $ 247  
v3.4.0.3
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS - Other Receivables (Details) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Accounts receivable and allowance for doubtful accounts    
Receivables $ 2,807 $ 2,704
Payables 1,228 1,380
California's Provider Fee Program | Other current assets    
Accounts receivable and allowance for doubtful accounts    
Receivables 450 387
California's Provider Fee Program | Other current liabilities    
Accounts receivable and allowance for doubtful accounts    
Payables $ 174 $ 139
v3.4.0.3
ASSETS AND LIABILITIES HELD FOR SALE (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Current Assets and Liabilities Held for Sale    
Assets held for sale $ 2 $ 550
Proceeds from sales of facilities and other assets 573  
Net receivables 2,807 2,704
Liabilities held for sale   101
Impairment charges 2  
Georgia Facilities | Disposal Group, Held-for-sale, Not Discontinued Operations    
Current Assets and Liabilities Held for Sale    
Assets held for sale   549
Liabilities held for sale   $ 101
Georgia Facilities | Disposal Group, Disposed of by Sale, Not Discontinued Operations    
Current Assets and Liabilities Held for Sale    
Proceeds from sales of facilities and other assets 575  
Net receivables 141  
Gain on sale $ 113  
v3.4.0.3
IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION-RELATED COSTS (Details)
$ in Millions
 3 Months Ended
Mar. 31, 2016
USD ($)
segment
Mar. 31, 2015
USD ($)
IMPAIRMENT AND RESTRUCTURING CHARGES, AND ACQUISITION-RELATED COSTS    
Net impairment and restructuring charges and acquisition-related costs $ 28 $ 29
Impairment charges 2  
Employee severance costs 10 6
Restructuring costs 1 3
Lease termination costs 1  
Acquisition costs 14 20
Acquisition-related transaction costs 5 7
Acquisition integration charges $ 9 $ 13
Number of continuing operating segments | segment 3  
v3.4.0.3
LONG-TERM DEBT AND LEASE OBLIGATIONS - Schedule of Debt (Details) - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Capital leases and mortgage notes $ 853 $ 852
Unamortized note discounts and premium (252) (263)
Total long-term debt 14,522 14,510
Less current portion 172 127
Long-term debt, net of current portion $ 14,350 $ 14,383
5%, due 2019    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 5.00% 5.00%
Carrying amount $ 1,100 $ 1,100
5 1/2%, due 2019    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 5.50% 5.50%
Carrying amount $ 500 $ 500
6 3/4%, due 2020    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 6.75% 6.75%
Carrying amount $ 300 $ 300
8%, due 2020    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 8.00% 8.00%
Carrying amount $ 750 $ 750
8 1/8%, due 2022    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 8.125% 8.125%
Carrying amount $ 2,800 $ 2,800
6 3/4%, due 2023    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 6.75% 6.75%
Carrying amount $ 1,900 $ 1,900
6 7/8%, due 2031    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 6.875% 6.875%
Carrying amount $ 430 $ 430
6 1/4%, due 2018    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 6.25% 6.25%
Carrying amount $ 1,041 $ 1,041
4 3/4%, due 2020    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 4.75% 4.75%
Carrying amount $ 500 $ 500
6%, due 2020    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 6.00% 6.00%
Carrying amount $ 1,800 $ 1,800
Floating % due 2020    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Carrying amount $ 900 $ 900
4 1/2%, due 2021    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 4.50% 4.50%
Carrying amount $ 850 $ 850
4 3/8%, due 2021    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Interest rate, stated percentage 4.375% 4.375%
Carrying amount $ 1,050 $ 1,050
v3.4.0.3
LONG-TERM DEBT AND LEASE OBLIGATIONS - Credit Agreement and Letter of Credit Facility (Details)
 3 Months Ended
Mar. 31, 2016
USD ($)
Mar. 07, 2014
USD ($)
Credit Agreement    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Revolving credit facility, maximum borrowing capacity $ 1,000,000,000  
Line of credit facility, subfacility maximum available capacity 300,000,000  
Borrowings outstanding 0  
Standby letters of credit outstanding 4,000,000  
Amount available for borrowing under revolving credit facility $ 996,000,000  
Credit Agreement | Minimum    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Unused commitment fee (as a percent) 0.25%  
Credit Agreement | Maximum    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Unused commitment fee (as a percent) 0.375%  
Credit Agreement | Base rate | Minimum    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Margin on variable rate (as a percent) 0.25%  
Credit Agreement | Base rate | Maximum    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Margin on variable rate (as a percent) 0.75%  
Credit Agreement | LIBOR | Minimum    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Margin on variable rate (as a percent) 1.25%  
Credit Agreement | LIBOR | Maximum    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Margin on variable rate (as a percent) 1.75%  
Letter of Credit Facility    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Revolving credit facility, maximum borrowing capacity   $ 180,000,000
Unused commitment fee (as a percent) 0.50%  
Standby letters of credit outstanding $ 139,000,000  
Borrowing capacity after increase subject to certain conditions   $ 200,000,000
Secured debt to EBITDA ratio 3.00  
Issuance fee (percentage) 1.875%  
Issuance fee, based on face amount (percentage) 0.125%  
Letter of Credit Facility | Maximum    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Number of business days after notice, for reimbursement of amount drawn. 3 days  
Unused commitment fee after step down 0.375%  
Letter of Credit Facility | Base rate    
LONG-TERM DEBT AND LEASE OBLIGATIONS    
Margin on variable rate (as a percent) 0.875%  
v3.4.0.3
GUARANTEES (Details)
$ in Millions
Mar. 31, 2016
USD ($)
Income and Revenue Collection Guarantee  
GUARANTEES  
Maximum potential amount of future payments under guarantees $ 89
Income and Revenue Collection Guarantee | Other current liabilities  
GUARANTEES  
Liability for the fair value of guarantees 75
Guaranteed Investees Of Third Parties  
GUARANTEES  
Liability for the fair value of guarantees 35
Guaranteed Investees Of Third Parties | Other current liabilities  
GUARANTEES  
Guarantee obligations for consolidated subsidiaries $ 17
v3.4.0.3
EMPLOYEE BENEFIT PLANS (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
EMPLOYEE BENEFIT PLANS    
Stock-based compensation costs, pretax $ 14 $ 18
2008 Stock Incentive Plan    
EMPLOYEE BENEFIT PLANS    
Shares available for issuance under the plan 1,700,000  
2008 Stock Incentive Plan | Stock Options    
EMPLOYEE BENEFIT PLANS    
Expiration period from the date of grant 10 years  
Portion of awards vesting on each of the first three anniversary dates of the grant (as a percent) 33.30%  
Vesting period 3 years  
2008 Stock Incentive Plan | Restricted Stock Units    
EMPLOYEE BENEFIT PLANS    
Contractual right to receive shares of common stock for a stock based award 1  
Portion of awards vesting on each of the first three anniversary dates of the grant (as a percent) 33.30%  
Vesting period 3 years  
v3.4.0.3
EMPLOYEE BENEFIT PLANS - Stock Options (Details) - USD ($)
 3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Stock option activity      
Stock-Based Compensation Expense $ 14,000,000 $ 18,000,000  
Stock Options      
Stock option activity      
Outstanding at the beginning of the period (in shares) 1,606,842    
Granted (in shares)   0  
Exercised (in shares) (3,950) (77,658)  
Forfeited/Expired (in shares) (29,392)    
Outstanding at the end of the period (in shares) 1,573,500   1,606,842
Vested and expected to vest at the end of the period (in shares) 1,573,500    
Exercisable at the end of the period (in shares) 1,573,500    
Weighted Average Exercise Price Per Share      
Outstanding at the beginning of the period (in dollars per share) $ 22.87    
Exercised (in dollars per share) 4.56    
Forfeited/Expired (in dollars per share) 4.56    
Outstanding at the end of the period (in dollars per share) 22.75   $ 22.87
Vested and expected to vest at the end of the period (in dollars per share) 22.75    
Exercisable at the end of the period (in dollars per share) $ 22.75    
Aggregate Intrinsic Value      
Outstanding at the end of the period $ 13,000,000    
Vested and expected to vest at the end of the period 13,000,000    
Exercisable at the end of the period $ 13,000,000    
Weighted Average Remaining Life      
Outstanding at the end of the period 2 years 10 months 24 days   3 years 10 months 24 days
Vested and expected to vest at the end of the period 3 years 10 months 24 days    
Exercisable at the end of the period 3 years 8 months 12 days    
Other Disclosures      
Aggregate Intrinsic value of awards exercised $ 1,000,000 $ 1,000,000  
Unrecognized compensation costs   $ 0  
v3.4.0.3
EMPLOYEE BENEFIT PLANS - Range of Exercise Prices (Details) - Stock Options
 3 Months Ended
Mar. 31, 2016
$ / shares
shares
Options Outstanding  
Number of Options Outstanding (in shares) | shares 1,573,500
Weighted Average Remaining Contractual life 2 years 10 months 24 days
Weighted Average Exercise Price (in dollars per share) $ 22.75
Options Exercisable  
Number of Options Exercisable (in shares) | shares 1,573,500
Weighted Average Exercise Price (in dollars per share) $ 22.75
Range of Exercise Prices, $0.00 to $4.569  
Summary information about outstanding stock options  
Exercise price per share, low end of the range (in dollars per share) 0.00
Exercise price per share, high end of the range (in dollars per share) $ 4.569
Options Outstanding  
Number of Options Outstanding (in shares) | shares 202,152
Weighted Average Remaining Contractual life 2 years 10 months 24 days
Weighted Average Exercise Price (in dollars per share) $ 4.56
Options Exercisable  
Number of Options Exercisable (in shares) | shares 202,152
Weighted Average Exercise Price (in dollars per share) $ 4.56
Range of Exercise Prices, $4.57 to $25.089  
Summary information about outstanding stock options  
Exercise price per share, low end of the range (in dollars per share) 4.57
Exercise price per share, high end of the range (in dollars per share) $ 25.089
Options Outstanding  
Number of Options Outstanding (in shares) | shares 910,897
Weighted Average Remaining Contractual life 3 years 7 months 6 days
Weighted Average Exercise Price (in dollars per share) $ 20.99
Options Exercisable  
Number of Options Exercisable (in shares) | shares 910,897
Weighted Average Exercise Price (in dollars per share) $ 20.99
Range of Exercise Prices, $25.09 to $32.569  
Summary information about outstanding stock options  
Exercise price per share, low end of the range (in dollars per share) 25.09
Exercise price per share, high end of the range (in dollars per share) $ 32.569
Options Outstanding  
Number of Options Outstanding (in shares) | shares 182,000
Weighted Average Remaining Contractual life 10 months 24 days
Weighted Average Exercise Price (in dollars per share) $ 26.40
Options Exercisable  
Number of Options Exercisable (in shares) | shares 182,000
Weighted Average Exercise Price (in dollars per share) $ 26.40
Range of Exercise Prices, $32.57 to $42.529  
Summary information about outstanding stock options  
Exercise price per share, low end of the range (in dollars per share) 32.57
Exercise price per share, high end of the range (in dollars per share) $ 42.529
Options Outstanding  
Number of Options Outstanding (in shares) | shares 278,451
Weighted Average Remaining Contractual life 1 year 9 months 18 days
Weighted Average Exercise Price (in dollars per share) $ 39.31
Options Exercisable  
Number of Options Exercisable (in shares) | shares 278,451
Weighted Average Exercise Price (in dollars per share) $ 39.31
v3.4.0.3
EMPLOYEE BENEFIT PLANS - Restricted Stock (Details) - Restricted Stock Units
$ / shares in Units, $ in Millions
 1 Months Ended 3 Months Ended
Jan. 31, 2016
director
$ / shares
shares
Mar. 31, 2016
USD ($)
$ / shares
shares
Restricted stock unit activity    
Unvested at the beginning of the period (in shares) 3,627,232 3,627,232
Granted (in shares)   1,231,727
Vested (in shares)   (1,223,015)
Forfeited (in shares)   (23,639)
Unvested at the end of the period (in shares)   3,612,305
Weighted Average Grant Date Fair Value Per Unit    
Unvested at the beginning of the period (in dollars per share) | $ / shares $ 44.69 $ 44.69
Granted (in dollars per share) | $ / shares   31.08
Vested (in dollars per share) | $ / shares   43.68
Forfeited (in dollars per share) | $ / shares   45.05
Unvested at the end of the period (in dollars per share) | $ / shares   $ 40.38
Other Disclosures    
Unrecognized compensation costs | $   $ 117
Period for recognition of unrecognized compensation costs   2 years 3 months 18 days
Time-vesting    
Restricted stock unit activity    
Granted (in shares)   474,052
Other Disclosures    
Restricted stock that will vest and be settled over a three-year period from the grant date (in shares)   458,379
Restricted stock that will vest and be settled on the third anniversary of the grant date (in shares)   15,673
Vesting period   3 years
Time-vesting | Director    
Other Disclosures    
Initial grant received (in shares) 5,084  
Pro-rated annual grant (in shares) 5,614  
New directors | director 2  
Performance-based vesting    
Restricted stock unit activity    
Granted (in shares)   291,540
Performance-based vesting | Minimum    
Other Disclosures    
Awards vesting (as a percent)   0.00%
Performance-based vesting | Maximum    
Other Disclosures    
Awards vesting (as a percent)   200.00%
Performance-based vesting | Senior Officers    
Restricted stock unit activity    
Granted (in shares)   455,437
Other Disclosures    
Term for achievement of specified performance goal   3 years
v3.4.0.3
EQUITY - Changes in Shareholders' Equity (Details) - USD ($)
shares in Thousands, $ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Changes in Shareholders' Equity    
Balances $ 958 $ 785
Net income (loss) (46) 55
Distributions paid to noncontrolling interests (10) (10)
Contributions from noncontrolling interests 10 1
Other comprehensive income 4 3
Purchases (sales) of businesses and noncontrolling interests 14 129
Stock-based compensation expense and issuance of common stock (4) 9
Balances 926 972
Common Stock    
Changes in Shareholders' Equity    
Balances $ 7 $ 7
Balances (in shares) 98,495 98,382
Stock-based compensation expense and issuance of common stock (in shares) 773 782
Balances $ 7 $ 7
Balances (in shares) 99,268 99,164
Additional Paid-in Capital    
Changes in Shareholders' Equity    
Balances $ 4,815 $ 4,614
Purchases (sales) of businesses and noncontrolling interests (7) 129
Stock-based compensation expense and issuance of common stock (4) 8
Balances 4,804 4,751
Accumulated Other Comprehensive Loss    
Changes in Shareholders' Equity    
Balances (164) (182)
Other comprehensive income 4 3
Balances (160) (179)
Accumulated Deficit    
Changes in Shareholders' Equity    
Balances (1,550) (1,410)
Net income (loss) (59) 47
Balances (1,609) (1,363)
Treasury Stock    
Changes in Shareholders' Equity    
Balances (2,417) (2,378)
Stock-based compensation expense and issuance of common stock   1
Balances (2,417) (2,377)
Noncontrolling Interests    
Changes in Shareholders' Equity    
Balances 267 134
Net income (loss) 13 8
Distributions paid to noncontrolling interests (10) (10)
Contributions from noncontrolling interests 10 1
Purchases (sales) of businesses and noncontrolling interests 21  
Balances $ 301 $ 133
v3.4.0.3
PROPERTY AND PROFESSIONAL AND GENERAL LIABILITY INSURANCE (Details) - USD ($)
$ in Millions
 3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Other operating expense, net      
Insurance coverage      
Malpractice expense $ 93 $ 89  
Professional and General Liability Insurance      
Insurance coverage      
Self insurance reserve $ 784   $ 755
Loss contingency discount rate, maturity rate period 7 years   7 years
Risk-free discount rate (as a percent) 1.54%   2.09%
v3.4.0.3
CLAIMS AND LAWSUITS (Details)
 1 Months Ended 3 Months Ended
Jun. 30, 2006
defendant
Mar. 31, 2016
USD ($)
defendant
item
Institution
Dec. 31, 2015
USD ($)
Loss Contingencies      
Reimbursement times | item   3  
Clinica de la Mama Investigations and Qui Tam Action      
Loss Contingencies      
Number of defendants | defendant   4  
Number of hospitals with sold operating assets | Institution   3  
Litigation reserve | $   $ 407,000,000 $ 238,000,000
Clinica de la Mama Investigations and Qui Tam Action | Minimum      
Loss Contingencies      
Number of hospitals that could enter into a guilty plea | Institution   1  
Antitrust Class Action Lawsuit      
Loss Contingencies      
Number of defendants | defendant 3    
v3.4.0.3
CLAIMS AND LAWSUITS - Reconciliations (Details) - Claims, lawsuits, and regulatory proceedings - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Loss Contingencies    
Litigation reserve, Balances at Beginning of Period $ 299 $ 83
Litigation and Investigation costs 173  
Cash Payments (45) (15)
Litigation reserve, Balances at End of Period 427 68
Continuing operations    
Loss Contingencies    
Litigation reserve, Balances at Beginning of Period 299 73
Litigation and Investigation costs 173 3
Cash Payments (45) (15)
Litigation reserve, Balances at End of Period $ 427 61
Discontinued operations    
Loss Contingencies    
Litigation reserve, Balances at Beginning of Period   10
Litigation and Investigation costs   (3)
Litigation reserve, Balances at End of Period   $ 7
v3.4.0.3
REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES - Changes in Redeemable Noncontrolling Interests (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Changes in redeemable noncontrolling interests in equity of consolidated subsidiaries    
Distributions paid to noncontrolling interests $ (10) $ (10)
Contributions from noncontrolling interests 10 1
Redeemable noncontrolling interests    
Changes in redeemable noncontrolling interests in equity of consolidated subsidiaries    
Balances at beginning of period 2,266 401
Net income 80 21
Distributions paid to noncontrolling interests (34) (1)
Contributions from noncontrolling interests 6 1
Purchases and sales of businesses and noncontrolling interests, net 63 (214)
Balances at end of period $ 2,381 $ 208
v3.4.0.3
INCOME TAXES (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Taxes    
Income tax expenses $ 67 $ 16
State income tax expense 13  
Nondeductible goodwill 29  
Nontaxable gains 17  
Tax benefits related to net income of noncontrolling interests 21  
Continued operations pre-tax earnings 105 $ 91
Reduction in estimated liabilities for uncertain tax positions 3  
Unrecognized tax benefits 37  
Unrecognized tax benefits which, if recognized, would impact effective tax rate 34  
Nondeductible litigation 26  
Unrecognized federal and state tax benefits and reserves for interest and penalties, which may decrease in the next 12 months 6  
Continuing operations    
Income Taxes    
Interest and penalties related to accrued liabilities for uncertain tax positions, recognized $ 5  
v3.4.0.3
EARNINGS (LOSS) PER COMMON SHARE (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Net Income Available (Loss Attributable) to Common Shareholders (Numerator)    
Net income attributable to Tenet Healthcare Corporation common shareholders for basic loss per share $ (55) $ 46
Effect of dilutive stock options, restricted stock units, and deferred compensation units
Net income attributable to Tenet Healthcare Corporation common shareholders for diluted loss per share $ (55) $ 46
Weighted Average Shares (Denominator)    
Net income attributable to Tenet Healthcare Corporation common shareholders for basic loss per share 98,768 98,699
Effect of dilutive stock options, restricted stock units and deferred compensation units (in weighted average shares) 2,173
Net income attributable to Tenet Healthcare Corporation common shareholders for diluted loss per share 98,768 100,872
Per-Share Amount    
Net income attributable to Tenet Healthcare Corporation common shareholders for basic loss per share $ (0.56) $ 0.47
Effect of dilutive stock options, restricted stock units, and deferred compensation units (Per-Share) (0.01)
Net income attributable to Tenet Healthcare Corporation common shareholders for diluted loss per share $ (0.56) $ 0.46
v3.4.0.3
EARNINGS (LOSS) PER COMMON SHARE - Antidilutive securities (Details)
 3 Months Ended
Mar. 31, 2016
shares
Employee stock options, restricted stock units and deferred compensation units  
Antidilutive securities  
Anti-dilutive securities excluded from computation of earnings per share 1,567
v3.4.0.3
FAIR VALUE MEASUREMENTS (Details) - Recurring basis - USD ($)
$ in Millions
Mar. 31, 2016
Dec. 31, 2015
Fair value of assets and liabilities measured on recurring basis    
Marketable debt securities-noncurrent $ 60 $ 59
Investments 60 59
Quoted Prices in Active Markets for Identical Assets (Level 1)    
Fair value of assets and liabilities measured on recurring basis    
Marketable debt securities-noncurrent 25 24
Investments $ 25 $ 24
Estimated fair value of the long-term debt instrument as a percentage of carrying value 99.10% 96.20%
Significant Other Observable Inputs (Level 2)    
Fair value of assets and liabilities measured on recurring basis    
Marketable debt securities-noncurrent $ 35 $ 35
Investments $ 35 $ 35
v3.4.0.3
ACQUISITIONS - Purchase Price Allocation (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Preliminary purchase price allocations    
Goodwill $ 7,122 $ 6,970
Series of individual business acquisitions    
Preliminary purchase price allocations    
Current assets 30  
Property and equipment 24  
Other intangible assets 5  
Goodwill 114  
Other long-term assets 6  
Current liabilities (9)  
Other long-term liabilities (13)  
Redeemable noncontrolling interests in equity of consolidated subsidiaries (62)  
Noncontrolling interests (37)  
Net cash paid (29)  
Gain on consolidations 29  
Transaction costs related to prospective and closed acquisitions $ 5  
v3.4.0.3
ACQUISITIONS - Pro Forma (Details) - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Pro Forma Information - Unaudited    
Net operating revenues $ 5,044 $ 4,629
Equity in earnings of unconsolidated affiliates 24 4
Net income attributable (loss attributable) to common shareholders $ (59) $ 28
Net earnings (loss) per share available (attributable) to common shareholders $ (0.60) $ 0.28
Pro Forma    
Pro Forma Information - Unaudited    
Equity in earnings of unconsolidated affiliates $ 24 $ 25
v3.4.0.3
SEGMENT INFORMATION - General Information and Customer Concentration (Details)
 3 Months Ended
Mar. 31, 2016
state
item
plan
Institution
SEGMENT INFORMATION  
Number of hospitals owned by subsidiaries 84
Number of facilities owned by subsidiaries 9
Number of short-stay surgical hospitals 20
Number of licensed beds in hospitals operated by subsidiaries | item 21,529
Number of states where operations occur | state 13
Number of provider-based outpatient centers operated by subsidiaries 475
Number of health plans | plan 6
United Surgical Partners International  
SEGMENT INFORMATION  
Number of short-stay surgical hospitals 20
Number of ambulatory surgery centers 250
Number of diagnostic imaging centers 21
Number of states where operations occur | state 28
Number of urgent care centers 35
European Surgical Partners Ltd  
SEGMENT INFORMATION  
Number of facilities owned by subsidiaries 9
Minimum | Conifer  
SEGMENT INFORMATION  
Number of Tenet and non-Tenet Hospitals and other health care organizations to which Conifer provided revenue cycle services 800
v3.4.0.3
SEGMENT INFORMATION - Reconciling Items (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
SEGMENT INFORMATION      
Assets $ 23,766   $ 23,682
Capital expenditures: 208 $ 184  
Net operating revenues 5,044 4,424  
Adjusted EBITDA 613 529  
Depreciation and amortization 212 207  
Adjusted EBITDA and other reconciling items      
Adjusted EBITDA 613 529  
Depreciation and amortization (212) (207)  
Impairment and restructuring charges, and acquisition-related costs (28) (29)  
Litigation and investigation costs (173) (3)  
Interest expense (243) (199)  
Gains on sales, consolidation and deconsolidation of facilities 147    
Investment earnings 1    
Net income from continuing operations, before income taxes 105 91  
Hospital operations and other      
SEGMENT INFORMATION      
Assets 17,131   17,353
Conifer      
SEGMENT INFORMATION      
Assets 1,168   1,170
Ambulatory Care      
SEGMENT INFORMATION      
Assets 5,467   $ 5,159
Operating segments | Hospital operations and other      
SEGMENT INFORMATION      
Capital expenditures: 191 176  
Net operating revenues 4,397 4,151  
Adjusted EBITDA 414 418  
Depreciation and amortization 174 192  
Adjusted EBITDA and other reconciling items      
Adjusted EBITDA 414 418  
Depreciation and amortization (174) (192)  
Operating segments | Conifer      
SEGMENT INFORMATION      
Capital expenditures: 5 4  
Net operating revenues 385 342  
Adjusted EBITDA 63 82  
Depreciation and amortization 13 11  
Adjusted EBITDA and other reconciling items      
Adjusted EBITDA 63 82  
Depreciation and amortization (13) (11)  
Operating segments | Conifer | Tenet      
SEGMENT INFORMATION      
Net operating revenues 167 160  
Operating segments | Conifer | Other customers      
SEGMENT INFORMATION      
Net operating revenues 218 182  
Operating segments | Ambulatory Care      
SEGMENT INFORMATION      
Capital expenditures: 12 4  
Net operating revenues 429 91  
Adjusted EBITDA 136 29  
Depreciation and amortization 25 4  
Adjusted EBITDA and other reconciling items      
Adjusted EBITDA 136 29  
Depreciation and amortization (25) (4)  
Intercompany eliminations      
SEGMENT INFORMATION      
Net operating revenues $ (167) $ (160)  
v3.4.0.3
SUBSEQUENT EVENTS (Details) - United Surgical Partners International - USD ($)
$ in Millions
 1 Months Ended
Apr. 30, 2016
Mar. 31, 2016
Minimum | Put Option    
Subsequent events    
Equity necessary for joint venture (as a percent)   12.50%
Maximum | Put Option    
Subsequent events    
Equity necessary for joint venture (as a percent)   25.00%
Subsequent event    
Subsequent events    
Amount paid for repurchase $ 127  
Ownership interest (as a percent) 56.30%