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On a consolidated basis, Community Health Systems, Inc. and its subsidiaries (collectively the &#8220;Company&#8221;) own, lease and operate acute care hospitals in non-urban and selected urban markets. As of December&#160;31, 2011, the Company owned or leased 131 hospitals, including four stand-alone rehabilitation or psychiatric hospitals, licensed for 19,695 beds in 29 states. Throughout these notes to the consolidated financial statements, Community Health Systems, Inc. (the &#8220;Parent&#8221;) and its consolidated subsidiaries are referred to on a collective basis as the &#8220;Company.&#8221; This drafting style is not meant to indicate that the publicly-traded Parent or any subsidiary of the Parent owns or operates any asset, business, or property. The hospitals, operations and businesses described in this filing are owned and operated, and management services provided, by distinct and indirect subsidiaries of Community Health Systems, Inc. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2">As of December&#160;31, 2011, Indiana, Texas and Pennsylvania represent the only areas of geographic concentration. Net operating revenues generated by the Company&#8217;s hospitals in Indiana, as a percentage of consolidated net operating revenues, were 10.3% in 2011, 10.6% in 2010 and 11.2% in 2009. Net operating revenues generated by the Company&#8217;s hospitals in Texas, as a percentage of consolidated net operating revenues, were 13.1% in 2011, 13.0% in 2010 and 13.2% in 2009. Net operating revenues generated by the Company&#8217;s hospitals in Pennsylvania, as a percentage of consolidated net operating revenues, were 11.5% in 2011, 10.3% in 2010 and 10.2% in 2009. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"><i>Use of Estimates.</i>&#160;The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (&#8220;U.S. GAAP&#8221;) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates under different assumptions or conditions. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"><i>Principles of Consolidation.</i>&#160;The consolidated financial statements include the accounts of the Parent, its subsidiaries, all of which are controlled by the Parent through majority voting control, and variable interest entities for which the Company is the primary beneficiary. All significant intercompany accounts, profits and transactions have been eliminated. Noncontrolling interests in less-than-wholly-owned consolidated subsidiaries of the Parent are presented as a component of total equity to distinguish between the interests of the Parent and the interests of the noncontrolling owners. Revenues, expenses and income from continuing operations from these subsidiaries are included in the consolidated amounts as presented on the consolidated statements of income, along with a net income measure that separately presents the amounts attributable to the controlling interests and the amounts attributable to the noncontrolling interests for each of the periods presented. Noncontrolling interests that are redeemable or may become redeemable at a fixed or determinable price at the option of the holder or upon the occurrence of an event outside of the control of the Company are presented in mezzanine equity on the consolidated balance sheets. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"><i>Cost of Revenue.</i>&#160;Substantially all of the Company&#8217;s operating expenses are &#8220;cost of revenue&#8221; items. 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Revenues from Medicare outlier payments are included in the amounts received from Medicare and were approximately 0.42%, 0.43% and 0.43% of net operating revenues for the years ended December&#160;31, 2011, 2010 and 2009, respectively. In addition, the Company is reimbursed by non-governmental payors using a variety of payment methodologies. Amounts received by the Company for treatment of patients covered by such programs are generally less than the standard billing rates. The differences between the estimated program reimbursement rates and the standard billing rates are accounted for as contractual adjustments, which are deducted from gross revenues to arrive at net operating revenues. These net operating revenues are an estimate of the net realizable amount due from these payors. The process of estimating contractual allowances requires the Company to estimate the amount expected to be received based on payor contract provisions. The key assumption in this process is the estimated contractual reimbursement percentage, which is based on payor classification and historical paid claims data. Due to the complexities involved in these estimates, actual payments the Company receives could be different from the amounts it estimates and records. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. Adjustments to previous program reimbursement estimates are accounted for as contractual allowance adjustments and reported in the periods that such adjustments become known. 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In the ordinary course of business, the Company renders services to patients who are financially unable to pay for hospital care. Also, included in the provision for contractual allowance shown above is the value (at the Company&#8217;s standard charges) of these services to patients who are unable to pay that is eliminated from net operating revenues when it is determined they qualify under the Company&#8217;s charity care policy. The value of these services was $651.1 million, $512.4&#160;million and $451.0&#160;million for the years ended December&#160;31, 2011, 2010 and 2009, respectively. The estimated cost incurred by the Company to provide these services to patients who are unable to pay was approximately $125.7 million, $105.5 million and $104.0 million for the years ended December&#160;31, 2011, 2010 and 2009, respectively. 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Of this amount, approximately $24.0 million has been expended through December 31, 2011. This project is required to be completed in 2013. In October 2008, after the purchase of the noncontrolling owner&#8217;s interest in the Company&#8217;s Birmingham, Alabama facility, the Company initiated the purchase of a site, which includes a partially constructed hospital structure, for a potential replacement for the existing Birmingham facility. In September 2010, the Company received approval of its request for a certificate of need from the Alabama Certificate of Need Review Board; however, this certificate of need remains subject to an appeal process. The Company&#8217;s estimated construction costs, including the acquisition of the site and equipment costs, are approximately $280.0 million for the Birmingham replacement facility. Of this amount, approximately $3.5 million has been expended through December&#160;31, 2011. In addition, under other purchase agreements outstanding at December&#160;31, 2011, the Company has committed to spend approximately $652.5 million for costs such as capital improvements, equipment, selected leases and physician recruiting. These commitments are required to be fulfilled generally over a five to seven year period after acquisition. Through December&#160;31, 2011, the Company has spent approximately $247.8 million related to these commitments. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"> <i>Physician Recruiting Commitments.</i>&#160;As part of its physician recruitment strategy, the Company provides income guarantee agreements to certain physicians who agree to relocate to its communities and commit to remain in practice there. 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Substantially all losses for the former Triad hospitals in periods prior to May 1999 were insured through a wholly-owned insurance subsidiary of HCA, Triad&#8217;s owner prior to that time, and excess loss policies maintained by HCA. HCA has agreed to indemnify the former Triad hospitals in respect of claims covered by such insurance policies arising prior to May 1999. After May 1999 through December&#160;31, 2006, the former Triad hospitals obtained insurance coverage on a claims incurred basis from HCA&#8217;s wholly-owned insurance subsidiary, with excess coverage obtained from other carriers that is subject to certain deductibles. Effective for claims incurred after December&#160;31, 2006, Triad began insuring its claims from $1&#160;million to $5&#160;million through its wholly-owned captive insurance company, replacing the coverage provided by HCA. 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If the likelihood of a negative outcome is reasonably possible and the Company is able to determine an estimate of the possible loss or a range of loss, the Company discloses that fact together with the estimate of the possible loss or range of loss. However, it is difficult to predict the outcome or estimate a possible loss or range of loss in some instances because litigation is subject to significant uncertainties. </font></p> <p style="margin-top:18px;margin-bottom:0px"><font style="font-family:times new roman" size="2"> <u>Reasonably Possible Contingencies </u></font></p> <p style="margin-top:6px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2">For all of the legal matters below, the Company believes that a negative outcome is reasonably possible, but the Company is unable to determine an estimate of the possible loss or a range of loss. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"> On February&#160;10, 2006, the Company received a letter from the Civil Division of the Department of Justice requesting documents in an investigation it was conducting involving the Company. The inquiry related to the way in which different state Medicaid programs apply to the federal government for matching or supplemental funds that are ultimately used to pay for a small portion of the services provided to Medicaid and indigent patients. These programs are referred to by different names, including &#8220;intergovernmental payments,&#8221; &#8220;upper payment limit programs,&#8221; and &#8220;Medicaid disproportionate share hospital payments.&#8221; The February 2006 letter focused on the Company&#8217;s hospitals in three states: Arkansas, New Mexico, and South Carolina. On August&#160;31, 2006, the Company received a follow up letter from the Department of Justice requesting additional documents relating to the programs in New Mexico and the payments to the Company&#8217;s three hospitals in that state. Through the beginning of 2009, the Company provided the Department of Justice with requested documents, met with its personnel on numerous occasions, and otherwise cooperated in its investigation. During the course of the investigation, the Civil Division notified the Company that it believed that the Company and its three New Mexico hospitals caused the State of New Mexico to submit improper claims for federal funds, in violation of the Federal False Claims Act. At one point, the Civil Division calculated that the three hospitals received ineligible federal participation payments from August 2000 to June 2006 of approximately $27.5 million and said that if it proceeded to trial, it would seek treble damages plus an appropriate penalty for each of the violations of the Federal False Claims Act. This investigation has culminated in the federal government&#8217;s intervention in a qui tam lawsuit styled U.S. ex rel. Baker vs. Community Health Systems, Inc., pending in the United States District Court for the District of New Mexico. The federal government filed its complaint in intervention on June&#160;30, 2009. The relator filed a second amended complaint on July&#160;1, 2009. Both of these complaints expand the time period during which alleged improper payments were made. The Company filed motions to dismiss all of the federal government&#8217;s and the relator&#8217;s claims on August&#160;28, 2009. On March&#160;19, 2010, the court granted in part and denied in part the Company&#8217;s motion to dismiss as to the relator&#8217;s complaint. On July&#160;7, 2010, the court denied the Company&#8217;s motion to dismiss the federal government&#8217;s complaint in intervention. On July&#160;21, 2010, the Company filed its answer and pretrial discovery began. On June&#160;2, 2011, the relator filed a Third Amended Complaint adding subsidiaries Community Health Systems Professional Services Corporation and CHS/Community Health Systems, Inc. as defendants. On June&#160;6, 2011, the government filed its First Amended Complaint in intervention adding Community Health Systems Professional Services Corporation as a defendant. Discovery is closed. The deadline for filing of Motions for Summary Judgment is March&#160;27, 2012 and there is currently no trial date set. The Company is vigorously defending this action. </font></p> <p style="font-size:1px;margin-top:12px;margin-bottom:0px">&#160;</p> <p style="margin-top:0px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2">On June&#160;12, 2008, two of the Company&#8217;s hospitals received letters from the United States Attorney&#8217;s Office for the Western District of New York requesting documents in an investigation it is conducting into billing practices with respect to kyphoplasty procedures performed during the period January&#160;1, 2002, through June&#160;9, 2008. On September&#160;16, 2008, one of the Company&#8217;s hospitals in South Carolina also received an inquiry. Kyphoplasty is a surgical spine procedure that returns a compromised vertebrae (either from trauma or osteoporotic disease process) to its previous height, reducing or eliminating severe pain. The Company has been informed that similar investigations have been initiated at unaffiliated facilities in Alabama, South Carolina, Indiana and other states. The Company believes that this investigation is related to a qui tam settlement between the same United States Attorney&#8217;s office and the manufacturer and distributor of the Kyphon product, which is used in performing the kyphoplasty procedure. The Company is cooperating with the investigation and continuing to evaluate and discuss this matter with the federal government. </font></p> <p style="margin-top:18px;margin-bottom:0px"><font style="font-family:times new roman" size="2"><u>Matters for which an Outcome Cannot be Assessed </u></font></p> <p style="margin-top:6px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"> For all of the legal matters below, the Company cannot at this time assess what the outcome may be and is further unable to determine any estimate of loss or range of loss. Because the investigations are at a very preliminary stage, there are not sufficient facts available to make these assessments. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2">On April&#160;8, 2011, the Company received a document subpoena, dated March&#160;31, 2011, from the United States Department of Health and Human Services, Office of Inspector General (the &#8220;OIG&#8221;), in connection with an investigation of possible improper claims submitted to Medicare and Medicaid. The subpoena, issued from the OIG&#8217;s Chicago, Illinois office, requested documents from all of the Company&#8217;s hospitals and appears to concern emergency department processes and procedures, including the Company&#8217;s hospitals&#8217; use of the Pro-MED Clinical Information System, which is a third-party software system that assists with the management of patient care and provides operational support and data collection for emergency department management and has the ability to track discharge, transfer and admission recommendations of emergency department physicians. The subpoena also requested other information about the Company&#8217;s relationships with emergency department physicians, including financial arrangements. The subpoena&#8217;s requests were very similar to those contained in the Civil Investigative Demands received by the Company&#8217;s Texas hospitals from the Office of the Attorney General of the State of Texas on November&#160;15, 2010. The Company is continuing to cooperate with the government (including production of documents and interviews with witnesses) in this investigation. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"> On April&#160;11, 2011, Tenet Healthcare Corporation (&#8220;Tenet&#8221;) filed suit against the Company, Wayne T. Smith and W. Larry Cash in the United States District Court for the Northern District of Texas. The suit alleged the Company committed violations of certain federal securities laws by making certain statements in various proxy materials filed with the SEC in connection with the Company&#8217;s offer to purchase Tenet. Tenet alleged that the Company engaged in a practice to under-utilize observation status and over-utilize inpatient admission status and asserts that by doing so, the Company created undisclosed financial and legal liability to federal, state and private payors. The suit seeks declaratory and injunctive relief and Tenet&#8217;s costs. On April&#160;19, 2011, the Company filed a motion to dismiss the complaint. On April&#160;28, 2011, the Company responded to the allegations during its earnings release conference call as discussed in the Company&#8217;s Form 8-K furnished on April&#160;28, 2011. On May&#160;16, 2011, Tenet filed an amended complaint. On June&#160;29, 2011, the Company filed a motion to dismiss the amended complaint. A hearing on the Company&#8217;s motion to dismiss occurred on September&#160;8, 2011. The court took this matter under advisement. The Company will continue to vigorously defend this suit. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"> On April&#160;22, 2011, a joint motion was filed by the relator and the United States Department of Justice in the case styled United States ex rel. and Reuille vs. Community Health Systems Professional Services Corporation and Lutheran Musculoskeletal Center, LLC d/b/a Lutheran Hospital, in the United States District Court for the Northern District of Indiana, Fort Wayne Division. The lawsuit was originally filed under seal on January&#160;7, 2009. The suit is brought under the False Claims Act and alleges that Lutheran Hospital of Indiana billed the Medicare program for (a)&#160;false 23 hour observation after outpatient surgeries and procedures, and (b)&#160;intentional assignment of inpatient status to one-day stays for cases that do not meet Medicare criteria for inpatient intensity of service or severity of illness. The relator had worked in the case management department of Lutheran Hospital of Indiana but was reassigned to another department in the fall of 2006. This facility was acquired by the Company as part of the July&#160;25, 2007 merger transaction with Triad. The complaint also includes allegations of age discrimination in Ms.&#160;Reuille&#8217;s 2006 reassignment and retaliation in connection with her resignation on October&#160;1, 2008. The Company had cooperated fully with the government in its investigation of this matter, but had been unaware of the exact nature of the allegations in the complaint. On December&#160;27, 2010, the government filed a notice that it declined to intervene in this suit. The motion contained additional information about how the government intended to proceed with an investigation regarding &#8220;allegations of improper billing for inpatient care at other hospitals associated with Community Health Systems, Inc. &#8230; asserted in other qui tam complaints in other jurisdictions.&#8221; The motion stated that the Department of Justice has &#8220;consolidated its investigations&#8221; of the Company and other related entities and that &#8220;the Civil Division of the Department of Justice, multiple United States Attorneys&#8217; offices, and the Office of Inspector General for the Department of Health and Human Services (the &#8220;HHS&#8221;) are now closely coordinating their investigation of these overlapping allegations. The Attorney General of Texas has initiated an investigation; the United States intends to work cooperatively with Texas and any other States investigating these allegations.&#8221; The motion also stated that the Office of Audit Services for the Office of Investigations for HHS has been engaged to conduct a national audit of certain of the Company&#8217;s Medicare claims. The government confirmed that it considers the allegations made in the complaint styled Tenet Healthcare Corporation vs. Community Health Systems, Inc., et al. filed in the United States District Court for the Northern District of Texas, Dallas Division on April&#160;11, 2011 to be related to the allegations in the qui tam and to what the government is now describing as a consolidated investigation. Because qui tam suits are filed &#8220;under seal,&#8221; no one but the relator and the government knows that the suit has been filed or what allegations are being made by the relator on behalf of the government. Initially, the government has 60 days to make a determination about whether to intervene in a case and to act as the plaintiff or to decline to intervene and allow the relator to act as the plaintiff in the suit, but extensions of time are frequently granted to allow the government additional time to investigate the allegations. Even if, in the course of an investigation, the court partially unseals a complaint to allow the government and a defendant to work to a resolution of the complaint&#8217;s allegations, the defendant is prohibited from revealing to anyone even that the partial unsealing has occurred. As the investigation proceeds, the Company may learn of additional qui tam suits filed against the Company or its affiliated hospitals or related entities, or that contact letters, document requests, or medical record requests the Company has received in the past from various governmental agencies are generated from qui tam cases filed under seal. The motion filed on April&#160;22, 2011 concluded by requesting a stay of the litigation in the Reuille case for 180 days, and on April&#160;25, 2011, the court granted the motion. The Company&#8217;s management company subsidiary, Community Health Systems Professional Services Corporation, the defendant in the Reuille case, consented to the request for the stay. On October&#160;19, 2011, the government filed an application to transfer the Reuille case to the Middle District of Tennessee or for an extension of the stay for an additional 180 days. The Company agreed that a stay for an additional, but shorter period of time, 90 days, was appropriate, but did not consent to the transfer of the case. The Company&#8217;s response setting forth the Company&#8217;s legal arguments was filed on October&#160;24, 2011. On November&#160;1, 2011, the court denied the motion to transfer the matter and extended the stay until April&#160;30, 2012. The Company is cooperating fully with the government in its investigations. </font></p> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2">Three purported class action shareholder federal securities cases have been filed in the United States District Court for the Middle District of Tennessee; namely, Norfolk County Retirement System v. Community Health Systems, Inc., Wayne T. Smith and W. Larry Cash, filed May&#160;5, 2011; De Zheng v. Community Health Systems, Inc., Wayne T. Smith and W. Larry Cash, filed May&#160;12, 2011; and Minneapolis Firefighters Relief Association v. Community Health Systems, Inc., Wayne T. Smith, W. Larry Cash and Thomas Mark Buford, filed June&#160;2, 2011. All three seek class certification on behalf of purchasers of the Company&#8217;s common stock between July&#160;27, 2006 and April&#160;11, 2011 and allege that misleading statements resulted in artificially inflated prices for the Company&#8217;s common stock. On September&#160;20, 2011, all three were assigned to the same judge as related cases. On December&#160;28, 2011, the court consolidated all three shareholder cases for pretrial purposes, selected NYC Funds as lead plaintiffs, and selected NYC Funds&#8217; counsel as lead plaintiffs&#8217; counsel. The parties are in the process of negotiating operative dates for these consolidated shareholder federal securities actions, including dates for the filing of an operative consolidated complaint and related briefing. Three purported shareholder derivative actions have also been filed in the United States District Court for the Middle District of Tennessee; Plumbers and Pipefitters Local Union No.&#160;630 Pension Annuity Trust Fund v. Wayne T. Smith, W. Larry Cash, T. Mark Buford, John A. Clerico, James S. Ely III, John A. Fry, William Norris Jennings, Julia B. North and H. Mitchell Watson, Jr., filed May&#160;24, 2011; Roofers Local No.&#160;149 Pension Fund v. Wayne T. Smith, W. Larry Cash, John A. Clerico, James S. Ely, III, John A. Fry, William Norris Jennings, Julia B. North and H. Mitchell Watson, Jr., filed June&#160;21, 2011; and Lambert Sweat v. Wayne T. Smith, W. Larry Cash, T. Mark Buford, John A. Clerico, James S. Ely, III, John A. Fry, William Norris Jennings, Julia B. North, H. Mitchell Watson, Jr. and Community Health Systems, Inc., filed October&#160;5, 2011. These three cases allege breach of fiduciary duty arising out of allegedly improper inpatient admission practices, mismanagement, waste and unjust enrichment. On September&#160;28, 2011, the court ordered that the Plumbers and Pipefitters Local Union No.&#160;630 Pension Annuity Trust Fund action and the Roofers Local No.&#160;149 Pension Fund action be consolidated for pretrial purposes, and appointed the derivative plaintiffs&#8217; lead counsel. On November&#160;29, 2011, the court ordered that the Lambert Sweat action be consolidated with the Plumbers and Roofers consolidated derivative actions. Plaintiffs are expected to file an operative amended derivative complaint in these three consolidated actions on or about March&#160;15, 2012. 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Noncontrolling interests in less-than-wholly-owned consolidated subsidiaries of the Parent are presented as a component of total equity to distinguish between the interests of the Parent and the interests of the noncontrolling owners. Revenues, expenses and income from continuing operations from these subsidiaries are included in the consolidated amounts as presented on the consolidated statements of income, along with a net income measure that separately presents the amounts attributable to the controlling interests and the amounts attributable to the noncontrolling interests for each of the periods presented. 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The differences between the estimated program reimbursement rates and the standard billing rates are accounted for as contractual adjustments, which are deducted from gross revenues to arrive at net operating revenues. These net operating revenues are an estimate of the net realizable amount due from these payors. The process of estimating contractual allowances requires the Company to estimate the amount expected to be received based on payor contract provisions. The key assumption in this process is the estimated contractual reimbursement percentage, which is based on payor classification and historical paid claims data. Due to the complexities involved in these estimates, actual payments the Company receives could be different from the amounts it estimates and records. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. 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Amounts due from third-party payors were $86.5 million and $118.7&#160;million as of December&#160;31, 2011 and 2010, respectively, and are included in other current assets in the accompanying consolidated balance sheets. Substantially all Medicare and Medicaid cost reports are final settled through 2006. </font></p> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <!-- Begin Block Tagged Accounting Policy: cyh-20111231_note1_accounting_policy_table11 - cyh:HealthCareOrganizationRevenueRecognizedPolicyPolicyTextBlock--> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"><i>Net Operating Revenues.</i>&#160;Net operating revenues are recorded net of provisions for contractual allowance of approximately $42.4 billion, $35.8 billion and $30.8&#160;billion in 2011, 2010 and 2009, respectively. Net operating revenues are recognized when services are provided and are reported at the estimated net realizable amount from patients, third-party payors and others for services rendered. 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The Company also continually reviews its overall reserve adequacy by monitoring historical cash collections as a percentage of trailing net revenue less provision for bad debts, as well as by analyzing current period net revenue and admissions by payor classification, aged accounts receivable by payor, days revenue outstanding, and the impact of recent acquisitions and dispositions. </font></p> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <!-- Begin Block Tagged Accounting Policy: cyh-20111231_note1_accounting_policy_table14 - cyh:PhysicianIncomeGuaranteesPolicyTextBlock--> <p style="margin-top:0px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"><i>Physician Income Guarantees.</i>&#160;The Company enters into physician recruiting agreements under which it supplements physician income to a minimum amount over a period of time, typically one year, while the physicians establish themselves in the community. 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Accounts receivable, net of contractual allowances, from Medicare were $250.8 million and $270.8&#160;million as of December&#160;31, 2011 and 2010, respectively, representing 6.7% and 8.1% of consolidated net accounts receivable, before allowance for doubtful accounts, as of December&#160;31, 2011 and 2010, respectively. </font></p> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <!-- Begin Block Tagged Accounting Policy: cyh-20111231_note1_accounting_policy_table16 - us-gaap:MalpracticeLossContingencyPolicy--> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2"><i>Professional Liability Claims.</i>&#160;The Company accrues for estimated losses resulting from professional liability. The accrual, which includes an estimate for incurred but not reported claims, is based on historical loss patterns and actuarially-determined projections and is discounted to its net present value. 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Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. 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U.S. GAAP requires (1)&#160;that financial information be disclosed for operating segments that meet a 10% quantitative threshold of the consolidated totals of net revenue, profit or loss, or total assets; and (2)&#160;that the individual reportable segments disclosed contribute at least 75% of total consolidated net revenue. Based on these measures, only the hospital operations segment meets the criteria as a separate reportable segment. 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The adoption of this ASU increased other current assets by $5.3 million, other assets, net by $36.9 million and long-term liabilities by $42.2 million in the consolidated balance sheet at December&#160;31, 2011 and had no impact to the consolidated statement of income for the year ended December&#160;31, 2011. </font></p> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <!-- Begin Block Tagged Accounting Policy: cyh-20111231_note1_accounting_policy_table23 - cyh:DescriptionOfNewAccountingPronouncementsNotYetAdoptedPolicyTextBlock--> <p style="margin-top:12px;margin-bottom:0px; text-indent:4%"><font style="font-family:times new roman" size="2">In June 2011, the FASB issued ASU 2011-05, which eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders&#8217; equity. 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859000000 -2145000 18236000 2145000 29838000 29838000 7201000 7201000 1229000 1229000 110400000 4019000 824000 3195000 8401000 8140000 261000 11160000 2283000 8877000 12759000 12759000 56916000 56916000 18910000 18910000 306377000 243150000 46716000 -623380000 256490000 16511000 186967000 243150000 243150000 348441000 279983000 50292000 -689444000 310117000 18166000 167802000 279983000 279983000 277623000 201948000 54251000 -528733000 268607000 21424000 133853000 201948000 201948000 8383122000 9369528000 6324437000 0 0 3889651000 2434786000 0 6855976000 0 0 4395498000 2460478000 0 24 8 14 40 18 15 5 4 2 1408953000 841342000 567611000 1530852000 901580000 629272000 1719956000 1003252000 716704000 40200000 40200000 387472000 0 0 0 387472000 0 395743000 0 0 0 395743000 0 258173000 246950000 -6615000 13853000 3985000 61476000 44510000 13507000 3459000 1651533000 1927703000 -2145000 22888000 2087000 1299382000 1100304000 -2346468000 1177995000 68169000 1299382000 1501330000 1241535000 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7458000 629000 1833000 3469000 1560000 13000 134000 300000 1100000 70000 349000 5400000 663000 3575000 800000 11500000 23600000 -1154250000 -1366506000 -1485111000 1111131000 1417188000 1639198000 1891334000 1460307000 1588516000 1766201000 -28954000 91517274 92836451 92946048 94711919 92462702 91778801 92136819 90666348 91783725 89857583 88913813 90614886 91615275 91718791 93358771 91484466 90422331 91008405 89966933 91130672 89412310 88344566 Total per share amounts may not add due to rounding.