VP Investor Relations
This press release contains forward-looking statements based on current management expectations. Those forward-looking statements
include all statements regarding our estimated results of operations in future periods and all statements other than those made solely
with respect to historical fact. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those
expressed in any forward-looking statements. These factors include, but are not limited to (i) the highly competitive nature of the
health care business, (ii) the efforts of insurers, health care providers and others to contain health care costs, (iii) possible changes in
the Medicare and Medicaid programs that may impact reimbursements to health care providers and insurers, (iv) the ability to achieve
operating and financial targets and achieve expected levels of patient volumes and control the costs of providing services, (v)
increases in the amount and risk of collectibility of uninsured accounts and deductibles and co-pay amounts for insured accounts, (vi)
the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical support
personnel, (vii) potential liabilities and other claims that may be asserted against the Company, (viii) fluctuations in the market value
of the Company’s common stock, (ix) the Company’s ability to complete the share repurchase program, (x) changes in accounting
practices, (xi) changes in general economic conditions, (xii) future divestitures which may result in additional charges, (xiii) changes
in revenue mix and the ability to enter into and renew managed care provider arrangements on acceptable terms, (xiv) the availability
and terms of capital to fund the expansion of the Company’s business, (xv) changes in business strategy or development plans, (xvi)
delays in receiving payments for services provided, (xvii) the possible enactment of Federal or state health care reform, (xviii) the
outcome of pending and any future tax audits and litigation associated with the Company’s tax positions, (xix) the outcome of the
Company’s continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures and the
Company’s corporate integrity agreement with the government, (xx) changes in Federal, state or local regulations affecting the health
care industry, (xxi) the impact of charity care and self-pay discounting policy changes, (xxii) the ability to successfully integrate the
operations of Health Midwest, (xxiii) the ability to develop and implement the financial enterprise resource planning information
system within the expected time and cost projections and, upon implementation, to realize the expected benefits and efficiencies,
(xxiv) the ability to obtain court approval of the settlement of the class action securities lawsuits originally filed against the Company
in 1997; (xxv) the ability of the Company to continue to fund a cash dividend in the future at the current rate; and (xxvi) other risk
factors detailed from time to time in the Company’s filings with the SEC. Many of the factors that will determine the Company’s
future results are beyond the ability of the Company to control or predict. In light of the significant uncertainties inherent in the
forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect
management’s views only as of the date hereof. The Company undertakes no obligation to revise or update any forward-looking
statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
All references to “Company” and “HCA” as used throughout this document refer to HCA Inc. and its affiliates.
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HCA–Hospital Corporation of America
•
190 Hospitals—Approximately $22 billion in
revenues
•
Focused upon market leading positions in fastgrowing urban and suburban communities
•
Targeted capital investments to improve
quality and availability of care
•
Use scale/size to improve processes and
operate more efficiently
3
HCA is located in 16 of 20 Fastest
Dallas/Ft.
Worth
+12%
Growing Large US Cities
Generally 25-40% Market Share
40% of facilities in Texas & Florida
Denver
+9%
Kansas City
+5%
U.K.
Las Vegas
+22%
Nashville
+8%
Richmond
+8%
Austin
+18%
Southern
California
+9%
Panhandle
+10%
%%
%
Percent Growth in
Market Population
2000-2005
Compared to the
National Average of
4.5%
Palm Beach
+11%
%
Houston
+10%
Switzerland
Tampa Bay
+8%
Dade
+8%
4
Focused on Strengthening
Outpatient Services
•
Outpatient services account for 37% of
revenue or $8 billion
•
Existing outpatient units must operate in a
manner consistent with “retail nature” of
the business
•
Increase the accessibility and convenience
of the service
•
Build or buy outpatient outlets that improve
our market presence
•
Develop management structure dedicated
to the success of outpatient services
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Operations: 2003 Key Observations
• Payor class composition is changing. Medicare and selfpay are growing (2.7%, 6.9%). All other Payors have
declined (-1.2%)
• Self-pay admissions, although representing only 4.4% of
total admissions grew 6.9%.
• Self-pay admissions via the emergency room grew 14%
• No surprises in pricing (rate, acuity, technology)
environment in 2003 (+7.5%), but 2004 will be more
difficult due to Medicare Outlier and Charity Care
changes.
6
Operations: 2003 Key Observations
Impact on earnings from volume pressures minimized by
efficient expense management:
•
•
•
•
•
•
SW&B % of Net Revenue  50 bps
Contract labor/APD  33% from 1Q 03
Avg. hourly rate increased 4.7% ( 40 bps from PY)
SW&B/AA declined 260 bps from prior year
Employee Benefit Cost moderating; 2.9% vs.13.7% PY
Supplies/AA costs slowing ( 80 bps vs. 2002)
Bad Debt experience in 2003:
1. sf: Same Facility
a. Bad Debt expense was $2.2B, up $574M (sf1), or 36% over 2002
b. Charity care recognition grew dramatically in 2003 to $821M up
$230M (sf), or 40% over 2002
c. We are forecasting no relief in Bad Debt/Charity in 2004
 At close of 2003, we had $2.65B reserved as Bad Debt, representing
88.3% of self-pay balances (only $351M on balance sheet not reserved)
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Operations: 2003 Key Observations
•
Net Revenue (less Bad Debt) is converting to cash at favorable levels
(100.2%)
•
Successfully integrated Health MidWest
•
Patient Safety agenda was aggressively deployed
•
Total employee turnover, 20.1% vs. 22.8% in 2002. RN turnover1,
16.8% vs. 17.0% in 2002. Fourth consecutive year of improving
turnover rates.
•
Enhanced outpatient organization and strategy underway
•
All patient/employee satisfaction scores remain positive and at record
levels
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1. Turnover results exclude Midwest Division.
2003 Operating Indicators Same Facility vs. Prior Year
2003 Quarterly Trending
Q1
-0.4%
Q2
Q3
0.6%
0.2%
Admissions
Net
Revenue/ AA
SWB/AA
Supplies/ AA
Labor Cost/
Manhour
Q4
2.1%
7.5%
7.1%
5.8%
9.6%
5.0%
9.8%
9.5%
4.8%
+0.6%
+7.5%
1.6%
-2.6%
7.3%
7.6%
+8.1%
4.9%
4.5%
6.3%
7.7%
2003 vs. 2002
(same facility)
4.7%
+4.7%
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Increasing Uninsured Revenues
Put Pressure on Bad Debts
•
Provision for Doubtful Accounts increased to
approximately 10% of NR in 2003
•
Increasing self-pay receivables combined
with a deterioration in collectibility of this
A/R contributed to the need to increase the
provision for doubtful accounts
•
Soft economy/unemployment is a major
driver of the escalation of uninsured
patients
•
We anticipate no significant moderation in
bad debts in 2004
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Response to Increasing Bad Debt
•
Increasing level of intensity around front-end collections
 40% from ‘01-’02
 30% from ‘02-’03
•
Enhance self-pay policy, procedure and process flow
- Hospital self-pay committees
- Review access points—impact on non-emergent access
•
Aggressively pursue all alternative payment sources,
including federal and/or state funding sources (i.e.
Medicaid, etc.)
- 15% of uninsured accounts convert to Medicaid
•
Charity care and financial discount policy
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Capital Expenditures Dollars ($ in billions)
Billions
2000
2001
2002
2003
2004E
$1.2
$1.4
$1.7
$1.8
$1.8
$2.0
Shared Services
$1.5
Infrastructure
Develop., IT&S, &
Pat. Safety
New &
Replacement
Facilities
$1.0
Facility Expansion
Projects
Midwest
Division
$0.5
Routine
Capital
$0.0
2000
2001
2002
2003 2004E
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Distribution of Capital Dollars
2002-2005 and beyond
Ongoing Projects in Capital Plan
ER & Outpatient
Services
19%/$720
Land &
Improvements
14%/$565M
Replacement
Facilities
3%/$98M
37
37 ER
ER
Expansions
Expansions
54 Facilities with
Surgery and/or ICU/CCU
expansions
Surgery/Special
Units
22%/$870M
New & Expanded
Services
18%/$740M
Imaging,
Open Heart, Cardiology
Oncology, etc.
Four New Facilities
378 Beds
1,565 New Beds
Beds
14%/$550M
New Facilities
10%/$395M
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Growth Capital Assets Placed in Service
2003
$457
(Dollars in Millions)
$500
$1,400
$206
$296 $264
$1,200
$1,000
$800
$0
1Q
2Q
3Q
4Q
$600
$400
$200
$0
2000
Total HCA
$549
2001
$373
2002
$676
2003
$1,223
2004
$896
2005
$678
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New Facilities: Denver, CO
Sky Ridge Medical Center
Denver, Colorado
Opened 8/20/03
104 Beds
Cost: $147M
4 Month Update
Admissions:
2,076 (+47% vs. Budget)
ADC:
45 (57 in December)
ER Visits:
9,125 (+56% vs. Budget)
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New Facilities: Nashville, TN
StoneCrest Medical
Center
Nashville, Tennessee
Opened 11/30/03
75 Beds
Cost: $76M
One Month of Operations
Admissions:
255
ER Visits:
3,449
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Replacement Facility: Tallahassee, FL
Before Replacement
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Replacement Facility: Tallahassee, FL
Replacement Facility
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Replacement Facility: Tallahassee, FL
Capital Regional
Medical Center
Tallahassee, Florida
Opened 8/26/03
180 Beds
Cost: $98M
4 Month Update
(% change vs. PY)
Admissions:
Surgeries:
ER Visits:
Caths:
+15.3%
+9%
+28%
+30%
•Admissions growth for 12 months
prior to the new facility opening: 5%
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Capital Targeted to Growth Opportunities
3.2% Admissions growth rate for facilities with major projects
opening in 2002 or 2003—vs. 1.4% for Total Company
•
Denver: New Facility
2,076 admissions in the first 4 months of operations
(+47% vs. budget)
•
Tallahassee: Replacement Facility
15.3% growth in admissions in the first four months vs.
5% growth rate in the 12 months prior to opening
•
Nashville: New Facility
3,449 ER visits in the first month of operations
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Capital Targeted to Growth Opportunities
•
Lewisville, TX: 85 net new beds (1Q)
14.6% growth in admissions (April-December)
•
Richmond, VA: Major surgery expansions at 2 facilities (2Q)
14.4% inpatient surgery growth (July-December)
•
Brandon, FL: Open heart program
323 open hearts in first year.

Austin, TX: 66 new beds in North Austin (3Q 02)
2003 admissions growth rate: 12.5% vs. 10.3% PY
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HCA Board Approves Dividend Increase
From $0.02 Per Share to $0.13 Per Share
•
Prudent investment/use of free cash flow
•
Share Repurchase
 Integral component of the Company’s
financial policies
 Since 1997, repurchased $6.9 billion of
HCA stock (average cost $29.51)
•
Dividend
• Cash-flows allow us to pay a significantly
increased dividend
• Continue to reinvest in our markets, and
strengthen our balance sheet
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HCA is Investing Significantly in Programs
for Patient Safety and Improved Patient Outcomes

 E MAR:
Medication Error
Prevention
 E POM:
Physician Order
Entry
 100% Participation in CMS
Quality Reporting Initiative
 Member of NQF and
Leapfrog
 Cardiovascular, OB and
Emergency Department
Initiatives
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In Summary We Have….
Great Assets
Excellent Investment Opportunities
Strong Cash Flows
Excellent Long-Term Earnings Growth Outlook
A prudent financial strategy that provides for a strong
balance sheet and return of cash to shareholders through
share repurchase and/or dividends
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