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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K
(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the year ended December 31, 2011
OR
 
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from              to             
Commission file number 001-15925

COMMUNITY HEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Delaware	 	13-3893191	
(State of incorporation)	 	(IRS Employer
Identification No.)	
 	 	
4000 Meridian Boulevard
Franklin, Tennessee	 	37067	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code:
(615) 465-7000
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	 	Name of Each Exchange on Which Registered	
Common Stock, $.01 par value	 	New York Stock Exchange	

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  x    NO  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    YES  ¨    NO  x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES   x     NO   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to the Form 10-K.   x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	 	x	  	Accelerated filer	 	¨	
 	 	 	 	
Non-accelerated filer	 	¨  (Do not check if a smaller reporting company)	  	Smaller reporting company	 	¨	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    YES  ¨    NO  x
The aggregate market value of the voting stock held by non-affiliates of the Registrant was $2,368,591,590. Market value is determined by reference to the closing price on June 30, 2011 of the Registrant’s Common Stock as reported by the New York Stock Exchange. The Registrant does not (and did not at June 30, 2011) have any non-voting common stock outstanding. As of February 15, 2012, there were 91,546,078 shares of common stock, par value $.01 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
The information required for Part III of this annual report is incorporated by reference to portions of the Registrant’s definitive proxy statement for its 2012 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of the Registrant’s fiscal year ended December 31, 2011.

 

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TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT
COMMUNITY HEALTH SYSTEMS, INC.
Year ended December 31, 2011

 	  	 	  	Page	
 	 	 	
 	  	PART I	  	 	
 	 	 	
Item 1.	  	Business	  	1	
 	 	 	
Item 1A.	  	Risk Factors	  	24	
 	 	 	
Item 1B.	  	Unresolved Staff Comments	  	32	
 	 	 	
Item 2.	  	Properties	  	32	
 	 	 	
Item 3.	  	Legal Proceedings	  	37	
 	 	 	
Item 4.	  	Mine Safety Disclosures	  	43	
 	 	 	
 	  	PART II	  	 	
 	 	 	
Item 5.	  	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	  	43	
 	 	 	
Item 6.	  	Selected Financial Data	  	45	
 	 	 	
Item 7.	  	Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	46	
 	 	 	
Item 7A.	  	Quantitative and Qualitative Disclosures about Market Risk	  	71	
 	 	 	
Item 8.	  	Financial Statements and Supplementary Data	  	72	
 	 	 	
Item 9.	  	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	  	131	
 	 	 	
Item 9A.	  	Controls and Procedures	  	131	
 	 	 	
Item 9B.	  	Other Information	  	131	
 	 	 	
 	  	PART III	  	 	
 	 	 	
Item 10.	  	Directors, Executive Officers and Corporate Governance	  	134	
 	 	 	
Item 11.	  	Executive Compensation	  	134	
 	 	 	
Item 12.	  	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	  	134	
 	 	 	
Item 13.	  	Certain Relationships and Related Transactions	  	134	
 	 	 	
Item 14.	  	Principal Accountant Fees and Services	  	134	
 	 	 	
 	  	PART IV	  	 	
 	 	 	
Item 15.	  	Exhibits and Financial Statement Schedules	  	134	

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PART I
Item 1. Business of Community Health Systems, Inc.
Overview of Our Company
We are one of the largest publicly-traded operators of hospitals in the United States in terms of number of facilities and net operating revenues. We were originally founded in 1986 and were reincorporated in 1996 as a Delaware corporation. We provide healthcare services through the hospitals that we own and operate in non-urban and selected urban markets throughout the United States. As of December 31, 2011, we owned or leased 131 hospitals, including four stand-alone rehabilitation or psychiatric hospitals. These hospitals are geographically diversified across 29 states, with an aggregate of 19,695 licensed beds. We generate revenues by providing a broad range of general and specialized hospital healthcare services to patients in the communities in which we are located. Services provided by our hospitals include general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric and rehabilitation services. As an integral part of providing these services, we also employ approximately 2,000 physicians and an additional 500 licensed healthcare practitioners, and provide additional outpatient services at urgent care centers, occupational medicine clinics, imaging centers, cancer centers, ambulatory surgery centers and home health and hospice agencies. Through our management and operation of these businesses, we provide standardization and centralization of operations across key business areas; strategic assistance to expand and improve services and facilities; implementation of patient safety and quality of care improvement programs; and assistance in the recruitment of additional physicians and licensed healthcare practitioners to the markets in which our hospitals are located. In a number of our markets, we have partnered with local physicians or not-for-profit providers, or both, in the ownership of our facilities. In addition to our hospitals and related businesses, we also own and operate 63 licensed home care agencies and 30 licensed hospice agencies, located primarily in markets where we also operate a hospital. Also, through our wholly-owned subsidiary, Quorum Health Resources, LLC, or QHR, we provide management and consulting services to non-affiliated general acute care hospitals located throughout the United States. The home care agencies and the hospital management services businesses constitute operating segments, but are not considered reportable segments since they do not meet the quantitative thresholds for a separate identifiable reportable segment. The financial information for our reportable operating segments is presented in Note 14 of the Notes to our Consolidated Financial Statements included under Item 8 of this Report.
Our strategy has also included growth by acquisition. We generally target hospitals in growing, non-urban and selected urban healthcare markets for acquisition because of their favorable demographic and economic trends and competitive conditions. Because non-urban service areas have smaller populations, there are generally fewer hospitals and other healthcare service providers in these communities and generally a lower level of managed care presence in these markets. We believe that smaller populations support less direct competition for hospital-based services and these communities generally view the local hospital as an integral part of the community. We believe opportunities exist for skilled, disciplined operators in selected urban markets to create networks between urban hospitals and non-urban hospitals while improving physician alignment in those markets and making it more attractive to managed care.
Throughout this Form 10-K, we refer to Community Health Systems, Inc., or the Parent Company, and its consolidated subsidiaries in a simplified manner and on a collective basis, using words like “we” and “our.” This drafting style is suggested by the Securities and Exchange Commission, or SEC, and is not meant to indicate that the publicly-traded Parent Company or any other subsidiary of the Parent Company 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.
Available Information
Our website address is www.chs.net and the investor relations section of our website is located at www.chs.net/investor/index.html. We make available free of charge, through the investor relations section of our website, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K as well as amendments to those reports, as soon as reasonably practical after they are filed with the SEC. Our filings are also available to the public at the website maintained by the SEC, www.sec.gov.
 
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We also make available free of charge, through the investor relations section of our website, our Governance Principles, our Code of Conduct and the charters of our Audit and Compliance Committee, Compensation Committee and Governance and Nominating Committee.
We have included the Chief Executive Officer and the Chief Financial Officer certifications regarding the public disclosure required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1, 31.2, 32.1 and 32.2 of this report.
Our Business Strategy
With the objective of increasing shareholder value and improving care, the key elements of our business strategy are to:
 
 	•	 	increase revenue at our facilities,	
 
 	•	 	improve profitability,	
 
 	•	 	improve patient safety and quality of care and	
 
 	•	 	grow through selective acquisitions.	
Increase Revenue at Our Facilities
Overview. We seek to increase revenue at our facilities by providing a broader range of services in a more attractive care setting, as well as by supporting and recruiting physicians. We identify the healthcare needs of the community by analyzing demographic data and patient referral trends. We also work with local hospital boards, management teams and medical staffs to determine the number and type of additional physician specialties needed. Our initiatives to increase revenue include:
 
 	•	 	recruiting and/or employing additional primary care physicians and specialists,	
 
 	•	 	expanding the breadth of services offered at our hospitals and in the communities in which we operate through targeted capital expenditures and physician alignment to support the addition of more complex services, including orthopedics, cardiovascular services and urology and	
 
 	•	 	providing the capital to invest in technology and the physical plant at our facilities, particularly in our emergency rooms, surgery departments, critical care departments and diagnostic services.	
We believe that appropriate capital investments in our facilities, combined with the development of our service capabilities, will reduce the migration of patients to competing providers while providing an attractive return on investment.
Our industry is highly regulated by the government and other third parties who provide payment for the services we provide to patients. Accordingly, we seek to review all initiatives to increase revenue through our corporate-wide voluntary compliance program in an effort to ensure compliance with laws and regulation.
Physician Recruiting. The primary method of adding or expanding medical services is the recruitment of new physicians into the community. A core group of primary care physicians is necessary as an initial contact point for all local healthcare. The addition of specialists who offer services, including general surgery, obstetrics and gynecology, cardiovascular services, orthopedics and urology, completes the full range of medical and surgical services required to meet a community’s core healthcare needs. At the time we acquire a hospital and from time to time thereafter, we identify the healthcare needs of the community by analyzing demographic data and patient referral trends. As a result of this analysis, we are able to determine what we believe to be the optimum mix of primary care physicians and specialists. We employ recruiters at the corporate level to support the local hospital managers in their recruitment efforts. We have increased the number of physicians affiliated with us through our
 
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recruiting efforts, net of turnover, by approximately 869 in 2011, 935 in 2010 and 772 in 2009. The percentage of recruited or other physicians commencing practice with us that were specialists was over 50% in 2011. Additionally, in response to the recent trend in physicians seeking employment, we have begun employing more physicians, including, in some instances, acquiring physician practices. However, most of the physicians in our communities remain in private practice and are not our employees. We believe we have been successful in recruiting physicians because of the practice opportunities afforded physicians in our markets, as well as lower managed care penetration as compared to larger urban areas.
Emergency Room Initiatives. Approximately 60% of our patients initiate their encounter with our hospitals through the emergency room. Accordingly, we believe that making sure that this experience is as satisfying and efficient for the patient as it reasonably can be, but at the same time seeking to ensure that a safe and high quality service is provided to each patient, will in turn result in an optimized revenue stream and provide growth in services performed by our hospitals. We take numerous steps to seek to achieve these intertwined objectives, including:
 
 	•	 	Improving safety, service, satisfaction and waiting times – initiatives include rounding on patients while in the emergency room, applying quality monitoring tools in evaluating the care provided, implementing a five-level triage system and fast-tracking patients with non-emergency conditions, post-discharge calls to patients and monitoring practitioner utilization rates and practices,	
 
 	•	 	Raise community awareness of the services offered and the efforts to improve service and quality through marketing campaigns and	
 
 	•	 	Improving patient flow by renovating and expanding our emergency room facilities – 13 such projects have been undertaken in the past three years, including four in 2011.	
One of our emergency room initiatives that spans our efforts across all three of these areas is the use of specialized emergency room information management software. Such software is designed to collect information to monitor the patients’ experience and care provided; assist nurses, physicians and other clinicians in communicating with each other about the clinical condition of the patients and provide consistent discharge instructions to patients. We believe that these information management systems enable our hospitals and their medical staffs to also monitor and seek to improve aggregate performance and patient outcomes. In addition, these information management systems are integral to our efforts to achieve “meaningful use” of electronic health records and qualify for and retain payments under the Health Information Technology for Economic and Clinical Health Act, or HITECH Act.
Expansion of Services. In an effort to better meet the healthcare needs of the communities we serve and to capture a greater portion of the healthcare spending in our markets, we have added a broad range of services to our facilities and, in certain markets, acquired physician practices to broaden our service offerings. These services range from various types of diagnostic equipment capabilities to additional and renovated emergency rooms, surgical and critical care suites and specialty services. For example, we spent approximately $203.7 million on 48 major construction projects that were completed in 2011. The 2011 projects included new emergency rooms, cardiac cathertization laboratories, intensive care units, hospital additions and surgical suites. These projects improved various diagnostic and other inpatient and outpatient service capabilities. We continue to believe that appropriate capital investments in our facilities, combined with the development of our service capabilities, will reduce the migration of patients to competing providers while providing an attractive return on investment. We also employ a small group of clinical consultants at our corporate headquarters to assist the hospitals in their development of surgery, emergency, critical care, cardiovascular and hospitalist services. In addition to spending capital on expanding services at our existing hospitals, we also build replacement facilities in certain markets to better meet the healthcare needs in those communities. In 2011, we spent $162.9 million on construction projects related to three replacement hospitals that we are required to build pursuant to either a hospital purchase agreement or an amendment to a lease agreement. In addition, in September 2010, we received approval of our request for a certificate of need, or CON, from the Alabama Certificate of Need Review Board for the construction of a replacement hospital in Birmingham, Alabama. This CON remains subject to an appeal process. The total cost of these four replacement hospitals is estimated to be $597.2 million.
 
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Managed Care Strategy. Managed care has seen growth across the U.S. as health plans expand service areas and membership in an attempt to control rising medical costs. As we service primarily non-urban markets, we do not have significant relationships with individual managed care organizations, including Medicare Advantage. We have responded with a proactive and carefully considered strategy developed specifically for each of our facilities. Our experienced corporate managed care department reviews and approves all managed care contracts, which are organized and monitored using a central database. The primary mission of this department is to select and evaluate appropriate managed care opportunities, manage existing reimbursement arrangements and negotiate increases. Generally, we do not intend to enter into capitated or risk sharing contracts. However, some purchased hospitals have risk sharing contracts at the time we acquire them. We seek to discontinue these contracts to eliminate risk retention related to payment for patient care. We do not believe that we have, at the present time, any risk sharing contracts that would have a material impact on our results of operations.
Improve Profitability
Overview. To improve efficiencies and increase operating margins, we implement cost containment programs and adhere to operating philosophies that include:
 
 	•	 	standardizing and centralizing our methods of operation and management,	
 
 	•	 	improving patient safety and optimizing resource allocation through our case and resource management program, which assists in improving clinical care and containing costs,	
 
 	•	 	monitoring and enhancing productivity of our human resources,	
 
 	•	 	capitalizing on purchasing efficiencies through the use of company-wide standardized purchasing contracts and terminating or renegotiating specified vendor contracts and	
 
 	•	 	installing a standardized management information system, resulting in more streamlined clinical operations and more efficient billing and collection procedures.	
In addition, each of our hospital management teams is supported by our centralized operational, reimbursement, regulatory and compliance expertise, as well as by our senior management team, a seasoned group of executives with an average of over 25 years of experience in the healthcare industry.
Standardization and Centralization. Our standardization and centralization initiatives encompass nearly every aspect of our business, from developing standard policies and procedures with respect to patient accounting and physician practice management to implementing standard processes to initiate, evaluate and complete construction projects. Our standardization and centralization initiatives are a key element in improving our operating results.
 
 	•	 	Billing and Collections. We have adopted standard policies and procedures with respect to billing and collections. We have also automated and standardized various components of the collection cycle, including statement and collection letters and the movement of accounts through the collection cycle. Upon completion of an acquisition, our management information systems team converts the hospital’s existing information system to our standardized system. This enables us to quickly implement our business controls and cost containment initiatives.	
 
 	•	 	Physician Support. We support our newly recruited physicians to enhance their transition into our communities. All newly recruited physicians who enter into contracts with us are required to attend a three-day introductory seminar that covers issues involved in starting up a practice. We have also implemented physician practice management seminars, webinars and other training. We host these seminars monthly.	
 
 	•	 	Procurement and Materials Management. We have standardized and centralized our operations with respect to medical supplies, equipment and pharmaceuticals used in our hospitals. We have a participation agreement with HealthTrust Purchasing Group, L.P., or HealthTrust, a group purchasing organization, or GPO. HealthTrust contracts with certain vendors who supply a substantial portion of our medical supplies, equipment and pharmaceuticals. Our agreement with HealthTrust extends to January 2013, with automatic renewal terms of one year unless either party terminates by giving notice of non-renewal.	
 
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 	•	 	Facilities Management. We have standardized interiors, lighting and furniture programs. We have also implemented a standard process to initiate, evaluate and complete construction projects. Our corporate staff monitors all construction projects, and reviews and pays all construction project invoices. Our initiatives in this area have reduced our construction costs while maintaining the same level of quality and have shortened the time it takes us to complete these projects.	
 
 	•	 	Other Initiatives. We have also improved margins by implementing standard programs with respect to ancillary services in areas, including emergency rooms, pharmacy, laboratory, imaging, home care, skilled nursing, centralized outpatient scheduling and health information management. We have improved quality and reduced costs associated with these services by improving contract terms and standardizing information systems. We work to identify and communicate best practices and monitor these improvements throughout the Company.	
 
 	•	 	Internal Controls Over Financial Reporting. We have centralized many of our significant internal controls over financial reporting and standardized those other controls that are performed at our hospital locations. We continuously monitor compliance with and evaluate the effectiveness of our internal controls over financial reporting.	
Case and Resource Management. The primary goal of our case management program is to ensure the delivery of safe, high quality care in an efficient and cost effective manner. The program focuses on:
 
 	•	 	appropriate management of length of stay consistent with national standards and benchmarks;	
 
 	•	 	reducing unnecessary utilization;	
 
 	•	 	discharge planning;	
 
 	•	 	developing and implementing operational best practices; and	
 
 	•	 	compliance with all regulatory standards.	
Our case management program integrates the functions of utilization review, discharge planning, assessment of medical necessity and resource management. Patients are assessed upon presentation to the hospital with ongoing reviews throughout their course of care. Industry standard criteria are utilized in patient assessments, and discharge plans are adjusted according to patient needs. Cases are monitored to prevent delays in service or unnecessary utilization of resources. When a patient is ready for discharge, a case manager works with the patient’s attending physician to evaluate and coordinate the patient’s needs for continued care in the post-acute setting. Each hospital has the support of a physician advisor to act as a liaison to the medical staff and assist with all the activities of the program.
Improve Patient Safety and Quality of Care
Each of our hospitals has a board of trustees, which includes members of the hospital’s medical staff. The board of trustees establishes policies concerning the hospital’s medical, professional, and ethical practices, monitors these practices, and is responsible for ensuring that these practices conform to legally required standards. We maintain quality assurance programs to support and monitor quality of care standards and to meet Medicare and Medicaid accreditation and regulatory requirements. Patient care evaluations and other quality of care assessment activities are reviewed and monitored continuously.
We have implemented various programs to support our hospitals in an effort to ensure continuous improvement in patient safety and the quality of care provided. We have developed training programs for all senior hospital management, chief nursing officers, quality directors, physicians and other clinical staff. We share information among our hospital management to implement best practices and assist in complying with regulatory requirements.
 
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We have standardized our process for documenting compliance with accreditation requirements. All hospitals conduct patient, physician and staff satisfaction surveys to help identify methods of improving patient safety and the quality of care.
To ensure the experience of our emergency room patients meets our service and quality expectations, we have implemented a program to contact selected patients as a follow-up to the services they received. We verify that patients were able to obtain any prescriptions and outpatient appointments recommended at discharge. We also ensure that their symptoms have abated and that they understood the discharge instructions given at the hospital. Through this program, we placed in excess of one million follow-up calls in 2011.
In 2011, we established a component patient safety organization, or PSO, which was listed by the U.S. Department of Health and Human Services Agency for Healthcare Research and Quality on January 11, 2012. We believe we are the first for-profit hospital company to form a component PSO and that it will assist us in improving patient safety at our hospitals.
Grow Through Selective Acquisitions
Acquisition Criteria. Each year we intend to acquire, on a selective basis, approximately two to four hospitals that fit our acquisition criteria. Generally, we pursue acquisition candidates that:
 
 	•	 	have a service area population between 20,000 and 400,000 with a stable or growing population base,	
 
 	•	 	are the sole or primary provider of acute care services in the community,	
 
 	•	 	are located in an area with the potential for service expansion,	
 
 	•	 	are not located in an area that is dependent upon a single employer or industry and	
 
 	•	 	have financial performance that we believe will benefit from our management’s operating skills.	
Occasionally, we have pursued acquisition opportunities outside of our specified criteria when such opportunities have had uniquely favorable characteristics. In addition, in recent years, we have been successful in acquiring a few multi-hospital systems. In 2009, we acquired a total of three hospitals-two hospitals located in Wilkes-Barre, Pennsylvania and one hospital in Siloam Springs, Arkansas-and purchased the remaining equity in a hospital located in El Dorado, Arkansas in which we previously had a noncontrolling interest. In 2010, we acquired five hospitals located in Marion, South Carolina; Youngstown, Ohio; Warren, Ohio and Bluefield, West Virginia and in 2011, we acquired four hospitals located in Scranton, Pennsylvania; Tunkhannock, Pennsylvania; Nanticoke, Pennsylvania and Tomball, Texas. We believe that our access to capital, reputation for providing quality care and ability to recruit physicians makes us an attractive partner for these communities.
Disciplined Acquisition Approach. We believe that we have been disciplined in our approach to acquisitions. We have a dedicated team of internal and external professionals who complete a thorough review of the hospital’s financial and operating performance, the demographics and service needs of the market and the physical condition of the facilities. Based on our historical experience, we then build a pro forma financial model that reflects what we believe can be accomplished under our ownership. Whether we buy or lease the existing facility or agree to construct a replacement hospital, we believe we have been disciplined in our approach to pricing. We typically begin the acquisition process by entering into a non-binding letter of intent with an acquisition candidate. After we complete business and financial due diligence and financial modeling, we decide whether or not to enter into a definitive agreement. Once an acquisition is completed, we have an organized and systematic approach to transitioning and integrating the new hospital into our system of hospitals.
Acquisition Efforts. Most of our acquisition targets are municipal or other not-for-profit hospitals. We believe that our access to capital, ability to recruit physicians and reputation for providing quality care make us an attractive partner for these communities. In addition, we have found that communities located in states where we already operate a hospital are more receptive to our acquiring their hospitals, because they are aware of our operating track record with respect to our other hospitals within the state.
 
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At the time we acquire a hospital, we may commit to an amount of capital expenditures, such as a replacement facility, renovations, or equipment over a specified period of time. As obligations under two hospital purchase agreements in effect as of December 31, 2011, we are required to build a replacement facility in Valparaiso, Indiana by April 2011 and in Siloam Springs, Arkansas by February 2013. Due to delays in receiving government approved building and zoning permits, the replacement facility in Valparaiso, Indiana is not expected to be completed until the fourth quarter of 2012. These delays did not result in any penalties under the terms of the purchase agreement and we do not expect such delays to result in any significant increase in the costs to construct the replacement facility. Also, as required by an amendment to a lease agreement entered into in 2005, we agreed to build a replacement hospital at our Barstow, California location by November 2012. Estimated construction costs, including equipment costs, are approximately $317.2 million for these three replacement facilities, of which approximately $210.3 million has been incurred to date. In addition, in October 2008, after the purchase of the noncontrolling owner’s interest in our Birmingham, Alabama facility, we initiated the purchase of a site, which includes a partially constructed hospital structure, for a potential replacement for our existing Birmingham facility. In September 2010, we received approval of our request for a CON from the Alabama Certificate of Need Review Board; however, this CON remains subject to an appeal process. Our estimated construction costs, including the acquisition of the site and equipment costs, are approximately $280.0 million for the Birmingham replacement facility, of which approximately $3.5 million has been incurred to date. Under other purchase agreements in effect as of December 31, 2011, we have committed to spend $652.5 million, generally over a five to seven year period after acquisition, for costs such as capital improvements, equipment, selected leases and physician recruiting. Through December 31, 2011, we have incurred approximately $247.8 million related to these commitments.
Industry Overview
The Centers for Medicare and Medicaid Services, or CMS, reported that in 2010 total U.S. healthcare expenditures grew by 3.9% to approximately $2.6 trillion. CMS also projected total U.S. healthcare spending to grow by 4.8% in 2011 and by an average of 5.8% annually from 2010 through 2020. By these estimates, healthcare expenditures will account for approximately $4.6 trillion, or 19.8% of the total U.S. gross domestic product, by 2020.
Hospital services, the market in which we operate, is the largest single category of healthcare at 31.4% of total healthcare spending in 2010, or approximately $814.0 billion, as reported by CMS. CMS projects the hospital services category to grow by at least 4.7% per year through 2020. It expects growth in hospital healthcare spending to continue due to the aging of the U.S. population and consumer demand for expanded medical services. As hospitals remain the primary setting for healthcare delivery, CMS expects hospital services to remain the largest category of healthcare spending.
U.S. Hospital Industry. The U.S. hospital industry is broadly defined to include acute care, rehabilitation and psychiatric facilities that are either public (government owned and operated), not-for-profit private (religious or secular), or for-profit institutions (investor owned). According to the American Hospital Association, there are approximately 5,000 inpatient hospitals in the U.S. which are not-for-profit owned, investor owned, or state or local government owned. Of these hospitals, approximately 40% are located in non-urban communities. We believe that a majority of these hospitals are owned by not-for-profit or governmental entities. These facilities offer a broad range of healthcare services, including internal medicine, general surgery, cardiology, oncology, orthopedics, OB/GYN and emergency services. In addition, hospitals also offer other ancillary services, including psychiatric, diagnostic, rehabilitation, home care and outpatient surgery services.
Urban vs. Non-Urban Hospitals
According to the U.S. Census Bureau, 21% of the U.S. population lives in communities designated as non-urban. In these non-urban communities, hospitals are typically the primary source of healthcare. In many cases a single hospital is the only provider of general healthcare services in these communities.
Factors Affecting Performance. Among the many factors that can influence a hospital’s financial and operating performance are:
 
 	•	 	facility size and location,	
 
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 	•	 	facility ownership structure (i.e., tax-exempt or investor owned),	
 
 	•	 	a facility’s ability to participate in group purchasing organizations and	
 
 	•	 	facility payor mix.	
Patients needing the most complex care are more often served by the larger and/or more specialized urban hospitals. We believe opportunities exist in selected urban markets to create networks between urban hospitals and non-urban hospitals in order to expand the breadth of services offered in the non-urban hospitals while improving physician alignment in those markets and making it more attractive to managed care.
Hospital Industry Trends
Demographic Trends. According to the U.S. Census Bureau, there are presently approximately 40.3 million Americans aged 65 or older in the U.S. who comprise approximately 13.0% of the total U.S. population. By the year 2030, the number of Americans aged 65 or older is expected to climb to 72.1 million, or 19.3% of the total population. Due to the increasing life expectancy of Americans, the number of people aged 85 years and older is also expected to increase from 5.8 million to 8.7 million by the year 2030. This increase in life expectancy will increase demand for healthcare services and, as importantly, the demand for innovative, more sophisticated means of delivering those services. Hospitals, as the largest category of care in the healthcare market, will be among the main beneficiaries of this increase in demand. Based on data compiled for us, the populations of the service areas where our hospitals are located grew by 24.0% from 1990 to 2010 and are expected to grow by 3.9% from 2010 to 2015. The number of people aged 65 or older in these service areas grew by 27.4% from 1990 to 2010 and is expected to grow by 14.9% from 2010 to 2015.
Consolidation. In addition to our own acquisitions in recent years, consolidation activity in the hospital industry, primarily through mergers and acquisitions involving both for-profit and not-for-profit hospital systems, is continuing. Reasons for this activity include:
 
 	•	 	excess capacity of available capital,	
 
 	•	 	valuation levels,	
 
 	•	 	financial performance issues, including challenges associated with changes in reimbursement and collectability of self-pay revenue,	
 
 	•	 	the desire to enhance the local availability of healthcare in the community,	
 
 	•	 	the need and ability to recruit primary care physicians and specialists,	
 
 	•	 	the need to achieve general economies of scale and to gain access to standardized and centralized functions, including favorable supply agreements and access to malpractice coverage and	
 
 	•	 	regulatory changes.	
The healthcare industry is also undergoing consolidation, first, in anticipation of, and second, in reaction to, efforts to reform the payment system. Hospital systems are acquiring physician practices and other outpatient and sub-acute providers to position themselves for readmission, bundling and other payment restructuring. Similarly, payors are consolidating and acquiring disease management service providers in an effort to offer more competitive programs.
 
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Selected Operating Data
The following table sets forth operating statistics for our hospitals for each of the years presented, which are included in our continuing operations. Statistics for 2011 include a full year of operations for 127 hospitals and partial periods for four hospitals acquired during the year. Statistics for 2010 include a full year of operations for 122 hospitals and partial periods for five hospitals acquired during the year. Statistics for 2009 include a full year of operations for 118 hospitals and partial periods for three hospitals acquired during the year and one hospital in which we previously had a noncontrolling interest and purchased the remaining interest during the year. Statistics for hospitals which have been sold are excluded from all periods presented.

 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
 	  	(Dollars in thousands)	 	
 	 	 	 	
Consolidated Data	  	 	 	 	 	 	 	 	 	 	 	 	
Number of hospitals (at end of period)	  	 	131	  	 	 	127	  	 	 	122	  	
Licensed beds (at end of period)(1)	  	 	19,695	  	 	 	19,004	  	 	 	17,557	  	
Beds in service (at end of period)(2)	  	 	16,832	  	 	 	16,264	  	 	 	15,539	  	
Admissions(3)	  	 	675,050	  	 	 	678,284	  	 	 	675,902	  	
Adjusted admissions(4)	  	 	1,330,988	  	 	 	1,277,235	  	 	 	1,242,647	  	
Patient days(5)	  	 	2,970,044	  	 	 	2,891,699	  	 	 	2,874,125	  	
Average length of stay (days)(6)	  	 	4.4	  	 	 	4.3	  	 	 	4.3	  	
Occupancy rate (beds in service)(7)	  	 	49.1	% 	 	 	50.2	% 	 	 	51.3	% 	
Net operating revenues	  	$	13,626,168	  	 	$	12,623,274	  	 	$	11,742,454	  	
Net inpatient revenues as a % of total net operating revenues	  	 	46.1	% 	 	 	49.3	% 	 	 	50.4	% 	
Net outpatient revenues as a % of total net operating revenues	  	 	51.9	% 	 	 	48.5	% 	 	 	47.3	% 	
Net income attributable to Community Health Systems, Inc.	  	$	201,948	  	 	$	279,983	  	 	$	243,150	  	
Net income attributable to Community Health Systems, Inc. as a % of total net operating revenues	  	 	1.5	% 	 	 	2.2	% 	 	 	2.1	% 	
 	 	 	 	
Liquidity Data	  	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA(8)	  	$	1,836,650	  	 	$	1,761,484	  	 	$	1,652,405	  	
Adjusted EBITDA as a % of total net operating revenues(8)	  	 	13.5	% 	 	 	14.0	% 	 	 	14.1	% 	
Net cash flows provided by operating activities	  	$	1,261,908	  	 	$	1,188,730	  	 	$	1,076,429	  	
Net cash flows provided by operating activities as a % of total net operating revenues	  	 	9.3	% 	 	 	9.4	% 	 	 	9.2	% 	
Net cash flows used in investing activities	  	$	(1,195,775	) 	 	$	(1,044,310	) 	 	$	(867,182	) 	
Net cash flows used in financing activities	  	$	(235,437	) 	 	$	(189,792	) 	 	$	(85,361	) 	
 
See pages 10 and 11 for footnotes.
 
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 	  	Year Ended December 31,	 	 	(Decrease)	 	
 	  	2011	 	 	2010	 	 	Increase	 	
 	  	(Dollars in thousands)	 	
 	 	 	 	
Same-Store Data(9)	  	 	 	 	 	 	 	 	 	 	 	 	
Admissions(3)	  	 	640,302	  	 	 	678,284	  	 	 	(5.6	)% 	
Adjusted admissions(4)	  	 	1,267,860	  	 	 	1,277,235	  	 	 	(0.7	)% 	
Patient days(5)	  	 	2,806,139	  	 	 	2,891,699	  	 	 	 	 	
Average length of stay (days)(6)	  	 	4.4	  	 	 	4.3	  	 	 	 	 	
Occupancy rate (beds in service)(7)	  	 	48.9	% 	 	 	50.2	% 	 	 	 	 	
Net operating revenues	  	$	13,083,230	  	 	$	12,618,026	  	 	 	3.7	% 	
Income from operations	  	$	1,188,176	  	 	$	1,131,850	  	 	 	5.0	% 	
Income from operations as a % of net operating revenues	  	 	9.1	% 	 	 	9.0	% 	 	 	 	 	
Depreciation and amortization	  	$	633,417	  	 	$	594,997	  	 	 	 	 	
Equity in earnings of unconsolidated affiliates	  	$	49,507	  	 	$	45,380	  	 	 	 	 	
 
(1)	Licensed beds are the number of beds for which the appropriate state agency licenses a facility regardless of whether the beds are actually available for patient use.	
(2)	Beds in service are the number of beds that are readily available for patient use.	
(3)	Admissions represent the number of patients admitted for inpatient treatment.	
(4)	Adjusted admissions is a general measure of combined inpatient and outpatient volume. We computed adjusted admissions by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues.	
(5)	Patient days represent the total number of days of care provided to inpatients.	
(6)	Average length of stay (days) represents the average number of days inpatients stay in our hospitals.	
(7)	We calculated occupancy rate percentages by dividing the average daily number of inpatients by the weighted-average number of beds in service.	
(8)	EBITDA consists of net income attributable to Community Health Systems, Inc. before interest, income taxes, depreciation and amortization. Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations, gain/loss from early extinguishment of debt and net income attributable to noncontrolling interests. We have from time to time sold noncontrolling interests in certain of our subsidiaries or acquired subsidiaries with existing noncontrolling interest ownership positions. We believe that it is useful to present adjusted EBITDA because it excludes the portion of EBITDA attributable to these third-party interests and clarifies for investors our portion of EBITDA generated by continuing operations. We use adjusted EBITDA as a measure of liquidity. We have included this measure because we believe it provides investors with additional information about our ability to incur and service debt and make capital expenditures. Adjusted EBITDA is the basis for a key component in the determination of our compliance with some of the covenants under our senior secured credit facility, as well as to determine the interest rate and commitment fee payable under the senior secured credit facility (although adjusted EBITDA does not include all of the adjustments described in the senior secured credit facility).	
Adjusted EBITDA is not a measurement of financial performance or liquidity under generally accepted accounting principles. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. The items excluded from adjusted EBITDA are significant components in understanding and evaluating financial performance and liquidity. Our calculation of adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
 
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The following table reconciles adjusted EBITDA, as defined, to our net cash provided by operating activities as derived directly from our Consolidated Financial Statements for the years ended December 31, 2011, 2010 and 2009 (in thousands):

 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
Adjusted EBITDA	  	$	1,836,650	  	 	$	1,761,484	  	 	$	1,652,405	  	
Interest expense, net	  	 	(644,410	) 	 	 	(647,593	) 	 	 	(643,608	) 	
Provision for income taxes	  	 	(137,653	) 	 	 	(163,681	) 	 	 	(141,851	) 	
Deferred income taxes	  	 	107,032	  	 	 	97,370	  	 	 	34,268	  	
(Loss) income from operations of hospitals sold	  	 	(7,769	) 	 	 	(6,772	) 	 	 	971	  	
Depreciation and amortization of discontinued operations	  	 	4,991	  	 	 	14,842	  	 	 	15,500	  	
Stock compensation expense	  	 	42,542	  	 	 	38,779	  	 	 	44,501	  	
(Excess tax benefit) income tax payable increase relating to stock-based compensation	  	 	(5,290	) 	 	 	(10,219	) 	 	 	3,472	  	
Other non-cash expenses, net	  	 	28,716	  	 	 	12,503	  	 	 	22,870	  	
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:	  	 	 	 	 	 	 	 	 	 	 	 	
Patient accounts receivable	  	 	(138,332	) 	 	 	(27,049	) 	 	 	58,390	  	
Supplies, prepaid expenses and other current assets	  	 	(42,858	) 	 	 	(39,904	) 	 	 	(34,535	) 	
Accounts payable, accrued liabilities and income taxes	  	 	246,110	  	 	 	161,952	  	 	 	86,098	  	
Other	  	 	(27,821	) 	 	 	(2,982	) 	 	 	(22,052	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	$	1,261,908	  	 	$	1,188,730	  	 	$	1,076,429	  	

(9)	Includes acquired hospitals to the extent we operated them during comparable periods in both years.	
 
Sources of Revenue
We receive payment for healthcare services provided by our hospitals from:
 
 	•	 	the federal Medicare program,	
 
 	•	 	state Medicaid or similar programs,	
 
 	•	 	healthcare insurance carriers, health maintenance organizations or “HMOs,” preferred provider organizations or “PPOs,” and other managed care programs and	
 
 	•	 	patients directly.	
 
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The following table presents the approximate percentages of net operating revenues by payor source for the periods indicated. The data for the years presented are not strictly comparable due to the effect that hospital acquisitions have had on these statistics.

 	  	Year Ended December 31,	 	
Net Operating Revenues by Payor Source	  	2011	 	 	2010	 	 	2009	 	
Medicare	  	 	26.8	% 	 	 	27.4	% 	 	 	27.4	% 	
Medicaid	  	 	9.7	% 	 	 	10.7	% 	 	 	9.8	% 	
Managed Care and other third-party payors	  	 	51.5	% 	 	 	50.4	% 	 	 	51.6	% 	
Self-pay	  	 	12.0	% 	 	 	11.5	% 	 	 	11.2	% 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	 	100.0	% 	 	 	100.0	% 	 	 	100.0	% 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
As shown above, we receive a substantial portion of our revenues from the Medicare and Medicaid programs. Included in Managed Care and other third-party payors is net operating revenues from insurance companies with which we have insurance provider contracts, Medicare managed care, insurance companies for which we do not have insurance provider contracts, workers’ compensation carriers and non-patient service revenue, such as rental income and cafeteria sales. In the future, we generally expect revenues received from the Medicare and Medicaid programs to increase due to the general aging of the population. In addition, we expect the Reform Legislation (as defined below) to increase the number of insured patients, which should reduce revenues from self-pay patients and reduce our provision for bad debts. The Reform Legislation, however, imposes significant reductions in amounts the government pays Medicare managed care plans. Other provisions in the Reform Legislation impose minimum medical-loss ratios and require insurers to meet specific benefit requirements. In addition, specified managed care programs, insurance companies and employers are actively negotiating the amounts paid to hospitals. The trend toward increased enrollment in managed care may adversely affect our net operating revenue growth. There can be no assurance that we will retain our existing reimbursement arrangements or that these third-party payors will not attempt to further reduce the rates they pay for our services.
Medicare is a federal program that provides medical insurance benefits to persons age 65 and over, some disabled persons, and persons with end-stage renal disease. Medicaid is a federal-state funded program, administered by the states, which provides medical benefits to individuals who are unable to afford healthcare. All of our hospitals are certified as providers of Medicare and Medicaid services. Amounts received under the Medicare and Medicaid programs are generally significantly less than a hospital’s customary charges for the services provided. Since a substantial portion of our revenue comes from patients under Medicare and Medicaid programs, our ability to operate our business successfully in the future will depend in large measure on our ability to adapt to changes in these programs.
In addition to government programs, we are paid by private payors, which include insurance companies, HMOs, PPOs, other managed care companies, employers and by patients directly. Blue Cross payors are included in the “Managed Care and other third-party payors” line in the above table. Patients are generally not responsible for any difference between customary hospital charges and amounts paid for hospital services by Medicare and Medicaid programs, insurance companies, HMOs, PPOs and other managed care companies, but are responsible for services not covered by these programs or plans, as well as for deductibles and co-insurance obligations of their coverage. The amount of these deductibles and co-insurance obligations has increased in recent years. Collection of amounts due from individuals is typically more difficult than collection of amounts due from government or business payors. To further reduce their healthcare costs, an increasing number of insurance companies, HMOs, PPOs and other managed care companies are negotiating discounted fee structures or fixed amounts for hospital services performed, rather than paying healthcare providers the amounts billed. We negotiate discounts with managed care companies, which are typically smaller than discounts under governmental programs. If an increased number of insurance companies, HMOs, PPOs and other managed care companies succeed in negotiating discounted fee structures or fixed amounts, our results of operations may be negatively affected. For more information on the payment programs on which our revenues depend, see “Payment” on page 19.
 
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As of December 31, 2011, Indiana, Texas and Pennsylvania represented our only areas of geographic concentration. Net operating revenues as a percentage of consolidated net operating revenues generated in Indiana were 10.3% in 2011, 10.6% in 2010 and 11.2% in 2009. Net operating revenues as a percentage of consolidated net operating revenues generated in Texas were 13.1% in 2011, 13.0% in 2010 and 13.2% in 2009. Net operating revenues as a percentage of consolidated net operating revenues generated in Pennsylvania were 11.5% in 2011, 10.3% in 2010 and 10.2% in 2009.
Hospital revenues depend upon inpatient occupancy levels, the volume of outpatient procedures and the charges or negotiated payment rates for hospital services provided. Charges and payment rates for routine inpatient services vary significantly depending on the type of service performed and the geographic location of the hospital. In recent years, we have experienced a significant increase in revenue received from outpatient services. We attribute this increase to:
 
 	•	 	advances in technology, which have permitted us to provide more services on an outpatient basis and	
 
 	•	 	pressure from Medicare or Medicaid programs, insurance companies and managed care plans to reduce hospital stays and to reduce costs by having services provided on an outpatient rather than on an inpatient basis.	
Government Regulation
Overview. The healthcare industry is required to comply with extensive government regulation at the federal, state and local levels. Under these regulations, hospitals must meet requirements to be certified as hospitals and qualified to participate in government programs, including the Medicare and Medicaid programs. These requirements relate to the adequacy of medical care, equipment, personnel, operating policies and procedures, maintenance of adequate records, hospital use, rate-setting, compliance with building codes and environmental protection laws. There are also extensive regulations governing a hospital’s participation in these government programs. If we fail to comply with applicable laws and regulations, we can be subject to criminal penalties and civil sanctions, our hospitals can lose their licenses and we could lose our ability to participate in these government programs. In addition, government regulations may change. If that happens, we may have to make changes in our facilities, equipment, personnel and services so that our hospitals remain certified as hospitals and qualified to participate in these programs. We believe that our hospitals are in substantial compliance with current federal, state and local regulations and standards.
Hospitals are subject to periodic inspection by federal, state and local authorities to determine their compliance with applicable regulations and requirements necessary for licensing and certification. All of our hospitals are licensed under appropriate state laws and are qualified to participate in Medicare and Medicaid programs. In addition, most of our hospitals are accredited by the Joint Commission on Accreditation of Healthcare Organizations. This accreditation indicates that a hospital satisfies the applicable health and administrative standards to participate in Medicare and Medicaid programs.
Healthcare Reform. The American Recovery and Reinvestment Act of 2009, or ARRA, was signed into law on February 17, 2009, providing for a temporary increase in the federal matching assistance percentage (FMAP), a temporary increase in federal Medicaid Disproportionate Share Hospital, or DSH, allotments, subsidization of health insurance premiums (COBRA) for up to nine months, and grants and loans for infrastructure and incentive payments for providers who adopt and use health information technology. This act also provides penalties by reducing reimbursement from Medicare in the form of reductions to scheduled market basket increases beginning in federal fiscal year 2015 if eligible hospitals and professionals fail to demonstrate meaningful use of electronic health record technology.
The Patient Protection and Affordable Care Act, or PPACA, was signed into law on March 23, 2010. In addition, the Health Care and Education Affordability Reconciliation Act of 2010, or Reconciliation Act, which contains a number of amendments to PPACA, was signed into law on March 30, 2010. These two healthcare acts, referred to collectively as the Reform Legislation, include a mandate that requires substantially all U.S. citizens to maintain medical insurance coverage which will ultimately increase the number of persons with access to health insurance in the United States. The Reform Legislation should result in a reduction in uninsured patients, which should reduce
 
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our expense from uncollectible accounts receivable; however, this legislation makes a number of other changes to Medicare and Medicaid, such as reductions to the Medicare annual market basket update for federal fiscal years 2010 through 2019, a productivity offset to the Medicare market basket update which began October 1, 2011, and a reduction to the Medicare and Medicaid disproportionate share payments, that could adversely impact the reimbursement received under these programs. The various provisions in the Reform Legislation that directly or indirectly affect reimbursement are scheduled to take effect over a number of years, and we cannot predict their impact at this time. Other provisions of the Reform Legislation, such as requirements related to employee health insurance coverage, should increase our operating costs.
Also included in the Reform Legislation are provisions aimed at reducing fraud, waste and abuse in the healthcare industry. These provisions allocate significant additional resources to federal enforcement agencies and expand the use of private contractors to recover potentially inappropriate Medicare and Medicaid payments. The Reform Legislation amends several existing federal laws, including the Medicare Anti-Kickback Statute and the False Claims Act, making it easier for government agencies and private plaintiffs to prevail in lawsuits brought against healthcare providers. These amendments also make it easier for potentially severe fines and penalties to be imposed on healthcare providers accused of violating applicable laws and regulations.
In a number of markets, we have partnered with local physicians in the ownership of our facilities. Such investments have been permitted under an exception to the physician self-referral law, or Stark Law, that allows physicians to invest in an entire hospital (as opposed to individual hospital departments). The Reform Legislation changes the “whole hospital” exception to the Stark Law. The Reform Legislation permits existing physician investments in a whole hospital to continue under a “grandfather” clause if the arrangement satisfies certain requirements and restrictions, but physicians became prohibited, from the time the Reform Legislation became effective, from increasing the aggregate percentage of their ownership in the hospital. The Reform Legislation also restricts the ability of existing physician-owned hospitals to expand the capacity of their facilities.
The impact of the Reform Legislation on each of our hospitals will vary depending on payor mix and a variety of other factors. We anticipate that many of the provisions in the Reform Legislation will be subject to further clarification and modification through the rule-making process, the development of agency guidance and judicial interpretations. Moreover, twenty-six state attorneys general have jointly filed a challenge to certain aspects of the Reform Legislation. Currently, rulings in four separate federal Courts of Appeals have led to a split among the federal Circuit Courts regarding the constitutionality of the Reform Legislation. The Fourth Circuit, Sixth Circuit and the Court of Appeals for the D.C. Circuit have ruled in favor of the Reform Legislation while the Eleventh Circuit ruled the individual mandate within the Reform Legislation unconstitutional. The United States Supreme Court granted certiorari on or about November 14, 2011 to hear the appeal of the Eleventh Circuit’s ruling, with oral argument set for March 26 through 28, 2012. The Supreme Court will hear oral argument on four issues: (1) does the Anti-Injunction Act bar a legal challenge to the individual mandate aspect of the Reform Legislation until that mandate takes effect in 2014; (2) is the individual mandate aspect of the Reform Legislation constitutional; (3) if not, is the individual mandate aspect of the Reform Legislation severable from the Reform Legislation as a whole such that it may be stricken without nullifying the Reform Legislation in its entirety and (4) can the states be compelled by the federal government to expand their Medicaid expenditures or risk losing federal funding if they refuse. We cannot predict the impact the Reform Legislation may have on our business, results of operations, cash flow, capital resources and liquidity or the ultimate outcome of the Supreme Court case. Furthermore, we cannot predict whether we will be able to modify certain aspects of our operations to offset any potential adverse consequences from the Reform Legislation.
Fraud and Abuse Laws. Participation in the Medicare program is heavily regulated by federal statute and regulation. If a hospital fails substantially to comply with the requirements for participating in the Medicare program, the hospital’s participation in the Medicare program may be terminated and/or civil or criminal penalties may be imposed. For example, a hospital may lose its ability to participate in the Medicare program if it performs any of the following acts:
 
 	•	 	making claims to Medicare for services not provided or misrepresenting actual services provided in order to obtain higher payments,	
 
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 	•	 	paying money to induce the referral of patients where services are reimbursable under a federal health program or	
 
 	•	 	paying money to limit or reduce the services provided to Medicare beneficiaries.	
The Health Insurance Portability and Accountability Act of 1996, or HIPAA, broadened the scope of the fraud and abuse laws. Under HIPAA, any person or entity that knowingly and willfully defrauds or attempts to defraud a healthcare benefit program, including private healthcare plans, may be subject to fines, imprisonment or both. Additionally, any person or entity that knowingly and willfully falsifies or conceals a material fact or makes any material false or fraudulent statements in connection with the delivery or payment of healthcare services by a healthcare benefit plan is subject to a fine, imprisonment or both.
Another law regulating the healthcare industry is a section of the Social Security Act, known as the “anti-kickback” statute. This law prohibits some business practices and relationships under Medicare, Medicaid and other federal healthcare programs. These practices include the payment, receipt, offer, or solicitation of remuneration of any kind in exchange for items or services that are reimbursed under most federal or state healthcare programs. Violations of the anti-kickback statute may be punished by criminal and civil fines, exclusion from federal healthcare programs and damages up to three times the total dollar amount involved.
The Office of Inspector General of the Department of Health and Human Services, or OIG, is responsible for identifying and investigating fraud and abuse activities in federal healthcare programs. As part of its duties, the OIG provides guidance to healthcare providers by identifying types of activities that could violate the anti-kickback statute. The OIG also publishes regulations outlining activities and business relationships that would be deemed not to violate the anti-kickback statute. These regulations are known as “safe harbor” regulations. However, the failure of a particular activity to comply with the safe harbor regulations does not necessarily mean that the activity violates the anti-kickback statute.
The OIG has identified the following incentive arrangements as potential violations of the anti-kickback statute:
 
 	•	 	payment of any incentive by the hospital when a physician refers a patient to the hospital,	
 
 	•	 	use of free or significantly discounted office space or equipment for physicians in facilities usually located close to the hospital,	
 
 	•	 	provision of free or significantly discounted billing, nursing, or other staff services,	
 
 	•	 	free training for a physician’s office staff, including management and laboratory techniques (but excluding compliance training),	
 
 	•	 	guarantees which provide that if the physician’s income fails to reach a predetermined level, the hospital will pay any portion of the remainder,	
 
 	•	 	low-interest or interest-free loans, or loans which may be forgiven if a physician refers patients to the hospital,	
 
 	•	 	payment of the costs of a physician’s travel and expenses for conferences,	
 
 	•	 	payment of services which require few, if any, substantive duties by the physician, or payment for services in excess of the fair market value of the services rendered or	
 
 	•	 	purchasing goods or services from physicians at prices in excess of their fair market value.	
We have a variety of financial relationships with physicians who refer patients to our hospitals. Physicians own interests in a number of our facilities. Physicians may also own our stock. We also have contracts with physicians providing for a variety of financial arrangements, including employment contracts, leases, management agreements and professional service agreements. We provide financial incentives to recruit physicians to relocate to communities served by our hospitals. These incentives include relocation, reimbursement for certain direct expenses, income guarantees and, in some cases, loans. Although we believe that we have structured our
 
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arrangements with physicians in light of the “safe harbor” rules, we cannot assure you that regulatory authorities will not determine otherwise. If that happens, we could be subject to criminal and civil penalties and/or exclusion from participating in Medicare, Medicaid, or other government healthcare programs.
The Social Security Act also includes a provision commonly known as the “Stark Law.” This law prohibits physicians from referring Medicare patients to healthcare entities in which they or any of their immediate family members have ownership interests or other financial arrangements. These types of referrals are commonly known as “self referrals.” Sanctions for violating the Stark Law include denial of payment, civil money penalties, assessments equal to twice the dollar value of each service and exclusion from government payor programs. There are ownership and compensation arrangement exceptions to the self-referral prohibition. One exception allows a physician to make a referral to a hospital if the physician owns an interest in the entire hospital, as opposed to an ownership interest in a department of the hospital. Another exception allows a physician to refer patients to a healthcare entity in which the physician has an ownership interest if the entity is located in a rural area, as defined in the statute. There are also exceptions for many of the customary financial arrangements between physicians and providers, including employment contracts, leases and recruitment agreements. From time to time, the federal government has issued regulations which interpret the provisions included in the Stark Law. The Reform Legislation changed the “whole hospital” exception to the Stark Law. The Reform Legislation permitted existing physician investments in a whole hospital to continue under a “grandfather” clause if the arrangement satisfies certain requirements and restrictions, but physicians became prohibited, from the time the Reform Legislation became effective, from increasing the aggregate percentage of their ownership in the hospital. The Reform Legislation also restricted the ability of existing physician-owned hospitals to expand the capacity of their aggregate licensed beds, operating rooms and procedure rooms. The whole hospital exception, as amended, also contains additional disclosure requirements. For example, a grandfathered physician-owned hospital is required to submit an annual report to the Department of Health and Human Services, or the DHHS, listing each investor in the hospital, including all physician owners. In addition, grandfathered physician-owned hospitals must have procedures in place that require each referring physician owner to disclose to patients, with enough notice for the patient to make a meaningful decision regarding receipt of care, the physician’s ownership interest and, if applicable, any ownership interest held by the treating physician. A grandfathered physician-owned hospital also must disclose on its web site and in any public advertising the fact that it has physician ownership. The Reform Legislation required grandfathered physician-owned hospitals to comply with these new requirements by September 23, 2011, and requires audits of the hospitals’ compliance beginning no later than May 1, 2012.
Sanctions for violating the Stark Law include denial of payment, civil monetary penalties of up to $15,000 per claim submitted and exclusion from federal healthcare programs. The statute also provides for a penalty of up to $100,000 for a scheme intended to circumvent the Stark Law prohibitions.
In addition to the restrictions and disclosure requirements applicable to physician-owned hospitals under the Stark Law, CMS regulations require physician-owned hospitals and their physician owners to disclose certain ownership information to patients. Physician-owned hospitals that receive referrals from physician owners must disclose in writing to patients that such hospitals are owned by physicians and that patients may receive a list of the hospitals’ physician investors upon request. Additionally, a physician-owned hospital must require all physician owners who are members of the hospital’s medical staff to agree, as a condition of continued medical staff membership or admitting privileges, to disclose in writing to all patients whom they refer to the hospital their (or an immediate family member’s) ownership interest in the hospital. A hospital is considered to be physician-owned if any physician, or an immediate family member of a physician, holds debt, stock or other types of investment in the hospital or in any owner of the hospital, excluding physician ownership through publicly-traded securities that meet certain conditions. If a hospital fails to comply with these regulations, the hospital could lose its Medicare provider agreement and be unable to participate in Medicare.
 
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Evolving interpretations of current, or the adoption of new, federal or state laws or regulations could affect many of the arrangements entered into by each of our hospitals. In addition, law enforcement authorities, including the OIG, the courts and Congress are increasing scrutiny of arrangements between healthcare providers and potential referral sources to ensure that the arrangements are not designed as a mechanism to improperly pay for patient referrals and/or other business. Investigators also have demonstrated a willingness to look behind the formalities of a business transaction to determine the underlying purpose of payments between healthcare providers and potential referral sources.
Many states in which we operate have also adopted laws that prohibit payments to physicians in exchange for referrals similar to the federal anti-kickback statute or that otherwise prohibit fraud and abuse activities. Many states have also passed self-referral legislation similar to the Stark Law, prohibiting the referral of patients to entities with which the physician has a financial relationship. Often these state laws are broad in scope and may apply regardless of the source of payment for care. These statutes typically provide criminal and civil penalties, as well as loss of licensure. Little precedent exists for the interpretation or enforcement of these state laws.
Our operations could be adversely affected by the failure of our arrangements to comply with the anti-kickback statute, the Stark Law, billing laws and regulations, current state laws or other legislation or regulations in these areas adopted in the future. We are unable to predict whether other legislation or regulations at the federal or state level in any of these areas will be adopted, what form such legislation or regulations may take or how they may affect our operations. We are continuing to enter into new financial arrangements with physicians and other providers in a manner structured to comply in all material respects with these laws. We cannot assure you, however, that governmental officials responsible for enforcing these laws or whistleblowers will not assert that we are in violation of them or that such statutes or regulations ultimately will be interpreted by the courts in a manner consistent with our interpretation.
We strive to comply with the Stark Law and regulations; however, the government may interpret the law and regulations differently. If we are found to have violated the Stark Law or regulations, we could be subject to significant sanctions, including damages, penalties and exclusion from federal healthcare programs.
Federal False Claims Act and Similar State Laws. Another trend affecting the healthcare industry today is the increased use of the federal False Claims Act, or FCA, and, in particular, actions being brought by individuals on the government’s behalf under the FCA’s “qui tam” or whistleblower provisions. Whistleblower provisions allow private individuals to bring actions on behalf of the government alleging that the defendant has defrauded the federal government. If the government intervenes in the action and prevails, the party filing the initial complaint may share in any settlement or judgment. If the government does not intervene in the action, the whistleblower plaintiff may pursue the action independently and may receive a larger share of any settlement or judgment. When a private party brings a qui tam action under the FCA, the defendant generally will not be made aware of the lawsuit until the government commences its own investigation or makes a determination whether it will intervene. Further, every entity that receives at least $5 million annually in Medicaid payments must have written policies for all employees, contractors or agents providing detailed information about false claims, false statements and whistleblower protections under certain federal laws, including the FCA, and similar state laws.
When a defendant is determined by a court of law to be liable under the FCA, the defendant must pay three times the actual damages sustained by the government, plus mandatory civil penalties of between $5,500 and $11,000 for each separate false claim. Settlements entered into prior to litigation usually involve a less severe calculation of damages. There are many potential bases for liability under the FCA. Liability often arises when an entity knowingly submits a false claim for reimbursement to the federal government. The FCA broadly defines the term “knowingly.” Although simple negligence will not give rise to liability under the FCA, submitting a claim with reckless disregard to its truth or falsity can constitute “knowingly” submitting a false claim and result in liability. In some cases, whistleblowers, the federal government and courts have taken the position that providers who allegedly have violated other statutes, such as the anti-kickback statute or the Stark Law, have thereby submitted false claims under the FCA. The Reform Legislation clarifies this issue with respect to the anti-kickback statute by providing that submission of a claim for an item or service generated in violation of the anti-kickback statute constitutes a false or fraudulent claim under the FCA. The Fraud Enforcement and Recovery Act of 2009 expanded the scope of the FCA by, among other things, creating liability for knowingly and improperly avoiding repayment of an overpayment received from the government and broadening protections for whistleblowers. Under the Reform Legislation, the
 
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FCA is implicated by the knowing failure to report and return an overpayment within 60 days of identifying the overpayment or by the date a corresponding cost report is due, whichever is later. Further, the FCA will cover payments involving federal funds in connection with the new health insurance exchanges to be created pursuant to the Reform Legislation. Even if the FCA is not implicated and a mistake is made in the submission of claims, substantial financial liability can arise with respect to any overpayments. There is a notable gap in the time periods for which overpayments may be recouped by the government but for which corrected claims can be submitted.
A number of states, including states in which we operate, have adopted their own false claims provisions as well as their own whistleblower provisions whereby a private party may file a civil lawsuit in state court. The Deficit Reduction Act of 2005 created an incentive for states to enact false claims laws that are comparable to the FCA. From time to time, companies in the healthcare industry, including ours, may be subject to actions under the FCA or similar state laws.
Corporate Practice of Medicine; Fee-Splitting. Some states have laws that prohibit unlicensed persons or business entities, including corporations, from employing physicians. Some states also have adopted laws that prohibit direct or indirect payments or fee-splitting arrangements between physicians and unlicensed persons or business entities. Possible sanctions for violations of these restrictions include loss of a physician’s license, civil and criminal penalties and rescission of business arrangements. These laws vary from state to state, are often vague and have seldom been interpreted by the courts or regulatory agencies. We structure our arrangements with healthcare providers to comply with the relevant state law. However, we cannot be assured that governmental officials responsible for enforcing these laws will not assert that we, or transactions in which we are involved, are in violation of these laws. These laws may also be interpreted by the courts in a manner inconsistent with our interpretations.
Emergency Medical Treatment and Active Labor Act. The Emergency Medical Treatment and Active Labor Act imposes requirements as to the care that must be provided to anyone who comes to facilities providing emergency medical services seeking care before they may be transferred to another facility or otherwise denied care. Sanctions for failing to fulfill these requirements include exclusion from participation in Medicare and Medicaid programs and civil money penalties. In addition, the law creates private civil remedies which enable an individual who suffers personal harm as a direct result of a violation of the law to sue the offending hospital for damages and equitable relief. A medical facility that suffers a financial loss as a direct result of another participating hospital’s violation of the law also has a similar right. Although we believe that our practices are in compliance with the law, we can give no assurance that governmental officials responsible for enforcing the law or others will not assert we are in violation of these laws.
Conversion Legislation. Many states, including some where we have hospitals and others where we may in the future acquire hospitals, have adopted legislation regarding the sale or other disposition of hospitals operated by not-for-profit entities. In other states that do not have specific legislation, the attorneys general have demonstrated an interest in these transactions under their general obligations to protect charitable assets from waste. These legislative and administrative efforts primarily focus on the appropriate valuation of the assets divested and the use of the proceeds of the sale by the not-for-profit seller. While these reviews and, in some instances, approval processes can add additional time to the closing of a hospital acquisition, we have not had any significant difficulties or delays in completing the process. There can be no assurance, however, that future actions on the state level will not seriously delay or even prevent our ability to acquire hospitals. If these activities are widespread, they could limit our ability to acquire hospitals.
Certificates of Need. The construction of new facilities, the acquisition of existing facilities and the addition of new services at our facilities may be subject to state laws that require prior approval by state regulatory agencies. These CON laws generally require that a state agency determine the public need and give approval prior to the construction or acquisition of facilities or the addition of new services. As of December 31, 2011, we operated 57 hospitals in 16 states that have adopted CON laws for acute care facilities. If we fail to obtain necessary state approval, we will not be able to expand our facilities, complete acquisitions or add new services in these states. Violation of these state laws may result in the imposition of civil sanctions or the revocation of a hospital’s licenses.
HIPAA Administrative Simplification and Privacy and Security Requirements. HIPAA requires the use of uniform electronic data transmission standards for healthcare claims and payment transactions submitted or received electronically. These provisions are intended to encourage electronic commerce in the healthcare industry. The
 
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DHHS has established electronic data transmission standards that all healthcare providers must use when submitting or receiving certain healthcare transactions electronically. In addition, HIPAA requires that each provider use a National Provider Identifier. In January 2009, CMS published a final rule making changes to the formats used for certain electronic transactions and requiring the use of updated standard code sets for certain diagnoses and procedures known as ICD-10 code sets. Although use of the ICD-10 code sets is not mandatory until October 1, 2013, we will be modifying our payment systems and processes to prepare for their implementation. Use of the ICD-10 code sets will require significant changes; however, we believe that the cost of compliance with these regulations has not had and is not expected to have a material adverse effect on our business, financial position or results of operations. The Reform Legislation requires the DHHS to adopt standards for additional electronic transactions and to establish operating rules to promote uniformity in the implementation of each standardized electronic transaction.
As required by HIPAA, the DHHS has issued privacy and security regulations that extensively regulate the use and disclosure of individually identifiable health-related information and require healthcare providers to implement administrative, physical and technical practices to protect the security of individually identifiable health information that is electronically maintained or transmitted. ARRA broadens the scope of the HIPAA privacy and security regulations. In addition, ARRA extends the application of certain provisions of the security and privacy regulations to business associates (entities that handle identifiable health-related information on behalf of covered entities) and subjects business associates to civil and criminal penalties for violation of the regulations. On July 14, 2010, the DHHS issued a proposed rule that would implement these ARRA provisions. If finalized, these changes would likely require amendments to existing agreements with business associates and would subject business associates and their subcontractors to direct liability under the HIPAA privacy and security regulations. We have developed and utilize a HIPAA compliance plan as part of our effort to comply with HIPAA privacy and security requirements. The privacy regulations and security regulations have and will continue to impose significant costs on our facilities in order to comply with these standards.
As required by ARRA, the DHHS published an interim final rule on August 24, 2009, that requires covered entities to report breaches of unsecured protected health information to affected individuals without unreasonable delay, but not to exceed 60 days of discovery of the breach by the covered entity or its agents. Notification must also be made to the DHHS and, in certain situations involving large breaches, to the media. Various state laws and regulations may also require us to notify affected individuals in the event of a data breach involving individually identifiable information.
Violations of the HIPAA privacy and security regulations may result in civil and criminal penalties, and ARRA has strengthened the enforcement provisions of HIPAA, which may result in increased enforcement activity. Under ARRA, the DHHS is required to conduct periodic compliance audits of covered entities and their business associates. ARRA broadens the applicability of the criminal penalty provisions to employees of covered entities and requires the DHHS to impose penalties for violations resulting from willful neglect. ARRA significantly increases the amount of the civil penalties, with penalties of up to $50,000 per violation for a maximum civil penalty of $1,500,000 in a calendar year for violations of the same requirement. Further, ARRA authorizes state attorneys general to bring civil actions seeking either injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents. Our facilities also are subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and could impose additional penalties.
Payment
Medicare. Under the Medicare program, we are paid for inpatient and outpatient services performed by our hospitals.
Payments for inpatient acute services are generally made pursuant to a prospective payment system, commonly known as “PPS.” Under PPS, our hospitals are paid a predetermined amount for each hospital discharge based on the patient’s diagnosis. Specifically, each discharge is assigned to a diagnosis-related group, commonly known as a “DRG,” based upon the patient’s condition and treatment during the relevant inpatient stay. Commencing with the federal fiscal year 2009 (i.e., the federal fiscal year beginning October 1, 2008), each DRG is assigned a payment rate using 100% of the national average cost per case and 100% of the severity adjusted DRG weights. DRG payments are based on national averages and not on charges or costs specific to a hospital. Severity adjusted DRGs
 
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more accurately reflect the costs a hospital incurs for caring for a patient and account more fully for the severity of each patient’s condition. However, DRG payments are adjusted by a predetermined geographic adjustment factor assigned to the geographic area in which the hospital is located. While a hospital generally does not receive payment in addition to a DRG payment, hospitals may qualify for an “outlier” payment when the relevant patient’s treatment costs are extraordinarily high and exceed a specified regulatory threshold.
The DRG payment rates are adjusted by an update factor on October 1 of each year, the beginning of the federal fiscal year. The index used to adjust the DRG payment rates, known as the “market basket index,” gives consideration to the inflation experienced by hospitals in purchasing goods and services. DRG payment rates were increased by the full “market basket index,” for the federal fiscal years 2012, 2011, 2010 and 2009, by 3.0%, 2.6%, 2.1% and 3.6%, respectively. In addition, the DRG payment rates were reduced by 0.25% on April 1, 2010 and by 0.25% on October 1, 2010, as mandated by the Reform Legislation. The DRG payment rates were also reduced by 2.9% for federal fiscal year 2011 for behavioral changes in coding practices related to MS-DRG. In addition, for federal fiscal year 2012, the DRG payment rates were reduced by 1% for the multi-factor productivity adjustment; reduced by 0.1% in accordance with the Reform Legislation; reduced by 2% for documentation and coding; and increased by 1.1% as a result of the decision in Cape Cod Hospital v. Sebelius. The Deficit Reduction Act of 2005 imposed a two percentage point reduction to the market basket index beginning October 1, 2007, and each year thereafter, if patient quality data is not submitted. We are complying with this data submission requirement. Future legislation may decrease the rate of increase for DRG payments or even decrease such payment rates, but we are not able to predict the amount of any reduction or the effect that any reduction will have on us.
In addition, hospitals may qualify for Medicare disproportionate share payments when their percentage of low income patients exceeds specified regulatory thresholds. A majority of our hospitals qualify to receive Medicare disproportionate share payments. For the majority of our hospitals that qualify to receive Medicare disproportionate share payments, these payments were increased by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 effective April 1, 2004. These Medicare disproportionate share payments as a percentage of net operating revenues were 1.5%, 1.6% and 1.6% for the years ended December 31, 2011, 2010 and 2009, respectively.
Beginning August 1, 2000, we began receiving Medicare reimbursement for outpatient services through a PPS. Under the Balanced Budget Refinement Act of 1999, non-urban hospitals with 100 beds or less were held harmless. The Medicare Improvements for Patients and Providers Act extended the hold harmless provision for non-urban hospitals with 100 beds or less, including non-urban sole community hospitals, through December 31, 2009, at 85% of the hold harmless amount. Of our 125 hospitals at December 31, 2009, 44 qualified for this relief. The Reform Legislation extended the hold harmless provision for non-urban hospitals with 100 beds or less, including non-urban sole community hospitals, through December 31, 2010. Of our 130 hospitals at December 31, 2010, 46 qualified for this relief. The Medicare and Medicaid Extenders Act of 2010 extended the hold harmless provision for non-urban hospitals with 100 beds or less, including non-urban sole community hospitals, through December 31, 2011. Of our 131 hospitals at December 31, 2011, 45 qualified for this relief. The outpatient conversion factor was increased 3.6% effective January 1, 2009; however, coupled with adjustments to other variables with outpatient PPS, an approximate 3.5% to 3.9% net increase in outpatient payments occurred. The outpatient conversion factor was increased 2.1% effective January 1, 2010; however, coupled with adjustments to other variables with outpatient PPS, an approximate 1.8% to 2.2% net increase in outpatient payments occurred. The outpatient conversion factor was increased 2.35% effective January 1, 2011; however, coupled with adjustments to other variables with outpatient PPS, an approximate 2.1% to 2.5% net increase in outpatient payments occurred. The outpatient conversion factor was increased 3.0 % effective January 1, 2012; however, coupled with adjustments to other variables with outpatient PPS, an approximate 2.1% to 2.5% net increase in outpatient payments is expected to occur. The Medicare Improvements and Extension Act of the Tax Relief and Health Care Act of 2006 imposed a two percentage point reduction to the market basket index beginning January 1, 2009, and each year thereafter, if patient quality data is not submitted. We are complying with this data submission requirement.
The DHHS established a PPS for home health services (i.e., home care) effective October 1, 2000. The home health agency PPS per episodic payment rate increased by 2.9% on January 1, 2009; however, coupled with adjustments to other variables with home health agency PPS, an approximate 0.2% net increase in home health agency payments occurred. The home health agency PPS per episodic payment rate increased 2.0% on January 1, 2010; however, coupled with adjustments to other variables with home health agency PPS, an approximate 2.3% net
 
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increase in home health agency payments occurred. The home health agency PPS per episodic payment rate increased 1.1% on January 1, 2011; however, coupled with adjustments to other variables with home health agency PPS, an approximate 4.9% net decrease in home health agency payments occurred. The home health agency PPS per episodic payment rate increased 2.4% on January 1, 2012; however, coupled with adjustments to other variables with home health agency PPS, an approximate 2.31% net decrease in home health agency payments is expected to occur. The Reform Legislation increases the home health agency PPS per episodic payment rate by 3.0% for home health services provided to patients in rural areas on or after April 1, 2010 through December 31, 2016. The Deficit Reduction Act of 2005 imposed a two percentage point reduction to the market basket index beginning January 1, 2007, and each year thereafter, if patient quality data is not submitted. We are complying with this data submission requirement.
Medicaid. Most state Medicaid payments are made under a PPS or under programs which negotiate payment levels with individual hospitals. Medicaid is currently funded jointly by state and federal government. The federal government and many states are currently considering significantly reducing Medicaid funding, while at the same time expanding Medicaid benefits. Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to providers to offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from CMS and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. Similar programs are also being considered by other states. We can provide no assurance that reductions to Medicaid fundings will not have a material adverse effect on our consolidated results of operations.
Annual Cost Reports. Hospitals participating in the Medicare and some Medicaid programs, whether paid on a reasonable cost basis or under a PPS, are required to meet specified financial reporting requirements. Federal and, where applicable, state regulations require submission of annual cost reports identifying medical costs and expenses associated with the services provided by each hospital to Medicare beneficiaries and Medicaid recipients.
Annual cost reports required under the Medicare and some Medicaid programs are subject to routine governmental audits. These audits may result in adjustments to the amounts ultimately determined to be due to us under these reimbursement programs. Finalization of these audits often takes several years. Providers can appeal any final determination made in connection with an audit. DRG outlier payments have been and continue to be the subject of CMS audit and adjustment. The DHHS OIG is also actively engaged in audits and investigations into alleged abuses of the DRG outlier payment system.
Commercial Insurance and Managed Care Companies. Our hospitals provide services to individuals covered by private healthcare insurance or by health plans administered by managed care companies. These payors pay our hospitals or in some cases reimburse their policyholders based upon the hospital’s established charges and the coverage provided in the insurance policy. They try to limit the costs of hospital services by negotiating discounts, including PPS, which would reduce payments by commercial insurers or health plans to our hospitals. Commercial insurers and Managed Care companies also seek to reduce payments to hospitals by establishing payment rules that in effect recharacterize the services ordered by physicians. For example, some payors vigorously review each patient’s length of stay in the hospital and recharacterize as outpatient all in-patient stays of less than a particular duration (e.g. 24 hours). Reductions in payments for services provided by our hospitals to individuals covered by these payors could adversely affect us.
Supply Contracts
In March 2005, we began purchasing items, primarily medical supplies, medical equipment and pharmaceuticals, under an agreement with HealthTrust, a GPO in which we are a noncontrolling partner. Triad Hospitals, Inc., or Triad, was also a noncontrolling partner in HealthTrust and we acquired Triad’s ownership interest and contractual rights when we acquired Triad. As of December 31, 2011, we have a 17.6% ownership interest in HealthTrust. By participating in this organization, we are able to procure items at competitively priced rates for our hospitals. There can be no assurance that our arrangement with HealthTrust will continue to provide the discounts that we have historically received.
 
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Competition
The hospital industry is highly competitive. An important part of our business strategy is to continue to acquire hospitals in non-urban markets and selected urban markets. However, other for-profit hospital companies and not-for-profit hospital systems generally attempt to acquire the same type of hospitals as we do. In addition, some hospitals are sold through an auction process, which may result in higher purchase prices than we believe are reasonable.
In addition to the competition we face for acquisitions, we must also compete with other hospitals and healthcare providers for patients. The competition among hospitals and other healthcare providers for patients has intensified in recent years. Our hospitals are located in non-urban and selected urban service areas. Those hospitals in non-urban service areas face no direct competition because there are no other hospitals in their primary service areas. However, these hospitals do face competition from hospitals outside of their primary service area, including hospitals in urban areas that provide more complex services. Patients in those service areas may travel to these other hospitals for a variety of reasons, including the need for services we do not offer or physician referrals. Patients who are required to seek services from these other hospitals may subsequently shift their preferences to those hospitals for services we do provide. Those hospitals in selected urban service areas may face competition from hospitals that are more established than our hospitals. Certain of these competing facilities offer services, including extensive medical research and medical education programs, which are not offered by our facilities. In addition, in certain markets where we operate, there are large teaching hospitals that provide highly specialized facilities, equipment and services that may not be available at our hospitals.
Some of our hospitals operate in primary service areas where they compete with another hospital. Some of these competing hospitals use equipment and services more specialized than those available at our hospitals and/or are owned by tax-supported governmental agencies or not-for-profit entities supported by endowments and charitable contributions. These hospitals do not pay income or property taxes, and can make capital expenditures without paying sales tax. We also face competition from other specialized care providers, including outpatient surgery, orthopedic, oncology and diagnostic centers.
The number and quality of the physicians on a hospital’s staff is an important factor in a hospital’s competitive position. Physicians decide whether a patient is admitted to the hospital and the procedures to be performed. Admitting physicians may be on the medical staffs of other hospitals in addition to those of our hospitals. We attempt to attract our physicians’ patients to our hospitals by offering quality services and facilities, convenient locations and state-of-the-art equipment.
Compliance Program
We take an operations team approach to compliance and utilize corporate experts for program design efforts and facility leaders for employee-level implementation. We believe compliance is another area that demonstrates our utilization of standardization and centralization techniques and initiatives which yield efficiencies and consistency throughout our facilities. We recognize that our compliance with applicable laws and regulations depends on individual employee actions as well as company operations. Our approach focuses on integrating compliance responsibilities with operational functions. This approach is intended to reinforce our company-wide commitment to operate strictly in accordance with the laws and regulations that govern our business.
Our company-wide compliance program has been in place since 1997. Currently, the program’s elements include leadership, management and oversight at the highest levels, a Code of Conduct, risk area specific policies and procedures, employee education and training, an internal system for reporting concerns, auditing and monitoring programs and a means for enforcing the program’s policies.
Since its initial adoption, the compliance program continues to be expanded and developed to meet the industry’s expectations and our needs. Specific written policies, procedures, training and educational materials and programs, as well as auditing and monitoring activities, have been prepared and implemented to address the functional and operational aspects of our business. Included within these functional areas are materials and activities for business sub-units, including laboratory, radiology, pharmacy, emergency, surgery, observation, home care, skilled nursing and clinics. Specific areas identified through regulatory interpretation and enforcement activities have also been
 
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addressed in our program. Claims preparation and submission, including coding, billing and cost reports, comprise the bulk of these areas. Financial arrangements with physicians and other referral sources, including compliance with the federal anti-kickback statute and the Stark Law, emergency department treatment and transfer requirements and other patient disposition issues, are also the focus of policy and training, standardized documentation requirements and review and audit. Another focus of the program is the interpretation and implementation of the HIPAA standards for privacy and security.
We have a Code of Conduct which applies to all directors, officers, employees and consultants, and a confidential disclosure program to enhance the statement of ethical responsibility expected of our employees and business associates who work in the accounting, financial reporting and asset management areas of our Company. Our Code of Conduct is posted on our website at www.chs.net/company_overview/code_conduct.html.
Employees
At December 31, 2011, we employed approximately 66,000 full-time employees and 22,000 part-time employees. We have approximately 8,000 employees who are union members. We currently believe that our labor relations are good.
Professional Liability Claims
As part of our business of owning and operating hospitals, we are subject to legal actions alleging liability on our part. To cover claims arising out of the operations of hospitals, we maintain professional malpractice liability insurance and general liability insurance on a claims made basis in excess of those amounts for which we are self-insured, in amounts we believe to be sufficient for our operations. We also maintain umbrella liability coverage for claims which, due to their nature or amount, are not covered by our other insurance policies. However, our insurance coverage does not cover all claims against us or may not continue to be available at a reasonable cost for us to maintain adequate levels of insurance. For a further discussion of our insurance coverage, see our discussion of professional liability claims in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Report.
Environmental Matters
We are subject to various federal, state and local laws and regulations governing the use, discharge and disposal of hazardous materials, including medical waste products. Compliance with these laws and regulations is not expected to have a material adverse effect on us. It is possible, however, that environmental issues may arise in the future which we cannot now predict.
We are insured for damages of personal property or environmental injury arising out of environmental impairment for both above ground and underground storage tank issues under one insurance policy for all of our hospitals. Our policy coverage is $5 million per occurrence with a $50,000 deductible and a $20 million annual aggregate. This policy also provides pollution legal liability coverage.
 
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Item 1A. Risk Factors
The following risk factors could materially and adversely affect our future operating results and could cause actual results to differ materially from those predicted in the forward-looking statements we make about our business.
Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under the agreements relating to our indebtedness.
We are significantly leveraged. The table below shows our level of indebtedness and other information as of December 31, 2011. In connection with the consummation of our acquisition of Triad in July 2007, approximately $7.2 billion of senior secured financing under a new credit facility, or the Credit Facility, was obtained by our wholly-owned subsidiary, CHS/Community Health Systems, Inc., or CHS. CHS also issued 8.875% senior notes, or the 8  7 / 8 % Senior Notes, having an aggregate principal amount of approximately $3.0 billion. Both the indebtedness under the Credit Facility and the 8  7 / 8 % Senior Notes are senior obligations of CHS and are guaranteed on a senior basis by us and by certain of our domestic subsidiaries. We used the net proceeds from the 8  7 / 8 % Senior Notes offering and the net proceeds of the approximately $6.1 billion term loans under the Credit Facility to pay the consideration under the merger agreement with Triad, to refinance certain of our existing indebtedness and the indebtedness of Triad, to complete certain related transactions, to pay certain costs and expenses of the transactions and for general corporate uses. As of December 31, 2011, a $750 million revolving credit facility was available to us for working capital and general corporate purposes under the Credit Facility, with $37.7 million of the revolving credit facility being set aside for outstanding letters of credit and $30.0 million outstanding at December 31, 2011. On November 5, 2010, we entered into an amendment and restatement of our existing Credit Facility, which extended by two and a half years, until January 25, 2017, the maturity date of $1.5 billion of our existing term loans under the Credit Facility. In addition, effective February 2, 2012, we completed an additional amendment and restatement of the Credit Facility, which extended by two and a half years the maturity date of an additional $1.6 billion of our existing non-extended term loans under the Credit Facility, until January 25, 2017 (subject to customary acceleration events) or, if more than $50 million of our 8  7 / 8 % Senior Notes are outstanding on April 15, 2015, to April 15, 2015. The remaining approximately $2.9 billion in term loans mature in 2014. On November 22, 2011, CHS completed its offering of $1.0 billion aggregate principal amount of 8% Senior Notes, or the 8% Senior Notes, which were issued in a private placement. The net proceeds from this issuance, together with available cash on hand, were used to finance the purchase of up to $1.0 billion aggregate principal amount of outstanding 8  7 / 8 % Senior Notes and related fees and expenses. The 8% Senior Notes are unsecured senior obligations of CHS and are guaranteed on a senior basis by us and by certain of our domestic subsidiaries. With the exception of some small principal payments of our term loans under our Credit Facility, representing less than 1% of the outstanding balance each year through 2013, approximately $2.9 billion of term loans under our Credit Facility mature in 2014, our 8  7 / 8 % Senior Notes are due in 2015, the remaining $3.1 billion in term loans mature in 2017 and our 8% Senior Notes are due in 2019.

 	  	December 31,
2011	 	
 	  	($ in millions)	 	
 	 	
Senior secured credit facility term loans	  	$	5,949.4	  	
Revolving credit facility	  	 	30.0	  	
8 7/8% Senior Notes	  	 	1,777.6	  	
8% Senior Notes	  	 	1,000.0	  	
Other	  	 	89.5	  	
 	  	 	 	 	
Total debt	  	$	8,846.5	  	
 	  	 	 	 	
Community Health Systems, Inc. stockholders’ equity	  	$	2,397.1	  	

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As of December 31, 2011, our approximately $4.9 billion notional amount of interest rate swap agreements represented approximately 82% of our variable rate debt. On a prospective basis, a 1% change in interest rates on the remaining unhedged variable rate debt existing as of December 31, 2011, would result in interest expense fluctuating approximately $11.0 million per year.
The Credit Facility and/or both of the 8 7/8% Senior Notes and the 8% Senior Notes, or collectively known as the Senior Notes, contain various covenants that limit our ability to take certain actions, including our ability to:
 
 	•	 	incur, assume or guarantee additional indebtedness,	
 
 	•	 	issue redeemable stock and preferred stock,	
 
 	•	 	repurchase capital stock,	
 
 	•	 	make restricted payments, including paying dividends and making investments,	
 
 	•	 	redeem debt that is junior in right of payment to the Senior Notes,	
 
 	•	 	create liens,	
 
 	•	 	sell or otherwise dispose of assets, including capital stock of subsidiaries,	
 
 	•	 	enter into agreements that restrict dividends from subsidiaries,	
 
 	•	 	merge, consolidate, sell or otherwise dispose of substantial portions of our assets,	
 
 	•	 	enter into transactions with affiliates and	
 
 	•	 	guarantee certain obligations.	
In addition, our Credit Facility contains restrictive covenants and requires us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet these restrictive covenants and financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet those tests.
The counterparty to the interest rate swap agreements exposes us to credit risk in the event of non-performance. However, at December 31, 2011, we do not anticipate non-performance by the counterparty due to the net settlement feature of the agreements and our liability position with respect to each of our counterparties.
A breach of any of these covenants could result in a default under our Credit Facility and/or the Senior Notes. Upon the occurrence of an event of default under our Credit Facility or the Senior Notes, all amounts outstanding under our Credit Facility and the Senior Notes may become immediately due and payable and all commitments under the Credit Facility to extend further credit may be terminated.
Our leverage could have important consequences for you, including the following:
 
 	•	 	it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes,	
 
 	•	 	a substantial portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness and will not be available for other purposes, including our operations, capital expenditures and future business opportunities,	
 
 	•	 	the debt service requirements of our indebtedness could make it more difficult for us to satisfy our financial obligations,	
 
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 	•	 	some of our borrowings, including borrowings under our Credit Facility, are at variable rates of interest, exposing us to the risk of increased interest rates,	
 
 	•	 	it may limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors that have less debt and	
 
 	•	 	we may be vulnerable in a downturn in general economic conditions or in our business, or we may be unable to carry out capital spending that is important to our growth.	
The ratio of earnings to fixed charges is a measure of our ability to meet our fixed obligations related to our indebtedness. The following table shows the ratio of earnings to fixed charges for the periods indicated:

 	  	Year Ended December 31,	 	
 	  	2007	 	  	2008	 	  	2009	 	  	2010	 	  	2011	 	
 	 	 	 	 	 	
Ratio of earnings to fixed charges(1)	  	 	1.21x	  	  	 	1.47x	  	  	 	1.60x	  	  	 	1.69x	  	  	 	1.61x	  	
 
(1)	Fixed charges include interest expensed and capitalized during the year plus an estimate of the interest component of rent expense. There are no shares of preferred stock outstanding. See exhibit 12 filed as part of this Report for the calculation of this ratio.	
Despite current indebtedness levels, we may be able to incur substantially more debt. This could further exacerbate the risks described above.
We may be able to incur substantial additional indebtedness in the future. The terms of the indentures governing the Senior Notes do not fully prohibit us from doing so. For example, under the indentures for the 8  7 / 8 % Senior Notes and the 8% Senior Notes, we may incur up to approximately $7.8 billion pursuant to a credit facility or a qualified receivables transaction, less certain amounts repaid with the proceeds of asset dispositions. As of December 31, 2011, our Credit Facility provided for commitments of up to approximately $6.7 billion in the aggregate. Additionally, our Credit Facility also gives us the ability to provide for one or more additional tranches of term loans in the aggregate principal amount of up to $1.0 billion without the consent of the existing lenders if specified criteria are satisfied and for up to $300 million of borrowing capacity from receivable transactions (including securitizations). If new debt is added to our current debt levels, the related risks that we now face could be further exacerbated.
If competition decreases our ability to acquire additional hospitals on favorable terms, we may be unable to execute our acquisition strategy.
An important part of our business strategy is to acquire two to four hospitals each year. However, not-for-profit hospital systems and other for-profit hospital companies generally attempt to acquire the same type of hospital as we do. Some of these other purchasers have greater financial resources than us. Our principal competitors for acquisitions have included Health Management Associates, Inc. and LifePoint Hospitals, Inc. On some occasions, we also compete with HCA Holdings Inc., Universal Health Services, Inc., other non-public, for-profit hospitals and local market hospitals. In addition, some hospitals are sold through an auction process, which may result in higher purchase prices than we believe are reasonable. Therefore, we may not be able to acquire additional hospitals on terms favorable to us.
If we fail to improve the operations of acquired hospitals, we may be unable to achieve our growth strategy.
Many of the hospitals we have acquired had, or future acquisitions may have, significantly lower operating margins than we do and/or operating losses prior to the time we acquired or will acquire them. In the past, we have occasionally experienced temporary delays in improving the operating margins or effectively integrating the operations of these acquired hospitals. In the future, if we are unable to improve the operating margins of acquired hospitals, operate them profitably, or effectively integrate their operations, we may be unable to achieve our growth strategy.
 
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If we acquire hospitals with unknown or contingent liabilities, we could become liable for material obligations.
Hospitals that we acquire may have unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations. Although we generally seek indemnification from prospective sellers covering these matters, we may nevertheless have material liabilities for past activities of acquired hospitals.
State efforts to regulate the construction, acquisition or expansion of hospitals could prevent us from acquiring additional hospitals, renovating our facilities or expanding the breadth of services we offer.
Some states require prior approval for the construction or acquisition of healthcare facilities and for the expansion of healthcare facilities and services. In giving approval, these states consider the need for additional or expanded healthcare facilities or services. In some states in which we operate, we are required to obtain CONs for capital expenditures exceeding a prescribed amount, changes in bed capacity or services and some other matters. Other states may adopt similar legislation. We may not be able to obtain the required CONs or other prior approvals for additional or expanded facilities in the future. In addition, at the time we acquire a hospital, we may agree to replace or expand the facility we are acquiring. If we are not able to obtain required prior approvals, we would not be able to replace or expand the facility and expand the breadth of services we offer. Furthermore, if a CON or other prior approval, upon which we relied to invest in construction of a replacement or expanded facility, were to be revoked or lost through an appeal process, then we may not be able to recover the value of our investment.
State efforts to regulate the sale of hospitals operated by not-for-profit entities could prevent us from acquiring additional hospitals and executing our business strategy.
Many states, including some where we have hospitals and others where we may in the future acquire hospitals, have adopted legislation regarding the sale or other disposition of hospitals operated by not-for-profit entities. In other states that do not have specific legislation, the attorneys general have demonstrated an interest in these transactions under their general obligations to protect the use of charitable assets. These legislative and administrative efforts focus primarily on the appropriate valuation of the assets divested and the use of the proceeds of the sale by the non-profit seller. While these review and, in some instances, approval processes can add additional time to the closing of a hospital acquisition, we have not had any significant difficulties or delays in completing acquisitions. However, future actions on the state level could seriously delay or even prevent our ability to acquire hospitals.
If we are unable to effectively compete for patients, local residents could use other hospitals.
The hospital industry is highly competitive. In addition to the competition we face for acquisitions and physicians, we must also compete with other hospitals and healthcare providers for patients. The competition among hospitals and other healthcare providers for patients has intensified in recent years. The majority of our hospitals are located in non-urban service areas. In over 60% of our markets, we are the sole provider of general acute care health services. In most of our other markets, the primary competitor is a not-for-profit hospital. These not-for-profit hospitals generally differ in each jurisdiction. However, our hospitals face competition from hospitals outside of their primary service area, including hospitals in urban areas that provide more complex services. Patients in our primary service areas may travel to these other hospitals for a variety of reasons. These reasons include physician referrals or the need for services we do not offer. Patients who seek services from these other hospitals may subsequently shift their preferences to those hospitals for the services we provide.
Some of our hospitals operate in primary service areas where they compete with one other hospital; 25 of our hospitals compete with more than one other hospital in their respective primary service areas. Some of these competing hospitals use equipment and services more specialized than those available at our hospitals. In addition, some competing hospitals are owned by tax-supported governmental agencies or not-for-profit entities supported by endowments and charitable contributions. These hospitals do not pay income or property taxes, and can make capital expenditures without paying sales tax. We also face competition from other specialized care providers, including outpatient surgery, orthopedic, oncology and diagnostic centers.
We expect that these competitive trends will continue. Our inability to compete effectively with other hospitals and other healthcare providers could cause local residents to use other hospitals.
 
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The failure to obtain our medical supplies at favorable prices could cause our operating results to decline.
We have a participation agreement with HealthTrust, a GPO. This agreement extends to January 2013, with automatic renewal terms of one year, unless either party terminates by giving notice of non-renewal. GPOs attempt to obtain favorable pricing on medical supplies with manufacturers and vendors who sometimes negotiate exclusive supply arrangements in exchange for the discounts they give. To the extent these exclusive supply arrangements are challenged or deemed unenforceable, we could incur higher costs for our medical supplies obtained through HealthTrust. These higher costs could cause our operating results to decline.
There can be no assurance that our arrangement with HealthTrust will provide the discounts we expect to achieve.
If the fair value of our reporting units declines, a material non-cash charge to earnings from impairment of our goodwill could result.
At December 31, 2011, we had approximately $4.3 billion of goodwill recorded on our books. We expect to recover the carrying value of this goodwill through our future cash flows. On an ongoing basis, we evaluate, based on the fair value of our reporting units, whether the carrying value of our goodwill is impaired. If the carrying value of our goodwill is impaired, we may incur a material non-cash charge to earnings.
A significant decline in operating results or other indicators of impairment at one or more of our facilities could result in a material, non-cash charge to earnings to impair the value of long-lived assets.
Our operations are capital intensive and require significant investment in long-lived assets, such as property, equipment and other long-lived intangible assets, including capitalized internal-use software. If one of our facilities experiences declining operating results or is adversely impacted by one or more of these risk factors, we may not be able to recover the carrying value of those assets through our future operating cash flows. On an ongoing basis, we evaluate whether changes in future undiscounted cash flows reflect an impairment in the fair value of our long-lived assets. If the carrying value of those assets is impaired, we may incur a material non-cash charge to earnings.
Risks related to our industry
We are subject to uncertainties regarding healthcare reform.
In recent years, Congress and some state legislatures have introduced an increasing number of proposals to make major changes in the healthcare system, including an increased emphasis on the linkage between quality of care criteria and payment levels such as the submission of patient quality data to the Secretary of Health and Human Services. In addition, CMS conducts ongoing reviews of certain state reimbursement programs.
ARRA was signed into law on February 17, 2009, providing for a temporary increase in the federal matching assistance percentage (FMAP), a temporary increase in federal Medicaid DSH allotments, subsidization of health insurance premiums (COBRA) for up to nine months and grants and loans for infrastructure and incentive payments for providers who adopt and use health information technology. This act also provides penalties by reducing reimbursement from Medicare in the form of reductions to scheduled market basket increases beginning in federal fiscal year 2015 if eligible hospitals and professionals fail to demonstrate meaningful use of electronic health record technology.
PPACA was signed into law on March 23, 2010. In addition, the Reconciliation Act, which contains a number of amendments to PPACA, was signed into law on March 30, 2010. These two healthcare acts, referred to collectively as the Reform Legislation, include a mandate that requires substantially all U.S. citizens to maintain medical insurance coverage which will ultimately increase the number of persons with access to health insurance in the United States. The Reform Legislation should result in a reduction in uninsured patients, which should reduce our expense from uncollectible accounts receivable; however, this legislation makes a number of other changes to Medicare and Medicaid, such as reductions to the Medicare annual market basket update for federal fiscal years 2010 through 2019, a productivity offset to the Medicare market basket update which began October 1, 2011, and a reduction to the Medicare and Medicaid disproportionate share payments, that could adversely impact the reimbursement received under these programs. The various provisions in the Reform Legislation that directly or indirectly affect reimbursement are scheduled to take effect over a number of years, and we cannot predict their impact at this time. Other provisions of the Reform Legislation, such as requirements related to employee health insurance coverage, should increase our operating costs.
 
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Also included in the Reform Legislation are provisions aimed at reducing fraud, waste and abuse in the healthcare industry. These provisions allocate significant additional resources to federal enforcement agencies and expand the use of private contractors to recover potentially inappropriate Medicare and Medicaid payments. The Reform Legislation amends several existing federal laws, including the Medicare Anti-Kickback Statute and the False Claims Act, making it easier for government agencies and private plaintiffs to prevail in lawsuits brought against healthcare providers. These amendments also make it easier for potentially severe fines and penalties to be imposed on healthcare providers accused of violating applicable laws and regulations.
In a number of markets, we have partnered with local physicians in the ownership of our facilities. Such investments have been permitted under an exception to the physician self-referral law, or the Stark Law, that allows physicians to invest in an entire hospital (as opposed to individual hospital departments). The Reform Legislation changes the “whole hospital” exception to the Stark Law. The Reform Legislation permits existing physician investments in a whole hospital to continue under a “grandfather” clause if the arrangement satisfies certain requirements and restrictions, but physicians became prohibited, from the time the Reform Legislation became effective, from increasing the aggregate percentage of their ownership in the hospital. The Reform Legislation also restricts the ability of existing physician-owned hospitals to expand the capacity of their facilities. Physician investments in hospitals that are under development are protected by the grandfather clause only if the physician investments have been made and the hospital has a Medicare provider agreement as of a specific date.
The impact of the Reform Legislation on each of our hospitals will vary depending on payor mix and a variety of other factors. We anticipate that many of the provisions in the Reform Legislation will be subject to further clarification and modification through the rule-making process, the development of agency guidance and judicial interpretations. In particular, the Supreme Court of the United States has accepted an appeal of one of the many cases challenging various aspects, including constitutionality of the Reform Legislation. We cannot predict the impact the Reform Legislation may have on our business, results of operations, cash flow, capital resources and liquidity or the ultimate outcome of the judicial rulings. Furthermore, we cannot predict whether we will be able to modify certain aspects of our operations to offset any potential adverse consequences from the Reform Legislation.
If federal or state healthcare programs or managed care companies reduce the payments we receive as reimbursement for services we provide, our net operating revenues may decline.
In 2011, 36.5% of our net operating revenues came from the Medicare and Medicaid programs. Federal healthcare expenditures continue to increase and state governments continue to face budgetary shortfalls as a result of the current economic downturn and accelerating Medicaid enrollment. As a result, federal and state governments have made, and continue to make, significant changes in the Medicare and Medicaid programs. Some of these changes have decreased, or could decrease, the amount of money we receive for our services relating to these programs.
In addition, insurance and managed care companies and other third parties from whom we receive payment for our services increasingly are attempting to control healthcare costs by requiring that hospitals discount payments for their services in exchange for exclusive or preferred participation in their benefit plans. We believe that this trend may continue and our inability to negotiate increased reimbursement rates or maintain existing rates may reduce the payments we receive for our services.
If we fail to comply with extensive laws and government regulations, including fraud and abuse laws, we could suffer penalties or be required to make significant changes to our operations.
The healthcare industry is required to comply with many laws and regulations at the federal, state and local government levels. These laws and regulations require that hospitals meet various requirements, including those relating to the adequacy of medical care, equipment, personnel, operating policies and procedures, maintenance of adequate records, compliance with building codes, environmental protection and privacy. These laws include, in part, the Health Insurance Portability and Accountability Act of 1996 and a section of the Social Security Act, known as the “anti-kickback” statute. If we fail to comply with applicable laws and regulations, including fraud and abuse laws, we could suffer civil or criminal penalties, including the loss of our licenses to operate and our ability to participate in the Medicare, Medicaid and other federal and state healthcare programs.
 
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In addition, there are heightened coordinated civil and criminal enforcement efforts by both federal and state government agencies relating to the healthcare industry, including the hospital segment. Recent enforcement actions have focused on financial arrangements between hospitals and physicians, billing for services without adequately documenting the medical necessity for such services and billing for services outside the coverage guidelines for such services. Specific to our hospitals, we have received inquiries and subpoenas from various governmental agencies regarding these and other matters, and we are also subject to various claims and lawsuits relating to such matters. For a further discussion of these matters, see “Legal Proceedings” in Item 3 of this Report.
In the future, different interpretations or enforcement of these laws and regulations could subject our current practices to allegations of impropriety or illegality or could require us to make changes in our facilities, equipment, personnel, services, capital expenditure programs and operating expenses.
A shortage of qualified nurses could limit our ability to grow and deliver hospital healthcare services in a cost-effective manner.
Hospitals are currently experiencing a shortage of nursing professionals, a trend which we expect to continue for some time. If the supply of qualified nurses declines in the markets in which our hospitals operate, it may result in increased labor expenses and lower operating margins at those hospitals. In addition, in some markets like California, there are requirements to maintain specified nurse-staffing levels. To the extent we cannot meet those levels, the healthcare services that we provide in these markets may be reduced.
If we become subject to significant legal actions, we could be subject to substantial uninsured liabilities or increased insurance costs.
In recent years, physicians, hospitals and other healthcare providers have become subject to an increasing number of legal actions alleging malpractice, product liability, or related legal theories. Even in states that have imposed caps on damages, litigants are seeking recoveries under new theories of liability that might not be subject to the caps on damages. Many of these actions involve large claims and significant defense costs. To protect us from the cost of these claims, we maintain claims made professional malpractice liability insurance and general liability insurance coverage in excess of those amounts for which we are self-insured. This insurance coverage is in amounts that we believe to be sufficient for our operations. However, our insurance coverage does not cover all claims against us or may not continue to be available at a reasonable cost for us to maintain adequate levels of insurance. As a percentage of net operating revenues, our expense related to malpractice and other professional liability claims, including the cost of excess insurance, increased in 2009 by 0.2%, decreased in 2010 by 0.2% and decreased in 2011 by 0.2%. If these costs rise rapidly, our profitability could decline. For a further discussion of our insurance coverage, see our discussion of professional liability claims in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Report.
If we experience growth in self-pay volume and revenues, our financial condition or results of operations could be adversely affected.
Like others in the hospital industry, we have experienced an increase in our provision for bad debts as a percentage of net operating revenues due to a growth in self-pay volume and revenues. Although we continue to seek ways of improving point of service collection efforts and implementing appropriate payment plans with our patients, if we experience growth in self-pay volume and revenues, our results of operations could be adversely affected. Further, our ability to improve collections for self-pay patients may be limited by statutory, regulatory and investigatory initiatives, including private lawsuits directed at hospital charges and collection practices for uninsured and underinsured patients.
Currently, the global economies, and in particular the United States, are experiencing a period of economic uncertainty and the related financial markets are experiencing a high degree of volatility. This current financial turmoil is adversely affecting the banking system and financial markets and resulting in a tightening in the credit
 
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markets, a low level of liquidity in many financial markets and extreme volatility in fixed income, credit, currency and equity markets. This uncertainty poses a risk as it could potentially lead to higher levels of uninsured patients, result in higher levels of patients covered by lower paying government programs and/or result in fiscal uncertainties at both government payors and private insurers.
If our implementation of electronic health record systems is not effective or exceeds our budget and timeline, our consolidated results of operations could be adversely affected.
ARRA created an incentive payment program for eligible hospitals and healthcare professionals to adopt and meaningfully use certified electronic health records, or EHR, technology. The implementation of EHR that meets the meaningful use criteria requires a significant capital investment, and our current plan to implement EHR anticipates maximizing the incentive payment program created by ARRA. If our hospitals and employed professionals are unable to meet the requirements for participation in the incentive payment program, we will not be eligible to receive incentive payments that could offset some of the costs of implementing EHR systems. As additional incentive, beginning in federal fiscal year 2015, if eligible hospitals and professionals fail to demonstrate meaningful use of certified EHR technology, they will be penalized with reduced reimbursement from Medicare in the form of reductions to scheduled market basket increases. If we fail to implement EHR systems effectively and in a timely manner, there could be a material adverse effect on our consolidated financial position and consolidated results of operations.
This Report includes forward-looking statements which could differ from actual future results.
Some of the matters discussed in this Report include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “thinks,” and similar expressions are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These factors include the following:
 
 	•	 	general economic and business conditions, both nationally and in the regions in which we operate,	
 
 	•	 	implementation and effect of adopted and potential federal and state healthcare legislation,	
 
 	•	 	risks associated with our substantial indebtedness, leverage and debt service obligations,	
 
 	•	 	demographic changes,	
 
 	•	 	changes in, or the failure to comply with, governmental regulations,	
 
 	•	 	potential adverse impact of known and unknown government investigations, audits, and Federal and State False Claims Act litigation and other legal proceedings,	
 
 	•	 	our ability, where appropriate, to enter into and maintain managed care provider arrangements and the terms of these arrangements,	
 
 	•	 	changes in, or the failure to comply with, managed care provider contracts could result in disputes and changes in reimbursement that could be applied retroactively,	
 
 	•	 	changes in inpatient or outpatient Medicare and Medicaid payment levels,	
 
 	•	 	increases in the amount and risk of collectability of patient accounts receivable,	
 
 	•	 	increases in wages as a result of inflation or competition for highly technical positions and rising supply costs due to market pressure from pharmaceutical companies and new product releases,	
 
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 	•	 	liabilities and other claims asserted against us, including self-insured malpractice claims,	
 
 	•	 	competition,	
 
 	•	 	our ability to attract and retain, without significant employment costs, qualified personnel, key management, physicians, nurses and other healthcare workers,	
 
 	•	 	trends toward treatment of patients in less acute or specialty healthcare settings, including ambulatory surgery centers or specialty hospitals,	
 
 	•	 	changes in medical or other technology,	
 
 	•	 	changes in U.S. GAAP,	
 
 	•	 	the availability and terms of capital to fund additional acquisitions or replacement facilities,	
 
 	•	 	our ability to successfully acquire additional hospitals or complete divestitures,	
 
 	•	 	our ability to successfully integrate any acquired hospitals or to recognize expected synergies from such acquisitions,	
 
 	•	 	our ability to obtain adequate levels of general and professional liability insurance and	
 
 	•	 	timeliness of reimbursement payments received under government programs.	
Although we believe that these statements are based upon reasonable assumptions, we can give no assurance that our goals will be achieved. Given these uncertainties, prospective investors are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this filing. We assume no obligation to update or revise them or provide reasons why actual results may differ.
 
Item 1B.	Unresolved Staff Comments	
None
 
Item 2.	Properties	
Corporate Headquarters
We own our corporate headquarters building located in Franklin, Tennessee.
Hospitals
Our hospitals are general care hospitals offering a wide range of inpatient and outpatient medical services. These services generally include general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric and rehabilitation services. In addition, some of our hospitals provide skilled nursing and home care services based on individual community needs.
 
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For each of our hospitals owned or leased as of December 31, 2011, the following table shows its location, the date of its acquisition or lease inception and the number of licensed beds:

Hospital	  	City	  	Licensed
Beds(1)	  	Date of Acquisition/
Lease Inception	  	Ownership Type	
Alabama	  	 	  	 	  	 	  	 	
LV Stabler Memorial Hospital	  	Greenville	  	72	  	October, 1994	  	Owned	
South Baldwin Regional Medical Center	  	Foley	  	112	  	June, 2000	  	Leased	
Cherokee Medical Center	  	Centre	  	60	  	April, 2006	  	Owned	
Dekalb Regional Medical Center	  	Fort Payne	  	134	  	April, 2006	  	Owned	
Trinity Medical Center	  	Birmingham	  	534	  	July, 2007	  	Owned	
Flowers Hospital	  	Dothan	  	235	  	July, 2007	  	Owned	
Medical Center Enterprise	  	Enterprise	  	131	  	July, 2007	  	Owned	
Gadsden Regional Medical Center	  	Gadsden	  	346	  	July, 2007	  	Owned	
Crestwood Medical Center	  	Huntsville	  	150	  	July, 2007	  	Owned	
 	 	 	 	 	
Alaska	  	 	  	 	  	 	  	 	
Mat-Su Regional Medical Center	  	Palmer	  	74	  	July, 2007	  	Owned	
 	 	 	 	 	
Arizona	  	 	  	 	  	 	  	 	
Payson Regional Medical Center	  	Payson	  	44	  	August, 1997	  	Leased	
Western Arizona Regional Medical Center	  	Bullhead City	  	139	  	July, 2000	  	Owned	
Northwest Medical Center	  	Tucson	  	300	  	July, 2007	  	Owned	
Northwest Medical Center Oro Valley	  	Oro Valley	  	144	  	July, 2007	  	Owned	
 	 	 	 	 	
Arkansas	  	 	  	 	  	 	  	 	
Harris Hospital	  	Newport	  	133	  	October, 1994	  	Owned	
Helena Regional Medical Center	  	Helena	  	155	  	March, 2002	  	Leased	
Forrest City Medical Center	  	Forrest City	  	118	  	March, 2006	  	Leased	
Northwest Medical Center — Bentonville	  	Bentonville	  	128	  	July, 2007	  	Owned	
Northwest Medical Center — Springdale	  	Springdale	  	222	  	July, 2007	  	Owned	
Willow Creek Women’s Hospital	  	Johnson	  	64	  	July, 2007	  	Owned	
Siloam Springs Memorial Hospital	  	Siloam Springs	  	73	  	February, 2009	  	Leased	
Medical Center of South Arkansas	  	El Dorado	  	166	  	April, 2009	  	Leased	
 	 	 	 	 	
California	  	 	  	 	  	 	  	 	
Barstow Community Hospital	  	Barstow	  	56	  	January, 1993	  	Leased	
Fallbrook Hospital	  	Fallbrook	  	47	  	November, 1998	  	Operated (2)	
Watsonville Community Hospital	  	Watsonville	  	106	  	September, 1998	  	Owned	
 	 	 	 	 	
Florida	  	 	  	 	  	 	  	 	
Lake Wales Medical Center	  	Lake Wales	  	160	  	December, 2002	  	Owned	
North Okaloosa Medical Center	  	Crestview	  	110	  	March, 1996	  	Owned	
 	 	 	 	 	
Georgia	  	 	  	 	  	 	  	 	
Fannin Regional Hospital	  	Blue Ridge	  	50	  	January, 1986	  	Owned	
Trinity Hospital of Augusta	  	Augusta	  	231	  	July, 2007	  	Leased	
 
33

Table of Contents

Index to Financial Statements
 	 	 	 	 	 	 	 	 	
Hospital	  	City	  	Licensed
Beds(1)	  	Date of Acquisition/
Lease Inception	  	Ownership Type	
Illinois	  	 	  	 	  	 	  	 	
Crossroads Community Hospital	  	Mt. Vernon	  	57	  	October, 1994	  	Owned	
Gateway Regional Medical Center	  	Granite City	  	367	  	January, 2002	  	Owned	
Heartland Regional Medical Center	  	Marion	  	92	  	October, 1996	  	Owned	
Red Bud Regional Hospital	  	Red Bud	  	31	  	September, 2001	  	Owned	
Galesburg Cottage Hospital	  	Galesburg	  	173	  	July, 2004	  	Owned	
Vista Medical Center East	  	Waukegan	  	336	  	July, 2006	  	Owned	
Vista Medical Center West (psychiatric and rehabilitation beds)	  	Waukegan	  	71	  	July, 2006	  	Owned	
Union County Hospital	  	Anna	  	25	  	November, 2006	  	Leased	
 	 	 	 	 	
Indiana	  	 	  	 	  	 	  	 	
Porter Hospital	  	Valparaiso	  	301	  	May, 2007	  	Owned	
Bluffton Regional Medical Center	  	Bluffton	  	79	  	July, 2007	  	Owned	
Dupont Hospital	  	Fort Wayne	  	131	  	July, 2007	  	Owned	
Lutheran Hospital	  	Fort Wayne	  	396	  	July, 2007	  	Owned	
Lutheran Musculoskeletal Center	  	Fort Wayne	  	39	  	July, 2007	  	Owned	
Lutheran Rehabilitation Hospital (rehabilitation)	  	Fort Wayne	  	36	  	July, 2007	  	Owned	
St. Joseph’s Hospital	  	Fort Wayne	  	191	  	July, 2007	  	Owned	
Dukes Memorial Hospital	  	Peru	  	25	  	July, 2007	  	Owned	
Kosciusko Community Hospital	  	Warsaw	  	72	  	July, 2007	  	Owned	
 	 	 	 	 	
Kentucky	  	 	  	 	  	 	  	 	
Parkway Regional Hospital	  	Fulton	  	70	  	May, 1992	  	Owned	
Three Rivers Medical Center	  	Louisa	  	90	  	May, 1993	  	Owned	
Kentucky River Medical Center	  	Jackson	  	55	  	August, 1995	  	Leased	
 	 	 	 	 	
Louisiana	  	 	  	 	  	 	  	 	
Byrd Regional Hospital	  	Leesville	  	60	  	October, 1994	  	Owned	
Northern Louisiana Medical Center	  	Ruston	  	159	  	April, 2007	  	Owned	
Women & Children’s Hospital	  	Lake Charles	  	88	  	July, 2007	  	Owned	
 	 	 	 	 	
Mississippi	  	 	  	 	  	 	  	 	
Wesley Medical Center	  	Hattiesburg	  	211	  	July, 2007	  	Owned	
River Region Health System	  	Vicksburg	  	341	  	July, 2007	  	Owned	
 	 	 	 	 	
Missouri	  	 	  	 	  	 	  	 	
Moberly Regional Medical Center	  	Moberly	  	101	  	November, 1993	  	Owned	
Northeast Regional Medical Center	  	Kirksville	  	115	  	December, 2000	  	Leased	
 	 	 	 	 	
Nevada	  	 	  	 	  	 	  	 	
Mesa View Regional Hospital	  	Mesquite	  	25	  	July, 2007	  	Owned	
 	 	 	 	 	
New Jersey	  	 	  	 	  	 	  	 	
Memorial Hospital of Salem County	  	Salem	  	140	  	September, 2002	  	Owned	
 
34

Table of Contents

Index to Financial Statements
 	 	 	 	 	 	 	 	 	
Hospital	  	City	  	Licensed
Beds(1)	  	Date of Acquisition/
Lease Inception	  	Ownership Type	
New Mexico	  	 	  	 	  	 	  	 	
Mimbres Memorial Hospital	  	Deming	  	49	  	March, 1996	  	Owned	
Eastern New Mexico Medical Center	  	Roswell	  	162	  	April, 1998	  	Owned	
Alta Vista Regional Hospital	  	Las Vegas	  	54	  	April, 2000	  	Owned	
Carlsbad Medical Center	  	Carlsbad	  	115	  	July, 2007	  	Owned	
Lea Regional Medical Center	  	Hobbs	  	201	  	July, 2007	  	Owned	
Mountain View Regional Medical Center	  	Las Cruces	  	168	  	July, 2007	  	Owned	
 	 	 	 	 	
North Carolina	  	 	  	 	  	 	  	 	
Martin General Hospital	  	Williamston	  	49	  	November, 1998	  	Leased	
 	 	 	 	 	
Ohio	  	 	  	 	  	 	  	 	
Affinity Medical Center	  	Massillon	  	266	  	July, 2007	  	Owned	
Northside Medical Center	  	Youngstown	  	355	  	October, 2010	  	Owned	
Trumbull Memorial Hospital	  	Warren	  	311	  	October, 2010	  	Owned	
Hillside Rehabilitation Hospital (rehabilitation)	  	Warren	  	69	  	October, 2010	  	Owned	
 	 	 	 	 	
Oklahoma	  	 	  	 	  	 	  	 	
Ponca City Medical Center	  	Ponca City	  	140	  	May, 2006	  	Owned	
Deaconess Hospital	  	Oklahoma City	  	291	  	July, 2007	  	Owned	
Woodward Regional Hospital	  	Woodward	  	87	  	July, 2007	  	Leased	
 	 	 	 	 	
Oregon	  	 	  	 	  	 	  	 	
McKenzie-Willamette Medical Center	  	Springfield	  	113	  	July, 2007	  	Owned	
 	 	 	 	 	
Pennsylvania	  	 	  	 	  	 	  	 	
Berwick Hospital	  	Berwick	  	101	  	March, 1999	  	Owned	
Brandywine Hospital	  	Coatesville	  	236	  	June, 2001	  	Owned	
Jennersville Regional Hospital	  	West Grove	  	59	  	October, 2001	  	Owned	
Easton Hospital	  	Easton	  	254	  	October, 2001	  	Owned	
Lock Haven Hospital	  	Lock Haven	  	47	  	August, 2002	  	Owned	
Pottstown Memorial Medical Center	  	Pottstown	  	226	  	July, 2003	  	Owned	
Phoenixville Hospital	  	Phoenixville	  	137	  	August, 2004	  	Owned	
Chestnut Hill Hospital	  	Philadelphia	  	160	  	February, 2005	  	Owned	
Sunbury Community Hospital	  	Sunbury	  	89	  	October, 2005	  	Owned	
Wilkes-Barre General Hospital	  	Wilkes-Barre	  	412	  	April, 2009	  	Owned	
First Hospital Wyoming Valley (psychiatric)	  	Wilkes-Barre	  	135	  	April, 2009	  	Owned	
Regional Hospital of Scranton	  	Scranton	  	230	  	May, 2011	  	Owned	
Special Care Hospital	  	Nanticoke	  	67	  	May, 2011	  	Leased	
Tyler Memorial Hospital	  	Tunkhannock	  	48	  	May, 2011	  	Owned	
 	 	 	 	 	
South Carolina	  	 	  	 	  	 	  	 	
Marlboro Park Hospital	  	Bennettsville	  	102	  	August, 1996	  	Leased	
Chesterfield General Hospital	  	Cheraw	  	59	  	August, 1996	  	Leased	
Springs Memorial Hospital	  	Lancaster	  	231	  	November, 1994	  	Owned	
Carolinas Hospital System — Florence	  	Florence	  	420	  	July, 2007	  	Owned	
Mary Black Memorial Hospital	  	Spartanburg	  	209	  	July, 2007	  	Owned	
Marion Regional Hospital	  	Mullins	  	124	  	July, 2010	  	Owned	
 
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Table of Contents

Index to Financial Statements
 	 	 	 	 	 	 	 	 	
Hospital	  	City	  	Licensed
Beds(1)	  	Date of Acquisition/
Lease Inception	  	Ownership Type	
Tennessee	  	 	  	 	  	 	  	 	
Lakeway Regional Hospital	  	Morristown	  	135	  	May, 1993	  	Owned	
Regional Hospital of Jackson	  	Jackson	  	152	  	January, 2003	  	Owned	
Dyersburg Regional Medical Center	  	Dyersburg	  	225	  	January, 2003	  	Owned	
Haywood Park Community Hospital	  	Brownsville	  	62	  	January, 2003	  	Owned	
Henderson County Community Hospital	  	Lexington	  	45	  	January, 2003	  	Owned	
McKenzie Regional Hospital	  	McKenzie	  	45	  	January, 2003	  	Owned	
McNairy Regional Hospital	  	Selmer	  	45	  	January, 2003	  	Owned	
Volunteer Community Hospital	  	Martin	  	100	  	January, 2003	  	Owned	
Heritage Medical Center	  	Shelbyville	  	60	  	July, 2005	  	Owned	
Sky Ridge Medical Center	  	Cleveland	  	351	  	October, 2005	  	Owned	
Gateway Medical Center	  	Clarksville	  	270	  	July, 2007	  	Owned	
 	 	 	 	 	
Texas	  	 	  	 	  	 	  	 	
Big Bend Regional Medical Center	  	Alpine	  	25	  	October, 1999	  	Owned	
Scenic Mountain Medical Center	  	Big Spring	  	150	  	October, 1994	  	Owned	
Hill Regional Hospital	  	Hillsboro	  	92	  	October, 1994	  	Leased	
Lake Granbury Medical Center	  	Granbury	  	83	  	January, 1997	  	Leased	
South Texas Regional Medical Center	  	Jourdanton	  	67	  	November, 2001	  	Owned	
Laredo Medical Center	  	Laredo	  	326	  	October, 2003	  	Owned	
Weatherford Regional Medical Center	  	Weatherford	  	99	  	November, 2006	  	Leased	
Abilene Regional Medical Center	  	Abilene	  	231	  	July, 2007	  	Owned	
Brownwood Regional Medical Center	  	Brownwood	  	194	  	July, 2007	  	Owned	
College Station Medical Center	  	College Station	  	166	  	July, 2007	  	Owned	
Navarro Regional Hospital	  	Corsicana	  	162	  	July, 2007	  	Owned	
Longview Regional Medical Center	  	Longview	  	131	  	July, 2007	  	Owned	
Woodland Heights Medical Center	  	Lufkin	  	149	  	July, 2007	  	Owned	
San Angelo Community Medical Center	  	San Angelo	  	171	  	July, 2007	  	Owned	
DeTar Healthcare System	  	Victoria	  	308	  	July, 2007	  	Owned	
Cedar Park Regional Medical Center	  	Cedar Park	  	77	  	December, 2007	  	Owned	
Tomball Regional Hospital	  	Tomball	  	358	  	October, 2011	  	Owned	
 	 	 	 	 	
Utah	  	 	  	 	  	 	  	 	
Mountain West Medical Center	  	Tooele	  	44	  	October, 2000	  	Owned	
 	 	 	 	 	
Virginia	  	 	  	 	  	 	  	 	
Southern Virginia Regional Medical Center	  	Emporia	  	80	  	March, 1999	  	Owned	
Southampton Memorial Hospital	  	Franklin	  	105	  	March, 2000	  	Owned	
Southside Regional Medical Center	  	Petersburg	  	300	  	August, 2003	  	Owned	
 	 	 	 	 	
Washington	  	 	  	 	  	 	  	 	
Deaconess Medical Center	  	Spokane	  	388	  	October, 2008	  	Owned	
Valley Hospital and Medical Center	  	Spokane Valley	  	123	  	October, 2008	  	Owned	
 	 	 	 	 	
West Virginia	  	 	  	 	  	 	  	 	
Plateau Medical Center	  	Oak Hill	  	25	  	July, 2002	  	Owned	
Greenbrier Valley Medical Center	  	Ronceverte	  	122	  	July, 2007	  	Owned	
Bluefield Regional Medical Center	  	Bluefield	  	240	  	October, 2010	  	Owned	
 
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Index to Financial Statements
 	 	 	 	 	 	 	 	 	
Hospital	  	City	  	Licensed
Beds(1)	  	Date of Acquisition/
Lease Inception	  	Ownership Type	
Wyoming	  	 	  	 	  	 	  	 	
Evanston Regional Hospital	  	Evanston	  	42	  	November, 1999	  	Owned	

Total Licensed Beds at December 31, 2011	  	 	  	19,695	  	 	  	 	

(1)	Licensed beds are the number of beds for which the appropriate state agency licenses a facility regardless of whether the beds are actually available for patient use.	
(2)	We operate this hospital under a lease-leaseback and operating agreement. We recognize all operating statistics, revenues and expenses associated with this hospital in our consolidated financial statements.	
The real property of substantially all of our wholly-owned hospitals is encumbered by mortgages under the Credit Facility.
The following table lists the hospitals owned by joint venture entities in which we do not have a consolidating ownership interest, along with our percentage ownership interest in the joint venture entity as of December 31, 2011. Information on licensed beds was provided by the majority owner and manager of each joint venture. A subsidiary of HCA is the majority owner of Macon Healthcare LLC, and a subsidiary of UHS is the majority owner of Summerlin Hospital Medical Center LLC and Valley Health System LLC.

Joint Venture	 	Facility Name	 	City	 	State	 	 	Licensed
Beds	 	
Macon Healthcare LLC	 	Coliseum Medical Center (38%)	 	Macon	 	 	GA	  	 	 	250	  	
Macon Healthcare LLC	 	Coliseum Psychiatric Center (38%)	 	Macon	 	 	GA	  	 	 	60	  	
Macon Healthcare LLC	 	Coliseum Northside Hospital (38%)	 	Macon	 	 	GA	  	 	 	103	  	
Summerlin Hospital Medical Center LLC	 	Summerlin Hospital Medical Center (26.1%)	 	Las Vegas	 	 	NV	  	 	 	454	  	
Valley Health System LLC	 	Desert Springs Hospital (27.5%)	 	Las Vegas	 	 	NV	  	 	 	293	  	
Valley Health System LLC	 	Valley Hospital Medical Center (27.5%)	 	Las Vegas	 	 	NV	  	 	 	404	  	
Valley Health System LLC	 	Spring Valley Hospital Medical Center (27.5%)	 	Las Vegas	 	 	NV	  	 	 	231	  	
Valley Health System LLC	 	Centennial Hills Hospital Medical Center (27.5%)	 	Las Vegas	 	 	NV	  	 	 	171	  	
 
Item 3.	Legal Proceedings	
From time to time, we receive various inquiries or subpoenas from state regulators, fiscal intermediaries, the Centers for Medicare and Medicaid Services and the Department of Justice regarding various Medicare and Medicaid issues. In addition to the subpoenas discussed below, we are currently responding to subpoenas for matters such as: DME vendor relationships and patient choice discharge instructions at our Washington hospitals, operations of a cardiovascular surgery department at our Oregon hospital and lab operations at a New Mexico hospital. In addition, we are subject to other claims and lawsuits arising in the ordinary course of our business. We are not aware of any pending or threatened litigation that is not covered by insurance policies or reserved for in our financial statements or which we believe would have a material adverse impact on us; however, some pending or threatened proceedings against us may involve potentially substantial amounts as well as the possibility of civil, criminal, or administrative fines, penalties, or other sanctions, which could be material. Settlements of suits involving Medicare and Medicaid issues routinely require both monetary payments as well as corporate integrity agreements. Additionally, qui tam or “whistleblower” actions initiated under the civil False Claims Act may be pending but placed under seal by the court to comply with the False Claims Act’s requirements for filing such suits.
 
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Index to Financial Statements
Community Health Systems, Inc. Legal Proceedings
On February 10, 2006, we 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 “intergovernmental payments,” “upper payment limit programs,” and “Medicaid disproportionate share hospital payments.” The February 2006 letter focused on our hospitals in three states: Arkansas, New Mexico and South Carolina. On August 31, 2006, we received a follow up letter from the Department of Justice requesting additional documents relating to the programs in New Mexico and the payments to our three hospitals in that state. Through the beginning of 2009, we 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 us that it believed that we and these 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’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 30, 2009. The relator filed a second amended complaint on July 1, 2009. Both of these complaints expand the time period during which alleged improper payments were made. We filed motions to dismiss all of the federal government’s and the relator’s claims on August 28, 2009. On March 19, 2010, the court granted in part and denied in part our motion to dismiss as to the relator’s complaint. On July 7, 2010, the court denied our motion to dismiss the federal government’s complaint in intervention. On July 21, 2010, we filed our answer and pretrial discovery began. On June 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 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 27, 2012 and there is currently no trial date set. We are vigorously defending this action.
On June 12, 2008, two of our hospitals received letters from the United States Attorney’s Office for the Western District of New York requesting documents in an investigation it was conducting into billing practices with respect to kyphoplasty procedures performed during the period January 1, 2002 through June 9, 2008. On September 16, 2008, one of our 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. We have been informed that similar investigations have been initiated at unaffiliated facilities in Alabama, South Carolina, Indiana and other states. We believe that this investigation is related to a qui tam settlement between the same United States Attorney’s office and the manufacturer and distributor of the Kyphon product, which is used in performing the kyphoplasty procedure. We are cooperating with the investigation and we are continuing to evaluate and discuss this matter with the federal government.
On April 19, 2009, we were served in Roswell, New Mexico with an answer and counterclaim in the case of Roswell Hospital Corporation d/b/a Eastern New Mexico Medical Center vs. Patrick Sisneros and Tammie McClain (sued as Jane Doe Sisneros). The case was originally filed as a collection matter. The counterclaim was filed as a putative class action and alleged theories of breach of contract, unjust enrichment, misrepresentation, prima facie tort, Fair Trade Practices Act and violation of the New Mexico RICO statute. On May 7, 2009, the hospital filed a notice of removal to federal court. On July 27, 2009, the case was remanded to state court for lack of a federal question. A motion to dismiss and a motion to dismiss misjoined counterclaim plaintiffs were filed on October 20, 2009. These motions were denied. Extensive discovery has been conducted. A motion for class certification for all uninsured patients was heard on March 3 through March 5, 2010 and on April 13, 2010, the state district court judge certified the case as a class action. Numerous hearings have been conducted to assess the sufficiency of the methodology used to determine class damages. On December 5, 2011, the court entered an order approving the suggested damages methodology. We are vigorously defending this action.
 
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Index to Financial Statements
On December 7, 2009, we received a document subpoena from the United States Department of Health and Human Services, Office of the Inspector General, or OIG, requesting documents related to our hospital in Laredo, Texas. The categories of documents requested included case management, resource management, admission criteria, patient medical records, coding, billing, compliance, the Joint Commission accreditation, physician documentation, payments to referral sources, transactions involving physicians, disproportionate share hospital status and audits by the hospital’s Quality Improvement organization. On January 22, 2010, we received a “request for information or assistance” from the OIG’s Office of Investigation requesting patient medical records from Laredo Medical Center in Laredo, Texas for certain Medicaid patients with an extended length of stay. Additional requests for records have also been received, including a request containing follow-up questions received on January 5, 2011. We continue to cooperate fully with this investigation.
On May 16, 2011, we received a subpoena dated May 10, 2011 from the Houston Office of the United States Department of Health and Human Services, OIG, requesting 71 patient medical records from our hospital in Shelbyville, Tennessee, and directing the return of the records to the Assistant United States Attorney handling the Laredo investigation. We are unaware of any connection between these two facilities other than they are both affiliated with us. We continue to cooperate fully with this investigation.
On September 20, 2010, we received a letter from the United States Department of Justice, Civil Division, advising us that an investigation is being conducted to determine whether certain hospitals have improperly submitted claims for payment for implantable cardioverter defibrillators, or ICD. The period of time covered by the investigation is 2003 to the present. The letter states that the Department of Justice’s data indicates that many of our hospitals have claims that need to be reviewed to determine if Medicare payment was appropriate. We understand that the Department of Justice has submitted similar requests to many other hospitals and hospital systems across the country as well as to the ICD manufacturers themselves. We continue to fully cooperate with the government in this investigation and have provided requested records and documents.
On November 15, 2010, we were served with substantially identical Civil Investigative Demands (CIDs) from the Office of Attorney General, State of Texas for all 18 of our affiliated Texas hospitals. The subject of the requests appears to concern emergency department procedures and billing. We have complied with these requests and are providing all documentation and reports requested. We are continuing to cooperate with the government in this investigation.
On April 8, 2011, we received a document subpoena, dated March 31, 2011, from the United States Department of Health and Human Services, OIG, in connection with an investigation of possible improper claims submitted to Medicare and Medicaid. The subpoena, issued from the OIG’s Chicago, Illinois office, requested documents from all of our hospitals and appears to concern emergency department processes and procedures, including our hospitals’ 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 our relationships with emergency department physicians, including financial arrangements. The subpoena’s requests were very similar to those contained in the Civil Investigative Demands received by our Texas hospitals from the Office of the Attorney General of the State of Texas on November 15, 2010 (described above). We are continuing to cooperate with the government (including production of documents and interviews with witnesses) in this investigation.
On April 11, 2011, Tenet Healthcare Corporation, or Tenet, 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 we committed violations of certain federal securities laws by making certain statements in various proxy materials filed with the Securities and Exchange Commission, or SEC, in connection with our offer to purchase Tenet. Tenet alleged that we engaged in a practice to under-utilize observation status and over-utilize inpatient admission status and asserts that by doing so, we created undisclosed financial and legal liability to federal, state and private payors. The suit seeks declaratory and injunctive relief and Tenet’s costs. On April 19, 2011, we filed a motion to dismiss the complaint. On April 28, 2011, we responded to the allegations during our earnings release conference call (see our Form 8-K furnished on April 28, 2011). On May 16, 2011, Tenet filed an amended complaint. On June 29, 2011, we filed a motion to dismiss the amended complaint. A hearing on our motion to dismiss occurred on September 8, 2011. The court took this matter under advisement. We will continue to vigorously defend this suit.
 
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On April 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 7, 2009. The suit is brought under the False Claims Act and alleges that Lutheran Hospital of Indiana billed the Medicare program for (a) false 23 hour observation after outpatient surgeries and procedures, and (b) 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 us as part of the July 25, 2007 merger transaction with Triad Hospitals, Inc. The complaint also includes allegations of age discrimination in Ms. Reuille’s 2006 reassignment and retaliation in connection with her resignation on October 1, 2008. We 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 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 “allegations of improper billing for inpatient care at other hospitals associated with Community Health Systems, Inc. … asserted in other qui tam complaints in other jurisdictions.” The motion stated that the Department of Justice has “consolidated its investigations” of the Company and other related entities and that “the Civil Division of the Department of Justice, multiple United States Attorneys’ offices, and the Office of Inspector General for the Department of Health and Human Services, or HHS, 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.” 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 our 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 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 “under seal,” 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’s allegations, the defendant is prohibited from revealing to anyone even that the partial unsealing has occurred. As the investigation proceeds, we may learn of additional qui tam suits filed against us or our affiliated hospitals or related entities, or that contact letters, document requests, or medical record requests we have received in the past from various governmental agencies are generated from qui tam cases filed under seal. The motion filed on April 22, 2011 concluded by requesting a stay of the litigation in the Reuille case for 180 days, and on April 25, 2011, the court granted the motion. Our management company subsidiary, Community Health Systems Professional Services Corporation, the defendant in the Reuille case, consented to the request for the stay. On October 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. We 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. Our response setting forth our legal arguments was filed on October 24, 2011. On November 1, 2011, the court denied the motion to transfer the matter and extended the stay until April 30, 2012. We are cooperating fully with the government in its investigations.
On May 13, 2011, we received a subpoena from the SEC requesting documents related to or requested in connection with the various inquiries, lawsuits and investigations regarding, generally, emergency room admissions or observation practices at our hospitals. The subpoena also requested documents relied upon by us in responding to the Tenet litigation, as well as other communications about the Tenet litigation. As with all government investigations, we are cooperating fully with the SEC.
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 5, 2011; De Zheng v. Community Health Systems, Inc., Wayne T. Smith and W. Larry Cash, filed May 12, 2011; and Minneapolis Firefighters Relief Association v.
 
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Community Health Systems, Inc., Wayne T. Smith, W. Larry Cash and Thomas Mark Buford, filed June 2, 2011. All three seek class certification on behalf of purchasers of our common stock between July 27, 2006 and April 11, 2011 and allege that misleading statements resulted in artificially inflated prices for our common stock. On September 20, 2011, all three were assigned to the same judge as related cases. On December 28, 2011, the court consolidated all three shareholder cases for pretrial purposes, selected NYC Funds as lead plaintiffs, and selected NYC Funds’ counsel as lead plaintiffs’ 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. 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 24, 2011; Roofers Local No. 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 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 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 28, 2011, the court ordered that the Plumbers and Pipefitters Local Union No. 630 Pension Annuity Trust Fund action and the Roofers Local No. 149 Pension Fund action be consolidated for pretrial purposes, and appointed the derivative plaintiffs’ lead counsel. On November 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 15, 2012. We believe all of these matters are without merit and will vigorously defend them.
On June 2, 2011, an order was entered unsealing a relator’s qui tam complaint in the matter of U.S. ex. rel Wood M. Deming, MD, individually and on behalf of Regional Cardiology Consultants, PC v. Jackson-Madison County General Hospital, an Affiliate of West Tennessee Healthcare, Regional Hospital of Jackson, a Division of Community Health Systems Professional Services Corporation, James Moss, individually, Timothy Puthoff, individually, Joel Perchik, MD, individually, and Elie H. Korban, MD, individually. The action is pending in the Western District of Tennessee, Jackson Division. Regional Hospital of Jackson is an affiliated hospital and Mr. Puthoff is a former chief executive officer there. The Order recited that the United States had elected to intervene to a limited degree only concerning the claims against Dr. Korban for false and fraudulent billing for allegedly unnecessary stent procedures and for causing the submission of false claims by the hospitals. The United States expressly declined to intervene in all other claims against all other named defendants. On July 28, 2011, we were served by the relator. On September 7, 2011, we filed our answer. On January 26, 2012, the relator was granted unopposed leave to file an amended complaint. We believe the claims against our hospital are without merit and we will vigorously defend this case.
On June 13, 2011, our hospital in Easton, Pennsylvania received a document subpoena from the Philadelphia office of the United States Department of Justice. The documents requested included medical records for certain urological procedures performed by a non-employed physician who is no longer on the medical staff and other records concerning the hospital’s relationship with the physician. Certain procedures performed by the physician had been previously reviewed and appropriate repayments had been made. We are cooperating fully with the government in this investigation.
On February 2, 2012, an order was entered unsealing a relator’s qui tam complaint in the matter of Pamela Gronemeyer ex rel. United States of America v. Crossroads Community Hospital. The action is pending in the United States District Court, Southern District of Illinois. Crossroads Community Hospital is an affiliated hospital. The order recited that the United States had declined to intervene in this matter. We had previously disclosed this matter in the context of our response to a subpoena concerning blood administration practices at an affiliated Illinois hospital. We believe the claim against our hospital is without merit and we will vigorously defend this case.
Management of Significant Legal Proceedings
In accordance with our governance documents, including our Governance Guidelines and the charter of the Audit and Compliance Committee, our management of significant legal proceedings is overseen by the independent
 
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members of the Board of Directors and, in particular, the Audit and Compliance Committee. The Audit and Compliance Committee is charged with oversight of compliance, regulatory and litigation matters, and enterprise risk management. All significant legal proceedings and allegations of financial statement fraud, error, or misstatement are promptly referred to the Audit and Compliance Committee for its oversight and evaluation. Consistent with New York Stock Exchange and Sarbanes-Oxley independence requirements, the Audit and Compliance Committee is comprised entirely of individuals who are independent of Company management, and all three members of the Audit and Compliance Committee are “audit committee financial experts” as defined in the Exchange Act.
In addition, the Audit and Compliance Committee and the other independent members of the Board of Directors oversee the functions of the voluntary compliance program, including its auditing and monitoring functions and confidential disclosure program. In recent years, the voluntary compliance program has addressed the potential for a variety of billing errors that might be the subject of audits and payment denials by the CMS Recovery Audit Contractors’ permanent project, including MS-DRG coding, outpatient hospital and physician coding and billing, and medical necessity for services (including a focus on hospital stays of very short duration). Efforts by management, through the voluntary compliance program, to identify and limit risk from these government audits included significant policy and guidance revisions, training and education, and auditing. With respect to Medicare inpatient admissions, improvements in case management, including updating of inpatient medical necessity criteria, heightened focus on correct use of observation status, and new policies requiring unambiguous signed physician orders prior to billing, were all adopted in 2009 and 2010. These activities were communicated to and discussed with the Audit and Compliance Committee.
With respect to the various assertions of third parties about the Audit and Compliance Committee’s oversight:
 
 	•	 	The September 2010 allegation made by CtW Investment Group (that a high percentage of our hospitals had a high percentage of Medicare short-stay inpatient admissions, which could signal billing improprieties) was promptly referred to the Audit and Compliance Committee and an investigation was authorized and initiated with outside counsel and consultants in December 2010 (on February 15, 2012, we received a follow-up letter from CtW Investment Group that discusses the inherent limitations in using only publicly available data and points out that other factors can affect admission and length of stay patterns; the letter also concludes that CtW Investment Group is now satisfied with the commitment of the Company, its management and its Board of Directors to acting in accordance with their respective duties and obligations);	
 
 	•	 	Prior to the receipt of the civil investigative demands in Texas in November 2010, no concerns had been raised that the Pro-MED emergency department management system inappropriately caused physicians or hospitals to order tests or admit patients, and we continue to dispute that it does so; and	
 
 	•	 	The purported “observation rate” metric, which served as a basis for allegations contained in Tenet’s lawsuit, is not generally accepted in the industry and fails to account for patients who are treated and discharged promptly (i.e., neither admitted as inpatients nor placed in observation), we continue to dispute the validity of the metric in the manner used by Tenet or that the metric is a meaningful indicator of incorrect billing practices.	
Since the filing of the Tenet lawsuit on April 11, 2011, our Audit and Compliance Committee and/or Board of Directors has met, on average, monthly to review the status of the lawsuits and investigations relating to allegations of improper billing for inpatient care at our hospitals and to oversee management in connection with our investigation and defense of these matters. At many of those meetings, the independent members of the Board of Directors have met in separate session, first with outside counsel handling the investigations and lawsuits, and then alone, to discuss their duties and oversight of these matters. The independent members of the Board of Directors have determined that (a) the Audit and Compliance Committee is the correct and most capable group of directors to oversee these matters and, given the independence and authority of the Audit and Compliance Committee, there is no need to form a further special committee to oversee these matters, and (b) outside counsel is handling the investigation and defense of these matters in the best interests of us and our stockholders and there is no need to engage separate counsel in connection with the investigation of these matters.
The independent members of our Board of Directors remain fully engaged in the oversight of these matters. We intend to provide additional updates about these matters as we are able to do so (taking into account any potential impact on these matters) through appropriate, widely-disseminated means.
 
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Triad Hospitals, Inc. Legal Proceedings
In a case styled U.S. ex rel. Bartlett vs. Quorum Health Resources, LLC, et al., pending in the Western District of Pennsylvania, Johnstown Division, the relator alleges in his second amended complaint, filed in January 2006 (the first amended complaint having been dismissed), that QHR conspired with an unaffiliated hospital to pay illegal remuneration in violation of the federal anti-kickback statute and the Stark Law, thus causing false claims to be filed. A renewed motion to dismiss was filed in March 2006 asserting that the second amended complaint did not cure the defects contained in the first amended complaint. In September 2006, the hospital and one of the other defendants affiliated with the hospital filed for protection under Chapter 11 of the federal bankruptcy code, which imposed an automatic stay on proceedings in the case. Relators entered into a settlement agreement with the hospital, subject to confirmation of the hospital’s reorganization plan. The District Court conducted a status conference on January 30, 2009 and later convened another conference on March 30, 2009 and heard arguments on whether to proceed with a motion to dismiss, but did not make a ruling. The government and relator have reached a settlement with the hospital. On March 22, 2011, the court denied all other defendants’ motions to dismiss. Initial written discovery is underway. We believe this case is without merit and will continue to vigorously defend it.
 
Item 4.	Mine Safety Disclosures	
Not applicable.
PART II
 
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	
We completed an initial public offering of our common stock on June 14, 2000. Our common stock began trading on June 9, 2000 and is listed on the New York Stock Exchange under the symbol CYH. At February 15, 2012, there were approximately 47 record holders of our common stock. The following table sets forth, for the periods indicated, the high and low sale prices per share of our common stock as reported by the New York Stock Exchange.

 	  	High	 	  	Low	 	
Year Ended December 31, 2010	  	 	 	 	  	 	 	 	
First Quarter	  	$	40.84	  	  	$	31.00	  	
Second Quarter	  	 	42.30	  	  	 	33.21	  	
Third Quarter	  	 	34.11	  	  	 	25.63	  	
Fourth Quarter	  	 	38.00	  	  	 	29.08	  	
Year Ended December 31, 2011	  	 	 	 	  	 	 	 	
First Quarter	  	$	42.50	  	  	$	34.62	  	
Second Quarter	  	 	41.09	  	  	 	22.33	  	
Third Quarter	  	 	27.63	  	  	 	15.91	  	
Fourth Quarter	  	 	21.92	  	  	 	14.61	  	
 
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Stock Performance Graph
The following graph sets forth the cumulative return of our common stock during the five year period ended December 31, 2011, as compared to the cumulative return of the Standard & Poor’s 500 Stock Index (S&P 500) and the cumulative return of the Dow Jones Healthcare Index. The graph assumes an initial investment of $100 in our common stock and in each of the foregoing indices and the reinvestment of dividends where applicable.

We have not paid any cash dividends since our inception, and do not anticipate the payment of cash dividends in the foreseeable future. Our Credit Facility limits our ability to pay dividends and/or repurchase stock to an amount not to exceed $50 million in the aggregate after November 5, 2010, the date of our initial amendment and restatement of our Credit Facility. In addition, our Credit Facility allows us to repurchase stock in an amount not to exceed the aggregate amount of proceeds from the exercise of stock options. The indentures governing our Senior Notes also limit our ability to pay dividends and/or repurchase stock. As of December 31, 2011, under the most restrictive test under these agreements, we have approximately $30.1 million remaining available with which to pay permitted dividends and/or make stock and Senior Notes repurchases.
On December 14, 2011, we adopted a new open market repurchase program for up to 4,000,000 shares of our common stock, not to exceed $100 million in repurchases. The new repurchase program will conclude at the earliest of three years, when the maximum number of shares has been repurchased, or when the maximum dollar amount has been expended. Through December 31, 2011, no shares have been purchased and retired under this program.
On September 15, 2010, we commenced an open market repurchase program for up to 4,000,000 shares of our common stock, not to exceed $100 million in repurchases. This program will conclude at the earliest of three years from the commencement date, when the maximum number of shares has been repurchased or when the maximum dollar amount has been expended. During the three months ended December 31, 2011, we did not repurchase any shares under this program. During the year ended December 31, 2011, we repurchased and retired 3,469,866 shares at a weighted-average price of $24.68 per share. The cumulative number of shares that have been repurchased and retired under this program through December 31, 2011 is 3,921,138 shares at a weighted-average price of $25.39 per share.
 
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Item 6.	Selected Financial Data	
The following table summarizes specified selected financial data and should be read in conjunction with our related Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements. The amounts shown below have been adjusted for discontinued operations.
Community Health Systems, Inc.
Five Year Summary of Selected Financial Data

 	 	Year Ended December 31,	 	
 	 	2011	 	 	2010	 	 	2009	 	 	2008	 	 	2007(1)	 	
 	 	(in thousands, except share and per share data)	 	
 	 	 	 	 	 	
Consolidated Statement of Income Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	
Net operating revenues	 	$	13,626,168	  	 	$	12,623,374	  	 	$	11,742,454	  	 	$	10,563,460	  	 	$	6,915,234	  	
 	 	 	 	 	 	
Income from operations	 	 	1,134,485	  	 	 	1,121,044	  	 	 	1,064,831	  	 	 	970,086	  	 	 	470,598	  	
 	 	 	 	 	 	
Income from continuing operations	 	 	335,894	  	 	 	355,213	  	 	 	305,811	  	 	 	238,386	  	 	 	70,351	  	
 	 	 	 	 	 	
Net income	 	 	277,623	  	 	 	348,441	  	 	 	306,377	  	 	 	252,734	  	 	 	44,691	  	
 	 	 	 	 	 	
Net income attributable to noncontrolling interests	 	 	75,675	  	 	 	68,458	  	 	 	63,227	  	 	 	34,430	  	 	 	14,402	  	
 	 	 	 	 	 	
Net income attributable to Community Health Systems, Inc	 	 	201,948	  	 	 	279,983	  	 	 	243,150	  	 	 	218,304	  	 	 	30,289	  	
 	 	 	 	 	 	
Basic earnings per share attributable to Community Health Systems, Inc. common stockholders (2):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	
Continuing operations	 	$	2.89	  	 	$	3.13	  	 	$	2.68	  	 	$	2.18	  	 	$	0.61	  	
Discontinued operations	 	 	(0.65	) 	 	 	(0.07	) 	 	 	—  	  	 	 	0.16	  	 	 	(0.29	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	2.24	  	 	$	3.05	  	 	$	2.68	  	 	$	2.34	  	 	$	0.32	  	

Diluted earnings per share attributable to Community Health Systems, Inc. common stockholders (2):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	 	$	2.87	  	 	$	3.08	  	 	$	2.65	  	 	$	2.16	  	 	$	0.60	  	
Discontinued operations	 	 	(0.64	) 	 	 	(0.07	) 	 	 	—  	  	 	 	0.16	  	 	 	(0.28	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	2.23	  	 	$	3.01	  	 	$	2.66	  	 	$	2.32	  	 	$	0.32	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average number of shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	89,966,933	  	 	 	91,718,791	  	 	 	90,614,886	  	 	 	93,371,782	  	 	 	93,517,337	  	
 	 	 	 	 	 	
Diluted (3)	 	 	90,666,348	  	 	 	92,946,048	  	 	 	91,517,274	  	 	 	94,288,829	  	 	 	94,642,294	  	
 	 	 	 	 	 	
Consolidated Balance Sheet Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	
Cash and cash equivalents	 	$	129,865	  	 	$	299,169	  	 	$	344,541	  	 	$	220,655	  	 	$	133,574	  	
Total assets	 	 	15,208,840	  	 	 	14,698,123	  	 	 	14,021,472	  	 	 	13,818,254	  	 	 	13,493,644	  	
Long-term obligations	 	 	10,437,513	  	 	 	10,418,234	  	 	 	10,179,402	  	 	 	10,287,535	  	 	 	9,974,516	  	
Redeemable noncontrolling interests in equity of consolidated subsidiaries	 	 	395,743	  	 	 	387,472	  	 	 	368,857	  	 	 	348,816	  	 	 	346,999	  	
Community Health Systems, Inc. stockholders’ equity	 	 	2,397,096	  	 	 	2,189,464	  	 	 	1,950,635	  	 	 	1,611,029	  	 	 	1,687,293	  	
Noncontrolling interests in equity of consolidated subsidiaries	 	 	67,349	  	 	 	60,913	  	 	 	64,782	  	 	 	61,457	  	 	 	51,419	  	
 
(1)	Includes the results of operations of the former Triad hospitals from July 25, 2007, the date of acquisition.	
(2)	Total per share amounts may not add due to rounding.	
(3)	See Note 12 to the Consolidated Financial Statements, included in Item 8 of this Form 10-K.	
 
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Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	
You should read this discussion together with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements and “Selected Financial Data” included elsewhere in this Form 10-K.
Executive Overview
We are one of the largest publicly-traded operators of hospitals in the United States in terms of number of facilities and net operating revenues. We provide healthcare services through the hospitals that we own and operate in non-urban and selected urban markets. We generate revenue primarily by providing a broad range of general hospital healthcare services to patients in the communities in which we are located. We currently own and operate 133 hospitals comprised of 129 general acute care hospitals and four stand-alone rehabilitation or psychiatric hospitals. In addition, we own and operate home care agencies, located primarily in markets where we also operate a hospital, and through our wholly-owned subsidiary, Quorum Health Resources, LLC, or QHR, we provide management and consulting services to non-affiliated general acute care hospitals located throughout the United States. For the hospitals and home care agencies that we own and operate, we are paid for our services by governmental agencies, private insurers and directly by the patients we serve. For our management and consulting services, we are paid by the non-affiliated hospitals utilizing our services.
In 2011, we continued the execution of our acquisition strategy by acquiring a total of four hospitals located in Scranton, Pennsylvania; Tunkhannock, Pennsylvania; Nanticoke, Pennsylvania and Tomball, Texas. In 2010, we acquired a total of five hospitals located in Marion, South Carolina; Youngstown and Warren, Ohio and Bluefield, West Virginia.
Additionally, during 2011, we sold three hospitals and a multi-specialty physician clinic. Accordingly, the related results of operations, impairment of long-lived assets held for sale and the loss on sale of these entities have been classified as discontinued operations in the consolidated statements of income for all years presented.
During 2011, we experienced same-store decreases of 5.6% in inpatient admissions and 0.7% in adjusted admissions, when compared to the year ended December 31, 2010. Same-store outpatient surgeries increased 4.0% in 2011, when compared to the year ended December 31, 2010. Contributing to the decrease in inpatient admissions were decreases in admissions from women’s services including obstetrics and gynecology, reductions in one day stay inpatient admissions from the emergency room, reductions in surgical inpatient admissions, reductions due to certain service closures in a few of our hospitals and reductions due to competition and weather. Offsetting these decreases, we experienced increases in outpatient surgical visits and outpatient registrations and had an increase in the average acuity of inpatient admissions. Our net operating revenues for the year ended December 31, 2011 increased to approximately $13.6 billion, as compared to approximately $12.6 billion for the year ended December 31, 2010. The loss on early extinguishment of debt decreased income from continuing operations, before noncontrolling interests for the year ended December 31, 2011, resulting in a decrease of 5.4% over the year ended December 31, 2010. The loss on early extinguishment of debt related to the purchase of $1.0 billion aggregate principal amount of the 8  7 / 8 % Senior Notes with proceeds from the sale of $1.0 billion aggregate principal amount of the 8% Senior Notes. Excluding the loss on early extinguishment of debt, our income from continuing operations, before noncontrolling interests, for the year ended December 31, 2011 increased 6.4% compared to the year ended December 31, 2010. This increase is due primarily to higher revenues from an increase in outpatient services, which offset the decrease in inpatient admissions, an increase in average acuity of inpatient admissions and the elimination of certain unprofitable services in a few of our hospitals. It also reflects our ability to reduce supply expense as a percentage of net operating revenues, although our expense savings were partially offset by expenses related to the Tenet lawsuit, shareholder lawsuits and government investigations.
Self-pay revenues represented approximately 12.0% of our net operating revenues in 2011 compared to 11.5% in 2010. The amount of foregone revenue related to providing charity care services as a percentage of net operating revenues was approximately 4.8% and 4.1% in 2011 and 2010, respectively. Direct and indirect costs incurred by us in providing charity care services were approximately 0.9% and 0.8% of net operating revenues in 2011 and 2010, respectively.
 
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The Patient Protection and Affordable Care Act, or PPACA, was signed into law on March 23, 2010. In addition, the Health Care and Education Affordability Reconciliation Act of 2010, or Reconciliation Act, which contains a number of amendments to PPACA, was signed into law on March 30, 2010. These two healthcare acts, referred to collectively as the Reform Legislation, include a mandate that requires substantially all United States citizens to maintain medical insurance coverage which will ultimately increase the number of persons with access to health insurance in the United States. The Reform Legislation should result in a reduction in uninsured patients, which should reduce our expense from uncollectible accounts receivable; however, this legislation makes a number of other changes to Medicare and Medicaid, such as reductions to the Medicare annual market basket update for federal fiscal years 2010 through 2019, a productivity offset to the Medicare market basket update, and a reduction to the Medicare and Medicaid disproportionate share payments, that could adversely impact the reimbursement received under these programs. The various provisions in the Reform Legislation that directly or indirectly affect reimbursement are scheduled to take effect over a number of years, and we cannot predict their impact at this time. Other provisions of the Reform Legislation, such as requirements related to employee health insurance coverage, should increase our operating costs.
Also included in the Reform Legislation are provisions aimed at reducing fraud, waste and abuse in the healthcare industry. These provisions allocate significant additional resources to federal enforcement agencies and expand the use of private contractors to recover potentially inappropriate Medicare and Medicaid payments. The Reform Legislation amends several existing federal laws, including the federal anti-kickback statute and the False Claims Act, making it easier for government agencies and private plaintiffs to prevail in lawsuits brought against healthcare providers. These amendments also make it easier for potentially severe fines and penalties to be imposed on healthcare providers accused of violating applicable laws and regulations.
In a number of markets, we have partnered with local physicians in the ownership of our facilities. Such investments have been permitted under an exception to the physician self-referral law, or the Stark Law, that allows physicians to invest in an entire hospital (as opposed to individual hospital departments). The Reform Legislation changes the “whole hospital” exception to the Stark Law. The Reform Legislation permits existing physician investments in a whole hospital to continue under a “grandfather” clause if the arrangement satisfies certain requirements and restrictions, but physicians became prohibited, from the time the Reform Legislation became effective, from increasing the aggregate percentage of their ownership in the hospital. The Reform Legislation also restricts the ability of existing physician-owned hospitals to expand the capacity of their facilities.
The impact of the Reform Legislation on each of our hospitals will vary depending on payor mix and a variety of other factors. We anticipate that many of the provisions in the Reform Legislation will be subject to further clarification and modification through the rule-making process, the development of agency guidance and judicial interpretations. Moreover, twenty-six state attorneys general have jointly filed a challenge to certain aspects of the Reform Legislation. Currently, rulings in four separate federal Courts of Appeals have led to a split among the federal Circuit Courts regarding the constitutionality of the Reform Legislation. The Fourth Circuit, Sixth Circuit and the Court of Appeals for the D.C. Circuit have ruled in favor of the Reform Legislation while the Eleventh Circuit ruled the individual mandate within the Reform Legislation unconstitutional. The United States Supreme Court granted certiorari on or about November 14, 2011 to hear the appeal of the Eleventh Circuit’s ruling, with oral argument set for March 26 through 28, 2012. The Supreme Court will hear oral argument on four issues: (1) does the Anti-Injunction Act bar a legal challenge to the individual mandate aspect of the Reform Legislation until that mandate takes effect in 2014; (2) is the individual mandate aspect of the Reform Legislation constitutional; (3) if not, is the individual mandate aspect of the Reform Legislation severable from the Reform Legislation as a whole such that it may be stricken without nullifying the Reform Legislation in its entirety and (4) can the states be compelled by the federal government to expand their Medicaid expenditures or risk losing federal funding if they refuse. We cannot predict the impact the Reform Legislation may have on our business, results of operations, cash flow, capital resources and liquidity or the ultimate outcome of the Supreme Court case. Furthermore, we cannot predict whether we will be able to modify certain aspects of our operations to offset any potential adverse consequences from the Reform Legislation.
In addition to the Reform Legislation, the American Recovery and Reinvestment Act of 2009 included provisions for implementing health information technology under the Health Information Technology for Economic and Clinical Health Act, or HITECH. These provisions were designed to increase the use of electronic health records, or EHR, technology and establish the requirements for a Medicare and Medicaid incentive payments program
 
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beginning in 2011 for eligible hospitals and providers that adopt and meaningfully use certified EHR technology. These incentive payments are intended to offset a portion of the costs incurred to implement and qualify as a meaningful user of EHR. Rules adopted in July 2010 by the Department of Health and Human Services established an initial set of standards and certification criteria. Our hospital facilities have begun to implement EHR technology on a facility-by-facility basis beginning in 2011. We anticipate recognizing incentive reimbursement related to the Medicare or Medicaid incentives as we are able to implement the certified EHR technology, meet the defined “meaningful use criteria,” and information from completed cost report periods is available from which to calculate the incentive reimbursement. The timing of recognizing incentive reimbursement will not correlate with the timing of recognizing operating expenses and incurring capital costs in connection with the implementation of EHR technology which may result in material period-to-period changes in our future results of operations. Hospitals that do not qualify as a meaningful user of EHR technology by 2015 are subject to a reduced market basket update to the inpatient prospective payment system standardized amount in 2015 and each subsequent fiscal year. Although we believe that our hospital facilities will be in compliance with the EHR standards by 2015, there can be no assurance that all of our facilities will be in compliance and therefore not subject to the penalty provisions of HITECH. During the year ended December 31, 2011, we recognized approximately $63.4 million of HITECH incentive reimbursements from Medicaid, which are presented as a reduction of operating expenses.
Effective January 1, 2012, we completed the acquisition of Moses Taylor Healthcare System, located in northeast Pennsylvania. This healthcare system includes Moses Taylor Hospital in Scranton, Pennsylvania (217 licensed beds) and Mid-Valley Hospital in Peckville, Pennsylvania (25 licensed beds). The total cash consideration paid at closing for long-lived assets was approximately $152.0 million and for preliminary net working capital was approximately $10.0 million. We have signed definitive agreements for the acquisition of two hospitals, located in York, Pennsylvania and Blue Island, Illinois, which are scheduled to close in 2012.
In addition, effective February 2, 2012, we completed an amendment and restatement of our existing Credit Facility. The amendment extended by two and a half years the maturity date of $1.6 billion of our existing non-extended term loans under the Credit Facility to January 25, 2017 (subject to customary acceleration events) or, if more than $50 million of our 8  7 / 8 % Senior Notes are outstanding on April 15, 2015, to April 15, 2015. The amendment also increased the pricing on the newly extended term loans by 125 basis points and amended certain covenants and certain other terms and conditions of the Credit Facility.
As a result of our current levels of cash, available borrowing capacity, long-term outlook on our debt repayments, the refinancing of our term loans and our continued projection of our ability to generate cash flows, we do not anticipate a significant impact on our ability to invest the necessary capital in our business over the next twelve months and into the foreseeable future. We believe there continues to be ample opportunity for growth in substantially all of our markets by decreasing the need for patients to travel outside their communities for healthcare services. Furthermore, we continue to benefit from synergies from our acquisitions and will continue to strive to improve operating efficiencies and procedures in order to improve our profitability at all of our hospitals.
Acquisitions and Divestitures
Effective October 22, 2011, we sold Cleveland Regional Medical Center, located in Cleveland, Texas, and other related healthcare assets affiliated with the hospital to New Directions Health Systems, LLC for approximately $0.9 million in cash. The carrying amount of the net assets sold in this transaction, including an allocation of reporting unit goodwill, was approximately $14.2 million.
Effective October 1, 2011, we completed the acquisition of Tomball Regional Hospital (358 licensed beds) located in Tomball, Texas. The total cash consideration paid for fixed assets and working capital was approximately $192.0 million and $17.5 million, respectively, with additional consideration of $15.8 million assumed in liabilities, for a total consideration of $225.3 million. Based upon our preliminary purchase price allocation relating to this acquisition as of December 31, 2011, approximately $30.8 million of goodwill has been recorded. The preliminary allocation of the purchase price has been determined by us based on available information and is subject to settling amounts related to purchased working capital and final appraisals of tangible and intangible assets. Adjustments to the purchase price allocation are not expected to be material.
 
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Effective September 1, 2011, we sold Southcrest Hospital, located in Tulsa, Oklahoma, Claremore Regional Hospital, located in Claremore, Oklahoma, and other related healthcare assets affiliated with those hospitals to Hillcrest Healthcare System, part of Ardent Health Services, for approximately $154.2 million in cash. The carrying amount of the net assets sold in this transaction, including an allocation of reporting unit goodwill, was approximately $193.0 million.
Effective May 1, 2011, we completed the acquisition of Mercy Health Partners based in Scranton, Pennsylvania, which is a healthcare system comprised of two acute care hospitals, a long-term acute care facility and other healthcare providers. This healthcare system includes Regional Hospital of Scranton (198 licensed beds) located in Scranton, Pennsylvania, and Tyler Memorial Hospital (48 licensed beds) located in Tunkhannock, Pennsylvania. This healthcare system also includes a long-term acute care facility, Special Care Hospital (67 licensed beds) located in Nanticoke, Pennsylvania, as well as several outpatient clinics and other ancillary facilities. The total cash consideration paid for fixed assets was approximately $150.8 million, with additional consideration of $12.3 million assumed in liabilities as well as a credit applied at closing of $2.1 million for negative acquired working capital, for a total consideration of $161.0 million. Based upon our final purchase price allocation relating to this acquisition as of December 31, 2011, approximately $43.1 million of goodwill has been recorded.
Effective February 1, 2011, we sold Willamette Community Medical Group, which is a physician clinic operating as Oregon Medical Group, or OMG, located in Springfield, Oregon, to Oregon Healthcare Resources, LLC, for $14.6 million in cash; this business had a carrying amount of net assets, including an allocation of reporting unit goodwill, of $19.7 million.
Additionally, during 2011, we paid approximately $57.9 million to acquire the operating assets and related businesses of certain physician practices, clinics and other ancillary businesses that operate within the communities served by our hospitals. In connection with these acquisitions, we allocated approximately $13.1 million of the consideration paid to property and equipment, $2.9 million to net working capital, $1.6 million to other intangible assets and the remainder, approximately $40.3 million consisting of intangible assets that do not qualify for separate recognition, was allocated to goodwill. These acquisition transactions were accounted for as purchase business combinations.
Sources of Revenue
The following table presents the approximate percentages of net operating revenues derived from Medicare, Medicaid, managed care, self-pay and other sources for the periods indicated. The data for the years presented are not strictly comparable due to the effect that hospital acquisitions have had on these statistics.

 	  	Year Ended December 31,	 	
Net Operating Revenues by Payor Source	  	2011	 	 	2010	 	 	2009	 	
Medicare	  	 	26.8	% 	 	 	27.4	% 	 	 	27.4	% 	
Medicaid	  	 	9.7	% 	 	 	10.7	% 	 	 	9.8	% 	
Managed Care and other third-party payors	  	 	51.5	% 	 	 	50.4	% 	 	 	51.6	% 	
Self-pay	  	 	12.0	% 	 	 	11.5	% 	 	 	11.2	% 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	 	100.0	% 	 	 	100.0	% 	 	 	100.0	% 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-based reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for treatment of patients covered by these programs are generally less than the standard billing rates. We account for the differences between the estimated program reimbursement rates and the standard billing rates as contractual allowance adjustments, which we deduct from gross revenues to arrive at net operating revenues. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known. Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues and net
 
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income by an insignificant amount in each of the years ended December 31, 2011, 2010 and 2009. In the future, we expect the percentage of revenues received from the Medicare program to increase due to the general aging of the population.
Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to providers to offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from Centers for Medicare and Medicaid Services, or CMS, and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. Similar programs are also being considered by other states. After these supplemental programs are signed into law, we recognize revenue and related expenses in the period in which amounts are estimable and collection is reasonably assured. Reimbursement under these programs is reflected in net operating revenues and included as Medicaid revenue in the table above, and fees, taxes or other program related costs are reflected in other operating costs and expenses.
The payment rates under the Medicare program for hospital inpatient and outpatient acute care services are based on a prospective payment system, depending upon the diagnosis of a patient’s condition. These rates are indexed for inflation annually, although increases have historically been less than actual inflation. On August 18, 2011, CMS issued the final rule to adjust this index by 3.0% for hospital inpatient acute care services that are reimbursed under the prospective payment system. The final rule also made other payment adjustments that, coupled with the 0.1% reduction to hospital inpatient rates implemented pursuant to the Reform Legislation, yielded a net 1.1% increase in reimbursement for hospital inpatient acute care services beginning October 1, 2011. Reductions in the rate of increase or overall reductions in Medicare reimbursement may cause a decline in the growth of our net operating revenues. In addition, specified managed care programs, insurance companies and employers are actively negotiating the amounts paid to hospitals. The trend toward increased enrollment in managed care may adversely affect our net operating revenue growth.
In addition, specified managed care programs, insurance companies and employers are actively negotiating the amounts paid to hospitals. The trend toward increased enrollment in managed care may adversely affect our net operating revenue growth.
Results of Operations
Our hospitals offer a variety of services involving a broad range of inpatient and outpatient medical and surgical services. These include general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic services, psychiatric and rehabilitation services. The strongest demand for hospital services generally occurs during January through April and the weakest demand for these services occurs during the summer months. Accordingly, eliminating the effect of new acquisitions, our net operating revenues and earnings are historically highest during the first quarter and lowest during the third quarter.
 
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The following tables summarize, for the periods indicated, selected operating data.

 	 	Year Ended December 31,	 	
 	 	2011	 	 	2010	 	 	2009	 	
 	 	(Expressed as a percentage of net operating revenues)	 	
 	 	 	 	
Consolidated	 	 	 	 	 	 	 	 	 	 	 	 	
Net operating revenues	 	 	100.0	% 	 	 	100.0	% 	 	 	100.0	% 	
Operating expenses (a)	 	 	(86.9	) 	 	 	(86.4	) 	 	 	(86.2	) 	
Depreciation and amortization	 	 	(4.8	) 	 	 	(4.7	) 	 	 	(4.7	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	8.3	  	 	 	8.9	  	 	 	9.1	  	
Interest expense, net	 	 	(4.7	) 	 	 	(5.2	) 	 	 	(5.5	) 	
Loss (gain) from early extinguishment of debt (b)	 	 	(0.5	) 	 	 	—  	  	 	 	—  	  	
Equity in earnings of unconsolidated affiliates	 	 	0.4	  	 	 	0.4	  	 	 	0.3	  	
Impairment of long-lived and other assets	 	 	—  	  	 	 	—  	  	 	 	(0.1	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations before income taxes	 	 	3.5	  	 	 	4.1	  	 	 	3.8	  	
Provision for income taxes	 	 	(1.0	) 	 	 	(1.3	) 	 	 	(1.2	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	 	 	2.5	  	 	 	2.8	  	 	 	2.6	  	
(Loss) income from discontinued operations, net of taxes	 	 	(0.5	) 	 	 	(0.1	) 	 	 	—  	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	2.0	  	 	 	2.7	  	 	 	2.6	  	
Less: Net income attributable to noncontrolling interests	 	 	(0.5	) 	 	 	(0.5	) 	 	 	(0.5	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Community Health Systems, Inc.	 	 	1.5	% 	 	 	2.2	% 	 	 	2.1	% 	

 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	
 	  	(Expressed in percentages)	 	
 	 	 	
Percentage increase (decrease) from same period prior year:	  	 	 	 	 	 	 	 	
Net operating revenues	  	 	7.9	% 	 	 	7.5	% 	
Admissions	  	 	(0.5	) 	 	 	0.4	  	
Adjusted admissions(c)	  	 	4.2	  	 	 	2.8	  	
Average length of stay	  	 	2.3	  	 	 	0.0	  	
Net income attributable to Community Health Systems, Inc. (d)	  	 	(27.9	) 	 	 	15.1	  	
Same-store percentage increase (decrease) from same period prior year(e):	  	 	 	 	 	 	 	 	
Net operating revenues	  	 	3.7	% 	 	 	4.1	% 	
Admissions	  	 	(5.6	) 	 	 	(2.4	) 	
Adjusted admissions(c)	  	 	(0.7	) 	 	 	(0.3	) 	

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(a)	Operating expenses include salaries and benefits, provision for bad debts, supplies, other operating expenses, electronic health records incentive reimbursement and rent.	
(b)	Both the gain from early extinguishment of debt and income from discontinued operations were less than 0.1% for the year ended December 31, 2009.	
(c)	Adjusted admissions is a general measure of combined inpatient and outpatient volume. We computed adjusted admissions by multiplying admissions by gross patient revenues and then dividing that number by gross inpatient revenues.	
(d)	Includes income from discontinued operations, if any.	
(e)	Includes acquired hospitals to the extent we operated them in both years.	
Year Ended December 31, 2011 Compared to Year Ended December 31, 2010
Net operating revenues increased by 7.9% to approximately $13.6 billion in 2011, from approximately $12.6 billion in 2010. Growth from hospitals owned throughout both periods contributed $465 million of that increase and $538 million was contributed by hospitals acquired in 2011 and 2010. On a same-store basis, net operating revenues increased 3.7%. The increased net operating revenues contributed by hospitals that we owned throughout both periods were primarily attributable to general rate and reimbursement increases including revenues from states with provider assessment programs.
On a consolidated basis, inpatient admissions decreased by 0.5% and adjusted admissions increased by 4.2%. On a same-store basis, inpatient admissions decreased by 5.6% and adjusted admissions decreased by 0.7% during the year ended December 31, 2011. This decrease in same-store inpatient admissions was due primarily to a decrease in admissions from women’s services including obstetrics and gynecology, reductions in one day stays from the emergency room, reductions in surgical inpatient admissions and reductions due to competition, weather and certain service closures in a few of our hospitals during the year ended December 31, 2011, as compared to the year ended December 31, 2010. The reductions in surgical inpatient admissions were offset with a corresponding increase in outpatient surgical visits.
Operating expenses, excluding depreciation and amortization, as a percentage of net operating revenues, increased from 86.4% in 2010 to 86.9% in 2011. Salaries and benefits, as a percentage of net operating revenues, increased from 40.3% in 2010 to 40.9% in 2011 as a result of recent acquisitions and an increase in the number of employed physicians. Provision for bad debts, as a percentage of net revenues, increased from 12.1% in 2010 to 12.6% in 2011. This increase in the provision for bad debts primarily represents an increase in self-pay revenues as a percentage of our total net operating revenues. The increase does not reflect a further deterioration in our ability to collect self-pay accounts receivable, as our collection trends have remained relatively consistent over the prior period. Supplies, as a percentage of net operating revenues, decreased from 13.8% in 2010 to 13.5% in 2011. This decrease in supplies expenses is due primarily to greater utilization of and improved pricing under our purchasing program. Other operating expenses, as a percentage of net operating revenues, increased from 18.2% in 2010 to 18.5% in 2011. Rent, as a percentage of net operating revenues, decreased from 2.0% in 2010 to 1.9% in 2011.
Electronic health records incentive reimbursements represent those incentives under the HITECH Act for which the recognition criterion has been met. For the year ended December 31, 2011, we have recognized approximately $63.4 million of incentive reimbursements, or 0.5% of net operating revenues. Of these incentives, we had received payments of $28.9 million through December 31, 2011. Operating expenses incurred related to the installation and adoption of electronic health records, including depreciation and amortization, totaled approximately 0.2% of net operating revenues in 2011, of which depreciation and amortization represented less than 0.1% of net operating revenues.
Depreciation and amortization, as a percentage of net operating revenues, increased from 4.7% in 2010 to 4.8% in 2011.
Interest expense, net, decreased by $3.2 million from $647.6 million in 2010, to $644.4 million in 2011. A decrease in our average outstanding debt during 2011, compared to 2010, resulted in a decrease in interest expense of $1.3 million. Additionally, interest expense decreased by $9.7 million as a result of more interest being capitalized during 2011, as compared to 2010, as the current year period had more major construction projects.
 
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These increases were offset by an increase in interest rates during 2011, including the pricing increase on $1.5 billion of our existing term loans under the amended Credit Facility beginning November 5, 2010, compared to 2010, resulting in an increase in interest expense of $7.8 million. Interest savings in 2012 from replacing $1.0 billion aggregate principal amount of our 8  7 / 8 % Senior Notes with our 8% Senior Notes will be more than offset by the higher interest rate on the $1.6 billion of extended term loans under the second amendment and restatement of the Credit Facility that was effective on February 2, 2012.
Loss from early extinguishment of debt was recognized after the purchase of up to $1.0 billion aggregate principal amount of CHS’ outstanding 8  7 / 8 % Senior Notes due 2015.
Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, remained consistent at 0.4% for 2010 and 2011.
The net results of the above mentioned changes resulted in income from continuing operations before income taxes decreasing $45.4 million from $518.9 million in 2010 to $473.5 million for 2011.
Provision for income taxes from continuing operations decreased from $163.7 million in 2010 to $137.7 million in 2011 due to the decrease in income from continuing operations before income taxes. Our effective tax rates were 29.1% and 31.6% for the years ended December 31, 2011 and 2010, respectively. The decrease in our effective tax rate is primarily related to the release of uncertain tax positions and an increase in federal tax credits.
Income from continuing operations, as a percentage of net operating revenues, decreased from 2.8% in 2010 to 2.5% in 2011. The decrease is primarily due to the loss from early extinguishment of debt discussed above.
Net income, as a percentage of net operating revenues, decreased from 2.7% in 2010 to 2.0% in 2011. The decrease is primarily due to the loss from early extinguishment of debt and loss from discontinued operations.
Net income attributable to noncontrolling interests as a percentage of net operating revenues remained consistent at 0.5% for the years ended December 31, 2011 and 2010.
Net income attributable to Community Health Systems, Inc. was $201.9 million in 2011 compared to $280.0 million in 2010, a decrease of 27.9%. The decrease in net income attributable to Community Health Systems, Inc. is reflective of the loss from early extinguishment of debt and loss from discontinued operations.
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
Net operating revenues increased by 7.5% to approximately $12.6 billion in 2010, from approximately $11.7 billion in 2009. Growth from hospitals owned throughout both periods contributed $478 million of that increase and $404 million was contributed by hospitals acquired in 2010 and 2009. On a same-store basis, net operating revenues increased 4.1%. The increased net operating revenues contributed by hospitals that we owned throughout both periods were primarily attributable to general rate and reimbursement increases.
On a consolidated basis, inpatient admissions increased by 0.4% and adjusted admissions increased by 2.8%. On a same-store basis, inpatient admissions decreased by 2.4% during the year ended December 31, 2010. This decrease in inpatient admissions was due primarily to a decrease in admissions from a less severe flu season as compared to the prior year period, lower birth rates coinciding with the downturn in the economy, reductions in one day stays and certain service closures during the year ended December 31, 2010, as compared to the year ended December 31, 2009.
Operating expenses, excluding depreciation and amortization, as a percentage of net operating revenues, increased from 86.2% in 2009 to 86.4% in 2010. Salaries and benefits, as a percentage of net operating revenues, increased from 40.0% in 2009 to 40.3% in 2010 as a result of recent acquisitions and an increase in the number of employed physicians, which offset efficiencies gained at hospitals owned throughout both periods. Provision for bad debts, as a percentage of net revenues, increased from 12.0% in 2009 to 12.1% in 2010, which is reflective of stabilization in the economy and unemployment rates. Supplies, as a percentage of net operating revenues, decreased from 14.0% in 2009 to 13.8% in 2010. This decrease in supplies expenses is due primarily to greater
 
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utilization of and improved pricing under our purchasing program. Other operating expenses, as a percentage of net operating revenues, remained consistent at 18.2% for 2009 and 2010. Rent, as a percentage of net operating revenues, remained consistent at 2.0% for 2009 and 2010.
Depreciation and amortization remained consistent at 4.7% of net operating revenues for 2009 and 2010.
Interest expense, net, increased by $4.0 million from $643.6 million in 2009, to $647.6 million in 2010. An increase in interest rates during 2010, including the pricing increase on $1.5 billion of our existing term loans under the amended Credit Facility beginning November 5, 2010, compared to 2009, resulted in an increase in interest expense of $5.9 million. Additionally, interest expense increased by $5.3 million as a result of less interest being capitalized during 2010, as compared to 2009, as the current year period had fewer major construction projects. These increases were offset by a decrease in interest expense of $7.2 million due to a decrease in our average outstanding debt during 2010, compared to 2009.
Equity in earnings of unconsolidated affiliates, as a percentage of net operating revenues, increased from 0.3% in 2009 to 0.4% in 2010.
Impairment of long-lived and other assets of $12.5 million in 2009 resulted from our assessment of the recoverability of these assets. No impairment of long-lived and other assets was recognized in 2010.
The net results of the above mentioned changes resulted in income from continuing operations before income taxes increasing $71.2 million from $447.7 million in 2009 to $518.9 million for 2010.
Provision for income taxes from continuing operations increased from $141.9 million in 2009 to $163.7 million in 2010 due to the increase in income from continuing operations before income taxes. Our effective tax rates were 31.6% and 31.7% for the years ended December 31, 2010 and 2009, respectively. The decrease in our effective tax rate is primarily a result of a decrease in our effective state tax rate.
Income from continuing operations, as a percentage of net operating revenues, increased from 2.6% in 2009 to 2.8% in 2010. The increase is primarily due to the decrease in interest expense as a percentage of net operating revenues, discussed above.
Net income, as a percentage of net operating revenues, increased from 2.6% in 2009 to 2.7% in 2010. The increase is primarily due to the decrease in interest expense as a percentage of net operating revenues, discussed above.
Net income attributable to noncontrolling interests as a percentage of net operating revenues remained consistent at 0.5% for the years ended December 31, 2010 and 2009.
Net income attributable to Community Health Systems, Inc. was $280.0 million in 2010 compared to $243.2 million in 2009, an increase of 15.1%. The increase in net income attributable to Community Health Systems, Inc. is reflective of the increase in net operating revenues while maintaining substantially the same profit margin levels as discussed above.
Liquidity and Capital Resources
2011 Compared to 2010
Net cash provided by operating activities increased $73.2 million, from approximately $1.2 billion for the year ended December 31, 2010 to approximately $1.3 billion for the year ended December 31, 2011. Net income, adjusted for non-cash expenses of depreciation and amortization expense of $47.8 million, impairment of hospitals sold of $47.9 million, loss on early extinguishment of debt of $66.0 million and all other non-cash charges of $9.4 million, resulted in an increase in cash flows from operating activities of $100.3 million. In addition, an increase in cash flows from accounts payable, accrued liabilities and income taxes, primarily as a result of the timing of payments, increased cash flows from operating activities by $112.0 million. These increases in cash flows were offset by a decrease in cash flows from supplies, prepaid expenses and other current assets of $3.0 million, a
 
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decrease in cash flows generated from the change in all other assets and liabilities of $24.8 million, and decreases in cash generated from accounts receivable of $111.3 million, primarily a result of delays in payment from the Illinois Medicaid program, which contributed to our three-day decline in account receivable days outstanding in 2011 compared to a two-day improvement in 2010.
The cash used in investing activities increased $151.5 million, from approximately $1.0 billion for the year ended December 31, 2010 to approximately $1.2 billion for the year ended December 31, 2011. The increase in cash used in investing activities, in comparison to the prior year, is primarily attributable to an increase in cash paid for acquisitions of facilities and other related equipment of $167.1 million, an increase in the cash used for the purchase of property and equipment of $109.3 million and an increase in cash used for the acquisition of software, primarily related to electronic health records, resulting in an increase in other investments of $51.3 million. These increases in cash used in investing activities were offset by an increase in the amount of the proceeds from the sale of property and equipment of $2.8 million and the proceeds of $173.4 million from the sale of three hospitals in 2011. There were no hospital divestitures in 2010. We anticipate being able to fund future routine capital expenditures with cash flows generated from operations.
In 2011, our net cash used in financing activities increased $45.6 million from $189.8 million in 2010 to $235.4 million in 2011. The increase in cash used in financing activities, in comparison to the prior year, is primarily due to an increase in deferred financing costs of $6.0 million associated with the issuance of our 8% Senior Notes, a reduction in the proceeds from the exercise of stock options of $38.0 million, an increase in the repurchase of restricted stock shares for payroll tax withholding requirements of $13.3 million and a reduction in the proceeds from noncontrolling investors in joint ventures of $6.0 million as the Reform Legislation significantly limits the selling of noncontrolling interests to physician investors. The net increase in all other financing activities was $22.5 million. This included an increase in borrowings under our Credit Facility and the issuance of our 8% Senior Notes, but was mostly offset by repayments of our long-term debt. These increases were offset by a decrease in the repurchases of our common stock of $28.2 million and a reduction in the distributions to noncontrolling investors in joint ventures of $12.0 million.
In 2011, we used $85.7 million for the repurchase and retirement of 3,469,866 shares of our outstanding common stock on the open market. We believed this to be a prudent use of cash as a result of our low market valuation when compared with historical valuations of both our stock and other healthcare providers’ stock. Our Credit Facility limits our ability to pay dividends and/or repurchase stock to an amount not to exceed $50 million in the aggregate after November 5, 2010, the date of the initial amendment and restatement of our Credit Facility. In addition, our Credit Facility allows us to repurchase stock in an amount not to exceed the aggregate amount of proceeds from the exercise of stock options. The indentures governing our Senior Notes also limit our ability to pay dividends and/or repurchase stock. As of December 31, 2011, under the most restrictive test under these agreements, we have approximately $30.1 million remaining available with which to pay permitted dividends and/or make stock and Senior Notes repurchases.
In 2011, we successfully continued efforts commenced in 2010 to access the capital markets and extend the maturities of our long-term indebtedness. Our current debt structure was put into place in connection with our acquisition of Triad in 2007 and the then balance of our $6.1 billion Credit Facility term loans was to mature on July 25, 2014; the approximately $3.0 billion aggregate principal amount of 8  7 / 8 % Senior Notes were due July 25, 2015. In November 2011, we completed an offering of $1.0 billion aggregate principal amount of 8% Senior Notes (due 2019), the proceeds of which were used, together with available cash on hand, to finance the repurchase of up to $1.0 billion aggregate principal amount of our 8  7 / 8 % Senior Notes. Subsequent to year end, on February 2, 2012, we completed an amendment and extension of our Credit Facility to extend the maturity date of $1.6 billion of our existing term loans under the Credit Facility by two and a half years, to January 25, 2017, the same maturity date as the November 2010 amendment and extension of $1.5 billion in principal amount of our existing term loans (and at the same increased pricing by 125 basis points). We believe that we will continue to be able to extend the maturities on the unextended portions of our existing Credit Facility (now, approximately $2.9 billion), albeit at higher interest rates, and that we should be able to replace our remaining 8  7 / 8 % Senior Notes (approximately $1.8 billion in principal amount) at lower interest rates. The table below sets forth addition detail about our upcoming cash obligations and a further discussion of our existing Credit Facility is set out under the section “Capital Resources” in Item 7 of this Report. We do not anticipate the need to use funds currently available under our Credit Facility for purposes of funding our operations, although these funds could be used for the purpose of making further acquisitions or for restructuring our existing debt. Furthermore, we anticipate we will remain in compliance with our debt covenants through the next 12 months and beyond into the foreseeable future.
 
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As described in Notes 6, 9 and 15 of the Notes to Consolidated Financial Statements, at December 31, 2011, we had certain cash obligations, which are due as follows (in thousands):

 	  	Total	 	  	2012	 	  	2013 - 2015	 	  	2016 - 2017	 	  	2018
and thereafter	 	
Long-term debt(1)	  	$	6,020,525	  	  	$	59,698	  	  	$	4,515,632	  	  	$	1,441,327	  	  	$	3,868	  	
8 7/8% Senior Notes	  	 	1,777,617	  	  	 	—  	  	  	 	1,777,617	  	  	 	—  	  	  	 	—  	  	
8% Senior Notes	  	 	1,000,000	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	1,000,000	  	
Interest on Credit Facility and Senior Notes(2)	  	 	1,778,254	  	  	 	427,151	  	  	 	1,019,699	  	  	 	221,404	  	  	 	110,000	  	
Capital lease obligations, including interest	  	 	91,419	  	  	 	8,386	  	  	 	19,931	  	  	 	11,127	  	  	 	51,975	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total long-term debt	  	 	10,667,815	  	  	 	495,235	  	  	 	7,332,879	  	  	 	1,673,858	  	  	 	1,165,843	  	
Operating leases	  	 	793,855	  	  	 	176,403	  	  	 	370,766	  	  	 	122,479	  	  	 	124,207	  	
Replacement facilities and other capital commitments(3)	  	 	511,692	  	  	 	226,683	  	  	 	254,194	  	  	 	4,509	  	  	 	26,306	  	
Open purchase orders(4)	  	 	354,745	  	  	 	354,745	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Liability for uncertain tax positions, including interest and penalties	  	 	1,028	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	1,028	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	12,329,135	  	  	$	1,253,066	  	  	$	7,957,839	  	  	$	1,800,846	  	  	$	1,317,384	  	

(1)	Subsequent to December 31, 2011, we completed an amendment and restatement of our existing Credit Facility. The amendment, effective February 2, 2012, extended by two and a half years the maturity date of $1.6 billion of the existing non-extended term loans under the Credit Facility to January 25, 2017 (subject to customary acceleration events) or, if more than $50 million of our 8  7 / 8 % Senior Notes are outstanding on April 15, 2015, to April 15, 2015.	
(2)	Estimate of interest payments assumes the interest rates at December 31, 2011 remain constant during the period presented for the Credit Facility, which is variable rate debt. The interest rate used to calculate interest payments for the Credit Facility was the London Interbank Offered Rate, or LIBOR, as of December 31, 2011 plus the applicable spread. The 8  7 / 8 % Senior Notes are fixed at an interest rate of 8.875% per annum. The 8% Senior Notes are fixed at an interest rate of 8% per annum.	
(3)	Pursuant to hospital purchase agreements in effect as of December 31, 2011, and where final CON approval has been obtained, we have commitments to build the following replacement facilities and the following capital commitments. As required by an amendment to our lease agreement entered into in 2005, we agreed to build a replacement hospital at our Barstow, California location by November 2012. As part of an acquisition in 2007, we agreed to build a replacement hospital in Valparaiso, Indiana by April 2011; however, due to delays in receiving government approved building and zoning permits, completion is not expected until the fourth quarter of 2012. These delays did not result in any penalties under the terms of the purchase agreement and we do not expect such delays to result in any significant increase in the costs to construct the replacement facility. As part of an acquisition in 2009, we agreed to build a replacement hospital in Siloam Springs, Arkansas by February 2013. Construction costs, including equipment costs, for these three replacement facilities are currently estimated to be approximately $317.2 million of which approximately $210.3 million has been incurred to date. In addition, under other purchase agreements, we have 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 31, 2011, we have incurred approximately $247.8 million related to these commitments.	
(4)	Open purchase orders represent our commitment for items ordered but not yet received.	
At December 31, 2011, we had issued letters of credit primarily in support of potential insurance related claims and specified outstanding bonds of approximately $37.7 million.
Our debt as a percentage of total capitalization decreased from 80% at December 31, 2010 to 79% at December 31, 2011.
 
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2010 Compared to 2009
Net cash provided by operating activities increased $112.3 million, from approximately $1.1 billion for the year ended December 31, 2009 to approximately $1.2 billion for the year ended December 31, 2010. The increase is primarily due to an increase in cash flows from net income of $42.1 million, an increase in non-cash depreciation and amortization expense of $43.3 million, an increase in other non-cash expenses of $22.8 million, an increase in cash flows from accounts payable, accrued liabilities and income taxes of $75.9 million, primarily as a result of the timing of payments, and an increase in cash flows generated from the change in all other assets and liabilities of $19.0 million. These increases in cash flows were offset by decreases in cash flows from supplies, prepaid expenses and other current assets of $5.4 million and decreases in cash generated from accounts receivable of $85.4 million, primarily a result of our two-day improvement in account receivable days outstanding in 2010 compared to a five-day improvement in 2009.
The cash used in investing activities increased $177.1 million, from $867.2 million for the year ended December 31, 2009 to approximately $1.0 billion for the year ended December 31, 2010. The increase in cash used in investing activities, in comparison to the prior year, is primarily attributable to an increase in the cash used for the purchase of property and equipment of $90.5 million, a reduction in the amount of proceeds from the disposition of hospitals and other ancillary operations of $89.5 million due to the sale of one hospital in 2009 and no hospital divestitures in 2010, and a net increase in other non-operating assets of $17.0 million. These increases in cash used in investing activities were offset by a reduction in acquisitions of facilities and other related equipment of $15.5 million and an increase in the amount of the proceeds from the sale of property and equipment of $4.4 million. We anticipate being able to fund future routine capital expenditures with cash flows generated from operations.
In 2010, our net cash used in financing activities increased $104.4 million from $85.4 million in 2009 to $189.8 million in 2010. The increase in cash used in financing activities, in comparison to the prior year, is primarily due to repurchases of our common stock of $114.0 million, an increase in deferred financing costs of $13.2 million associated with the amendment and extension of a portion of the Credit Facility, and a reduction in the proceeds from noncontrolling investors in joint ventures of $22.6 million, as the Reform Legislation significantly limits the selling of noncontrolling interests to physician investors. These increases were offset by an increase in the proceeds from the exercise of stock options of $44.2 million and an increase in the excess tax benefit relating to stock-based compensation of $13.7 million. The net increase in all other financing activities was $12.5 million. This included an increase in borrowings under our Credit Facility, but was mostly offset by repayments of our long-term debt.
Capital Expenditures
Cash expenditures for purchases of facilities were $415.4 million in 2011, $248.3 million in 2010 and $263.8 million in 2009. Our expenditures in 2011 included $357.3 million for the purchase of four hospitals, $56.7 million for the purchase of clinics, surgery centers and physician practices and $1.4 million for the settlement of acquired working capital. Our expenditures in 2010 included $181.1 million for the purchase of five hospitals and $67.2 million for the purchase of clinics, surgery centers and physician practices. Our expenditures in 2009 included $182.2 million for the purchase of three hospitals and the remaining equity in a hospital in which we previously had a noncontrolling interest, $72.3 million for the purchase of clinics, surgery centers and physician practices, and $9.3 million for the settlement of acquired working capital.
Excluding the cost to construct replacement hospitals, our cash expenditures for routine capital for 2011 totaled $611.7 million compared to $631.7 million in 2010, and $572.1 million in 2009. These capital expenditures related primarily to the purchase of additional equipment, minor renovations and information systems infrastructure. Costs to construct replacement hospitals totaled $165.0 million in 2011, $35.7 million in 2010 and $4.8 million in 2009. The costs to construct replacement hospitals for the year ended December 31, 2011 represent both planning and construction costs for the four replacement hospitals discussed below. The costs to construct replacement hospitals for the year ended December 31, 2010 represent both planning and construction costs for the four replacement hospitals. The costs to construct replacement hospitals for the year ended December 31, 2009 represent planning costs for future construction projects since there were no replacement hospitals under construction at year ended December 31, 2009.
 
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Pursuant to hospital purchase agreements in effect as of December 31, 2011, and where final CON approval has been obtained, we have commitments to build the following three replacement facilities: As required by an amendment to our lease agreement entered into in 2005, we agreed to build a replacement hospital at our Barstow, California location by November 2012. As part of an acquisition in 2007, we agreed to build a replacement hospital in Valparaiso, Indiana by April 2011; however, due to delays in receiving government approved building and zoning permits, completion is not expected until the fourth quarter of 2012. These delays did not result in any penalties under the terms of the applicable purchase agreement and we do not expect such delays to result in any significant increase in the costs to construct the replacement facility. As part of an acquisition in 2009, we agreed to build a replacement hospital in Siloam Springs, Arkansas by February 2013. Construction costs, including equipment costs, for these three replacement facilities are currently estimated to be approximately $317.2 million, of which approximately $210.3 million has been incurred to date. In addition, in October 2008, after the purchase of the noncontrolling owner’s interest in our Birmingham, Alabama facility, we initiated the purchase of a site, which includes a partially constructed hospital structure, for a potential replacement to our existing Birmingham facility. In September 2010, we received approval of our request for a CON from the Alabama Certificate of Need Review Board; however, this CON remains subject to an appeal process. Our estimated construction costs, including the acquisition of the site and equipment costs, are approximately $280.0 million for the Birmingham replacement facility. We expect total capital expenditures of approximately $800 million to $900 million in 2012 (which includes amounts which are required to be expended pursuant to the terms of hospital purchase agreements), including approximately $640 million to $720 million for renovation and equipment cost and approximately $160 million to $180 million for construction and equipment cost of the replacement hospitals.
Capital Resources
Net working capital was approximately $935.0 million at December 31, 2011, compared to $1.229 billion at December 31, 2010, a decrease of $294.2 million. Contributing to the decrease in net working capital were decreases in cash of approximately $170.3 million, prepaid taxes of approximately $17.1 million, deferred tax assets of approximately $26.0 million and increases in accounts payable of approximately $211.1 million and employee compensation liabilities of approximately $15.6 million. These decreases in working capital were offset by increases in patient accounts receivable of approximately $103.2 million, supplies of approximately $8.3 million, net working capital acquired as part of our business acquisitions of approximately $7.3 million and decreases in deferred tax liabilities of approximately $8.9 million and accrued interest of $36.3 million. All other changes in working capital items decreased net working capital by approximately $18.1 million.
In connection with the consummation of the Triad acquisition in July 2007, we obtained approximately $7.2 billion of senior secured financing under the Credit Facility with a syndicate of financial institutions led by Credit Suisse, as administrative agent and collateral agent. The Credit Facility consisted of an approximately $6.1 billion funded term loan facility with a maturity of seven years, a $300 million delayed draw term loan facility (reduced by us from $400 million) with a maturity of seven years and a $750 million revolving credit facility with a maturity of six years. During the fourth quarter of 2008, $100 million of the delayed draw term loan had been drawn down by us, reducing the delayed draw term loan availability to $200 million at December 31, 2008. In January 2009, we drew down the remaining $200 million of the delayed draw term loan. The revolving credit facility also includes a subfacility for letters of credit and a swingline subfacility. The Credit Facility requires quarterly amortization payments of each term loan facility equal to 0.25% of the outstanding amount of the term loans. On November 5, 2010, we entered into an amendment and restatement of our existing Credit Facility. The amendment extended by two and a half years, until January 25, 2017, the maturity date of $1.5 billion of our existing term loans under the Credit Facility and increased the pricing on these term loans to LIBOR plus 350 basis points. If more than $50 million of our 8  7 / 8 % Senior Notes remain outstanding on April 15, 2015, without having been refinanced, then the maturity date for the extended term loans will be accelerated to April 15, 2015. The amendment also increased our ability to issue additional indebtedness under the uncommitted incremental facility to $1.0 billion from $600 million, permitted us to issue Term A term loans under the incremental facility and provided up to $2.0 billion of borrowing capacity from receivable transactions, an increase of $0.5 billion, of which approximately $1.7 billion would be required to be used for repayment of our existing term loans. In addition, effective February 2, 2012, we completed an additional amendment and restatement of the Credit Facility, which extended by two and a half years, until January 25, 2017, the maturity date of an additional $1.6 billion of our existing non-extended term loans under the Credit Facility and increased the pricing on the newly extended term loans by 125 basis points. The maturity date of the balance of the term loans of approximately $2.9 billion remained unchanged at July 25, 2014.
 
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The term loan facility must be prepaid in an amount equal to (1) 100% of the net cash proceeds of certain asset sales and dispositions by us and our subsidiaries, subject to certain exceptions and reinvestment rights, (2) 100% of the net cash proceeds of issuances of certain debt obligations or receivables based financing by us and our subsidiaries, subject to certain exceptions, and (3) 50%, subject to reduction to a lower percentage based on our leverage ratio (as defined in the Credit Facility generally as the ratio of total debt on the date of determination to our EBITDA, as defined, for the four quarters most recently ended prior to such date), of excess cash flow (as defined) for any year, commencing in 2008, subject to certain exceptions. Voluntary prepayments and commitment reductions are permitted in whole or in part, without any premium or penalty, subject to minimum prepayment or reduction requirements.
The obligor under the Credit Facility is CHS. All of our obligations under the Credit Facility are unconditionally guaranteed by Community Health Systems, Inc. and certain existing and subsequently acquired or organized domestic subsidiaries. All obligations under the Credit Facility and the related guarantees are secured by a perfected first priority lien or security interest in substantially all of the assets of Community Health Systems, Inc., CHS and each subsidiary guarantor, including equity interests held by us or any subsidiary guarantor, but excluding, among others, the equity interests of non-significant subsidiaries, syndication subsidiaries, securitization subsidiaries and joint venture subsidiaries.
The loans under the Credit Facility bear interest on the outstanding unpaid principal amount at a rate equal to an applicable percentage plus, at our option, either (a) an Alternate Base Rate (as defined) determined by reference to the greater of (1) the Prime Rate (as defined) announced by Credit Suisse or (2) the Federal Funds Effective Rate (as defined) plus one-half of 1.0% or (3) the adjusted LIBOR rate on such day for a three-month interest period commencing on the second business day after such day plus 1%, or (b) a reserve adjusted LIBOR for dollars (Eurodollar rate) (as defined). The applicable percentage for Alternate Base Rate loans is 1.25% for term loans due 2014 and 2.25% for term loans due 2017. The applicable percentage for Eurodollar rate loans is 2.25% for term loans due 2014 and 3.5% for term loans due 2017. The applicable percentage for revolving loans was initially 1.25% for Alternate Base Rate revolving loans and 2.25% for Eurodollar revolving loans, in each case subject to reduction based on our leverage ratio. Loans under the swingline subfacility bear interest at the rate applicable to Alternate Base Rate loans under the revolving credit facility.
We have agreed to pay letter of credit fees equal to the applicable percentage then in effect with respect to Eurodollar rate loans under the revolving credit facility times the maximum aggregate amount available to be drawn under all letters of credit outstanding under the subfacility for letters of credit. The issuer of any letter of credit issued under the subfacility for letters of credit will also receive a customary fronting fee and other customary processing charges. We were initially obligated to pay commitment fees of 0.50% per annum (subject to reduction based upon our leverage ratio), on the unused portion of the revolving credit facility. For purposes of this calculation, swingline loans are not treated as usage of the revolving credit facility. With respect to the delayed draw term loan facility, we were also obligated to pay commitment fees of 0.50% per annum for the first nine months after the close of the Credit Facility and 0.75% per annum for the next three months after such nine-month period and thereafter 1.0% per annum. In each case, the commitment fee was based on the unused amount of the delayed draw term loan facility. After the draw down of the remaining $200 million of the delayed draw term loan in January 2009, we no longer pay any commitment fees for the delayed draw term loan facility. We also paid arrangement fees on the closing of the Credit Facility and pay an annual administrative agent fee.
The Credit Facility contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting our and our subsidiaries’ ability, subject to certain exception, to, among other things, (1) declare dividends, make distributions or redeem or repurchase capital stock, (2) prepay, redeem or repurchase other debt, (3) incur liens or grant negative pledges, (4) make loans and investments and enter into acquisitions and joint ventures, (5) incur additional indebtedness or provide certain guarantees, (6) make capital expenditures, (7) engage in mergers, acquisitions and asset sales, (8) conduct transactions with affiliates, (9) alter the nature of our businesses, (10) grant certain guarantees with respect to physician practices, (11) engage in sale and leaseback transactions or (12) change our fiscal year. We and our subsidiaries are also required to comply with specified financial covenants (consisting of a leverage ratio and an interest coverage ratio) and various affirmative covenants.
 
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Events of default under the Credit Facility include, but are not limited to, (1) our failure to pay principal, interest, fees or other amounts under the credit agreement when due (taking into account any applicable grace period), (2) any representation or warranty proving to have been materially incorrect when made, (3) covenant defaults subject, with respect to certain covenants, to a grace period, (4) bankruptcy events, (5) a cross default to certain other debt, (6) certain undischarged judgments (not paid within an applicable grace period), (7) a change of control, (8) certain ERISA-related defaults and (9) the invalidity or impairment of specified security interests, guarantees or subordination provisions in favor of the administrative agent or lenders under the Credit Facility.
As of December 31, 2011, the availability for additional borrowings under our Credit Facility was approximately $750 million pursuant to the revolving credit facility, of which $37.7 million was set aside for outstanding letters of credit and $30.0 million was outstanding at December 31, 2011. We believe that these funds, along with internally generated cash and continued access to the bank credit and capital markets, will be sufficient to finance future acquisitions, capital expenditures and working capital requirements through the next 12 months and into the foreseeable future.
On November 22, 2011, CHS completed its offering of $1.0 billion aggregate principal amount of 8% Senior Notes, which were issued in a private placement. The net proceeds from this issuance, together with available cash on hand, were used to finance the purchase of up to $1.0 billion aggregate principal amount of CHS’ outstanding 8  7 / 8 % Senior Notes and related fees and expenses. This resulted in a loss from early extinguishment of debt of $66.0 million with an after-tax impact of $42.0 million recorded in continuing operations for the year ended December 31, 2011.
As of December 31, 2011, we are currently a party to the following interest rate swap agreements to limit the effect of changes in interest rates on approximately 82% of our variable rate debt. On each of these swaps, we receive a variable rate of interest based on the three-month LIBOR, in exchange for the payment by us of a fixed rate of interest. We currently pay, on a quarterly basis, a margin above LIBOR of 225 basis points for revolving credit and term loans due 2014 and 350 basis points for term loans due 2017 under the Credit Facility.
 
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Swap #	 	Notional
Amount
(in 000’s)	 	 	Fixed Interest
Rate	 	 	Termination Date	 	 	Fair Value
of Liability
(in 000’s)	 	
1	 	 	100,000	  	 	 	3.8470	% 	 	 	January 4, 2012	  	 	 	30	  	
2	 	 	100,000	  	 	 	3.8510	% 	 	 	January 4, 2012	  	 	 	30	  	
3	 	 	100,000	  	 	 	3.8560	% 	 	 	January 4, 2012	  	 	 	30	  	
4	 	 	200,000	  	 	 	3.7260	% 	 	 	January 8, 2012	  	 	 	152	  	
5	 	 	200,000	  	 	 	3.5065	% 	 	 	January 16, 2012	  	 	 	281	  	
6	 	 	250,000	  	 	 	5.0185	% 	 	 	May 30, 2012	  	 	 	4,509	  	
7	 	 	150,000	  	 	 	5.0250	% 	 	 	May 30, 2012	  	 	 	2,709	  	
8	 	 	200,000	  	 	 	4.6845	% 	 	 	September 11, 2012	  	 	 	5,574	  	
9	 	 	100,000	  	 	 	3.3520	% 	 	 	October 23, 2012	  	 	 	2,161	  	
10	 	 	125,000	  	 	 	4.3745	% 	 	 	November 23, 2012	  	 	 	4,104	  	
11	 	 	75,000	  	 	 	4.3800	% 	 	 	November 23, 2012	  	 	 	2,466	  	
12	 	 	150,000	  	 	 	5.0200	% 	 	 	November 30, 2012	  	 	 	5,900	  	
13	 	 	200,000	  	 	 	2.2420	% 	 	 	February 28, 2013	  	 	 	3,550	  	
14	 	 	100,000	  	 	 	5.0230	% 	 	 	May 30, 2013	  	 	 	5,952	  	
15	 	 	300,000	  	 	 	5.2420	% 	 	 	August 6, 2013	  	 	 	21,085	  	
16	 	 	100,000	  	 	 	5.0380	% 	 	 	August 30, 2013	  	 	 	6,967	  	
17	 	 	50,000	  	 	 	3.5860	% 	 	 	October 23, 2013	  	 	 	2,505	  	
18	 	 	50,000	  	 	 	3.5240	% 	 	 	October 23, 2013	  	 	 	2,451	  	
19	 	 	100,000	  	 	 	5.0500	% 	 	 	November 30, 2013	  	 	 	7,948	  	
20	 	 	200,000	  	 	 	2.0700	% 	 	 	December 19, 2013	  	 	 	5,080	  	
21	 	 	100,000	  	 	 	5.2310	% 	 	 	July 25, 2014	  	 	 	10,706	  	
22	 	 	100,000	  	 	 	5.2310	% 	 	 	July 25, 2014	  	 	 	10,707	  	
23	 	 	200,000	  	 	 	5.1600	% 	 	 	July 25, 2014	  	 	 	21,073	  	
24	 	 	75,000	  	 	 	5.0405	% 	 	 	July 25, 2014	  	 	 	7,685	  	
25	 	 	125,000	  	 	 	5.0215	% 	 	 	July 25, 2014	  	 	 	12,752	  	
26	 	 	100,000	  	 	 	2.6210	% 	 	 	July 25, 2014	  	 	 	4,436	  	
27	 	 	100,000	  	 	 	3.1100	% 	 	 	July 25, 2014	  	 	 	5,612	  	
28	 	 	100,000	  	 	 	3.2580	% 	 	 	July 25, 2014	  	 	 	5,968	  	
29	 	 	200,000	  	 	 	2.6930	% 	 	 	October 26, 2014	  	 	 	9,916	  	
30	 	 	300,000	  	 	 	3.4470	% 	 	 	August 8, 2016	  	 	 	27,728	  	
31	 	 	200,000	  	 	 	3.4285	% 	 	 	August 19, 2016	  	 	 	18,401	  	
32	 	 	100,000	  	 	 	3.4010	% 	 	 	August 19, 2016	  	 	 	9,099	  	
33	 	 	200,000	  	 	 	3.5000	% 	 	 	August 30, 2016	  	 	 	19,048	  	
34	 	 	100,000	  	 	 	3.0050	% 	 	 	November 30, 2016	  	 	 	7,613	  	
The Credit Facility and/or the Senior Notes contain various covenants that limit our ability to take certain actions including; among other things, our ability to:
 
 	•	 	incur, assume or guarantee additional indebtedness;	
 
 	•	 	issue redeemable stock and preferred stock;	
 
 	•	 	repurchase capital stock;	
 
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 	•	 	make restricted payments, including paying dividends and making investments;	
 
 	•	 	redeem debt that is junior in right of payment to the Senior Notes;	
 
 	•	 	create liens without securing the Senior Notes;	
 
 	•	 	sell or otherwise dispose of assets, including capital stock of subsidiaries;	
 
 	•	 	enter into agreements that restrict dividends from subsidiaries;	
 
 	•	 	merge, consolidate, sell or otherwise dispose of substantial portions of our assets;	
 
 	•	 	enter into transactions with affiliates; and	
 
 	•	 	guarantee certain obligations.	
In addition, our Credit Facility contains restrictive covenants and requires us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet these restricted covenants and financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet those tests. A breach of any of these covenants could result in a default under our Credit Facility and/or the Senior Notes. Upon the occurrence of an event of default under our Credit Facility or the Senior Notes, all amounts outstanding under our Credit Facility and the Senior Notes may become immediately due and payable and all commitments under the Credit Facility to extend further credit may be terminated.
We believe that internally generated cash flows, availability for additional borrowings under our Credit Facility of $750 million (consisting of a $750 million revolving credit facility, of which $37.7 million is set aside for outstanding letters of credit and $30 million outstanding at December 31, 2011) and our ability to amend the Credit Facility to provide for one or more tranches of term loans in an aggregate principal amount of $1.0 billion, our ability to add up to $300 million of borrowing capacity from receivable transactions (including securitizations) and our continued access to the bank credit and capital markets will be sufficient to finance acquisitions, capital expenditures and working capital requirements through the next 12 months. We believe these same sources of cash, borrowings under our Credit Facility as well as access to bank credit and capital markets will be available to us beyond the next 12 months and into the foreseeable future.
On December 22, 2008, we filed a universal automatic shelf registration statement on Form S-3ASR that will permit us, from time to time, in one or more public offerings, to offer debt securities, common stock, preferred stock, warrants, depositary shares, or any combination of such securities. The shelf registration statement will also permit our subsidiary, CHS, to offer debt securities that would be guaranteed by us, from time to time in one or more public offerings. The terms of any such future offerings would be established at the time of the offering.
Off-balance sheet arrangements
Our consolidated operating results for the years ended December 31, 2011 and 2010, included $248.4 million and $245.4 million, respectively, of net operating revenues and $16.4 million and $26.6 million, respectively, of income from continuing operations, generated from five hospitals operated by us under operating lease arrangements. In accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, the respective assets and the future lease obligations under these arrangements are not recorded in our consolidated balance sheet. Lease costs under these arrangements are included in rent expense and totaled approximately $11.9 million and $12.4 million for the years ended December 31, 2011 and 2010, respectively. The current terms of these operating leases expire between January 2013 and June 2022, not including lease extension options. If we allow these leases to expire, we would no longer generate revenues nor incur expenses from these hospitals.
In the past, we have utilized operating leases as a financing tool for obtaining the operations of specified hospitals without acquiring, through ownership, the related assets of the hospital and without a significant outlay of cash at the front end of the lease. We utilize the same operating strategies to improve operations at those hospitals held under operating leases as we do at those hospitals that we own. We have not entered into any operating leases for hospital operations since December 2000.
 
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During the year ended December 31, 2010, we entered into an agreement with the lessor of Cleveland Regional Medical Center, or Cleveland Regional, our leased facility in Cleveland, TX, to exchange our ownership interest in certain real estate at Hill Regional Medical Center, or Hill Regional, in Hillsboro, TX for the lessor’s ownership interest in the real estate at Cleveland Regional. The related lease agreement was amended to incorporate Hill Regional as a leased asset with no change to the remaining lease term or payment schedule. No monetary consideration was exchanged in this transaction, and the transaction qualifies as a non-taxable, like-kind exchange under the regulations in Section 1031 of the Internal Revenue Code. The assets of Cleveland Regional were recorded in the consolidated balance sheet at fair value on the date of this transaction; however, as a result of our continuing involvement in the Hill Regional assets, the exchange with the lessor does not qualify for sale treatment under U.S. GAAP. Accordingly, the transaction has been accounted for as a financing obligation and the assets of Hill Regional will remain on the consolidated balance sheet as assets recorded under a financing obligation. Starting in the fourth quarter of 2010, future payments under the lease are amortized against the financing obligation rather than recorded as rent expense.
As described more fully in Note 15 of the Notes to Consolidated Financial Statements, at December 31, 2011, we have certain cash obligations for replacement facilities and other construction commitments of $511.7 million and open purchase orders for $354.7 million.
Noncontrolling Interests
We have sold noncontrolling interests in certain of our subsidiaries or acquired subsidiaries with existing noncontrolling interest ownership positions. As of December 31, 2011, we have hospitals in 24 of the markets we serve, with noncontrolling physician ownership interests ranging from less than 1% to 40%, including one hospital that also had a non-profit entity as a partner. In addition, we have three other hospitals with noncontrolling interests owned by non-profit entities. During 2010 (prior to the enactment of the Reform Legislation), we sold noncontrolling interests in two of our hospitals and additional noncontrolling interests in hospitals with existing physician ownership, for total consideration of $7.2 million. During 2009, we sold noncontrolling interests in six of our hospitals, including additional noncontrolling interests in hospitals with existing physician ownership, for total consideration of $19.3 million. Effective June 1, 2009, we acquired from Akron General Medical Center the remaining 20% noncontrolling interest in Massillon Community Health System, LLC not then owned by us. This entity indirectly owns and operates Affinity Medical Center of Massillon, Ohio. The purchase price for this noncontrolling interest was $1.1 million in cash. Affinity Medical Center is now wholly-owned by us. Redeemable noncontrolling interests in equity of consolidated subsidiaries was $395.7 million and $387.5 million as of December 31, 2011 and 2010, respectively, and noncontrolling interests in equity of consolidated subsidiaries was $67.3 million and $60.9 million as of December 31, 2011 and 2010, respectively, and the amount of net income attributable to noncontrolling interests was $75.7 million, $68.5 million and $63.2 million for the years ended December 31, 2011, 2010 and 2009, respectively. As a result of the change in the Stark Law “whole hospital” exception included in the Reform Legislation, we will not introduce physician ownership at any of our wholly-owned facilities or increase the aggregate percentage of physician ownership in any of our existing joint ventures.
Reimbursement, Legislative and Regulatory Changes
The Reform Legislation was enacted in the context of other ongoing legislative and regulatory efforts, which would reduce or otherwise adversely affect the payments we receive from Medicare and Medicaid. Within the statutory framework of the Medicare and Medicaid programs, including programs currently unaffected by the Reform Legislation, there are substantial areas subject to administrative rulings, interpretations and discretion which may further affect payments made under those programs, and the federal and state governments might, in the future, reduce the funds available under those programs or require more stringent utilization and quality reviews of hospital facilities. Additionally, there may be a continued rise in managed care programs and additional restructuring of the financing and delivery of healthcare in the United States. These events could cause our future financial results to decline. We cannot estimate the impact of Medicare and Medicaid reimbursement changes that have been enacted or are under consideration. We cannot predict whether additional reimbursement reductions will be made or whether any such changes would have a material adverse effect on our business, financial conditions, results of operations, cash flow, capital resources and liquidity.
 
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Inflation
The healthcare industry is labor intensive. Wages and other expenses increase during periods of inflation and when labor shortages occur in the marketplace. In addition, our suppliers pass along rising costs to us in the form of higher prices. We have implemented cost control measures, including our case and resource management program, to curb increases in operating costs and expenses. We have generally offset increases in operating costs by increasing reimbursement for services, expanding services and reducing costs in other areas. However, we cannot predict our ability to cover or offset future cost increases, particularly any increases in our cost of providing health insurance benefits to our employees as a result of the Reform Legislation.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions.
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. We believe that our critical accounting policies are limited to those described below. For a detailed discussion on the application of these and other accounting policies, see Note 1 in the Notes to the Consolidated Financial Statements included under Item 8 of this Report.
Third-party Reimbursement
Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for treatment of patients covered by these programs are generally less than the standard billing rates. Contractual allowances are automatically calculated and recorded through our internally developed “automated contractual allowance system.” Within the automated system, actual Medicare DRG data and payors’ historical paid claims data are utilized to calculate the contractual allowances. This data is automatically updated on a monthly basis. All hospital contractual allowance calculations are subjected to monthly review by management to ensure reasonableness and accuracy. We account for the differences between the estimated program reimbursement rates and the standard billing rates as contractual allowance adjustments, which we deduct from gross revenues to arrive at net operating revenues. The process of estimating contractual allowances requires us 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 we receive could be different from the amounts we estimate and record. If the actual contractual reimbursement percentage under government programs and managed care contracts differed by 1% at December 31, 2011 from our estimated reimbursement percentage, net income for the year ended December 31, 2011 would have changed by approximately $35.0 million, and net accounts receivable at December 31, 2011 would have changed by $55.6 million. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known. Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues and net income by an insignificant amount in each of the years ended December 31, 2011, 2010 and 2009.
Allowance for Doubtful Accounts
Substantially all of our accounts receivable are related to providing healthcare services to our hospitals’ patients. Collection of these accounts receivable is our primary source of cash and is critical to our operating performance. Our primary collection risks relate to uninsured patients and outstanding patient balances for which the primary
 
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insurance payor has paid some but not all of the outstanding balance, with the remaining outstanding balance (generally deductibles and co-payments) owed by the patient. At the point of service, for patients required to make a co-payment, we generally collect less than 15% of the related revenue. For all procedures scheduled in advance, our policy is to verify insurance coverage prior to the date of the procedure. Insurance coverage is not verified in advance of procedures for walk-in and emergency room patients.
We estimate the allowance for doubtful accounts by reserving a percentage of all self-pay accounts receivable without regard to aging category, based on collection history, adjusted for expected recoveries and, if present, anticipated changes in trends. For all other non-self-pay payor categories, we reserve 100% of all accounts aging over 365 days from the date of discharge. The percentage used to reserve for all self-pay accounts is based on our collection history. We believe that we collect substantially all of our third-party insured receivables, which include receivables from governmental agencies.
Collections are impacted by the economic ability of patients to pay and the effectiveness of our collection efforts. Significant changes in payor mix, business office operations, economic conditions or trends in federal and state governmental healthcare coverage could affect our collection of accounts receivable. The process of estimating the allowance for doubtful accounts requires us to estimate the collectability of self-pay accounts receivable, which is primarily based on our collection history, adjusted for expected recoveries and, if available, anticipated changes in collection trends. Significant change in payor mix, business office operations, economic conditions, trends in federal and state governmental healthcare coverage or other third-party payors could affect our estimates of accounts receivable collectability. If the actual collection percentage at December 31, 2011 differed by 1% from our estimated collection percentage as a result of a change in expected recoveries, net income for the year ended December 31, 2011 would have changed by $19.5 million, and net accounts receivable at December 31, 2011 would have changed by $31.0 million. We also continually review our 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.
Our policy is to write-off gross accounts receivable if the balance is under $10.00 or when such amounts are placed with outside collection agencies. We believe this policy accurately reflects our ongoing collection efforts and is consistent with industry practices. We had approximately $2.2 billion and $2.1 billion at December 31, 2011 and 2010, respectively, being pursued by various outside collection agencies. We expect to collect less than 3%, net of estimated collection fees, of the amounts being pursued by outside collection agencies. As these amounts have been written-off, they are not included in our gross accounts receivable or our allowance for doubtful accounts. Collections on amounts previously written-off are recognized as a reduction to bad debt expense when received. However, we take into consideration estimated collections of these future amounts written-off in evaluating the reasonableness of our allowance for doubtful accounts.
All of the following information is derived from our hospitals, excluding clinics, unless otherwise noted.
Patient accounts receivable from our hospitals represent approximately 95% of our total consolidated accounts receivable.
Days revenue outstanding was 49 days at December 31, 2011 and 46 days at December 31, 2010. Our target range for days revenue outstanding is from 46 to 56 days.
Total gross accounts receivable (prior to allowance for contractual adjustments and doubtful accounts) was approximately $8.3 billion as of December 31, 2011 and approximately $7.2 billion as of December 31, 2010.
 
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The approximate percentage of total gross accounts receivable (prior to allowances for contractual adjustments and doubtful accounts) summarized by payor is as follows:

 	  	December 31,	 	
 	  	2011	 	 	2010	 	
Insured receivables	  	 	63.7	% 	 	 	63.9	% 	
Self-pay receivables	  	 	36.3	% 	 	 	36.1	% 	
 	  	 	 	 	 	 	 	 	
Total	  	 	100.0	% 	 	 	100.0	% 	
 	  	 	 	 	 	 	 	 	
For the hospital segment, the combined total of the allowance for doubtful accounts for self-pay accounts receivable and related allowances for other self-pay discounts and contractuals, as a percentage of gross self-pay receivables, was approximately 84% at both December 31, 2011 and 2010. If the receivables that have been written-off, but where collections are still being pursued by outside collection agencies, were included in both the allowances and gross self-pay receivables specified above, the percentage of combined allowances to total self-pay receivables would have been approximately 91% at both December 31, 2011 and 2010.
Goodwill and Other Intangibles
Goodwill represents the excess of the fair value of the consideration conveyed in the acquisition over the fair value of net assets acquired. Goodwill is evaluated for impairment at the same time every year and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value. There is a two-step method for determining goodwill impairment. Step one is to compare the fair value of the reporting unit with the unit’s carrying amount, including goodwill. If this test indicates the fair value is less than the carrying value, then step two is required to compare the implied fair value of the reporting unit’s goodwill with the carrying value of the reporting unit’s goodwill. We have selected September 30 as our annual testing date. Based on the results of our most recent annual impairment test, we have concluded that we do not have any reporting units that are at risk of failing step one of the goodwill impairment test.
Impairment or Disposal of Long-Lived Assets
Whenever events or changes in circumstances indicate that the carrying values of certain long-lived assets may be impaired, we project the undiscounted cash flows expected to be generated by these assets. If the projections indicate that the reported amounts are not expected to be recovered, such amounts are reduced to their estimated fair value based on a quoted market price, if available, or an estimate based on valuation techniques available in the circumstances.
 
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Professional Liability Claims
As part of our business of owning and operating hospitals, we are subject to legal actions alleging liability on our part. We accrue for losses resulting from such liability claims, as well as loss adjustment expenses that are out-of-pocket and directly related to such liability claims. These direct out-of-pocket expenses include fees of outside counsel and experts. We do not accrue for costs that are part of our corporate overhead, such as the costs of our in-house legal and risk management departments. The losses resulting from professional liability claims primarily consist of estimates for known claims, as well as estimates for incurred but not reported claims. The estimates are based on specific claim facts, our historical claim reporting and payment patterns, the nature and level of our hospital operations and actuarially determined projections. The actuarially determined projections are based on our actual claim data, including historic reporting and payment patterns which have been gathered over approximately a 20-year period. As discussed below, since we purchase excess insurance on a claims-made basis that transfers risk to third party insurers, the liability we accrue does include an amount for the losses covered by our excess insurance. We also record a receivable for the expected reimbursement of losses covered by excess insurance. Since we believe that the amount and timing of our future claims payments are reliably determinable, we discount the amount we accrue for losses resulting from professional liability claims using the risk-free interest rate corresponding to the timing of our expected payments.
The net present value of the projected payments was discounted using a weighted-average risk-free rate of 1.2%, 1.3% and 1.4% in 2011, 2010 and 2009, respectively. This liability is adjusted for new claims information in the period such information becomes known to us. Professional malpractice expense includes the losses resulting from professional liability claims and loss adjustment expense, as well as paid excess insurance premiums, and is presented within other operating expenses in the accompanying consolidated statements of income.
Our processes for obtaining and analyzing claims and incident data are standardized across all of our hospitals and have been consistent for many years. We monitor the outcomes of the medical care services that we provide and for each reported claim, we obtain various information concerning the facts and circumstances related to that claim. In addition, we routinely monitor current key statistics and volume indicators in our assessment of utilizing historical trends. The average lag period between claim occurrence and payment of a final settlement is between four and five years, although the facts and circumstances of individual claims could result in the timing of such payments being different from this average. Since claims are paid promptly after settlement with the claimant is reached, settled claims represent less than 1.0% of the total liability at the end of any period.
For purposes of estimating our individual claim accruals, we utilize specific claim information, including the nature of the claim, the expected claim amount, the year in which the claim occurred and the laws of the jurisdiction in which the claim occurred. Once the case accruals for known claims are determined, information is stratified by loss layers and retentions, accident years, reported years, geography and claims relating to the acquired Triad hospitals versus claims relating to our other hospitals. Several actuarial methods are used against this data to produce estimates of ultimate paid losses and reserves for incurred but not reported claims. Each of these methods uses our company-specific historical claims data and other information. This company-specific data includes information regarding our business, including historical paid losses and loss adjustment expenses, historical and current case loss reserves, actual and projected hospital statistical data, a variety of hospital census information, employed physician information, professional liability retentions for each policy year, geographic information and other data.
Based on these analyses we determine our estimate of the professional liability claims. The determination of management’s estimate, including the preparation of the reserve analysis that supports such estimate, involves subjective judgment of management. Changes in reserving data or the trends and factors that influence reserving data may signal fundamental shifts in our future claim development patterns or may simply reflect single-period anomalies. Even if a change reflects a fundamental shift, the full extent of the change may not become evident until years later. Moreover, since our methods and models use different types of data and we select our liability from the results of all of these methods, we typically cannot quantify the precise impact of such factors on our estimates of the liability. Due to our standardized and consistent processes for handling claims and the long history and depth of our company-specific data, our methodologies have produced reliably determinable estimates of ultimate paid losses.
 
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The following table presents the amounts of our accrual for professional liability claims and approximate amounts of our activity for each of the respective years (excludes premiums for excess insurance coverage) (in thousands):

 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
 	 	 	 	
Accrual for professional liability claims, beginning of year	  	$	489,207	  	 	$	431,225	  	 	$	350,579	  	

Impact from adopting ASU 2010-24	  	 	42,171	  	 	 	—  	  	 	 	—  	  	
 	 	 	 	
Expense (income) related to:	  	 	 	 	 	 	 	 	 	 	 	 	
Current accident year	  	 	145,396	  	 	 	141,923	  	 	 	136,424	  	
Prior accident years	  	 	(30,698	) 	 	 	(10,583	) 	 	 	(6,702	) 	
(Income) expense from discounting	  	 	(2,393	) 	 	 	(2,678	) 	 	 	11,515	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total incurred loss and loss expense (1)	  	 	112,305	  	 	 	128,662	  	 	 	141,237	  	

Paid claims and expenses related to:	  	 	 	 	 	 	 	 	 	 	 	 	
Current accident year	  	 	(468	) 	 	 	(1,980	) 	 	 	(1,387	) 	
Prior accident years	  	 	(75,430	) 	 	 	(68,700	) 	 	 	(59,204	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total paid claims and expenses	  	 	(75,898	) 	 	 	(70,680	) 	 	 	(60,591	) 	

Accrual for professional liability claims, end of year	  	$	567,785	  	 	$	489,207	  	 	$	431,225	  	

(1)	Total expense, including premiums for insured coverage, was $150.2 million in 2011, $164.2 million in 2010 and $176.4 million in 2009.	
The increase in current accident year claims expense in each year from 2009 to 2011 is consistent with the increase in net operating revenues during these periods. Income/expense related to prior accident years reflects changes in estimates resulting from the filing of claims for prior year incidents, claim settlements, updates from litigation and our ongoing investigation of open claims. Expense/income from discounting reflects the changes in the weighted-average risk-free interest rate used and timing of estimated payments for discounting in each year.
We are primarily self-insured for these claims; however, we obtain excess insurance that transfers the risk of loss to a third-party insurer for claims in excess of our self-insured retentions. Our excess insurance is underwritten on a claims-made basis. For claims reported prior to June 1, 2002, substantially all of our professional and general liability risks were subject to a $0.5 million per occurrence self-insured retention and for claims reported from June 1, 2002 through June 1, 2003, these self-insured retentions were $2.0 million per occurrence. Substantially all claims reported after June 1, 2003 and before June 1, 2005 are self-insured up to $4 million per claim. Substantially all claims reported on or after June 1, 2005 are self-insured up to $5 million per claim. Management, on occasion, has selectively increased the insured risk at certain hospitals based upon insurance pricing and other factors and may continue that practice in the future. Excess insurance for all hospitals has been purchased through commercial insurance companies and generally covers us for liabilities in excess of the self-insured retentions. The excess coverage consists of multiple layers of insurance, the sum of which totals up to $95 million per occurrence and in the aggregate for claims reported on or after June 1, 2003 and up to $145 million per occurrence and in the aggregate for claims incurred and reported after January 1, 2008. For certain policy years, if the first aggregate layer of excess coverage becomes fully utilized, then the self-insured retention could increase to $10 million per claim for any subsequent claims in that policy year until our total aggregate coverage is met.
 
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Effective January 1, 2008, the former Triad hospitals are insured on a claims-made basis as described above and through commercial insurance companies as described above for substantially all claims occurring on or after January 1, 2002 and reported on or after January 1, 2008. Substantially all losses for the former Triad hospitals in periods prior to May 1, 1999 were insured through a wholly-owned insurance subsidiary of HCA Holdings Inc., or HCA, Triad’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 1, 1999. From May 1, 1999 through December 31, 2006, the former Triad hospitals obtained insurance coverage on a claims incurred basis from HCA’s wholly-owned insurance subsidiary, with excess coverage obtained from other carriers that is subject to certain deductibles. Effective for claims incurred after December 31, 2006, Triad began insuring its claims from $1 million to $5 million through its wholly-owned captive insurance company, replacing the coverage provided by HCA. Substantially all claims occurring during 2007 were self-insured up to $10 million per claim.
Income Taxes
We must make estimates in recording provision for income taxes, including determination of deferred tax assets and deferred tax liabilities and any valuation allowances that might be required against the deferred tax assets. We believe that future income will enable us to realize certain deferred tax assets, subject to the valuation allowance we have established.
The total amount of unrecognized benefit that would impact the effective tax rate, if recognized, was approximately $0.8 million as of December 31, 2011. During the year ended December 31, 2011, we decreased liabilities for uncertain tax positions by $5.4 million, including the favorable resolution of an issue on appeal with the IRS related to its tax examination of Triad tax returns, and decreased interest and penalties by approximately $1.1 million. A total of approximately $0.3 million of interest and penalties is included in the amount of liability for uncertain tax positions at December 31, 2011. It is our policy to recognize interest and penalties related to unrecognized benefits in our consolidated statements of income as income tax expense. During the year ended December 31, 2011, we released $2.3 million for income taxes and $0.7 million for accrued interest of our liability for uncertain tax positions, as a result of the expiration of the statute of limitations pertaining to tax positions taken in prior years.
It is possible the amount of unrecognized tax benefit could change in the next twelve months as a result of a lapse of the statute of limitations and settlements with taxing authorities; however, we do not anticipate the change will have a material impact on our consolidated results of operations or consolidated financial position.
We, or one or more of our subsidiaries, file income tax returns in the United States federal jurisdiction and various state jurisdictions. We have extended the federal statute of limitations for Triad for the tax periods ended December 31, 1999, December 31, 2000, April 30, 2001, June 30, 2001, December 31, 2001, December 31, 2002 and December 31, 2003. The IRS has concluded its examination of the federal tax return of Triad for the tax periods ended December 31, 2004, December 31, 2005, December 31, 2006 and July 25, 2007. In September 2011, we reached a favorable resolution of an issue on appeal with the IRS related to its examination of Triad’s tax returns. As a result, we recognized a tax benefit of $4.0 million, which is reflected in the accompanying consolidated statement of income for the year ended December 31, 2011. With few exceptions, we are no longer subject to state income tax examinations for years prior to 2008 and federal income tax examinations with respect to Community Health Systems, Inc. federal returns for years prior to 2007. Our federal income tax returns for the 2007 and 2008 tax years are currently under examination by the IRS. We believe the results of this examination will not be material to our consolidated results of operations or consolidated financial position. In connection with our 2007 and 2008 IRS examinations, the IRS has taken exception to the timing of our malpractice expense deductions. Management believes that our deduction timing is appropriate, and will work to resolve this item over the next 24 months. If management is unable to sustain the current timing of our deduction, then it would be subject to interest and penalty costs. Management does not consider this matter to have met the recognition criteria to be considered an uncertain tax position for which a reserve is necessary.
 
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Recent Accounting Pronouncements
In August 2010, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2010-24, which provides clarification to companies in the healthcare industry on the accounting for professional liability insurance. This ASU states that receivables related to insurance recoveries should not be netted against the related claim liability and such claim liabilities should be determined without considering insurance recoveries. This ASU is effective for fiscal years beginning after December 15, 2010 and was adopted prospectively by us on January 1, 2011. 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 31, 2011 and had no impact to the consolidated statement of income for the year ended December 31, 2011.
In August 2010, the FASB issued ASU 2010-23, which requires a company in the healthcare industry to use its direct and indirect costs of providing charity care as the measurement basis for charity care disclosures. This ASU also requires additional disclosures of the method used to determine such costs. We adopted this ASU on January 1, 2011. In the ordinary course of business, we render services to patients who are financially unable to pay for hospital care. Included in the provision for contractual allowances is the value (at our 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 our charity care policy. The estimated cost incurred by us 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 31, 2011, 2010 and 2009, respectively. The estimated cost of these charity care services was determined using a ratio of cost to gross charges and applying that ratio to the gross charges associated with providing care to charity patients for the period. Gross charges associated with providing care to charity patients includes only the related charges for those patients who are financially unable to pay and qualify under our charity care policy and that do not otherwise qualify for reimbursement from a governmental program.
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’ equity. Instead, ASU 2011-05 requires that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued ASU 2011-12, which amends ASU 2011-05 to defer the requirement to measure and present reclassification adjustments from accumulated other comprehensive income to net income by income statement line item in net income and also in other comprehensive income. ASU 2011-05, as amended by ASU 2011-12, is required to be applied retrospectively and is effective for fiscal years beginning after December 15, 2011, and will be adopted by us in the first quarter of 2012. The adoption of ASU 2011-05, as amended by ASU 2011-12, will not impact our consolidated financial position, results of operations or cash flows, although it will change the presentation of our other comprehensive income for all periods presented.
 
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In July 2011, the FASB issued ASU 2011-07, which requires healthcare organizations that perform services for patients for which the ultimate collection of all or a portion of the amounts billed or billable cannot be determined at the time services are rendered to present all bad debt expense associated with such patient service revenue as an offset to the patient service revenue line item in the statement of operations. The ASU also requires qualitative disclosures about our policy for recognizing revenue and bad debt expense for patient service transactions and quantitative information about the effects of changes in the assessment of collectability of patient service revenue. This ASU is effective for fiscal years beginning after December 15, 2011, and will be adopted by us in the first quarter of 2012. Upon adoption, our provision for bad debts will be presented as a reduction of patient service revenue after contractual adjustments and discounts. The changes in net revenue for all periods presented in this annual report as if the ASU was early adopted in 2011 are as follows (in thousands):

 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
Net operating revenues (net of contractual allowances and discounts)	  	$	13,626,168	  	 	$	12,623,274	  	 	$	11,742,454	  	
Provision for bad debts	  	 	(1,719,956	) 	 	 	(1,530,852	) 	 	 	(1,408,953	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net operating revenues, less provision for bad debts	  	$	11,906,212	  	 	$	11,092,422	  	 	$	10,333,501	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
In September 2011, the FASB issued ASU 2011-08, which simplifies how entities test goodwill for impairment. Previous guidance required an entity to perform a two-step goodwill impairment test at least annually by comparing the fair value of a reporting unit with its carrying amount, including goodwill, and recording an impairment loss if the fair value is less than the carrying amount. This ASU allows an entity to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines after that assessment that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. ASU 2011-08 is required to be applied to interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011, and will be adopted by us in 2012. The adoption of ASU 2011-08 is not expected to impact our consolidated financial position, results of operations or cash flows.
 
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	
We are exposed to interest rate changes, primarily as a result of our Credit Facility which bears interest based on floating rates. In order to manage the volatility relating to the market risk, we entered into interest rate swap agreements described under the heading “Liquidity and Capital Resources.” We utilize risk management procedures and controls in executing derivative financial instrument transactions. We do not execute transactions or hold derivative financial instruments for trading purposes. Derivative financial instruments related to interest rate sensitivity of debt obligations are used with the goal of mitigating a portion of the exposure when it is cost effective to do so. As interest rate swap agreements expire throughout the year we will become more subject to variable interest rates during 2012.
A 1% change in interest rates on variable rate debt in excess of that amount covered by interest rate swaps would have resulted in interest expense fluctuating approximately $7.2 million in 2011, $6.8 million in 2010 and $2.5 million in 2009.
 
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Item 8.	Financial Statements and Supplementary Data	
Index to Financial Statements

 	  	Page	 	
 	 	
Community Health Systems, Inc. Consolidated Financial Statements:	  	 	 	 	
 	 	
Report of Independent Registered Public Accounting Firm	  	 	73	  	
 	 	
Consolidated Statements of Income for the Years Ended December 31, 2011, 2010 and 2009	  	 	74	  	
 	 	
Consolidated Balance Sheets as of December 31, 2011 and 2010	  	 	75	  	
 	 	
Consolidated Statements of Stockholders’ Equity for the Years Ended December  31, 2011, 2010 and 2009	  	 	76	  	
 	 	
Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2010 and 2009	  	 	77	  	
 	 	
Notes to Consolidated Financial Statements	  	 	78	  	
 
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Community Health Systems, Inc.
Franklin, Tennessee
We have audited the accompanying consolidated balance sheets of Community Health Systems, Inc. and subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Community Health Systems, Inc. and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2011, based on the criteria established in  Internal Control—Integrated Framework  issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2012 expressed an unqualified opinion on the Company’s internal control over financial reporting.
/s/ Deloitte & Touche LLP
Nashville, Tennessee
February 22, 2012
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
 	  	(In thousands, except share and per share data)	 	
 	 	 	 	
Net operating revenues	  	$	13,626,168	  	 	$	12,623,274	  	 	$	11,742,454	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Operating costs and expenses:	  	 	 	 	 	 	 	 	 	 	 	 	
Salaries and benefits	  	 	5,577,925	  	 	 	5,093,767	  	 	 	4,701,231	  	
Provision for bad debts	  	 	1,719,956	  	 	 	1,530,852	  	 	 	1,408,953	  	
Supplies	  	 	1,834,106	  	 	 	1,738,088	  	 	 	1,649,779	  	
Other operating expenses	  	 	2,515,638	  	 	 	2,296,063	  	 	 	2,129,081	  	
Electronic health records incentive reimbursement	  	 	(63,397	) 	 	 	—  	  	 	 	—  	  	
Rent	  	 	254,781	  	 	 	248,463	  	 	 	237,536	  	
Depreciation and amortization	  	 	652,674	  	 	 	594,997	  	 	 	551,043	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	  	 	12,491,683	  	 	 	11,502,230	  	 	 	10,677,623	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	1,134,485	  	 	 	1,121,044	  	 	 	1,064,831	  	
Interest expense, net of interest income of $4,650, $1,757 and $3,561 in 2011, 2010, and 2009, respectively	  	 	644,410	  	 	 	647,593	  	 	 	643,608	  	
Loss (gain) from early extinguishment of debt	  	 	66,019	  	 	 	—  	  	 	 	(2,385	) 	
Equity in earnings of unconsolidated affiliates	  	 	(49,491	) 	 	 	(45,443	) 	 	 	(36,531	) 	
Impairment of long-lived and other assets	  	 	—  	  	 	 	—  	  	 	 	12,477	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations before income taxes	  	 	473,547	  	 	 	518,894	  	 	 	447,662	  	
Provision for income taxes	  	 	137,653	  	 	 	163,681	  	 	 	141,851	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	335,894	  	 	 	355,213	  	 	 	305,811	  	
Discontinued operations, net of taxes:	  	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from operations of entities sold	  	 	(7,769	) 	 	 	(6,772	) 	 	 	971	  	
Impairment of hospitals sold	  	 	(47,930	) 	 	 	—  	  	 	 	—  	  	
Loss on sale, net	  	 	(2,572	) 	 	 	—  	  	 	 	(405	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from discontinued operations	  	 	(58,271	) 	 	 	(6,772	) 	 	 	566	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	277,623	  	 	 	348,441	  	 	 	306,377	  	
Less: Net income attributable to noncontrolling interests	  	 	75,675	  	 	 	68,458	  	 	 	63,227	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Community Health Systems, Inc.	  	$	201,948	  	 	$	279,983	  	 	$	243,150	  	

Basic earnings per share attributable to Community Health Systems, Inc. common stockholders(1):	  	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	  	$	2.89	  	 	$	3.13	  	 	$	2.68	  	
Discontinued operations	  	 	(0.65	) 	 	 	(0.07	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	2.24	  	 	$	3.05	  	 	$	2.68	  	

Diluted earnings per share attributable to Community Health Systems, Inc. common stockholders(1):	  	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	  	$	2.87	  	 	$	3.08	  	 	$	2.65	  	
Discontinued operations	  	 	(0.64	) 	 	 	(0.07	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	2.23	  	 	$	3.01	  	 	$	2.66	  	

Weighted-average number of shares outstanding:	  	 	 	 	 	 	 	 	 	 	 	 	
Basic	  	 	89,966,933	  	 	 	91,718,791	  	 	 	90,614,886	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Diluted	  	 	90,666,348	  	 	 	92,946,048	  	 	 	91,517,274	  	

(1)	Total per share amounts may not add due to rounding.	
See notes to consolidated financial statements.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

 	  	December 31,	 	
 	  	2011	 	 	2010	 	
 	  	(In thousands, except	 	
 	  	share data)	 	
ASSETS	  	
Current assets:	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	129,865	  	 	$	299,169	  	
Patient accounts receivable, net of allowance for doubtful accounts of $1,891,334 and $1,639,198 at December 31, 2011 and December 31, 2010, respectively	  	 	1,834,167	  	 	 	1,714,542	  	
Supplies	  	 	346,611	  	 	 	329,114	  	
Prepaid income taxes	  	 	101,389	  	 	 	118,464	  	
Deferred income taxes	  	 	89,797	  	 	 	115,819	  	
Prepaid expenses and taxes	  	 	112,613	  	 	 	100,754	  	
Other current assets	  	 	231,647	  	 	 	193,331	  	
 	  	 	 	 	 	 	 	 	
Total current assets	  	 	2,846,089	  	 	 	2,871,193	  	
 	  	 	 	 	 	 	 	 	
Property and equipment:	  	 	 	 	 	 	 	 	
Land and improvements	  	 	591,457	  	 	 	538,496	  	
Buildings and improvements	  	 	5,715,066	  	 	 	5,108,711	  	
Equipment and fixtures	  	 	3,063,005	  	 	 	2,735,915	  	
 	  	 	 	 	 	 	 	 	
 	  	 	9,369,528	  	 	 	8,383,122	  	
 	 	 	
Less accumulated depreciation and amortization	  	 	(2,513,552	) 	 	 	(2,058,685	) 	
 	  	 	 	 	 	 	 	 	
Property and equipment, net	  	 	6,855,976	  	 	 	6,324,437	  	
 	  	 	 	 	 	 	 	 	
Goodwill	  	 	4,264,845	  	 	 	4,150,247	  	
 	  	 	 	 	 	 	 	 	
Other assets, net of accumulated amortization of $313,028 and $258,547 at December 31, 2011 and December 31, 2010, respectively (including long-lived assets of hospitals held for sale of $0 and $182,688 at December 31, 2011 and 2010, respectively)	  	 	1,241,930	  	 	 	1,352,246	  	
 	  	 	 	 	 	 	 	 	
Total assets	  	$	15,208,840	  	 	$	14,698,123	  	

LIABILITIES AND EQUITY	  	 	 	 	 	 	 	 	
Current liabilities:	  	 	 	 	 	 	 	 	
Current maturities of long-term debt	  	$	63,706	  	 	$	63,139	  	
Accounts payable	  	 	748,997	  	 	 	526,338	  	
Deferred income taxes	  	 	—  	  	 	 	8,882	  	
Accrued liabilities:	  	 	 	 	 	 	 	 	
Employee compensation	  	 	620,508	  	 	 	596,026	  	
Interest	  	 	110,121	  	 	 	146,415	  	
Other	  	 	367,807	  	 	 	301,240	  	
 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	1,911,139	  	 	 	1,642,040	  	
 	  	 	 	 	 	 	 	 	
Long-term debt	  	 	8,782,798	  	 	 	8,808,382	  	
 	  	 	 	 	 	 	 	 	
Deferred income taxes	  	 	704,725	  	 	 	608,177	  	
 	  	 	 	 	 	 	 	 	
Other long-term liabilities	  	 	949,990	  	 	 	1,001,675	  	
 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	12,348,652	  	 	 	12,060,274	  	
 	  	 	 	 	 	 	 	 	
Redeemable noncontrolling interests in equity of consolidated subsidiaries	  	 	395,743	  	 	 	387,472	  	
 	  	 	 	 	 	 	 	 	
Commitments and contingencies (Note 15)	  	 	 	 	 	 	 	 	
 	 	 	
EQUITY	  	 	 	 	 	 	 	 	
Community Health Systems, Inc. stockholders’ equity	  	 	 	 	 	 	 	 	
Preferred stock, $.01 par value per share, 100,000,000 shares authorized; none issued	  	 	—  	  	 	 	—  	  	
Common stock, $.01 par value per share, 300,000,000 shares authorized; 91,547,079 shares issued and 90,571,530 shares outstanding at December 31, 2011 and 93,644,862 shares issued and 92,669,313 shares outstanding at December 31, 2010	  	 	915	  	 	 	936	  	
Additional paid-in capital	  	 	1,086,008	  	 	 	1,126,751	  	
Treasury stock, at cost, 975,549 shares at December 31, 2011 and December 31, 2010	  	 	(6,678	) 	 	 	(6,678	) 	
Accumulated other comprehensive loss	  	 	(184,479	) 	 	 	(230,927	) 	
Retained earnings	  	 	1,501,330	  	 	 	1,299,382	  	
 	  	 	 	 	 	 	 	 	
Total Community Health Systems, Inc. stockholders’ equity	  	 	2,397,096	  	 	 	2,189,464	  	
Noncontrolling interests in equity of consolidated subsidiaries	  	 	67,349	  	 	 	60,913	  	
 	  	 	 	 	 	 	 	 	
Total equity	  	 	2,464,445	  	 	 	2,250,377	  	
 	  	 	 	 	 	 	 	 	
Total liabilities and equity	  	$	15,208,840	  	 	$	14,698,123	  	
 	  	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

 	 	 	 	 	Community Health Systems, Inc. Stockholders	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	 	 	 	 	 	 	 	 	
 	 	Redeemable	 	 	 	 	 	Additional	 	 	 	 	 	Other	 	 	 	 	 	 	 	 	 	 	
 	 	Noncontrolling	 	 	Common Stock	 	 	Paid-in	 	 	Treasury Stock	 	 	Comprehensive	 	 	Retained	 	 	Noncontrolling	 	 	 	 	
 	 	Interests	 	 	Shares	 	 	Amount	 	 	Capital	 	 	Shares	 	 	Amount	 	 	Income (Loss)	 	 	Earnings	 	 	Interests	 	 	Total	 	
 	 	 	 	 	(In thousands, except share data)	 	
 	 	 	 	 	 	 	 	 	 	 	
BALANCE, December 31, 2008	 	$	348,816	  	 	 	92,483,166	  	 	$	925	  	 	$	1,136,108	  	 	 	(975,549	) 	 	$	(6,678	) 	 	$	(295,575	) 	 	$	776,249	  	 	$	61,457	  	 	$	1,672,486	  	
 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	46,716	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	243,150	  	 	 	16,511	  	 	 	259,661	  	
Net change in fair value of interest rate swaps, net of tax of $42,876	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	76,225	  	 	 	—  	  	 	 	—  	  	 	 	76,225	  	
Net change in fair value of available-for-sale securities	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	412	  	 	 	—  	  	 	 	—  	  	 	 	412	  	
Amortization and recognition of unrecognized pension cost components, net of tax benefit of $3,262	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(2,447	) 	 	 	—  	  	 	 	—  	  	 	 	(2,447	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total comprehensive income	 	 	46,716	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	74,190	  	 	 	243,150	  	 	 	16,511	  	 	 	333,851	  	
Distributions to noncontrolling interests, net of contributions	 	 	(27,072	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(13,582	) 	 	 	(13,582	) 	
Purchase of subsidiary shares from noncontrolling interests	 	 	(5,439	) 	 	 	—  	  	 	 	—  	  	 	 	3,106	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	396	  	 	 	3,502	  	
Sale of less-than-wholly-owned subsidiaries	 	 	(21,691	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Adjustment to redemption value of redeemable noncontrolling interests	 	 	27,527	  	 	 	—  	  	 	 	—  	  	 	 	(27,527	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(27,527	) 	
Issuance of common stock in connection with the exercise of stock options	 	 	—  	  	 	 	680,898	  	 	 	7	  	 	 	12,760	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	12,767	  	
Cancellation of restricted stock for tax withholdings on vested shares	 	 	—  	  	 	 	(328,470	) 	 	 	(3	) 	 	 	(7,117	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(7,120	) 	
Income tax payable increase from exercise of stock options	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(3,472	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(3,472	) 	
Share-based compensation	 	 	—  	  	 	 	1,177,943	  	 	 	11	  	 	 	44,501	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	44,512	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE, December 31, 2009	 	 	368,857	  	 	 	94,013,537	  	 	 	940	  	 	 	1,158,359	  	 	 	(975,549	) 	 	 	(6,678	) 	 	 	(221,385	) 	 	 	1,019,399	  	 	 	64,782	  	 	 	2,015,417	  	
 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	50,292	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	279,983	  	 	 	18,166	  	 	 	298,149	  	
Net change in fair value of interest rate swaps, net of tax benefit of $8,818	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(15,676	) 	 	 	—  	  	 	 	—  	  	 	 	(15,676	) 	
Net change in fair value of available-for-sale securities	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	3,716	  	 	 	—  	  	 	 	—  	  	 	 	3,716	  	
Amortization and recognition of unrecognized pension cost components, net of tax of $1,142	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	2,418	  	 	 	—  	  	 	 	—  	  	 	 	2,418	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total comprehensive income (loss)	 	 	50,292	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(9,542	) 	 	 	279,983	  	 	 	18,166	  	 	 	288,607	  	
Distributions to noncontrolling interests, net of contributions	 	 	(40,068	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(20,046	) 	 	 	(20,046	) 	
Purchase of subsidiary shares from noncontrolling interests	 	 	(3,754	) 	 	 	—  	  	 	 	—  	  	 	 	(3,529	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(3,529	) 	
 	 	 	 	 	 	 	 	 	 	 	
Other reclassifications of noncontrolling interests	 	 	1,989	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1,989	) 	 	 	(1,989	) 	
Adjustment to redemption value of redeemable noncontrolling interests	 	 	10,156	  	 	 	—  	  	 	 	—  	  	 	 	(10,156	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(10,156	) 	
Issuance of common stock in connection with the exercise of stock options	 	 	—  	  	 	 	2,194,862	  	 	 	22	  	 	 	56,916	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	56,938	  	
Cancellation of restricted stock for tax withholdings on vested shares	 	 	—  	  	 	 	(295,171	) 	 	 	(3	) 	 	 	(9,876	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(9,879	) 	
Repurchases of common stock	 	 	—  	  	 	 	(3,415,800	) 	 	 	(34	) 	 	 	(113,961	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(113,995	) 	
 	 	 	 	 	 	 	 	 	 	 	
Excess tax benefit from exercise of stock options	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	10,219	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	10,219	  	
Share-based compensation	 	 	—  	  	 	 	1,147,434	  	 	 	11	  	 	 	38,779	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	38,790	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE, December 31, 2010	 	 	387,472	  	 	 	93,644,862	  	 	 	936	  	 	 	1,126,751	  	 	 	(975,549	) 	 	 	(6,678	) 	 	 	(230,927	) 	 	 	1,299,382	  	 	 	60,913	  	 	 	2,250,377	  	
 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income (loss):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	54,251	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	201,948	  	 	 	21,424	  	 	 	223,372	  	
Net change in fair value of interest rate swaps, net of tax of $31,154	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	55,145	  	 	 	—  	  	 	 	—  	  	 	 	55,145	  	
Net change in fair value of available-for-sale securities	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(960	) 	 	 	—  	  	 	 	—  	  	 	 	(960	) 	
Amortization and recognition of unrecognized pension cost components, net of tax benefit of $4,754	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(7,737	) 	 	 	—  	  	 	 	—  	  	 	 	(7,737	) 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total comprehensive income	 	 	54,251	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	46,448	  	 	 	201,948	  	 	 	21,424	  	 	 	269,820	  	
Distributions to noncontrolling interests, net of contributions	 	 	(39,816	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(15,049	) 	 	 	(15,049	) 	
Purchase of subsidiary shares from noncontrolling interests	 	 	(7,426	) 	 	 	—  	  	 	 	—  	  	 	 	(4,556	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1,040	) 	 	 	(5,596	) 	
 	 	 	 	 	 	 	 	 	 	 	
Other reclassifications of noncontrolling interests	 	 	(2,099	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	1,101	  	 	 	1,101	  	
Adjustment to redemption value of redeemable noncontrolling interests	 	 	3,361	  	 	 	—  	  	 	 	—  	  	 	 	(3,361	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(3,361	) 	
Issuance of common stock in connection with the exercise of stock options	 	 	—  	  	 	 	623,341	  	 	 	6	  	 	 	18,910	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	18,916	  	
Cancellation of restricted stock for tax withholdings on vested shares	 	 	—  	  	 	 	(346,419	) 	 	 	(3	) 	 	 	(13,311	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(13,314	) 	
 	 	 	 	 	 	 	 	 	 	 	
Repurchases of common stock	 	 	—  	  	 	 	(3,469,099	) 	 	 	(35	) 	 	 	(85,790	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(85,825	) 	
 	 	 	 	 	 	 	 	 	 	 	
Excess tax benefit from exercise of stock options	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	4,823	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	4,823	  	
 	 	 	 	 	 	 	 	 	 	 	
Share-based compensation	 	 	—  	  	 	 	1,094,394	  	 	 	11	  	 	 	42,542	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	42,553	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE, December 31, 2011	 	$	395,743	  	 	 	91,547,079	  	 	$	915	  	 	$	1,086,008	  	 	 	(975,549	) 	 	$	(6,678	) 	 	$	(184,479	) 	 	$	1,501,330	  	 	$	67,349	  	 	$	2,464,445	  	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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Index to Financial Statements
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
 	  	(In thousands)	 	
Cash flows from operating activities:	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	277,623	  	 	$	348,441	  	 	$	306,377	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	  	 	657,665	  	 	 	609,839	  	 	 	566,543	  	
Deferred income taxes	  	 	107,032	  	 	 	97,370	  	 	 	34,268	  	
Stock-based compensation expense	  	 	42,542	  	 	 	38,779	  	 	 	44,501	  	
Loss on sale, net	  	 	2,572	  	 	 	—  	  	 	 	405	  	
Impairment of hospitals sold and other long-lived assets	  	 	47,930	  	 	 	—  	  	 	 	12,477	  	
Loss (gain) on early extinguishment of debt	  	 	66,019	  	 	 	—  	  	 	 	(2,385	) 	
(Excess tax benefit) income tax payable increase relating to stock-based compensation expense	  	 	(5,290	) 	 	 	(10,219	) 	 	 	3,472	  	
Other non-cash expenses, net	  	 	28,716	  	 	 	12,503	  	 	 	22,870	  	
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:	  	 	 	 	 	 	 	 	 	 	 	 	
Patient accounts receivable	  	 	(138,332	) 	 	 	(27,049	) 	 	 	58,390	  	
Supplies, prepaid expenses and other current assets	  	 	(42,858	) 	 	 	(39,904	) 	 	 	(34,535	) 	
Accounts payable, accrued liabilities and income taxes	  	 	246,110	  	 	 	161,952	  	 	 	86,098	  	
Other	  	 	(27,821	) 	 	 	(2,982	) 	 	 	(22,052	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	1,261,908	  	 	 	1,188,730	  	 	 	1,076,429	  	

Cash flows from investing activities:	  	 	 	 	 	 	 	 	 	 	 	 	
Acquisitions of facilities and other related equipment	  	 	(415,360	) 	 	 	(248,251	) 	 	 	(263,773	) 	
Purchases of property and equipment	  	 	(776,713	) 	 	 	(667,378	) 	 	 	(576,888	) 	
Proceeds from disposition of hospitals and other ancillary operations	  	 	173,387	  	 	 	—  	  	 	 	89,514	  	
Proceeds from sale of property and equipment	  	 	11,160	  	 	 	8,401	  	 	 	4,019	  	
Increase in other investments	  	 	(188,249	) 	 	 	(137,082	) 	 	 	(120,054	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(1,195,775	) 	 	 	(1,044,310	) 	 	 	(867,182	) 	

Cash flows from financing activities:	  	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from exercise of stock options	  	 	18,910	  	 	 	56,916	  	 	 	12,759	  	
Repurchase of restricted stock shares for payroll tax withholding requirements	  	 	(13,311	) 	 	 	—  	  	 	 	—  	  	
Deferred financing costs	  	 	(19,352	) 	 	 	(13,260	) 	 	 	(82	) 	
Excess tax benefit (income tax payable increase) relating to stock-based compensation	  	 	5,290	  	 	 	10,219	  	 	 	(3,472	) 	
Stock buy-back	  	 	(85,790	) 	 	 	(113,961	) 	 	 	—  	  	
Proceeds from noncontrolling investors in joint ventures	  	 	1,229	  	 	 	7,201	  	 	 	29,838	  	
Redemption of noncontrolling investments in joint ventures	  	 	(13,022	) 	 	 	(7,318	) 	 	 	(7,268	) 	
Distributions to noncontrolling investors in joint ventures	  	 	(56,094	) 	 	 	(68,113	) 	 	 	(58,963	) 	
Borrowings under credit agreement	  	 	578,236	  	 	 	—  	  	 	 	200,000	  	
Issuance of long-term debt	  	 	1,000,000	  	 	 	—  	  	 	 	—  	  	
Repayments of long-term indebtedness	  	 	(1,651,533	) 	 	 	(61,476	) 	 	 	(258,173	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in financing activities	  	 	(235,437	) 	 	 	(189,792	) 	 	 	(85,361	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	  	 	(169,304	) 	 	 	(45,372	) 	 	 	123,886	  	
Cash and cash equivalents at beginning of period	  	 	299,169	  	 	 	344,541	  	 	 	220,655	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	129,865	  	 	$	299,169	  	 	$	344,541	  	

Supplemental disclosure of cash flow information:	  	 	 	 	 	 	 	 	 	 	 	 	
Interest payments	  	$	680,704	  	 	$	650,712	  	 	$	656,997	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income taxes paid, net	  	$	26,463	  	 	$	128,186	  	 	$	57,299	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
See notes to consolidated financial statements.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.	Business and Summary of Significant Accounting Policies	
Business. Community Health Systems, Inc. is a holding company and operates no business in its own name. On a consolidated basis, Community Health Systems, Inc. and its subsidiaries (collectively the “Company”) own, lease and operate acute care hospitals in non-urban and selected urban markets. As of December 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 “Parent”) and its consolidated subsidiaries are referred to on a collective basis as the “Company.” 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.
As of December 31, 2011, Indiana, Texas and Pennsylvania represent the only areas of geographic concentration. Net operating revenues generated by the Company’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’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’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.
Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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.
Principles of Consolidation. 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.
Cost of Revenue. Substantially all of the Company’s operating expenses are “cost of revenue” items. Operating costs that could be classified as general and administrative by the Company would include the Company’s corporate office costs at its Franklin, Tennessee office, which were $183.4 million, $155.4 million and $157.9 million for the years ended December 31, 2011, 2010 and 2009, respectively. Included in these amounts is stock-based compensation of $42.5 million, $38.8 million and $44.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.
Cash Equivalents. The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents.
Supplies. Supplies, principally medical supplies, are stated at the lower of cost (first-in, first-out basis) or market.
 
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Index to Financial Statements
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Marketable Securities. The Company’s marketable securities are classified as trading or available-for-sale. Available-for-sale securities are carried at fair value as determined by quoted market prices, with unrealized gains and losses reported as a separate component of stockholders’ equity. Trading securities are reported at fair value with unrealized gains and losses included in earnings. Interest and dividends on securities classified as available-for-sale or trading are included in net operating revenues and were not material in all periods presented. Accumulated other comprehensive income (loss) included an unrealized loss of $1.0 million and an unrealized gain of $3.7 million at December 31, 2011 and 2010, respectively, related to these available-for-sale securities.
Property and Equipment. Property and equipment are recorded at cost. Depreciation is recognized using the straight-line method over the estimated useful lives of the land and improvements (2 to 15 years; weighted-average useful life is 14 years), buildings and improvements (5 to 40 years; weighted-average useful life is 24 years) and equipment and fixtures (4 to 18 years; weighted-average useful life is 8 years). Costs capitalized as construction in progress were $397.2 million and $221.2 million at December 31, 2011 and 2010, respectively. Expenditures for renovations and other significant improvements are capitalized; however, maintenance and repairs which do not improve or extend the useful lives of the respective assets are charged to operations as incurred. Interest capitalized related to construction in progress was $21.4 million, $11.9 million and $16.7 million for the years ended December 31, 2011, 2010 and 2009, respectively. Purchases of property and equipment accrued in accounts payable and not yet paid were $94.2 million and $59.5 million at December 31, 2011 and 2010, respectively.
The Company also leases certain facilities and equipment under capital leases (see Note 9). Such assets are amortized on a straight-line basis over the lesser of the term of the lease or the remaining useful lives of the applicable assets.
Goodwill. Goodwill represents the excess of the fair value of the consideration conveyed in the acquisition over the fair value of net assets acquired. Goodwill arising from business combinations is not amortized. Goodwill is required to be evaluated for impairment at the same time every year and when an event occurs or circumstances change such that it is reasonably possible that an impairment may exist. The Company has selected September 30 as its annual testing date.
Other Assets. Other assets primarily consist of costs associated with the issuance of debt, which are included in interest expense over the life of the related debt using the effective interest method, and costs to recruit physicians to the Company’s markets, which are deferred and expensed over the term of the respective physician recruitment contract, which is generally three years, and included in amortization expense. Other assets also include capitalized internal-use software costs, which are expensed over the expected useful life, which is generally three years for routine software and eight years for major software projects, and included in amortization expense.
Third-Party Reimbursement. Net patient service revenue is reported at the estimated net realizable amount from patients, third-party payors and others for services rendered. Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems, provisions of cost-reimbursement and other payment methods. Approximately 36.5%, 38.1% and 37.2% of net operating revenues for the years ended December 31, 2011, 2010 and 2009, respectively, are related to services rendered to patients covered by the Medicare and Medicaid programs. 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 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. Contractual allowance adjustments related to final settlements and previous program reimbursement estimates impacted net operating revenues and net income by an insignificant amount in each of the years ended December 31, 2011, 2010 and 2009.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Amounts due to third-party payors were $66.0 million and $80.5 million as of December 31, 2011 and 2010, respectively, and are included in accrued liabilities-other in the accompanying consolidated balance sheets. Amounts due from third-party payors were $86.5 million and $118.7 million as of December 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.
Net Operating Revenues. Net operating revenues are recorded net of provisions for contractual allowance of approximately $42.4 billion, $35.8 billion and $30.8 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. Also included in the provision for contractual allowance shown above is the value of administrative and other discounts provided to self-pay patients eliminated from net operating revenues which was $852.4 million, $689.4 million and $531.9 million for the years ended December 31, 2011, 2010 and 2009, respectively. 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’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’s charity care policy. The value of these services was $651.1 million, $512.4 million and $451.0 million for the years ended December 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 31, 2011, 2010 and 2009, respectively. The estimated cost of these charity care services was determined using a ratio of cost to gross charges and applying that ratio to the gross charges associated with providing care to charity patients for the period. Gross charges associated with providing care to charity patients includes only the related charges for those patients who are financially unable to pay and qualify under the Company’s charity care policy and that do not otherwise qualify for reimbursement from a governmental program.
Currently, several states utilize supplemental reimbursement programs for the purpose of providing reimbursement to providers to offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from Centers for Medicare and Medicaid Services and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. Similar programs are also being considered by other states. After these supplemental programs are signed into law, the Company recognizes revenue and related expenses in the period in which amounts are estimable and collection is reasonably assured. Reimbursement under these programs is reflected in net operating revenues and fees, taxes or other program-related costs are reflected in other operating costs and expenses.
Allowance for Doubtful Accounts. Accounts receivable are reduced by an allowance for amounts that could become uncollectible in the future. Substantially all of the Company’s receivables are related to providing healthcare services to its hospitals’ patients.
The Company estimates the allowance for doubtful accounts by reserving a percentage of all self-pay accounts receivable without regard to aging category, based on collection history, adjusted for expected recoveries and, if present, anticipated changes in trends. For all other non-self-pay payor categories, the Company reserves 100% of all accounts aging over 365 days from the date of discharge. The percentage used to reserve for all self-pay accounts is based on the Company’s collection history. The Company collects substantially all of its third-party insured receivables, which include receivables from governmental agencies.
Collections are impacted by the economic ability of patients to pay and the effectiveness of the Company’s collection efforts. Significant changes in payor mix, business office operations, economic conditions or trends in federal and state governmental healthcare coverage could affect the Company’s collection of accounts receivable and the estimates of the collectability of future accounts receivable. The process of estimating the allowance for doubtful accounts requires the Company to estimate the collectability of self-pay accounts receivable, which is primarily based on its collection history, adjusted for expected recoveries and, if available, anticipated changes in collection trends. 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.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Physician Income Guarantees. 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. As part of the agreements, the physicians are committed to practice in the community for a period of time, typically three years, which extends beyond their income guarantee period. The Company records an asset and liability for the estimated fair value of minimum revenue guarantees on new agreements. Adjustments to the ultimate value of the guarantee paid to physicians are recognized in the period that the change in estimate is identified. The Company amortizes an asset over the life of the agreement. As of December 31, 2011 and 2010, the unamortized portion of these physician income guarantees was $33.0 million and $37.2 million, respectively.
Concentrations of Credit Risk. The Company grants unsecured credit to its patients, most of whom reside in the service area of the Company’s facilities and are insured under third-party payor agreements. Because of the economic diversity of the Company’s facilities and non-governmental third-party payors, Medicare represents the only significant concentration of credit risk from payors. Accounts receivable, net of contractual allowances, from Medicare were $250.8 million and $270.8 million as of December 31, 2011 and 2010, respectively, representing 6.7% and 8.1% of consolidated net accounts receivable, before allowance for doubtful accounts, as of December 31, 2011 and 2010, respectively.
Professional Liability Claims. 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. To the extent that subsequent claims information varies from management’s estimates, the liability is adjusted when such information becomes available.
Accounting for the Impairment or Disposal of Long-Lived Assets. Whenever events or changes in circumstances indicate that the carrying values of certain long-lived assets may be impaired, the Company projects the undiscounted cash flows expected to be generated by these assets. If the projections indicate that the reported amounts are not expected to be recovered, such amounts are reduced to their estimated fair value based on a quoted market price, if available, or an estimate based on valuation techniques available in the circumstances.
Income Taxes. The Company accounts for income taxes under the asset and liability method, in which deferred income tax assets and liabilities are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statement of income during the period in which the tax rate change becomes law.
Comprehensive Income (Loss). Comprehensive income (loss) is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.
Accumulated Other Comprehensive Income (Loss) consisted of the following (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Change in Fair
Value of Interest
Rate Swaps	 	 	Change in Fair
Value of Available
for Sale Securities	 	 	Change in
Unrecognized
Pension Cost
Components	 	 	Accumulated
Other
Comprehensive
Income (Loss)	 	
Balance as of December 31, 2009	  	$	(202,260	) 	 	$	(1,180	) 	 	$	(17,945	) 	 	$	(221,385	) 	
2010 Activity, net of tax	  	 	(15,676	) 	 	 	3,716	  	 	 	2,418	  	 	 	(9,542	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of December 31, 2010	  	 	(217,936	) 	 	 	2,536	  	 	 	(15,527	) 	 	 	(230,927	) 	
2011 Activity, net of tax	  	 	55,145	  	 	 	(960	) 	 	 	(7,737	) 	 	 	46,448	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance as of December 31, 2011	  	$	(162,791	) 	 	$	1,576	  	 	$	(23,264	) 	 	$	(184,479	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment Reporting. A public company is required to report annual and interim financial and descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
decision maker in deciding how to allocate resources and in assessing performance. Aggregation of similar operating segments into a single reportable operating segment is permitted if the businesses have similar economic characteristics and meet the criteria established by U.S. GAAP.
The Company operates in three distinct operating segments, represented by the hospital operations (which includes the Company’s acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services), the home care agencies operations (which provide in-home outpatient care), and the hospital management services business (which provides executive management and consulting services to non-affiliated general acute care hospitals). U.S. GAAP requires (1) 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) 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. Financial information for the home care agencies and hospital management services segments do not meet the quantitative thresholds and are therefore combined with corporate into the all other reportable segment.
Derivative Instruments and Hedging Activities. The Company records derivative instruments on the consolidated balance sheet as either an asset or liability measured at its fair value. Changes in a derivative’s fair value are recorded each period in earnings or other comprehensive income (“OCI”), depending on whether the derivative is designated and is effective as a hedged transaction, and on the type of hedge transaction. Changes in the fair value of derivative instruments recorded to OCI are reclassified to earnings in the period affected by the underlying hedged item. Any portion of the fair value of a derivative instrument determined to be ineffective under the standard is recognized in current earnings.
The Company has entered into several interest rate swap agreements. See Note 7 for further discussion about the swap transactions.
New Accounting Pronouncements. In August 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-24, which provides clarification to companies in the healthcare industry on the accounting for professional liability insurance. This ASU states that receivables related to insurance recoveries should not be netted against the related claim liability and such claim liabilities should be determined without considering insurance recoveries. This ASU is effective for fiscal years beginning after December 15, 2010 and was adopted prospectively by the Company on January 1, 2011. 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 31, 2011 and had no impact to the consolidated statement of income for the year ended December 31, 2011.
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’ equity. Instead, ASU 2011-05 requires that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued ASU 2011-12, which amends ASU 2011-05 to defer the requirement to measure and present reclassification adjustments from accumulated other comprehensive income to net income by income statement line item in net income and also in other comprehensive income. ASU 2011-05, as amended by ASU 2011-12, is required to be applied retrospectively and is effective for fiscal years beginning after December 15, 2011, and will be adopted by the Company in the first quarter of 2012. The adoption of ASU 2011-05, as amended by ASU 2011-12, will not impact the Company’s consolidated financial position, results of operations or cash flows, although it will change the presentation of the Company’s other comprehensive income for all periods presented.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
In July 2011, the FASB issued ASU 2011-07, which requires healthcare organizations that perform services for patients for which the ultimate collection of all or a portion of the amounts billed or billable cannot be determined at the time services are rendered to present all bad debt expense associated with such patient service revenue as an offset to the patient service revenue line item in the statement of operations. The ASU also requires qualitative disclosures about the Company’s policy for recognizing revenue and bad debt expense for patient service transactions and quantitative information about the effects of changes in the assessment of collectability of patient service revenue. This ASU is effective for fiscal years beginning after December 15, 2011, and will be adopted by the Company in the first quarter of 2012. Upon adoption, the Company’s provision for bad debts will be presented as a reduction of patient service revenue after contractual adjustments and discounts. The changes in net revenue for all periods presented in this annual report as if the ASU was early adopted in 2011 are as follows (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
Net operating revenues (net of contractual allowances and discounts)	  	$	13,626,168	  	 	$	12,623,274	  	 	$	11,742,454	  	
Provision for bad debts	  	 	(1,719,956	) 	 	 	(1,530,852	) 	 	 	(1,408,953	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net operating revenues, less provision for bad debts	  	$	11,906,212	  	 	$	11,092,422	  	 	$	10,333,501	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
In September 2011, the FASB issued ASU 2011-08, which simplifies how entities test goodwill for impairment. Previous guidance required an entity to perform a two-step goodwill impairment test at least annually by comparing the fair value of a reporting unit with its carrying amount, including goodwill, and recording an impairment loss if the fair value is less than the carrying amount. This ASU allows an entity to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines after that assessment that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. ASU 2011-08 is required to be applied to interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011, and will be adopted by the Company in 2012. The adoption of ASU 2011-08 is not expected to impact the Company’s consolidated financial position, results of operations or cash flows.
 
2.	Accounting for Stock-Based Compensation	
Stock-based compensation awards are granted under the Community Health Systems, Inc. Amended and Restated 2000 Stock Option and Award Plan, amended and restated as of March 24, 2009 (the “2000 Plan”), and the Community Health Systems, Inc. 2009 Stock Option and Award Plan, amended and restated as of March 18, 2011 (the “2009 Plan”).
The 2000 Plan allows for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code (“IRC”), as well as stock options which do not so qualify, stock appreciation rights, restricted stock, restricted stock units, performance-based shares or units and other share awards. Prior to being amended in 2009, the 2000 Plan also allowed for the grant of phantom stock. Persons eligible to receive grants under the 2000 Plan include the Company’s directors, officers, employees and consultants. To date, all options granted under the 2000 Plan have been “nonqualified” stock options for tax purposes. Generally, vesting of these granted options occurs in one-third increments on each of the first three anniversaries of the award date. Options granted prior to 2005 have a 10-year contractual term, options granted in 2005 through 2007 have an eight-year contractual term and options granted in 2008 or later have a 10-year contractual term. As of December 31, 2011, 332,747 shares of unissued common stock were reserved for future grants under the 2000 Plan.
The 2009 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the IRC and for the grant of stock options which do not so qualify, stock appreciation rights, restricted stock, restricted stock units, performance-based shares or units and other share awards. Persons eligible to receive grants under the 2009 Plan include the Company’s directors, officers, employees and consultants. To date, all options granted under the 2009 Plan have been “nonqualified” stock options for tax purposes. Options granted in 2011 have a 10-year contractual term. As of December 31, 2011, 2,773,489 shares of unissued common stock were reserved for future grants under the 2009 Plan.
The exercise price of all options granted is equal to the fair value of the Company’s common stock on the option grant date.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The following table reflects the impact of total compensation expense related to stock-based equity plans on the reported operating results for the respective periods (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
Effect on income from continuing operations before income taxes	  	$	(42,542	) 	 	$	(38,779	) 	 	$	(44,501	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Effect on net income	  	$	(27,014	) 	 	$	(24,625	) 	 	$	(26,986	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
At December 31, 2011, $59.0 million of unrecognized stock-based compensation expense was expected to be recognized over a weighted-average period of 22 months. Of that amount, $13.1 million relates to outstanding unvested stock options expected to be recognized over a weighted-average period of 22 months and $45.9 million relates to outstanding unvested restricted stock, restricted stock units and phantom shares expected to be recognized over a weighted-average period of 22 months. There were no modifications to awards during the years ended December 31, 2011, 2010 and 2009.
The fair value of stock options was estimated using the Black-Scholes option pricing model with the following assumptions during the years ended December 31, 2011, 2010 and 2009:

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
Expected volatility	  	 	33.8	% 	 	 	33.7	% 	 	 	40.7	% 	
Expected dividends	  	 	0	  	 	 	0	  	 	 	0	  	
Expected term	  	 	4 years	  	 	 	3.1 years	  	 	 	4 years	  	
Risk-free interest rate	  	 	1.63	% 	 	 	1.41	% 	 	 	1.64	% 	
In determining the expected term, the Company examined concentrations of option holdings and historical patterns of option exercises and forfeitures, as well as forward-looking factors, in an effort to determine if there were any discernable employee populations. From this analysis, the Company identified two primary employee populations, one consisting of certain senior executives and the other consisting of substantially all other recipients.
The expected volatility rate was estimated based on historical volatility. In determining expected volatility, the Company also reviewed the market-based implied volatility of actively traded options of its common stock and determined that historical volatility utilized to estimate the expected volatility rate did not differ significantly from the implied volatility.
The expected term computation is based on historical exercise and cancellation patterns and forward-looking factors, where present, for each population identified. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The pre-vesting forfeiture rate is based on historical rates and forward-looking factors for each population identified. The Company adjusts the estimated forfeiture rate to its actual experience.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Options outstanding and exercisable under the 2000 Plan and 2009 Plan as of December 31, 2011, and changes during each of the years in the three-year period ended December 31, 2011 were as follows (in thousands, except share and per share data):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Shares	 	 	Weighted -
Average
Exercise
Price	 	  	Weighted -
Average
Remaining
Contractual
Term	 	  	Aggregate
Intrinsic
Value as of
December 31,
2011	 	
Outstanding at December 31, 2008	  	 	8,764,084	  	 	$	30.97	  	  	 	 	 	  	 	 	 	
Granted	  	 	1,313,000	  	 	 	19.43	  	  	 	 	 	  	 	 	 	
Exercised	  	 	(680,898	) 	 	 	18.74	  	  	 	 	 	  	 	 	 	
Forfeited and cancelled	  	 	(442,105	) 	 	 	31.27	  	  	 	 	 	  	 	 	 	

Outstanding at December 31, 2009	  	 	8,954,081	  	 	 	30.19	  	  	 	 	 	  	 	 	 	
Granted	  	 	1,447,500	  	 	 	33.89	  	  	 	 	 	  	 	 	 	
Exercised	  	 	(2,194,862	) 	 	 	25.88	  	  	 	 	 	  	 	 	 	
Forfeited and cancelled	  	 	(372,387	) 	 	 	29.80	  	  	 	 	 	  	 	 	 	

Outstanding at December 31, 2010	  	 	7,834,332	  	 	 	32.08	  	  	 	 	 	  	 	 	 	
Granted	  	 	1,505,000	  	 	 	35.87	  	  	 	 	 	  	 	 	 	
Exercised	  	 	(623,341	) 	 	 	30.34	  	  	 	 	 	  	 	 	 	
Forfeited and cancelled	  	 	(326,849	) 	 	 	33.69	  	  	 	 	 	  	 	 	 	

Outstanding at December 31, 2011	  	 	8,389,142	  	 	$	32.83	  	  	 	5.3 years	  	  	$	120	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Exercisable at December 31, 2011	  	 	5,884,262	  	 	$	32.74	  	  	 	3.9 years	  	  	$	74	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
The weighted-average grant date fair value of stock options granted during the years ended December 31, 2011, 2010 and 2009, was $10.07, $8.47 and $6.61, respectively. The aggregate intrinsic value (the number of in-the-money stock options multiplied by the difference between the Company’s closing stock price on the last trading day of the reporting period ($17.45) and the exercise price of the respective stock options) in the table above represents the amount that would have been received by the option holders had all option holders exercised their options on December 31, 2011. This amount changes based on the market value of the Company’s common stock. The aggregate intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was $6.1 million, $28.9 million and $7.6 million, respectively. The aggregate intrinsic value of options vested and expected to vest approximates that of the outstanding options.
The Company has also awarded restricted stock under the 2000 Plan and the 2009 Plan to its directors and employees of certain subsidiaries. The restrictions on these shares generally lapse in one-third increments on each of the first three anniversaries of the award date. Certain of the restricted stock awards granted to the Company’s senior executives contain a performance objective that must be met in addition to any vesting requirements. If the performance objective is not attained, the awards will be forfeited in their entirety. Once the performance objective has been attained, restrictions will lapse in one-third increments on each of the first three anniversaries of the award date. Notwithstanding the above-mentioned performance objectives and vesting requirements, the restrictions will lapse earlier in the event of death, disability or termination of employment by the Company for any reason other than for cause of the holder of the restricted stock, or change in control of the Company. Restricted stock awards subject to performance standards are not considered outstanding for purposes of determining earnings per share until the performance objectives have been satisfied.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Restricted stock outstanding under the 2000 Plan and the 2009 Plan as of December 31, 2011, and changes during each of the years in the three-year period ended December 31, 2011 was as follows:

 	 	 	 	 	 	 	 	 	
 	  	Shares	 	 	Weighted -
Average
Grant
Date Fair
Value	 	
Unvested at December 31, 2008	  	 	1,684,207	  	 	$	35.57	  	
Granted	  	 	1,188,814	  	 	 	18.45	  	
Vested	  	 	(965,478	) 	 	 	37.08	  	
Forfeited	  	 	(10,002	) 	 	 	32.52	  	
 	  	 	 	 	 	 	 	 	
Unvested at December 31, 2009	  	 	1,897,541	  	 	 	24.09	  	
Granted	  	 	1,099,000	  	 	 	33.83	  	
Vested	  	 	(860,749	) 	 	 	27.04	  	
Forfeited	  	 	(10,501	) 	 	 	27.84	  	
 	  	 	 	 	 	 	 	 	
Unvested at December 31, 2010	  	 	2,125,291	  	 	 	27.92	  	
Granted	  	 	1,109,949	  	 	 	37.57	  	
Vested	  	 	(1,009,959	) 	 	 	27.40	  	
Forfeited	  	 	(17,669	) 	 	 	35.68	  	
 	  	 	 	 	 	 	 	 	
Unvested at December 31, 2011	  	 	2,207,612	  	 	 	32.95	  	
 	  	 	 	 	 	 	 	 	
Phantom stock and restricted stock units (“RSUs”) have been granted to the Company’s outside directors under the 2000 Plan and the 2009 Plan. On February 25, 2009, each of the Company’s outside directors received a grant under the 2000 Plan of 7,151 shares of phantom stock. On May 19, 2009, the newly elected outside director received a grant under the 2000 Plan of 7,151 RSUs. On February 24, 2010, six of the Company’s seven outside directors each received a grant under the 2000 Plan of 4,130 RSUs and one outside director, who did not stand for reelection in 2010, did not receive such a grant. On February 23, 2011, each of the Company’s outside directors received a grant under the 2009 Plan of 3,688 RSUs. Vesting of these shares of phantom stock and RSUs occurs in one-third increments on each of the first three anniversaries of the award date.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Phantom stock and RSUs outstanding as of December 31, 2011, and changes during each of the years in the three-year period ended December 31, 2011 were as follows:

 	 	 	 	 	 	 	 	 	
 	  	Shares	 	 	Weighted -
Average
Grant
Date Fair
Value	 	
Unvested at December 31, 2008	  	 	—  	  	 	$	—  	  	
Phantom Stock Granted February 25, 2009	  	 	42,906	  	 	 	18.18	  	
RSUs Granted May 19, 2009	  	 	7,151	  	 	 	25.27	  	
Vested	  	 	—  	  	 	 	—  	  	
Forfeited	  	 	—  	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	
Unvested at December 31, 2009	  	 	50,057	  	 	 	19.19	  	
RSUs Granted February 24, 2010	  	 	24,780	  	 	 	33.90	  	
Vested	  	 	(21,449	) 	 	 	18.97	  	
Forfeited	  	 	—  	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	
Unvested at December 31, 2010	  	 	53,388	  	 	 	26.11	  	
RSUs Granted February 23, 2011	  	 	22,128	  	 	 	37.96	  	
Vested	  	 	(22,560	) 	 	 	24.68	  	
Forfeited	  	 	—  	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	
Unvested at December 31, 2011	  	 	52,956	  	 	 	31.67	  	
 	  	 	 	 	 	 	 	 	
Under the Directors’ Fees Deferral Plan, the Company’s outside directors may elect to receive share equivalent units in lieu of cash for their directors’ fees. These share equivalent units are held in the plan until the director electing to receive the share equivalent units retires or otherwise terminates his/her directorship with the Company. Share equivalent units are converted to shares of common stock of the Company at the time of distribution based on the closing market price of the Company’s common stock on that date. The following table represents the amount of directors’ fees which were deferred during each of the respective periods, and the number of share equivalent units into which such directors’ fees would have converted had each of the directors who had deferred such fees retired or terminated his/her directorship with the Company as of the end of the respective periods (in thousands, except share equivalent units):

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	  	2010	 	  	2009	 	
 	 	 	 	
Directors’ fees earned and deferred into plan	  	$	220	  	  	$	180	  	  	$	80	  	

Share equivalent units	  	 	9,974	  	  	 	5,207	  	  	 	3,284	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
At December 31, 2011, a total of 28,775 share equivalent units were deferred in the plan with an aggregate fair value of $0.5 million, based on the closing market price of the Company’s common stock at December 31, 2011 of $17.45.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
3.	Acquisitions and Divestitures	
Acquisitions
The Company accounts for all transactions that represent business combinations after January 1, 2009 using the acquisition method of accounting, where the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity are recognized and measured at their fair values on the date the Company obtains control in the acquiree. Such fair values that are not finalized for reporting periods following the acquisition date are estimated and recorded as provisional amounts. Adjustments to these provisional amounts during the measurement period (defined as the date through which all information required to identify and measure the consideration transferred, the assets acquired, the liabilities assumed and any noncontrolling interests has been obtained, limited to one year from the acquisition date) are recorded as of the date of acquisition. Any material impact to comparative information for periods after acquisition, but before the period in which adjustments are identified, is reflected in those prior periods as if the adjustments were considered as of the acquisition date. Goodwill is determined as the excess of the fair value of the consideration conveyed in the acquisition over the fair value of the net assets acquired.
Effective October 1, 2011, one or more subsidiaries of the Company completed the acquisition of Tomball Regional Hospital (358 licensed beds) located in Tomball, Texas. The total cash consideration paid for fixed assets and working capital was approximately $192.0 million and $17.5 million, respectively, with additional consideration of $15.8 million assumed in liabilities, for a total consideration of $225.3 million. Based upon the Company’s preliminary purchase price allocation relating to this acquisition as of December 31, 2011, approximately $30.8 million of goodwill has been recorded. The preliminary allocation of the purchase price has been determined by the Company based on available information and is subject to settling amounts related to purchased working capital and final appraisals of tangible and intangible assets. Adjustments to the purchase price allocation are not expected to be material.
Effective May 1, 2011, one or more subsidiaries of the Company completed the acquisition of Mercy Health Partners based in Scranton, Pennsylvania, which is a healthcare system comprised of two acute care hospitals, a long-term acute care facility and other healthcare providers. This healthcare system includes Regional Hospital of Scranton (198 licensed beds) located in Scranton, Pennsylvania, and Tyler Memorial Hospital (48 licensed beds) located in Tunkhannock, Pennsylvania. This healthcare system also includes a long-term acute care facility, Special Care Hospital (67 licensed beds) located in Nanticoke, Pennsylvania, as well as several outpatient clinics and other ancillary facilities. The total cash consideration paid for fixed assets was approximately $150.8 million, with additional consideration of $12.3 million assumed in liabilities as well as a credit applied at closing of $2.1 million for negative acquired working capital, for a total consideration of $161.0 million. Based upon the Company’s final purchase price allocation relating to this acquisition, as of December 31, 2011 approximately $43.1 million of goodwill has been recorded.
Effective October 1, 2010, one or more subsidiaries of the Company completed the acquisition of Forum Health based in Youngstown, Ohio, a healthcare system of two acute care hospitals, a rehabilitation hospital and other healthcare providers. This healthcare system includes Northside Medical Center (355 licensed beds) located in Youngstown, Ohio, and Trumbull Memorial Hospital (311 licensed beds) located in Warren, Ohio. This healthcare system also includes Hillside Rehabilitation Hospital (69 licensed beds) located in Warren, Ohio, as well as several outpatient clinics and other ancillary facilities. The total cash consideration paid for fixed assets and working capital was approximately $93.4 million and $27.8 million, respectively, with additional consideration of $40.3 million assumed in liabilities, for a total consideration of $161.5 million. Based upon the Company’s final purchase price allocation relating to this acquisition, as of December 31, 2011 approximately $8.1 million of goodwill has been recorded.
Effective October 1, 2010, one or more subsidiaries of the Company completed the acquisition of Bluefield Regional Medical Center (240 licensed beds) located in Bluefield, West Virginia. The total cash consideration paid for fixed assets was approximately $35.4 million, with additional consideration of $8.9 million assumed in liabilities as well as a credit applied at closing of $1.8 million for negative acquired working capital, for a total consideration of $42.5 million. Based upon the Company’s final purchase price allocation relating to this acquisition, as of December 31, 2011 approximately $2.4 million of goodwill has been recorded.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Effective July 7, 2010, one or more subsidiaries of the Company completed the acquisition of Marion Regional Healthcare System located in Marion, South Carolina. This healthcare system includes Marion Regional Hospital (124 licensed beds), an acute care hospital, along with a related skilled nursing facility and other ancillary services. The total cash consideration paid for fixed assets and working capital was approximately $18.6 million and $5.8 million, respectively, with additional consideration of $3.9 million assumed in liabilities, for a total consideration of $28.3 million. Based upon the Company’s final purchase price allocation relating to this acquisition, as of December 31, 2011 no goodwill has been recorded.
On December 31, 2009, one or more subsidiaries of the Company completed an affiliation transaction providing $54.2 million of financing to Rockwood Clinic, P.S., a multi-specialty clinic with 32 locations across the inland northwest region of eastern Washington and western Idaho. This transaction was accounted for as a purchase business combination.
Effective June 1, 2009, one or more subsidiaries of the Company acquired from Akron General Medical Center the remaining 20% noncontrolling interest in Massillon Community Health System, LLC not then owned by a subsidiary of the Company. This entity indirectly owns and operates Affinity Medical Center of Massillon, Ohio. The purchase price for this noncontrolling interest was $1.1 million in cash. Affinity Medical Center is now wholly-owned by these subsidiaries of the Company.
Effective April 30, 2009, one or more subsidiaries of the Company acquired Wyoming Valley Health Care System in Wilkes-Barre, Pennsylvania. This healthcare system includes Wilkes-Barre General Hospital (392 licensed beds), an acute care hospital located in Wilkes-Barre, Pennsylvania, and First Hospital Wyoming Valley, a behavioral health facility located in Kingston, Pennsylvania, as well as other outpatient and ancillary services. The total consideration for fixed assets and working capital of Wyoming Valley Health Care System was approximately $133.7 million and $30.0 million, respectively, with additional consideration of $25.4 million assumed in liabilities and net of $14.2 million of cash in acquired bank accounts, for a total consideration of $174.9 million. Based upon the Company’s final purchase price allocation relating to this acquisition, as of December 31, 2011 no goodwill has been recorded.
Effective April 1, 2009, one or more subsidiaries of the Company acquired from Share Foundation the remaining 50% equity interest in MCSA L.L.C., an entity in which one or more subsidiaries of the Company previously had a 50% unconsolidated noncontrolling interest. One or more subsidiaries of the Company provided MCSA L.L.C. certain management services. This acquisition resulted in these subsidiaries of the Company owning a 100% equity interest in that entity. MCSA L.L.C. owns and operates Medical Center of South Arkansas (166 licensed beds) in El Dorado, Arkansas. The purchase price was $26.0 million in cash. As of the acquisition date, one or more subsidiaries of the Company had a liability to MCSA L.L.C. of $14.1 million, as a result of a cash management agreement previously entered into with the hospital. Upon completion of the acquisition, this liability was eliminated in consolidation.
Effective February 1, 2009, one or more subsidiaries of the Company completed the acquisition of Siloam Springs Memorial Hospital (73 licensed beds), located in Siloam Springs, Arkansas, from the City of Siloam Springs. The total consideration for this hospital consisted of approximately $0.1 million paid in cash for working capital and approximately $1.0 million of assumed liabilities. In connection with this acquisition, a subsidiary of the Company entered into a lease agreement for the existing hospital and agreed to build a replacement facility at this location, with construction required to commence by February 2011 and be completed by February 2013. As security for this obligation, a subsidiary of the Company deposited $1.6 million into an escrow account at closing and agreed to deposit an additional $1.6 million by February 1, 2010, which the Company’s subsidiary deposited in January 2010. If the construction of the replacement facility is not completed within the agreed time frame, the escrow balance will be remitted to the City of Siloam Springs. If the construction of the replacement facility is completed by February 2013 as planned, the escrow balance will be returned to the Company’s subsidiary.
Approximately $16.0 million, $8.9 million and $6.7 million of acquisition costs related to prospective and closed acquisitions were expensed during the years ended December 31, 2011, 2010 and 2009, respectively.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The table below summarizes the allocations of the purchase price (including assumed liabilities) for the above acquisition transactions (in thousands):

 	 	 	 	 	 	 	 	 	
 	  	2011	 	  	2010	 	
Current assets	  	$	26,017	  	  	$	46,842	  	
Property and equipment	  	 	280,639	  	  	 	169,209	  	
Goodwill	  	 	73,923	  	  	 	10,537	  	
Intangible assets	  	 	2,260	  	  	 	1,730	  	
Other long-term assets	  	 	3,497	  	  	 	—  	  	
Liabilities	  	 	28,089	  	  	 	51,124	  	
The operating results of the foregoing transactions have been included in the consolidated statements of income from their respective dates of acquisition, including net operating revenues of $169.7 million for the year ended December 31, 2011 from hospital acquisitions that closed during 2011 and net operating revenues of $139.0 million for the year ended December 31, 2010 from hospital acquisitions that closed during 2010. The following pro forma combined summary of operations of the Company gives effect to using historical information of the operations of the acquisitions in 2011 and 2010 discussed above as if the transactions had occurred as of January 1, 2010 (in thousands, except per share data):

 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	  	2010	 	
 	  	(Unaudited)	 	
 	 	 	
Pro forma net operating revenues	  	$	13,904,851	  	  	$	13,364,916	  	
Pro forma net income	  	 	173,697	  	  	 	259,978	  	
Pro forma net income per share:	  	 	 	 	  	 	 	 	
Basic	  	$	1.93	  	  	$	2.83	  	
 	  	 	 	 	  	 	 	 	
Diluted	  	$	1.92	  	  	$	2.80	  	
 	  	 	 	 	  	 	 	 	
Pro forma adjustments to net income include adjustments to depreciation and amortization expense, net of the related tax effect, based on the estimated fair value assigned to the long-lived assets acquired, and to interest expense, net of the related tax effect, assuming the increase in long-term debt used to fund the acquisitions had occurred as of January 1, 2010. These pro forma results are not necessarily indicative of the actual results of operations.
Additionally, during 2011, the Company paid approximately $57.9 million to acquire the operating assets and related businesses of certain physician practices, clinics and other ancillary businesses that operate within the communities served by its hospitals. In connection with these acquisitions, the Company allocated approximately $13.1 million of the consideration paid to property and equipment, $2.9 million to net working capital, $1.6 million to other intangible assets and the remainder, approximately $40.3 million consisting of intangible assets that do not qualify for separate recognition, was allocated to goodwill. These acquisition transactions were accounted for as purchase business combinations.
During 2010, the Company paid approximately $67.4 million to acquire the operating assets and related businesses of certain physician practices, clinics and other ancillary businesses that operate within the communities served by its hospitals. In connection with these acquisitions, the Company allocated approximately $35.6 million of the consideration paid to property and equipment and the remainder, approximately $35.4 million consisting of intangible assets that do not qualify for separate recognition, was allocated to goodwill. These acquisition transactions were accounted for as purchase business combinations.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Discontinued Operations
Effective February 1, 2011, the Company sold Willamette Community Medical Group, which is a physician clinic operating as Oregon Medical Group, located in Springfield, Oregon, to Oregon Healthcare Resources, LLC, for $14.6 million in cash; this business had a carrying amount of net assets, including an allocation of reporting unit goodwill, of $19.7 million.
Effective September 1, 2011, the Company sold Southcrest Hospital, located in Tulsa, Oklahoma, Claremore Regional Hospital, located in Claremore, Oklahoma, and other related healthcare assets affiliated with those hospitals to Hillcrest Healthcare System, part of Ardent Health Services, for approximately $154.2 million in cash. The carrying amount of the net assets sold in this transaction, including an allocation of reporting unit goodwill, was approximately $193.0 million.
Effective October 22, 2011, the Company sold Cleveland Regional Medical Center, located in Cleveland, Texas, and other related healthcare assets affiliated with the hospital to New Directions Health Systems, LLC for approximately $0.9 million in cash. The carrying amount of the net assets sold in this transaction, including an allocation of reporting unit goodwill, was approximately $14.2 million.
Effective March 31, 2009, the Company, through its subsidiaries Triad-Denton Hospital LLC and Triad-Denton Hospital LP, completed the settlement of pending litigation, which resulted in the sale of its ownership interest in a partnership, which owned and operated Presbyterian Hospital of Denton (255 licensed beds) in Denton, Texas, to Texas Health Resources for $103.0 million in cash. Also as part of the settlement, these subsidiaries transferred certain hospital related assets to Texas Health Resources.
In connection with management’s decision to sell the previously mentioned facilities, the Company has classified the results of operations of the above mentioned hospitals as discontinued operations in the accompanying consolidated statements of income. As of December 31, 2011, no hospitals are held for sale.
Net operating revenues and income from discontinued operations for the respective periods are as follows (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
 	 	 	 	
Net operating revenues	  	$	190,791	  	 	$	363,226	  	 	$	407,272	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from operations of entities sold before income taxes	  	 	(12,390	) 	 	 	(10,460	) 	 	 	1,492	  	
Impairment of hospitals sold	  	 	(51,695	) 	 	 	—  	  	 	 	—  	  	
Loss on sale, net	  	 	(4,301	) 	 	 	—  	  	 	 	(644	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from discontinued operations before income taxes	  	 	(68,386	) 	 	 	(10,460	) 	 	 	848	  	
(Benefit from) provision for income taxes	  	 	(10,115	) 	 	 	(3,688	) 	 	 	282	  	

(Loss) income from discontinued operations, net of taxes	  	$	(58,271	) 	 	$	(6,772	) 	 	$	566	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Interest expense was allocated to discontinued operations based on sales proceeds available for debt repayment.
The long-lived assets and allocated goodwill at December 31, 2010 of the hospitals and physician clinic sold during the year ended December 31, 2011 totaled approximately $182.7 million, and are included in the accompanying consolidated balance sheet in other assets, net.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
4.	Goodwill and Other Intangible Assets	
The changes in the carrying amount of goodwill are as follows (in thousands):

 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	  	2010	 	
Balance, beginning of year	  	$	4,150,247	  	  	$	4,157,927	  	
Goodwill acquired as part of acquisitions during the year	  	 	114,473	  	  	 	45,975	  	
Consideration adjustments and purchase price allocation adjustments for prior year’s acquisitions	  	 	125	  	  	 	(3,997	) 	
Goodwill related to the hospital operations reporting unit assigned to the disposal group classified as held for sale in 2011	  	 	—  	  	  	 	(49,658	) 	
 	  	 	 	 	  	 	 	 	
Balance, end of year	  	$	4,264,845	  	  	$	4,150,247	  	
 	  	 	 	 	  	 	 	 	
Goodwill is allocated to each identified reporting unit, which is defined as an operating segment or one level below the operating segment (referred to as a component of the entity). Management has determined that the Company’s operating segments meet the criteria to be classified as reporting units. At December 31, 2011, the hospital operations reporting unit, the home care agency operations reporting unit and the hospital management services reporting unit had approximately $4.2 billion, $40.5 million and $33.3 million, respectively, of goodwill. At December 31, 2010, the hospital operations reporting unit, the home care agency operations reporting unit and the hospital management services reporting unit had approximately $4.1 billion, $35.9 million and $33.3 million, respectively, of goodwill.
Goodwill is evaluated for impairment at the same time every year and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value. There is a two-step method for determining goodwill impairment. Step one is to compare the fair value of the reporting unit with the unit’s carrying amount, including goodwill. If this test indicates the fair value is less than the carrying value, then step two is required to compare the implied fair value of the reporting unit’s goodwill with the carrying value of the reporting unit’s goodwill. The Company has selected September 30 as its annual testing date. The Company performed its last annual goodwill evaluation as of September 30, 2011, which evaluation took place during the fourth quarter of 2011. No impairment was indicated by this evaluation.
The Company estimates the fair value of the related reporting units using both a discounted cash flow model as well as an EBITDA multiple model. The cash flow forecasts are adjusted by an appropriate discount rate based on the Company’s estimate of a market participant’s weighted-average cost of capital. These models are both based on the Company’s best estimate of future revenues and operating costs and are reconciled to the Company’s consolidated market capitalization, with consideration of the amount a potential acquirer would be required to pay, in the form of a control premium, in order to gain sufficient ownership to set policies, direct operations and control management decisions.
Approximately $3.8 million of intangible assets other than goodwill were acquired during the year ended December 31, 2011. The gross carrying amount of the Company’s other intangible assets subject to amortization was $60.0 million and $60.5 million at December 31, 2011 and 2010, respectively, and the net carrying amount was $30.6 million and $36.1 million at December 31, 2011 and 2010, respectively. The carrying amount of the Company’s other intangible assets not subject to amortization was $46.9 million and $44.4 million at December 31, 2011 and 2010. Other intangible assets are included in other assets, net on the Company’s consolidated balance sheets. Substantially all of the Company’s intangible assets are contract-based intangible assets related to operating licenses, management contracts, or non-compete agreements entered into in connection with prior acquisitions.
The weighted-average amortization period for the intangible assets subject to amortization is approximately nine years. There are no expected residual values related to these intangible assets. Amortization expense on these intangible assets was $8.1 million, $12.2 million and $13.0 million during the years ended December 31, 2011, 2010 and 2009, respectively. Amortization expense on intangible assets is estimated to be $7.4 million in 2012, $4.7 million in 2013, $2.9 million in 2014, $2.5 million in 2015, $2.3 million in 2016 and $10.8 million thereafter.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The gross carrying amount of capitalized software for internal use was approximately $451.0 million and $356.5 million at December 31, 2011 and 2010, respectively, and the net carrying amount considering accumulated amortization was approximately $241.3 million and $209.4 million at December 31, 2011 and 2010, respectively. The estimated amortization period for capitalized internal-use software is generally three years, except for capitalized costs related to significant system conversions, which is generally eight years. There is no expected residual value for capitalized internal-use software. At December 31, 2011, there was approximately $109.3 million of capitalized costs for internal-use software that will begin amortization once the software project is complete and ready for its intended use. Amortization expense for capitalized internal-use software was $70.5 million, $48.2 million and $32.5 million during the years ended December 31, 2011, 2010 and 2009, respectively. Amortization expense for capitalized internal-use software is estimated to be $81.0 million in 2012, $70.8 million in 2013, $35.1 million in 2014, $17.3 million in 2015, $15.4 million in 2016 and $21.7 million thereafter.
 
5.	Income Taxes	
The provision for income taxes for income from continuing operations consists of the following (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	  	2010	 	  	2009	 	
Current:	  	 	 	 	  	 	 	 	  	 	 	 	
Federal	  	$	23,020	  	  	$	54,986	  	  	$	93,543	  	
State	  	 	7,601	  	  	 	11,208	  	  	 	13,577	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
 	  	 	30,621	  	  	 	66,194	  	  	 	107,120	  	
 	 	 	 	
Deferred:	  	 	 	 	  	 	 	 	  	 	 	 	
Federal	  	 	105,771	  	  	 	92,628	  	  	 	16,012	  	
State	  	 	1,261	  	  	 	4,859	  	  	 	18,719	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
 	  	 	107,032	  	  	 	97,487	  	  	 	34,731	  	

Total provision for income taxes for income from continuing operations	  	$	137,653	  	  	$	163,681	  	  	$	141,851	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	
The following table reconciles the differences between the statutory federal income tax rate and the effective tax rate (dollars in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
 	  	Amount	 	 	%	 	 	Amount	 	 	%	 	 	Amount	 	 	%	 	
Provision for income taxes at statutory federal rate	  	$	165,741	  	 	 	35.0	% 	 	$	181,474	  	 	 	35.0	% 	 	$	156,682	  	 	 	35.0	% 	
 	 	 	 	 	 	 	
State income taxes, net of federal income tax benefit	  	 	8,212	  	 	 	1.7	  	 	 	8,847	  	 	 	1.7	  	 	 	9,080	  	 	 	2.0	  	
Release of unrecognized tax benefit	  	 	(6,509	) 	 	 	(1.3	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Net income attributable to noncontrolling interests	  	 	(26,486	) 	 	 	(5.6	) 	 	 	(23,960	) 	 	 	(4.6	) 	 	 	(22,006	) 	 	 	(4.9	) 	
Change in valuation allowance	  	 	—  	  	 	 	0.0	  	 	 	(910	) 	 	 	(0.2	) 	 	 	1,113	  	 	 	0.3	  	
Federal and state tax credits	  	 	(3,788	) 	 	 	(0.8	) 	 	 	(2,246	) 	 	 	(0.4	) 	 	 	(4,241	) 	 	 	(0.9	) 	
Deferred tax revaluation	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(2,996	) 	 	 	(0.7	) 	
Other	  	 	483	  	 	 	0.1	  	 	 	476	  	 	 	0.1	  	 	 	4,219	  	 	 	0.9	  	

Provision for income taxes and effective tax rate for income from continuing operations	  	$	137,653	  	 	 	29.1	% 	 	$	163,681	  	 	 	31.6	% 	 	$	141,851	  	 	 	31.7	% 	

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Deferred income taxes are based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities under the provisions of the enacted tax laws. Deferred income taxes as of December 31, 2011 and 2010 consist of (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	December 31,	 	
 	  	2011	 	  	2010	 	
 	  	Assets	 	 	Liabilities	 	  	Assets	 	 	Liabilities	 	
 	 	 	 	 	
Net operating loss and credit carryforwards	  	$	140,825	  	 	$	—  	  	  	$	131,093	  	 	$	—  	  	
Property and equipment	  	 	—  	  	 	 	727,366	  	  	 	—  	  	 	 	685,089	  	
Self-insurance liabilities	  	 	113,640	  	 	 	—  	  	  	 	91,246	  	 	 	—  	  	
Intangibles	  	 	—  	  	 	 	201,396	  	  	 	—  	  	 	 	169,860	  	
Investments in unconsolidated affiliates	  	 	—  	  	 	 	62,112	  	  	 	—  	  	 	 	48,353	  	
Other liabilities	  	 	—  	  	 	 	22,050	  	  	 	—  	  	 	 	27,045	  	
Long-term debt and interest	  	 	—  	  	 	 	24,115	  	  	 	—  	  	 	 	29,191	  	
Accounts receivable	  	 	11,435	  	 	 	—  	  	  	 	60,026	  	 	 	—  	  	
Accrued expenses	  	 	49,575	  	 	 	—  	  	  	 	53,842	  	 	 	—  	  	
Other comprehensive income	  	 	128,170	  	 	 	—  	  	  	 	156,597	  	 	 	—  	  	
Stock-based compensation	  	 	28,894	  	 	 	—  	  	  	 	25,472	  	 	 	—  	  	
Deferred compensation	  	 	42,668	  	 	 	—  	  	  	 	41,703	  	 	 	—  	  	
Other	  	 	57,158	  	 	 	—  	  	  	 	24,963	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
 	  	 	572,365	  	 	 	1,037,039	  	  	 	584,942	  	 	 	959,538	  	
Valuation allowance	  	 	(150,254	) 	 	 	—  	  	  	 	(126,644	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total deferred income taxes	  	$	422,111	  	 	$	1,037,039	  	  	$	458,298	  	 	$	959,538	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
The Company’s deferred tax assets and liabilities have been adjusted in 2010 for the effects of its filed 2009 tax return, having the effect of increasing total deferred tax assets by $12.5 million, increasing total deferred tax liabilities by $11.4 million, and decreasing prepaid income taxes by $1.1 million. The effects of the adjustments did not impact income tax expense, and their effects on previously issued consolidated financial statements were not material.
The Company believes that the net deferred tax assets will ultimately be realized, except as noted below. Its conclusion is based on its estimate of future taxable income and the expected timing of temporary difference reversals. The Company has state net operating loss carry forwards of approximately $3.3 billion, which expire from 2012 to 2031. The Company also has unrecognized deferred tax assets primarily related to interest expense that are included in other comprehensive income. If recognized, additional state net operating losses will be created which the Company does not expect to be able to utilize prior to the expiration of the carryforward period. A valuation allowance of approximately $24.9 million has been recognized for those items. With respect to the deferred tax liability pertaining to intangibles, as included above, goodwill purchased in connection with certain of the Company’s business acquisitions is amortizable for income tax reporting purposes. However, for financial reporting purposes, there is no corresponding amortization allowed with respect to such purchased goodwill.
The valuation allowance increased by $23.6 million during the year ended December 31, 2011 and increased by $11.5 million during the year ended December 31, 2010. In addition to amounts previously discussed, the change in valuation allowance relates to a redetermination of the amount of, and realizability of, net operating losses in certain state income tax jurisdictions.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The total amount of unrecognized benefit that would impact the effective tax rate, if recognized, was approximately $0.8 million as of December 31, 2011. A total of approximately $0.3 million of interest and penalties is included in the amount of liability for uncertain tax positions at December 31, 2011. During the year ended December 31, 2011, the Company decreased liabilities for uncertain tax positions by $5.4 million, including the favorable resolution of an issue on appeal with the IRS related to its tax examination of Triad tax returns, and decreased interest and penalties by approximately $1.1 million. It is the Company’s policy to recognize interest and penalties related to unrecognized benefits in its consolidated statements of income as income tax expense. During the year ended December 31, 2011, the Company released $2.3 million for income taxes and $0.7 million for accrued interest of its liability for uncertain tax positions, as a result of the expiration of the statute of limitations pertaining to tax positions taken in prior years.
It is possible the amount of unrecognized tax benefit could change in the next twelve months as a result of a lapse of the statute of limitations and settlements with taxing authorities; however, the Company does not anticipate the change will have a material impact on its consolidated results of operations or consolidated financial position.
The following is a tabular reconciliation of the total amount of unrecognized tax benefit for the years ended December 31, 2011, 2010 and 2009 (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
Unrecognized tax benefit, beginning of year	  	$	7,458	  	 	$	9,234	  	 	$	15,630	  	
Gross (decreases) increases — purchase business combination	  	 	—  	  	 	 	—  	  	 	 	(4,173	) 	
Gross increases — tax positions in prior period	  	 	349	  	 	 	70	  	 	 	—  	  	
Reductions — tax positions in prior period	  	 	(3,469	) 	 	 	(1,833	) 	 	 	—  	  	
Lapse of statute of limitations	  	 	(3,575	) 	 	 	—  	  	 	 	(663	) 	
Settlements	  	 	(134	) 	 	 	(13	) 	 	 	(1,560	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Unrecognized tax benefit, end of year	  	$	629	  	 	$	7,458	  	 	$	9,234	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
The Company, or one of its subsidiaries, files income tax returns in the United States federal jurisdiction and various state jurisdictions. The Company has extended the federal statute of limitations for Triad for the tax periods ended December 31, 1999, December 31, 2000, April 30, 2001, June 30, 2001, December 31, 2001, December 31, 2002 and December 31, 2003. The IRS has concluded its examination of the federal tax return of Triad for the tax periods ended December 31, 2004, December 31, 2005, December 31, 2006 and July 25, 2007. In September 2011, the Company reached a favorable resolution of an issue on appeal with the IRS related to its examination of Triad’s tax returns. As a result, the Company recognized a tax benefit of $4.0 million, which is reflected in the accompanying consolidated statement of income for the year ended December 31, 2011. With few exceptions, the Company is no longer subject to state income tax examinations for years prior to 2008 and federal income tax examinations with respect to Community Health Systems, Inc. federal returns for years prior to 2007. The Company’s federal income tax returns for the 2007 and 2008 tax years are currently under examination by the IRS. The Company believes the results of this examination will not be material to its consolidated results of operations or consolidated financial position. In connection with the Company’s 2007 and 2008 IRS examinations, the IRS has taken exception to the timing of the Company’s malpractice expense deductions. Management believes that the Company’s deduction timing is appropriate, and will work to resolve this item over the next 24 months. If management is unable to sustain the current timing of the Company’s deduction, then it would be subject to interest and penalty costs. Management does not consider this matter to have met the recognition criteria to be considered an uncertain tax position for which a reserve is necessary.
The Company paid income taxes, net of refunds received, of $26.5 million, $128.2 million and $57.3 million during the years ended December 31, 2011, 2010 and 2009.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
6.	Long-Term Debt	
Long-term debt consists of the following (in thousands):

 	 	 	 	 	 	 	 	 	
 	  	December 31,	 	
 	  	2011	 	 	2010	 	
Credit Facility:	  	 	 	 	 	 	 	 	
Term loans	  	$	5,949,383	  	 	$	5,999,337	  	
Revolving credit loans	  	 	30,000	  	 	 	—  	  	
8 7/8% Senior Notes due 2015	  	 	1,777,617	  	 	 	2,784,331	  	
8% Senior Notes due 2019	  	 	1,000,000	  	 	 	—  	  	
Capital lease obligations (see Note 9)	  	 	48,361	  	 	 	51,731	  	
Other	  	 	41,143	  	 	 	36,122	  	
 	  	 	 	 	 	 	 	 	
Total debt	  	 	8,846,504	  	 	 	8,871,521	  	
Less current maturities	  	 	(63,706	) 	 	 	(63,139	) 	
 	  	 	 	 	 	 	 	 	
Total long-term debt	  	$	8,782,798	  	 	$	8,808,382	  	
 	  	 	 	 	 	 	 	 	
Credit Facility
In connection with the consummation of the acquisition of Triad in July 2007, the Company’s wholly-owned subsidiary CHS/Community Health Systems, Inc. (“CHS”) obtained approximately $7.2 billion of senior secured financing under a new credit facility (the “Credit Facility”) with a syndicate of financial institutions led by Credit Suisse, as administrative agent and collateral agent, and issued approximately $3.0 billion aggregate principal amount of 8  7 / 8 % senior notes due 2015 (the “8  7 / 8 % Senior Notes”). The Company used the net proceeds of $3.0 billion from the 8  7 / 8 % Senior Notes offering and the net proceeds of approximately $6.1 billion of term loans under the Credit Facility to acquire the outstanding shares of Triad, to refinance certain of Triad’s indebtedness and the Company’s indebtedness, to complete certain related transactions, to pay certain costs and expenses of the transactions and for general corporate uses. Specifically, the Company repaid its outstanding debt under the previously outstanding credit facility, the 6.50% senior subordinated notes due 2012 and certain of Triad’s existing indebtedness.
The Credit Facility consisted of an approximately $6.1 billion funded term loan facility with a maturity of seven years, a $400 million delayed draw term loan facility with a maturity of seven years and a $750 million revolving credit facility with a maturity of six years. As of December 31, 2007, the $400 million delayed draw term loan facility had been reduced to $300 million at the request of CHS. During the fourth quarter of 2008, $100 million of the delayed draw term loan was drawn by CHS, reducing the delayed draw term loan availability to $200 million at December 31, 2008. In January 2009, CHS drew down the remaining $200 million of the delayed draw term loan. The revolving credit facility also includes a subfacility for letters of credit and a swingline subfacility. The Credit Facility requires quarterly amortization payments of each term loan facility equal to 0.25% of the outstanding amount of the term loans. On November 5, 2010, CHS entered into an amendment and restatement of its existing Credit Facility. The amendment extended by two and a half years, until January 25, 2017, the maturity date of $1.5 billion of the existing term loans under the Credit Facility and increased the pricing on these term loans to LIBOR plus 350 basis points. If more than $50 million of the 8  7 / 8 % Senior Notes remain outstanding on April 15, 2015, without having been refinanced, then the maturity date for the extended term loans will be accelerated to April 15, 2015. The amendment also increases CHS’s ability to issue additional indebtedness under the uncommitted incremental facility to $1.0 billion from $600 million, permits CHS to issue Term A term loans under the incremental facility, and provides up to $2.0 billion of borrowing capacity from receivable transactions, an increase of $0.5 billion, of which $1.7 billion would be required to be used for repayment of existing term loans. In addition, effective February 2, 2012, the Company completed an additional amendment and restatement of the Credit Facility, which extended by two and a half years, until January 25, 2017, the maturity date of an additional $1.6 billion of the existing non-extended term loans under the Credit Facility and increased the pricing on the newly extended term loans by 125 basis points. The maturity date of the balance of the term loans of approximately $2.9 billion remained unchanged at July 25, 2014.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The term loan facility must be prepaid in an amount equal to (1) 100% of the net cash proceeds of certain asset sales and dispositions by the Company and its subsidiaries, subject to certain exceptions and reinvestment rights, (2) 100% of the net cash proceeds of issuances of certain debt obligations or receivables based financing by the Company and its subsidiaries, subject to certain exceptions, and (3) 50%, subject to reduction to a lower percentage based on the Company’s leverage ratio (as defined in the Credit Facility generally as the ratio of total debt on the date of determination to the Company’s EBITDA, as defined, for the four quarters most recently ended prior to such date), of excess cash flow (as defined) for any year, commencing in 2008, subject to certain exceptions. Voluntary prepayments and commitment reductions are permitted in whole or in part, without any premium or penalty, subject to minimum prepayment or reduction requirements.
The obligor under the Credit Facility is CHS. All of the obligations under the Credit Facility are unconditionally guaranteed by the Company and certain existing and subsequently acquired or organized domestic subsidiaries. All obligations under the Credit Facility and the related guarantees are secured by a perfected first priority lien or security interest in substantially all of the assets of the Company, CHS and each subsidiary guarantor, including equity interests held by the Company, CHS or any subsidiary guarantor, but excluding, among others, the equity interests of non-significant subsidiaries, syndication subsidiaries, securitization subsidiaries and joint venture subsidiaries.
The loans under the Credit Facility bear interest on the outstanding unpaid principal amount at a rate equal to an applicable percentage plus, at CHS’s option, either (a) an Alternate Base Rate (as defined) determined by reference to the greater of (1) the Prime Rate (as defined) announced by Credit Suisse or (2) the Federal Funds Effective Rate (as defined) plus one-half of 1.0% or (3) the adjusted London Interbank Offered Rate (“LIBOR”) on such day for a three-month interest period commencing on the second business day after such day plus 1%, or (b) a reserve adjusted LIBOR for dollars (Eurodollar rate) (as defined). The applicable percentage for Alternate Base Rate loans is 1.25% for term loans due 2014 and is 2.25% for term loans due 2017. The applicable percentage for Eurodollar rate loans is 2.25% for term loans due 2014 and 3.5% for term loans due 2017. The applicable percentage for revolving loans is 1.25% for Alternate Base Rate revolving loans and 2.25% for Eurodollar revolving loans, in each case subject to reduction based on the Company’s leverage ratio. Loans under the swingline subfacility bear interest at the rate applicable to Alternate Base Rate loans under the revolving credit facility.
CHS has agreed to pay letter of credit fees equal to the applicable percentage then in effect with respect to Eurodollar rate loans under the revolving credit facility times the maximum aggregate amount available to be drawn under all letters of credit outstanding under the subfacility for letters of credit. The issuer of any letter of credit issued under the subfacility for letters of credit will also receive a customary fronting fee and other customary processing charges. CHS was initially obligated to pay commitment fees of 0.50% per annum (subject to reduction based upon the Company’s leverage ratio) on the unused portion of the revolving credit facility. For purposes of this calculation, swingline loans are not treated as usage of the revolving credit facility. With respect to the delayed draw term loan facility, CHS was also obligated to pay commitment fees of 0.50% per annum for the first nine months after the closing of the Credit Facility, 0.75% per annum for the next three months after such nine-month period and thereafter, 1.0% per annum. In each case, the commitment fee was paid on the unused amount of the delayed draw term loan facility. After the draw down of the remaining $200 million of the delayed draw term loan in January 2009, CHS no longer pays any commitment fees for the delayed draw term loan facility. CHS paid arrangement fees on the closing of the Credit Facility and pays an annual administrative agent fee.
The Credit Facility contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the Company’s and its subsidiaries’ ability, subject to certain exceptions, to, among other things (1) declare dividends, make distributions or redeem or repurchase capital stock, (2) prepay, redeem or repurchase other debt, (3) incur liens or grant negative pledges, (4) make loans and investments and enter into acquisitions and joint ventures, (5) incur additional indebtedness or provide certain guarantees, (6) make capital expenditures, (7) engage in mergers, acquisitions and asset sales, (8) conduct transactions with affiliates, (9) alter the nature of the Company’s businesses, (10) grant certain guarantees with respect to physician practices, (11) engage in sale and leaseback transactions or (12) change the Company’s fiscal year. The Company is also required to comply with specified financial covenants (consisting of a leverage ratio and an interest coverage ratio) and various affirmative covenants.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Events of default under the Credit Facility include, but are not limited to, (1) CHS’s failure to pay principal, interest, fees or other amounts under the credit agreement when due (taking into account any applicable grace period), (2) any representation or warranty proving to have been materially incorrect when made, (3) covenant defaults subject, with respect to certain covenants, to a grace period, (4) bankruptcy events, (5) a cross default to certain other debt, (6) certain undischarged judgments (not paid within an applicable grace period), (7) a change of control, (8) certain ERISA-related defaults and (9) the invalidity or impairment of specified security interests, guarantees or subordination provisions in favor of the administrative agent or lenders under the Credit Facility.
On April 2, 2009, the Company paid down $110.4 million of its term loans under the Credit Facility. Of this amount, $85.0 million was paid down as required under the terms of the Credit Facility with the net proceeds received from the sale of the ownership interest in the partnership that owned and operated Presbyterian Hospital of Denton. This resulted in a loss from early extinguishment of debt of $1.1 million with an after-tax impact of $0.7 million recorded in discontinued operations for the year ended December 31, 2009. The remaining $25.4 million was paid on the term loans as required under the terms of the Credit Facility with the net proceeds received from the sale of various other assets. This resulted in a loss from early extinguishment of debt of $0.3 million with an after-tax impact of $0.2 million recorded in continuing operations for the year ended December 31, 2009.
As of December 31, 2011, a $750 million revolving credit facility was available to the Company for working capital and general corporate purposes under the Credit Facility, with $37.7 million of the revolving credit facility being set aside for outstanding letters of credit and $30.0 million outstanding at December 31, 2011. CHS has the ability to amend the Credit Facility to provide for one or more tranches of term loans in an aggregate principal amount of $1.0 billion, which CHS has not yet accessed. CHS also has the ability to add up to $300 million of borrowing capacity from receivable transactions (including securitizations) under the Credit Facility, which has not yet been accessed. As of December 31, 2011, the weighted-average interest rate under the Credit Facility, excluding swaps, was 3.5%.
The term loans are scheduled to be paid with principal payments for future years as follows (in thousands):

 	 	 	 	 	
Year	  	Amount	 	
 	 	
2012	  	$	49,874	  	
2013	  	 	49,874	  	
2014	  	 	4,413,385	  	
2015	  	 	15,000	  	
2016	  	 	15,000	  	
Thereafter	  	 	1,406,250	  	

Total	  	$	5,949,383	  	
 	  	 	 	 	
As of December 31, 2011 and 2010, the Company had letters of credit issued, primarily in support of potential insurance-related claims and certain bonds, of approximately $37.7 million and $81.9 million, respectively.
8  7/8% Senior Notes due 2015
The 8 7/8% Senior Notes were issued by CHS in connection with the Triad acquisition in the principal amount of approximately $3.0 billion. The 8  7 / 8 % Senior Notes will mature on July 15, 2015. The 8  7 / 8 % Senior Notes bear interest at the rate of 8.875% per annum, payable semiannually in arrears on January 15 and July 15, commencing January 15, 2008. Interest on the 8  7 / 8 % Senior Notes accrues from the date of original issuance. Interest is calculated on the basis of a 360-day year comprised of twelve 30-day months.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
On and after July 15, 2011, CHS is entitled, at its option, to redeem all or a portion of the 8 7/8% Senior Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on July 15 of the years set forth below:

 	 	 	 	 	
Period	  	Redemption
Price	 	
2012	  	 	102.219	% 	
2013 and thereafter	  	 	100.000	% 	
Pursuant to a registration rights agreement entered into at the time of the issuance of the 8 7/8% Senior Notes, as a result of an exchange offer made by CHS, substantially all of the 8  7 / 8 % Senior Notes issued in July 2007 were exchanged in November 2007 for new notes (the “Exchange Notes”) having terms substantially identical in all material respects to the 8  7 / 8 % Senior Notes (except that the Exchange Notes were issued under a registration statement pursuant to the 1933 Act). References to the 8  7 / 8 % Senior Notes shall also be deemed to include the Exchange Notes unless the context provides otherwise.
On December 7, 2011, CHS completed the cash tender offer for $1.0 billion of the $2.8 billion aggregate principal amount of 8 7/8% Senior Notes due 2015. This resulted in a loss from early extinguishment of debt of $66.0 million with an after-tax impact of $42.0 million recorded in continuing operations for the year ended December 31, 2011.
8% Senior Notes due 2019
On November 22, 2011, CHS completed its offering of $1.0 billion aggregate principal amount of 8% Senior Notes due 2019 (the “8% Senior Notes”), which were issued in a private placement. The net proceeds from this issuance, together with available cash on hand, were used to finance the purchase of $1.0 billion aggregate principal amount of CHS’ outstanding 8  7 / 8 % Senior Notes due 2015 and related fees and expenses. The 8% Senior Notes bear interest at 8% per annum, payable semiannually in arrears on May 15 and November 15, commencing May 15, 2012. Interest on the 8% Senior Notes accrues from the date of original issuance. Interest is calculated on the basis of a 360-day year comprised of twelve 30-day months.
Except as set forth below, CHS is not entitled to redeem the 8% Senior Notes prior to November 15, 2015.
On and after November 15, 2015, CHS is entitled, at its option, to redeem all or a portion of the 8% Senior Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on November 15 of the years set forth below:

 	 	 	 	 	
Period	  	Redemption
Price	 	
2015	  	 	104.000	% 	
2016	  	 	102.000	% 	
2017 and thereafter	  	 	100.000	% 	
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
In addition, any time prior to November 15, 2014, CHS is entitled, at its option, on one or more occasions to redeem the 8% Senior Notes (which include additional 8% Senior Notes, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the 8% Senior Notes (which includes additional 8% Senior Notes, if any) originally issued at a redemption price (expressed as a percentage of principal amount) of 108.000%, plus accrued and unpaid interest to the redemption date, with the Net Cash Proceeds (as defined in the indenture governing the 8% Senior Notes) from one or more Public Equity Offerings (as defined in the indenture governing the 8% Senior Notes) (provided that if the Public Equity Offering is an offering by the Company, a portion of the Net Cash Proceeds thereof equal to the amount required to redeem any such 8% Senior Notes is contributed to the equity capital of CHS); provided, however, that:
1) at least 65% of such aggregate principal amount of 8% Senior Notes originally issued remains outstanding immediately after the occurrence of each such redemption (other than the 8% Senior Notes held, directly or indirectly, by the Company or its subsidiaries); and
2) each such redemption occurs within 180 days after the date of the related Public Equity Offering.
CHS is entitled, at its option, to redeem the 8% Senior Notes, in whole or in part, at any time prior to November 15, 2015, upon not less than 30 or more than 60 days notice, at a redemption price equal to 100% of the principal amount of 8% Senior Notes redeemed plus the Applicable Premium (as defined), and accrued and unpaid interest, if any, as of the applicable redemption date.
Other Debt. As of December 31, 2011, other debt consisted primarily of the mortgage obligation on the Company’s corporate headquarters and other obligations maturing in various installments through 2020.
To limit the effect of changes in interest rates on a portion of the Company’s long-term borrowings, the Company is a party to 34 separate interest swap agreements in effect at December 31, 2011, with an aggregate notional amount of approximately $4.9 billion. On each of these swaps, the Company receives a variable rate of interest based on the three-month LIBOR in exchange for the payment of a fixed rate of interest. The Company currently pays, on a quarterly basis, a margin above LIBOR of 225 basis points for the outstanding balance of revolver loans and term loans due in 2014 and 350 basis points for term loans due in 2017 under the Credit Facility. See Note 7 for additional information regarding these swaps.
As of December 31, 2011, the scheduled maturities of long-term debt outstanding, including capital lease obligations for each of the next five years and thereafter are as follows (in thousands):

 	 	 	 	 	
Year	  	Amount	 	
 	 	
2012	  	$	63,706	  	
2013	  	 	87,993	  	
2014	  	 	4,417,745	  	
2015	  	 	1,796,304	  	
2016	  	 	18,644	  	
Thereafter	  	 	2,462,112	  	

Total	  	$	8,846,504	  	
 	  	 	 	 	
The Company paid interest of $680.7 million, $650.7 million and $657.0 million on borrowings during the years ended December 31, 2011, 2010 and 2009, respectively.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
7.	Fair Values of Financial Instruments	
The fair value of financial instruments has been estimated by the Company using available market information as of December 31, 2011 and 2010, and valuation methodologies considered appropriate. The estimates presented are not necessarily indicative of amounts the Company could realize in a current market exchange (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	December 31,	 	
 	  	2011	 	  	2010	 	
 	  	Carrying
Amount	 	  	Estimated
Fair Value	 	  	Carrying
Amount	 	  	Estimated
Fair Value	 	
Assets:	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Cash and cash equivalents	  	$	129,865	  	  	$	129,865	  	  	$	299,169	  	  	$	299,169	  	
Available-for-sale securities	  	 	31,582	  	  	 	31,582	  	  	 	31,570	  	  	 	31,570	  	
Trading securities	  	 	30,486	  	  	 	30,486	  	  	 	35,092	  	  	 	35,092	  	
Liabilities:	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Credit Facility	  	 	5,979,383	  	  	 	5,780,877	  	  	 	5,999,337	  	  	 	5,882,124	  	
8 7/8 % Senior Notes	  	 	1,777,617	  	  	 	1,842,322	  	  	 	2,784,331	  	  	 	2,923,548	  	
8% Senior Notes	  	 	1,000,000	  	  	 	995,000	  	  	 	—  	  	  	 	—  	  	
Other debt	  	 	41,143	  	  	 	41,143	  	  	 	36,122	  	  	 	36,122	  	
Cash and cash equivalents. The carrying amount approximates fair value due to the short-term maturity of these instruments (less than three months).
Available-for-sale securities. Estimated fair value is based on closing price as quoted in public markets.
Trading securities. Estimated fair value is based on closing price as quoted in public markets.
Credit Facility. Estimated fair value is based on information from the Company’s bankers regarding relevant pricing for trading activity among the Company’s lending institutions.
8 7/8% Senior Notes. Estimated fair value is based on the average bid and ask price as quoted by the bank who served as underwriters in the sale of these notes.
8% Senior notes. Estimated fair value is based on the average bid and ask price as quoted by the bank who served as underwriters in the sale of these notes.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Other debt. The carrying amount of all other debt approximates fair value due to the nature of these obligations.
Interest rate swaps. The fair value of interest rate swap agreements is the amount at which they could be settled, based on estimates calculated by the Company using a discounted cash flow analysis based on observable market inputs and validated by comparison to estimates obtained from the counterparty. The Company incorporates credit valuation adjustments (“CVAs”) to appropriately reflect both its own nonperformance or credit risk and the respective counterparty’s nonperformance or credit risk in the fair value measurements. In adjusting the fair value of its interest rate swap agreements for the effect of nonperformance or credit risk, the Company has considered the impact of any netting features included in the agreements.
The Company assesses the effectiveness of its hedge instruments on a quarterly basis. For the years ended December 31, 2011 and 2010, the Company completed an assessment of the cash flow hedge instruments and determined the hedges to be highly effective. The Company has also determined that the ineffective portion of the hedges do not have a material effect on the Company’s consolidated financial position, operations or cash flows. The counterparties to the interest rate swap agreements expose the Company to credit risk in the event of nonperformance. However, at December 31, 2011, each swap agreement entered into by the Company was in a net liability position so that the Company would be required to make the net settlement payments to the counterparties; the Company does not anticipate nonperformance by those counterparties. The Company does not hold or issue derivative financial instruments for trading purposes.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Interest rate swaps consisted of the following at December 31, 2011:

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Swap
#	  	Notional
Amount
(in 000’s)	 	  	Fixed
Interest
Rate	 	 	Termination Date	 	  	Fair Value
of Liability
(in 000’s)	 	
1	  	 	100,000	  	  	 	3.8470	% 	 	 	January 4, 2012	  	  	 	30	  	
2	  	 	100,000	  	  	 	3.8510	% 	 	 	January 4, 2012	  	  	 	30	  	
3	  	 	100,000	  	  	 	3.8560	% 	 	 	January 4, 2012	  	  	 	30	  	
4	  	 	200,000	  	  	 	3.7260	% 	 	 	January 8, 2012	  	  	 	152	  	
5	  	 	200,000	  	  	 	3.5065	% 	 	 	January 16, 2012	  	  	 	281	  	
6	  	 	250,000	  	  	 	5.0185	% 	 	 	May 30, 2012	  	  	 	4,509	  	
7	  	 	150,000	  	  	 	5.0250	% 	 	 	May 30, 2012	  	  	 	2,709	  	
8	  	 	200,000	  	  	 	4.6845	% 	 	 	September 11, 2012	  	  	 	5,574	  	
9	  	 	100,000	  	  	 	3.3520	% 	 	 	October 23, 2012	  	  	 	2,161	  	
10	  	 	125,000	  	  	 	4.3745	% 	 	 	November 23, 2012	  	  	 	4,104	  	
11	  	 	75,000	  	  	 	4.3800	% 	 	 	November 23, 2012	  	  	 	2,466	  	
12	  	 	150,000	  	  	 	5.0200	% 	 	 	November 30, 2012	  	  	 	5,900	  	
13	  	 	200,000	  	  	 	2.2420	% 	 	 	February 28, 2013	  	  	 	3,550	  	
14	  	 	100,000	  	  	 	5.0230	% 	 	 	May 30, 2013	  	  	 	5,952	  	
15	  	 	300,000	  	  	 	5.2420	% 	 	 	August 6, 2013	  	  	 	21,085	  	
16	  	 	100,000	  	  	 	5.0380	% 	 	 	August 30, 2013	  	  	 	6,967	  	
17	  	 	50,000	  	  	 	3.5860	% 	 	 	October 23, 2013	  	  	 	2,505	  	
18	  	 	50,000	  	  	 	3.5240	% 	 	 	October 23, 2013	  	  	 	2,451	  	
19	  	 	100,000	  	  	 	5.0500	% 	 	 	November 30, 2013	  	  	 	7,948	  	
20	  	 	200,000	  	  	 	2.0700	% 	 	 	December 19, 2013	  	  	 	5,080	  	
21	  	 	100,000	  	  	 	5.2310	% 	 	 	July 25, 2014	  	  	 	10,706	  	
22	  	 	100,000	  	  	 	5.2310	% 	 	 	July 25, 2014	  	  	 	10,707	  	
23	  	 	200,000	  	  	 	5.1600	% 	 	 	July 25, 2014	  	  	 	21,073	  	
24	  	 	75,000	  	  	 	5.0405	% 	 	 	July 25, 2014	  	  	 	7,685	  	
25	  	 	125,000	  	  	 	5.0215	% 	 	 	July 25, 2014	  	  	 	12,752	  	
26	  	 	100,000	  	  	 	2.6210	% 	 	 	July 25, 2014	  	  	 	4,436	  	
27	  	 	100,000	  	  	 	3.1100	% 	 	 	July 25, 2014	  	  	 	5,612	  	
28	  	 	100,000	  	  	 	3.2580	% 	 	 	July 25, 2014	  	  	 	5,968	  	
29	  	 	200,000	  	  	 	2.6930	% 	 	 	October 26, 2014	  	  	 	9,916	  	
30	  	 	300,000	  	  	 	3.4470	% 	 	 	August 8, 2016	  	  	 	27,728	  	
31	  	 	200,000	  	  	 	3.4285	% 	 	 	August 19, 2016	  	  	 	18,401	  	
32	  	 	100,000	  	  	 	3.4010	% 	 	 	August 19, 2016	  	  	 	9,099	  	
33	  	 	200,000	  	  	 	3.5000	% 	 	 	August 30, 2016	  	  	 	19,048	  	
34	  	 	100,000	  	  	 	3.0050	% 	 	 	November 30, 2016	  	  	 	7,613	  	
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The Company is exposed to certain risks relating to its ongoing business operations. The risk managed by using derivative instruments is interest rate risk. Interest rate swaps are entered into to manage interest rate fluctuation risk associated with the term loans in the Credit Facility. Companies are required to recognize all derivative instruments as either assets or liabilities at fair value in the consolidated statement of financial position. The Company designates its interest rate swaps as cash flow hedges. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.
Assuming no change in December 31, 2011 interest rates, approximately $131.8 million of interest expense resulting from the spread between the fixed and floating rates defined in each interest rate swap agreement will be recognized during the next 12 months. If interest rate swaps do not remain highly effective as a cash flow hedge, the derivatives’ gains or losses resulting from the change in fair value reported through OCI will be reclassified into earnings.
The following tabular disclosure provides the amount of pre-tax loss recognized in the consolidated balance sheets as a component of OCI during the years ended December 31, 2011 and 2010 (in thousands):

 	 	 	 	 	 	 	 	 	 	
Derivatives in Cash Flow Hedging Relationships	  	Amount of Pre-Tax Loss
Recognized in OCI on
Derivative
(Effective Portion)
Year Ended December 31,	 	 	
 	  	 	 	 	 	
 	  	2011	 	 	2010	 	 	 	
 	 	 	 	 	
Interest rate swaps	  	($	122,686	) 	 	($	239,893	) 	 	 	
The following tabular disclosure provides the location of the effective portion of the pre-tax loss reclassified from accumulated other comprehensive loss (“AOCL”) into interest expense on the consolidated statements of income during the years ended December 31, 2011 and 2010 (in thousands):

 	 	 	 	 	 	 	 	 	 	
Location of Loss Reclassified from AOCL into Income (Effective Portion)	  	Amount of Pre-Tax Loss
Reclassified from AOCL
into Income
(Effective Portion)
Year Ended December 31,	 	 	
 	  	2011	 	  	2010	 	 	
 	 	 	 	
Interest expense, net	  	$	208,985	  	  	$	215,399	  	 	
The fair values of derivative instruments in the consolidated balance sheets as of December 31, 2011 and 2010 were as follows (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Asset Derivatives	 	  	Liability Derivatives	 	
 	  	December 31, 2011	 	  	December 31, 2010	 	  	December 31, 2011	 	  	December 31, 2010	 	
 	  	Balance
Sheet
Location	  	Fair
Value	 	  	Balance
Sheet
Location	  	Fair
Value	 	  	Balance
Sheet
Location	  	Fair
Value	 	  	Balance
Sheet
Location	  	Fair
Value	 	
 	 	 	 	 	 	 	 	 	
Derivatives designated as hedging instruments	  	Other assets, net	  	$	—  	  	  	Other assets, net	  	$	—  	  	  	Other
long-term
liabilities	  	$	254,228	  	  	Other
long-term
liabilities	  	$	340,526	  	
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
8.	Fair Value	
Fair Value Hierarchy
Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company utilizes the U.S. GAAP fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumption about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
The inputs used to measure fair value are classified into the following fair value hierarchy:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 includes values determined using pricing models, discounted cash flow methodologies, or similar techniques reflecting the Company’s own assumptions.
In instances where the determination of the fair value hierarchy measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment of factors specific to the asset or liability.
The following table sets forth, by level within the fair value hierarchy, the financial assets and liabilities recorded at fair value on a recurring basis as of December 31, 2011 and 2010 (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	December 31,
2011	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
Available-for-sale securities	  	$	31,582	  	  	$	31,582	  	  	$	—  	  	  	$	—  	  	
Trading securities	  	 	30,486	  	  	 	30,486	  	  	 	—  	  	  	 	—  	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total assets	  	$	62,068	  	  	$	62,068	  	  	$	—  	  	  	$	—  	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Fair value of interest rate swap agreements	  	$	254,228	  	  	$	—  	  	  	$	254,228	  	  	$	—  	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total liabilities	  	$	254,228	  	  	$	—  	  	  	$	254,228	  	  	$	—  	  	

 	  	December 31,
2010	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
Available-for-sale securities	  	$	31,570	  	  	$	31,570	  	  	$	—  	  	  	$	—  	  	
Trading securities	  	 	35,092	  	  	 	35,092	  	  	 	—  	  	  	 	—  	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total assets	  	$	66,662	  	  	$	66,662	  	  	$	—  	  	  	$	—  	  	

Fair value of interest rate swap agreements	  	$	340,526	  	  	$	—  	  	  	$	340,526	  	  	$	—  	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total liabilities	  	$	340,526	  	  	$	—  	  	  	$	340,526	  	  	$	—  	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Available-for-sale securities and trading securities classified as Level 1 are measured using quoted market prices.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The valuation of the Company’s interest rate swap agreements is determined using market valuation techniques, including discounted cash flow analysis on the expected cash flows of each agreement. This analysis reflects the contractual terms of the agreement, including the period to maturity, and uses observable market-based inputs, including forward interest rate curves. The fair value of interest rate swap agreements are determined by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates based on observable market forward interest rate curves and the notional amount being hedged.
The Company incorporates CVAs to appropriately reflect both its own nonperformance or credit risk and the respective counterparty’s nonperformance or credit risk in the fair value measurements. In adjusting the fair value of its interest rate swap agreements for the effect of nonperformance or credit risk, the Company has considered the impact of any netting features included in the agreements. The CVA on the Company’s interest rate swap agreements at December 31, 2011 resulted in a decrease in the fair value of the related liability of $21.7 million and an after-tax adjustment of $13.9 million to OCI. The CVA on the Company’s interest rate swap agreements at December 31, 2010 resulted in a decrease in the fair value of the related liability of $3.9 million and an after-tax adjustment of $2.5 million to OCI.
The majority of the inputs used to value its interest rate swap agreements, including the forward interest rate curves and market perceptions of the Company’s credit risk used in the CVAs, are observable inputs available to a market participant. As a result, the Company has determined that the interest rate swap valuations are classified in Level 2 of the fair value hierarchy.
 
9.	Leases	
The Company leases hospitals, medical office buildings, and certain equipment under capital and operating lease agreements. During 2011, 2010 and 2009, the Company entered into capital lease obligations of $3.0 million, $22.7 million and $3.3 million, respectively. All lease agreements generally require the Company to pay maintenance, repairs, property taxes and insurance costs.
During 2010, the Company entered into an agreement with the lessor of Cleveland Regional Medical Center (“Cleveland Regional”), its leased facility in Cleveland, TX, to exchange its ownership interest in certain real estate at Hill Regional Medical Center (“Hill Regional”), in Hillsboro, TX for the lessor’s ownership interest in the real estate at Cleveland Regional. The related lease agreement was amended to incorporate Hill Regional as a leased asset with no change to the remaining lease term or payment schedule. No monetary consideration was exchanged in this transaction, and the transaction qualifies as a non-taxable, like-kind exchange under the regulations in Section 1031 of the Internal Revenue Code. The assets of Cleveland Regional were recorded in the consolidated balance sheet at fair value on the date of this transaction; however, as a result of the Company’s continuing involvement in the Hill Regional assets, the exchange with the lessor does not qualify for sale treatment under U.S. GAAP. Accordingly, the transaction has been accounted for as a financing obligation and the assets of Hill Regional will remain on the consolidated balance sheet as assets recorded under a financing obligation. Starting in the fourth quarter of 2010, future payments under the lease are amortized against the financing obligation rather than recorded as rent expense. The disclosures below for capital leases include the amounts related to the Hill Regional financing obligation.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Commitments relating to noncancellable operating and capital leases for each of the next five years and thereafter are as follows (in thousands):

 	 	 	 	 	 	 	 	 	
Year Ended December 31,	  	Operating (1)	 	  	Capital	 	
2012	  	$	176,403	  	  	$	8,386	  	
2013	  	 	149,460	  	  	 	7,216	  	
2014	  	 	122,763	  	  	 	6,710	  	
2015	  	 	98,543	  	  	 	6,005	  	
2016	  	 	70,087	  	  	 	5,630	  	
Thereafter	  	 	176,599	  	  	 	57,472	  	
 	  	 	 	 	  	 	 	 	
Total minimum future payments	  	$	793,855	  	  	$	91,419	  	
 	  	 	 	 	  	 	 	 	
Less imputed interest	  	 	 	 	  	 	(43,058	) 	
 	  	 	 	 	  	 	 	 	
 	  	 	 	 	  	 	48,361	  	
Less current portion	  	 	 	 	  	 	(4,008	) 	
 	  	 	 	 	  	 	 	 	
Long-term capital lease obligations	  	 	 	 	  	$	44,353	  	

(1)	Minimum lease payments have not been reduced by minimum sublease rentals due in the future of $21.3 million.	
Assets capitalized under capital leases as reflected in the accompanying consolidated balance sheets were $27.9 million of land and improvements, $193.7 million of buildings and improvements and $69.3 million of equipment and fixtures as of December 31, 2011 and $27.9 million of land and improvements, $193.7 million of buildings and improvements and $76.7 million of equipment and fixtures as of December 31, 2010. The accumulated depreciation related to assets under capital leases was $119.3 million and $106.7 million as of December 31, 2011 and 2010, respectively. Depreciation of assets under capital leases is included in depreciation and amortization expense and amortization of debt discounts on capital lease obligations is included in interest expense in the consolidated statements of income.
 
10.	Employee Benefit Plans	
The Company maintains various benefit plans, including defined contribution plans, defined benefit plans and deferred compensation plans, for which the Company’s subsidiary, CHS, is the plan sponsor. On January 1, 2009, the plan sponsor merged the Triad Hospitals, Inc. Retirement Savings Plan, the Abilene Physicians Group 401(k) Plan and Trust and the Regional Employee Assistance Program 401(k) Plan with and into the CHS/Community Health Systems, Inc. 401(k) Plan. Contemporaneously, the plan sponsor also established the CHS/Community Health Systems, Inc. Retirement Savings Plan, and the accounts of substantially all participants in the CHS/Community Health Systems, Inc. 401(k) Plan were transferred subsequently to the CHS/Community Health Systems, Inc. Retirement Savings Plan. Employees of certain subsidiaries whose employment is covered by collective bargaining agreements have remained participants in the CHS/Community Health Systems, Inc. 401(k) Plan. The plan sponsor also established the CHS/Community Health Systems, Inc. Spokane 401(k) Plan on January 1, 2009 for the exclusive benefit of certain employees of the Deaconess Medical Center and Valley Hospital and Medical Center and their beneficiaries. Effective October 1, 2010, the plan sponsor established the CHS/Community Health Systems, Inc. Standard 401(k) Plan for the benefit of employees at the three hospitals acquired in Youngstown, Ohio and Warren, Ohio and their beneficiaries. Total expense to the Company under the 401(k) plans was $101.7 million, $95.8 million and $69.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The Company maintains unfunded deferred compensation plans that allow participants to defer receipt of a portion of their compensation. The liability under the deferred compensation plans was $71.4 million and $73.2 million as of December 31, 2011 and 2010, respectively. The Company had assets of $72.5 million and $75.0 million as of December 31, 2011 and 2010, respectively, in a non-qualified plan trust generally designated to pay benefits of the deferred compensation plans, consisting of trading securities of $30.5 million and $35.1 million as of December 31, 2011 and 2010, respectively, and company-owned life insurance contracts of $42.0 million and $39.9 million as of December 31, 2011 and 2010, respectively.
The Company maintains the Community Health Systems Retirement Income Plan, which is a defined benefit, non-contributory pension plan that covers certain employees at three of its hospitals (“Pension Plan”). The Pension Plan provides benefits to covered individuals satisfying certain age and service requirements. Employer contributions to the Pension Plan are in accordance with the minimum funding requirements of the Employee Retirement Income Security Act of 1974, as amended. The Company expects to contribute $2.7 million to the Pension Plan in 2012. The Company also provides an unfunded Supplemental Executive Retirement Plan (“SERP”) for certain members of its executive management. The Company uses a December 31 measurement date for the benefit obligations and a January 1 measurement date for its net periodic costs for both the Pension Plan and SERP. Variances from actuarially assumed rates will result in increases or decreases in benefit obligations, net periodic cost and funding requirements in future periods. The Company had available-for-sale securities in a rabbi trust generally designated to pay benefits of the SERP in the amounts of $31.6 million at both December 31, 2011 and 2010. These amounts are included in other assets, net on the consolidated balance sheets.
A summary of the benefit obligations and funded status for the Company’s Pension and SERP Plans at December 31, 2011 and 2010 follows (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Pension Plan	 	 	SERP	 	
 	  	2011	 	 	2010	 	 	2011	 	 	2010	 	
Change in benefit obligation:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Benefit obligation, beginning of year	  	$	39,682	  	 	$	42,245	  	 	$	73,840	  	 	$	61,079	  	
Service cost	  	 	1,315	  	 	 	1,169	  	 	 	5,197	  	 	 	4,661	  	
Interest cost	  	 	2,159	  	 	 	2,051	  	 	 	3,434	  	 	 	3,728	  	
Curtailment	  	 	—  	  	 	 	(7,407	) 	 	 	—  	  	 	 	—  	  	
Plan amendment	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(24	) 	
Actuarial loss	  	 	8,480	  	 	 	2,082	  	 	 	5,225	  	 	 	4,396	  	
Benefits paid	  	 	(524	) 	 	 	(458	) 	 	 	(1,546	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Benefit obligation, end of year	  	 	51,112	  	 	 	39,682	  	 	 	86,150	  	 	 	73,840	  	
 	 	 	 	 	
Change in plan assets:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value of assets, beginning of year	  	 	34,354	  	 	 	28,583	  	 	 	—  	  	 	 	—  	  	
Actual return on plan assets	  	 	(536	) 	 	 	3,895	  	 	 	—  	  	 	 	—  	  	
Employer contributions	  	 	1,758	  	 	 	2,334	  	 	 	—  	  	 	 	—  	  	
Benefits paid	  	 	(524	) 	 	 	(458	) 	 	 	—  	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value of assets, end of year	  	 	35,052	  	 	 	34,354	  	 	 	—  	  	 	 	—  	  	

Unfunded status	  	$	(16,060	) 	 	$	(5,328	) 	 	$	(86,150	) 	 	$	(73,840	) 	

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
A summary of the amounts recognized in the accompanying consolidated balance sheets at December 31, 2011 and 2010 follows (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Pension Plan	 	 	SERP	 	
 	  	2011	 	 	2010	 	 	2011	 	 	2010	 	
Noncurrent asset	  	$	—  	  	 	$	—  	  	 	$	—  	  	 	$	—  	  	
Current liability	  	 	—  	  	 	 	—  	  	 	 	(1,191	) 	 	 	(1,546	) 	
Noncurrent liability	  	 	(16,060	) 	 	 	(5,328	) 	 	 	(84,959	) 	 	 	(72,294	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net amount recognized in the consolidated balance sheets	  	$	(16,060	) 	 	$	(5,328	) 	 	$	(86,150	) 	 	$	(73,840	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
A summary of the amounts recognized in AOCL at December 31, 2011 and 2010 follows (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Pension Plan	 	  	SERP	 	
 	  	2011	 	 	2010	 	  	2011	 	  	2010	 	
Prior service (credit) cost	  	$	(1,076	) 	 	$	(1,217)	  	  	$	7,084	  	  	$	8,781	  	
Net actuarial loss	  	 	13,260	  	 	 	1,474	  	  	 	23,779	  	  	 	20,087	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Total amount recognized in AOCL	  	$	12,184	  	 	$	257	  	  	$	30,863	  	  	$	28,868	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
A summary of the plans’ benefit obligation in excess of the fair value of plan assets at December 31, 2011 and 2010 follows (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Pension Plan	 	  	SERP	 	
 	  	2011	 	  	2010	 	  	2011	 	  	2010	 	
Projected benefit obligation	  	$	51,112	  	  	$	39,682	  	  	$	86,150	  	  	$	73,840	  	
Accumulated benefit obligation	  	 	50,745	  	  	 	39,380	  	  	 	66,172	  	  	 	47,304	  	
Fair value of plan assets	  	 	35,052	  	  	 	34,354	  	  	 	—  	  	  	 	—  	  	
A summary of the weighted-average assumptions used by the Company to determine benefit obligations as of December 31 follows:

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Pension Plan	 	 	SERP	 	
 	  	2011	 	 	2010	 	 	2011	 	 	2010	 	
Discount rate	  	 	4.33	% 	 	 	5.50	% 	 	 	4.00	% 	 	 	4.75	% 	
Annual salary increases	  	 	4.50	% 	 	 	4.50	% 	 	 	4.00	% 	 	 	4.00	% 	
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
A summary of net periodic cost and other amounts recognized in OCI for the years ended December 31, 2011, 2010 and 2009 follows (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Pension Plan	 	 	SERP	 	
 	  	2011	 	 	2010	 	 	2009	 	 	2011	 	 	2010	 	 	2009	 	
Service cost	  	$	1,315	  	 	$	1,169	  	 	$	3,886	  	 	$	5,197	  	 	$	4,661	  	 	$	4,437	  	
Interest cost	  	 	2,159	  	 	 	2,051	  	 	 	2,200	  	 	 	3,434	  	 	 	3,728	  	 	 	2,469	  	
Expected return on plan assets	  	 	(2,771	) 	 	 	(2,497	) 	 	 	(1,683	) 	 	 	-	  	 	 	-	  	 	 	-	  	
Amortization of unrecognized prior service (credit) cost	  	 	(141	) 	 	 	(38	) 	 	 	689	  	 	 	1,696	  	 	 	1,697	  	 	 	1,704	  	
Amortization of net loss	  	 	—  	  	 	 	—  	  	 	 	426	  	 	 	1,533	  	 	 	1,459	  	 	 	1	  	
Curtailment credit	  	 	—  	  	 	 	(1,910	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net periodic cost	  	 	562	  	 	 	(1,225	) 	 	 	5,518	  	 	 	11,860	  	 	 	11,545	  	 	 	8,611	  	
 	 	 	 	 	 	 	
Prior service (credit) cost arising during period	  	 	—  	  	 	 	(2,770	) 	 	 	—  	  	 	 	—  	  	 	 	(24	) 	 	 	—  	  	
Net (gain) loss arising during period	  	 	11,787	  	 	 	(2,044	) 	 	 	(4,595	) 	 	 	5,225	  	 	 	4,396	  	 	 	13,028	  	
Amortization of:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Prior service cost (credit)	  	 	141	  	 	 	38	  	 	 	(689	) 	 	 	(1,696	) 	 	 	(1,697	) 	 	 	(1,704	) 	
Net actuarial gain	  	 	—  	  	 	 	—  	  	 	 	(426	) 	 	 	(1,533	) 	 	 	(1,459	) 	 	 	(1	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total amount recognized in OCI	  	 	11,928	  	 	 	(4,776	) 	 	 	(5,710	) 	 	 	1,996	  	 	 	1,216	  	 	 	11,323	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total recognized in net periodic cost and OCI	  	$	12,490	  	 	$	(6,001	) 	 	$	(192	) 	 	$	13,856	  	 	$	12,761	  	 	$	19,934	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
A summary of the expected amortization amounts to be included in net periodic cost for 2012 are as follows (in thousands):

 	 	 	 	 	 	 	 	 	
 	  	Pension Plan	 	 	SERP	 	
Prior service (credit) cost	  	$	(141	) 	 	$	1,696	  	
Actuarial loss	  	 	978	  	 	 	2,028	  	
A summary of the weighted-average assumptions used by the Company to determine net periodic cost for the years ended December 31, 2011, 2010 and 2009 follows:

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Pension Plan	 	 	SERP	 	
 	  	2011	 	 	2010	 	 	2009	 	 	2011	 	 	2010	 	 	2009	 	
Discount rate	  	 	5.50	% 	 	 	5.99	% 	 	 	5.96	% 	 	 	4.75	% 	 	 	6.00	% 	 	 	6.00	% 	
Rate of compensation increase	  	 	4.50	% 	 	 	4.50	% 	 	 	4.00	% 	 	 	4.00	% 	 	 	5.00	% 	 	 	5.00	% 	
Expected long term rate of return on assets	  	 	8.00	% 	 	 	8.50	% 	 	 	8.50	% 	 	 	N/A	  	 	 	N/A	  	 	 	N/A	  	
The Company’s weighted-average asset allocations by asset category at December 31, 2011 and 2010 follows:

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Pension Plan	 	 	SERP	 	
 	  	2011	 	 	2010	 	 	2011	 	  	2010	 	
Equity securities	  	 	100	% 	 	 	100	% 	 	 	N/A	  	  	 	N/A	  	
Debt securities	  	 	0	% 	 	 	0	% 	 	 	N/A	  	  	 	N/A	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Total	  	 	100	% 	 	 	100	% 	 	 	N/A	  	  	 	N/A	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
The Pension Plan assets are invested in mutual funds with an underlying investment allocation of 60% equity securities and 40% debt securities. All assets are measured at fair value using quoted prices in active markets and therefore are classified as Level 1 measurements in the fair value hierarchy. The expected long-term rate of return for the Pension Plan assets is based on current expected long-term inflation and historical rates of return on equities and fixed income securities, taking into account the investment policy under the plan. The expected long-term rate of return is weighted based on the target allocation for each asset category. Equity securities are expected to return between 7% and 11% and debt securities are expected to return between 3% and 6%. The Company expects the Pension Plan asset managers will provide a premium of approximately 0% to 1.5% per annum to the respective market benchmark indices.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The Company’s investment policy related to the Pension Plan is to provide for growth of capital with a moderate level of volatility by investing in accordance with the target asset allocations stated above. The Company reviews its investment policy, including its target asset allocations, on a semi-annual basis to determine whether any changes in market conditions or amendments to its pension plans require a revision to its investment policy.
The estimated future benefit payments reflecting future service as of December 31, 2011 for the Pension Plan and SERP plan follows (in thousands):

 	 	 	 	 	 	 	 	 	
Year Ending	  	Pension Plan	 	  	SERP	 	
2012	  	$	1,236	  	  	$	1,191	  	
2013	  	 	1,511	  	  	 	1,392	  	
2014	  	 	1,701	  	  	 	10,782	  	
2015	  	 	1,820	  	  	 	3,365	  	
2016	  	 	2,237	  	  	 	44,737	  	
2017-2021	  	 	15,115	  	  	 	40,072	  	
 
11.	Stockholders’ Equity	
Authorized capital shares of the Company include 400,000,000 shares of capital stock consisting of 300,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each of the aforementioned classes of capital stock has a par value of $0.01 per share. Shares of preferred stock, none of which were outstanding as of December 31, 2011, may be issued in one or more series having such rights, preferences and other provisions as determined by the Board of Directors without approval by the holders of common stock.
On December 14, 2011, the Company adopted a new open market repurchase program for up to 4,000,000 shares of the Company’s common stock, not to exceed $100 million in repurchases. The new repurchase program will conclude at the earliest of three years, when the maximum number of shares has been repurchased, or when the maximum dollar amount has been reached. Through December 31, 2011, no shares have been purchased and retired under this program.
On September 15, 2010, the Company commenced an open market repurchase program for up to 4,000,000 shares of the Company’s common stock, not to exceed $100 million in repurchases. This program will conclude at the earliest of three years from the commencement date, when the maximum number of shares has been repurchased or when the maximum dollar amount has been expended. During the year ended December 31, 2010, the Company repurchased and retired 451,272 shares at a weighted-average price of $30.81 per share. During the year ended December 31, 2011, the Company repurchased and retired 3,469,866 shares at a weighted-average price of $24.68 per share. The cumulative number of shares that have been repurchased and retired under this program through December 31, 2011 is 3,921,138 shares at a weighted-average price of $25.39 per share.
On December 9, 2009, the Company commenced the predecessor open market repurchase program for up to 3,000,000 shares of the Company’s common stock, not to exceed $100 million in repurchases. This program concluded in September 2010 when purchases approximately totaled the permitted maximum dollar amount. During the year ended December 31, 2010, the Company repurchased and retired 2,964,528 shares at a weighted-average price of $33.69 per share, which is the cumulative number of shares that were repurchased under this program.
The Credit Facility limits the Company’s ability to pay dividends and/or repurchase stock to an amount not to exceed $50 million in the aggregate after November 5, 2010, the date of the initial amendment and restatement of the Credit Facility. In addition, the Credit Facility allows the Company to repurchase stock in an amount not to exceed the aggregate amount of proceeds from the exercise of stock options. The indentures governing the 8  7 / 8 % Senior Notes and the 8% Senior Notes (collectively, the “Senior Notes”) also limit the Company’s ability to pay dividends and/or repurchase stock. As of December 31, 2011, under the most restrictive test under these agreements, the Company has approximately $30.1 million remaining available with which to pay permitted dividends and/or make stock and Senior Notes repurchases.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
The following schedule discloses the effects of changes in the Company’s ownership interest in its less-than-wholly-owned subsidiaries on Community Health Systems, Inc. stockholders’ equity (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
Net income attributable to Community Health Systems, Inc.	  	$	201,948	  	 	$	279,983	  	 	$	243,150	  	
Transfers (to) from the noncontrolling interests:	  	 	 	 	 	 	 	 	 	 	 	 	
Net (decrease) increase in Community Health Systems, Inc. paid-in capital for purchase of subsidiary partnership interests	  	 	(4,556	) 	 	 	(3,529	) 	 	 	3,106	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net transfers (to) from the noncontrolling interests	  	 	(4,556	) 	 	 	(3,529	) 	 	 	3,106	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Change to Community Health Systems, Inc. stockholders' equity from net income attributable to Community Health Systems, Inc. and transfers (to) from noncontrolling interests	  	$	197,392	  	 	$	276,454	  	 	$	246,256	  	

12.	Earnings Per Share	
The following table sets forth the components of the numerator and denominator for the computation of basic and diluted earnings per share for income from continuing operations, discontinued operations and net income attributable to Community Health Systems, Inc. common stockholders (in thousands, except share data):

 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
Numerator:	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations, net of taxes	  	$	335,894	  	 	$	355,213	  	 	$	305,811	  	
Less: Income from continuing operations attributable to noncontrolling interests, net of taxes	  	 	75,675	  	 	 	68,577	  	 	 	62,948	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations attributable to Community Health Systems, Inc. common stockholders – basic and diluted	  	$	260,219	  	 	$	286,636	  	 	$	242,863	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from discontinued operations, net of taxes	  	$	(58,271	) 	 	$	(6,772	) 	 	$	566	  	
Less: (Loss) income from discontinued operations attributable to noncontrolling interests, net of taxes	  	 	—  	  	 	 	(119	) 	 	 	279	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Loss from discontinued operations attributable to Community Health Systems, Inc. common stockholders – basic and diluted	  	$	(58,271	) 	 	$	(6,653	) 	 	$	287	  	

Denominator:	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average number of shares outstanding – basic	  	 	89,966,933	  	 	 	91,718,791	  	 	 	90,614,886	  	
Effect of dilutive securities:	  	 	 	 	 	 	 	 	 	 	 	 	
Restricted stock awards	  	 	327,652	  	 	 	542,488	  	 	 	469,134	  	
Employee stock options	  	 	361,554	  	 	 	667,606	  	 	 	422,637	  	
Other equity-based awards	  	 	10,209	  	 	 	17,163	  	 	 	10,617	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average number of shares outstanding – diluted	  	 	90,666,348	  	 	 	92,946,048	  	 	 	91,517,274	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Dilutive securities outstanding not included in the computation of earnings per share because their effect is antidilutive:	  	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	
Employee stock options	  	 	6,432,281	  	 	 	4,882,338	  	 	 	6,820,393	  	
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
13.	Equity Investments	
As of December 31, 2011, the Company owned equity interests of 27.5% in four hospitals in Las Vegas, Nevada, and 26.1% in one hospital in Las Vegas, Nevada, in which Universal Health Systems, Inc. owns the majority interest, and an equity interest of 38.0% in three hospitals in Macon, Georgia, in which HCA Inc. (“HCA”) owns the majority interest.
Summarized combined financial information for the unconsolidated entities in which the Company owns an equity interest is as follows (in thousands):

 	 	 	 	 	 	 	 	 	
 	  	December 31,	 	
 	  	2011	 	  	2010	 	
 	 	 	
Current assets	  	$	233,496	  	  	$	220,881	  	
Noncurrent assets	  	 	790,125	  	  	 	771,646	  	
 	  	 	 	 	  	 	 	 	
Total assets	  	$	1,023,621	  	  	$	992,527	  	

Current liabilities	  	$	82,687	  	  	$	83,985	  	
Noncurrent liabilities	  	 	2,094	  	  	 	2,198	  	
Members’ equity	  	 	938,672	  	  	 	905,006	  	
Noncontrolling interests	  	 	168	  	  	 	1,338	  	
 	  	 	 	 	  	 	 	 	
Total liabilities and equity	  	$	1,023,621	  	  	$	992,527	  	

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	  	2010	 	  	2009	 	
Revenues	  	$	1,455,991	  	  	$	1,418,432	  	  	$	1,401,095	  	
Operating costs and expenses	  	$	1,294,057	  	  	$	1,268,075	  	  	$	1,252,714	  	
Income from continuing operations before taxes	  	$	162,124	  	  	$	150,640	  	  	$	148,343	  	
The summarized financial information was derived from the financial information provided to the Company by those unconsolidated entities.
The Company’s investment in all of its unconsolidated affiliates was $422.2 million and $409.5 million at December 31, 2011 and 2010, respectively, and is included in other assets, net in the accompanying consolidated balance sheets. Included in the Company’s results of operations is the Company’s equity in pre-tax earnings from all of its investments in unconsolidated affiliates, which was $49.5 million, $45.4 million and $36.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.
 
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14.	Segment Information	
The Company operates in three distinct operating segments, represented by hospital operations (which includes its general acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services), home care agency operations (which provide in-home outpatient care), and hospital management services (which provides executive management and consulting services to non-affiliated acute care hospitals). Only the hospital operations segment meets the criteria as a separate reportable segment. The financial information for the home care agencies and hospital management services segments do not meet the quantitative thresholds for a separate identifiable reportable segment and are combined into the corporate and all other reportable segment.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1. Expenditures for segment assets are reported on an accrual basis, which includes amounts that are reflected in accounts payable. Substantially all depreciation and amortization as reflected in the consolidated statements of income relates to the hospital operations segment.
The distribution between reportable segments of the Company’s net operating revenues, income from continuing operations before income taxes, expenditures for segment assets and total assets is summarized in the following tables (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	 	2010	 	 	2009	 	
Net operating revenues:	  	 	 	 	 	 	 	 	 	 	 	 	
Hospital operations	  	$	13,349,446	  	 	$	12,343,537	  	 	$	11,474,356	  	
Corporate and all other	  	 	276,722	  	 	 	279,737	  	 	 	268,098	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
 	  	$	13,626,168	  	 	$	12,623,274	  	 	$	11,742,454	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations before income taxes:	  	 	 	 	 	 	 	 	 	 	 	 	
Hospital operations	  	$	720,215	  	 	$	662,303	  	 	$	590,389	  	
Corporate and all other	  	 	(246,668	) 	 	 	(143,409	) 	 	 	(142,727	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
 	  	$	473,547	  	 	$	518,894	  	 	$	447,662	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Expenditures for segment assets:	  	 	 	 	 	 	 	 	 	 	 	 	
Hospital operations	  	$	737,391	  	 	$	646,509	  	 	$	543,969	  	
Corporate and all other	  	 	39,322	  	 	 	20,869	  	 	 	15,105	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
 	  	$	776,713	  	 	$	667,378	  	 	$	559,074	  	

 	 	 	 	 	 	 	 	 	
 	  	December 31,	 	
 	  	2011	 	  	2010	 	
Total assets:	  	 	 	 	  	 	 	 	
Hospital operations	  	$	13,984,964	  	  	$	13,398,314	  	
Corporate and all other	  	 	1,223,876	  	  	 	1,299,809	  	
 	  	 	 	 	  	 	 	 	
 	  	$	15,208,840	  	  	$	14,698,123	  	

15.	Commitments and Contingencies	
Construction and Other Capital Commitments. Pursuant to hospital purchase agreements in effect as of December 31, 2011, and where final certificate of need approval has been obtained, the Company is required to build replacement facilities. As required by an amendment to a lease agreement entered into in 2005, the Company agreed to build a replacement facility at its Barstow, California location with an aggregate estimated construction cost, including equipment costs, of approximately $73.5 million. Of this amount, approximately $49.3 million has been expended through December 31, 2011. This project is expected to be completed in 2012. The Company has agreed, as part of an acquisition in 2007, to build a replacement hospital in Valparaiso, Indiana with an aggregate estimated construction cost, including equipment costs, of approximately $208.7 million. Of this amount, approximately $137.0 million has been expended through December 31, 2011. This project is expected to be completed in 2012. The Company has agreed, as part of an acquisition in 2009, to build a replacement hospital in Siloam Springs, Arkansas with an aggregate estimated construction cost, including equipment costs, of approximately $35.0 million. Of this amount, approximately $24.0 million has been expended through December 31,
 
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2011. This project is required to be completed in 2013. In October 2008, after the purchase of the noncontrolling owner’s interest in the Company’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’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 31, 2011. In addition, under other purchase agreements outstanding at December 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 31, 2011, the Company has spent approximately $247.8 million related to these commitments.
Physician Recruiting Commitments. 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. Under such agreements, the Company is required to make payments to the physicians in excess of the amounts they earned in their practice up to the amount of the income guarantee. These income guarantee periods are typically for 12 months. Such payments are recoverable by the Company from physicians who do not fulfill their commitment period, which is typically three years, to the respective community. At December 31, 2011, the maximum potential amount of future payments under these guarantees in excess of the liability recorded is $27.4 million.
Professional Liability Claims. As part of the Company’s business of owning and operating hospitals, it is subject to legal actions alleging liability on its part. The Company accrues for losses resulting from such liability claims, as well as loss adjustment expenses that are out-of-pocket and directly related to such liability claims. These direct out-of-pocket expenses include fees of outside counsel and experts. The Company does not accrue for costs that are part of corporate overhead, such as the costs of in-house legal and risk management departments. The losses resulting from professional liability claims primarily consist of estimates for known claims, as well as estimates for incurred but not reported claims. The estimates are based on specific claim facts, historical claim reporting and payment patterns, the nature and level of hospital operations and actuarially determined projections. The actuarially determined projections are based on the Company’s actual claim data, including historic reporting and payment patterns which have been gathered over an approximate 20-year period. As discussed below, since the Company purchases excess insurance on a claims-made basis that transfers risk to third-party insurers, the liability it accrues does include an amount for the losses covered by its excess insurance. The Company also records a receivable for the expected reimbursement of losses covered by excess insurance. Since the Company believes that the amount and timing of its future claims payments are reliably determinable, it discounts the amount accrued for losses resulting from professional liability claims using the risk-free interest rate corresponding to the timing of expected payments.
The net present value of the projected payments was discounted using a weighted-average risk-free rate of 1.2%, 1.3% and 1.4% in 2011, 2010 and 2009, respectively. This liability is adjusted for new claims information in the period such information becomes known. The Company’s estimated liability for the self-insured portion of professional and general liability claims was $567.8 million and $489.2 million as of December 31, 2011 and 2010, respectively. The estimated undiscounted claims liability was $595.7 million and $513.2 million as of December 31, 2011 and 2010, respectively. The current portion of the liability for self-insured portion of professional and general liability claims was $98.1 million and $82.9 million as of December 31, 2011 and 2010, respectively, and is included in other accrued liabilities in the accompanying consolidated balance sheets. Professional malpractice expense includes the losses resulting from professional liability claims and loss adjustment expense, as well as paid excess insurance premiums, and is presented within other operating expenses in the accompanying consolidated statements of income.

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The Company’s processes for obtaining and analyzing claims and incident data are standardized across all of its hospitals and have been consistent for many years. The Company monitors the outcomes of the medical care services that it provides and for each reported claim, the Company obtains various information concerning the facts and circumstances related to that claim. In addition, the Company routinely monitors current key statistics and volume indicators in its assessment of utilizing historical trends. The average lag period between claim occurrence and payment of a final settlement is between four and five years, although the facts and circumstances of individual claims could result in the timing of such payments being different from this average. Since claims are paid promptly after settlement with the claimant is reached, settled claims represent less than 1.0% of the total liability at the end of any period.
For purposes of estimating its individual claim accruals, the Company utilizes specific claim information, including the nature of the claim, the expected claim amount, the year in which the claim occurred and the laws of the jurisdiction in which the claim occurred. Once the case accruals for known claims are determined, information is stratified by loss layers and retentions, accident years, reported years, geography and claims relating to the acquired Triad hospitals versus claims relating to the Company’s other hospitals. Several actuarial methods are used against this data to produce estimates of ultimate paid losses and reserves for incurred but not reported claims. Each of these methods uses company-specific historical claims data and other information. This company-specific data includes information regarding the Company’s business, including historical paid losses and loss adjustment expenses, historical and current case loss reserves, actual and projected hospital statistical data, a variety of hospital census information, employed physician information, professional liability retentions for each policy year, geographic information and other data.
Based on these analyses the Company determines its estimate of the professional liability claims. The determination of management’s estimate, including the preparation of the reserve analysis that supports such estimate, involves subjective judgment of the management. Changes in reserving data or the trends and factors that influence reserving data may signal fundamental shifts in the Company’s future claim development patterns or may simply reflect single-period anomalies. Even if a change reflects a fundamental shift, the full extent of the change may not become evident until years later. Moreover, since the Company’s methods and models use different types of data and the Company selects its liability from the results of all of these methods, it typically cannot quantify the precise impact of such factors on its estimates of the liability. Due to the Company’s standardized and consistent processes for handling claims and the long history and depth of company-specific data, the Company’s methodologies have produced reliably determinable estimates of ultimate paid losses.
The Company is primarily self-insured for these claims; however, the Company obtains excess insurance that transfers the risk of loss to a third-party insurer for claims in excess of self-insured retentions. The Company’s excess insurance is underwritten on a claims-made basis. For claims reported prior to June 1, 2002, substantially all of the Company’s professional and general liability risks were subject to a $0.5 million per occurrence self-insured retention and for claims reported from June 1, 2002 through June 1, 2003, these self-insured retentions were $2.0 million per occurrence. Substantially all claims reported after June 1, 2003 and before June 1, 2005 are self-insured up to $4 million per claim. Substantially all claims reported on or after June 1, 2005 are self-insured up to $5 million per claim. Management on occasion has selectively increased the insured risk at certain hospitals based upon insurance pricing and other factors and may continue that practice in the future. Excess insurance for all hospitals has been purchased through commercial insurance companies and generally covers the Company for liabilities in excess of the self-insured retentions. The excess coverage consists of multiple layers of insurance, the sum of which totals up to $95 million per occurrence and in the aggregate for claims reported on or after June 1, 2003 and up to $145 million per occurrence and in the aggregate for claims incurred and reported after January 1, 2008. For certain policy years, if the first aggregate layer of excess coverage becomes fully utilized, then the Company’s self-insured retention could increase to $10 million per claim for any subsequent claims in that policy year until the Company’s total aggregate coverage is met.

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Effective January 1, 2008, the former Triad hospitals are insured on a claims-made basis as described above and through commercial insurance companies as described above for substantially all claims occurring on or after January 1, 2002 and reported on or after January 1, 2008. 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’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 31, 2006, the former Triad hospitals obtained insurance coverage on a claims incurred basis from HCA’s wholly-owned insurance subsidiary, with excess coverage obtained from other carriers that is subject to certain deductibles. Effective for claims incurred after December 31, 2006, Triad began insuring its claims from $1 million to $5 million through its wholly-owned captive insurance company, replacing the coverage provided by HCA. Substantially all claims occurring during 2007 were self-insured up to $10 million per claim.
Legal Matters. The Company is a party to various legal proceedings incidental to its business. In the opinion of management, any ultimate liability with respect to these actions will not have a material adverse effect on the Company’s consolidated financial position, cash flows or results of operations. With respect to all litigation matters, the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, the Company records an estimated loss for the expected outcome of the litigation. 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.
Reasonably Possible Contingencies
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.
On February 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 “intergovernmental payments,” “upper payment limit programs,” and “Medicaid disproportionate share hospital payments.” The February 2006 letter focused on the Company’s hospitals in three states: Arkansas, New Mexico, and South Carolina. On August 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’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’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 30, 2009. The relator filed a second amended complaint on July 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’s and the relator’s claims on August 28, 2009. On March 19, 2010, the court granted in part and denied in part the Company’s motion to dismiss as to the relator’s complaint. On July 7, 2010, the court denied the Company’s motion to dismiss the federal government’s complaint in intervention. On July 21, 2010, the Company filed its answer and pretrial discovery began. On June 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 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 27, 2012 and there is currently no trial date set. The Company is vigorously defending this action.
 
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On June 12, 2008, two of the Company’s hospitals received letters from the United States Attorney’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 1, 2002, through June 9, 2008. On September 16, 2008, one of the Company’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’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.
Matters for which an Outcome Cannot be Assessed
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.
On April 8, 2011, the Company received a document subpoena, dated March 31, 2011, from the United States Department of Health and Human Services, Office of Inspector General (the “OIG”), in connection with an investigation of possible improper claims submitted to Medicare and Medicaid. The subpoena, issued from the OIG’s Chicago, Illinois office, requested documents from all of the Company’s hospitals and appears to concern emergency department processes and procedures, including the Company’s hospitals’ 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’s relationships with emergency department physicians, including financial arrangements. The subpoena’s requests were very similar to those contained in the Civil Investigative Demands received by the Company’s Texas hospitals from the Office of the Attorney General of the State of Texas on November 15, 2010. The Company is continuing to cooperate with the government (including production of documents and interviews with witnesses) in this investigation.
On April 11, 2011, Tenet Healthcare Corporation (“Tenet”) 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’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’s costs. On April 19, 2011, the Company filed a motion to dismiss the complaint. On April 28, 2011, the Company responded to the allegations during its earnings release conference call as discussed in the Company’s Form 8-K furnished on April 28, 2011. On May 16, 2011, Tenet filed an amended complaint. On June 29, 2011, the Company filed a motion to dismiss the amended complaint. A hearing on the Company’s motion to dismiss occurred on September 8, 2011. The court took this matter under advisement. The Company will continue to vigorously defend this suit.
On April 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 7, 2009. The suit is brought under the False Claims Act and alleges that Lutheran Hospital of Indiana billed the Medicare program for (a) false 23 hour observation after outpatient surgeries and procedures, and (b) 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
 
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reassigned to another department in the fall of 2006. This facility was acquired by the Company as part of the July 25, 2007 merger transaction with Triad. The complaint also includes allegations of age discrimination in Ms. Reuille’s 2006 reassignment and retaliation in connection with her resignation on October 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 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 “allegations of improper billing for inpatient care at other hospitals associated with Community Health Systems, Inc. … asserted in other qui tam complaints in other jurisdictions.” The motion stated that the Department of Justice has “consolidated its investigations” of the Company and other related entities and that “the Civil Division of the Department of Justice, multiple United States Attorneys’ offices, and the Office of Inspector General for the Department of Health and Human Services (the “HHS”) 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.” 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’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 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 “under seal,” 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’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 22, 2011 concluded by requesting a stay of the litigation in the Reuille case for 180 days, and on April 25, 2011, the court granted the motion. The Company’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 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’s response setting forth the Company’s legal arguments was filed on October 24, 2011. On November 1, 2011, the court denied the motion to transfer the matter and extended the stay until April 30, 2012. The Company is cooperating fully with the government in its investigations.
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 5, 2011; De Zheng v. Community Health Systems, Inc., Wayne T. Smith and W. Larry Cash, filed May 12, 2011; and Minneapolis Firefighters Relief Association v. Community Health Systems, Inc., Wayne T. Smith, W. Larry Cash and Thomas Mark Buford, filed June 2, 2011. All three seek class certification on behalf of purchasers of the Company’s common stock between July 27, 2006 and April 11, 2011 and allege that misleading statements resulted in artificially inflated prices for the Company’s common stock. On September 20, 2011, all three were assigned to the same judge as related cases. On December 28, 2011, the court consolidated all three shareholder cases for pretrial purposes, selected NYC Funds as lead plaintiffs, and selected NYC Funds’ counsel as lead plaintiffs’ 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. 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 24, 2011; Roofers Local No. 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 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
 
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Norris Jennings, Julia B. North, H. Mitchell Watson, Jr. and Community Health Systems, Inc., filed October 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 28, 2011, the court ordered that the Plumbers and Pipefitters Local Union No. 630 Pension Annuity Trust Fund action and the Roofers Local No. 149 Pension Fund action be consolidated for pretrial purposes, and appointed the derivative plaintiffs’ lead counsel. On November 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 15, 2012. The Company believes all of these matters are without merit and will vigorously defend them.
The Company incurred the following pre-tax charges in connection with the Tenet acquisition lawsuit, government investigations and shareholder lawsuits relating to possible improper claims submitted to Medicare and Medicaid (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Year Ended December 31,	 	
 	  	2011	 	  	2010	 	  	2009	 	
 	 	 	 	
Professional fees and other related costs	  	$	15,317	  	  	$	—  	  	  	$	—  	  	

16.	Subsequent Events	
The Company evaluated all material events occurring subsequent to the balance sheet date for events requiring disclosure or recognition in the consolidated financial statements.
Effective January 1, 2012, one or more subsidiaries of the Company completed the acquisition of Moses Taylor Healthcare System, located in northeast Pennsylvania. This healthcare system includes Moses Taylor Hospital in Scranton, Pennsylvania (217 licensed beds) and Mid-Valley Hospital in Peckville, Pennsylvania (25 licensed beds). The total cash consideration paid at closing for long-lived assets was approximately $152.0 million and for preliminary net working capital was approximately $10.0 million.
On January 24, 2012, the Company announced that one or more subsidiaries of the Company have executed a definitive agreement to acquire substantially all of the assets of Memorial Health Systems in York, Pennsylvania. Memorial Health Systems includes 100-bed Memorial Hospital, the Surgical Center of York and other outpatient and ancillary services.
On February 2, 2012, the Company completed an additional amendment and restatement of the Credit Facility, which extended by two and a half years, until January 25, 2017, the maturity date of an additional $1.6 billion of the existing non-extended term loans under the Credit Facility and increased the pricing on the newly extended term loans by 125 basis points. The maturity date of the balance of the term loans of approximately $2.9 billion remained unchanged at July 25, 2014.
 
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17.	Quarterly Financial Data (Unaudited)	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Quarter	 	 	 	 	
 	  	1st	 	 	2nd	 	 	3rd	 	 	4th	 	 	Total	 	
 	  	(in thousands, except share and per share data)	 	
Year ended December 31, 2011:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net operating revenues(1)	  	$	3,354,052	  	 	$	3,433,829	  	 	$	3,395,773	  	 	$	3,442,514	  	 	$	13,626,168	  	
Income from continuing operations before income taxes	  	 	135,697	  	 	 	137,695	  	 	 	132,517	  	 	 	67,638	  	 	 	473,547	  	
Income from continuing operations	  	 	91,605	  	 	 	92,874	  	 	 	95,800	  	 	 	55,615	  	 	 	335,894	  	
Loss from discontinued operations	  	 	(13,280	) 	 	 	(39,327	) 	 	 	(3,169	) 	 	 	(2,495	) 	 	 	(58,271	) 	
Net income attributable to Community Health Systems, Inc	  	$	61,324	  	 	$	35,389	  	 	$	74,304	  	 	$	30,931	  	 	$	201,948	  	
Basic earnings per share attributable to Community Health Systems, Inc. common stockholders(2):	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	  	$	0.82	  	 	$	0.82	  	 	$	0.87	  	 	$	0.38	  	 	$	2.89	  	
Discontinued operations	  	 	(0.15	) 	 	 	(0.43	) 	 	 	(0.04	) 	 	 	(0.03	) 	 	 	(0.65	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	0.67	  	 	$	0.39	  	 	$	0.83	  	 	$	0.35	  	 	$	2.24	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share attributable to Community Health Systems, Inc. common stockholders(2):	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	  	$	0.81	  	 	$	0.81	  	 	$	0.86	  	 	$	0.38	  	 	$	2.87	  	
Discontinued operations	  	 	(0.14	) 	 	 	(0.43	) 	 	 	(0.04	) 	 	 	(0.03	) 	 	 	(0.64	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	0.67	  	 	$	0.39	  	 	$	0.83	  	 	$	0.35	  	 	$	2.23	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average number of shares:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	  	 	91,008,405	  	 	 	91,130,672	  	 	 	89,412,310	  	 	 	88,344,566	  	 	 	89,966,933	  	
Diluted	  	 	92,136,819	  	 	 	91,783,725	  	 	 	89,857,583	  	 	 	88,913,813	  	 	 	90,666,348	  	
Year ended December 31, 2010:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net operating revenues	  	$	3,068,612	  	 	$	3,080,646	  	 	$	3,159,823	  	 	$	3,314,193	  	 	$	12,623,274	  	
Income from continuing operations before taxes	  	 	123,906	  	 	 	131,140	  	 	 	131,328	  	 	 	132,520	  	 	 	518,894	  	
Income from continuing operations	  	 	84,357	  	 	 	88,379	  	 	 	88,009	  	 	 	94,468	  	 	 	355,213	  	
Gain (loss) from discontinued operations	  	 	639	  	 	 	(2,037	) 	 	 	(3,155	) 	 	 	(2,219	) 	 	 	(6,772	) 	
Net income attributable to Community Health Systems, Inc.	  	$	70,007	  	 	$	70,065	  	 	$	70,401	  	 	$	69,510	  	 	$	279,983	  	
Basic earnings per share attributable to Community Health Systems, Inc. common stockholders(2):	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	  	$	0.76	  	 	$	0.77	  	 	$	0.80	  	 	$	0.79	  	 	$	3.13	  	
Discontinued operations	  	 	0.01	  	 	 	(0.02	) 	 	 	(0.03	) 	 	 	(0.02	) 	 	 	(0.07	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	0.76	  	 	$	0.75	  	 	$	0.77	  	 	$	0.77	  	 	$	3.05	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share attributable to Community Health Systems, Inc. common stockholders(2):	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	  	$	0.75	  	 	$	0.76	  	 	$	0.80	  	 	$	0.78	  	 	$	3.08	  	
Discontinued operations	  	 	0.01	  	 	 	(0.02	) 	 	 	(0.03	) 	 	 	(0.02	) 	 	 	(0.07	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	0.75	  	 	$	0.74	  	 	$	0.76	  	 	$	0.76	  	 	$	3.01	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average number of shares:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	  	 	91,615,275	  	 	 	93,358,771	  	 	 	91,484,466	  	 	 	90,422,331	  	 	 	91,718,791	  	
Diluted	  	 	92,836,451	  	 	 	94,711,919	  	 	 	92,462,702	  	 	 	91,778,801	  	 	 	92,946,048	  	
 
(1)	Net operating revenues for the quarter ended September 30, 2011 have been restated to reflect the reclassification of electronic health records incentive reimbursement, which was changed during the fourth quarter of 2011 as a reduction of operating expenses. This reclassification decreased net operating revenues and operating expenses by $40.2 million, and had no impact on income from continuing operations or net income as previously reported. Management does not believe this reclassification is material.	
(2)	Total per share amounts may not add due to rounding.	
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
18.	Supplemental Condensed Consolidating Financial Information	
In 2007, CHS issued the 8 7/8% Senior Notes in the aggregate principal amount of approximately $3.0 billion. In 2011, CHS issued the 8% Senior Notes in the aggregate principal amount of $1.0 billion, the proceeds from which were used to purchase $1.0 billion of the 8  7 / 8 % Senior Notes. These 8  7 / 8 % Senior Notes and 8% Senior Notes are senior unsecured obligations of CHS and are guaranteed on a senior basis by the Company and by certain of its existing and subsequently acquired or organized 100% owned domestic subsidiaries.
Both the 8 7/8% Senior Notes and the 8% Senior Notes are guaranteed on a joint and several basis, with limited exceptions considered customary for such guarantees, including the release of the guarantee when a subsidiary’s assets used in operations are sold. The following condensed consolidating financial statements present Community Health Systems, Inc. (as parent guarantor), CHS (as the issuer), the subsidiary guarantors, the subsidiary non-guarantors and eliminations. These condensed consolidating financial statements have been prepared and presented in accordance with SEC Regulation S-X Rule 3-10 “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.”
The accounting policies used in the preparation of this financial information are consistent with those elsewhere in the consolidated financial statements of the Company, except as noted below:
 
 	•	 	Intercompany receivables and payables are presented gross in the supplemental consolidating balance sheets.	
 
 	•	 	Cash flows from intercompany transactions are presented in cash flows from financing activities, as changes in intercompany balances with affiliates, net.	
 
 	•	 	Income tax expense is allocated from the parent guarantor to the income producing operations (other guarantors and non-guarantors) and the issuer through stockholders’ equity. As this approach represents an allocation, the income tax expense allocation is considered non-cash for statement of cash flow purposes.	
 
 	•	 	Interest expense, net has been presented to reflect net interest expense and interest income from outstanding long-term debt and intercompany balances.	
The Company’s intercompany activity consists primarily of daily cash transfers for purposes of cash management, the allocation of certain expenses and expenditures paid for by the parent on behalf of its subsidiaries, and the push down of investment in its subsidiaries. The Company’s subsidiaries generally do not purchase services from one another; thus, the intercompany transactions do not represent revenue generating transactions. All intercompany transactions eliminate in consolidation.
From time to time, the Company sells and/or repurchases noncontrolling interests in consolidated subsidiaries, which may change subsidiaries between guarantors and non-guarantors. Amounts for prior periods are restated to reflect the status of guarantors or non-guarantors as of December 31, 2011.
 
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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Condensed Consolidating Statement of Income
Year Ended December 31, 2011

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Parent
Guarantor	 	 	Issuer	 	 	Other
Guarantors	 	 	Non-
Guarantors	 	 	Eliminations	 	 	Consolidated	 	
 	  	(In thousands)	 	
Net operating revenues	  	$	—  	  	 	$	—  	  	 	$	7,904,497	  	 	$	5,721,671	  	 	$	—  	  	 	$	13,626,168	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating costs and expenses:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Salaries and benefits	  	 	—  	  	 	 	—  	  	 	 	3,065,753	  	 	 	2,512,172	  	 	 	—  	  	 	 	5,577,925	  	
Provision for bad debts	  	 	—  	  	 	 	—  	  	 	 	1,003,252	  	 	 	716,704	  	 	 	—  	  	 	 	1,719,956	  	
Supplies	  	 	—  	  	 	 	—  	  	 	 	1,058,807	  	 	 	775,299	  	 	 	—  	  	 	 	1,834,106	  	
Other operating expenses	  	 	—  	  	 	 	—  	  	 	 	1,486,113	  	 	 	1,029,525	  	 	 	—  	  	 	 	2,515,638	  	
Electronic health records incentive reimbursement	  	 	—  	  	 	 	—  	  	 	 	(42,312	) 	 	 	(21,085	) 	 	 	—  	  	 	 	(63,397	) 	
Rent	  	 	—  	  	 	 	—  	  	 	 	124,823	  	 	 	129,958	  	 	 	—  	  	 	 	254,781	  	
Depreciation and amortization	  	 	—  	  	 	 	—  	  	 	 	393,549	  	 	 	259,125	  	 	 	—  	  	 	 	652,674	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	  	 	—  	  	 	 	—  	  	 	 	7,089,985	  	 	 	5,401,698	  	 	 	—  	  	 	 	12,491,683	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	—  	  	 	 	—  	  	 	 	814,512	  	 	 	319,973	  	 	 	—  	  	 	 	1,134,485	  	
 	 	 	 	 	 	 	
Interest expense, net	  	 	—  	  	 	 	87,095	  	 	 	495,258	  	 	 	62,057	  	 	 	—  	  	 	 	644,410	  	
Loss (gain) from early extinguishment of debt	  	 	—  	  	 	 	66,019	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	66,019	  	
Equity in earnings of unconsolidated affiliates	  	 	(201,948	) 	 	 	(275,175	) 	 	 	(101,101	) 	 	 	—  	  	 	 	528,733	  	 	 	(49,491	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations before income taxes	  	 	201,948	  	 	 	122,061	  	 	 	420,355	  	 	 	257,916	  	 	 	(528,733	) 	 	 	473,547	  	
Provision for (benefit from) income taxes	  	 	—  	  	 	 	(79,887	) 	 	 	151,748	  	 	 	65,792	  	 	 	—  	  	 	 	137,653	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	201,948	  	 	 	201,948	  	 	 	268,607	  	 	 	192,124	  	 	 	(528,733	) 	 	 	335,894	  	
Discontinued operations, net of taxes:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from operations of entities sold	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(7,769	) 	 	 	—  	  	 	 	(7,769	) 	
Impairment of hospitals sold	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(47,930	) 	 	 	—  	  	 	 	(47,930	) 	
Loss on sale, net	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(2,572	) 	 	 	—  	  	 	 	(2,572	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from discontinued operations, net of taxes	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(58,271	) 	 	 	—  	  	 	 	(58,271	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	201,948	  	 	 	201,948	  	 	 	268,607	  	 	 	133,853	  	 	 	(528,733	) 	 	 	277,623	  	
Less: Net income attributable to noncontrolling interests	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	75,675	  	 	 	—  	  	 	 	75,675	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Community Health Systems, Inc.	  	$	201,948	  	 	$	201,948	  	 	$	268,607	  	 	$	58,178	  	 	$	(528,733	) 	 	$	201,948	  	

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Condensed Consolidating Statement of Income
Year Ended December 31, 2010

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Parent
Guarantor	 	 	Issuer	 	 	Other
Guarantors	 	 	Non-
Guarantors	 	 	Eliminations	 	 	Consolidated	 	
 	  	(In thousands)	 	
Net operating revenues	  	$	—  	  	 	$	—  	  	 	$	7,271,078	  	 	$	5,352,196	  	 	$	—  	  	 	$	12,623,274	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating costs and expenses:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Salaries and benefits	  	 	—  	  	 	 	—  	  	 	 	2,792,543	  	 	 	2,301,224	  	 	 	—  	  	 	 	5,093,767	  	
Provision for bad debts	  	 	—  	  	 	 	—  	  	 	 	901,580	  	 	 	629,272	  	 	 	—  	  	 	 	1,530,852	  	
Supplies	  	 	—  	  	 	 	—  	  	 	 	989,241	  	 	 	748,847	  	 	 	—  	  	 	 	1,738,088	  	
Other operating expenses	  	 	—  	  	 	 	—  	  	 	 	1,295,527	  	 	 	1,000,536	  	 	 	—  	  	 	 	2,296,063	  	
Electronic health records incentive reimbursement	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Rent	  	 	—  	  	 	 	—  	  	 	 	118,215	  	 	 	130,248	  	 	 	—  	  	 	 	248,463	  	
Depreciation and amortization	  	 	—  	  	 	 	—  	  	 	 	348,037	  	 	 	246,960	  	 	 	—  	  	 	 	594,997	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	  	 	—  	  	 	 	—  	  	 	 	6,445,143	  	 	 	5,057,087	  	 	 	—  	  	 	 	11,502,230	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	—  	  	 	 	—  	  	 	 	825,935	  	 	 	295,109	  	 	 	—  	  	 	 	1,121,044	  	
 	 	 	 	 	 	 	
Interest expense, net	  	 	—  	  	 	 	113,464	  	 	 	477,418	  	 	 	56,711	  	 	 	—  	  	 	 	647,593	  	
Loss (gain) from early extinguishment of debt	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Equity in earnings of unconsolidated affiliates	  	 	(279,983	) 	 	 	(312,730	) 	 	 	(142,174	) 	 	 	—  	  	 	 	689,444	  	 	 	(45,443	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations before income taxes	  	 	279,983	  	 	 	199,266	  	 	 	490,691	  	 	 	238,398	  	 	 	(689,444	) 	 	 	518,894	  	
Provision for (benefit from) income taxes	  	 	—  	  	 	 	(80,717	) 	 	 	180,574	  	 	 	63,824	  	 	 	—  	  	 	 	163,681	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	279,983	  	 	 	279,983	  	 	 	310,117	  	 	 	174,574	  	 	 	(689,444	) 	 	 	355,213	  	
Discontinued operations, net of taxes:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from operations of entities sold	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(6,772	) 	 	 	—  	  	 	 	(6,772	) 	
Impairment of hospitals sold	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Loss on sale, net	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from discontinued operations, net of taxes	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(6,772	) 	 	 	—  	  	 	 	(6,772	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	279,983	  	 	 	279,983	  	 	 	310,117	  	 	 	167,802	  	 	 	(689,444	) 	 	 	348,441	  	
Less: Net income attributable to noncontrolling interests	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	68,458	  	 	 	—  	  	 	 	68,458	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Community Health Systems, Inc.	  	$	279,983	  	 	$	279,983	  	 	$	310,117	  	 	$	99,344	  	 	$	(689,444	) 	 	$	279,983	  	

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Index to Financial Statements
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Condensed Consolidating Statement of Income
Year Ended December 31, 2009

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Parent
Guarantor	 	 	Issuer	 	 	Other
Guarantors	 	 	Non-
Guarantors	 	 	Eliminations	 	 	Consolidated	 	
 	  	(In thousands)	 	
Net operating revenues	  	$	—  	  	 	$	—  	  	 	$	6,763,647	  	 	$	4,978,807	  	 	$	—  	  	 	$	11,742,454	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating costs and expenses:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Salaries and benefits	  	 	—  	  	 	 	—  	  	 	 	2,630,349	  	 	 	2,070,882	  	 	 	—  	  	 	 	4,701,231	  	
Provision for bad debts	  	 	—  	  	 	 	—  	  	 	 	841,342	  	 	 	567,611	  	 	 	—  	  	 	 	1,408,953	  	
Supplies	  	 	—  	  	 	 	—  	  	 	 	933,730	  	 	 	716,049	  	 	 	—  	  	 	 	1,649,779	  	
Other operating expenses	  	 	—  	  	 	 	—  	  	 	 	1,169,896	  	 	 	959,185	  	 	 	—  	  	 	 	2,129,081	  	
Electronic health records incentive reimbursement	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Rent	  	 	—  	  	 	 	—  	  	 	 	113,407	  	 	 	124,129	  	 	 	—  	  	 	 	237,536	  	
Depreciation and amortization	  	 	—  	  	 	 	—  	  	 	 	324,018	  	 	 	227,025	  	 	 	—  	  	 	 	551,043	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating costs and expenses	  	 	—  	  	 	 	—  	  	 	 	6,012,742	  	 	 	4,664,881	  	 	 	—  	  	 	 	10,677,623	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	—  	  	 	 	—  	  	 	 	750,905	  	 	 	313,926	  	 	 	—  	  	 	 	1,064,831	  	
 	 	 	 	 	 	 	
Interest expense, net	  	 	—  	  	 	 	110,507	  	 	 	479,458	  	 	 	53,643	  	 	 	—  	  	 	 	643,608	  	
Loss (gain) from early extinguishment of debt	  	 	—  	  	 	 	(2,385	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(2,385	) 	
Equity in earnings of unconsolidated affiliates	  	 	(243,150	) 	 	 	(259,270	) 	 	 	(157,491	) 	 	 	—  	  	 	 	623,380	  	 	 	(36,531	) 	
Impairment of long-lived and other assets	  	 	—  	  	 	 	—  	  	 	 	12,477	  	 	 	—  	  	 	 	—  	  	 	 	12,477	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations before income taxes	  	 	243,150	  	 	 	151,148	  	 	 	416,461	  	 	 	260,283	  	 	 	(623,380	) 	 	 	447,662	  	
Provision for (benefit from) income taxes	  	 	—  	  	 	 	(92,002	) 	 	 	159,921	  	 	 	73,932	  	 	 	—  	  	 	 	141,851	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	243,150	  	 	 	243,150	  	 	 	256,540	  	 	 	186,351	  	 	 	(623,380	) 	 	 	305,811	  	
Discontinued operations, net of taxes:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from operations of entities sold	  	 	—  	  	 	 	—  	  	 	 	(50	) 	 	 	1,021	  	 	 	—  	  	 	 	971	  	
Impairment of hospitals sold	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Loss on sale, net	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(405	) 	 	 	—  	  	 	 	(405	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from discontinued operations, net of taxes	  	 	—  	  	 	 	—  	  	 	 	(50	) 	 	 	616	  	 	 	—  	  	 	 	566	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	243,150	  	 	 	243,150	  	 	 	256,490	  	 	 	186,967	  	 	 	(623,380	) 	 	 	306,377	  	
Less: Net income attributable to noncontrolling interests	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	63,227	  	 	 	—  	  	 	 	63,227	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Community Health Systems, Inc.	  	$	243,150	  	 	$	243,150	  	 	$	256,490	  	 	$	123,740	  	 	$	(623,380	) 	 	$	243,150	  	

125

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Index to Financial Statements
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Condensed Consolidating Balance Sheet
December 31, 2011

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Parent
Guarantor	 	 	Issuer	 	 	Other
Guarantors	 	 	Non-
Guarantors	 	  	Eliminations	 	 	Consolidated	 	
 	  	(In thousands)	 	
ASSETS	  	
Current assets:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	—  	  	 	$	—  	  	 	$	14,536	  	 	$	115,329	  	  	$	—  	  	 	$	129,865	  	
Patient accounts receivable, net of allowance for doubtful accounts	  	 	—  	  	 	 	—  	  	 	 	1,088,121	  	 	 	746,046	  	  	 	—  	  	 	 	1,834,167	  	
Supplies	  	 	—  	  	 	 	—  	  	 	 	215,203	  	 	 	131,408	  	  	 	—  	  	 	 	346,611	  	
Deferred income taxes	  	 	89,797	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	89,797	  	
Prepaid expenses and taxes	  	 	101,389	  	 	 	117	  	 	 	83,983	  	 	 	28,513	  	  	 	—  	  	 	 	214,002	  	
Other current assets	  	 	—  	  	 	 	10,235	  	 	 	141,192	  	 	 	80,220	  	  	 	—  	  	 	 	231,647	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total current assets	  	 	191,186	  	 	 	10,352	  	 	 	1,543,035	  	 	 	1,101,516	  	  	 	—  	  	 	 	2,846,089	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Intercompany receivable	  	 	1,160,785	  	 	 	9,294,295	  	 	 	1,741,928	  	 	 	1,672,003	  	  	 	(13,869,011	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Property and equipment, net	  	 	—  	  	 	 	—  	  	 	 	4,395,498	  	 	 	2,460,478	  	  	 	—  	  	 	 	6,855,976	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Goodwill	  	 	—  	  	 	 	—  	  	 	 	2,412,517	  	 	 	1,852,328	  	  	 	—  	  	 	 	4,264,845	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Other assets, net of accumulated amortization	  	 	—  	  	 	 	99,521	  	 	 	523,645	  	 	 	618,764	  	  	 	—  	  	 	 	1,241,930	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net investment in subsidiaries	  	 	1,758,458	  	 	 	6,413,757	  	 	 	2,450,625	  	 	 	—  	  	  	 	(10,622,840	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total assets	  	$	3,110,429	  	 	$	15,817,925	  	 	$	13,067,248	  	 	$	7,705,089	  	  	$	(24,491,851	) 	 	$	15,208,840	  	

LIABILITIES AND EQUITY	  	
Current liabilities:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Current maturities of long-term debt	  	$	—  	  	 	$	49,954	  	 	$	9,625	  	 	$	4,127	  	  	$	—  	  	 	$	63,706	  	
Accounts payable	  	 	—  	  	 	 	345	  	 	 	511,145	  	 	 	237,507	  	  	 	—  	  	 	 	748,997	  	
Deferred income taxes	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	
Accrued interest	  	 	—  	  	 	 	109,984	  	 	 	131	  	 	 	6	  	  	 	—  	  	 	 	110,121	  	
Accrued liabilities	  	 	7,580	  	 	 	567	  	 	 	662,746	  	 	 	317,422	  	  	 	—  	  	 	 	988,315	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	7,580	  	 	 	160,850	  	 	 	1,183,647	  	 	 	559,062	  	  	 	—  	  	 	 	1,911,139	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Long-term debt	  	 	—  	  	 	 	8,707,805	  	 	 	49,184	  	 	 	25,809	  	  	 	—  	  	 	 	8,782,798	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Intercompany payable	  	 	—  	  	 	 	4,936,587	  	 	 	9,290,461	  	 	 	6,229,469	  	  	 	(20,456,517	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Deferred income taxes	  	 	704,725	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	704,725	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Other long-term liabilities	  	 	1,028	  	 	 	254,228	  	 	 	433,119	  	 	 	261,615	  	  	 	—  	  	 	 	949,990	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	713,333	  	 	 	14,059,470	  	 	 	10,956,411	  	 	 	7,075,955	  	  	 	(20,456,517	) 	 	 	12,348,652	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Redeemable noncontrolling interests in equity of consolidated subsidiaries	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	395,743	  	  	 	—  	  	 	 	395,743	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Equity:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Community Health Systems, Inc. stockholders’ equity:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Preferred stock	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	
Common stock	  	 	915	  	 	 	—  	  	 	 	1	  	 	 	2	  	  	 	(3	) 	 	 	915	  	
Additional paid-in capital	  	 	1,086,008	  	 	 	701,399	  	 	 	769,841	  	 	 	59,941	  	  	 	(1,531,181	) 	 	 	1,086,008	  	
Treasury stock, at cost	  	 	(6,678	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	(6,678	) 	
Accumulated other comprehensive (loss) income	  	 	(184,479	) 	 	 	(184,479	) 	 	 	(21,687	) 	 	 	—  	  	  	 	206,166	  	 	 	(184,479	) 	
Retained earnings	  	 	1,501,330	  	 	 	1,241,535	  	 	 	1,362,682	  	 	 	106,099	  	  	 	(2,710,316	) 	 	 	1,501,330	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total Community Health Systems, Inc. stockholders’ equity	  	 	2,397,096	  	 	 	1,758,455	  	 	 	2,110,837	  	 	 	166,042	  	  	 	(4,035,334	) 	 	 	2,397,096	  	
Noncontrolling interests in equity of consolidated subsidiaries	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	67,349	  	  	 	—  	  	 	 	67,349	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total equity	  	 	2,397,096	  	 	 	1,758,455	  	 	 	2,110,837	  	 	 	233,391	  	  	 	(4,035,334	) 	 	 	2,464,445	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities and equity	  	$	3,110,429	  	 	$	15,817,925	  	 	$	13,067,248	  	 	$	7,705,089	  	  	$	(24,491,851	) 	 	$	15,208,840	  	

126

Table of Contents

Index to Financial Statements
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Condensed Consolidating Balance Sheet
December 31, 2010

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Parent
Guarantor	 	 	Issuer	 	 	Other
Guarantors	 	 	Non-
Guarantors	 	  	Eliminations	 	 	Consolidated	 	
 	  	(In thousands)	 	
ASSETS	  	
Current assets:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	—  	  	 	$	—  	  	 	$	213,117	  	 	$	86,052	  	  	$	—  	  	 	$	299,169	  	
Patient accounts receivable, net of allowance for doubtful accounts	  	 	—  	  	 	 	—  	  	 	 	969,928	  	 	 	744,614	  	  	 	—  	  	 	 	1,714,542	  	
Supplies	  	 	—  	  	 	 	—  	  	 	 	193,902	  	 	 	135,212	  	  	 	—  	  	 	 	329,114	  	
Deferred income taxes	  	 	115,819	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	115,819	  	
Prepaid expenses and taxes	  	 	118,464	  	 	 	116	  	 	 	88,647	  	 	 	11,991	  	  	 	—  	  	 	 	219,218	  	
Other current assets	  	 	—  	  	 	 	41	  	 	 	137,113	  	 	 	56,177	  	  	 	—  	  	 	 	193,331	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total current assets	  	 	234,283	  	 	 	157	  	 	 	1,602,707	  	 	 	1,034,046	  	  	 	—  	  	 	 	2,871,193	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Intercompany receivable	  	 	1,079,294	  	 	 	9,002,158	  	 	 	1,424,734	  	 	 	1,370,494	  	  	 	(12,876,680	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Property and equipment, net	  	 	—  	  	 	 	—  	  	 	 	3,889,651	  	 	 	2,434,786	  	  	 	—  	  	 	 	6,324,437	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Goodwill	  	 	—  	  	 	 	—  	  	 	 	2,331,452	  	 	 	1,818,795	  	  	 	—  	  	 	 	4,150,247	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Other assets, net of accumulated amortization	  	 	—  	  	 	 	131,352	  	 	 	438,131	  	 	 	782,763	  	  	 	—  	  	 	 	1,352,246	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net investment in subsidiaries	  	 	1,510,063	  	 	 	5,267,860	  	 	 	1,944,795	  	 	 	—  	  	  	 	(8,722,718	) 	 	 	—  	  	

Total assets	  	$	2,823,640	  	 	$	14,401,527	  	 	$	11,631,470	  	 	$	7,440,884	  	  	$	(21,599,398	) 	 	$	14,698,123	  	

LIABILITIES AND EQUITY	  	
Current liabilities:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Current maturities of long-term debt	  	$	—  	  	 	$	49,953	  	 	$	11,070	  	 	$	2,116	  	  	$	—  	  	 	$	63,139	  	
Accounts payable	  	 	—  	  	 	 	—  	  	 	 	361,088	  	 	 	165,250	  	  	 	—  	  	 	 	526,338	  	
Deferred income taxes	  	 	8,882	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	8,882	  	
Accrued interest	  	 	—  	  	 	 	146,297	  	 	 	116	  	 	 	2	  	  	 	—  	  	 	 	146,415	  	
Accrued liabilities	  	 	7,595	  	 	 	567	  	 	 	567,101	  	 	 	322,003	  	  	 	—  	  	 	 	897,266	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	16,477	  	 	 	196,817	  	 	 	939,375	  	 	 	489,371	  	  	 	—  	  	 	 	1,642,040	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Long-term debt	  	 	—  	  	 	 	8,734,473	  	 	 	44,831	  	 	 	29,078	  	  	 	—  	  	 	 	8,808,382	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Intercompany payable	  	 	—  	  	 	 	3,619,651	  	 	 	8,424,670	  	 	 	6,086,227	  	  	 	(18,130,548	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Deferred income taxes	  	 	608,177	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	608,177	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Other long-term liabilities	  	 	9,522	  	 	 	340,526	  	 	 	371,667	  	 	 	279,960	  	  	 	—  	  	 	 	1,001,675	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	634,176	  	 	 	12,891,467	  	 	 	9,780,543	  	 	 	6,884,636	  	  	 	(18,130,548	) 	 	 	12,060,274	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Redeemable noncontrolling interests in equity of consolidated subsidiaries	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	387,472	  	  	 	—  	  	 	 	387,472	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Equity:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Community Health Systems, Inc. stockholders’ equity:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Preferred stock	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	
Common stock	  	 	936	  	 	 	—  	  	 	 	1	  	 	 	2	  	  	 	(3	) 	 	 	936	  	
Additional paid-in capital	  	 	1,126,751	  	 	 	640,683	  	 	 	685,921	  	 	 	39,693	  	  	 	(1,366,297	) 	 	 	1,126,751	  	
Treasury stock, at cost	  	 	(6,678	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	(6,678	) 	
Accumulated other comprehensive (loss) income	  	 	(230,927	) 	 	 	(230,927	) 	 	 	(12,990	) 	 	 	—  	  	  	 	243,917	  	 	 	(230,927	) 	
Retained earnings	  	 	1,299,382	  	 	 	1,100,304	  	 	 	1,177,995	  	 	 	68,169	  	  	 	(2,346,468	) 	 	 	1,299,382	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total Community Health Systems, Inc. stockholders’ equity	  	 	2,189,464	  	 	 	1,510,060	  	 	 	1,850,927	  	 	 	107,864	  	  	 	(3,468,851	) 	 	 	2,189,464	  	
Noncontrolling interests in equity of consolidated subsidiaries	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	60,913	  	  	 	—  	  	 	 	60,913	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total equity	  	 	2,189,464	  	 	 	1,510,060	  	 	 	1,850,927	  	 	 	168,777	  	  	 	(3,468,851	) 	 	 	2,250,377	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities and equity	  	$	2,823,640	  	 	$	14,401,527	  	 	$	11,631,470	  	 	$	7,440,885	  	  	$	(21,599,399	) 	 	$	14,698,123	  	

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Index to Financial Statements
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2011

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Parent
Guarantor	 	 	Issuer	 	 	Other
Guarantors	 	 	Non-
Guarantors	 	 	Eliminations	 	 	Consolidated	 	
 	  	(In thousands)	 	
 	 	 	 	 	 	 	
Net cash (used in) provided by operating activities	  	$	(41,780	) 	 	$	(111,011	) 	 	$	840,582	  	 	$	574,117	  	 	$	—  	  	 	$	1,261,908	  	

Cash flows from investing activities:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisitions of facilities and other related equipment	  	 	—  	  	 	 	—  	  	 	 	(370,243	) 	 	 	(45,117	) 	 	 	—  	  	 	 	(415,360	) 	
Purchases of property and equipment	  	 	—  	  	 	 	—  	  	 	 	(440,754	) 	 	 	(335,959	) 	 	 	—  	  	 	 	(776,713	) 	
Proceeds from disposition of hospitals and other ancillary operations	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	173,387	  	 	 	—  	  	 	 	173,387	  	
Proceeds from sale of property and equipment	  	 	—  	  	 	 	—  	  	 	 	2,283	  	 	 	8,877	  	 	 	—  	  	 	 	11,160	  	
Increase in other investments	  	 	—  	  	 	 	(10,000	) 	 	 	(129,852	) 	 	 	(48,397	) 	 	 	—  	  	 	 	(188,249	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	—  	  	 	 	(10,000	) 	 	 	(938,566	) 	 	 	(247,209	) 	 	 	—  	  	 	 	(1,195,775	) 	

Cash flows from financing activities:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from exercise of stock options	  	 	18,910	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	18,910	  	
Repurchase of restricted stock shares for payroll tax withholding requirements	  	 	(13,311	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(13,311	) 	
Deferred financing costs	  	 	—  	  	 	 	(19,352	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(19,352	) 	
Excess tax benefit (income tax payable increase) relating to stock-based compensation	  	 	5,290	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	5,290	  	
Stock buy-back	  	 	(85,790	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(85,790	) 	
Proceeds from noncontrolling investors in joint ventures	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	1,229	  	 	 	—  	  	 	 	1,229	  	
Redemption of noncontrolling investments in joint ventures	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(13,022	) 	 	 	—  	  	 	 	(13,022	) 	
Distributions to noncontrolling investors in joint ventures	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(56,094	) 	 	 	—  	  	 	 	(56,094	) 	
Changes in intercompany balances with affiliates, net	  	 	116,681	  	 	 	209,066	  	 	 	(95,945	) 	 	 	(229,802	) 	 	 	—  	  	 	 	—  	  	
Borrowings under credit agreement	  	 	—  	  	 	 	560,000	  	 	 	18,236	  	 	 	2,145	  	 	 	(2,145	) 	 	 	578,236	  	
Issuance of long-term debt	  	 	—  	  	 	 	1,000,000	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	1,000,000	  	
Repayments of long-term indebtedness	  	 	—  	  	 	 	(1,628,703	) 	 	 	(22,888	) 	 	 	(2,087	) 	 	 	2,145	  	 	 	(1,651,533	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	  	 	41,780	  	 	 	121,011	  	 	 	(100,597	) 	 	 	(297,631	) 	 	 	—  	  	 	 	(235,437	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	  	 	—  	  	 	 	—  	  	 	 	(198,581	) 	 	 	29,277	  	 	 	—  	  	 	 	(169,304	) 	
Cash and cash equivalents at beginning of period	  	 	—  	  	 	 	—  	  	 	 	213,117	  	 	 	86,052	  	 	 	—  	  	 	 	299,169	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	—  	  	 	$	—  	  	 	$	14,536	  	 	$	115,329	  	 	$	—  	  	 	$	129,865	  	

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Index to Financial Statements
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2010

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Parent
Guarantor	 	 	Issuer	 	 	Other
Guarantors	 	 	Non-
Guarantors	 	 	Eliminations	 	  	Consolidated	 	
 	  	(In thousands)	 	
 	 	 	 	 	 	 	
Net cash (used in) provided by operating activities	  	$	(154,101	) 	 	$	(87,018	) 	 	$	782,993	  	 	$	646,856	  	 	$	—  	  	  	$	1,188,730	  	

Cash flows from investing activities:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Acquisitions of facilities and other related equipment	  	 	—  	  	 	 	—  	  	 	 	(204,773	) 	 	 	(43,478	) 	 	 	—  	  	  	 	(248,251	) 	
Purchases of property and equipment	  	 	—  	  	 	 	—  	  	 	 	(342,735	) 	 	 	(324,643	) 	 	 	—  	  	  	 	(667,378	) 	
Proceeds from disposition of hospitals and other ancillary operations	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	
Proceeds from sale of property and equipment	  	 	—  	  	 	 	—  	  	 	 	8,140	  	 	 	261	  	 	 	—  	  	  	 	8,401	  	
Increase in other investments	  	 	—  	  	 	 	—  	  	 	 	(112,587	) 	 	 	(24,495	) 	 	 	—  	  	  	 	(137,082	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Net cash used in investing activities	  	 	—  	  	 	 	—  	  	 	 	(651,955	) 	 	 	(392,355	) 	 	 	—  	  	  	 	(1,044,310	) 	

Cash flows from financing activities:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Proceeds from exercise of stock options	  	 	56,916	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	56,916	  	
Repurchase of restricted stock shares for payroll tax withholding requirements	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	
Deferred financing costs	  	 	—  	  	 	 	(13,260	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	(13,260	) 	
Excess tax benefit (income tax payable increase) relating to stock-based compensation	  	 	10,219	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	10,219	  	
Stock buy-back	  	 	(113,961	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	(113,961	) 	
Proceeds from noncontrolling investors in joint ventures	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	7,201	  	 	 	—  	  	  	 	7,201	  	
Redemption of noncontrolling investments in joint ventures	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(7,318	) 	 	 	—  	  	  	 	(7,318	) 	
Distributions to noncontrolling investors in joint ventures	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(68,113	) 	 	 	—  	  	  	 	(68,113	) 	
Changes in intercompany balances with affiliates, net	  	 	200,927	  	 	 	144,788	  	 	 	(142,864	) 	 	 	(202,851	) 	 	 	—  	  	  	 	—  	  	
Borrowings under credit agreement	  	 	 	 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	
Issuance of long-term debt	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	  	 	—  	  	
Repayments of long-term indebtedness	  	 	—  	  	 	 	(44,510	) 	 	 	(13,507	) 	 	 	(3,459	) 	 	 	—  	  	  	 	(61,476	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Net cash provided by (used in) financing activities	  	 	154,101	  	 	 	87,018	  	 	 	(156,371	) 	 	 	(274,540	) 	 	 	—  	  	  	 	(189,792	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Net change in cash and cash equivalents	  	 	—  	  	 	 	—  	  	 	 	(25,333	) 	 	 	(20,039	) 	 	 	—  	  	  	 	(45,372	) 	
Cash and cash equivalents at beginning of period	  	 	—  	  	 	 	—  	  	 	 	238,450	  	 	 	106,091	  	 	 	—  	  	  	 	344,541	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Cash and cash equivalents at end of period	  	$	—  	  	 	$	—  	  	 	$	213,117	  	 	$	86,052	  	 	$	—  	  	  	$	299,169	  	

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Index to Financial Statements
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2009

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	  	Parent
Guarantor	 	 	Issuer	 	 	Other
Guarantors	 	 	Non-
Guarantors	 	 	Eliminations	 	 	Consolidated	 	
 	  	(In thousands)	 	
 	 	 	 	 	 	 	
Net cash (used in) provided by operating activities	  	$	(62,883	) 	 	$	(88,486	) 	 	$	671,528	  	 	$	556,270	  	 	$	—  	  	 	$	1,076,429	  	

Cash flows from investing activities:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisitions of facilities and other related equipment	  	 	—  	  	 	 	—  	  	 	 	(199,363	) 	 	 	(64,410	) 	 	 	—  	  	 	 	(263,773	) 	
Purchases of property and equipment	  	 	—  	  	 	 	—  	  	 	 	(368,408	) 	 	 	(208,480	) 	 	 	—  	  	 	 	(576,888	) 	
Proceeds from disposition of hospitals and other ancillary operations	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	89,514	  	 	 	—  	  	 	 	89,514	  	
Proceeds from sale of property and equipment	  	 	—  	  	 	 	—  	  	 	 	824	  	 	 	3,195	  	 	 	—  	  	 	 	4,019	  	
Increase in other investments	  	 	—  	  	 	 	—  	  	 	 	(115,799	) 	 	 	(4,255	) 	 	 	—  	  	 	 	(120,054	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	—  	  	 	 	—  	  	 	 	(682,746	) 	 	 	(184,436	) 	 	 	—  	  	 	 	(867,182	) 	

Cash flows from financing activities:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from exercise of stock options	  	 	12,759	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	12,759	  	
Repurchase of restricted stock shares for payroll tax withholding requirements	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Deferred financing costs	  	 	—  	  	 	 	(82	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(82	) 	
Excess tax benefit (income tax payable increase) relating to stock-based compensation	  	 	(3,472	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(3,472	) 	
Stock buy-back	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Proceeds from noncontrolling investors in joint ventures	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	29,838	  	 	 	—  	  	 	 	29,838	  	
Redemption of noncontrolling investments in joint ventures	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(7,268	) 	 	 	—  	  	 	 	(7,268	) 	
Distributions to noncontrolling investors in joint ventures	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(58,963	) 	 	 	—  	  	 	 	(58,963	) 	
Changes in intercompany balances with affiliates, net	  	 	53,596	  	 	 	135,518	  	 	 	100,944	  	 	 	(290,058	) 	 	 	—  	  	 	 	—  	  	
Borrowings under credit agreement	  	 	—  	  	 	 	200,000	  	 	 	4,045	  	 	 	2,570	  	 	 	(6,615	) 	 	 	200,000	  	
Issuance of long-term debt	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Repayments of long-term indebtedness	  	 	—  	  	 	 	(246,950	) 	 	 	(13,853	) 	 	 	(3,985	) 	 	 	6,615	  	 	 	(258,173	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	  	 	62,883	  	 	 	88,486	  	 	 	91,136	  	 	 	(327,866	) 	 	 	—  	  	 	 	(85,361	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	  	 	—  	  	 	 	—  	  	 	 	79,918	  	 	 	43,968	  	 	 	—  	  	 	 	123,886	  	
Cash and cash equivalents at beginning of period	  	 	—  	  	 	 	—  	  	 	 	158,532	  	 	 	62,123	  	 	 	—  	  	 	 	220,655	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	—  	  	 	$	—  	  	 	$	238,450	  	 	$	106,091	  	 	$	—  	  	 	$	344,541	  	

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Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	
None
 
Item 9A.	Controls and Procedures	
Our Chief Executive Officer and Chief Financial Officer, with the participation of other members of management, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on such evaluations, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective (at the reasonable assurance level) to ensure that the information required to be included in this report has been recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and to ensure that the information required to be included in this report was accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
There have been no changes in internal control over financial reporting that occurred during the period that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.
Management’s report on internal control over financial reporting is included herein at page 132.
The attestation report from Deloitte & Touche LLP, our independent registered public accounting firm, on our internal control over financial reporting is included herein at page 133.
 
Item 9B.	Other Information	
None
 
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Management’s Report on Internal Control over Financial Reporting
We are responsible for the preparation and integrity of the consolidated financial statements appearing in our Annual Report. The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America and include amounts based on management’s estimates and judgments. All other financial information in this report has been presented on a basis consistent with the information included in the consolidated financial statements.
We are also responsible for establishing and maintaining adequate internal controls over financial reporting (as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended). We maintain a system of internal controls that is designed to provide reasonable assurance as to the fair and reliable preparation and presentation of the consolidated financial statements, as well as to safeguard assets from unauthorized use or disposition.
Our control environment is the foundation for our system of internal control over financial reporting and is embodied in our Code of Conduct. It sets the tone of our organization and includes factors such as integrity and ethical values. Our internal control over financial reporting is supported by formal policies and procedures which are reviewed, modified and improved as changes occur in business conditions and operations.
The Audit and Compliance Committee of the Board of Directors, which is composed solely of outside directors, meets periodically with members of management, the internal auditors and the independent registered public accounting firm to review and discuss internal control over financial reporting and accounting and financial reporting matters. The independent registered public accounting firm and internal auditors report to the Audit and Compliance Committee and accordingly have full and free access to the Audit and Compliance Committee at any time.
We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework  issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. We have concluded that our internal control over financial reporting was effective as of December 31, 2011, based on these criteria.
Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting, which is included herein.
We do not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
 
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Community Health Systems, Inc.
Franklin, Tennessee
We have audited the internal control over financial reporting of Community Health Systems, Inc. and subsidiaries (the “Company”) as of December 31, 2011, based on criteria established in  Internal Control — Integrated Framework  issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying  Management’s Report on Internal Control over Financial Reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the criteria established in  Internal Control — Integrated Framework  issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2011 of the Company and our report dated February 22, 2012 expressed an unqualified opinion on those financial statements.
/s/ Deloitte & Touche LLP
Nashville, Tennessee
February 22, 2012
 
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PART III
 
Item 10.	Directors, Executive Officers and Corporate Governance	
The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed under Regulation 14A in connection with the Annual Meeting of the Stockholders of the Company scheduled to be held on May 15, 2012, under “Members of the Board of Directors,” “Information About our Executive Officers,” “Compliance with Exchange Act Section 16(A) Beneficial Ownership Reporting” and “Corporate Governance Principles and Board Matters.”
 
Item 11.	Executive Compensation	
The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed under Regulation 14A in connection with the Annual Meeting of the Stockholders of the Company scheduled to be held on May 15, 2012 under “Executive Compensation.”
 
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	
The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed under Regulation 14A in connection with the Annual Meeting of the Stockholders of the Company scheduled to be held on May 15, 2012 under “Security Ownership of Certain Beneficial Owners and Management.”
 
Item 13.	Certain Relationships and Related Transactions	
The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed under Regulation 14A in connection with the Annual Meeting of the Stockholders of the Company scheduled to be held on May 15, 2012 under “Certain Transactions.”
 
Item 14.	Principal Accountant Fees and Services	
The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed under Regulation 14A in connection with the Annual Meeting of the Stockholders of the Company scheduled to be held on May 15, 2012 under “Ratification of the Appointment of Independent Registered Public Accounting Firm.”
PART IV
 
Item 15.	Exhibits and Financial Statement Schedules	
Item 15(a) 1. Financial Statements
Reference is made to the index of financial statements and supplementary data under Item 8 in Part II.
Item 15(a) 2. Financial Statement Schedules
The following financial statement schedule is filed as part of this Report at page 142 hereof:
Schedule II — Valuation and Qualifying Accounts
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.
 
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Item 15(a)(3):
The following exhibits are either filed with this Report or incorporated herein by reference.

 	  	Description	
 	 	
    2.1	  	Agreement and Plan of Merger, dated as of March 19, 2007, by and among Triad Hospitals, Inc., Community Health Systems, Inc. and FWCT-1 Acquisition Corporation (incorporated by reference to Exhibit 2.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed March 19, 2007 (No. 001-15925))	
 	 	
    3.1	  	Form of Restated Certificate of Incorporation of Community Health Systems, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 4 to Community Health Systems, Inc.’s Registration Statement on Form S-1/A filed June 8, 2000 (No. 333-31790))	
 	 	
    3.2	  	Certificate of Amendment to the Restated Certificate of Incorporation of Community Health Systems, Inc., dated May 18, 2010 (incorporated by reference to Exhibit 3.2 to Community Health Systems, Inc.’s Current Report on Form 8-K filed May 20, 2010 (No. 001-15925))	
 	 	
    3.3	  	Amended and Restated By-Laws of Community Health Systems, Inc. (as of February 27, 2008) (incorporated by reference to Exhibit 3(ii).1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed February 29, 2008 (No. 001-15925))	
 	 	
    4.1	  	Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to Community Health Systems, Inc.’s Registration Statement on Form S-1/A filed May 2, 2000 (No. 333-31790))	
 	 	
    4.2	  	Senior Notes Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of July 25, 2007, by and among CHS/Community Health Systems, Inc., the Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.3 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.3	  	Form of 8 7/8% Senior Note due 2015 (included in Exhibit 4.2)	
 	 	
    4.4	  	Registration Rights Agreement relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of July 25, 2007, by and among CHS/Community Health Systems, Inc., the Guarantors party thereto and the Initial Purchasers (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.5	  	Joinder to the Registration Rights Agreement relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of July 25, 2007 (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.6	  	Senior Notes Indenture relating to CHS/Community Health Systems, Inc.’s 8.000% Senior Notes due 2019, dated as of November 22, 2011, by and among CHS/Community Health Systems, Inc., the Guarantors party thereto and U.S. Bank National Association, as Trustee*	
 	 	
    4.7	  	Form of 8.000% Senior Note due 2019 (included in Exhibit 4.6)	
 	 	
    4.8	  	Registration Rights Agreement relating to CHS/Community Health Systems, Inc.’s 8.000% Senior Notes due 2019, dated as of November 22, 2011, by and among CHS/Community Health Systems, Inc., the Guarantors party thereto and the Initial Purchasers*	
 	 	
    4.9	  	First Supplemental Indenture relating to Triad Hospitals, Inc.’s 7% Senior Subordinated Notes due 2013, dated as of July 24, 2007, by and among Triad Hospitals, Inc. and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.7 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.10	  	Second Supplemental Indenture relating to Triad Hospitals, Inc.’s 7% Senior Notes due 2012, dated as of July 24, 2007, by and among Triad Hospitals, Inc. and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.6 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.11	  	First Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of July 25, 2007, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.4 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.12	  	Second Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 31, 2007, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.7 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 
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    4.13	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of January 30, 2008, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.8 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.14	  	Third Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of October 10, 2008, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.9 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.15	  	Fourth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 1, 2008, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.10 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.16	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 31, 2008, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.11 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.17	  	Fifth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of February 5, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.12 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.18	  	Sixth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of March 30, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed April 29, 2009 (No. 001-15925))	
 	 	
    4.19	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of March 30, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed April 29, 2009 (No. 001-15925))	
 	 	
    4.20	  	Seventh Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of June 30, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed July 31, 2009 (No. 001-15925))	
 	 	
    4.21	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of June 30, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed July 31, 2009 (No. 001-15925))	
 	 	
    4.22	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 31, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.19 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 filed February 26, 2010 (No. 001-15925))	
 	 	
    4.23	  	Eighth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of March 31, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed April 28, 2010 (No. 001-15925))	
 	 	
    4.24	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of March 31, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed April 28, 2010 (No. 001-15925))	
 	 	
    4.25	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of September 30, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 filed October 29, 2010 (No. 001-15925))	
 	 	
    4.26	  	Ninth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of October 25, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.23 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2010 filed February 25, 2011 (No. 001-15925))	
 
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    4.27	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 31, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.24 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2010 filed February 25, 2011 (No. 001-15925))	
 	 	
    4.28	  	Tenth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of June 30, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 filed August 1, 2011 (No. 001-15925))	
 	 	
    4.29	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of September 1, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed October 28, 2011 (No. 001-15925))	
 	 	
    4.30	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of September 30, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed October 28, 2011 (No. 001-15925))	
 	 	
    4.31	  	Eleventh Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of October 1, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association*	
 	 	
    4.32	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of October 22, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association*	
 	 	
  10.1	  	Amendment and Restatement Agreement, dated as of November 5, 2010, to the Credit Agreement, dated as of July 25, 2007, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the subsidiaries of CHS/Community Health Systems, Inc. party thereto, the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed November 9, 2010 (No. 001-15925))	
 	 	
  10.2	  	Amended and Restated Credit Agreement, dated as of July 25, 2007, as amended and restated as of November 5, 2010, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.2 to Community Health Systems, Inc.’s Current Report on Form 8-K filed November 9, 2010 (No. 001-15925))	
 	 	
  10.3	  	Amended and Restated Guarantee and Collateral Agreement, dated as of July 25, 2007, as amended and restated as of November 5, 2010, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the subsidiaries of CHS/Community Health Systems, Inc. from time to time party thereto and Credit Suisse AG, as Collateral Agent (incorporated by reference to Exhibit 10.3 to Community Health Systems, Inc.’s Current Report on Form 8-K filed November 9, 2010 (No. 001-15925))	
 	 	
  10.4	  	Second Amendment and Restatement Agreement, dated as of February 2, 2012, to the Credit Agreement, dated as of July 25, 2007, as amended and restated as of November 5, 2010, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the subsidiaries of CHS/Community Health Systems, Inc. party thereto, the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed February 6, 2012 (No. 001-15925))	
 	 	
  10.5	  	Second Amended and Restated Credit Agreement, dated as of July 25, 2007, as amended and restated as of November 5, 2010 and February 2, 2012, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.2 to Community Health Systems, Inc.’s Current Report on Form 8-K filed February 6, 2012 (No. 001-15925))	
 	 	
  10.6†	  	Form of Indemnification Agreement between Community Health Systems, Inc. and its directors and executive officers (incorporated by reference to Exhibit 10.8 to Amendment No. 2 to Community Health Systems, Inc.’s Registration Statement on Form S-1/A filed May 2, 2000 (No. 333-31790))	
 	 	
  10.7†	  	CHS/Community Health Systems, Inc. Amended and Restated Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.13 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 
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  10.8†	  	Amendment No. 1, dated as of September 13, 2011, to the CHS/Community Health Systems, Inc. Amended and Restated Supplemental Executive Retirement Plan, as amended and restated on January 1, 2009 (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed October 28, 2011 (No. 001-15925))	
 	 	
  10.9†	  	Community Health Systems Supplemental Executive Benefits (incorporated by reference to Exhibit 10.14 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.10†	  	Supplemental Executive Retirement Plan Trust, dated June 1, 2005, by and between CHS/Community Health Systems, Inc., as grantor, and Wachovia Bank, N.A., as trustee (incorporated by reference to Exhibit 10.3 to Community Health Systems, Inc.’s Current Report on Form 8-K filed June 1, 2005 (No. 001-15925))	
 	 	
  10.11†	  	Community Health Systems Deferred Compensation Plan Trust, amended and restated effective February 26, 1999 (incorporated by reference to Exhibit 10.18 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2002 filed March 27, 2003 (No. 001-15925))	
 	 	
  10.12†	  	CHS/Community Health Systems, Inc. Deferred Compensation Plan, amended and restated effective January 1, 2008 (incorporated by reference to Exhibit 10.12 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.13†	  	CHS NQDCP, effective as of September 1, 2009 (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Registration Statement on Form S-8 filed December 11, 2009 (No. 333-163691))	
 	 	
  10.14†	  	CHS NQDCP Adoption Agreement, executed as of August 11, 2009 (incorporated by reference to Exhibit 4.3 to Community Health Systems, Inc.’s Registration Statement on Form S-8 filed December 11, 2009 (No. 333-163691))	
 	 	
  10.15†	  	Guarantee, dated December 9, 2009, made by Community Health Systems, Inc. in favor of CHS/Community Health Systems, Inc. with respect to CHS/Community Health Systems, Inc.’s payment obligations under the CHS/Community Health Systems, Inc. Deferred Compensation Plan and the NQDCP (incorporated by reference to Exhibit 4.4 to Community Health Systems, Inc.’s Registration Statement on Form S-8 filed December 11, 2009 (No. 333-163691))	
 	 	
  10.16†	  	Community Health Systems, Inc. 2004 Employee Performance Incentive Plan, as amended and restated on March 24, 2009 (incorporated by reference to Exhibit 10.3 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed July 31, 2009 (No. 001-15925))	
 	 	
  10.17†	  	Amendment No. 1, dated as of December 8, 2010, to the Community Health Systems, Inc. 2004 Employee Performance Incentive Plan, as amended and restated on March 24, 2009 (incorporated by reference to Exhibit 10.14 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2010 filed February 25, 2011 (No. 001-15925))	
 	 	
  10.18†	  	Form of Amended and Restated Change in Control Severance Agreement (incorporated by reference to Exhibit 10.22 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.19†	  	Community Health Systems, Inc. 2000 Stock Option and Award Plan, as amended and restated on March 24, 2009 (incorporated by reference to Exhibit 10.4 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed July 31, 2009 (No. 001-15925))	
 	 	
  10.20†	  	Form of Nonqualified Stock Option Agreement (Employee) for Community Health Systems, Inc. 2000 Stock Option and Award Plan (incorporated by reference to Exhibit 10.15 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 filed February 26, 2010 (No. 001-15925))	
 	 	
  10.21†	  	Form of Restricted Stock Award Agreement for Community Health Systems, Inc. 2000 Stock Option and Award Plan (incorporated by reference to Exhibit 10.18 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.22†	  	Form of Performance Based Restricted Stock Award Agreement for Community Health Systems, Inc. 2000 Stock Option and Award Plan (Most Highly Compensated Executive Officers) (incorporated by reference to Exhibit 10.20 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.23†	  	Form of Director Restricted Stock Unit Award Agreement for Community Health Systems, Inc. 2000 Stock Option and Award Plan (incorporated by reference to Exhibit 10.19 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 filed February 26, 2010 (No. 001-15925))	
 	 	
  10.24†	  	Community Health Systems, Inc. Directors’ Fees Deferral Plan, as amended and restated on December 10, 2008 (incorporated by reference to Exhibit 10.15 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.25†	  	Community Health Systems, Inc. 2009 Stock Option and Award Plan, as amended and restated on March 18, 2011 (incorporated by reference to Annex A to Community Health Systems, Inc.’s Definitive Proxy Statement on Form 14A filed April 7, 2011)	
 
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  10.26†	  	Form of Nonqualified Stock Option Agreement (Employee) for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed April 29, 2011 (No. 001-15925))	
 	 	
  10.27†	  	Form of Restricted Stock Award Agreement for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed April 29, 2011 (No. 001-15925))	
 	 	
  10.28†	  	Form of Performance Based Restricted Stock Award Agreement (Most Highly Compensated Executive Officers) for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.3 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed April 29, 2011 (No. 001-15925))	
 	 	
  10.29†	  	Form of Director Restricted Stock Unit Award Agreement for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.4 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed April 29, 2011 (No. 001-15925))	
 	 	
  10.30	  	Participation Agreement entered into as of January 1, 2005, by and between Community Health Systems Professional Services Corporation and HealthTrust Purchasing Group, L.P. (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed January 7, 2005 (No. 001-15925))	
 	 	
  12	  	Computation of Ratio of Earnings to Fixed Charges*	
 	 	
  21	  	List of Subsidiaries*	
 	 	
  23.1	  	Consent of Deloitte & Touche LLP*	
 	 	
  31.1	  	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*	
 	 	
  31.2	  	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*	
 	 	
  32.1	  	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*	
 	 	
  32.2	  	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*	
 	 	
101.INS	  	XBRL Instance Document**	
 	 	
101.SCH	  	XBRL Taxonomy Extension Schema**	
 	 	
101.CAL	  	XBRL Taxonomy Extension Calculation Linkbase**	
 	 	
101.DEF	  	XBRL Taxonomy Extension Definition Linkbase**	
 	 	
101.LAB	  	XBRL Taxonomy Extension Label Linkbase**	
 	 	
101.PRE	  	XBRL Taxonomy Extension Presentation Linkbase**	
 
*	Filed herewith.	
†	Indicates a management contract or compensatory plan or arrangement.	
**	Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.	
 
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SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

COMMUNITY HEALTH SYSTEMS, INC.	
 	 	
By:	 	/s/    Wayne T. Smith        	
 	 	Wayne T. Smith	
 	 	Chairman of the Board,	
 	 	President and Chief Executive Officer	
 	
Date: February 22, 2012	
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	  	Title	 	Date	
 	 	 	
/s/    WAYNE T. SMITH        	  	President and Chief Executive Officer and	 	02/22/2012	
Wayne T. Smith	  	Director (principal executive officer)	 	 	
 	 	 	
/s/    W. LARRY CASH        	  	Executive Vice President, Chief Financial	 	02/22/2012	
W. Larry Cash	  	Officer and Director (principal financial officer)	 	 	
 	 	 	
/s/    T. MARK BUFORD        	  	Senior Vice President and Chief Accounting	 	02/22/2012	
T. Mark Buford	  	Officer (principal accounting officer)	 	 	
 	 	 	
/s/    JOHN A. CLERICO        	  	Director	 	02/22/2012	
John A. Clerico	  	 	 	 	
 	 	 	
/s/    JAMES S. ELY III        	  	Director	 	02/22/2012	
James S. Ely III	  	 	 	 	
 	 	 	
/s/    JOHN A. FRY        	  	Director	 	02/22/2012	
John A. Fry	  	 	 	 	
 	 	 	
/s/    WILLIAM NORRIS JENNINGS, M.D.        	  	Director	 	02/22/2012	
William Norris Jennings, M.D.	  	 	 	 	
 	 	 	
/s/    JULIA B. NORTH        	  	Director	 	02/22/2012	
Julia B. North	  	 	 	 	
 	 	 	
/S/    H. MITCHELL WATSON, JR.        	  	Director	 	02/22/2012	
H. Mitchell Watson, Jr.	  	 	 	 	
 
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Community Health Systems, Inc.
Franklin, Tennessee
We have audited the consolidated financial statements of Community Health Systems, Inc. and subsidiaries (the “Company”) as of December 31, 2011 and 2010, and for each of the three years in the period ended December 31, 2011, and the Company’s internal control over financial reporting as of December 31, 2011, and have issued our reports thereon dated February 22, 2012; such reports are included elsewhere in this Form 10-K. Our audits also included the consolidated financial statement schedule of the Company listed in Item 15. This consolidated financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ Deloitte & Touche LLP
Nashville, Tennessee
February 22, 2012
 
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Index to Financial Statements
Community Health Systems, Inc. and Subsidiaries
Schedule II – Valuation and Qualifying Accounts

Description	  	Balance at
Beginning of
Year	 	  	Acquisitions
and
Dispositions	 	 	Charged to
Costs and
Expenses	 	  	Write-offs	 	 	Balance
at End
of Year	 	
 	  	(In thousands)	 	
 	 	 	 	 	 	
Year ended December 31, 2011 allowance for doubtful accounts	  	$	1,639,198	  	  	$	(28,954	) 	 	$	1,766,201	  	  	$	(1,485,111	) 	 	$	1,891,334	  	
Year ended December 31, 2010 allowance for doubtful accounts	  	$	1,417,188	  	  	$	—  	  	 	$	1,588,516	  	  	$	(1,366,506	) 	 	$	1,639,198	  	
Year ended December 31, 2009 allowance for doubtful accounts	  	$	1,111,131	  	  	$	—  	  	 	$	1,460,307	  	  	$	(1,154,250	) 	 	$	1,417,188	  	
 
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Index to Financial Statements
Exhibit Index

 	  	Description	
 	 	
    2.1	  	Agreement and Plan of Merger, dated as of March 19, 2007, by and among Triad Hospitals, Inc., Community Health Systems, Inc. and FWCT-1 Acquisition Corporation (incorporated by reference to Exhibit 2.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed March 19, 2007 (No. 001-15925))	
 	 	
    3.1	  	Form of Restated Certificate of Incorporation of Community Health Systems, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 4 to Community Health Systems, Inc.’s Registration Statement on Form S-1/A filed June 8, 2000 (No. 333-31790))	
 	 	
    3.2	  	Certificate of Amendment to the Restated Certificate of Incorporation of Community Health Systems, Inc., dated May 18, 2010 (incorporated by reference to Exhibit 3.2 to Community Health Systems, Inc.’s Current Report on Form 8-K filed May 20, 2010 (No. 001-15925))	
 	 	
    3.3	  	Amended and Restated By-Laws of Community Health Systems, Inc. (as of February 27, 2008) (incorporated by reference to Exhibit 3(ii).1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed February 29, 2008 (No. 001-15925))	
 	 	
    4.1	  	Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to Community Health Systems, Inc.’s Registration Statement on Form S-1/A filed May 2, 2000 (No. 333-31790))	
 	 	
    4.2	  	Senior Notes Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of July 25, 2007, by and among CHS/Community Health Systems, Inc., the Guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.3 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.3	  	Form of 8 7/8% Senior Note due 2015 (included in Exhibit 4.2)	
 	 	
    4.4	  	Registration Rights Agreement relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of July 25, 2007, by and among CHS/Community Health Systems, Inc., the Guarantors party thereto and the Initial Purchasers (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.5	  	Joinder to the Registration Rights Agreement relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of July 25, 2007 (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.6	  	Senior Notes Indenture relating to CHS/Community Health Systems, Inc.’s 8.000% Senior Notes due 2019, dated as of November 22, 2011, by and among CHS/Community Health Systems, Inc., the Guarantors party thereto and U.S. Bank National Association, as Trustee*	
 	 	
    4.7	  	Form of 8.000% Senior Note due 2019 (included in Exhibit 4.6)	
 	 	
    4.8	  	Registration Rights Agreement relating to CHS/Community Health Systems, Inc.’s 8.000% Senior Notes due 2019, dated as of November 22, 2011, by and among CHS/Community Health Systems, Inc., the Guarantors party thereto and the Initial Purchasers*	
 	 	
    4.9	  	First Supplemental Indenture relating to Triad Hospitals, Inc.’s 7% Senior Subordinated Notes due 2013, dated as of July 24, 2007, by and among Triad Hospitals, Inc. and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.7 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.10	  	Second Supplemental Indenture relating to Triad Hospitals, Inc.’s 7% Senior Notes due 2012, dated as of July 24, 2007, by and among Triad Hospitals, Inc. and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.6 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.11	  	First Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of July 25, 2007, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.4 to Community Health Systems, Inc.’s Current Report on Form 8-K filed July 30, 2007 (No. 001-15925))	
 	 	
    4.12	  	Second Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 31, 2007, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.7 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.13	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of January 30, 2008, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.8 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	

Table of Contents

Index to Financial Statements
 	 	 	
    4.14	  	Third Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of October 10, 2008, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.9 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.15	  	Fourth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 1, 2008, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.10 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.16	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 31, 2008, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.11 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.17	  	Fifth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of February 5, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.12 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
    4.18	  	Sixth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of March 30, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed April 29, 2009 (No. 001-15925))	
 	 	
    4.19	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of March 30, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed April 29, 2009 (No. 001-15925))	
 	 	
    4.20	  	Seventh Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of June 30, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed July 31, 2009 (No. 001-15925))	
 	 	
    4.21	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of June 30, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed July 31, 2009 (No. 001-15925))	
 	 	
    4.22	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 31, 2009, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.19 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 filed February 26, 2010 (No. 001-15925))	
 	 	
    4.23	  	Eighth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of March 31, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed April 28, 2010 (No. 001-15925))	
 	 	
    4.24	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of March 31, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed April 28, 2010 (No. 001-15925))	
 	 	
    4.25	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of September 30, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 filed October 29, 2010 (No. 001-15925))	
 	 	
    4.26	  	Ninth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of October 25, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.23 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2010 filed February 25, 2011 (No. 001-15925))	

Table of Contents

Index to Financial Statements
 	 	 	
    4.27	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of December 31, 2010, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.24 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2010 filed February 25, 2011 (No. 001-15925))	
 	 	
    4.28	  	Tenth Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of June 30, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 filed August 1, 2011 (No. 001-15925))	
 	 	
    4.29	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of September 1, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed October 28, 2011 (No. 001-15925))	
 	 	
    4.30	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of September 30, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed October 28, 2011 (No. 001-15925))	
 	 	
    4.31	  	Eleventh Supplemental Indenture relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of October 1, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association*	
 	 	
    4.32	  	Release of Certain Guarantors relating to CHS/Community Health Systems, Inc.’s 8 7/8% Senior Notes due 2015, dated as of October 22, 2011, by and among CHS/Community Health Systems, Inc., the guarantors party thereto and U.S. Bank National Association*	
 	 	
  10.1	  	Amendment and Restatement Agreement, dated as of November 5, 2010, to the Credit Agreement, dated as of July 25, 2007, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the subsidiaries of CHS/Community Health Systems, Inc. party thereto, the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed November 9, 2010 (No. 001-15925))	
 	 	
  10.2	  	Amended and Restated Credit Agreement, dated as of July 25, 2007, as amended and restated as of November 5, 2010, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.2 to Community Health Systems, Inc.’s Current Report on Form 8-K filed November 9, 2010 (No. 001-15925))	
 	 	
  10.3	  	Amended and Restated Guarantee and Collateral Agreement, dated as of July 25, 2007, as amended and restated as of November 5, 2010, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the subsidiaries of CHS/Community Health Systems, Inc. from time to time party thereto and Credit Suisse AG, as Collateral Agent (incorporated by reference to Exhibit 10.3 to Community Health Systems, Inc.’s Current Report on Form 8-K filed November 9, 2010 (No. 001-15925))	
 	 	
  10.4	  	Second Amendment and Restatement Agreement, dated as of February 2, 2012, to the Credit Agreement, dated as of July 25, 2007, as amended and restated as of November 5, 2010, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the subsidiaries of CHS/Community Health Systems, Inc. party thereto, the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed February 6, 2012 (No. 001-15925))	
 	 	
  10.5	  	Second Amended and Restated Credit Agreement, dated as of July 25, 2007, as amended and restated as of November 5, 2010 and February 2, 2012, among CHS/Community Health Systems, Inc., Community Health Systems, Inc., the lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.2 to Community Health Systems, Inc.’s Current Report on Form 8-K filed February 6, 2012 (No. 001-15925))	
 	 	
  10.6†	  	Form of Indemnification Agreement between Community Health Systems, Inc. and its directors and executive officers (incorporated by reference to Exhibit 10.8 to Amendment No. 2 to Community Health Systems, Inc.’s Registration Statement on Form S-1/A filed May 2, 2000 (No. 333-31790))	
 	 	
  10.7†	  	CHS/Community Health Systems, Inc. Amended and Restated Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.13 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.8†	  	Amendment No. 1, dated as of September 13, 2011, to the CHS/Community Health Systems, Inc. Amended and Restated Supplemental Executive Retirement Plan, as amended and restated on January 1, 2009 (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed October 28, 2011 (No. 001-15925))	

Table of Contents

Index to Financial Statements
 	 	 	
  10.9†	  	Community Health Systems Supplemental Executive Benefits (incorporated by reference to Exhibit 10.14 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.10†	  	Supplemental Executive Retirement Plan Trust, dated June 1, 2005, by and between CHS/Community Health Systems, Inc., as grantor, and Wachovia Bank, N.A., as trustee (incorporated by reference to Exhibit 10.3 to Community Health Systems, Inc.’s Current Report on Form 8-K filed June 1, 2005 (No. 001-15925))	
 	 	
  10.11†	  	Community Health Systems Deferred Compensation Plan Trust, amended and restated effective February 26, 1999 (incorporated by reference to Exhibit 10.18 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2002 filed March 27, 2003 (No. 001-15925))	
 	 	
  10.12†	  	CHS/Community Health Systems, Inc. Deferred Compensation Plan, amended and restated effective January 1, 2008 (incorporated by reference to Exhibit 10.12 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.13†	  	CHS NQDCP, effective as of September 1, 2009 (incorporated by reference to Exhibit 4.2 to Community Health Systems, Inc.’s Registration Statement on Form S-8 filed December 11, 2009 (No. 333-163691))	
 	 	
  10.14†	  	CHS NQDCP Adoption Agreement, executed as of August 11, 2009 (incorporated by reference to Exhibit 4.3 to Community Health Systems, Inc.’s Registration Statement on Form S-8 filed December 11, 2009 (No. 333-163691))	
 	 	
  10.15†	  	Guarantee, dated December 9, 2009, made by Community Health Systems, Inc. in favor of CHS/Community Health Systems, Inc. with respect to CHS/Community Health Systems, Inc.’s payment obligations under the CHS/Community Health Systems, Inc. Deferred Compensation Plan and the NQDCP (incorporated by reference to Exhibit 4.4 to Community Health Systems, Inc.’s Registration Statement on Form S-8 filed December 11, 2009 (No. 333-163691))	
 	 	
  10.16†	  	Community Health Systems, Inc. 2004 Employee Performance Incentive Plan, as amended and restated on March 24, 2009 (incorporated by reference to Exhibit 10.3 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed July 31, 2009 (No. 001-15925))	
 	 	
  10.17†	  	Amendment No. 1, dated as of December 8, 2010, to the Community Health Systems, Inc. 2004 Employee Performance Incentive Plan, as amended and restated on March 24, 2009 (incorporated by reference to Exhibit 10.14 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2010 filed February 25, 2011 (No. 001-15925))	
 	 	
  10.18†	  	Form of Amended and Restated Change in Control Severance Agreement (incorporated by reference to Exhibit 10.22 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.19†	  	Community Health Systems, Inc. 2000 Stock Option and Award Plan, as amended and restated on March 24, 2009 (incorporated by reference to Exhibit 10.4 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed July 31, 2009 (No. 001-15925))	
 	 	
  10.20†	  	Form of Nonqualified Stock Option Agreement (Employee) for Community Health Systems, Inc. 2000 Stock Option and Award Plan (incorporated by reference to Exhibit 10.15 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 filed February 26, 2010 (No. 001-15925))	
 	 	
  10.21†	  	Form of Restricted Stock Award Agreement for Community Health Systems, Inc. 2000 Stock Option and Award Plan (incorporated by reference to Exhibit 10.18 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.22†	  	Form of Performance Based Restricted Stock Award Agreement for Community Health Systems, Inc. 2000 Stock Option and Award Plan (Most Highly Compensated Executive Officers) (incorporated by reference to Exhibit 10.20 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.23†	  	Form of Director Restricted Stock Unit Award Agreement for Community Health Systems, Inc. 2000 Stock Option and Award Plan (incorporated by reference to Exhibit 10.19 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 filed February 26, 2010 (No. 001-15925))	
 	 	
  10.24†	  	Community Health Systems, Inc. Directors’ Fees Deferral Plan, as amended and restated on December 10, 2008 (incorporated by reference to Exhibit 10.15 to Community Health Systems, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 filed February 27, 2009 (No. 001-15925))	
 	 	
  10.25†	  	Community Health Systems, Inc. 2009 Stock Option and Award Plan, as amended and restated on March 18, 2011 (incorporated by reference to Annex A to Community Health Systems, Inc.’s Definitive Proxy Statement on Form 14A filed April 7, 2011)	
 	 	
  10.26†	  	Form of Nonqualified Stock Option Agreement (Employee) for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed April 29, 2011 (No. 001-15925))	

Table of Contents

Index to Financial Statements
 	 	 	
  10.27†	  	Form of Restricted Stock Award Agreement for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.2 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed April 29, 2011 (No. 001-15925))	
 	 	
  10.28†	  	Form of Performance Based Restricted Stock Award Agreement (Most Highly Compensated Executive Officers) for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.3 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed April 29, 2011 (No. 001-15925))	
 	 	
  10.29†	  	Form of Director Restricted Stock Unit Award Agreement for Community Health Systems, Inc. 2009 Stock Option and Award Plan (incorporated by reference to Exhibit 10.4 to Community Health Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed April 29, 2011 (No. 001-15925))	
 	 	
  10.30	  	Participation Agreement entered into as of January 1, 2005, by and between Community Health Systems Professional Services Corporation and HealthTrust Purchasing Group, L.P. (incorporated by reference to Exhibit 10.1 to Community Health Systems, Inc.’s Current Report on Form 8-K filed January 7, 2005 (No. 001-15925))	
 	 	
  12	  	Computation of Ratio of Earnings to Fixed Charges*	
 	 	
  21	  	List of Subsidiaries*	
 	 	
  23.1	  	Consent of Deloitte & Touche LLP*	
 	 	
  31.1	  	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*	
 	 	
  31.2	  	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*	
 	 	
  32.1	  	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*	
 	 	
  32.2	  	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*	
 	 	
101.INS	  	XBRL Instance Document**	
 	 	
101.SCH	  	XBRL Taxonomy Extension Schema**	
 	 	
101.CAL	  	XBRL Taxonomy Extension Calculation Linkbase**	
 	 	
101.DEF	  	XBRL Taxonomy Extension Definition Linkbase**	
 	 	
101.LAB	  	XBRL Taxonomy Extension Label Linkbase**	
 	 	
101.PRE	  	XBRL Taxonomy Extension Presentation Linkbase**	
 
*	Filed herewith.	
†	Indicates a management contract or compensatory plan or arrangement.	
**	Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.	

Exhibit 4.6
EXECUTION COPY

 
 
CHS/COMMUNITY HEALTH SYSTEMS, INC.
Issuer
8.000% Senior Notes Due 2019

INDENTURE
Dated as of November 22, 2011

U.S. BANK NATIONAL ASSOCIATION
Trustee

 

CROSS-REFERENCE TABLE

TIA Section	  	Indenture
Section	
 	 	
310(a)(1)	  	7.10	
(a)(2)	  	7.10	
(a)(3)	  	N.A.	
(a)(4)	  	N.A.	
(b)	  	7.08; 7.10	
(c)	  	N.A.	
311(a)	  	7.11	
(b)	  	7.11	
(c)	  	N.A.	
312(a)	  	2.05	
(b)	  	11.03	
(c)	  	11.03	
313(a)	  	7.06	
(b)(1)	  	N.A.	
(b)(2)	  	7.06	
(c)	  	11.02	
(d)	  	7.06	
314(a)	  	4.02; 11.02	
(b)	  	N.A.	
(c)(1)	  	11.04	
(c)(2)	  	11.04	
(c)(3)	  	N.A.	
(d)	  	N.A.	
(e)	  	11.05	
(f)	  	4.12	
315(a)	  	7.01	
(b)	  	7.05; 11.02	
(c)	  	7.01	
(d)	  	7.01	
(e)	  	6.11	
316(a)(last sentence)	  	11.06	
(a)(1)(A)	  	6.05	
(a)(1)(B)	  	6.04	
(a)(2)	  	N.A.	
(b)	  	6.07	
317(a)(1)	  	6.08	
(a)(2)	  	6.09	
(b)	  	2.04	
318(a)	  	11.01	
N.A. means Not Applicable.
 
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.

TABLE OF CONTENTS

 	  	Page	 	
 	 	 	
 	 	Article 1	  	 	 	 	
 	 	 	
 	 	Definitions and Incorporation by Reference	  	 	 	 	
 	 	 	
SECTION 1.01.	 	Definitions	  	 	1	  	
SECTION 1.02.	 	Other Definitions	  	 	30	  	
SECTION 1.03.	 	Incorporation by Reference of Trust Indenture Act	  	 	31	  	
SECTION 1.04.	 	Rules of Construction	  	 	31	  	
 	 	 	
 	 	Article 2	  	 	 	 	
 	 	 	
 	 	The Securities	  	 	 	 	
 	 	 	
SECTION 2.01.	 	Form and Dating	  	 	32	  	
SECTION 2.02.	 	Execution and Authentication	  	 	32	  	
SECTION 2.03.	 	Registrar and Paying Agent	  	 	33	  	
SECTION 2.04.	 	Paying Agent To Hold Money in Trust	  	 	33	  	
SECTION 2.05.	 	Securityholder Lists	  	 	34	  	
SECTION 2.06.	 	Transfer and Exchange	  	 	34	  	
SECTION 2.07.	 	Replacement Securities	  	 	34	  	
SECTION 2.08.	 	Outstanding Securities	  	 	34	  	
SECTION 2.09.	 	Temporary Securities	  	 	35	  	
SECTION 2.10.	 	Cancellation	  	 	35	  	
SECTION 2.11.	 	Defaulted Interest	  	 	35	  	
SECTION 2.12.	 	CUSIP Numbers, ISINs, etc.	  	 	35	  	
SECTION 2.13.	 	Issuance of Additional Securities	  	 	35	  	
 	 	 	
 	 	Article 3	  	 	 	 	
 	 	 	
 	 	Redemption	  	 	 	 	
 	 	 	
SECTION 3.01.	 	Notices to Trustee	  	 	36	  	
SECTION 3.02.	 	Selection of Securities to Be Redeemed	  	 	36	  	
SECTION 3.03.	 	Notice of Redemption	  	 	37	  	
SECTION 3.04.	 	Effect of Notice of Redemption	  	 	37	  	
SECTION 3.05.	 	Deposit of Redemption Price	  	 	37	  	
SECTION 3.06.	 	Securities Redeemed in Part	  	 	38	  	
SECTION 3.07.	 	Company Discretion	  	 	38	  	

 	 	 	 	 	 	 	
 	 	 	
 	 	Article 4	  	 	 	 	
 	 	 	
 	 	Covenants	  	 	 	 	
 	 	 	
SECTION 4.01.	 	Payment of Securities	  	 	38	  	
SECTION 4.02.	 	SEC Reports	  	 	38	  	
SECTION 4.03.	 	Limitation on Indebtedness	  	 	39	  	
SECTION 4.04.	 	Limitation on Restricted Payments	  	 	42	  	
SECTION 4.05.	 	Limitation on Restrictions on Distributions from Restricted Subsidiaries	  	 	47	  	
SECTION 4.06.	 	Limitation on Sales of Assets and Subsidiary Stock	  	 	49	  	
SECTION 4.07.	 	Limitation on Affiliate Transactions	  	 	52	  	
SECTION 4.08.	 	Limitation on Line of Business	  	 	53	  	
SECTION 4.09.	 	Change of Control	  	 	54	  	
SECTION 4.10.	 	Limitation on Liens	  	 	55	  	
SECTION 4.11.	 	Limitation on Sale/Leaseback Transactions	  	 	55	  	
SECTION 4.12.	 	Future Guarantors	  	 	55	  	
SECTION 4.13.	 	Compliance Certificate	  	 	56	  	
SECTION 4.14.	 	Further Instruments and Acts	  	 	56	  	
SECTION 4.15.	 	Covenant Suspension	  	 	56	  	
 	 	 	
 	 	Article 5	  	 	 	 	
 	 	 	
 	 	Successor Company	  	 	 	 	
 	 	 	
SECTION 5.01.	 	When Company May Merge or Transfer Assets	  	 	57	  	
 	 	 	
 	 	Article 6	  	 	 	 	
 	 	 	
 	 	Defaults and Remedies	  	 	 	 	
 	 	 	
SECTION 6.01.	 	Events of Default	  	 	60	  	
SECTION 6.02.	 	Acceleration	  	 	62	  	
SECTION 6.03.	 	Other Remedies	  	 	62	  	
SECTION 6.04.	 	Waiver of Past Defaults	  	 	62	  	
SECTION 6.05.	 	Control by Majority	  	 	63	  	
SECTION 6.06.	 	Limitation on Suits	  	 	63	  	
SECTION 6.07.	 	Rights of Holders to Receive Payment	  	 	64	  	
SECTION 6.08.	 	Collection Suit by Trustee	  	 	64	  	
SECTION 6.09.	 	Trustee May File Proofs of Claim	  	 	64	  	
SECTION 6.10.	 	Priorities	  	 	64	  	
SECTION 6.11.	 	Undertaking for Costs	  	 	64	  	
SECTION 6.12.	 	Waiver of Stay or Extension Laws	  	 	65	  	
 
ii

 	 	 	 	 	 	 	
 	 	 	
 	 	Article 7	  	 	 	 	
 	 	 	
 	 	Trustee	  	 	 	 	
 	 	 	
SECTION 7.01.	 	Duties of Trustee	  	 	65	  	
SECTION 7.02.	 	Rights of Trustee	  	 	66	  	
SECTION 7.03.	 	Individual Rights of Trustee	  	 	66	  	
SECTION 7.04.	 	Trustee’s Disclaimer	  	 	67	  	
SECTION 7.05.	 	Notice of Defaults	  	 	67	  	
SECTION 7.06.	 	Reports by Trustee to Holders	  	 	67	  	
SECTION 7.07.	 	Compensation and Indemnity	  	 	67	  	
SECTION 7.08.	 	Replacement of Trustee	  	 	68	  	
SECTION 7.09.	 	Successor Trustee by Merger	  	 	69	  	
SECTION 7.10.	 	Eligibility; Disqualification	  	 	69	  	
SECTION 7.11.	 	Preferential Collection of Claims Against Company	  	 	69	  	
 	 	 	
 	 	Article 8	  	 	 	 	
 	 	 	
 	 	Discharge of Indenture; Defeasance	  	 	 	 	
 	 	 	
SECTION 8.01.	 	Discharge of Liability on Securities; Defeasance	  	 	69	  	
SECTION 8.02.	 	Conditions to Defeasance	  	 	70	  	
SECTION 8.03.	 	Application of Trust Money	  	 	72	  	
SECTION 8.04.	 	Repayment to Company	  	 	72	  	
SECTION 8.05.	 	Indemnity for Government Obligations	  	 	72	  	
SECTION 8.06.	 	Reinstatement	  	 	72	  	
 	 	 	
 	 	Article 9	  	 	 	 	
 	 	 	
 	 	Amendments	  	 	 	 	
 	 	 	
SECTION 9.01.	 	Without Consent of Holders	  	 	72	  	
SECTION 9.02.	 	With Consent of Holders	  	 	74	  	
SECTION 9.03.	 	Compliance with Trust Indenture Act	  	 	75	  	
SECTION 9.04.	 	Revocation and Effect of Consents and Waivers	  	 	75	  	
SECTION 9.05.	 	Notation on or Exchange of Securities	  	 	75	  	
SECTION 9.06.	 	Trustee to Sign Amendments	  	 	75	  	
SECTION 9.07.	 	Payment for Consent	  	 	75	  	
 	 	 	
 	 	Article 10	  	 	 	 	
 	 	 	
 	 	Guaranties	  	 	 	 	
 	 	 	
SECTION 10.01.	 	Guaranties	  	 	76	  	
SECTION 10.02.	 	Limitation on Liability	  	 	77	  	
SECTION 10.03.	 	Successors and Assigns	  	 	78	  	
SECTION 10.04.	 	No Waiver	  	 	78	  	
 
iii

 	 	 	 	 	 	 	
SECTION 10.05.	 	Modification	  	 	78	  	
SECTION 10.06.	 	Release of Guarantor	  	 	78	  	
SECTION 10.07.	 	Contribution	  	 	79	  	
 	 	 	
 	 	Article 11	  	 	 	 	
 	 	 	
 	 	Miscellaneous	  	 	 	 	
 	 	 	
SECTION 11.01.	 	Trust Indenture Act Controls	  	 	79	  	
SECTION 11.02.	 	Notices	  	 	79	  	
SECTION 11.03.	 	Communication by Holders with Other Holders	  	 	80	  	
SECTION 11.04.	 	Certificate and Opinion as to Conditions Precedent	  	 	80	  	
SECTION 11.05.	 	Statements Required in Certificate or Opinion	  	 	80	  	
SECTION 11.06.	 	When Securities Disregarded	  	 	81	  	
SECTION 11.07.	 	Rules by Trustee, Paying Agent and Registrar	  	 	81	  	
SECTION 11.08.	 	Legal Holidays	  	 	81	  	
SECTION 11.09.	 	Governing Law	  	 	81	  	
SECTION 11.10.	 	No Recourse Against Others	  	 	81	  	
SECTION 11.11.	 	Successors	  	 	81	  	
SECTION 11.12.	 	Multiple Originals	  	 	81	  	
SECTION 11.13.	 	Table of Contents; Headings	  	 	82	  	
 	 	
Rule 144A/Regulation S/IAI Appendix	  	 	 	 	
 	 	 	
Exhibit 1 –	 	Form of Initial Security	  	 	 	 	
 	 	 	
Exhibit A –	 	Form of Exchange Security or Private Exchange Security	  	 	 	 	
 
iv

INDENTURE dated as of November 22, 2011, among CHS/COMMUNITY HEALTH SYSTEMS, INC., a Delaware corporation (the “Company”), COMMUNITY HEALTH SYSTEMS, INC., a Delaware corporation (the “Parent”), those Subsidiary Guarantors that from time to time become parties to this Indenture and U.S. BANK NATIONAL ASSOCIATION, as trustee (the “Trustee”).
Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders (as defined below) of the Company’s Initial Securities, Exchange Securities and Private Exchange Securities (in each case, as defined in the Rule 144A/Regulation S/IAI Appendix attached hereto, collectively, the “Securities”):
Article 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
“Additional Assets” means (1) any property, plant or equipment or other assets or capital expenditures used in a Related Business or that replace the assets that were the subject of the Asset Disposition; (2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or (3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;  provided ,  however , that any such Restricted Subsidiary described in clause (2) or (3) above is primarily engaged in a Related Business or replaces the assets that were the subject of the Asset Disposition.
“Additional Securities” means Securities issued under this Indenture after the Issue Date and in compliance with Section 2.13 and 4.03, it being understood that any Securities issued in exchange for or replacement of any Initial Security issued on the Issue Date shall not be an Additional Security, including any such Securities issued pursuant to a Registration Rights Agreement.
“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Applicable Premium” means with respect to any Security on any applicable redemption date, the excess of (A) the present value at such redemption date

of (i) the redemption price of such Security on November 15, 2015 (such redemption price being described in the second paragraph of section 5 of the Securities, exclusive of any accrued interest) plus (ii) all required remaining scheduled interest payments due on such Security through November 15, 2015 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate plus 0.50%, over (B) the then-outstanding principal amount of such Security on such redemption date.
“Asset Disposition” means any sale, lease, transfer or other voluntary disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a “disposition”), of
(1) any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary);
(2) all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary
other than, in the case of clauses (1), (2) and (3) above, (A) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary, (B) for purposes of Section 4.06 only, (i) a disposition that constitutes a Restricted Payment (or would constitute a Restricted Payment but for the exclusions from the definition thereof, including the exclusion for Permitted Investments) and that is not prohibited by Section 4.04 and (ii) a disposition of all or substantially all the assets of the Company in accordance with Section 5.01 or any disposition that constitutes a Change of Control, (C) a disposition of assets with a fair market value of less than $100,000,000, (D) a disposition of cash or Temporary Cash Investments, (E) the creation of a Lien (but not the sale or other disposition of the property subject to such Lien), (F) a Hospital Swap, (G) long-term leases of Hospitals to another Person;  provided  that the aggregate book value of the properties subject to such leases at any one time outstanding does not exceed 10% of the Total Assets at the time any such lease is entered into, (H) a disposition of property no longer used or useful in the conduct of the business of the Company and its Restricted Subsidiaries, (I) a disposition of Capital Stock, or Indebtedness or other securities of, an Unrestricted Subsidiary, (J) foreclosures on assets or transfers by reason of eminent domain, (K) a disposition of an account receivable in connection with the collection or compromise thereof and (L) any sale, disposition or creation of a Lien pursuant to a Qualified Receivables Transaction.
“Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the
 
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Securities, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended);  provided ,  however , that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation”.
“Average Life” means, as of the date of determination, with respect to any Indebtedness, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of or redemption or similar payment with respect to such Indebtedness multiplied by the amount of such payment by (2) the sum of all such payments.
“Board of Directors” means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board.
“Business Day” means each day which is not a Legal Holiday.
“Capital Lease Obligation” means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of Section 4.10, a Capital Lease Obligation will be deemed to be secured by a Lien on the property being leased.
“Capital Stock” of any Person means any and all shares, interests (including partnership interests), rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.
“Change of Control” means the occurrence of any of the following events:
(1) the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) of “beneficial ownership” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company or Parent;
 
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(2) individuals who on the Issue Date constituted the Board of Directors or the Parent Board (together with any new directors whose election by such Board of Directors or the Parent Board or whose nomination for election by the stockholders of the Company or Parent, as the case may be, was approved by a vote of a majority of the directors of the Company or Parent, as the case may be, then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors or the Parent Board, as the case may be, then in office; and
(3) the merger or consolidation of Parent or the Company with or into another Person or the merger of another Person with or into Parent or the Company, or the sale of all or substantially all the assets of Parent or the Company (determined on a consolidated basis) to another Person other than a transaction following which (i) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of Parent or the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and (ii) in the case of a sale of assets transaction, each transferee becomes an obligor in respect of the Securities.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities.
“Consolidated Coverage Ratio” as of any date of determination means the ratio of
(1) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters for which internal financial statements are available to
(2) Consolidated Interest Expense for such four fiscal quarters;
provided, however, that
(A) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a  pro forma  basis to such Indebtedness (but excluding any Indebtedness Incurred on or after such date of determination pursuant to Section 4.03(b)) as if such Indebtedness had been Incurred on the first day of such period,
 
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(B) if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall be calculated on a  pro forma  basis as if such discharge had occurred on the first day of such period and as if the Company or such Restricted Subsidiary had not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness,
(C) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, EBITDA for such period shall be reduced by an amount equal to EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to EBITDA (if negative), directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale),
(D) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction requiring a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving  pro forma  effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition had occurred on the first day of such period and
(E) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any
 
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Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (C) or (D) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving  pro forma  effect thereto as if such Asset Disposition, Investment or acquisition had occurred on the first day of such period.
For purposes of this definition, whenever proforma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the  pro forma  calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given  pro forma  effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). If any Indebtedness is incurred under a revolving credit facility and is being given  pro forma  effect, the interest on such Indebtedness shall be calculated based on the average daily balance of such Indebtedness for the four fiscal quarters subject to the  pro forma  calculation to the extent that such Indebtedness was Incurred solely for working capital purposes.
“Consolidated Interest Expense” means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent incurred by the Company or its Restricted Subsidiaries, without duplication (but excluding, in each case amortization of deferred financing fees, any loss on early extinguishment of Indebtedness and any fees related to a Qualified Receivables Transaction),
(1) interest expense attributable to Capital Lease Obligations;
(2) amortization of debt discount;
(3) capitalized interest;
(4) non-cash interest expense (other than imputed interest as a result of purchase accounting);
(5) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;
(6) net payments pursuant to Hedging Obligations;
(7) dividends paid in respect of all Disqualified Stock of the Company and all Preferred Stock of any Restricted Subsidiary, in each case, held by Persons other than the Company or a Wholly Owned Subsidiary (other than dividends payable solely in Capital Stock (other than Disqualified Stock) of the Company);
 
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(8) interest incurred in connection with Investments in discontinued operations;
(9) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets of) the Company or any Restricted Subsidiary; and
(10) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust.
“Consolidated Net Income” means, for any period, the net income of the Company and its consolidated Subsidiaries; provided, however , that there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that
(A) subject to the exclusion contained in clause (4) below, the Company’s equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (3) below); and
(B) the Company’s equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income to the extent actually funded with cash;
(2) any net income (or loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction (or any transaction accounted for in a manner similar to a pooling of interests) for any period prior to the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that
(A) subject to the exclusion contained in clause (4) below, the Company’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause); and
 
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(B) the Company’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income to the extent actually funded in cash;
(4) any gain (or loss) realized upon the sale or other disposition of any assets of the Company, its consolidated Subsidiaries or any other Person (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain (or loss) realized upon the sale or other disposition of any Capital Stock of any Person;
(5) extraordinary, unusual or nonrecurring gains, losses, costs, charges or expenses (including severance, relocation, transition and other restructuring costs and litigation settlements or losses);
(6) the cumulative effect of a change in accounting principles;
(7) non-cash compensation charges, including any such charges arising from stock options, restricted stock grants or other equity-incentive programs;
(8) any net after-tax gains or losses and all fees and expenses or charges relating thereto attributable to the early extinguishment of Indebtedness;
(9) the effect of any non-cash items resulting from any amortization, write-up, write-down or write-off of assets (including intangible assets, goodwill and deferred financing costs in connection with the Transactions or any future acquisition, disposition, merger, consolidation or similar transaction or any other non-cash impairment charges incurred subsequent to the Issue Date resulting from the application at SFAS Nos. 141, 142 or 144 (excluding any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period except to the extent such item is subsequently reversed));
(10) any net gain or loss resulting from Hedging Obligations (including pursuant to the application of SFAS No. 133); and
(11) any net after-tax income or loss from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations,
in each case, for such period. Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall be excluded from Consolidated Net Income any repurchases, repayments or redemptions of Investments, proceeds realized on the sale of Investments or return of capital to the Company or a Restricted Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or returns increase the amount of Restricted Payments permitted under such Section pursuant to Section 4.04(a)(3)(D).
 
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“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor or (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.
“Credit Agreement” means the Credit Agreement, originally dated as of July 25, 2007, by and among Parent, the Company, certain of its Subsidiaries identified therein as guarantors, the lenders from time to time party thereto, Credit Suisse, as Administrative Agent and collateral agent, together with the related documents thereto (including the term loans and revolving loans thereunder, any letters of credit and reimbursement obligations related thereto, any guarantees and security documents), as amended, extended, renewed, restated, refunded, replaced, refinanced, supplemented, modified or otherwise changed (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any one or more other agreements (and related documents) governing Indebtedness, including indentures, incurred to Refinance, substitute, supplement, replace or add to (including increasing the amount available for borrowing or adding or removing any Person as a borrower, issuer or guarantor thereunder), in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such Credit Agreement or one or more successors to the Credit Agreement or one or more new credit agreements.
“Credit Facilities” means one or more debt facilities (including the Credit Agreement and indentures or debt securities) or commercial paper facilities, in each case with banks or other institutional lenders or investors providing for revolving credit loans, term debt, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), debt securities or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time, including any refunding, replacement or refinancing thereof through the issuance of debt securities.
“Currency Agreement” means any foreign exchange contract, currency swap agreement or other similar agreement with respect to currency values.
“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
 
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“Designated Noncash Consideration” means the fair market value of noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Disposition that is designated as Designated Noncash Consideration pursuant to an Officers’ Certificate setting forth the basis of such valuation, less the amount of cash or cash equivalents received in connection with a subsequent sale, redemption or payment of, on or with respect to such Designated Noncash Consideration.
“Disqualified Stock” means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event:
(1) matures or is mandatorily redeemable (other than redeemable only for Capital Stock of such Person which is not itself Disqualified Stock) pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the occurrence of certain events or otherwise, in whole or in part,
in each case on or prior to the date which is 91 days after the Stated Maturity of the Securities; provided, however, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to purchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” shall not constitute Disqualified Stock if (A) the “asset sale” or “change of control” provisions applicable to such Capital Stock are not more favorable in terms of price to the holders of such Capital Stock than the terms applicable to the Securities in Sections 4.06 and 4.09 and (B) any such requirement only becomes operative after compliance with such terms applicable to the Securities, including the purchase of any Securities tendered pursuant thereto.
The amount of any Disqualified Stock that does not have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or repurchased on any date on which the amount of such Disqualified Stock is to be determined pursuant to this Indenture;  provided ,  however , that if such Disqualified Stock could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be the book value of such Disqualified Stock as reflected in the most recent financial statements of such Person.
“Domestic Restricted Subsidiary” means any Restricted Subsidiary other than a Foreign Subsidiary.
 
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“EBITDA” for any period means the sum of Consolidated Net Income, plus the following to the extent deducted in calculating such Consolidated Net Income:
(1) all income tax expense of the Company and its consolidated Restricted Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation and amortization expense of the Company and its consolidated Restricted Subsidiaries (excluding amortization expense attributable to a prepaid item that was paid in cash in a prior period);
(4) all other non-cash charges of the Company and its consolidated Restricted Subsidiaries (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period) less all non-cash items of income of the Company and its consolidated Restricted Subsidiaries (other than accruals of revenue by the Company and its consolidated Restricted Subsidiaries in the ordinary course of business); and
(5) fees related to a Qualified Receivables Transaction,
in each case for such period. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion, including by reason of minority interests) that the net income or loss of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exchange Securities” means the debt securities of the Company issued pursuant to this Indenture in exchange for, and in an aggregate principal amount equal to, the Initial Securities, in compliance with the terms of the Registration Rights Agreement.
“Foreign Subsidiary” means any Restricted Subsidiary of the Company that is not organized under the laws of the United States of America or any State thereof or the District of Columbia or any Subsidiary of such Person.
“GAAP” means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in
(1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants;
 
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(2) statements and pronouncements of the Financial Accounting Standards Board; and
(3) such other statements by such other entity as approved by a significant segment of the accounting profession.
“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.
“Guarantor” means Parent and each Subsidiary Guarantor, as applicable.
“Guaranty” means the Parent Guaranty and each Subsidiary Guaranty, as applicable.
“Guaranty Agreement” means a supplemental indenture, in a form reasonably satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor or a successor to Parent guarantees the Company’s obligations with respect to the Securities on the terms provided for in this Indenture.
“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement or agreement intended to hedge against fluctuations in commodity prices.
“Holder” or “Securityholder” means the Person in whose name a Security is registered on the Registrar’s books.
“Hospital” means a hospital, outpatient clinic, outpatient surgical center, long-term care facility, medical office building or other facility or business that is used or useful in or related to the provision of healthcare services.
“Hospital Swap” means an exchange of assets and, to the extent necessary to equalize the value of the assets being exchanged, cash by the Company or a Restricted Subsidiary for one or more Hospitals and/or one or more Related Businesses, or for 100%
 
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of the Capital Stock of any Person owning or operating one or more Hospitals and/or one or more Related Businesses; provided that cash does not exceed 30% of the sum of the amount of the cash and the fair market value of the Capital Stock or assets received or given by the Company or a Restricted Subsidiary in such transaction. Notwithstanding the foregoing, the Company and its Restricted Subsidiaries may consummate two Hospital Swaps in any 12-month period without regard to the requirements of the proviso in the previous sentence.
“Incur” means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary. The term “Incurrence” when used as a noun shall have a correlative meaning. Solely for purposes of determining compliance with Sections 4.03 and 4.10:
(1) amortization of debt discount or the accretion of principal with respect to a non-interest bearing or other discount security;
(2) the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument or the payment of regularly scheduled dividends on Capital Stock in the form of additional Capital Stock of the same class and with the same terms; and
(3) the obligation to pay a premium in respect of Indebtedness arising in connection with the issuance of a notice of redemption or the making of a mandatory offer to purchase such Indebtedness,
will not be deemed to be the Incurrence of Indebtedness or Liens.
“Indebtedness” means, with respect to any Person on any date of determination (without duplication):
(1) the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;
(2) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person;
(3) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding any accounts payable or other liability to trade creditors arising in the ordinary course of business);
 
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(4) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock of such Person or, with respect to any Preferred Stock of any Subsidiary of such Person, the principal amount of such Preferred Stock to be determined in accordance with this Indenture (but excluding, in each case, any accrued dividends);
(6) all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the fair market value of such property or assets and the amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition, Hedging Obligations of such Person.
Notwithstanding the foregoing, (A) in connection with the purchase by the Company or any Restricted Subsidiary of any business, the term “Indebtedness” will exclude post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing;  provided ,  however , that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter and (B) the term “Indebtedness” will exclude Contingent Obligations Incurred in the ordinary course of business and not in respect of Indebtedness.
The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above;  provided ,  however , that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time.
“Indenture” means this Indenture as amended or supplemented from time to time.
 
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“Independent Qualified Party” means an investment banking firm, accounting firm or appraisal firm of national standing; provided ,  however , that such firm is not an Affiliate of the Company.
“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement with respect to exposure to interest rates.
“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person, in each case by any other Person. If the Company or any Restricted Subsidiary issues, sells or otherwise disposes of any Capital Stock of a Person that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no longer a Restricted Subsidiary, any Investment by the Company or any Restricted Subsidiary in such Person remaining after giving effect thereto will be deemed to be a new Investment at such time. The acquisition by the Company or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person at such time. Except as otherwise provided for herein, the amount of an Investment shall be its fair market value at the time the Investment is made and without giving effect to subsequent changes in value.
For purposes of the definition of “Unrestricted Subsidiary”, the definition of “Restricted Payment” and Section 4.04, “Investment” shall include
(1) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary;  provided ,  however , that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors.
“Investment Grade Status” shall occur when the Securities receive both of the following: (1) a rating of “BBB-” or higher from S&P and (2) a rating of “ Baa3 ” or higher from Moody’s; or the equivalent of such rating by either such rating organization or, if no rating of Moody’s or S&P then exists, the equivalent of such rating by any other Nationally Recognized Statistical Rating Organization.
 
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“Issue Date” means November 22, 2011.
“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York.
“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).
“Moody’s” means Moody’s Investors Service, Inc. or any of its successors or assigns that is a Nationally Recognized Statistical Rating Organization.
“Nationally Recognized Statistical Rating Organization” means a nationally recognized statistical rating organization within the meaning of Rule 436 under the Securities Act.
“Net Available Cash” from an Asset Disposition means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other non-cash form), in each case net of:
(1) all legal, title and recording tax expenses, commissions and other fees and expenses Incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Disposition;
(4) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition; and
 
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(5) any portion of the purchase price from an Asset Disposition placed in escrow, whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Asset Disposition or otherwise in connection with that Asset Disposition;  provided ,  however , that upon the termination of that escrow, Net Available Cash will be increased by any portion of funds in the escrow that are released to the Company or any Restricted Subsidiary.
“Net Cash Proceeds”, with respect to any issuance or sale of Capital Stock or Indebtedness, means the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.
“Non-Recourse Indebtedness” of a Person means Indebtedness:
(1) as to which neither the Company nor any Subsidiary Guarantor:
(A) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness);
(B) is directly or indirectly liable as guarantor or otherwise; or
(C) constitutes the lender; and
(2) no default with respect to which would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Company or any Subsidiary Guarantor to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity.
“Obligations” means, with respect to any Indebtedness, all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, and other amounts payable pursuant to the documentation governing such Indebtedness.
“Offering Circular” means the final offering circular dated as of November 14, 2011 for the original issuance of the Securities.
“Officer” means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company.
“Officers’ Certificate” means a certificate signed by two Officers.
“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.
“Parent” means Community Health Systems, Inc., a Delaware corporation, and its successors or any other direct or indirect parent of the Company.
 
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“Parent Board” means the Board of Directors of Parent or any committee thereof duly authorized to act on behalf of such Board.
“Parent Guaranty” means the Guarantee by Parent of the Company’s obligations with respect to the Securities.
“Permitted Investment” means an Investment by the Company or any Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary;
(2) another Person if, as a result of such Investment, such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary;
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;  provided ,  however , that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;
(6) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary, but in any event not to exceed $25 million in the aggregate outstanding at any one time;
(7) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash portion of the consideration received for (i) an Asset Disposition as permitted pursuant to Section 4.06 or (ii) a disposition of assets not constituting an Asset Disposition;
(9) any Person where such Investment was acquired by the Company or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (b) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;
 
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(10) any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Company or any Restricted Subsidiary;
(11) any Person to the extent such Investments consist of Hedging Obligations otherwise permitted under Section 4.03;
(12) any Person to the extent such Investment exists on the Issue Date, and any extension, modification or renewal of any such Investments existing on the Issue Date, but only to the extent not involving additional advances, contributions or other Investments of cash or other assets or other increases thereof (other than as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investment as in effect on the Issue Date);
(13) (a) any Investment in any captive insurance subsidiary in existence on the Issue Date or (b) in the event the Company or a Restricted Subsidiary shall establish a Subsidiary for the purpose of insuring the healthcare business or facilities owned or operated by the Company, any Subsidiary or any physician employed by or on the medical staff of any such business or facility (the “Insurance Subsidiary”), Investments in an amount that do not exceed 125% of the minimum amount of capital required under the laws of the jurisdiction in which the Insurance Subsidiary is formed (other than any excess capital that would result in any unfavorable tax or reimbursement impact if distributed), and any Investment by such Insurance Subsidiary that is a legal investment for an insurance company under the laws of the jurisdiction in which the Insurance Subsidiary is formed and made in the ordinary course of business and rated in one of the four highest rating categories;
(14) Physician Support Obligations incurred by the Company or any Restricted Subsidiary;
(15) Investments made in connection with Hospital Swaps;
(16) any Investment in a Receivables Subsidiary or other Person, pursuant to the terms and conditions of a Qualified Receivables Transaction;
(17) Investments the payment for which consists of a Capital Stock of the Company or Parent (other than Disqualified Stock);
(18) the Incurrence of Guarantees of Indebtedness not prohibited by Section 4.03 and performance guarantees;
 
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(19) Investments consisting of earnest money deposits required in connection with a purchase agreement or other acquisition; and
(20) Persons to the extent such Investments, when taken together with all other Investments made pursuant to this clause (20) and outstanding on the date such Investment is made, do not exceed 5% of the Total Assets (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);  provided ,  however , that if such Investment is in Capital Stock of a Person that subsequently becomes a Restricted Subsidiary, such Investment shall thereafter be deemed permitted under clause (1) above and shall not be included as having been made pursuant to this clause (20).
“Permitted Liens” means, with respect to any Person,
(1) pledges or deposits by such Person under workers’ compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;
(2) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet overdue for a period of more than 30 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review and Liens arising solely by virtue of any statutory or common law provision relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution;  provided ,  however , that (A) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board and (B) such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution;
(3) Liens for taxes, assessments or other governmental charges not yet overdue for a period of more than 30 days or payable or subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings;
(4) Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;  provided ,  however , that such letters of credit do not constitute Indebtedness;
 
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(5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(6) Liens securing Indebtedness Incurred to finance the construction, purchase or lease of, or repairs, improvements or additions to, property, plant or equipment of such Person;  provided ,  however , that the Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries at the time the Lien is Incurred (other than assets and property affixed or appurtenant thereto), and the Indebtedness (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the later of the acquisition, completion of construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien;
(7) Liens to secure Indebtedness permitted under Sections 4.03(b)(1) and 4.03(b)(16) (including, during any Suspension Period, Indebtedness of the type and in the amounts specified under such clause);
(8) Liens existing on the Issue Date;
(9) Liens on property or shares of Capital Stock of another Person at the time such other Person becomes a Subsidiary of such Person; provided ,  however , that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);
(10) Liens on property at the time such Person or any of its Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Subsidiary of such Person;  provided ,  however , that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);
(11) Liens securing Indebtedness or other obligations of a Subsidiary of such Person owing to such Person or a Restricted Subsidiary of such Person;
(12) Liens securing Hedging Obligations so long as such Hedging Obligations are permitted to be Incurred under this Indenture;
(13) Liens to secure any Refinancing (or successive Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clause (6), (8), (9), (10) or (15);  provided ,  however , that (A) such new Lien shall be limited to all or part of the same property and assets that secured or,
 
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under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to such property or proceeds or distributions thereof) and (B) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clause (6), (8), (9), (10) or (15) at the time the original Lien became a Permitted Lien and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement;
(14) Liens on assets of a Receivables Subsidiary and other customary Liens established pursuant to a Qualified Receivables Transaction; and
(15) Liens established to secure Obligations in respect of any
Indebtedness permitted to be incurred pursuant to Section 4.03 (including, during any Suspension Period, Indebtedness of the type and in the amounts specified under such Section);  provided ,  however , that at the time of Incurrence and after giving  pro forma  effect thereto, the ratio of (i) the aggregate amount of Secured Indebtedness as of such date of determination to (ii) EBITDA (determined on a  pro forma  basis consistent with the calculation of Consolidated Coverage Ratio) for the most recent four consecutive fiscal quarters for which internal financial statements are available would be less than 4.0 to 1.0.
Notwithstanding the foregoing, “Permitted Liens” will not include any Lien described in clause (9) or (10) above to the extent such Lien applies to any Additional Assets acquired directly or indirectly from Net Available Cash pursuant to Section 4.06. For purposes of this definition, the term “Indebtedness” shall be deemed to include interest on such Indebtedness.
“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
“Physician Support Obligation” means:
(1) a loan to or on behalf of, or a Guarantee of Indebtedness of or income of, a physician or healthcare professional providing service to patients in the service area of a Hospital operated by the Company or any of its Restricted Subsidiaries made or given by the Company or any Subsidiary of the Company:
(A) in the ordinary course of its business; and
(B) pursuant to a written agreement having a period not to exceed five years; or
(2) Guarantees by the Company or any Restricted Subsidiary of leases and loans to acquire property (real or personal) for or on behalf of a physician or healthcare professional providing service to patients in the service area of a Hospital operated by the Company or any of its Restricted Subsidiaries.
 
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“Preferred Stock”, as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
“principal” of a Security means the principal of the Security plus the premium, if any, payable on the Security which is due or overdue or is to become due at the relevant time.
“Public Equity Offering” means an underwritten primary public offering of common stock of Parent or the Company for cash pursuant to an effective registration statement under the Securities Act.
“Purchase Money Indebtedness” means Indebtedness (including Capital Lease Obligations) Incurred to finance the acquisition by the Company or a Restricted Subsidiary of equipment or property that is used or useful in a Related Business (whether through the direct purchase of such asset or the purchase of Capital Stock of any Person owning such asset), including additions and improvements;  provided ,  however , that any Lien arising in connection with any such Indebtedness shall be limited to the specific asset being financed or, in the case of real property or fixtures, including additions and improvements, the real property on which such asset is attached;  provided further ,  however , that such Indebtedness is Incurred within 180 days after such acquisition of such assets.
“Qualified Receivables Transaction” means any transaction or series of transactions that may be entered into by the Company or any Restricted Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell, convey or otherwise transfer pursuant to customary terms to (1) a Receivables Subsidiary (in the case of a transfer by the Company or any Restricted Subsidiary) and (2) any other Person (in the case of a transfer by a Receivables Subsidiary), or grants a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Restricted Subsidiaries, and any assets related thereto, including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets that are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable.
“Rating Agency” means S&P and Moody’s or if S&P, Moody’s or both shall not make a rating on the Securities publicly available, a Nationally Recognized Statistical Rating Organization or organizations, as the case may be, selected by the Company (as certified by a resolution of the Board of Directors) which shall be substituted for S&P, Moody’s or both, as the case may be.
 
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“Receivables Subsidiary” means any special purpose Wholly Owned Subsidiary of the Company that acquires accounts receivable generated by the Company or any of its Subsidiaries and that engages in no operations or activities other than those related to a Qualified Receivables Transaction; provided that, except pursuant to Standard Securitization Undertakings, (a) no portion of the obligations (contingent or otherwise) of which is recourse to or obligates the Company or any of its Restricted Subsidiaries in any way, (b) with which neither the Company nor any of its Restricted Subsidiaries has any contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company and (c) to which neither the Company nor any of its Restricted Subsidiaries has any obligation to maintain or preserve such Receivables Subsidiary’s financial condition or cause such Receivables Subsidiary to achieve certain levels of operating results.
“Receivables Transaction Amount” means, with respect to any Qualified Receivables Transaction, (a) in the case of any securitization, the amount of obligations outstanding under the legal documents entered into as part of such Qualified Receivables Transaction on any date of determination that would be characterized as principal if such Qualified Receivables Transaction were structured as a secured lending transaction rather than as a purchase and (b) in the case of any other sale or factoring of accounts receivable, the cash purchase price paid by the buyer in connection with its purchase of such accounts receivable (including any bills of exchange) less the amount of collections received in respect of such accounts receivable and paid to such buyer, excluding any amounts applied to purchase fees or discount or in the nature of interest, in each case as determined in good faith and in a consistent and commercially reasonable manner by the Company.
“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, purchase, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.
“Refinancing Indebtedness” means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with this Indenture, including Indebtedness that Refinances Refinancing Indebtedness;  provided , however , that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier than the earlier of (A) the Stated Maturity of the Indebtedness being Refinanced and (B) the 91st day after the Stated Maturity of any Securities then outstanding;
(2) such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the greater of (A) the Average Life of the Indebtedness being Refinanced and (B) the Average Life of any Securities then outstanding;
 
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(3) such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced; and
(4) if the Indebtedness being Refinanced is subordinated in right of payment to the Securities or a Subsidiary Guarantee, such Refinancing Indebtedness is subordinated in right of payment to the Securities at least to the same extent as the Indebtedness being Refinanced;
providedfurther, however, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary (other than a Subsidiary Guarantor) that Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.
“Registration Rights Agreement” means the Registration Rights Agreement dated the Issue Date, among the Company, the Guarantors and Credit Suisse Securities (USA) LLC, as representative of the Initial Purchasers (as defined in the Rule 144A/Regulation S/IAI Appendix attached hereto).
“Related Business” means a business affiliated or associated with a Hospital or any business related or ancillary to the provision of healthcare services or information or the investment in, or the management, leasing or operation of, any of the foregoing.
“Restricted Payment” with respect to any Person means
(1) the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock in their capacity as such (other than (A) dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock), (B) dividends or distributions payable solely to the Company or a Restricted Subsidiary and (C) pro rata dividends or other distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity other than a corporation));
(2) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Capital Stock of the Company held by any Person (other than by a Restricted Subsidiary), including in connection with any merger or consolidation and including the exercise of any option to exchange any Capital Stock (other than into Capital Stock of the Company that is not Disqualified Stock);
 
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(3) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations of the Company or any Subsidiary Guarantor (other than (A) from the Company or a Restricted Subsidiary or (B) the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase, redemption, defeasance or other acquisition or retirement); or
(4) the making of any Investment (other than a Permitted Investment) in any Person.
“Restricted Subsidiary” means any Subsidiary of the Company that is not an Unrestricted Subsidiary.
“RP Reference Date” means July 25, 2007.
“S&P” means Standard & Poor’s Investors Ratings Services or any of its successors or assigns that is a Nationally Recognized Statistical Rating Organization.
“Sale/Leaseback Transaction” means an arrangement relating to property owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person.
“SEC” means the U.S. Securities and Exchange Commission.
“Secured Indebtedness” means any Indebtedness of the Company and its Restricted Subsidiaries secured by a Lien.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Senior Indebtedness” means with respect to any Person:
(1) Indebtedness of such Person, whether outstanding on the Issue Date or thereafter Incurred; and
(2) all other Obligations of such Person (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of Indebtedness described in clause (1) above,
 
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unless, in the case of clauses (1) and (2), in the instrument creating or evidencing the same or pursuant to which the same is outstanding it is provided that such Indebtedness or other Obligations are subordinate in right of payment to the Securities or the Subsidiary Guaranty of such Person, as the case may be;  provided ,  however , that Senior Indebtedness shall not include:
(A) any obligation of such Person to the Company or any Subsidiary of the Company;
(B) any liability for Federal, state, local or other taxes owed or owing by such Person;
(C) any accounts payable or other liability to trade creditors arising in the ordinary course of business;
(D) any Indebtedness or other Obligation of such Person which is subordinate or junior in any respect to any other Indebtedness or other Obligation of such Person; or
(E) that portion of any Indebtedness which at the time of Incurrence is Incurred in violation of this Indenture.
“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
“Standard Securitization Undertakings” means all representations, warranties, covenants and indemnities entered into by the Company or any Restricted Subsidiary which are customary in securitization transactions involving accounts receivable.
“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).
“Subordinated Obligation” means, with respect to a Person, any Indebtedness of such Person (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Securities or a Subsidiary Guaranty of such Person, as the case may be, pursuant to a written agreement to that effect.
“Subsidiary” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
 
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“Subsidiary Guarantor” means each Subsidiary of the Company that executes this Indenture as a guarantor on the Issue Date and each other Subsidiary of the Company that thereafter guarantees the Securities pursuant to the terms of this Indenture.
“Subsidiary Guaranty” means a Guarantee by a Subsidiary Guarantor of the Company’s obligations with respect to the Securities.
“Temporary Cash Investments” means any of the following:
(1) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof;
(2) investments in demand and time deposit accounts, certificates of deposit and money market deposits maturing within one year of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any State thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $50,000,000 (or the foreign currency equivalent thereof) and has outstanding debt which is rated “A” (or such similar equivalent rating) or higher by at least one Nationally Recognized Statistical Rating Organization or any money-market fund sponsored by a registered broker dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above;
(4) investments in commercial paper, maturing not more than one year after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P;
(5) investments in securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A” by S&P or “A” by Moody’s; and
(6) investments in money market funds that invest substantially all their assets in securities of the types described in clauses (1) through (5) above.
“Total Assets” means, as of any date of determination, after giving proforma effect to any acquisition of assets on such date, the sum of the amounts that would appear on the consolidated balance sheet of the Company and its Restricted Subsidiaries as the total assets of the Company and its Restricted Subsidiaries.
 
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“Treasury Rate” means, as of the applicable redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two Business Days prior to such redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to November 15, 2015;  provided ,  however , that if the period from such redemption date to November 15, 2015 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the Issue Date.
“Trustee” means U.S. Bank National Association until a successor replaces it and, thereafter, means the successor.
“Trust Officer” means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters.
“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.
“Unrestricted Subsidiary” means:
(1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated;  provided ,  however , that either (A) the Subsidiary to be so designated has total assets of $1,000 or less or (B) if such Subsidiary has assets greater than $1,000, such designation would be permitted under Section 4.04. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary;  provided ,  however , that immediately after giving effect to such designation no Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.
 
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“U.S. Dollar Equivalent” means with respect to any monetary amount in a currency other than U.S. dollars, at any time for determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency as published in  The Wall Street Journal  in the “Exchange Rates” column under the heading “Currency Trading” on the date two Business Days prior to such determination.
Except as described in Section 4.03, whenever it is necessary to determine whether the Company has complied with any covenant in this Indenture or a Default has occurred and an amount is expressed in a currency other than U.S. dollars, such amount will be treated as the U.S. Dollar Equivalent determined as of the date such amount is initially determined in such currency.
“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer’s option.
“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
“Wholly Owned Subsidiary” means a Restricted Subsidiary all the Capital Stock of which (other than directors’ qualifying shares) is owned by the Company or one or more other Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.

Term	  	Defined in
Section	
“Acceptable Commitment”	  	  4.06	
“Affiliate Transaction”	  	  4.07(a)	
“Bankruptcy Law”	  	  6.01	
“Change of Control Offer”	  	  4.09(b)	
“Company”	  	Preamble	
“covenant defeasance option”	  	  8.01(b)	
“Custodian”	  	  6.01	
“Event of Default”	  	  6.01	
“Guaranteed Obligations”	  	10.01	
“Initial Lien”	  	  4.10	
“legal defeasance option”	  	  8.01(b)	
“Offer”	  	  4.06(b)	
“Offer Amount”	  	  4.06(c)(2)	
“Offer Period”	  	  4.06(c)(2)	
“Paying Agent”	  	  2.03	
“Purchase Date”	  	  4.06(c)(1)	
“Registrar”	  	  2.03	
“Securities”	  	Preamble	
“Successor Company”	  	  5.01(a)(1)	
“Trustee”	  	Preamble	
 
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SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings:
“Commission” means the SEC;
“indenture securities” means the Securities and the Guaranties;
“indenture security holder” means a Securityholder;
“indenture to be qualified” means this Indenture;
“indenture trustee” or “institutional trustee” means the Trustee; and
“obligor” on the indenture securities means the Company, each Guarantor and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) “or” is not exclusive;
(4) “including” means including without limitation;
(5) words in the singular include the plural and words in the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;
 
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(7) secured Indebtedness shall not be deemed to be subordinate or junior to any other secured Indebtedness merely because it has a junior priority with respect to the same collateral;
(8) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP;
(9) the principal amount of any Preferred Stock shall be (A) the maximum liquidation value of such Preferred Stock or (B) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater; and
(10) all references to the date the Securities were originally issued shall refer to the Issue Date.
Article 2
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the Initial Securities, the Private Exchange Securities and the Exchange Securities are set forth in the Rule 144A/Regulation S/IAI Appendix attached hereto (the “Appendix”) which is hereby incorporated in, and expressly made part of, this Indenture. The Initial Securities and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit 1 to the Appendix which is hereby incorporated in, and expressly made a part of, this Indenture. The Exchange Securities, the Private Exchange Securities and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The terms of the Securities set forth in the Appendix and Exhibit A are part of the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature which may be in counterparts.
If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.
 
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On the Issue Date, the Trustee shall authenticate and deliver $1,000,000,000 of 8.000% Senior Notes Due 2019 and, at any time and from time to time thereafter, the Trustee shall authenticate and deliver Securities for original issue in an aggregate principal amount specified in such order, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and, in the case of an issuance of Additional Securities pursuant to Section 2.13 after the Issue Date, shall certify that such issuance is in compliance with Section 4.03.
The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the “Registrar”) and an office or agency where Securities may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term “Paying Agent” includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any Wholly Owned Subsidiary incorporated or organized within The United States of America may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall
 
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segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders and shall comply with the other provisions of TIA § 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued in registered form and shall be transferable only upon the surrender of a Security for registration of transfer. When a Security is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of this Indenture and Section 8-401(1) of the Uniform Commercial Code are met. When Securities are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met.
SECTION 2.07. Replacement Securities. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional Obligation of the Company.
SECTION 2.08. Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a protected purchaser (as defined in Section 8-303 of the Uniform Commercial Code).
 
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If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date, money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date, such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and deliver them in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and destroy (subject to the record retention requirements of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or cancellation and deliver a certificate of such destruction to the Company unless the Company directs the Trustee to deliver canceled Securities to the Company. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a payment of interest on the Securities, the Company shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the persons who are Securityholders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail to each Securityholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers, ISINs, etc. The Company in issuing the Securities may use “CUSIP” numbers, ISINs and “Common Code” numbers (in each case if then generally in use) and, if so, the Trustee shall use “CUSIP” numbers, ISINs and “Common Code” numbers in notices of redemption as a convenience to Holders;  provided ,  however , that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall advise the Trustee in writing of any change in any “CUSIP” numbers, ISINs or “Common Code” numbers applicable to the Securities.
SECTION 2.13. Issuance of Additional Securities. After the Issue Date, the Company shall be entitled, subject to its compliance with Section 4.03, to issue
 
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Additional Securities under this Indenture, which Securities shall have identical terms as the Initial Securities issued on the Issue Date, other than with respect to the date of issuance and issue price. All the Securities issued under this Indenture shall be treated as a single class for all purposes of this Indenture including waivers, amendments, redemptions and offers to purchase.
With respect to any Additional Securities, the Company shall set forth in a resolution of the Board of Directors and an Officers’ Certificate, a copy of each which shall be delivered to the Trustee, the following information:
(1) the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture and the provision of Section 4.03 that the Company is relying on to issue such Additional Securities;
(2) the issue price, the issue date and the CUSIP number of such Additional Securities; provided, however, that no Additional Securities may be issued at a price that would cause such Additional Securities to have “original issue discount” within the meaning of Section 1273 of the Code; and
(3) whether such Additional Securities shall be Initial Securities or shall be issued in the form of Exchange Securities as set forth in Exhibit A.
Article 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date, the principal amount of Securities to be redeemed and the paragraph of the Securities pursuant to which the redemption will occur.
The Company shall give each notice to the Trustee provided for in this Section at least 60 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers’ Certificate and an Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions herein.
SECTION 3.02. Selection of Securities to Be Redeemed. If fewer than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata to the extent practicable. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $2,000. Securities and portions of them the Trustee selects shall be in principal amounts of $2,000 or any greater integral multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed.
 
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SECTION 3.03. Notice of Redemption. At least 30 days but not more than 60 days before a date for redemption of Securities, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed at such Holder’s registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed, the identification and principal amounts of the particular Securities to be redeemed;
(6) that, unless the Company defaults in making such redemption payment, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date;
(7) the “CUSIP” number, ISIN or “Common Code” number, if any, printed on the Securities being redeemed; and
(8) that no representation is made as to the correctness or accuracy of the “CUSIP” number, ISIN, or “Common Code” number, if any, listed in such notice or printed on the Securities.
At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense. In such event, the Company shall provide the Trustee with the information required by this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date), and such Securities shall be canceled by the Trustee. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which have been delivered by the Company to the Trustee for cancellation.
 
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SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company’s expense) a new Security equal in principal amount to the unredeemed portion of the Security surrendered. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price for, and accrued interest on, all Securities to be redeemed.
SECTION 3.07. Company Discretion. Any redemption and notice of redemption may, at the Company’s discretion, be subject to the satisfaction of one or more conditions precedent (including, in the case of a redemption related to a Public Equity Offering, the consummation of such Public Equity Offering).
Article 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due.
The Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC, subject to the next sentence, and provide the Trustee and Securityholders with such annual and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such reports to be so filed and provided at the times specified for the filings of such reports under such Sections and containing all the information, audit reports and exhibits required for such reports. If, at any time, the Company is not subject to the periodic reporting requirements of the Exchange Act for any reason, the Company shall nevertheless continue filing the reports specified in the preceding sentence with the SEC within the time periods required unless the SEC will not accept such filing. The Company agrees that it shall not take any action for the purpose of causing the SEC not to accept such filings. If, notwithstanding the foregoing, the SEC will not accept such filings for any reason, the Company shall post the reports specified in the preceding sentence on its website within the time periods that would apply if the Company were required to file those reports with the SEC.
 
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At any time that any of the Company’s Subsidiaries are Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company.
In addition, the Company shall furnish to the Holders of the Securities and to prospective investors, upon the requests of such Holders, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Securities are not freely transferable under the Securities Act. The Company also shall comply with the other provisions of TIA § 314(a).
In addition, at any time that Parent holds no material assets other than cash, Temporary Cash Investments and the Capital Stock of the Company or any other direct or indirect intermediate holding company parent of the Company (and performs the related incidental activities associated with such ownership) and complies with the requirements of Rule 3-10 of Regulation S-X promulgated by the SEC (or any successor provision), the reports, information and other documents required to be filed and furnished to Holders of the Securities pursuant to this Section 4.02 may, at the option of the Company, be filed by and be those of Parent rather than of the Company;  provided ,  however , that the issuance by Parent of any Indebtedness or Capital Stock shall not be deemed to prevent the Company from exercising its option described in this paragraph to file and furnish reports, information and other documents of Parent to satisfy the requirements of this Section 4.02.
Notwithstanding the foregoing, such requirements shall be deemed satisfied prior to the commencement of the exchange offer contemplated by the Registration Rights Agreement or the effectiveness of a shelf registration statement relating to the registration of the Securities under the Securities Act as contemplated by the Registration Rights Agreement by the filing with the SEC of an exchange offer registration statement or a shelf registration statement, and any amendments thereto, with such financial information that satisfies Regulation S-X of the Securities Act within the time periods and in accordance with the other provisions in the Registration Rights Agreement.
SECTION 4.03. Limitation on Indebtedness. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness;  provided ,  however , that the Company and the Subsidiary Guarantors shall be entitled to Incur Indebtedness if, on the date of such Incurrence and after giving effect thereto on a  pro forma  basis, the Consolidated Coverage Ratio exceeds 2.0 to 1.0.
(b) Notwithstanding Section 4.03(a), the Company and the Restricted Subsidiaries shall be entitled to Incur any or all of the following Indebtedness:
(1) Indebtedness of the Company and the Subsidiary Guarantors pursuant to Credit Facilities; provided, however, that, immediately after giving effect to any such Incurrence, the aggregate principal amount of all Indebtedness Incurred under this clause (b)(1) and clause (b)(13) below and then outstanding does not exceed $7,815 million less the sum of all principal payments with respect to such Indebtedness pursuant to Section 4.06(a)(3)(A);
 
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(2) Indebtedness owed to and held by the Company or a Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon, (B) if the Company is the obligor on such Indebtedness and such Indebtedness is held by a Restricted Subsidiary that is not a Subsidiary Guarantor, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Securities and (C) if a Subsidiary Guarantor is the obligor on such Indebtedness and such Indebtedness is held by a Restricted Subsidiary that is not a Subsidiary Guarantor, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations of such Subsidiary Guarantor or with respect to its Subsidiary Guaranty;
(3) the Securities and the Exchange Securities (other than any Additional Securities);
(4) Indebtedness outstanding on the Issue Date (other than Indebtedness described in clause (1), (2) or (3) of this Section 4.03(b));
(5) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Subsidiary was acquired by the Company (other than Indebtedness Incurred in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary or was acquired by the Company);  provided ,  however , that on the date of such acquisition and after giving  pro forma  effect thereto, the Company would have been entitled to Incur at least $1.00 of additional Indebtedness pursuant to Section 4.03(a) or the Consolidated Coverage Ratio would be higher after giving  pro forma  effect to such acquisition;
(6) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to Section 4.03(a) or pursuant to clause (3), (4) or (5) of this Section 4.03(b) or this clause (6);  provided ,  however , that to the extent such Refinancing Indebtedness directly or indirectly Refinances Indebtedness of a Subsidiary Incurred pursuant to clause (5), such Refinancing Indebtedness shall be Incurred only by such Subsidiary;
(7) Hedging Obligations;
 
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(8) obligations in respect of performance, bid, appeal and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;
(9) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;  provided ,  however , that such Indebtedness is extinguished within five Business Days of its Incurrence;
(10) Indebtedness consisting of the Guarantee of a Subsidiary Guarantor of Indebtedness Incurred pursuant to this Section 4.03 (other than Indebtedness Incurred pursuant to clauses (5) and (14) of this Section 4.03(b) or Refinancing Indebtedness Incurred pursuant to Section 4.03(b)(6) to the extent such Refinancing Indebtedness Refinances Indebtedness Incurred pursuant to such clause (5));  provided ,  however , that if the Indebtedness being guaranteed is subordinated to or  pari passu  with the Securities, then the Guarantee thereof shall be subordinated or  pari passu , as applicable, to the same extent as the Indebtedness being Guaranteed;
(11) Purchase Money Indebtedness and any Refinancing Indebtedness Incurred to Refinance such Indebtedness, in an aggregate principal amount which, when added together with the amount of Indebtedness Incurred pursuant to this clause (11) and then outstanding, does not exceed 4.0% of Total Assets;
(12) Physician Support Obligations incurred by the Company or any Restricted Subsidiary;
(13) Indebtedness Incurred pursuant to a Qualified Receivables Transaction; provided, however, that, at the time of such Incurrence, the Company would have been entitled to Incur Indebtedness pursuant to Section 4.03(b)(1) in an amount equal to the Receivables Transaction Amount of such Qualified Receivables Transaction;
(14) Non-Recourse Indebtedness of Restricted Subsidiaries in an aggregate principal amount which, when taken together with all other Non-Recourse Indebtedness of Restricted Subsidiaries Incurred pursuant to this clause (14) and then outstanding does not exceed 4% of Total Assets;
(15) the Incurrence by the Company or any Guarantor of Indebtedness to the extent that the net proceeds thereof are promptly deposited to fully defease or fully satisfy and discharge the Securities; and
(16) Indebtedness of the Company or the Subsidiary Guarantors in an aggregate principal amount which, when taken together with all other Indebtedness of the Company and its Subsidiary Guarantors Incurred pursuant to this clause (16) and then outstanding does not exceed the greater of $750 million and 5% of Total Assets.
 
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(c) For purposes of determining compliance with this Section 4.03, (1) any Indebtedness outstanding under the Credit Agreement as of the Issue Date will be treated as Incurred on the Issue Date under Section 4.03(b)(1), (2) in the event that an item of Indebtedness (or any portion thereof) meets the criteria of more than one of the types of Indebtedness described herein, the Company, in its sole discretion, shall classify such item of Indebtedness (or any portion thereof) at the time of Incurrence and will only be required to include the amount and type of such Indebtedness in one of the above clauses of Section 4.03(a) or Section 4.03(b), (3) the Company shall be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described herein and (4) in the case of any Indebtedness initially Incurred pursuant to Section 4.03(b)(11), (14) or (16), the Company shall be entitled, in its sole discretion, to later reclassify all or any portion of such Indebtedness as having been Incurred under any other clause of Section 4.03(a) or Section 4.03(b) as long as, at the time of such reclassification, such Indebtedness (or portion thereof) would be permitted to be Incurred pursuant to such other clause or paragraph.
(d) For purposes of determining compliance with any U.S. dollar restriction on the Incurrence of Indebtedness where the Indebtedness Incurred is denominated in a different currency, the amount of such Indebtedness will be the U.S. Dollar Equivalent, determined on the date of the Incurrence of such Indebtedness;  provided ,  however , that if any such Indebtedness denominated in a different currency is subject to a Currency Agreement with respect to U.S. dollars, covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be as provided in such Currency Agreement. The principal amount of any Refinancing Indebtedness Incurred in the same currency as the Indebtedness being Refinanced will be the U.S. Dollar Equivalent of the Indebtedness Refinanced, except to the extent that (1) such U.S. Dollar Equivalent was determined based on a Currency Agreement, in which case the Refinancing Indebtedness will be determined in accordance with the preceding sentence, and (2) the principal amount of the Refinancing Indebtedness exceeds the principal amount of the Indebtedness being Refinanced, in which case the U.S. Dollar Equivalent of such excess will be determined on the date such Refinancing Indebtedness is Incurred.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to make a Restricted Payment if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result therefrom);
(2) the Company is not entitled to Incur an additional $1.00 of Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other Restricted Payments since the RP Reference Date would exceed the sum of (without duplication):
(A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter during which the RP Reference Date occured to the end of the most recent fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); plus
 
42

(B) 100% of the aggregate Net Cash Proceeds and the fair market value, as determined in good faith by the Board of Directors of the Company, of other property received by the Company from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the RP Reference Date (other than an issuance or sale to a Subsidiary of the Company and other than an issuance or sale to an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) and 100% of any cash capital contribution and the fair market value, as determined in good faith by the Board of Directors of the Company, of other property received by the Company from its stockholders subsequent to the RP Reference Date;  plus
(C) 100% of the aggregate Net Cash Proceeds and the fair market value, as determined in good faith by the Board of Directors of the Company, of other property received by the Company from the Incurrence of Indebtedness to the extent such Indebtedness is converted or exchanged for Capital Stock (other than Disqualified Stock) subsequent to the RP Reference Date (other than an Incurrence to a Subsidiary of the Company and other than an Incurrence to an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) (less the amount of any cash distributed by the Company upon such conversion or exchange); plus
(D) an amount equal to the sum of (i) the aggregate amount received by the Company or its Restricted Subsidiaries after the RP Reference Date resulting from repurchases, repayments or redemptions of Investments (other than Permitted Investments) made by the Company or any Restricted Subsidiary in any Person, proceeds realized on the sale of such Investment and proceeds representing the return of capital (excluding dividends and distributions), in each case received by the Company or any Restricted Subsidiary, and (ii) to the extent such Person is an Unrestricted Subsidiary, the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary.
 
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(b) The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds of the substantially concurrent sale of, or made by exchange for, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit of their employees) or a substantially concurrent cash capital contribution received by the Company from its stockholders;  provided ,  however , that (A) such Restricted Payment shall be excluded in the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale or such cash capital contribution (to the extent so used for such Restricted Payment) shall be excluded from the calculation of amounts under Section 4.04(a)(3)(B);
(2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or a Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent Incurrence of, Subordinated Obligations of such Person which are permitted to be Incurred pursuant to Section 4.03;  provided ,  however , that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments;
(3) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with this Section 4.04 or the redemption, repurchase or retirement of Subordinated Obligations, if at the date of any irrevocable redemption notice such payment would have complied with this Section 4.04;  provided ,  however , that the payment of such dividend or payment of Subordinated Obligations shall be included in the calculation of the amount of Restricted Payments;
(4) so long as no Default has occurred and is continuing the purchase, redemption or other acquisition of shares of Capital Stock of Parent, the Company or any of its Subsidiaries from consultants, former consultants, employees, former employees, directors or former directors of Parent, the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such Capital Stock;  provided ,  however , that the aggregate amount of such Restricted Payments (excluding amounts representing cancellation of Indebtedness) shall not exceed $60 million in any calendar year (with unused amounts in any calendar year being carried over to succeeding calendar years);  provided further ,  however , that such amount in any calendar year may be increased by an amount not to exceed (A) the cash proceeds from the sale of Capital Stock of the Company and, to the extent contributed to the Company, Capital Stock of Parent, in each case to employees, directors or consultants of Parent, the Company or any of its Restricted Subsidiaries, that occurs after the Issue Date plus (B) the cash proceeds of key man life insurance
 
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policies received by the Company or its Restricted Subsidiaries, or by Parent to the extent contributed to the Company, after the Issue Date (provided that the Company shall be entitled to elect to apply all or any portion of the aggregate increase contemplated by clauses (A) and (B) above in any calendar year) less (C) the amount of any Restricted Payments previously made pursuant to clause (A) and (B) of this clause (4); provided further ,  however , that such Restricted Payments shall be excluded in the calculation of the amount of Restricted Payments;
(5) the declaration and payments of dividends on Disqualified Stock issued pursuant to Section 4.03; provided, however, that, at the time of payment of such dividend, no Default shall have occurred and be continuing (or result therefrom);  provided further ,  however , that such dividends shall be excluded in the calculation of the amount of Restricted Payments;
(6) repurchases of Capital Stock deemed to occur upon exercise of stock options or warrants if such Capital Stock represents a portion of the exercise price of such options or warrants;  provided ,  however , that such Restricted Payments shall be excluded in the calculation of the amount of Restricted Payments;
(7) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of the Company;  provided ,  however , that any such cash payment shall not be for the purpose of evading the limitation of this Section 4.04 (as determined in good faith by the Board of Directors);  provided further ,  however , that such payments shall be excluded in the calculation of the amount of Restricted Payments;
(8) in the event of a Change of Control or Asset Disposition, the payment, purchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations or Disqualified Stock of Parent, the Company or any Restricted Subsidiary;  provided ,  however , that prior to such payment, purchase, redemption, defeasance or other acquisition or retirement, the Company (or a third party to the extent permitted by this Indenture) has made a Change of Control Offer with respect to the Securities as a result of such Change of Control or an offer to purchase the Securities with the Net Cash Proceeds of an Asset Disposition and has purchased all Securities validly tendered and not withdrawn in connection in with such offer;  provided further ,  however , that such payments, purchases, redemptions, defeasances or other acquisitions or retirements shall be excluded in the calculation of the amount of Restricted Payments;
(9) payments of intercompany subordinated Indebtedness, the Incurrence of which was permitted under Section 4.03(b)(2); provided, however, that no Default has occurred and is continuing or would otherwise result therefrom;  provided further ,  however , that such payments shall be excluded in the calculation of the amount of Restricted Payments;
 
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(10) Restricted Payments made by or in connection with the sale, disposition, transfer, dividend, distribution, contribution or other disposition of assets, other than cash or Temporary Cash Investments, in an amount which, when taken together with all Restricted Payments previously made pursuant to this clause (10), does not exceed 4% of Total Assets;  provided ,  however , that (A) at the time of each such Restricted Payment, no Default shall have occurred and be continuing (or result therefrom), (B) at the time of and after giving effect to each such Restricted Payment, the Company is entitled to Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a) and (C) the amount of Restricted Payments made pursuant to this clause (10) shall be excluded in the calculation of the amount of Restricted Payments;
(11) the declaration and payment of dividends to, or the making of loans to Parent in amounts required for Parent to pay, without duplication: (A) franchise taxes and other fees, taxes and expenses required to maintain its corporate existence; (B) income taxes to the extent such income taxes are attributable to the income of the Company and its Restricted Subsidiaries and, to the extent of the amount actually received from the Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of the Unrestricted Subsidiaries; (C) customary salary, bonus, severance, indemnification obligations and other benefits payable to officers and employees of Parent; (D) general corporate overhead and operating expenses for Parent; and (E) reasonable fees and expenses incurred in connection with any unsuccessful debt or equity offering or other financing transaction by Parent;  provided ,  however , that such payments shall be excluded in the calculation of the amount of Restricted Payments;
(12) distributions of Investments in Unrestricted Subsidiaries; provided, however, that such distributions shall be excluded in the calculation of the amount of Restricted Payments;
(13) payments in connection with a Qualified Receivables Transaction; provided, however, that such payments shall be excluded in the calculation of the amount of Restricted Payments;
(14) so long as no Default or Event of Default has occurred and is continuing (or would result therefrom), mandatory redemptions of any Disqualified Stock issued as a Restricted Payment or as consideration for a Permitted Investment; provided that (A) the aggregate amount paid for such redemptions with respect to any such issuance is no greater than the corresponding amount that constituted a Restricted Payment or Permitted Investment upon issuance thereof and (B) at the time of and after giving effect to each such mandatory redemption, the Company is entitled to Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a); or
(15) Restricted Payments in an amount which, when taken together with all Restricted Payments previously made pursuant to this clause (15) does not
 
46

exceed $300 million; provided, however, that (A) at the time of each such Restricted Payment, no Default shall have occurred and be continuing (or result therefrom) and (B) the amount of Restricted Payments made pursuant to this clause (15) shall be excluded in the calculation of the amount of Restricted Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) pay dividends or make any other distributions on its Capital Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company, (b) make any loans or advances to the Company or (c) transfer any of its property or assets to the Company, except:
(1) with respect to clauses (a), (b) and (c),
(A) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date, including the Credit Agreement in effect on the Issue Date;
(B) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company) and outstanding on such date;
(C) any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in Section 4.05(1)(A) or (B) or this clause (C) or contained in any amendment to an agreement referred to in Section 4.05(1)(A) or (B) or this clause (C);  provided ,  however , that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such refinancing agreement or amendment are no less favorable to the holders of the Securities than encumbrances and restrictions with respect to such Restricted Subsidiary contained in such predecessor agreements;
(D) any encumbrance or restriction included in contracts for the sale of assets, including any encumbrance or restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;
 
47

(E) any encumbrance or restriction required by the terms of any agreement relating to a Qualified Receivables Transaction; provided, however , that such encumbrance or restriction applies only to such Qualified Receivables Transaction;
(F) any encumbrance or restriction on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;
(G) any encumbrance or restriction pursuant to the terms of any agreement or instrument relating to any Indebtedness of a Restricted Subsidiary permitted to be Incurred subsequent to the Issue Date pursuant to Section 4.03 (i) if such encumbrance and restriction contained in any such agreement or instrument taken as a whole are not materially less favorable to the holders of the Securities than the encumbrances and restrictions contained in the Credit Agreement on the Issue Date (as determined in good faith by the Company) or (ii) if the encumbrances and restrictions are not materially more disadvantageous to the holders of the Securities than is customary in comparable financings (as determined in good faith by the Company) and either (x) the Company determines that such encumbrance or restriction will not adversely affect the Company’s ability to make principal and interest payments on the Securities as and when they come due or (y) such encumbrances and restrictions apply only during the continuance of a default in respect of a payment or financial maintenance covenant relating to such Indebtedness;
(H) any encumbrance or restriction pursuant to the terms of any agreement or instrument relating to any Indebtedness of Subsidiary Guarantors or Foreign Subsidiaries to the extent such Indebtedness is permitted to be Incurred pursuant to an agreement entered into subsequent to the Issue Date pursuant to Section 4.03;
(I) any encumbrance or restriction pursuant to customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business; and
(J) applicable law or any applicable rule, regulation or order; and
(2) with respect to clause (c) only,
(A) any encumbrance or restriction consisting of customary nonassignment provisions in leases governing leasehold interests to the extent such provisions restrict the transfer of the lease or the property leased thereunder; and
(B) any encumbrance or restriction contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements or mortgages.
 
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SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Disposition unless (1) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair market value (including as to the value of all non-cash consideration), as determined in good faith by the Company, of the shares and assets subject to such Asset Disposition; (2) at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash or cash equivalents; and (3) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) (A)  first , to the extent the Company elects (or is required by the terms of any Indebtedness), to prepay, repay, redeem or purchase Senior Indebtedness of the Company or of a Subsidiary Guarantor or Indebtedness (other than any Disqualified Stock) of a Restricted Subsidiary (in each case other than Indebtedness owed to the Company or a Subsidiary of the Company) within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (B)  second , to the extent of the balance of such Net Available Cash after application in accordance with clause (A), to the extent the Company elects, to acquire Additional Assets within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; and (C)  third , to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to make an Offer to the holders of the Securities (and to holders of other Senior Indebtedness of the Company or of a Subsidiary Guarantor designated by the Company) to purchase Securities (and such other Senior Indebtedness of the Company) pursuant to and subject to the conditions contained in this Indenture;  provided ,  however , that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A) or (C) above, the Company or such Restricted Subsidiary shall permanently retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased, although such requirement to retire Indebtedness and reduce loan commitments shall not be deemed to prohibit the Company and the Restricted Subsidiaries from thereafter Incurring Indebtedness otherwise permitted by Section 4.03;  provided ,  however , that, in the case of clause (B) above a binding commitment shall be treated as a permitted application of the Net Available Cash from the date of such commitment so long as the Company or such Restricted Subsidiary enters into such commitment with the good faith expectation that such Net Proceeds will be applied to satisfy such commitment within 180 days of such commitment (an “Acceptable Commitment”);  provided further  that if any Acceptable Commitment is later canceled or terminated for any reason before such Net Available Cash is applied, then such Net Available Cash shall be applied pursuant to clause (C) above. Notwithstanding the foregoing provisions of this Section 4.06, the Company and the Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section 4.06(a) except to the extent that the aggregate Net Available Cash from all Asset Dispositions which is not applied in accordance with this Section 4.06(a) exceeds $100 million. Pending application of Net Available Cash pursuant to this Section 4.06(a), such Net Available Cash shall be invested in Temporary Cash Investments or applied to temporarily reduce revolving credit indebtedness or in any other manner permitted by this Indenture.
 
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For the purposes of this Section 4.06(a), the following are deemed to be cash or cash equivalents: (i) the assumption or discharge of Indebtedness or other liabilities of the Company (other than obligations in respect of Disqualified Stock of the Company) or any Restricted Subsidiary (other than obligations in respect of Disqualified Stock or Preferred Stock of a Subsidiary Guarantor) and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness or other liability in connection with such Asset Disposition; (ii) securities or other obligations received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days of the Asset Disposition, to the extent of the cash received in that conversion; (iii) Additional Assets; and (iv) any Designated Noncash Consideration received by the Company or any Restricted Subsidiary in such Asset Disposition having an aggregate fair market value (as determined in good faith by the Board of Directors), taken together with all other Designated Noncash Consideration received pursuant to this clause) that is at that time outstanding, not to exceed the greater of (x) $250 million and (y) an amount equal to 3% of Total Assets on the date on which such Designated Noncash Consideration is received (with the fair market value of each item of Designated Noncash Consideration being measured at the time received without giving effect to subsequent changes in value).
(b) In the event of an Asset Disposition that requires the purchase of Securities (and other Senior Indebtedness of the Company or of a Subsidiary Guarantor) pursuant to Section 4.06(a)(3)(C), the Company will purchase Securities tendered pursuant to an offer by the Company for the Securities (and such other Senior Indebtedness of the Company or of a Subsidiary Guarantor) (the “Offer”) at a purchase price of 100% of their principal amount (or, in the event such other Senior Indebtedness was issued with significant original issue discount, 100% of the accreted value thereof), without premium, plus accrued but unpaid interest (or, in respect of such other Senior Indebtedness, such other price, not to exceed 100%, as may be provided for by the terms of such other Senior Indebtedness) in accordance with the procedures (including prorating in the event of oversubscription) set forth in Section 4.06(c). If the aggregate purchase price of securities tendered exceeds the Net Available Cash allotted to their purchase, the Company shall select the securities to be purchased on a pro rata basis but in round denominations, which in the case of the Securities will be denominations of $2,000 principal amount or any greater integral multiple of $1,000. The Company shall not be required to make an Offer to purchase Securities (and other Senior Indebtedness of the Company or a Subsidiary Guarantor) pursuant to this Section 4.06 if the Net Available Cash available therefor is less than $100 million (which lesser amount shall be carried forward for purposes of determining whether such an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). Upon completion of such an Offer, Net Available Cash shall be deemed to be reduced by the aggregate amount of such Offer.
(c) (1) Promptly, and in any event within 10 days after the Company becomes obligated to make an Offer, the Company shall deliver to the Trustee and send,
 
50

by first-class mail to each Holder, a written notice stating that the Holder may elect to have his Securities purchased by the Company either in whole or in part (subject to prorating as described in Section 4.06(b) in the event the Offer is oversubscribed) in denominations of $2,000 principal amount or any greater integral multiple of $1,000, at the applicable purchase price. The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice (the “Purchase Date”) and shall contain such information concerning the business of the Company which the Company in good faith believes will enable such Holders to make an informed decision (which at a minimum will include (A) the most recently filed Annual Report on Form 10-K (including audited consolidated financial statements) of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company filed subsequent to such Quarterly Report, other than Current Reports describing Asset Dispositions otherwise described in the offering materials (or corresponding successor reports), (B) a description of material developments in the Company’s business subsequent to the date of the latest of such reports, and (C) if material, appropriate  pro forma  financial information) and all instructions and materials necessary to tender Securities pursuant to the Offer, together with the information contained in clause (3).
(2) Not later than the date upon which written notice of an Offer is delivered to the Trustee as provided below, the Company shall deliver to the Trustee an Officers’ Certificate as to (A) the amount of the Offer (the “Offer Amount”), including information as to any other Senior Indebtedness included in the Offer, (B) the allocation of the Net Available Cash from the Asset Disposition pursuant to which such Offer is being made and (C) the compliance of such allocation with the provisions of Section 4.06(a) and (b). On such date, the Company shall also irrevocably deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust) in Temporary Cash Investments, maturing on the last day prior to the Purchase Date or on the Purchase Date if funds are immediately available by open of business, an amount equal to the Offer Amount to be held for payment in accordance with the provisions of this Section. If the Offer includes other Senior Indebtedness, the deposit described in the preceding sentence may be made with any other paying agent pursuant to arrangements satisfactory to the Trustee. Upon the expiration of the period for which the Offer remains open (the “Offer Period”), the Company shall deliver to the Trustee for cancellation the Securities or portions thereof which have been properly tendered to and are to be accepted by the Company. The Trustee shall, on the Purchase Date, mail or deliver payment (or cause the delivery of payment) to each tendering Holder in the amount of the purchase price. In the event that the aggregate purchase price of the Securities delivered by the Company to the Trustee is less than the Offer Amount applicable to the Securities, the Trustee shall deliver the excess to the Company immediately after the expiration of the Offer Period for application in accordance with this Section 4.06.
(3) Holders electing to have a Security purchased shall be required to surrender the Security, with an appropriate form duly completed, to the Company
 
51

at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the Purchase Date, a telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Security purchased. Holders whose Securities are purchased only in part shall be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officers’ Certificate stating that such Securities are to be accepted by the Company pursuant to and in accordance with the terms of this Section. A Security shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section 4.06. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.06, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.06 by virtue of its compliance with such securities laws or regulations.
SECTION 4.07. Limitation on Affiliate Transactions. (a) The Company will not, and will not permit any Restricted Subsidiary to, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with, or for the benefit of, any Affiliate of the Company (an “Affiliate Transaction”) involving aggregate consideration in excess of $5.0 million unless (1) the terms of the Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary than those that could be obtained at the time of the Affiliate Transaction in arm’s-length dealings with a Person who is not an Affiliate; (2) if such Affiliate Transaction involves an amount in excess of $25 million, the terms of the Affiliate Transaction are set forth in writing and a majority of the directors of the Company disinterested with respect to such Affiliate Transaction, if any, have determined in good faith that the criteria set forth in clause (1) are satisfied and have approved the relevant Affiliate Transaction as evidenced by a resolution of the Board of Directors; and (3) if such Affiliate Transaction involves an amount in excess of $100 million, the Board of Directors shall also have received a written opinion from an Independent Qualified Party to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or is not less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm’s-length transaction with a Person who was not an Affiliate.
 
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(b) The provisions of Section 4.07(a) shall not prohibit (1) any Permitted Investment (other than a Permitted Investment described in clauses (1), (2) or (15) of the definition thereof) or Restricted Payment (but, in the case of a Restricted Payment, only to the extent (i) included in the calculation of the amount of Restricted Payments made pursuant to Section 4.04(a)(3), or (ii) made pursuant to Section 4.04(b)(4) through (15)); (2) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans, or indemnities provided on behalf of employees or directors approved by the Board of Directors or senior management of the Company; (3) loans or advances to employees in the ordinary course of business consistent with the past practices of the Company or its Restricted Subsidiaries, but in any event not to exceed $25 million in the aggregate outstanding at any one time; (4) the payment of reasonable fees to directors of the Company and its Restricted Subsidiaries who are not employees of the Company or its Restricted Subsidiaries; (5) any transaction with the Company, a Restricted Subsidiary or joint venture or similar entity which would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns an equity interest in or otherwise controls such Restricted Subsidiary, joint venture or similar entity; (6) the issuance or sale of any Capital Stock (other than Disqualified Stock) of the Company; (7) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture that are fair to the Company or its Restricted Subsidiaries, in the reasonable determination of the Board of Directors or the senior management of the Company, or are no less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm’s length transaction with a Person who is not an Affiliate; (8) any agreement as in effect on the Issue Date or any renewals or extensions of any such agreement (so long as such renewals or extensions are not less favorable to the Company or the Restricted Subsidiaries in any material respect) and the transactions evidenced thereby; (9) any transaction pursuant to a Qualified Receivables Transaction; (10) any transaction between or among the Company and any Restricted Subsidiary (or entity that becomes a Restricted Subsidiary as a result of such transaction), or between or among Restricted Subsidiaries; (11) the entry into and performance obligations of the Company or any of its Restricted Subsidiaries under the terms of any transaction arising out of, and any payments pursuant to or for purposes of funding, any agreement or instrument in effect as of or on the Issue Date, as these agreements and instruments may be amended, modified, supplemented, extended, renewed or refinanced from time to time in accordance with the other terms of this Section 4.07 or to the extent not less favorable to the Holders in any material respect; and (12) any purchases by the Company’s Affiliates of Indebtedness or Disqualified Stock of the Company or any of its Restricted Subsidiaries the majority of which Indebtedness or Disqualified Stock is purchased substantially contemporaneously by Persons who are not the Company’s Affiliates; provided that such purchases by the Company’s Affiliates are on the same terms as such purchases by such Persons who are not the Company’s Affiliates.
SECTION 4.08. Limitation on Line of Business. The Company will not, and will not permit any Restricted Subsidiary, to engage in any business other than a Related Business, except to the extent as would not be material to the Company and its Subsidiaries taken as a whole.
 
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SECTION 4.09. Change of Control. (a) Upon the occurrence of a Change of Control, each Holder shall have the right to require that the Company purchase such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
(b) Within 30 days following any Change of Control, the Company shall mail a notice to each Holder with a copy to the Trustee (the “Change of Control Offer”) stating:
(1) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder’s Securities at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of Control (including information with respect to proforma historical income, cash flow and capitalization, in each case after giving effect to such Change of Control);
(3) the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and
(4) the instructions, as determined by the Company, consistent with this Section, that a Holder must follow in order to have its Securities purchased.
(c) Holders electing to have a Security purchased will be required to surrender the Security, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the purchase date. Holders will be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company under this Section 4.09 shall be delivered by the Company to the Trustee for cancellation, and the Company shall pay the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto.
 
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(e) Notwithstanding the foregoing provisions of this Section 4.09, the Company shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.09 applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer.
(f) Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.
(g) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue of its compliance with such securities laws or regulations.
SECTION 4.10. Limitation on Liens. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or permit to exist any Lien (the “Initial Lien”) of any nature whatsoever on any of its properties (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired securing any Indebtedness, other than Permitted Liens, without effectively providing that the Securities shall be secured equally and ratably with (or prior to) the obligations so secured for so long as such obligations are so secured.
Any Lien created for the benefit of the Holders of the Securities pursuant to the preceding sentence shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien.
SECTION 4.11. Limitation on Sale/Leaseback Transactions. The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless (a) the Company or such Restricted Subsidiary would be entitled to (1) Incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to Section 4.03 and (2) create a Lien on such property securing such Attributable Debt without equally and ratably securing the Securities pursuant to Section 4.10, (b) the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the fair market value (as determined by the Board of Directors) of such property and (c) the Company applies the proceeds of such transaction in compliance with Section 4.06.
SECTION 4.12. Future Guarantors. The Company shall cause each Domestic Restricted Subsidiary that Incurs any Indebtedness (other than Indebtedness
 
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permitted to be Incurred pursuant to Section 4.03(b)(2), (7), (8), (9), (12), (13) or (14) to, and each Foreign Subsidiary that enters into a Guarantee of any Senior Indebtedness (other than Indebtedness permitted to be Incurred pursuant to Section 4.03(b)(2), (7), (8), (9), (12), (13) or (14) and other than a Foreign Subsidiary that Guarantees Senior Indebtedness Incurred by another Foreign Subsidiary) to, in each case, within 30 Business Days, execute and deliver to the Trustee a Guaranty Agreement pursuant to which such Restricted Subsidiary will Guarantee payment of the Securities on the same terms and conditions as those set forth in Article 10 of this Indenture.
SECTION 4.13. Compliance Certificate. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers’ Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA § 314(a)(4).
SECTION 4.14. Further Instruments and Acts. Upon request of the Trustee, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
SECTION 4.15. Covenant Suspension. (a) Following the first day (a) the Securities have achieved Investment Grade Status and (b) no Default or Event of Default has occurred and is continuing, then, beginning on that day and continuing until the Reversion Date (as defined below), the Company and its Restricted Subsidiaries will not be subject to the following provisions of this Indenture (collectively, the “Suspended Covenants”): Section 4.03, Section 4.04, Section 4.05, Section 4.06, Section 4.07, Section 4.08, Section 4.11(a)(1), Section 4.11(c), Section 4.12 and Section 5.01(a)(3).
(b) If at any time the Securities cease to have such Investment Grade Status or if a Default or Event of Default occurs and is continuing, then the Suspended Covenants will thereafter be reinstated as if such covenants had never been suspended (the “Reversion Date”) and shall be applicable pursuant to the terms of this Indenture (including in connection with performing any calculation or assessment to determine compliance with the terms of this Indenture), unless and until the Securities subsequently attain Investment Grade Status and no Default or Event of Default is in existence (in which event the Suspended Covenants shall no longer be in effect for such time that the Securities maintain an Investment Grade Status and no Default or Event of Default is in existence); provided, however, that no Default, Event of Default or breach of any kind shall be deemed to exist under this Indenture, the Securities or any Guaranty with respect to the Suspended Covenants based on, and none of the Company or any of its Subsidiaries shall bear any liability for, any actions taken or events occurring during the Suspension Period (as defined below), or any actions taken at any time pursuant to any contractual obligation arising prior to the Reversion Date, regardless of whether such actions or events would have been permitted if the applicable Suspended Covenants
 
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remained in effect during such period. The period of time between the date of suspension of the Suspended Covenants and the Reversion Date is referred to as the “Suspension Period.”
(c) On the Reversion Date, all Indebtedness Incurred during the Suspension Period will be classified to have been Incurred pursuant to Section 4.03(a) or Section 4.03(b) (to the extent such Indebtedness would be permitted to be Incurred thereunder as of the Reversion Date and after giving effect to the Indebtedness Incurred prior to the Suspension Period and outstanding on the Reversion Date). To the extent such Indebtedness would not be so permitted to be Incurred pursuant to Section 4.03(a) or Section 4.03(b), such Indebtedness will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under Section 4.03(b)(4). Calculations made after the Reversion Date of the amount available to be made as Restricted Payments under Section 4.04 will be made as though Section 4.04 had been in effect since the Issue Date and throughout the Suspension Period. Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under Section 4.04(a). During the Suspension Period, any future obligation to grant further Guarantees of the Securities shall be suspended. All such further obligation to grant Guarantees of the Securities shall be reinstated upon the Reversion Date.
(d) The Company shall deliver promptly to the Trustee an Officer’s Certificate notifying the Trustee of any suspension of the Suspended Covenants and any Reversion Date.
Article 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. (a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the “Successor Company”) shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Securities and this Indenture;
(2) immediately after giving proforma effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;
 
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(3) immediately after giving proforma effect to such transaction, (A) the Successor Company would be able to Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a) or (B) the Consolidated Coverage Ratio for the Successor Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction; and
(4) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture;
provided, however, that clauses (2) and (3) will not be applicable to (A) a Restricted Subsidiary consolidating with, merging into or transferring all or part of its properties and assets to the Company (so long as no Capital Stock of the Company is distributed to any Person) or to another Restricted Subsidiary or (B) the Company merging with an Affiliate of the Company solely for the purpose of reincorporating the Company in another jurisdiction.
For purposes of this Section 5.01, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.
The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from all obligations under the Indenture and to pay the principal of and interest on the Securities.
(b) The Company shall not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or series of transactions, all or substantially all of its assets to any Person unless:
(1) the resulting, surviving or transferee Person (if not such Subsidiary) shall be a Person organized and existing under the laws of the jurisdiction in which such Subsidiary was organized or under the laws of the United States of America, or any State thereof or the District of Columbia, and such Person shall expressly assume, by a Guaranty Agreement, in a form satisfactory to the Trustee, all the obligations of such Subsidiary, if any, under its Subsidiary Guaranty;  provided ,  however , that the foregoing shall not apply in the case of a Subsidiary Guarantor (x) that has been disposed of in its entirety to another Person (other than to the Company or a Restricted Subsidiary of the Company), whether through a merger, consolidation or sale of Capital Stock or assets or (y) that, as a result of the disposition of all or a portion of its Capital
 
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Stock, ceases to be a Subsidiary, in both cases, if in connection therewith the Company provides an Officers’ Certificate to the Trustee to the effect that the Company will comply with its obligations under Section 4.06 in respect of such disposition;
(2) immediately after giving effect to such transaction or transactions on a proforma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default shall have occurred and be continuing; and
(3) the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Guaranty Agreement, if any, complies with this Indenture;
provided, however, that clause (2) will not be applicable to (A) a Restricted Subsidiary consolidating with, merging into or transferring all or part of its properties and assets to a Subsidiary Guarantor (so long as no Capital Stock of the Subsidiary Guarantor is distributed to any Person) or to another Restricted Subsidiary or (B) a Subsidiary Guarantor merging with an Affiliate of the Company solely for the purpose of reincorporating the Subsidiary Guarantor in another jurisdiction.
(c) Parent shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to any Person unless:
(1) the resulting, surviving or transferee Person (if not Parent) shall be a Person organized and existing under the laws of the jurisdiction in which Parent was organized or under the laws of the United States of America, or any State thereof or the District of Columbia, and such Person shall expressly assume, by a Guaranty Agreement, in a form satisfactory to the Trustee, all the obligations of Parent, if any, under the Parent Guaranty;
(2) immediately after giving effect to such transaction or transactions on a proforma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default shall have occurred and be continuing; and
(3) the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Guaranty Agreement, if any, complies with this Indenture;
provided, however, that clause (2) will not be applicable to (A) a Restricted Subsidiary consolidating with, merging into or transferring all or part of its properties and assets to Parent (so long as no Capital Stock of Parent is distributed to any Person) or (B) Parent merging with an Affiliate of the Company solely for the purpose of reincorporating Parent in another jurisdiction.
 
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Article 6
Defaults and Remedies
SECTION 6.01. Events of Default. An “Event of Default” occurs if:
(1) the Company defaults in any payment of interest on any Security when the same becomes due and payable, and such default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Security when the same becomes due and payable at its Stated Maturity, upon optional redemption, upon required purchase, upon declaration of acceleration or otherwise;
(3) the Company or Parent fails to comply with Section 5.01;
(4) the Company or any Subsidiary Guarantor fails to comply with any of its agreements contained in this Indenture (other than those referred to in clause (1), (2) or (3) above) and such failure continues for 60 days after the notice specified below;
(5) Indebtedness of the Company, any Subsidiary Guarantor or any Significant Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $125 million, or its foreign currency equivalent at the time;
(6) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an involuntary case;
(C) consents to the appointment of a Custodian of it or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to insolvency;
(7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant Subsidiary in an involuntary case;
 
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(B) appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days;
(8) any judgment or decree for the payment of money in excess of $125 million or its foreign currency equivalent at the time (other than a judgment or decree covered by indemnities or insurance policies issued by reputable and creditworthy companies to the extent coverage has not been disclaimed) is entered against the Company or any Significant Subsidiary, remains outstanding for a period of 60 consecutive days following the entry of such judgment or decree and is not discharged, waived or stayed; or
(9) any Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Guaranty) or any Guarantor denies or disaffirms its obligations under its Guaranty.
The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.
The term “Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
A Default under clause (4) will not constitute an Event of Default until the Trustee or the holders of at least 25% in principal amount of the outstanding Securities notify the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default”.
In the event of any Event of Default under clause (5), such Event of Default and all consequences thereof (excluding, however, any resulting payment default) will be annulled, waived and rescinded, automatically and without any action by the Trustee or the Securityholders, if within 20 Business Days after such Event of Default arose the Company delivers an Officers’ Certificate to the Trustee stating that (x) the Indebtedness that is the basis for such Event of Default has been discharged or (y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default or (z) the default that is the basis for such Event of Default has been cured, it being understood that in no event shall an acceleration of the principal amount of the Securities be annulled, waived or rescinded upon the happening of any such events.
 
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In the event that the Company or any of its Restricted Subsidiaries had previously taken an action (or failed to take an action) that was prohibited (or required) by this Indenture solely because of the continuance of a Default (the “Initial Default”), then upon the cure or waiver of the Initial Default, any Default or Event of Default arising from the taking of such action (or failure to take such action) and all consequences thereof (excluding any resulting payment Default, other than as a result of acceleration of the Securities) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders.
The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers’ Certificate of any Event of Default under clause (5) or (9) and any event which with the giving of notice or the lapse of time would become an Event of Default under clause (4) or (8), its status and what action the Company is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) with respect to the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the Securities by notice to the Company and the Trustee, may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(6) or (7) with respect to the Company occurs, the principal of and interest on all the Securities shall  ipso facto  become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders. The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in principal amount of the Securities then outstanding by notice to the Trustee may waive an existing Default or Event of Default and its consequences under this Indenture except (a) a Default in the payment of the principal of or interest on a Security, (b) a Default
 
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arising from the failure to redeem or purchase any Security when required pursuant to this Indenture or (c) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in principal amount of the Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability;  provided ,  however , that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Securityholder may pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the outstanding Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding Securities do not give the Trustee a direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. In the event that the Definitive Securities are not issued to any beneficial owner promptly after the Registrar has received a request from the Holder of a Global Security to issue such Definitive Securities to such beneficial owner or its nominee, the Company expressly agrees and acknowledges, with respect to the right of any Holder to pursue a remedy pursuant to this Indenture, the right of such beneficial holder of Securities to pursue such remedy with respect to the portion of the Global Security that represents such beneficial holder’s Securities as if such Definitive Securities had been issued.
 
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SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Securities held by such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section. At least 15 days before such record date, the Company shall mail to each Securityholder and the Trustee a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in
 
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its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in aggregate principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.
Article 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
 
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(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.
(a) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(b) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.
(c) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers;  provided ,  however , that the Trustee’s conduct does not constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may
 
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otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee’s Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee’s certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs, is continuing and is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of or interest on any Security (including payments pursuant to the mandatory redemption provisions of such Security, if any), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is not opposed to the interests of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as practicable after each July 15, beginning with the July 15 following the date of this Indenture, and in any event prior to September 15 in each year, the Trustee shall mail to each Securityholder a brief report dated as of July 15 that complies with TIA § 313(a). The Trustee also shall comply with TIA § 313(b).
A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses Incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Company shall indemnify the Trustee against any and all loss, liability or expense (including attorneys’ fees) Incurred by it in connection with the administration of this trust and the performance of its duties hereunder. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee may have separate counsel and the Company shall pay the fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld or delayed. The Company need not reimburse any expense or indemnify against any loss, liability or expense Incurred by the Trustee through the Trustee’s own wilful misconduct, negligence or bad faith.
 
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To secure the Company’s payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities.
The Company’s payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee Incurs expenses after the occurrence of a Default specified in Section 6.01(6) or (7) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any time by so notifying the Company in writing. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Securities and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee.
 
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If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation, without any further act, shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificates of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA § 310(a). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA § 310(b);  provided ,  however , that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.
Article 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a) When (1) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancellation or (2) all outstanding Securities have become due and payable, whether at maturity or on a redemption date as a result of the mailing of an unconditional notice of redemption pursuant to Article 3
 
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hereof and, in the case of clause (2), the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding Securities, including interest thereon to maturity or such redemption date (other than Securities replaced pursuant to Section 2.07), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 8.01(c), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (1) all its obligations under the Securities and this Indenture (“legal defeasance option”) or (2) its obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 and 4.12 and the operation of Sections 6.01(5), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of Sections 6.01(6) and (7), with respect only to Significant Subsidiaries and Subsidiary Guarantors) and the limitations contained in Section 5.01(a)(3) (“covenant defeasance option”). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Sections 6.01(4), 6.01(5), 6.01(6) or 6.01(7) (but, in the case of Sections 6.01(4), (5) and (6), with respect only to Significant Subsidiaries and Subsidiary Guarantors) or because of the failure of the Company to comply with Section 5.01(a)(3). If the Company exercises its legal defeasance option or its covenant defeasance option, each Guarantor, if any, shall be released from all its obligations with respect to its Guaranty.
Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company’s obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in this Article 8 shall survive until the Securities have been paid in full. Thereafter, the Company’s obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company shall be entitled to exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of and interest on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the
 
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deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day period no Default specified in Section 6.01(6) or (7) with respect to the Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, nor is qualified as, a regulated investment company under the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (B) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Securityholders will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;
(8) the Company delivers to the Trustee an Opinion of Counsel in the jurisdiction of organization of the Company (if other than the United States) to the effect that Holders will not recognize income, gain or loss for income tax purposes of such jurisdiction as a result of such deposit and defeasance, and will be subject to income tax of such jurisdiction on the same amounts, and in the same manner and at the same times as would have been the case if such deposit and defeasance, had not occurred; and
(9) the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article 8 have been complied with.
 
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Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or Securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look to the Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and each Guarantor’s obligations under this Indenture, each Guaranty and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8;  provided ,  however , that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
Article 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the Guarantors and the Trustee may amend this Indenture or the Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, mistake, defect or inconsistency;
 
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(2) to provide for the assumption by a successor corporation of the obligations of the Company or any Guarantor pursuant to Article 5;
(3) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities, including any Subsidiary Guaranties, or to secure the Securities;
(5) to add to the covenants of the Company or any Guarantor for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or any Subsidiary Guarantor;
(6) to make any change that does not adversely affect the rights of any holder of the Securities;
(7) to comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA;
(8) to make changes of a technical or conforming nature that are necessary (as determined in good faith by the Company) for the proper issuance of Exchange Securities and/or Additional Securities otherwise permitted to be issued under this Indenture;
(9) to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee pursuant to the requirements hereof or to provide for the accession by such successor Trustee to the Securities, the Guaranties and this Indenture;
(10) to conform the text of this Indenture, the Securities and the Subsidiary Guaranties to any provision of the “Description of the Notes” contained in the Offering Circular to the extent that such provision was intended to be a verbatim recitation of a provision of this Indenture, the Securities and the Guaranties; or
(11) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Securities; provided, however, that (a) compliance with this Indenture as so amended would not result in Securities being transferred in violation of the Securities Act or any other applicable securities law and (b) such amendment does not materially and adversely affect the rights of Holders to transfer Securities.
After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.
 
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SECTION 9.02. With Consent of Holders. The Company, the Guarantors and the Trustee may amend this Indenture or the Securities with the consent of the Holders of at least a majority in principal amount of the Securities then outstanding (including consents obtained in connection with a tender offer or exchange for the Securities) and any past default or compliance with any provisions may also be waived with the consent of the Holders of at least a majority in principal amount of the Securities then outstanding. However, without the consent of each Securityholder affected thereby, an amendment or waiver may not:
(1) reduce the amount of Securities whose Holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of interest on any Security;
(3) reduce the principal of or change the Stated Maturity of any Security;
(4) change the provisions applicable to the redemption of any Security contained in Article 3 hereto or paragraph 5 of the Securities;
(5) make any Security payable in money other than that stated in the Security;
(6) make any changes in the ranking or priority of any Security that would adversely affect the Securityholders;
(7) make any change in Section 6.04 or 6.07 or the second sentence of this Section;
(8) make any change in the ranking or priority of any Securities that would adversely affect the Securityholders; or
(9) make any change in, or release other than in accordance with this Indenture, any Guaranty that would adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.
 
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SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Securityholder. An amendment or waiver becomes effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment.
SECTION 9.06. Trustee to Sign Amendments. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and (subject to Section 7.01) shall be fully protected in relying upon an Officers’ Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to all Holders and is paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.
 
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Article 10
Guaranties
SECTION 10.01. Guaranties. Each Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally, to each Holder and to the Trustee and its successors and assigns (a) the full and punctual payment of principal of and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under this Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under this Indenture and the Securities (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under this Article 10 notwithstanding any extension or renewal of any Obligation.
Each Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Securities or the Guaranteed Obligations. The obligations of each Guarantor hereunder shall not be affected by (1) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person (including any Subsidiary Guarantor) under this Indenture, the Securities or any other agreement or otherwise; (2) any extension or renewal of any thereof; (3) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (4) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (5) the failure of any Holder or the Trustee to exercise any right or remedy against any other Guarantor of the Guaranteed Obligations; or (6) except as set forth in Section 10.06, any change in the ownership of such Guarantor.
Each Guarantor further agrees that its Guaranty herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations.
Except as expressly set forth in Sections 8.01(b), 10.02 and 10.06, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not
 
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be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Obligation, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (A) the unpaid amount of such Guaranteed Obligations, (B) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by law) and (C) all other monetary Guaranteed Obligations of the Company to the Holders and the Trustee.
Each Guarantor agrees that it shall not be entitled to any right of subrogation in respect of any Obligations guaranteed hereby until payment in full of all such Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the Guaranteed Obligations hereby may be accelerated as provided in Article 6 for the purposes of such Guarantor’s Guaranty herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section.
Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees) Incurred by the Trustee or any Holder in enforcing any rights under this Section.
SECTION 10.02. Limitation on Liability. Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
 
77

SECTION 10.03. Successors and Assigns. This Article 10 shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.
SECTION 10.04. No Waiver. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 10 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 10 at law, in equity, by statute or otherwise.
SECTION 10.05. Modification. No modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances.
SECTION 10.06. Release of Guarantor. A Subsidiary Guarantor will be released (and, in the case of clause (5) and (6), Parent will be released) from its obligations under this Article 10 (other than any obligation that may have arisen under Section 10.07):
(1) upon the sale (including any sale pursuant to any foreclosure of any pledge or security interest, or other exercise of remedies by a holder of Indebtedness of the Company or of such Guarantor) or other disposition (including by way of consolidation or merger) of a Subsidiary Guarantor, including the sale or disposition of Capital Stock of a Subsidiary Guarantor, following which such Subsidiary Guarantor is no longer a Subsidiary,
(2) upon the sale or disposition of all or substantially all the assets of such Subsidiary Guarantor,
(3) upon the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the terms of this Indenture,
(4) at such time as such Subsidiary Guarantor does not have any Indebtedness outstanding that would have required such Subsidiary Guarantor to enter into a Guaranty Agreement pursuant to Section 4.12 and the Company
 
78

provides an Officers’ Certificate to the Trustee certifying that no such Indebtedness is outstanding and that the Company elects to have such Guarantor released from this Article 10,
(5) upon defeasance of the Securities pursuant to Article 8, or
(6) upon the full satisfaction of the Company’s obligations under this Indenture;
provided, however, that in the case of clauses (1) and (2) above, (i) such sale or other disposition is made to a Person other than the Company or a Restricted Subsidiary of the Company, (ii) such sale or disposition is otherwise permitted by this Indenture and (iii) the Company provides an Officers’ Certificate to the Trustee to the effect that the Company will comply with its obligations under Section 4.06.
At the request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release.
SECTION 10.07. Contribution. Each Subsidiary Guarantor that makes a payment under its Subsidiary Guaranty shall be entitled upon payment in full of all Guaranteed Obligations under this Indenture to a contribution from each other Subsidiary Guarantor in an amount equal to such other Subsidiary Guarantor’s  pro rata  portion of such payment based on the respective net assets of all the Subsidiary Guarantors at the time of such payment determined in accordance with GAAP.
Article 11
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.
SECTION 11.02. Notices. Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows:
if to the Company or any Guarantor:
CHS/Community Health Systems, Inc.
4000 Meridian Boulevard
Franklin, TN 37067
Attention of General Counsel
 
79

if to the Trustee:
U.S. Bank National Association
150 Fourth Avenue North, 2nd Floor
Nashville, TN 37219
Attention of Corporate Trust Services
The Company, any Guarantor or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to the Securityholder at the Securityholder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA § 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, any Guarantor, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
 
80

(3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.
SECTION 11.06. When Securities Disregarded. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by or at a meeting of Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.08. Legal Holidays. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09. Governing Law. This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York.
SECTION 11.10. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company or any Guarantor shall not have any liability for any obligations of the Company under the Securities or this Indenture or of such Guarantor under its Guaranty or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation (other than pursuant to any Guaranty). By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.
 
81

SECTION 11.13. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
[Remainder of Page Intentionally Left Blank]
 
82

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

CHS/COMMUNITY HEALTH SYSTEMS, INC.,	
 	 	 	
 	 	By: 	 	/s/ W. Larry Cash	
 	 	 	 	Name:	 	W. Larry Cash	
 	 	 	 	Title:	 	Executive Vice President, Chief Financial Officer and Director	
[Signature Page to Indenture]

 
 	 	 	
ABILENE HOSPITAL, LLC	  	CLEVELAND TENNESSEE HOSPITAL COMPANY, LLC	
 	 	
ABILENE MERGER, LLC	  	CLINTON HOSPITAL CORPORATION	
 	 	
ANNA HOSPITAL CORPORATION	  	COATESVILLE HOSPITAL CORPORATION	
 	 	
BERWICK HOSPITAL COMPANY, LLC	  	COLLEGE STATION HOSPITAL, L.P.	
 	 	
BIG BEND HOSPITAL CORPORATION	  	COLLEGE STATION MEDICAL CENTER, LLC	
 	 	
BIG SPRING HOSPITAL CORPORATION	  	COLLEGE STATION MERGER, LLC	
 	 	
BIRMINGHAM HOLDINGS II, LLC	  	COMMUNITY GP CORP.	
 	 	
BIRMINGHAM HOLDINGS, LLC	  	COMMUNITY HEALTH INVESTMENT COMPANY, LLC	
 	 	
BLUEFIELD HOLDINGS, LLC	  	COMMUNITY HEALTH SYSTEMS, INC.	
 	 	
BLUEFIELD HOSPITAL COMPANY, LLC	  	COMMUNITY LP CORP.	
 	 	
BLUFFTON HEALTH SYSTEM, LLC	  	CP HOSPITAL GP, LLC	
 	 	
BROWNSVILLE HOSPITAL CORPORATION	  	CPLP, LLC	
 	 	
BROWNWOOD HOSPITAL, L.P.	  	CRESTWOOD HOSPITAL, LLC	
 	 	
BROWNWOOD MEDICAL CENTER, LLC	  	CRESTWOOD HOSPITAL, LP, LLC	
 	 	
BULLHEAD CITY HOSPITAL CORPORATION	  	CSMC, LLC	
 	 	
BULLHEAD CITY HOSPITAL INVESTMENT CORPORATION	  	CSRA HOLDINGS, LLC	
 	 	
CARLSBAD MEDICAL CENTER, LLC	  	DEACONESS HOLDINGS, LLC	
 	 	
CENTRE HOSPITAL CORPORATION	  	DEACONESS HOSPITAL HOLDINGS, LLC	
 	 	
CHHS HOLDINGS, LLC	  	DEMING HOSPITAL CORPORATION	
 	 	
CHS KENTUCKY HOLDINGS, LLC	  	DESERT HOSPITAL HOLDINGS, LLC	
 	 	
CHS PENNSYLVANIA HOLDINGS, LLC	  	DETAR HOSPITAL, LLC	
 	 	
CHS VIRGINIA HOLDINGS, LLC	  	DHFW HOLDINGS, LLC	
 	 	
CHS WASHINGTON HOLDINGS, LLC	  	DHSC, LLC	
 	 	
CLARKSVILLE HOLDINGS, LLC	  	DUKES HEALTH SYSTEM, LLC	
 	 	
CLEVELAND HOSPITAL CORPORATION	  	DYERSBURG HOSPITAL CORPORATION	

 	 	By: 	 	/s/ Rachel A. Seifert	  	 	
 	 	 	 	Name:	 	RACHEL A. SEIFERT	  	 	
 	 	 	 	Title:	 	EXECUTIVE VICE PRESIDENT	  	 	
 	 	 	
 	 	 	 	Acting on behalf of each of the Guarantors set forth above	
[Signature Page to Indenture]

 
 	 	 	
EMPORIA HOSPITAL CORPORATION	  	KAY COUNTY HOSPITAL CORPORATION	
 	 	
EVANSTON HOSPITAL CORPORATION	  	KAY COUNTY OKLAHOMA HOSPITAL COMPANY, LLC	
 	 	
FALLBROOK HOSPITAL CORPORATION	  	KIRKSVILLE HOSPITAL COMPANY, LLC	
 	 	
FOLEY HOSPITAL CORPORATION	  	LAKEWAY HOSPITAL CORPORATION	
 	 	
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC	  	LANCASTER HOSPITAL CORPORATION	
 	 	
FORREST CITY HOSPITAL CORPORATION	  	LAS CRUCES MEDICAL CENTER, LLC	
 	 	
FORT PAYNE HOSPITAL CORPORATION	  	LEA REGIONAL HOSPITAL, LLC	
 	 	
FRANKFORT HEALTH PARTNER, INC.	  	LEXINGTON HOSPITAL CORPORATION	
 	 	
FRANKLIN HOSPITAL CORPORATION	  	LONGVIEW MERGER, LLC	
 	 	
GADSDEN REGIONAL MEDICAL CENTER, LLC	  	LRH, LLC	
 	 	
GALESBURG HOSPITAL CORPORATION	  	LUTHERAN HEALTH NETWORKOF INDIANA, LLC	
 	 	
GRANBURY HOSPITAL CORPORATION	  	MARION HOSPITAL CORPORATION	
 	 	
GRANITE CITY HOSPITAL CORPORATION	  	MARTIN HOSPITAL CORPORATION	
 	 	
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC	  	MASSILLON COMMUNITY HEALTH SYSTEM LLC	
 	 	
GREENVILLE HOSPITAL CORPORATION	  	MASSILLON HEALTH SYSTEM LLC	
 	 	
GRMC HOLDINGS, LLC	  	MASSILLON HOLDINGS, LLC	
 	 	
HALLMARK HEALTHCARE COMPANY, LLC	  	MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC	
 	 	
HOBBS MEDCO, LLC	  	MCNAIRY HOSPITAL CORPORATION	
 	 	
HOSPITALOF BARSTOW, INC.	  	MCSA, L.L.C.	
 	 	
HOSPITALOF FULTON, INC.	  	MEDICAL CENTEROF BROWNWOOD, LLC	
 	 	
HOSPITALOF LOUISA, INC.	  	MERGER LEGACY HOLDINGS, LLC	
 	 	
HOSPITALOF MORRISTOWN, INC.	  	MMC OF NEVADA, LLC	
 	 	
JACKSON HOSPITAL CORPORATION (KY)	  	MOBERLY HOSPITAL COMPANY, LLC	
 	 	
JACKSON HOSPITAL CORPORATION (TN)	  	MWMC HOLDINGS, LLC	
 	 	
JOURDANTON HOSPITAL CORPORATION	  	NANTICOKE HOSPITAL COMPANY, LLC	

 	 	By: 	 	/s/ Rachel A. Seifert	  	 	
 	 	 	 	Name:	 	RACHEL A. SEIFERT	  	 	
 	 	 	 	Title:	 	EXECUTIVE VICE PRESIDENT	  	 	
 	 	 	
 	 	 	 	Acting on behalf of each of the Guarantors set forth above	
[Signature Page to Indenture]

 
 	 	 	
NATIONAL HEALTHCAREOF LEESVILLE, INC.	  	QHG OF FORT WAYNE COMPANY, LLC	
 	 	
NATIONAL HEALTHCAREOF MT. VERNON, INC.	  	QHG OF HATTIESBURG, INC.	
 	 	
NATIONAL HEALTHCAREOF NEWPORT, INC.	  	QHG OF MASSILLON, INC.	
 	 	
NAVARRO HOSPITAL, L.P.	  	QHG OF SOUTH CAROLINA, INC.	
 	 	
NAVARRO REGIONAL, LLC	  	QHG OF SPARTANBURG, INC.	
 	 	
NC-DSH, LLC	  	QHG OF SPRINGDALE, INC.	
 	 	
NORTHAMPTON HOSPITAL COMPANY, LLC	  	QHG OF WARSAW COMPANY, LLC	
 	 	
NORTHWEST HOSPITAL, LLC	  	QUORUM HEALTH RESOURCES, LLC	
 	 	
NOV HOLDINGS, LLC	  	RED BUD HOSPITAL CORPORATION	
 	 	
NRH, LLC	  	RED BUD ILLINOIS HOSPITAL COMPANY, LLC	
 	 	
OAK HILL HOSPITAL CORPORATION	  	REGIONAL HOSPITALOF LONGVIEW, LLC	
 	 	
ORO VALLEY HOSPITAL, LLC	  	RIVER REGION MEDICAL CORPORATION	
 	 	
PALMER-WASILLA HEALTH SYSTEM, LLC	  	ROSWELL HOSPITAL CORPORATION	
 	 	
PAYSON HOSPITAL CORPORATION	  	RUSTON HOSPITAL CORPORATION	
 	 	
PENNSYLVANIA HOSPITAL COMPANY, LLC	  	RUSTON LOUISIANA HOSPITAL COMPANY, LLC	
 	 	
PHILLIPS HOSPITAL CORPORATION	  	SACMC, LLC	
 	 	
PHOENIXVILLE HOSPITAL COMPANY, LLC	  	SALEM HOSPITAL CORPORATION	
 	 	
POTTSTOWN HOSPITAL COMPANY, LLC	  	SAN ANGELO COMMUNITY MEDICAL CENTER, LLC	
 	 	
QHG GEORGIA HOLDINGS II, LLC	  	SAN ANGELO MEDICAL, LLC	
 	 	
QHG GEORGIA HOLDINGS, INC.	  	SAN MIGUEL HOSPITAL CORPORATION	
 	 	
QHG GEORGIA, LP	  	SCRANTON HOLDINGS, LLC	
 	 	
QHG OF BLUFFTON COMPANY, LLC	  	SCRANTON HOSPITAL COMPANY, LLC	
 	 	
QHG OF CLINTON COUNTY, INC.	  	SHELBYVILLE HOSPITAL CORPORATION	
 	 	
QHG OF ENTERPRISE, INC.	  	SILOAM SPRINGS ARKANSAS HOSPITAL COMPANY, LLC	
 	 	
QHG OF FORREST COUNTY, INC.	  	SILOAM SPRINGS HOLDINGS, LLC	

 	 	By: 	 	/s/ Rachel A. Seifert	  	 	
 	 	 	 	Name:	 	RACHEL A. SEIFERT	  	 	
 	 	 	 	Title:	 	EXECUTIVE VICE PRESIDENT	  	 	
 	 	 	
 	 	 	 	Acting on behalf of each of the Guarantors set forth above	
[Signature Page to Indenture]

 
 	 	 	
SOUTHERN TEXAS MEDICAL CENTER, LLC	  	WATSONVILLE HOSPITAL CORPORATION	
 	 	
SPOKANE VALLEY WASHINGTON HOSPITAL COMPANY, LLC	  	WAUKEGAN HOSPITAL CORPORATION	
 	 	
SPOKANE WASHINGTON HOSPITAL COMPANY, LLC
 
TENNYSON HOLDINGS, LLC	  	WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC
 
WEATHERFORD HOSPITAL CORPORATION	
 	 	
TOMBALL TEXAS HOLDINGS, LLC	  	WEATHERFORD TEXAS HOSPITAL COMPANY, LLC	
 	 	
TOMBALL TEXAS HOSPITAL COMPANY, LLC	  	WEBB HOSPITAL CORPORATION	
 	 	
TOOELE HOSPITAL CORPORATION	  	WEBB HOSPITAL HOLDINGS, LLC	
 	 	
TRIAD HEALTHCARE CORPORATION	  	WESLEY HEALTH SYSTEM, LLC	
 	 	
TRIAD HOLDINGS III, LLC	  	WEST GROVE HOSPITAL COMPANY, LLC	
 	 	
TRIAD HOLDINGS IV, LLC	  	WHMC, LLC	
 	 	
TRIAD HOLDINGS V, LLC	  	WILKES-BARRE BEHAVIORAL HOSPITAL COMPANY, LLC	
 	 	
TRIAD NEVADA HOLDINGS, LLC	  	WILKES-BARRE HOLDINGS, LLC	
 	 	
TRIADOF ALABAMA, LLC	  	WILKES-BARRE HOSPITAL COMPANY, LLC	
 	 	
TRIADOF OREGON, LLC	  	WILLIAMS HOSPITAL CORPORATION	
 	 	
TRIAD-ARMC, LLC	  	WOMEN & CHILDREN’S HOSPITAL, LLC	
 	 	
TRIAD-EL DORADO, INC.	  	WOODLAND HEIGHTS MEDICAL CENTER, LLC	
 	 	
TRIAD-NAVARRO REGIONAL HOSPITAL SUBSIDIARY, LLC	  	WOODWARD HEALTH SYSTEM, LLC	
 	 	
TUNKHANNOCK HOSPITAL COMPANY, LLC	  	YOUNGSTOWN OHIO HOSPITAL COMPANY, LLC	
 	 	
VHC MEDICAL, LLC	  	 	
 	 	
VICKSBURG HEALTHCARE, LLC	  	 	
 	 	
VICTORIA HOSPITAL, LLC	  	 	
 	 	
VICTORIAOF TEXAS, L.P.	  	 	
 	 	
VIRGINIA HOSPITAL COMPANY, LLC	  	 	
 	 	
WARREN OHIO HOSPITAL COMPANY LLC	  	 	
 	 	
WARREN OHIO REHAB HOSPITAL COMPANY, LLC	  	 	

 	 	By: 	 	/s/ Rachel A. Seifert	  	 	
 	 	 	 	Name:	 	RACHEL A. SEIFERT	  	 	
 	 	 	 	Title:	 	EXECUTIVE VICE PRESIDENT	  	 	
 	 	 	
 	 	 	 	Acting on behalf of each of the Guarantors set forth above	
[Signature Page to Indenture]

 
 	 	 	 	 	
U.S. BANK NATIONAL ASSOCIATION,	
 	 	 	
 	 	By 
 	 	/s/ Wally Jones	
 	 	 	 	Name: WALLY JONES	
 	 	 	 	Title:   VICE PRESIDENT	

RULE 144A/REGULATION S/IAI APPENDIX
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix the following terms shall have the meanings indicated below:
“Additional Securities” means Securities (other than the Initial Securities issued on the Issue Date) issued under this Indenture, as part of the same series as the Initial Securities issued on the Issue Date.
“Applicable Procedures” means, with respect to any transfer or transaction involving a Temporary Regulation S Global Security or beneficial interest therein, the rules and procedures of the Depository for such a Temporary Regulation S Global Security, to the extent applicable to such transaction and as in effect from time to time.
“Definitive Security” means a certificated Initial Security or Exchange Security or Private Exchange Security bearing, if required, the appropriate restricted securities legend set forth in Section 2.3(e).
“Depository” means The Depository Trust Company, its nominees and their respective successors.
“Distribution Compliance Period”, with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of (i) the day on which such Securities are first offered to Persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the issue date with respect to such Securities.
“Exchange Securities” means (1) the 8.000% Senior Notes Due 2019 issued pursuant to the Indenture in connection with a Registered Exchange Offer and (2) Additional Securities, if any, issued pursuant to a registration statement filed with the SEC under the Securities Act.
“IAI” means an institutional “accredited investor”, as defined in Rule 501(a)(1), (2), (3) and (7) of Regulation D under the Securities Act.
“Initial Purchasers” means (1) with respect to the Initial Securities issued on the Issue Date, Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, Credit Agricole Securities (USA) Inc., Goldman, Sachs & Co.,

Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, Scotia Capital (USA) Inc. and SunTrust Robinson Humphrey, Inc., and (2) with respect to each issuance of Additional Securities, the Persons purchasing such Additional Securities under the related Purchase Agreement.
“Initial Securities” means (1) $1,000,000,000, aggregate principal amount of 8.000% Senior Notes Due 2019 issued on the Issue Date and (2) Additional Securities, if any, issued in a transaction exempt from the registration requirements of the Securities Act.
“Private Exchange” means the offer by the Company, pursuant to a Registration Rights Agreement, to the Initial Purchasers to issue and deliver to each Initial Purchaser, in exchange for the Initial Securities held by the Initial Purchaser as part of its initial distribution, a like aggregate principal amount of Private Exchange Securities.
“Private Exchange Securities” means any 8.000% Senior Notes Due 2019 issued in connection with a Private Exchange.
“Purchase Agreement” means (1) with respect to the Initial Securities issued on the Issue Date, the Purchase Agreement dated November 14, 2011, among the Company, the Guarantors and the Initial Purchasers, and (2) with respect to each issuance of Additional Securities, the purchase agreement or underwriting agreement among the Company, the Guarantors and the Persons purchasing such Additional Securities.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Registered Exchange Offer” means the offer by the Company, pursuant to a Registration Rights Agreement, to certain Holders of Initial Securities, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of Exchange Securities registered under the Securities Act.
“Registration Rights Agreement” means (1) with respect to the Initial Securities issued on the Issue Date, the Registration Rights Agreement dated November 22, 2011, among the Company, the Guarantors and the Initial Purchasers and (2) with respect to each issuance of Additional Securities issued in a transaction exempt from the registration requirements of the Securities Act, the registration rights agreement, if any, among the Company and the Persons purchasing such Additional Securities under the related Purchase Agreement.
“Rule 144A Securities” means all Securities offered and sold to QIBs in reliance on Rule 144A.
“Securities” means the Initial Securities, the Exchange Securities and the Private Exchange Securities, treated as a single class.
“Securities Act” means the Securities Act of 1933.
 
2

“Securities Custodian” means the custodian with respect to a Global Security (as appointed by the Depository), or any successor Person thereto and shall initially be the Trustee.
“Shelf Registration Statement” means the registration statement issued by the Company in connection with the offer and sale of Initial Securities or Private Exchange Securities pursuant to a Registration Rights Agreement.
“Transfer Restricted Securities” means Securities that bear or are required to bear the legend relating to restrictions on transfer relating to the Securities Act set forth in Section 2.3(e) hereof.
1.2 Other Definitions

Term	  	Defined
in
Section:	
 	 	
“Agent Members”	  	2.1(b)	
 	 	
“Global Securities”	  	2.1(a)	
 	 	
“IAI Global Security”	  	2.1(a)	
 	 	
“Permanent Regulation S Global Security”	  	2.1(a)	
 	 	
“Regulation S”	  	2.1(a)	
 	 	
“Regulation S Global Security”	  	2.1(a)	
 	 	
“Rule 144A”	  	2.1(a)	
 	 	
“Rule 144A Global Security”	  	2.1(a)	
 	 	
“Temporary Regulation S Global Security”	  	2.1(a)	
2. The Securities.
2.1 (a) Form and Dating. The Initial Securities will be offered and sold by the Company pursuant to a Purchase Agreement. The Initial Securities will be resold initially only to (i) QIBs in reliance on Rule 144A under the Securities Act (“Rule 144A”) and (ii) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S under the Securities Act (“Regulation S”). Initial Securities may thereafter be transferred to, among others, QIBs, IAIs and purchasers in reliance on Regulation S, subject to the restrictions on transfer set forth herein. Initial Securities initially resold pursuant to Rule 144A shall be issued initially in the form of one or more
 
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permanent global Securities in definitive, fully registered form (collectively, the “Rule 144A Global Security”); Initial Securities initially resold to IAIs shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form (collectively, the “IAI Global Security”); and Initial Securities initially resold pursuant to Regulation S shall be issued initially in the form of one or more temporary global securities in fully registered form (collectively, the “Temporary Regulation S Global Security”), in each case without interest coupons and with the global securities legend and the applicable restricted securities legend set forth in Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the Initial Securities represented thereby with the Securities Custodian and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. Except as set forth in this Section 2.1(a), beneficial ownership interests in the Temporary Regulation S Global Security will not be exchangeable for interests in the Rule 144A Global Security, the IAI Global Security, a permanent global security (the “Permanent Regulation S Global Security”, and together with the Temporary Regulation S Global Security, the “Regulation S Global Security”) or any other Security prior to the expiration of the Distribution Compliance Period and then, after the expiration of the Distribution Compliance Period, may be exchanged for interests in a Rule 144A Global Security, an IAI Global Security or the Permanent Regulation S Global Security only upon certification in form reasonably satisfactory to the Trustee that (i) beneficial ownership interests in such Temporary Regulation S Global Security are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require registration under the Securities Act and (ii) in the case of an exchange for an IAI Global Security, certification that the interest in the Temporary Regulation S Global Security is being transferred to an institutional “accredited investor” under the Securities Act that is an institutional accredited investor acquiring the securities for its own account or for the account of an institutional accredited investor.
Beneficial interests in Temporary Regulation S Global Securities or IAI Global Securities may be exchanged for interests in Rule 144A Global Securities if (1) such exchange occurs in connection with a transfer of Securities in compliance with Rule 144A and (2) the transferor of the beneficial interest in the Temporary Regulation S Global Security or the IAI Global Security, as applicable, first delivers to the Trustee a written certificate (in a form satisfactory to the Trustee) to the effect that the beneficial interest in the Temporary Regulation S Global Security or the IAI Global Security, as applicable, is being transferred to a Person (a) who the transferor reasonably believes to be a QIB, (b) purchasing for its own account or the account of a QIB in a transaction meeting the requirements of Rule 144A, and (c) in accordance with all applicable securities laws of the States of the United States and other jurisdictions.
Beneficial interests in Temporary Regulation S Global Securities and Rule 144A Global Securities may be exchanged for an interest in IAI Global Securities if (1) such exchange occurs in connection with a transfer of the securities in compliance with an exemption under the Securities Act and (2) the transferor of the Regulation S Global Security or Rule 144A Global Security, as applicable, first delivers to the trustee a written certificate (substantially in the form of Exhibit 2) to the effect that the Regulation S Global Security or Rule 144A Global Security, as applicable, is being
 
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transferred (a) to an “accredited investor” within the meaning of 501(a)(1),(2),(3) and (7) under the Securities Act that is an institutional investor acquiring the securities for its own account or for the account of such an institutional accredited investor, in each case in a minimum principal amount of the securities of $250,000, for investment purposes and not with a view to or for offer or sale in connection with any distribution in violation of the Securities Act and (b) in accordance with all applicable securities laws of the States of the United States and other jurisdictions.
Beneficial interests in a Rule 144A Global Security or an IAI Global Security may be transferred to a Person who takes delivery in the form of an interest in a Regulation S Global Security, whether before or after the expiration of the Distribution Compliance Period, only if the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if applicable).
The Rule 144A Global Security, the IAI Global Security, the Temporary Regulation S Global Security and the Permanent Regulation S Global Security are collectively referred to herein as “Global Securities”. The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depository for such Global Security or Global Securities or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository’s instructions or held by the Trustee as custodian for the Depository.
Members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository or by the Trustee as the custodian of the Depository or under such Global Security, and the Company, the Trustee and any agent of the Company or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Security.
(c) Definitive Securities. Except as provided in this Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global Securities shall not be entitled to receive physical delivery of Definitive Securities.
 
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2.2 Authentication. The Trustee shall authenticate and deliver: (1) on the Issue Date, an aggregate principal amount of $1,000,000,000 8.000% Senior Notes Due 2019, (2) any Additional Securities for an original issue in an aggregate principal amount specified in the written order of the Company pursuant to Section 2.02 of the Indenture and (3) Exchange Securities or Private Exchange Securities for issue only in a Registered Exchange Offer or a Private Exchange, respectively, pursuant to a Registration Rights Agreement, for a like principal amount of Initial Securities, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and, in the case of any issuance of Additional Securities pursuant to Section 2.13 of the Indenture, shall certify that such issuance is in compliance with Section 4.03 of the Indenture.
2.3 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When Definitive Securities are presented to the Registrar with a request:
 
 	(x)	to register the transfer of such Definitive Securities; or	
 
 	(y)	to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations,	
the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the Holder thereof or its attorney duly authorized in writing; and
(ii) if such Definitive Securities are required to bear a restricted securities legend, they are being transferred or exchanged pursuant to an effective registration statement under the Securities Act, pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable:
(A) if such Definitive Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or
(B) if such Definitive Securities are being transferred to the Company, a certification to that effect; or
(C) if such Definitive Securities are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144A,
 
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Regulation S or Rule 144 under the Securities Act; or (y) in reliance upon another exemption from the requirements of the Securities Act: (i) a certification to that effect (in the form set forth on the reverse of the Security) and (ii) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a Beneficial Interest in a Global Security. A Definitive Security may not be exchanged for a beneficial interest in a Rule 144A Global Security, an IAI Global Security or a Permanent Regulation S Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse of the Security, that such Definitive Security is either (A) being transferred to a QIB in accordance with Rule 144A, (B) being transferred to an IAI or (C) being transferred after expiration of the Distribution Compliance Period by a Person who initially purchased such Security in reliance on Regulation S to a buyer who elects to hold its interest in such Security in the form of a beneficial interest in the Permanent Regulation S Global Security; and
(ii) written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an adjustment on its books and records with respect to such Rule 144A Global Security (in the case of a transfer pursuant to clause (b)(i)(A)), IAI Global Security (in the case of a transfer pursuant to clause (b)(i)(B)) or Permanent Regulation S Global Security (in the case of a transfer pursuant to clause (b)(i)(C)) to reflect an increase in the aggregate principal amount of the Securities represented by the Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global Security, as applicable, such instructions to contain information regarding the Depository account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Securities Custodian, the aggregate principal amount of Securities represented by the Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global Security, as applicable, to be increased by the aggregate principal amount of the Definitive Security to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global Security, as applicable, equal to the principal amount of the Definitive Security so canceled. If no Rule 144A Global Securities, IAI Global Securities or Permanent Regulation S Global Securities, as applicable, are then outstanding, the Company shall
 
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issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers’ Certificate of the Company, a new Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global Security, as applicable, in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities.
(i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository therefor. A transferor of a beneficial interest in a Global Security shall deliver to the Registrar a written order given in accordance with the Depository’s procedures containing information regarding the participant account of the Depository to be credited with a beneficial interest in the Global Security. The Registrar shall, in accordance with such instructions instruct the Depository to credit to the account of the Person specified in such instructions a beneficial interest in the Global Security and to debit the account of the Person making the transfer the beneficial interest in the Global Security being transferred.
(ii) If the proposed transfer is a transfer of a beneficial interest in one Global Security to a beneficial interest in another Global Security, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Security to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Security from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Security may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.
(iv) In the event that Global Security is exchanged for Definitive Securities pursuant to Section 2.4 of this Appendix, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Securities intended to ensure that such transfers comply with Rule 144A, Regulation S or another applicable exemption under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Company.
 
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(d) Restrictions on Transfer of Temporary Regulation S Global Securities. During the Distribution Compliance Period, beneficial ownership interests in Temporary Regulation S Global Securities may only be sold, pledged or transferred in accordance with the Applicable Procedures and only (i) to the Company, (ii) in an offshore transaction in accordance with Regulation S (other than a transaction resulting in an exchange for an interest in a Permanent Regulation S Global Security) and (iii) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States.
(e) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each Security certificate evidencing the Global Securities (and all Securities issued in exchange therefor or in substitution thereof), in the case of Securities offered otherwise than in reliance on Regulation S shall bear a legend in substantially the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
 
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REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (V) PURSUANT TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
Each certificate evidencing a Security offered in reliance on Regulation S shall, in addition to the foregoing, bear a legend in substantially the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
Each Definitive Security shall also bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
 
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(ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act, the Registrar shall permit the transferee thereof to exchange such Transfer Restricted Security for a certificated Security that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private Exchange Securities pursuant to and during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Securities or Private Exchange Securities, as the case may be, all requirements pertaining to legends on such Initial Security or such Private Exchange Security will cease to apply, the requirements requiring any such Initial Security or such Private Exchange Security issued to certain Holders be issued in global form will cease to apply, and a certificated Initial Security or Private Exchange Security or an Initial Security or Private Exchange Security in global form, in each case without restrictive transfer legends, will be available to the transferee of the Holder of such Initial Securities or Private Exchange Securities upon exchange of such transferring Holder’s certificated Initial Security or Private Exchange Security or directions to transfer such Holder’s interest in the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Securities that do not exchange their Initial Securities, and Exchange Securities in certificated or global form, in each case without the restricted securities legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Securities that do not exchange their Initial Securities, and Private Exchange Securities in global form with the global securities legend and the applicable restricted securities legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such Private Exchange.
(f) Cancellation or Adjustment of Global Security. At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, redeemed, purchased or canceled, such Global Security shall be returned to
 
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the Depository for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for certificated Securities, redeemed, purchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction.
(g) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
2.4 Definitive Securities.
(a) A Global Security deposited with the Depository or with the Trustee as Securities Custodian for the Depository pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Securities in an aggregate principal amount equal to the principal amount of such Global Security, in exchange for such Global Security, only if such transfer complies with Section 2.3 hereof and (i) the Depository notifies the Company that it is unwilling or unable to continue as
 
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Depository for such Global Security and the Depository fails to appoint a successor depository or if at any time such Depository ceases to be a “clearing agency” registered under the Exchange Act, in either case, and a successor depository is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depository to the Trustee located at its principal corporate trust office in the Borough of Manhattan, The City of New York, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations. Any portion of a Global Security transferred pursuant to this Section 2.4 shall be executed, authenticated and delivered only in denominations of $2,000 principal amount and any greater integral multiple of $1,000 and registered in such names as the Depository shall direct. Any Definitive Security delivered in exchange for an interest in the Transfer Restricted Security shall, except as otherwise provided by Section 2.3(e) hereof, bear the applicable restricted securities legend and definitive securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b) hereof, the registered Holder of a Global Security shall be entitled to grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.
(d) In the event of the occurrence of one of the events specified in Section 2.4(a) hereof, the Company shall promptly make available to the Trustee a reasonable supply of Definitive Securities in definitive, fully registered form without interest coupons. In the event that such Definitive Securities are not issued, the Company expressly acknowledges, with respect to the right of any Holder to pursue a remedy pursuant to Section 6.06 of this Indenture, the right of any beneficial owner of Securities to pursue such remedy with respect to the portion of the Global Security that represents such beneficial owner’s Securities as if such Definitive Securities had been issued.
 
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EXHIBIT 1
to
RULE 144A/REGULATION S/IAI APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[[FOR REGULATION S GLOBAL SECURITY ONLY] UNTIL 40 DAYS AFTER THE LATER OF COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]
[Restricted Securities Legend for Securities offered otherwise than in Reliance on Regulation S]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) WITHIN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (V) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
[Restricted Securities Legend for Securities Offered in Reliance on Regulation S.]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
[Temporary Regulation S Global Security Legend]
EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE PERMANENT
 
2

REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY REPRESENTING AN INTEREST IN THE SECURITIES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE “40-DAY DISTRIBUTION COMPLIANCE PERIOD” (WITHIN THE MEANING OF RULE 903(b)(2) OF REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED (I) TO THE COMPANY, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOTIFY ANY PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.
AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN A RULE 144A GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH RULE 144A AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED (A) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (B) TO A PERSON WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN AN IAI GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH AN EXEMPTION UNDER THE SECURITIES ACT AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY FIRST DELIVERS TO THE TRUSTEE
 
3

A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED (A) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
BENEFICIAL INTERESTS IN A RULE 144A GLOBAL SECURITY OR AN IAI GLOBAL SECURITY MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL SECURITY, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S OR RULE 144 (IF AVAILABLE).
[Definitive Securities Legend]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
 
4

 	 	 	
No.            	  	$            	
8.000% Senior Notes Due 2019
CHS/Community Health Systems, Inc., a Delaware corporation, promises to pay to                     , or registered assigns, the principal sum of                      Dollars on November 15, 2019.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth on the other side of this Security.
 
5

Dated:

CHS/COMMUNITY HEALTH SYSTEMS, INC.	
 	 	
By:	 	 	
 	 	Name:	
 	 	Title:	
 	 	
By:	 	 	
 	 	Name:	
 	 	Title:	
 
6

 	 	 	
This is one of the Securities referred to in the within-mentioned Indenture.	
 	
U.S. BANK NATIONAL ASSOCIATION,
as Trustee	
 	 	
By:	 	 	
 	 	    Authorized Signatory	
 
7

[FORM OF REVERSE SIDE OF INITIAL SECURITY]
8.000% Senior Note Due 2019
 
1.	Interest	
CHS/Community Health Systems, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above;  provided ,  however , that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.25% per annum (increasing by an additional 0.25% per annum after each consecutive 90-day period that occurs after the date on which such Registration Default occurs up to a maximum additional interest rate of 1.00%) from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest semiannually on May 15 and November 15 of each year, commencing May 15, 2012. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from November 22, 2011. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company will pay interest on overdue principal at the rate borne by this Security plus 1.0% per annum, and it will pay interest on overdue installments of interest at the same rate to the extent lawful.
 
2.	Method of Payment	
The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the May 1 or November 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depository. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof;  provided ,  however , that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
 
8

3.	Paying Agent and Registrar	
Initially, U.S. Bank National Association (the “Trustee”) will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.
 
4.	Indenture	
The Company issued the Securities under an Indenture dated as of November 22, 2011 (“Indenture”), among the Company, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15  U.S.C.  §§ 77aaa-77bbbb) (the “Act”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms.
The Securities are unsecured senior obligations of the Company. The Company shall be entitled, subject to its compliance with Section 4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in exchange therefor will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the ability of the Company and its subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; issue or sell capital stock of subsidiaries; engage in transactions with affiliates; create liens on assets; transfer or sell assets; guarantee indebtedness; restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries; and engage in sale/leaseback transactions. These covenants are subject to important exceptions and qualifications.
 
5.	Optional Redemption	
Except as set forth below, the Company shall not be entitled to redeem the Securities at its option prior to November 15, 2015.
 
9

On and after November 15, 2015, the Company shall be entitled at its option to redeem all or a portion of the Securities upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on November 15 of the years set forth below:
 	 	 	 	 	
Period	  	Redemption
Price	 	
2015	  	 	104.000	% 	
2016	  	 	102.000	% 	
2017 and thereafter	  	 	100.000	% 	
In addition, prior to November 15, 2014, the Company shall be entitled at its option on one or more occasions to redeem Securities (which includes Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities (which includes Additional Securities, if any) originally issued at a redemption price (expressed as a percentage of principal amount) of 108.000%, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date), with the Net Cash Proceeds from one or more Public Equity Offerings ( provided  that if the Public Equity Offering is an offering by Parent, a portion of the Net Cash Proceeds thereof equal to the amount required to redeem any such Securities is contributed to the equity capital of the Company);  provided ,  however , that (1) at least 65% of such aggregate principal amount of Securities originally issued remains outstanding immediately after the occurrence of each such redemption (other than Securities held, directly or indirectly, by the Company or its Subsidiaries); and (2) each such redemption occurs within 180 days after the date of the related Public Equity Offering.
Prior to November 15, 2015, the Company shall be entitled at its option to redeem all or a portion of the Securities at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the applicable redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date). The Company shall cause notice of such redemption to be mailed by first-class mail to each Holder’s registered address, not less than 30 nor more than 60 days prior to the redemption date.
 
6.	Notice of Redemption	
Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $2,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.
Any optional redemption and notice of redemption may, at the Company’s discretion, be subject to the satisfaction of one or more conditions precedent (including, in the case of a redemption related to a Public Equity Offering, the consummation of such Public Equity Offering).
 
10

7.	Put Provisions	
Upon a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of the principal amount of the Securities to be repurchased plus accrued interest to the date of repurchase (subject to the right of holders of record on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture.
 
8.	Guaranty	
The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by each of the Guarantors to the extent set forth in the Indenture.
 
9.	Denominations; Transfer; Exchange	
The Securities are in registered form without coupons in denominations of $2,000 principal amount and any greater integral multiple of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date.
 
10.	Persons Deemed Owners	
The registered Holder of this Security may be treated as the owner of it for all purposes.
 
11.	Unclaimed Money	
If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.
 
12.	Discharge and Defeasance	
Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
 
11

13.	Amendment; Waiver	
Subject to certain exceptions set forth in the Indenture, (a) the Indenture and the Securities may be amended or supplemented with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (b) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee shall be entitled to amend or supplement the Indenture or the Securities to cure any ambiguity, omission, mistake, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities, including Guaranties, or to secure the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the Act, or to make changes of a technical or conforming nature that are necessary (as determined in good faith by the Company) for the proper issuance of Exchange Securities and/or Additional Securities otherwise permitted to be issued under the Indenture, or to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to the requirements therefore or to provide for the accession by such successor Trustee to the Securities, the Guarantees and the Indenture, or to make any change that does not adversely affect the rights of any Securityholder, or to make amendments to provisions of the Indenture relating to the form, authentication, transfer and legending of the Securities.
 
14.	Defaults and Remedies	
Under the Indenture, Events of Default include (a) default for 30 days in payment of interest on the Securities; (b) default in payment of principal on the Securities at maturity, upon redemption pursuant to paragraph 5 of the Securities, upon acceleration or otherwise, or failure by the Company to purchase Securities when required; (c) failure by the Company, Parent or any Subsidiary Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (d) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company and Significant Subsidiaries if the amount accelerated (or so unpaid) exceeds $125 million; (e) certain events of bankruptcy or insolvency with respect to the Company and the Significant Subsidiaries; (f) certain judgments or decrees for the payment of money in excess of $125 million; and (g) certain defaults with respect to Guaranties. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default.
 
12

Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders.
 
15.	Trustee Dealings with the Company	
Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
 
16.	No Recourse Against Others	
A director, officer, employee or stockholder, as such, of the Company or the Trustee shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation (other than pursuant to any Guaranty). By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.
 
17.	Authentication	
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
 
18.	Abbreviations	
Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
 
19.	CUSIP Numbers	
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
 
13

20.	Holders’ Compliance with Registration Rights Agreement	
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein.
 
21.	Governing Law	
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company will furnish to any Securityholder upon written request and without charge to the Security holder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to:
CHS/Community Health Systems, Inc.
4000 Meridian Boulevard
Franklin, TN 37067
Attention: General Counsel
 
14

ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
[Print or type assignee’s name, address and zip code]
[Insert assignee’s soc. sec. or tax I.D. No.]
and irrevocably appoint                    agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

 	 	 	

Date:	 	 	 	 	  	Your Signature:	  	 	

 	 	 	
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this certificate, the undersigned confirms that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW

(1)	  	¨	  	to the Company; or	
 	 	 	
(2)	  	¨	  	pursuant to an effective registration statement under the Securities Act of 1933; or	
 	 	 	
(3)	  	¨	  	inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or	
 	 	 	
(4)	  	¨	  	outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or	
 	 	 	
(5)	  	¨	  	pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933; or	
 
15

 	 	 	 	 	
 	 	 	
(6)	  	¨	  	to an institutional “accredited investor” (as defined in Rule 501(a)(1),(2),(3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements.	
Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof;  provided ,  however , that if box (4) is checked, the Trustee shall be entitled to require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

 	
 	 	
Signature	 	 	
 	 	
Signature Guarantee:	 	 	

 	  	 	  	 	
 	 	 	
Signature must be guaranteed	  	Signature	  	 	
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 	  	 	  	 	
 
16

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:	 	 	 	 	  	 	  	 	
 	 	 	 	 	
 	 	 	 	 	  	 	  	Notice: To be executed by an executive officer	
 
17

[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been made:

Date of Exchange	  	Amount of decrease in
Principal amount of this
Global Security	  	Amount of increase in
Principal amount of this
Global Security	  	Principal amount of this
Global Security following
such decrease or increase	  	Signature of authorized
officer of Trustee or
Securities Custodian	

 	  	 	  	 	  	 	  	 	

 
18

OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 or 4.09 of the Indenture, check the box:   ¨
If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 or 4.09 of the Indenture, state the amount in principal amount: $                    

Dated:                                                                     	 	 	  	Your Signature:	  	 	
 	 	 	
 	 	 	  	(Sign exactly as your name appears on the other side of this Security.)	

Signature Guarantee:	  	 	
 	
(Signature must be guaranteed)	
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
 
19

EXHIBIT A
[FORM OF FACE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]*/**/
 
*/	If the Security is to be issued in global form add the Global Securities Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1 captioned “[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY”.	
**/	If the Security is a Private Exchange Security issued in a Private Exchange to an Initial Purchaser holding an unsold portion of its initial allotment, add the Restricted Securities Legend from Exhibit 1 to Appendix A and replace the Assignment Form included in this Exhibit A with the Assignment Form included in such Exhibit 1.	

 	 	 	
No.            	 	$            	
8.000% Senior Notes Due 2019
CHS/Community Health Systems, Inc., a Delaware corporation, promises to pay to             , or registered assigns, the principal sum of                      Dollars on November 15, 2019.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth on the other side of this Security.
 
2

Dated:

CHS/COMMUNITY HEALTH SYSTEMS, INC.	
 	 	
By:	 	 	
 	 	Name:	
 	 	Title:	
 	 	
By:	 	 	
 	 	Name:	
 	 	Title:	
 
3

 	 	 	
This is one of the Securities referred
to in the within-mentioned Indenture.	
 	
U.S. BANK NATIONAL ASSOCIATION,	
as Trustee	
 	 	
By:	 	 	
 	 	Authorized Signatory	
 
4

[FORM OF REVERSE SIDE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
8.000% Senior Note Due 2019
 
1.	Interest	
CHS/Community Health Systems, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above[;  provided ,  however , that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.25% per annum (increasing by an additional 0.25% per annum after each consecutive 90-day period that occurs after the date on which such Registration Default occurs up to a maximum additional interest rate of 1.00%) from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured.] 1  The Company will pay interest semiannually on May 15 and November 15 of each year, commencing May 15, 2012. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from November 22, 2011. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company will pay interest on overdue principal at the rate borne by this Security plus 1.0% per annum, and it will pay interest on overdue installments of interest at the same rate to the extent lawful.
 
2.	Method of Payment	
The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the May 1 or November 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depository. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof;  provided ,  however , that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
 
1 	Insert if at the date of issuance of the Exchange Security or Private Exchange Security (as the case may be) any Registration Default has occurred with respect to the related Initial Securities during the interest period in which such date of issuance occurs.	
 
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3.	Paying Agent and Registrar	
Initially, U.S. Bank National Association (the “Trustee”) will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.
 
4.	Indenture	
The Company issued the Securities under an Indenture dated as of November 22, 2011 (“Indenture”), among the Company, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15  U.S.C.  §§ 77aaa-77bbbb) (the “Act”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms.
The Securities are unsecured senior obligations of the Company. The Company shall be entitled, subject to its compliance with Section 4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in exchange therefor will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the ability of the Company and its subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; issue or sell capital stock of subsidiaries; engage in transactions with affiliates; create liens on assets; transfer or sell assets; guarantee indebtedness; restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries; and engage in sale/leaseback transactions. These covenants are subject to important exceptions and qualifications.
 
5.	Optional Redemption	
Except as set forth below, the Company shall not be entitled to redeem the Securities at its option prior to November 15, 2015.
On and after November 15, 2015, the Company shall be entitled at its option to redeem all or a portion of the Securities upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed in percentages of principal amount, on the redemption date) plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on November 15 of the years set forth below:

  	  	Redemption	 	
Period	  	Price	 	
2015	  	 	104.000	% 	
2016	  	 	102.000	% 	
2017 and thereafter	  	 	100.000	% 	
 
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In addition, prior to November 15, 2014, the Company shall be entitled at its option on one or more occasions to redeem Securities (which includes Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities (which includes Additional Securities, if any) originally issued at a redemption price (expressed as a percentage of principal amount) of 108.000%, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date), with the Net Cash Proceeds from one or more Public Equity Offerings ( provided  that if the Public Equity Offering is an offering by Parent, a portion of the Net Cash Proceeds thereof equal to the amount required to redeem any such Securities is contributed to the equity capital of the Company);  provided ,  however , that (1) at least 65% of such aggregate principal amount of Securities originally issued remains outstanding immediately after the occurrence of each such redemption (other than Securities held, directly or indirectly, by the Company or its Subsidiaries); and (2) each such redemption occurs within 180 days after the date of the related Public Equity Offering.
Prior to November 15, 2015, the Company shall be entitled at its option to redeem all or a portion of the Securities at a redemption price equal to 100.00% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the applicable redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date). The Company shall cause notice of such redemption to be mailed by first-class mail to each Holder’s registered address, not less than 30 nor more than 60 days prior to the redemption date.
 
6.	Notice of Redemption	
Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $2,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.
Any optional redemption and notice of redemption may, at the Company’s discretion, be subject to the satisfaction of one or more conditions precedent (including, in the case of a redemption related to a Public Equity Offering, the consummation of such Public Equity Offering).
 
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7.	Put Provisions	
Upon a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of the principal amount of the Securities to be repurchased plus accrued interest to the date of repurchase (subject to the right of holders of record on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture.
 
8.	Guaranty	
The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior basis by each of the Guarantors to the extent set forth in the Indenture.
 
9.	Denominations; Transfer; Exchange	
The Securities are in registered form without coupons in denominations of $2,000 principal amount and any greater integral multiple of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date.
 
10.	Persons Deemed Owners	
The registered Holder of this Security may be treated as the owner of it for all purposes.
 
11.	Unclaimed Money	
If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.
 
12.	Discharge and Defeasance	
Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.
 
8

13.	Amendment; Waiver	
Subject to certain exceptions set forth in the Indenture, (1) the Indenture and the Securities may be amended or supplemented with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (2) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Guarantors and the Trustee shall be entitled to amend or supplement the Indenture or the Securities to cure any ambiguity, omission, mistake, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities, including Guaranties, or to secure the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or the Guarantors, or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the Act, or to make changes of a technical or conforming nature that are necessary (as determined in good faith by the Company) for the proper issuance of Exchange Securities and/or Additional Securities otherwise permitted to be issued under the Indenture, or to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to the requirements therefore or to provide for the accession by such successor Trustee to the Securities, the Guarantees and the Indenture, or to make any change that does not adversely affect the rights of any Securityholder, or to make amendments to provisions of the Indenture relating to the form, authentication, transfer and legending of the Securities.
 
14.	Defaults and Remedies	
Under the Indenture, Events of Default include (a) default for 30 days in payment of interest on the Securities; (b) default in payment of principal on the Securities at maturity, upon redemption pursuant to paragraph 5 of the Securities, upon acceleration or otherwise, or failure by the Company to purchase Securities when required; (c) failure by the Company, Parent or any Subsidiary Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (d) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company and Significant Subsidiaries if the amount accelerated (or so unpaid) exceeds $125 million; (e) certain events of bankruptcy or insolvency with respect to the Company and the Significant Subsidiaries; (f) certain judgments or decrees for the payment of money in excess of $125 million; and (g) certain defaults with respect to Guaranties. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnity or security satisfactory to it. Subject to certain
 
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limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders.
 
15.	Trustee Dealings with the Company	
Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
 
16.	No Recourse Against Others	
A director, officer, employee or stockholder, as such, of the Company or the Trustee shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation (other than pursuant to any Guaranty). By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.
 
17.	Authentication	
This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.
 
18.	Abbreviations	
Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
 
19.	CUSIP Numbers	
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
 
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[20.	Holders’ Compliance with Registration Rights Agreement	
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein.] 2
 
21.	Governing Law	
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company will furnish to any Securityholder upon written request and without charge to the Security holder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to:
CHS/Community Health Systems, Inc.
4000 Meridian Boulevard
Franklin, TN 37067
Attention: General Counsel
 
2 	Delete if this Security is not being issued in exchange for an Initial Security.	
 
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
[Print or type assignee’s name, address and zip code]
[Insert assignee’s soc. sec. or tax I.D. No.]
and irrevocably appoint                     agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

 	 	 	 	 	

Date:	 	 	  	 	  	Your Signature:	  	 	

 	 	 	 	 	
Sign exactly as your name appears on the other side of this Security.
 
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 or 4.09 of the Indenture, check the box: ¨
If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 or 4.09 of the Indenture, state the amount in principal amount: $                    

Dated:	 	 	 	 	 	Your Signature:	 	 	

 	 	 	 	(Sign exactly as your name appears on the other side of this Security.)	

Signature Guarantee:	  	 	

 	  	(Signature must be guaranteed)	  	 	  	 	
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

EXHIBIT 2 to RULE 144A/REGULATION S/IAI APPENDIX
Form of
Transferee Letter of Representation
CHS/Community Health Systems, Inc.
In care of
U.S. Bank National Association
150 Fourth Avenue North, 2nd Floor
Nashville, TN 37219
Attention of Corporate Trust Services
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[            ] principal amount of the 8.000% Senior Notes Due 2019 (the “Securities”) of CHS/Community Health Systems, Inc. (the “Company”).
Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:

Name:	 	 	

Address:	 	 	

Taxpayer ID Number:	 	 	
The undersigned represents and warrants to you that:
1. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”)), purchasing for our own account or for the account of such an institutional “accredited investor” at least $250,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we invest in or purchase securities similar to the Securities in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following

sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (i) to the Company, (ii) in the United States to a person whom the seller reasonably believes is a qualified institutional buyer in a transaction meeting the requirements of Rule 144A, (iii) to an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is an institutional accredited investor purchasing for its own account or for the account of an institutional accredited investor, in each case in a minimum principal amount of the Securities of $250,000, (iv) outside the United States in a transaction complying with the provisions of Rule 904 under the Securities Act, (v) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if available) or (vi) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (vi) subject to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (iii) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Restriction Termination Date of the Securities pursuant to clause (iii), (iv) or (v) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Company and the Trustee.

TRANSFEREE:	 	                                                                                          ,	
 	 	
            by:	 	 	
 
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Exhibit 4.8
EXECUTION COPY
$1,000,000,000
CHS/COMMUNITY HEALTH SYSTEMS, INC.
8.000% Senior Notes due 2019
REGISTRATION RIGHTS AGREEMENT
November 22, 2011
Credit Suisse Securities (USA) LLC
As Representative of the Initial Purchasers
c/o Credit Suisse Securities (USA) LLC
      Eleven Madison Avenue
      New York, New York 10010-3629
Dear Sirs:
CHS/Community Health Systems, Inc., a Delaware corporation (the “Company”), a wholly owned subsidiary of Community Health Systems, Inc., a Delaware corporation (“Holdings”), agrees with the several initial purchasers named in Schedule A hereto (the “Initial Purchasers”), subject to the terms and conditions set forth in a purchase agreement, dated November 14, 2011 (the “Purchase Agreement”), to issue and sell to the several Initial Purchasers $1,000,000,000 aggregate principal amount of its 8.000% Senior Notes due 2019 (the “Initial Securities”) to be unconditionally guaranteed (the “Guarantees”) by Holdings and the subsidiary guarantors listed in Schedule I attached hereto (the “Guarantors”). The Initial Securities will be issued pursuant to an indenture, dated as of November 22, 2011 (the “Indenture”), among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee (the “Trustee”). As an inducement to the Initial Purchasers, the Company and the Guarantors agree with the Initial Purchasers, for the benefit of the holders of the Initial Securities (including, without limitation, the Initial Purchasers), the Exchange Securities (as defined below) and the Private Exchange Securities (as defined below) (collectively the “Holders”), as follows:
1. Registered Exchange Offer. The Company shall, at its own cost, prepare and, not later than 120 days after (or if the 120th day is not a business day, the first business day thereafter) the date of original issue of the Initial Securities (the “Issue Date”), file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Exchange Offer Registration Statement”) on an appropriate form under the Securities Act of 1933, as amended (the “Securities Act”), with respect to a proposed offer (the “Registered Exchange Offer”) to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities (the “Exchange Securities”) of the Company issued under the Indenture and substantially identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial Securities and the provisions relating to the matters described in Section 6 hereof) and registered under the Securities Act. Unless not permitted by applicable law or Commission policy, the Company shall use commercially reasonable efforts to (i) cause such Exchange Offer Registration Statement to become effective under the Securities Act within 210 days

(or if the 210th day is not a business day, the first business day thereafter) after the Issue Date, (ii) shall keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the “Exchange Offer Registration Period”) and (iii) cause the Registered Exchange Offer to be completed within 40 days after the Exchange Offer Registration Statement is declared effective. For purposes of this Agreement, “business day” shall mean a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law to close in New York City.
If the Company effects the Registered Exchange Offer, the Company will be entitled to consummate the Registered Exchange Offer 30 days after the commencement thereof provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer Registration Statement, unless not permitted by applicable law or Commission policy, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities (as defined in Section 6 hereof) electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder’s business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.
The Company acknowledges that, pursuant to current interpretations by the Commission’s staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Initial Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an “Exchanging Dealer”), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section, and (c) Annex C hereto in the “Plan of Distribution” section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Exchange Securities acquired in exchange for Initial Securities constituting any portion of an unsold allotment is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.
The Company shall use commercially reasonable efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto, available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of
 
2

the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the “Private Exchange”) for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and identical in all material respects (including the existence of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States, but excluding provisions relating to the matters described in Section 6 hereof) to the Initial Securities (the “Private Exchange Securities”). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the “Securities”.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange;
(y) deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter.
Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities.
Each Holder participating in the Registered Exchange Offer shall be required to represent in writing (which may be contained in the applicable letter of transmittal) to the Company that at the time of
 
3

the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an “affiliate,” as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies as to form in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
2. Shelf Registration. If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within 280 days of the Issue Date, (iii) any Initial Purchaser so requests with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder (A) is prohibited by applicable law or Commission policy from participating in the Registered Exchange Offer, or (B) may not resell the Exchange Securities acquired by it in the Registered Exchange Offer to the public without delivering a prospectus, the Company shall take the following actions:
(a) The Company shall, at its cost, as promptly as practicable (but in no event more than 30 days after so required or requested pursuant to this Section 2) file with the Commission and thereafter shall use its reasonable best efforts to cause to be declared effective (unless it becomes effective automatically upon filing) a registration statement (the “Shelf Registration Statement” and, together with the Exchange Offer Registration Statement, a “Registration Statement”) on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined in Section 6 hereof) by the Holders thereof (x) in the case of clause (i) above, on or prior to the 210th day after the Issue Date or (y) in the case of clause (ii), (iii) or (iv) above, on or prior to the 90th day after the date on which such Shelf Registration Statement is required to be filed, in each case in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the “Shelf Registration”); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, until the earlier of (x) one year from the date
 
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such Shelf Registration Statement is first declared effective and (y) the date on which all the Securities registered under the Shelf Registration Statement have been disposed of in accordance therewith (the “Shelf Registration Period”). The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless (i) such action is required by applicable law or (ii) such action is taken by the Company in good faith and for valid business reasons (not including avoidance of the Company’s obligations hereunder), including, but not limited to, the acquisition or divestiture of assets, so long as the Company promptly thereafter complies with the requirements of Section 3(j) hereof, if applicable.
(c) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use its reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section and in Annex C hereto in the “Plan of Distribution” section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser in writing, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled “Plan of Distribution,” reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential “underwriter” status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a “Participating Broker-Dealer”), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include in the prospectus included in the Shelf Registration Statement (or, if permitted by Commission Rule 430B(b), in a prospectus supplement that becomes a part thereof pursuant to Commission Rule 430B(f)) that is delivered to any Holder pursuant to Section 3(d) and (f), the names of the Holders, who propose to sell Securities pursuant to the Shelf Registration Statement, as selling securityholders.
 
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(b) The Company shall give written notice to the Initial Purchasers, the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):
(i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, of the issuance by the Commission of a notification of objection to the use of the form on which the Registration Statement has been filed, and of the happening of any event that causes the Company to become an “ineligible issuer,” as defined in Commission Rule 405.
(iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and
(v) of the happening of any event during the period that the Registration Statement is effective that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment or supplement thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference). The Company shall not, without the prior consent of the Initial Purchasers, make any offer relating to the Securities that would constitute a “free writing prospectus,” as defined in Commission Rule 405.
(e) The Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits thereto (including those incorporated by reference).
 
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(f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.
(g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities pursuant to any Registration Statement, the Company shall use its reasonable best efforts to register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or “blue sky” laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify generally to do business or as a dealer in Securities in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject.
(i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchasers, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in
 
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Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to and including the date when the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j). During the period during which the Company is required to maintain an effective Shelf Registration Statement pursuant to this Agreement, the Company will prior to the three-year expiration of that Shelf Registration Statement file, and use its reasonable best efforts to cause to be declared effective (unless it becomes effective automatically upon filing) within a period that avoids any interruption in the ability of Holders of Securities covered by the expiring Shelf Registration Statement to make registered dispositions, a new registration statement relating to the Securities, which shall be deemed the “Shelf Registration Statement” for purposes of this Agreement.
(k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be.
(l) The Company will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.
(m) The Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.
(n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion of the Holder in the Shelf Registration Statement, including requiring the Holder to properly complete and execute such selling security Holder notice and questionnaires, and any amendments or supplements thereto, as the Company may reasonably deem necessary or appropriate, and the Company may exclude from such registration the Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request.
(o) The Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, the Company shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities or any such underwriter at all reasonable times and in a reasonable manner all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders of
 
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the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by you and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4 hereof; and provided further, however, that any information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by each such person, unless (A) the disclosure of such information is necessary to avoid or correct a material misstatement or material omission in such Registration Statement or prospectus, (B) such disclosure is made in connection with a court proceeding, to any governmental or regulatory authority having jurisdiction over each such person or their respective affiliates, or is reasonably necessary in order to establish a “due diligence” defense” pursuant to Section 11 of the Securities Act or (C) such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality.
(q) In the case of any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any) addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement covering such matters as are customarily covered in opinions given in connection with underwritten offerings and such other matters as may be reasonably requested by such holders and managing underwriters, if any; (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Shelf Registration Statement to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by AU Section 634 of the Interim Accounting Standards of the Public Company Accounting Oversight Board.
(r) In the case of the Registered Exchange Offer, if requested by any Initial Purchaser or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to deliver to such Initial Purchaser or such Participating Broker-Dealer a signed opinion in the form set forth in Sections 7(c) and 7(d) of the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and (ii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Registration Statement to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, meeting the requirements as to the substance thereof as set forth in Sections 7(a) and 7(h) of the Purchase Agreement, with appropriate date changes.
(s) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or caused to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied.
 
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(t) The Company will use its reasonable best efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to be rated with the appropriate rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing underwriters, if any.
(u) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Conduct Rules (the “Rules”) of the Financial Industry Regulatory Authority, Inc. thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will cooperate with such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including Rule 5121, shall so require, engaging a “qualified independent underwriter” (as defined in Rule 5121) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.
(v) The Company shall use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby.
4. Registration Expenses. The Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 1 through 3 hereof (including the reasonable fees and expenses, if any, of Cravath, Swaine & Moore LLP, counsel for the Initial Purchasers, incurred in connection with the Registered Exchange Offer), whether or not the Registered Exchange Offer or a Shelf Registration is filed or becomes effective, and, in the event of a Shelf Registration, shall bear or reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the Initial Securities covered thereby to act as counsel for the Holders of the Initial Securities in connection therewith.
5. Indemnification. (a) The Company agrees to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the “Indemnified Parties”) from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus or “issuer free writing prospectus,” as defined in Commission Rule 433 (“Issuer FWP”), relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage,
 
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liability or action in respect thereof; provided, however, that (i) the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus or Issuer FWP relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Indemnified Party and furnished to the Company by or on behalf of such Indemnified Party specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered (including through satisfaction of the conditions of Commission Rule 172) by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer results from the fact that there was not conveyed to such person, at or prior to the time of the sale of such Securities to such person, an amended or supplemented prospectus or, if permitted by Section 3(d), an Issuer FWP correcting such untrue statement or omission or alleged untrue statement or omission if the Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer; provided further, however, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. The Company shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders.
(b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus or Issuer FWP relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate
 
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therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall, without the prior written consent of the indemnified party, provided that such consent is not unreasonably withheld or delayed; effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the exchange of the Securities, pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances. (a) Additional interest (the “Additional Interest”) with respect to the Initial Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (vi) below a “Registration Default”):
(i) if the Company fails to file an Exchange Offer Registration Statement with the Commission on or prior to the 120th day after the Issue Date;
 
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(ii) if the Exchange Offer Registration Statement is not declared effective by the Commission on or prior to the 210th day after the Issue Date or, if obligated to file a Shelf Registration Statement pursuant to clause (i) of Section 2 above, a Shelf Registration Statement is not declared effective by the Commission on or prior to the 210th day after the Issue Date;
(iii) if the Exchange Offer is not consummated on or before the 40th day after the Exchange Offer Registration Statement is declared effective;
(iv) if obligated to file the Shelf Registration Statement pursuant to clause (ii), (iii) or (iv) of Section 2 above, the Company fails to file the Shelf Registration Statement with the Commission on or prior to the 30th day (the “Shelf Filing Date”) after the date on which the obligation to file a Shelf Registration Statement arises;
(v) if obligated to file a Shelf Registration Statement pursuant to clause (ii), (iii) or (iv) of Section 2 above, the Shelf Registration Statement is not declared effective on or prior to the 90th day after the Shelf Filing Date; or
(vi) if after either the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is declared (or becomes automatically) effective and during the period when such Exchange Offer Registration Statement or Shelf Registration Statement is required to be kept effective, (A) such Registration Statement ceases to be effective; or (B) such Registration Statement or the related prospectus ceases to be usable (except as permitted in paragraph (b)) in connection with resales of Transfer Restricted Securities because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder, or (3) such Registration Statement is a Shelf Registration Statement that has expired before a replacement Shelf Registration Statement has become effective.
Additional Interest shall accrue on the Initial Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of 0.25% per annum for the first 90-day period immediately following the occurrence of a Registration Default, and such rate will increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum additional interest rate of 1.0% per annum.
(b) A Registration Default referred to in Section 6(a)(vi)(B) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material events, with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; provided, however, that in any case if such Registration Default occurs for a continuous period in excess of 30 days, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured.
 
13

(c) Any amounts of Additional Interest due pursuant to clause (i) through (vi) of Section 6(a) above will be payable in cash on the regular interest payment dates with respect to the Initial Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Initial Securities, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360.
(d) “Transfer Restricted Securities” means each Security until (i) the date on which such Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of an Initial Security for an Exchange Security, the date on which such Exchange Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement, (iv) the date on which such Initial Securities are distributed to the public pursuant to Rule 144 under the Securities Act or (v) the earliest date that is no less than two years after the Issue Date and on which such Security (except for Securities held by an affiliate of the Company) may be resold in reliance on paragraph (b)(1) of Rule 144 under the Securities Act.
7. Rules 144 and 144A. The Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the reasonable request of any Holder of Initial Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company covenants that it will take such further action as any Holder of Initial Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Initial Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Initial Purchasers upon request. Upon the request of any Holder of Initial Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act.
8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering (“Managing Underwriters”) will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering.
No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person’s Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents.
 
14

(b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address given by such Holder to the Company.
(2) if to the Initial Purchasers;
Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-4296
Attention: LCD-IBD Group
with a copy to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: William J. Whelan III, Esq.
(3) if to the Company, at its address as follows:
CHS/Community Health System, Inc.
4000 Meridian Boulevard
Franklin, TN 37067
Attention: General Counsel
with a copy to:
Kirkland & Ellis LLP
153 East 53rd Street
New York, NY 10022
Attention: Joshua Korff, Esq.
All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient’s facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof.
(d) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns.
 
15

(e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.
(i) Securities Held by the Company. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.
[Remainder of this page intentionally left blank]
 
16

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers, the Company and the Guarantors in accordance with its terms.

Very truly yours,	
 	
CHS/COMMUNITY HEALTH SYSTEMS, INC.	
 	 	
By: 	 	/s/ W. Larry Cash	
 	 	Name:	 	W. Larry Cash	
 	 	Title:	 	Executive Vice President, Chief Financial Officer and Director	
 	
COMMUNITY HEALTH SYSTEMS, INC.	
 	 	
By: 	 	/s/ W. Larry Cash	
 	 	Name:	 	W. Larry Cash	
 	 	Title:	 	Executive Vice President, Chief Financial Officer and Director	
[Signature Page to Registration Rights Agreement]

 	 	 	
ABILENE HOSPITAL, LLC	  	CLEVELAND TENNESSEE HOSPITAL COMPANY, LLC	
 	 	
ABILENE MERGER, LLC	  	CLINTON HOSPITAL CORPORATION	
 	 	
ANNA HOSPITAL CORPORATION	  	COATESVILLE HOSPITAL CORPORATION	
 	 	
BERWICK HOSPITAL COMPANY, LLC	  	COLLEGE STATION HOSPITAL, L.P.	
 	 	
BIG BEND HOSPITAL CORPORATION	  	COLLEGE STATION MEDICAL CENTER, LLC	
 	 	
BIG SPRING HOSPITAL CORPORATION	  	COLLEGE STATION MERGER, LLC	
 	 	
BIRMINGHAM HOLDINGS II, LLC	  	COMMUNITY GP CORP.	
 	 	
BIRMINGHAM HOLDINGS, LLC	  	COMMUNITY HEALTH INVESTMENT COMPANY, LLC	
 	 	
BLUEFIELD HOLDINGS, LLC	  	COMMUNITY HEALTH SYSTEMS, INC.	
 	 	
BLUEFIELD HOSPITAL COMPANY, LLC	  	COMMUNITY LP CORP.	
 	 	
BLUFFTON HEALTH SYSTEM, LLC	  	CP HOSPITAL GP, LLC	
 	 	
BROWNSVILLE HOSPITAL CORPORATION	  	CPLP, LLC	
 	 	
BROWNWOOD HOSPITAL, L.P.	  	CRESTWOOD HOSPITAL, LLC	
 	 	
BROWNWOOD MEDICAL CENTER, LLC	  	CRESTWOOD HOSPITAL, LP, LLC	
 	 	
BULLHEAD CITY HOSPITAL CORPORATION	  	CSMC, LLC	
 	 	
BULLHEAD CITY HOSPITAL INVESTMENT CORPORATION	  	CSRA HOLDINGS, LLC	
 	 	
CARLSBAD MEDICAL CENTER, LLC	  	DEACONESS HOLDINGS, LLC	
 	 	
CENTRE HOSPITAL CORPORATION	  	DEACONESS HOSPITAL HOLDINGS, LLC	
 	 	
CHHS HOLDINGS, LLC	  	DEMING HOSPITAL CORPORATION	
 	 	
CHS KENTUCKY HOLDINGS, LLC	  	DESERT HOSPITAL HOLDINGS, LLC	
 	 	
CHS PENNSYLVANIA HOLDINGS, LLC	  	DETAR HOSPITAL, LLC	
 	 	
CHS VIRGINIA HOLDINGS, LLC	  	DHFW HOLDINGS, LLC	
 	 	
CHS WASHINGTON HOLDINGS, LLC	  	DHSC, LLC	
 	 	
CLARKSVILLE HOLDINGS, LLC	  	DUKES HEALTH SYSTEM, LLC	
 	 	
CLEVELAND HOSPITAL CORPORATION	  	DYERSBURG HOSPITAL CORPORATION	

By: 	 	/s/ Rachel A. Seifert	
 	 	Name:	 	RACHEL A. SEIFERT	
 	 	Title:	 	EXECUTIVE VICE PRESIDENT	
Acting on behalf of each of the Guarantors set forth above
[Signature Page to Registration Rights Agreement]

 	 	 	
EMPORIA HOSPITAL CORPORATION	  	KAY COUNTY HOSPITAL CORPORATION	
 	 	
EVANSTON HOSPITAL CORPORATION	  	KAY COUNTY OKLAHOMA HOSPITAL COMPANY, LLC	
 	 	
FALLBROOK HOSPITAL CORPORATION	  	KIRKSVILLE HOSPITAL COMPANY, LLC	
 	 	
FOLEY HOSPITAL CORPORATION	  	LAKEWAY HOSPITAL CORPORATION	
 	 	
FORREST CITY ARKANSAS HOSPITAL COMPANY, LLC	  	LANCASTER HOSPITAL CORPORATION	
 	 	
FORREST CITY HOSPITAL CORPORATION	  	LAS CRUCES MEDICAL CENTER, LLC	
 	 	
FORT PAYNE HOSPITAL CORPORATION	  	LEA REGIONAL HOSPITAL, LLC	
 	 	
FRANKFORT HEALTH PARTNER, INC.	  	LEXINGTON HOSPITAL CORPORATION	
 	 	
FRANKLIN HOSPITAL CORPORATION	  	LONGVIEW MERGER, LLC	
 	 	
GADSDEN REGIONAL MEDICAL CENTER, LLC	  	LRH, LLC	
 	 	
GALESBURG HOSPITAL CORPORATION	  	LUTHERAN HEALTH NETWORKOF INDIANA, LLC	
 	 	
GRANBURY HOSPITAL CORPORATION	  	MARION HOSPITAL CORPORATION	
 	 	
GRANITE CITY HOSPITAL CORPORATION	  	MARTIN HOSPITALCORPORATION	
 	 	
GRANITE CITY ILLINOIS HOSPITAL COMPANY, LLC	  	MASSILLON COMMUNITY HEALTH SYSTEM LLC	
 	 	
GREENVILLE HOSPITAL CORPORATION	  	MASSILLON HEALTH SYSTEM LLC	
 	 	
GRMC HOLDINGS, LLC	  	MASSILLON HOLDINGS, LLC	
 	 	
HALLMARK HEALTHCARE COMPANY, LLC	  	MCKENZIE TENNESSEE HOSPITAL COMPANY, LLC	
 	 	
HOBBS MEDCO, LLC	  	MCNAIRY HOSPITAL CORPORATION	
 	 	
HOSPITALOF BARSTOW, INC.	  	MCSA, L.L.C.	
 	 	
HOSPITALOF FULTON, INC.	  	MEDICAL CENTEROF BROWNWOOD, LLC	
 	 	
HOSPITALOF LOUISA, INC.	  	MERGER LEGACY HOLDINGS, LLC	
 	 	
HOSPITALOF MORRISTOWN, INC.	  	MMC OF NEVADA, LLC	
 	 	
JACKSON HOSPITAL CORPORATION (KY)	  	MOBERLY HOSPITAL COMPANY, LLC	
 	 	
JACKSON HOSPITAL CORPORATION (TN)	  	MWMC HOLDINGS, LLC	
 	 	
JOURDANTON HOSPITAL CORPORATION	  	NANTICOKE HOSPITAL COMPANY, LLC	

By: 	 	/s/ Rachel A. Seifert	
 	 	Name:	 	RACHEL A. SEIFERT	
 	 	Title:	 	EXECUTIVE VICE PRESIDENT	
Acting on behalf of each of the Guarantors set forth above
[Signature Page to Registration Rights Agreement]

 	 	 	
NATIONAL HEALTHCAREOF LEESVILLE, INC.	  	QHG OF FORT WAYNE COMPANY, LLC	
 	 	
NATIONAL HEALTHCAREOF MT. VERNON, INC.	  	QHG OF HATTIESBURG, INC.	
 	 	
NATIONAL HEALTHCAREOF NEWPORT, INC.	  	QHG OF MASSILLON, INC.	
 	 	
NAVARRO HOSPITAL, L.P.	  	QHG OF SOUTH CAROLINA, INC.	
 	 	
NAVARRO REGIONAL, LLC	  	QHG OF SPARTANBURG, INC.	
 	 	
NC-DSH, LLC	  	QHG OF SPRINGDALE, INC.	
 	 	
NORTHAMPTON HOSPITAL COMPANY, LLC	  	QHG OF WARSAW COMPANY, LLC	
 	 	
NORTHWEST HOSPITAL, LLC	  	QUORUM HEALTH RESOURCES, LLC	
 	 	
NOV HOLDINGS, LLC	  	RED BUD HOSPITAL CORPORATION	
 	 	
NRH, LLC	  	RED BUD ILLINOIS HOSPITAL COMPANY, LLC	
 	 	
OAK HILL HOSPITAL CORPORATION	  	REGIONAL HOSPITALOF LONGVIEW, LLC	
 	 	
ORO VALLEY HOSPITAL, LLC	  	RIVER REGION MEDICAL CORPORATION	
 	 	
PALMER-WASILLA HEALTH SYSTEM, LLC	  	ROSWELL HOSPITAL CORPORATION	
 	 	
PAYSON HOSPITAL CORPORATION	  	RUSTON HOSPITAL CORPORATION	
 	 	
PENNSYLVANIA HOSPITAL COMPANY, LLC	  	RUSTON LOUISIANA HOSPITAL COMPANY, LLC	
 	 	
PHILLIPS HOSPITAL CORPORATION	  	SACMC, LLC	
 	 	
PHOENIXVILLE HOSPITAL COMPANY, LLC	  	SALEM HOSPITAL CORPORATION	
 	 	
POTTSTOWN HOSPITAL COMPANY, LLC	  	SAN ANGELO COMMUNITY MEDICAL CENTER, LLC	
 	 	
QHG GEORGIA HOLDINGS II, LLC	  	SAN ANGELO MEDICAL, LLC	
 	 	
QHG GEORGIA HOLDINGS, INC.	  	SAN MIGUEL HOSPITAL CORPORATION	
 	 	
QHG GEORGIA, LP	  	SCRANTON HOLDINGS, LLC	
 	 	
QHG OF BLUFFTON COMPANY, LLC	  	SCRANTON HOSPITAL COMPANY, LLC	
 	 	
QHG OF CLINTON COUNTY, INC.	  	SHELBYVILLE HOSPITAL CORPORATION	
 	 	
QHG OF ENTERPRISE, INC.	  	SILOAM SPRINGS ARKANSAS HOSPITAL COMPANY, LLC	
 	 	
QHG OF FORREST COUNTY, INC.	  	SILOAM SPRINGS HOLDINGS, LLC	

By: 	 	/s/ Rachel A. Seifert	
 	 	Name:	 	RACHEL A. SEIFERT	
 	 	Title:	 	EXECUTIVE VICE PRESIDENT	
Acting on behalf of each of the Guarantors set forth above
[Signature Page to Registration Rights Agreement]

 	 	 	
SOUTHERN TEXAS MEDICAL CENTER, LLC	  	WATSONVILLE HOSPITAL CORPORATION	
 	 	
SPOKANE VALLEY WASHINGTON HOSPITAL COMPANY, LLC	  	WAUKEGAN HOSPITAL CORPORATION	
 	 	
SPOKANE WASHINGTON HOSPITAL COMPANY, LLC	  	WAUKEGAN ILLINOIS HOSPITAL COMPANY, LLC	
 	 	
TENNYSON HOLDINGS, LLC	  	WEATHERFORD HOSPITAL CORPORATION	
 	 	
TOMBALL TEXAS HOLDINGS, LLC	  	WEATHERFORD TEXAS HOSPITAL COMPANY, LLC	
 	 	
TOMBALL TEXAS HOSPITAL COMPANY, LLC	  	WEBB HOSPITAL CORPORATION	
 	 	
TOOELE HOSPITAL CORPORATION	  	WEBB HOSPITAL HOLDINGS, LLC	
 	 	
TRIAD HEALTHCARE CORPORATION	  	WESLEY HEALTH SYSTEM, LLC	
 	 	
TRIAD HOLDINGS III, LLC	  	WEST GROVE HOSPITAL COMPANY, LLC	
 	 	
TRIAD HOLDINGS IV, LLC	  	WHMC, LLC	
 	 	
TRIAD HOLDINGS V, LLC	  	WILKES-BARRE BEHAVIORAL HOSPITAL COMPANY, LLC	
 	 	
TRIAD NEVADA HOLDINGS, LLC	  	WILKES-BARRE HOLDINGS, LLC	
 	 	
TRIADOF ALABAMA, LLC	  	WILKES-BARRE HOSPITAL COMPANY, LLC	
 	 	
TRIADOF OREGON, LLC	  	WILLIAMSTON HOSPITAL CORPORATION	
 	 	
TRIAD-ARMC, LLC	  	WOMEN & CHILDREN’S HOSPITAL, LLC	
 	 	
TRIAD-EL DORADO, INC.	  	WOODLAND HEIGHTS MEDICAL CENTER, LLC	
 	 	
TRIAD-NAVARRO REGIONAL HOSPITAL SUBSIDIARY, LLC	  	WOODWARD HEALTH SYSTEM, LLC	
 	 	
TUNKHANNOCK HOSPITAL COMPANY, LLC	  	YOUNGSTOWN OHIO HOSPITAL COMPANY, LLC	
 	 	
VHC MEDICAL, LLC	  	 	
 	 	
VICKSBURG HEALTHCARE, LLC	  	 	
 	 	
VICTORIA HOSPITAL, LLC	  	 	
 	 	
VICTORIAOF TEXAS, L.P.	  	 	
 	 	
VIRGINIA HOSPITAL COMPANY, LLC	  	 	
 	 	
WARREN OHIOHOSPITAL COMPANY, LLC	  	 	
 	 	
WARREN OHIO REHAB HOSPITAL COMPANY, LLC	  	 	

By: 	 	/s/ Rachel A. Seifert	
 	 	Name:	 	RACHEL A. SEIFERT	
 	 	Title:	 	EXECUTIVE VICE PRESIDENT	
Acting on behalf of each of the Guarantors set forth above
[Signature Page to Registration Rights Agreement]

 	 	 	 	 	 	 	 	 	
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.	
 	
CREDIT SUISSE SECURITIES (USA) LLC
Acting on behalf of itself and
as Representative of the Several Purchasers	
 	 	
by:	 	CREDIT SUISSE SECURITIES (USA) LLC	
 	 	 	
 	 	By: 	 	/s/ Colin Bathgate	
 	 	 	 	Name:	 	 	 	Colin Bathgate	
 	 	 	 	Title:	 	 	 	Director	

SCHEDULE A
Initial Purchasers
Credit Suisse Securities (USA) LLC
Merrill Lynch, Pierce, Fenner & Smith
         Incorporated
Citigroup Global Markets Inc.
J. P. Morgan Securities Inc.
Wells Fargo Securities, LLC
Credit Agricole Securities (USA) Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. LLC
RBC Capital Markets, LLC
Scotia Capital (USA) Inc.
SunTrust Robinson Humphrey, Inc.

 	 	Schedule A	 	23	

ANNEX A
Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

ANNEX B
Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See “Plan of Distribution.”

ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until             , 201  , all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

ANNEX D
¨ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

 	 	Name:	 	 	  	 	
 	 	Address:	 	 	  	 	
 	 	 	 	 	  	 	
If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

SCHEDULE I
Guarantors

Guarantor	  	Jurisdiction of Organization	
Community Health Systems, Inc.	  	DE	
 	 	
Abilene Hospital, LLC	  	DE	
 	 	
Abilene Merger, LLC	  	DE	
 	 	
Anna Hospital Corporation	  	IL	
 	 	
Berwick Hospital Company, LLC	  	DE	
 	 	
Big Bend Hospital Corporation	  	TX	
 	 	
Big Spring Hospital Corporation	  	TX	
 	 	
Birmingham Holdings II, LLC	  	DE	
 	 	
Birmingham Holdings, LLC	  	DE	
 	 	
Bluefield Holdings, LLC	  	DE	
 	 	
Bluefield Hospital Company, LLC	  	DE	
 	 	
Bluffton Health System, LLC	  	DE	
 	 	
Brownsville Hospital Corporation	  	TN	
 	 	
Brownwood Hospital, L.P.	  	DE	
 	 	
Brownwood Medical Center, LLC	  	DE	
 	 	
Bullhead City Hospital Corporation	  	AZ	
 	 	
Bullhead City Hospital Investment Corporation	  	DE	
 	 	
Carlsbad Medical Center, LLC	  	DE	
 	 	
Centre Hospital Corporation	  	AL	
 	 	
CHHS Holdings, LLC	  	DE	
 	 	
CHS Kentucky Holdings, LLC	  	DE	
 	 	
CHS Pennsylvania Holdings, LLC	  	DE	
 	 	
CHS Virginia Holdings, LLC	  	DE	
 	 	
CHS Washington Holdings, LLC	  	DE	
 	 	
Clarksville Holdings, LLC	  	DE	
 	 	
Cleveland Hospital Corporation	  	TN	
 	 	
Cleveland Tennessee Hospital Company, LLC	  	DE	
 	 	
Clinton Hospital Corporation	  	PA	
 	 	
Coatesville Hospital Corporation	  	PA	
 	 	
College Station Hospital, L.P.	  	DE	
 	 	
College Station Medical Center, LLC	  	DE	
 	 	
College Station Merger, LLC	  	DE	
 
Schedule I - 1

 	 	 	
Guarantor	  	Jurisdiction of Organization	
Community GP Corp.	  	DE	
 	 	
Community Health Investment Company, LLC	  	DE	
 	 	
Community LP Corp.	  	DE	
 	 	
CP Hospital GP, LLC	  	DE	
 	 	
CPLP, LLC	  	DE	
 	 	
Crestwood Hospital, LLC	  	DE	
 	 	
Crestwood Hospital, LP, LLC	  	DE	
 	 	
CSMC, LLC	  	DE	
 	 	
CSRA Holdings, LLC	  	DE	
 	 	
Deaconess Holdings, LLC	  	DE	
 	 	
Deaconess Hospital Holdings, LLC	  	DE	
 	 	
Deming Hospital Corporation	  	NM	
 	 	
Desert Hospital Holdings, LLC	  	DE	
 	 	
Detar Hospital, LLC	  	DE	
 	 	
DHFW Holdings, LLC	  	DE	
 	 	
DHSC, LLC	  	DE	
 	 	
Dukes Health System, LLC	  	DE	
 	 	
Dyersburg Hospital Corporation	  	TN	
 	 	
Emporia Hospital Corporation	  	VA	
 	 	
Evanston Hospital Corporation	  	WY	
 	 	
Fallbrook Hospital Corporation	  	DE	
 	 	
Foley Hospital Corporation	  	AL	
 	 	
Forrest City Arkansas Hospital Company, LLC	  	AR	
 	 	
Forrest City Hospital Corporation	  	AR	
 	 	
Fort Payne Hospital Corporation	  	AL	
 	 	
Frankfort Health Partner, Inc.	  	IN	
 	 	
Franklin Hospital Corporation	  	VA	
 	 	
Gadsden Regional Medical Center, LLC	  	DE	
 	 	
Galesburg Hospital Corporation	  	IL	
 	 	
Granbury Hospital Corporation	  	TX	
 	 	
Granite City Hospital Corporation	  	IL	
 	 	
Granite City Illinois Hospital Company, LLC	  	IL	
 	 	
Greenville Hospital Corporation	  	AL	
 	 	
GRMC Holdings, LLC	  	DE	
 	 	
Hallmark Healthcare Company, LLC	  	DE	
 
Schedule I - 2

 	 	 	
Guarantor	  	Jurisdiction of Organization	
Hobbs Medco, LLC	  	DE	
 	 	
Hospital of Barstow, Inc.	  	DE	
 	 	
Hospital of Fulton, Inc.	  	KY	
 	 	
Hospital of Louisa, Inc.	  	KY	
 	 	
Hospital of Morristown, Inc.	  	TN	
 	 	
Jackson Hospital Corporation (KY)	  	KY	
 	 	
Jackson Hospital Corporation (TN)	  	TN	
 	 	
Jourdanton Hospital Corporation	  	TX	
 	 	
Kay County Hospital Corporation	  	OK	
 	 	
Kay County Oklahoma Hospital Company, LLC	  	OK	
 	 	
Kirksville Hospital Company, LLC	  	DE	
 	 	
Lakeway Hospital Corporation	  	TN	
 	 	
Lancaster Hospital Corporation	  	DE	
 	 	
Las Cruces Medical Center, LLC	  	DE	
 	 	
Lea Regional Hospital, LLC	  	DE	
 	 	
Lexington Hospital Corporation	  	TN	
 	 	
Longview Merger, LLC	  	DE	
 	 	
LRH, LLC	  	DE	
 	 	
Lutheran Health Network of Indiana, LLC	  	DE	
 	 	
Marion Hospital Corporation	  	IL	
 	 	
Martin Hospital Corporation	  	TN	
 	 	
Massillon Community Health System LLC	  	DE	
 	 	
Massillon Health System LLC	  	DE	
 	 	
Massillon Holdings, LLC	  	DE	
 	 	
McKenzie Tennessee Hospital Company, LLC	  	DE	
 	 	
McNairy Hospital Corporation	  	TN	
 	 	
MCSA, L.L.C.	  	AR	
 	 	
Medical Center of Brownwood, LLC	  	DE	
 	 	
Merger Legacy Holdings, LLC	  	DE	
 	 	
MMC of Nevada, LLC	  	DE	
 	 	
Moberly Hospital Company, LLC	  	DE	
 	 	
MWMC Holdings, LLC	  	DE	
 	 	
Nanticoke Hospital Company, LLC	  	DE	
 	 	
National Healthcare of Leesville, Inc.	  	DE	
 	 	
National Healthcare of Mt. Vernon, Inc.	  	DE	
 
Schedule I - 3

 	 	 	
Guarantor	  	Jurisdiction of Organization	
National Healthcare of Newport, Inc.	  	DE	
 	 	
Navarro Hospital, L.P.	  	DE	
 	 	
Navarro Regional, LLC	  	DE	
 	 	
NC-DSH, LLC	  	NV	
 	 	
Northampton Hospital Company, LLC	  	DE	
 	 	
Northwest Hospital, LLC	  	DE	
 	 	
NOV Holdings, LLC	  	DE	
 	 	
NRH, LLC	  	DE	
 	 	
Oak Hill Hospital Corporation	  	WV	
 	 	
Oro Valley Hospital, LLC	  	DE	
 	 	
Palmer-Wasilla Health System, LLC	  	DE	
 	 	
Payson Hospital Corporation	  	AZ	
 	 	
Pennsylvania Hospital Company, LLC	  	DE	
 	 	
Phillips Hospital Corporation	  	AR	
 	 	
Phoenixville Hospital Company, LLC	  	DE	
 	 	
Pottstown Hospital Company, LLC	  	DE	
 	 	
QHG Georgia Holdings II, LLC	  	DE	
 	 	
QHG Georgia Holdings, Inc.	  	GA	
 	 	
QHG Georgia, LP	  	GA	
 	 	
QHG of Bluffton Company, LLC	  	DE	
 	 	
QHG of Clinton County, Inc.	  	IN	
 	 	
QHG of Enterprise, Inc.	  	AL	
 	 	
QHG of Forrest County, Inc.	  	MS	
 	 	
QHG of Fort Wayne Company, LLC	  	DE	
 	 	
QHG of Hattiesburg, Inc.	  	MS	
 	 	
QHG of Massillon, Inc.	  	OH	
 	 	
QHG of South Carolina, Inc.	  	SC	
 	 	
QHG of Spartanburg, Inc.	  	SC	
 	 	
QHG of Springdale, Inc.	  	AR	
 	 	
QHG of Warsaw Company, LLC	  	DE	
 	 	
Quorum Health Resources, LLC	  	DE	
 	 	
Red Bud Hospital Corporation	  	IL	
 	 	
Red Bud Illinois Hospital Company, LLC	  	IL	
 	 	
Regional Hospital of Longview, LLC	  	DE	
 	 	
River Region Medical Corporation	  	MS	
 
Schedule I - 4

 	 	 	
Guarantor	  	Jurisdiction of Organization	
Roswell Hospital Corporation	  	NM	
 	 	
Ruston Hospital Corporation	  	DE	
 	 	
Ruston Louisiana Hospital Company, LLC	  	DE	
 	 	
SACMC, LLC	  	DE	
 	 	
Salem Hospital Corporation	  	NJ	
 	 	
San Angelo Community Medical Center, LLC	  	DE	
 	 	
San Angelo Medical, LLC	  	DE	
 	 	
San Miguel Hospital Corporation	  	NM	
 	 	
Scranton Holdings, LLC	  	DE	
 	 	
Scranton Hospital Company, LLC	  	DE	
 	 	
Shelbyville Hospital Corporation	  	TN	
 	 	
Siloam Springs Arkansas Hospital Company, LLC	  	DE	
 	 	
Siloam Springs Holdings, LLC	  	DE	
 	 	
Southern Texas Medical Center, LLC	  	DE	
 	 	
Spokane Valley Washington Hospital Company, LLC	  	DE	
 	 	
Spokane Washington Hospital Company, LLC	  	DE	
 	 	
Tennyson Holdings, LLC	  	DE	
 	 	
Tooele Hospital Corporation	  	UT	
 	 	
Tomball Texas Holdings, LLC	  	DE	
 	 	
Tomball Texas Hospital Company, LLC	  	DE	
 	 	
Triad Healthcare Corporation	  	DE	
 	 	
Triad Holdings III, LLC	  	DE	
 	 	
Triad Holdings IV, LLC	  	DE	
 	 	
Triad Holdings V, LLC	  	DE	
 	 	
Triad Nevada Holdings, LLC	  	DE	
 	 	
Triad of Alabama, LLC	  	DE	
 	 	
Triad of Oregon, LLC	  	DE	
 	 	
Triad-ARMC, LLC	  	DE	
 	 	
Triad-El Dorado, Inc.	  	AR	
 	 	
Triad-Navarro Regional Hospital Subsidiary, LLC	  	DE	
 	 	
Tunkhannock Hospital Company, LLC	  	DE	
 	 	
VHC Medical, LLC	  	DE	
 	 	
Vicksburg Healthcare, LLC	  	DE	
 	 	
Victoria Hospital, LLC	  	DE	
 	 	
Victoria of Texas, L.P.	  	DE	
 
Schedule I - 5

 	 	 	
Guarantor	  	Jurisdiction of Organization	
Virginia Hospital Company, LLC	  	VA	
 	 	
Warren Ohio Hospital Company, LLC	  	DE	
 	 	
Warren Ohio Rehab Hospital Company, LLC	  	DE	
 	 	
Watsonville Hospital Corporation	  	DE	
 	 	
Waukegan Hospital Corporation	  	IL	
 	 	
Waukegan Illinois Hospital Company, LLC	  	IL	
 	 	
Weatherford Hospital Corporation	  	TX	
 	 	
Weatherford Texas Hospital Company, LLC	  	TX	
 	 	
Webb Hospital Corporation	  	DE	
 	 	
Webb Hospital Holdings, LLC	  	DE	
 	 	
Wesley Health System, LLC	  	DE	
 	 	
West Grove Hospital Company, LLC	  	DE	
 	 	
WHMC, LLC	  	DE	
 	 	
Wilkes-Barre Behavioral Hospital Company, LLC	  	DE	
 	 	
Wilkes-Barre Holdings, LLC	  	DE	
 	 	
Wilkes-Barre Hospital Company, LLC	  	DE	
 	 	
Williamston Hospital Corporation	  	NC	
 	 	
Women & Children’s Hospital, LLC	  	DE	
 	 	
Woodland Heights Medical Center, LLC	  	DE	
 	 	
Woodward Health System, LLC	  	DE	
 	 	
Youngstown Ohio Hospital Company, LLC	  	DE	
 
Schedule I - 6

Exhibit 4.31
ELEVENTH SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of October 1, 2011, among CHS/COMMUNITY HEALTH SYSTEMS, INC., a Delaware corporation (the “ Issuer ”), each of the parties identified as a New Subsidiary Guarantor on the signature pages hereto (each, a “ New Subsidiary Guarantor ” and collectively, the “ New Subsidiary Guarantors ”) and U.S. BANK NATIONAL ASSOCIATION, as Trustee under the Indenture (the “ Trustee ”).
W I T N E S S E T H:
WHEREAS the Issuer has heretofore executed and delivered to the Trustee an Indenture (the “Indenture”), dated as of July 25, 2007, providing for the issuance of the 8  7 / 8 % Senior Notes due 2015 (the “ Securities ”);
WHEREAS, each of the undersigned New Subsidiary Guarantors has deemed it advisable and in its best interest to execute and deliver this Supplemental Indenture, and to become a New Subsidiary Guarantor under the Indenture; and
WHEREAS, pursuant to Section 9.01(4) of the Indenture, the Trustee, the Issuer and the New Subsidiary Guarantors are authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the New Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Securities as follows:
SECTION 1. Capitalized Terms. Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.
SECTION 2. Guaranties. Each New Subsidiary Guarantor hereby agrees to guarantee the Issuer’s obligations under the Securities on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture as a Subsidiary Guarantor.
SECTION 3. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, shall inure to the benefit of the Trustee and every Holder of Securities heretofore or hereafter authenticated and the Issuer, the Trustee and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.
SECTION 4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 5. Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.
SECTION 6. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
SECTION 7. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction of this Supplemental Indenture.
[Signature page follows]

 	 	 	 	 	
IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to be duly executed as of this 1 st  day of October, 2011.	
 	 	
 	 	CHS/Community Health Systems, Inc.
a Delaware corporation	
 	 	 	
 	 	By:	 	/s/ Rachel A. Seifert	
 	 	 	 	Rachel A. Seifert	
 	 	 	 	Executive Vice President, Secretary & General Counsel	
 	 	
 	 	Tomball Texas Holdings, LLC,
a Delaware limited liability company	
 	 	 	
 	 	By:	 	/s/ Rachel A. Seifert	
 	 	 	 	Rachel A. Seifert	
 	 	 	 	Executive Vice President and Secretary	
 	 	
 	 	Tomball Texas Hospital Company, LLC,
a Delaware limited liability company	
 	 	 	
 	 	By:	 	/s/ Rachel A. Seifert	
 	 	 	 	Rachel A. Seifert	
 	 	 	 	Executive Vice President and Secretary	
 	 	
 	 	U.S. Bank National Association,
as Trustee	
 	 	 	
 	 	By:	 	/s/ Wally Jones	
 	 	 	 	Wally Jones	
 	 	 	 	Vice President	

Exhibit 4.32
RELEASE OF CERTAIN GUARANTOR (this “Release”), dated as of October 22, 2011, by and among CHS/COMMUNITY HEALTH SYSTEMS, INC., a Delaware corporation (the “ Issuer ”), the Subsidiary Guarantor party hereto, and U.S. BANK NATIONAL ASSOCIATION, as Trustee under the Indenture (the “ Trustee ”).
W I T N E S S E T H:
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an Indenture, dated as of July 25, 2007, as supplemented by the First Supplemental Indenture, dated as of July 25, 2007, the Second Supplemental Indenture, dated as of December 31, 2007, the Third Supplemental Indenture, dated as of October 10, 2008, the Fourth Supplemental Indenture, dated December 1, 2008, the Fifth Supplemental Indenture, dated February 5, 2009, the Sixth Supplemental Indenture, dated March 30, 2008, the Seventh Supplemental Indenture, dated June 30, 2009, the Eighth Supplemental Indenture, dated March 30, 2010, the Ninth Supplemental Indenture, dated October 25, 2010 and the Tenth Supplemental Indenture, dated June 30, 2011 (the “ Indenture ”), providing for the issuance of the 8  7 / 8 % Senior Notes due 2015 (the “ Securities ”);
WHEREAS, pursuant to that certain Purchase Agreement, dated as of June 16, 2011 (as amended, supplemented or otherwise modified from time to time, the “ Sale Agreement ”), by and between (i) Community GP Corp., Community LP Corp., and Community Health Investment Company, LLC (collectively, “ Seller ”), and (ii) New Directions Health Systems, LLC and New Directions Health Systems of Texas, LLC (collectively, “ Purchaser ”), Seller has agreed to sell to Purchaser, and Purchaser has agreed to purchase, all of the outstanding equity interests of certain Subsidiaries of the Issuer (such transaction, the “ Sale ”).
WHEREAS, (i) upon the consummation of the Sale, the Subsidiary Guarantor listed on the signature page hereto (the “Sold Subsidiary Guarantor ”) will no longer be a Subsidiary of the Issuer, (ii) the Purchaser is not the Issuer or a Restricted Subsidiary of the Issuer, (iii) the Sale is permitted by the Indenture, and (iv) the Issuer has delivered an Officer’s Certificate to the Trustee to the effect that the Issuer will comply with its obligations under Section 4.06 of the Indenture with respect to the Sale.
WHEREAS pursuant to Section 10.06(1) of the Indenture, a Guarantor will be released from its obligations under the Indenture under the circumstances described in the immediately preceding recital.
WHEREAS pursuant to the last sentence of Section 10.06 of the Indenture, the Issuer requests and the Trustee is authorized to execute and deliver this Release evidencing such release pursuant to Section 10.06(1) of the Indenture.
NOW THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the Subsidiary Guarantor party hereto and the Trustee mutually covenant and agree as follows:
SECTION 1. Capitalized Terms. Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.
SECTION 2. Subsidiary Guarantor. Effective from and after the consummation of the Sale, the Sold Subsidiary Guarantor is hereby irrevocably released and discharged from its obligations under Article 10 of the Indenture, any Guaranty Agreement to which it may be party or any obligations with respect to the Securities.
SECTION 3. Ratification of Indenture; Release Part of Indenture. Except as expressly modified hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Release shall form a part of the Indenture for all
 
1

purposes, shall inure to the benefit of the Issuer, the Sold Subsidiary Guarantor, the Trustee and every Holder of Securities heretofore or hereafter authenticated and the Issuer, the Sold Subsidiary Guarantor, the Trustee and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.
SECTION 4. Governing Law. THIS RELEASE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 5. Trustee Makes No Representation. The Trustee makes no representation as to the accuracy or correctness of the recitals of this Release.
SECTION 6. Counterparts. The parties may sign any number of copies of this Release. Each signed copy shall be an original, but all of them together represent the same agreement.
SECTION 7. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction of this Release.
[Signature page follows]
 
2

 	 	 	 	 	
IN WITNESS WHEREOF, the parties have caused this Release to be duly executed as of this 22 nd  day of October, 2011.	
 	 	
 	 	CHS/Community Health Systems, Inc.,
a Delaware corporation	
 	 	 	
 	 	By:	 	/s/ Rachel A. Seifert	
 	 	 	 	Rachel A. Seifert	
 	 	 	 	Executive Vice President, Secretary & General Counsel	
 	 	
 	 	Sold Subsidiary Guarantor:
 
Cleveland Regional Medical Center, L.P.	
 	 	 	
 	 	By:	 	/s/ James W. Doucette	
 	 	 	 	James W. Doucette	
 	 	 	 	Vice President, Finance and Treasurer	

U.S. Bank National Association,
as Trustee	
 	 	
By:	 	/s/ Wally Jones	
 	 	Wally Jones	
 	 	Vice President	
 
3

Exhibit 12
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)

 	  	Year Ended December 31,	 	
 	  	2007	 	 	2008	 	 	2009	 	 	2010	 	 	2011	 	
Earnings	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations before provision for income taxes and extraordinary item	  	$	111,858	  	 	$	366,287	  	 	$	447,662	  	 	$	518,894	  	 	$	473,547	  	
Income from equity investees	  	 	(25,136	) 	 	 	(42,073	) 	 	 	(36,531	) 	 	 	(45,443	) 	 	 	(49,491	) 	
Distributed income from equity investees	  	 	19,902	  	 	 	32,897	  	 	 	33,705	  	 	 	33,882	  	 	 	39,995	  	
Interest and amortization of deferred finance costs	  	 	356,488	  	 	 	643,397	  	 	 	643,608	  	 	 	647,593	  	 	 	644,410	  	
Amortization of capitalized interest	  	 	881	  	 	 	1,468	  	 	 	2,021	  	 	 	2,421	  	 	 	2,882	  	
Implicit rental interest expense	  	 	36,696	  	 	 	55,440	  	 	 	59,384	  	 	 	62,116	  	 	 	63,695	  	

Total Earnings	  	$	500,689	  	 	$	1,057,416	  	 	$	1,149,849	  	 	$	1,219,463	  	 	$	1,175,038	  	
 	 	 	 	 	 	
Fixed Charges	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest and amortization of deferred finance costs	  	$	356,488	  	 	$	643,397	  	 	$	643,608	  	 	$	647,593	  	 	$	644,410	  	
Capitalized interest	  	 	19,009	  	 	 	22,087	  	 	 	16,649	  	 	 	11,316	  	 	 	20,998	  	
Implicit rental interest expense	  	 	36,696	  	 	 	55,440	  	 	 	59,384	  	 	 	62,116	  	 	 	63,695	  	

Total Fixed Charges	  	$	412,193	  	 	$	720,924	  	 	$	719,641	  	 	$	721,025	  	 	$	729,103	  	
 	 	 	 	 	 	
Ratio of earnings to fixed charges	  	 	1.21	x 	 	 	1.47	x 	 	 	1.60	x 	 	 	1.69	x 	 	 	1.61	x 	

Exhibit 21
Community Health Systems, Inc.
SUBSIDIARY LISTING
 
(*)	Majority position held in an entity with physicians, non-profit entities or both	
(#)	Minority position held in a non-consolidating entity	

5300 Grand Limited Partnership*	  	 	
A Woman’s Place, LLC	  	 	
Abilene Clinic Asset Holding Company, LLC	  	 	
Abilene Hospital, LLC	  	 	
Abilene Merger, LLC	  	 	
Affinity Health Systems, LLC*	  	 	
Affinity Hospital, LLC*	  	d/b/a Trinity Medical Center	
Affinity Orthopedic Services, LLC	  	 	
Affinity Physician Services, LLC	  	 	
Affinity Skilled Nursing, LLC	  	 	
Alaska Physician Services, LLC	  	 	
Alice Hospital, LLC	  	 	
Ambulance Services of Dyersburg, Inc.	  	 	
Ambulance Services of Forrest City, LLC	  	 	
Ambulance Services of Lexington, Inc.	  	 	
Ambulance Services of McKenzie, Inc.	  	 	
Ambulance Services of McNairy, Inc.	  	 	
Ambulance Services of Tooele, LLC	  	 	
American Health Facilities Development, LLC	  	 	
Anesthesiology Group of Hattiesburg, LLC	  	 	
Angelo Community Healthcare Services, Inc.	  	 	
Anna Clinic Corp.	  	 	
Anna Home Care Services, LLC	  	 	
Anna Hospital Corporation	  	d/b/a Union County Hospital	
APS Medical, LLC	  	 	
Arizona ASC Management, Inc.	  	 	
Arizona DH, LLC	  	 	
Arizona Medco, LLC	  	 	
ARMC, LP	  	d/b/a Abilene Regional Medical Center	
Arusha LLC*	  	 	
Augusta Health System, LLC*	  	 	
Augusta Home Care Services, LLC	  	 	
Augusta Hospital, LLC*	  	d/b/a Trinity Hospital of Augusta	
Augusta Physician Services, LLC	  	 	
Barberton Health System, LLC	  	 	
Barberton Physician Services, LLC	  	 	
Barstow Healthcare Management, Inc.	  	 	
Beauco, LLC	  	 	

 	 	 	
Beaumont Medical Center, L.P.	  	 	
Beaumont Regional, LLC	  	 	
Berwick Clinic Company, LLC	  	 	
Berwick Clinic Corp.	  	 	
Berwick Home Care Services, LLC	  	 	
Berwick Home Health Private Care, Inc.	  	 	
Berwick Hospital Company, LLC	  	d/b/a Berwick Hospital Center	
Berwick Medical Professionals, P.C.	  	 	
BH Trans Company, LLC	  	 	
Big Bend Home Care Services, LLC	  	 	
Big Bend Hospital Corporation	  	d/b/a Big Bend Regional Medical Center	
Big Spring Hospital Corporation	  	d/b/a Scenic Mountain Medical Center	
Birmingham Holdings, LLC	  	 	
Birmingham Holdings II, LLC	  	 	
Bluefield Holdings, LLC	  	 	
Bluefield Hospital Company, LLC	  	d/b/a Bluefield Regional Medical Center	
Blue Island Clinic Company, LLC	  	 	
Blue Island Home Care Services, LLC	  	 	
Blue Island Hospital Company, LLC	  	 	
Blue Island Illinois Holdings, LLC	  	 	
Blue Ridge Georgia Hospital Company, LLC*	  	d/b/a Fannin Regional Hospital	
Bluffton Health System, LLC	  	d/b/a Bluffton Regional Medical Center	
Bluffton Physician Services, LLC	  	 	
Boyertown Medical Services, L.P.#	  	 	
Brandywine Hospital Malpractice Assistance Fund, Inc.	  	 	
Brazos Valley of Texas, L.P.	  	 	
Brazos Valley Surgical Center, LLC	  	 	
Broken Arrow Medical Group, LLC	  	 	
Brooklyn Medical Associates, LLC	  	 	
Brownsville Clinic Corp.	  	 	
Brownsville Hospital Corporation	  	d/b/a Haywood Park Community Hospital	
Brownwood Asset Holding Company, LLC	  	 	
Brownwood Hospital, L.P.	  	d/b/a Brownwood Regional Medical Center	
Brownwood Medical Center, LLC	  	 	
Bullhead City Clinic Corp.	  	 	
Bullhead City Hospital Corporation	  	d/b/a Western Arizona Regional Medical Center	
Bullhead City Hospital Investment Corporation	  	 	
Bullhead City Imaging Corporation	  	 	
Byrd Medical Clinic, Inc.	  	 	
Cardiology Associates of Spokane, LLC	  	 	
Cardiology Associates of Tri-cities, LLC	  	 	
Carlsbad Medical Center, LLC	  	d/b/a Carlsbad Medical Center	
Carolina Surgery Center, LLC*	  	 	
Carolinas Internal Medicine, LLC	  	 	
Carolinas Medical Alliance, Inc.	  	 	

 	 	 	
Carolinas OB/GYN Medical Group, LLC	  	 	
Cedar Park Health System, L.P.*	  	d/b/a Cedar Park Regional Medical Center	
Center for Adult Healthcare, LLC	  	 	
Central Alabama Physician Services, Inc.	  	 	
Centre Clinic Corp.	  	 	
Centre Home Care Corporation	  	 	
Centre Hospital Corporation	  	d/b/a Cherokee Medical Center	
Centre RHC Corp.	  	 	
Chaves County New Mexico Hospital Company, LLC	  	 	
Chesterfield Clinic Corp.	  	 	
Chesterfield/Marlboro, L.P.	  	d/b/a Marlboro Park Hospital; Chesterfield General Hospital	
Chestnut Hill Clinic Company, LLC*	  	 	
Chestnut Hill Health System, LLC*	  	 	
CHHS ALF Company, LLC*	  	 	
CHHS Development Company, LLC*	  	 	
CHHS Holdings, LLC	  	 	
CHHS Hospital Company, LLC*	  	d/b/a Chestnut Hill Hospital	
CHHS Rehab Company, LLC*	  	 	
Children’s Mobile Team#	  	 	
CHS Kentucky Holdings, LLC	  	 	
CHS Pennsylvania Holdings, LLC	  	 	
CHS PSO, LLC	  	 	
CHS Realty Holdings I, Inc.	  	 	
CHS Realty Holdings II, Inc.	  	 	
CHS Realty Holdings Joint Venture	  	 	
CHS Utah Holdings, LLC	  	 	
CHS Virginia Holdings, LLC	  	 	
CHS Washington Holdings, LLC	  	 	
CHS/Community Health Systems, Inc.	  	 	
CHSPSC Leasing, Inc.	  	 	
Claremore Anesthesia, LLC	  	 	
Claremore Internal Medicine, LLC	  	 	
Claremore Physicians, LLC	  	 	
Claremore Regional Hospital, LLC	  	 	
Clarksville Health System, G.P.*	  	d/b/a Gateway Health System	
Clarksville Holdings, LLC	  	 	
Clarksville Home Care Services, LLC*	  	 	
Clarksville Imaging Center, LLC#	  	 	
Clarksville Physician Services, G.P.*	  	 	
Cleveland Home Care Services, LLC	  	 	
Cleveland Hospital Corporation	  	 	
Cleveland Medical Clinic, Inc.	  	 	
Cleveland PHO, Inc.	  	 	
Cleveland Tennessee Hospital Company, LLC	  	d/b/a SkyRidge Medical Center	

 	 	 	
Clinton County Health System, LLC	  	 	
Clinton Hospital Corporation	  	d/b/a Lock Haven Hospital	
Coatesville Cardiology Clinic, LLC	  	 	
Coatesville Clinic Company, LLC	  	 	
Coatesville Hospital Corporation	  	d/b/a Brandywine Hospital	
C-OK, LLC	  	 	
College Station Clinic Asset Holding Company, LLC	  	 	
College Station Hospital, L.P.	  	d/b/a College Station Medical Center	
College Station Medical Center, LLC	  	 	
College Station Merger, LLC	  	 	
College Station RHC Company, LLC	  	 	
Community GP Corp.	  	 	
Community Health Care Partners, Inc.	  	 	
Community Health Investment Company, LLC	  	 	
Community Health Network, Inc.	  	 	
Community Health Physicians Operations Holding Company, LLC	  	 	
Community Health Systems Foundation	  	 	
Community Health Systems Professional Services Corporation	  	 	
Community Health Systems Professional Services Corporation Political Action Committee	  	 	
Community Health Systems, Inc.	  	 	
Community Health United Home Care, LLC	  	 	
Community Information Network, Inc.#	  	 	
Community Insurance Group SPC, LTD.	  	 	
Community LP Corp.	  	 	
Community Network Solutions, LLC	  	 	
Consolidated Hospital Laundry Services, Inc.#	  	 	
Coronado Medical, LLC	  	 	
Cottage Home Options, L.L.C.	  	 	
Cottage Rehabilitation and Sports Medicine, L.L.C.#	  	 	
Coventry Clinic Company, LLC	  	 	
CP Hospital GP, LLC	  	 	
CPLP, LLC	  	 	
Crestview Hospital Corporation*	  	d/b/a North Okaloosa Medical Center	
Crestview Professional Condominiums Association, Inc.*	  	 	
Crestview Surgery Center, L.P.	  	 	
Crestwood Healthcare, L.P.*	  	d/b/a Crestwood Medical Center	
Crestwood Hospital LP, LLC	  	 	
Crestwood Hospital, LLC	  	 	
Crestwood Physician Services, LLC	  	 	
Crestwood Surgery Center, LLC*	  	 	
Crossroads Healthcare Management, LLC#	  	 	
Crossroads Home Care Services, LLC	  	 	
Crossroads Physician Corp.	  	 	
CSMC, LLC	  	 	
CSRA Holdings, LLC	  	 	

 	 	 	
Dallas Phy Service, LLC	  	 	
Dallas Physician Practice, L.P.	  	 	
Day Surgery, Inc.	  	 	
Deaconess Clinical Associates, Inc.*	  	 	
Deaconess Health System, LLC*	  	d/b/a Deaconess Hospital	
Deaconess Holdings, LLC	  	 	
Deaconess Hospital Holdings, LLC	  	 	
Deaconess Metropolitan Physicians, LLC	  	 	
Deaconess Physician Services, LLC	  	 	
Deaconess Portland MOB Limited Partnership#	  	 	
Deming Clinic Corporation	  	 	
Deming Home Care Services, LLC	  	 	
Deming Hospital Corporation	  	d/b/a Mimbres Memorial Hospital	
Deming Nursing Home Company, LLC	  	 	
Desert Hospital Holdings, LLC	  	 	
Detar Hospital, LLC	  	 	
DFW Physerv, LLC	  	 	
DH Cardiology, LLC	  	 	
DHFW Holdings, LLC	  	 	
DHSC, LLC	  	d/b/a Affinity Medical Center	
Diagnostic Imaging Centers of NEPA, LLC#	  	 	
Diagnostic Imaging Management of Brandywine Valley, LLC	  	 	
Doctors Hospital Physician Services, LLC	  	 	
Doctors of Laredo, LLC	  	 	
Dukes Health System, LLC	  	d/b/a Dukes Memorial Hospital	
Dukes Physician Services, LLC	  	 	
Dupont Hospital, LLC*	  	d/b/a Dupont Hospital	
Dyersburg Clinic Corp.	  	 	
Dyersburg HBP Medical Group, LLC	  	 	
Dyersburg Home Care Services, LLC	  	 	
Dyersburg Hospital Corporation	  	d/b/a Dyersburg Regional Medical Center	
E.D. Clinics, LLC	  	 	
East Tennessee Clinic Corp.	  	 	
East Tennessee Health Systems, Inc.	  	 	
Easton Hospital Malpractice Assistance Fund, Inc.	  	 	
Edge Medical Clinic, Inc.	  	 	
Edwardsville Ambulatory Surgery Center, L.L.C.*	  	 	
El Dorado Home Care Services, LLC	  	 	
El Dorado Surgery Center, L.P.*	  	 	
EL MED, LLC	  	 	
Eligibility Screening Services, LLC	  	 	
Empire Health Services	  	 	
Emporia Clinic Corp.	  	 	
Emporia Home Care Services, LLC	  	 	

 	 	 	
Emporia Hospital Corporation	  	d/b/a Southern Virginia Regional Medical Center	
Enterprise Clinic, LLC	  	 	
Eufaula Clinic Corp.	  	 	
Eufaula Hospital Corporation	  	 	
Evanston Clinic Corp.	  	 	
Evanston Hospital Corporation	  	d/b/a Evanston Regional Hospital	
Fallbrook Home Care Services, LLC	  	 	
Fallbrook Hospital Corporation	  	d/b/a Fallbrook Hospital	
Family Home Care, Inc.	  	 	
Fannin Regional Orthopaedic Center, Inc.	  	 	
Firstcare, Inc.#	  	 	
First Choice Health Network, Inc.#	  	 	
Florence Home Care Services, LLC	  	 	
Flowers Real Estate Holdings, LLC	  	 	
Foley Clinic Corp.	  	 	
Foley Home Health Corporation	  	 	
Foley Hospital Corporation	  	d/b/a South Baldwin Regional Medical Center	
Forrest City Arkansas Hospital Company, LLC	  	d/b/a Forrest City Medical Center	
Forrest City Clinic Company, LLC	  	 	
Forrest City Hospital Corporation	  	 	
Fort Payne Clinic Corp.	  	 	
Fort Payne Home Care Corporation	  	 	
Fort Payne Hospital Corporation	  	d/b/a DeKalb Regional Medical Center	
Fort Payne RHC Corp.	  	 	
Frankfort Health Partner, Inc.	  	 	
Franklin Clinic Corp.	  	 	
Franklin Home Care Services, LLC	  	 	
Franklin Hospital Corporation	  	d/b/a Southampton Memorial Hospital	
Fulton Home Care Services, LLC	  	 	
Gadsden Home Care Services, LLC	  	 	
Gadsden Regional Medical Center, LLC	  	d/b/a Gadsden Regional Medical Center	
Gadsden Regional Physician Group Practice, LLC	  	 	
Gadsden Regional Primary Care, LLC	  	 	
Galesburg Home Care Corporation	  	 	
Galesburg Hospital Corporation	  	d/b/a Galesburg Cottage Hospital	
Galesburg In-Home Assistance, Inc.	  	 	
Galesburg Professional Services, LLC	  	 	
Gateway Malpractice Assistance Fund, Inc.	  	 	
Gateway Medical Services, Inc.	  	 	
Granbury Clinic Asset Holding Company, LLC	  	 	
Granbury Hospital Corporation	  	d/b/a Lake Granbury Medical Center	
Granbury Texas Hospital Investment Corporation	  	 	
Granite City ASC Investment Company, LLC	  	 	
Granite City Clinic Corp.	  	 	

 	 	 	
Granite City Home Care Services, LLC	  	 	
Granite City Hospital Corporation	  	 	
Granite City Illinois Hospital Company, LLC	  	d/b/a Gateway Regional Medical Center	
Granite City Orthopedic Physicians Company, LLC	  	 	
Granite City Physicians Corp.	  	 	
GRB Real Estate, LLC	  	 	
Great Plains Medical Foundation*	  	 	
Greenbrier Valley Anesthesia, LLC	  	 	
Greenbrier Valley Emergency Physicians, LLC	  	 	
Greenbrier VMC, LLC*	  	d/b/a Greenbrier Valley Medical Center	
Greenville Clinic Corp.	  	 	
Greenville Hospital Corporation	  	d/b/a L. V. Stabler Memorial Hospital	
GRMC Holdings, LLC	  	 	
Gulf Coast Hospital, L.P.	  	 	
Gulf Coast Medical Center, LLC	  	 	
Hallmark Healthcare Company, LLC	  	 	
Harris Managed Services, Inc.	  	 	
Harris Medical Clinics, Inc.	  	 	
Hattiesburg ASC-GP, LLC	  	 	
Hattiesburg Home Care Services, LLC	  	 	
Haven Clinton Medical Associates, LLC	  	 	
Healthcare of Forsyth County, Inc.	  	 	
HealthTrust Purchasing Group, L.P.#	  	 	
Healthwest Holdings, Inc.	  	 	
Heartland Malpractice Assistance Fund, Inc.	  	 	
Heartland Regional Health System, LLC	  	 	
Heartland Rural Healthcare, LLC	  	 	
Hefner Pointe Medical Associates, LLC#	  	 	
Helena Home Care Services, LLC	  	 	
Heritage Healthcare Innovation Fund, L.P.#	  	 	
Hidden Valley Medical Center, Inc.	  	 	
Highland Health Systems, Inc.	  	 	
Hill Regional Clinic Corp.	  	 	
Hill Regional Medical Group	  	 	
Hobbs Medco, LLC	  	 	
Hobbs Physician Practice, LLC	  	 	
Hood Medical Group	  	 	
Hood Medical Services, Inc.	  	 	
Hospital of Barstow, Inc.	  	d/b/a Barstow Community Hospital	
Hospital of Fulton, Inc.	  	d/b/a Parkway Regional Hospital	
Hospital of Louisa, Inc.	  	d/b/a Three Rivers Medical Center	
Hospital of Morristown, Inc.	  	d/b/a Lakeway Regional Hospital	
Hot Springs Outpatient Surgery Center, G.P.	  	 	
HTI Tucson Rehabilitation, Inc.	  	 	
Humble Texas Home Care Corporation	  	 	

 	 	 	
Huntington Associates	  	 	
INACTCO, Inc.	  	 	
In-Home Assistance, L.L.C.	  	 	
In-Home Medical Equipment Supplies and Services, Inc.	  	 	
Inland Empire Hospital Services Association#	  	 	
Innovative Recoveries, LLC	  	 	
Intermountain Medical Group, Inc.	  	 	
IOM Health System, L.P.*	  	d/b/a Lutheran Hospital of Indiana	
Jackson Home Care Services, LLC	  	 	
Jackson Hospital Corporation (KY)	  	d/b/a Kentucky River Medical Center	
Jackson Hospital Corporation (TN)	  	 	
Jackson Physician Corp.	  	 	
Jackson, Tennessee Hospital Company, LLC*	  	d/b/a Regional Hospital of Jackson	
Jennersville Family Medicine, LLC	  	 	
Jennersville Regional Hospital Malpractice Assistance Fund, Inc.	  	 	
Jourdanton Clinic Asset Holding Company, LLC	  	 	
Jourdanton Home Care Services, LLC	  	 	
Jourdanton Hospital Corporation	  	d/b/a South Texas Regional Medical Center	
Kay County Clinic Company, LLC	  	 	
Kay County Hospital Corporation	  	 	
Kay County Oklahoma Hospital Company, LLC	  	d/b/a Ponca City Medical Center	
Kentucky River HBP, LLC	  	 	
Kentucky River Physician Corporation	  	 	
King’s Daughters Malpractice Assistance Fund, Inc.	  	 	
Kirksville Academic Medicine, LLC	  	 	
Kirksville Clinic Corp.	  	 	
Kirksville Hospital Company, LLC	  	 	
Kirksville Missouri Hospital Company, LLC*	  	d/b/a Northeast Regional Medical Center	
Kirksville Physical Therapy Services, LLC	  	 	
Knox Clinic Corp.	  	 	
Kosciusko Medical Group, LLC	  	 	
Lake Area Physician Services, LLC	  	 	
Lake Area Surgicare, A Partnership in Commendam*	  	 	
Lake Wales Clinic Corp.	  	 	
Lake Wales Hospital Corporation*	  	d/b/a Lake Wales Medical Center	
Lake Wales Hospital Investment Corporation*	  	 	
Lakeland Home Care Services, LLC	  	 	
Lakeway Hospital Corporation	  	 	
Lancaster Clinic Corp.	  	 	
Lancaster Home Care Services, LLC	  	 	
Lancaster Hospital Corporation	  	d/b/a Springs Memorial Hospital	
Lancaster Imaging Center, LLC	  	 	
Laredo Texas Hospital Company, L.P.*	  	d/b/a Laredo Medical Center	
Las Cruces ASC-GP, LLC	  	 	
Las Cruces Medical Center, LLC	  	d/b/a Mountain View Regional Medical Center	

 	 	 	
Las Cruces Physician Services, LLC	  	 	
Las Cruces Surgery Center, L.P.*	  	 	
Lea Regional Hospital, LLC	  	d/b/a Lea Regional Medical Center	
Lexington Clinic Corp.	  	 	
Lexington Family Physicians, LLC	  	 	
Lexington Home Care Services, LLC	  	 	
Lexington Hospital Corporation	  	d/b/a Henderson County Community Hospital	
Lindenhurst Illinois Hospital Company, LLC	  	 	
Lindenhurst Surgery Center, LLC	  	 	
Lock Haven Clinic Company, LLC	  	 	
Lock Haven Home Care Services, LLC	  	 	
Lock Haven Medical Professionals, P.C.	  	 	
Logan Hospital Corporation	  	 	
Logan, West Virginia Hospital Company, LLC	  	 	
Longview Clinic Operations Company, LLC	  	 	
Longview Medical Center, L.P.*	  	d/b/a Longview Regional Medical Center	
Longview Merger, LLC	  	 	
Louisa Home Care Services, LLC	  	 	
LRH, LLC	  	 	
LS Psychiatric, LLC	  	 	
Lufkin Clinic Asset Holding Company, LLC	  	 	
Lutheran Health Network CBO, LLC	  	 	
Lutheran Health Network Investors, LLC*	  	 	
Lutheran Health Network of Indiana, LLC	  	 	
Lutheran Medical Group, LLC	  	 	
Lutheran Medical Office Park Property Owners Association, Inc.#	  	 	
Lutheran Medical Office Park Phase II Property Owners Association, Inc. #	  	 	
Lutheran Musculoskeletal Center, LLC*	  	 	
Lutheran/TRMA Network, LLC#	  	 	
Macon Healthcare, LLC#	  	 	
Madison Clinic Corp.	  	 	
Madison Hospital, LLC	  	 	
Marion Hospital Corporation	  	d/b/a Heartland Regional Medical Center	
Marion Physician Services, LLC	  	 	
Marlboro Clinic Corp.	  	 	
Martin Clinic Corp.	  	 	
Martin Hospital Corporation	  	d/b/a Volunteer Community Hospital	
Mary Black Health System LLC*	  	d/b/a Mary Black Memorial Hospital	
Mary Black Medical Office Building Limited Partnership*	  	 	
Mary Black MOB II, L.P.*	  	 	
Mary Black Physician Services, LLC	  	 	
Mary Black Physicians Group, LLC	  	 	
Massillon Community Health System LLC	  	 	
Massillon Health System, LLC	  	 	
Massillon Holdings, LLC	  	 	

 	 	 	
Mat-Su Regional ASC GP, LLC	  	 	
Mat-Su Regional Surgery Center, L.P.	  	 	
Mat-Su Valley II, LLC*	  	 	
Mat-Su Valley III, LLC*	  	 	
Mat-Su Valley Medical Center, LLC*	  	d/b/a Mat-Su Regional Medical Center	
McKenzie Clinic Corp.	  	 	
McKenzie Physician Services, LLC	  	 	
McKenzie Tennessee Hospital Company, LLC	  	d/b/a McKenzie Regional Hospital	
McKenzie-Willamette Regional Medical Center Associates, LLC*	  	d/b/a McKenzie-Willamette Medical Center	
McNairy Clinic Corp.	  	 	
McNairy Hospital Corporation	  	d/b/a McNairy Regional Hospital	
MCSA, L.L.C.	  	 	
Medical Center at Terrell, LLC	  	 	
Medical Center of Brownwood, LLC	  	 	
Medical Center of Sherman, LLC	  	 	
Medical Diagnostic Center Associates, LP#	  	 	
Medical Holdings, Inc.	  	 	
MEDSTAT, LLC	  	 	
Memorial Hospital of Salem Malpractice Assistance Fund, Inc.	  	 	
Memorial Management, Inc.	  	 	
Mercy Cardiovascular Cath Lab, LLC#	  	 	
Merger Legacy Holdings, LLC	  	 	
Mesa View Physical Rehabilitation, LLC#	  	 	
Mesa View PT, LLC	  	 	
Mesquite Clinic Management Company, LLC	  	 	
MHS Ambulatory Surgery Center, Inc.	  	 	
Mid-America Health Partners, Inc.#	  	 	
Mid-Plains, LLC	  	 	
Minot Health Services, Inc.	  	 	
MMC of Nevada, LLC	  	d/b/a Mesa View Regional Hospital	
Moberly HBP Medical Group, LLC	  	 	
Moberly Hospital Company, LLC	  	d/b/a Moberly Regional Medical Center	
Moberly Medical Clinics, Inc.	  	 	
Moberly Physicians Corp.	  	 	
Mohave Imaging Center, LLC	  	 	
Morristown Clinic Corp.	  	 	
Morristown Professional Centers, Inc.	  	 	
Morristown Surgery Center, LLC	  	 	
MWMC Holdings, LLC	  	 	
Nanticoke Hospital Company, LLC	  	d/b/a Special Care Hospital	
National Healthcare of England Arkansas, Inc.	  	 	
National Healthcare of Holmes County, Inc.	  	 	
National Healthcare of Leesville, Inc.	  	d/b/a Byrd Regional Hospital	
National Healthcare of Mt. Vernon, Inc.	  	d/b/a Crossroads Community Hospital	
National Healthcare of Newport, Inc.	  	d/b/a Harris Hospital	

 	 	 	
Navarro Hospital, L.P.	  	d/b/a Navarro Regional Hospital	
Navarro Regional, LLC	  	 	
NC-CSH, Inc.	  	 	
NC-DSH, LLC	  	 	
NeuroSpine-Pain Surgery Center, LLC#	  	 	
Newport Home Care Services, LLC	  	 	
NHCI of Hillsboro, Inc.	  	d/b/a Hill Regional Hospital	
North Okaloosa Clinic Corp.	  	 	
North Okaloosa Home Health Corp.	  	 	
North Okaloosa Medical Corp.*	  	 	
North Okaloosa Surgery Venture Corp.	  	 	
Northampton Clinic Company, LLC	  	 	
Northampton Home Care, LLC	  	 	
Northampton Hospital Company, LLC	  	d/b/a Easton Hospital	
Northampton Physician Services Corp.	  	 	
Northampton Urgent Care, LLC	  	 	
Northeast Medical Center, L.P.	  	 	
Northeast Radiation Oncology Center, LLC#	  	 	
Northeastern Pennsylvania Imaging Center#	  	 	
Northern Indiana Oncology Center of Porter Memorial Hospital, LLC*	  	 	
Northwest Allied Physicians, LLC	  	 	
Northwest Arkansas Employees, LLC	  	 	
Northwest Arkansas Hospitals, LLC*	  	d/b/a Northwest Medical Center – Bentonville;
Northwest Medical Center – Springdale;
Willow Creek Women’s Hospital	
Northwest Benton County Physician Services, LLC	  	 	
Northwest Cardiology, LLC	  	 	
Northwest Hospital, LLC	  	d/b/a Northwest Medical Center	
Northwest Indiana Health System, LLC*	  	 	
Northwest Marana Hospital, LLC	  	 	
Northwest Medical Center CT/MRI at Marana, LLC	  	 	
Northwest Physicians, LLC	  	 	
Northwest Rancho Vistoso Imaging Services, LLC	  	 	
Northwest Tucson ASC-GP, LLC	  	 	
Northwest Tucson Surgery Center, L.P.*	  	 	
NOV Holdings, LLC	  	 	
NRH, LLC	  	 	
Oak Hill Clinic Corp.	  	 	
Oak Hill Hospital Corporation	  	d/b/a Plateau Medical Center	
Ohio Sleep Disorders Centers, LLC#	  	 	
Oklahoma City ASC-GP, LLC	  	 	
Oklahoma City Home Care Services, LLC	  	 	
Olive Branch Clinic Corp.	  	 	
Olive Branch Hospital, Inc.	  	 	
One Boyertown Properties, L.P.#	  	 	

 	 	 	
Open MRI of Wharton, LLP	  	 	
Oro Valley Hospital, LLC	  	d/b/a Oro Valley Hospital	
Pacific Group ASC, Inc.	  	 	
Pacific Physicians Services, LLC	  	 	
Pain Management Joint Venture, LLP#	  	 	
Palm Drive Hospital, L.P.	  	 	
Palm Drive Medical Center, LLC	  	 	
Palmer-Wasilla Health System, LLC	  	 	
Palmetto Women’s Care, LLC	  	 	
Pampa Medical Center, LLC	  	 	
Panhandle Medical Center, LLC	  	 	
Panhandle Surgical Hospital, L.P.	  	 	
Parkway Regional Medical Clinic, Inc.	  	 	
Payson Healthcare Management, Inc.	  	 	
Payson Home Care Services, LLC	  	 	
Payson Hospital Corporation	  	d/b/a Payson Regional Medical Center	
PDMC, LLC	  	 	
Peckville Hospital Company, LLC	  	d/b/a Mid-Valley Hospital	
Pecos Valley of New Mexico, LLC	  	 	
Peerless Healthcare, LLC	  	 	
Pennsylvania Hospital Company, LLC	  	 	
Pennsylvania Medical Professionals, P.C.	  	 	
Petersburg Clinic Company, LLC	  	 	
Petersburg Home Care Services, LLC	  	 	
Petersburg Hospital Company, LLC*	  	d/b/a Southside Regional Medical Center	
Phillips & Coker OB-GYN, LLC	  	 	
Phillips Clinic Corp.	  	 	
Phillips Hospital Corporation	  	d/b/a Helena Regional Medical Center	
Phoenix Surgical, LLC	  	 	
Phoenixville Clinic Company, LLC	  	 	
Phoenixville Hospital Company, LLC	  	d/b/a Phoenixville Hospital	
Phoenixville Hospital Malpractice Assistance Fund, Inc.	  	 	
Phoenixville Specialty Clinics, LLC	  	 	
Physician Practice Support, Inc.	  	 	
Piney Woods Healthcare System, L.P.*	  	d/b/a Woodland Heights Medical Center	
Plymouth Hospital Corporation	  	 	
Polk Medical Services, Inc.	  	 	
Ponca City Home Care Services, Inc.	  	 	
Porter Health Services, LLC	  	 	
Porter Hospital, LLC*	  	d/b/a Porter Hospital	
Porter Physician Services, LLC	  	 	
Pottstown Clinic Company, LLC	  	 	
Pottstown Home Care Services, LLC	  	 	
Pottstown Hospital Company, LLC	  	d/b/a Pottstown Memorial Medical Center	
Pottstown Hospital Corporation	  	 	

 	 	 	
Pottstown Imaging Company, LLC	  	 	
Pottstown Medical Specialists, Inc.#	  	 	
Pottstown Memorial Malpractice Assistance Fund, Inc.	  	 	
PremierCare of Arkansas, LLC#	  	 	
PremierCare of Northwest Arkansas, LLC*	  	 	
Premier Care Super PHO, LLC	  	 	
Procure Solutions, LLC	  	 	
Professional Account Services Inc.	  	 	
QHG Georgia Holdings, Inc.	  	 	
QHG Georgia Holdings II, LLC	  	 	
QHG Georgia, L.P.	  	 	
QHG of Barberton, Inc.	  	 	
QHG of Bluffton Company, LLC	  	 	
QHG of Clinton County, Inc.	  	 	
QHG of Enterprise, Inc.	  	d/b/a Medical Center Enterprise	
QHG of Forrest County, Inc.	  	 	
QHG of Fort Wayne Company, LLC	  	 	
QHG of Hattiesburg, Inc.	  	 	
QHG of Kenmare, Inc.	  	 	
QHG of Lake City, Inc.	  	 	
QHG of Massillon, Inc.	  	 	
QHG of Minot, Inc.	  	 	
QHG of Ohio, Inc.	  	 	
QHG of South Carolina, Inc.	  	d/b/a Carolinas Hospital System; Marion Regional Hospital	
QHG of Spartanburg, Inc.	  	 	
QHG of Springdale, Inc.	  	 	
QHG of Texas, Inc.	  	 	
QHG of Warsaw Company, LLC	  	 	
QHR Healthcare Affiliates, LLC	  	 	
QHR Intensive Resources, LLC	  	 	
Quorum ELF, Inc.	  	 	
Quorum Health Resources, LLC	  	 	
Quorum Health Services, Inc.	  	 	
Quorum Purchasing Advantage, LLC	  	 	
Quorum Solutions, LLC	  	 	
Red Bud Clinic Corp.	  	 	
Red Bud Home Care Services, LLC	  	 	
Red Bud Hospital Corporation	  	 	
Red Bud Illinois Hospital Company, LLC	  	d/b/a Red Bud Regional Hospital	
Red Bud Physician Group, LLC	  	 	
Regional Cancer Treatment Center, Ltd.#	  	 	
Regional Employee Assistance Program	  	 	
Regional Hospital of Longview, LLC	  	 	
Regional Surgical Services, LLC*	  	 	

 	 	 	
Rehab Hospital of Fort Wayne General Partnership*	  	 	
River Region Medical Corporation	  	 	
River to River Heart Group, LLC	  	 	
Riverside MSO, LLC#	  	 	
Rockwood Clinic, P.S.*	  	 	
Rockwood Clinic Real Estate Holdings, LLC	  	 	
Ronceverte Physician Group, LLC	  	 	
Roswell Clinic Corp.	  	 	
Roswell Community Hospital Investment Corporation	  	 	
Roswell Hospital Corporation	  	d/b/a Eastern New Mexico Medical Center	
Russell County Clinic Corp.	  	 	
Russell County Medical Center, Inc.	  	 	
Ruston Clinic Company, LLC	  	 	
Ruston Hospital Corporation	  	 	
Ruston Louisiana Hospital Company, LLC	  	d/b/a Northern Louisiana Medical Center	
SACMC, LLC	  	 	
Salem Clinic Corp.	  	 	
Salem Home Care Services, LLC	  	 	
Salem Hospital Corporation	  	d/b/a The Memorial Hospital of Salem County	
Salem Medical Professionals, P.C.	  	 	
Samaritan Surgicenters of Arizona II, LLC	  	 	
San Angelo Ambulatory Surgery Center, Ltd.#	  	 	
San Angelo Community Medical Center, LLC	  	 	
San Angelo Hospital, L.P.#	  	d/b/a San Angelo Community Medical Center	
San Angelo Medical, LLC	  	 	
San Leandro, LLC	  	 	
San Leandro Hospital, L.P.	  	 	
San Leandro Medical Center, LLC	  	 	
San Leandro Surgery Center, Ltd.#	  	 	
San Miguel Clinic Corp.	  	 	
San Miguel Hospital Corporation	  	d/b/a Alta Vista Regional Hospital	
Scenic Managed Services, Inc.	  	 	
Schuylkill Internal Medicine Associates, LLC	  	 	
Scranton Cardiovascular Physician Services, LLC	  	 	
Scranton Clinic Company, LLC	  	 	
Scranton Emergency Physician Services, LLC	  	 	
Scranton GP Holdings, LLC	  	 	
Scranton Holdings, LLC	  	 	
Scranton Home Care Services, LLC	  	 	
Scranton Hospital Company, LLC	  	d/b/a Regional Hospital of Scranton	
Scranton Hospitalist Physician Services, LLC	  	 	
Sebastopol, LLC	  	 	
Scranton Quincy Clinic Company, LLC	  	 	
Scranton Quincy Holdings, LLC	  	 	
Scranton Quincy Home Care Services, LLC	  	 	

 	 	 	
Scranton Quincy Hospital Company, LLC	  	d/b/a Moses Taylor Hospital	
Senior Circle Association	  	 	
Shelby Alabama Real Estate, LLC	  	 	
Shelbyville Clinic Corp.	  	 	
Shelbyville Home Care Services, LLC	  	 	
Shelbyville Hospital Corporation	  	d/b/a Heritage Medical Center	
Sherman Hospital, L.P.	  	 	
Sherman Medical Center, LLC	  	 	
Siloam Springs Arkansas Hospital Company, LLC	  	d/b/a Siloam Springs Memorial Hospital	
Siloam Springs Clinic Company, LLC	  	 	
Siloam Springs Holdings, LLC	  	 	
Silver Creek MRI, LLC	  	 	
SJ Home Care, LLC	  	 	
SkyRidge Clinical Associates, LLC	  	 	
SLH, LLC	  	 	
SMMC Medical Group	  	 	
Software Sales Corp.	  	 	
South Alabama Managed Care Contracting, Inc.	  	 	
South Alabama Medical Management Services, Inc.	  	 	
South Alabama Physician Services, Inc.	  	 	
South Arkansas Clinic, LLC	  	 	
South Arkansas Physician Services, LLC	  	 	
South Tulsa Medical Group, LLC	  	 	
SouthCrest Anesthesia Group, LLC	  	 	
SouthCrest Medical Group, LLC	  	 	
SouthCrest, L.L.C.	  	 	
Southeast Alabama Maternity Center, LLC#	  	 	
Southern Chester County Medical Building I*	  	 	
Southern Chester County Medical Building II*	  	 	
Southern Illinois Medical Care Associates, LLC	  	 	
Southern Texas Medical Center, LLC	  	 	
Southside Physician Network, LLC	  	 	
Spokane Home Care Services, LLC	  	 	
Spokane Valley Washington Hospital Company, LLC	  	d/b/a Valley Hospital and Medical Center	
Spokane Washington Hospital Company, LLC	  	d/b/a Deaconess Medical Center	
Springdale Home Care Services, LLC	  	 	
Springfield Oregon Holdings, LLC	  	 	
Sprocket Medical Management, LLC	  	 	
St. Joseph Health System, LLC*	  	d/b/a St. Joseph Health System	
St. Joseph Medical Group, Inc.	  	 	
StrokeCareNow, LLC#	  	 	
Summerlin Hospital Medical Center, LLC#	  	 	
Summit Surgical Suites, LLC#	  	 	
Sunbury Clinic Company, LLC	  	 	
Sunbury Hospital Company, LLC*	  	d/b/a Sunbury Community Hospital	

 	 	 	
Surgery Center of Salem County, L.L.C.*	  	 	
Surgical Center of Amarillo, LLC	  	 	
Surgical Center of Carlsbad, LLC	  	 	
Surgicare of Independence, Inc.	  	 	
Surgicare of San Leandro, Inc.	  	 	
Surgicare of Sherman, Inc.	  	 	
Surgicare of Victoria, Inc.	  	 	
Surgicare of Victoria, Ltd.	  	 	
Surgicare Outpatient Center of Lake Charles, Inc.	  	 	
Surgicenter of Johnson County, Inc.	  	 	
Surgicenters of America, Inc.	  	 	
SVRMC-HBP, LLC	  	 	
Tennyson Holdings, LLC	  	 	
Terrell Hospital, L.P.	  	 	
Terrell Medical Center, LLC	  	 	
The Sleep Disorder Center of Wyoming Valley, LLC	  	 	
The Vicksburg Clinic, LLC	  	 	
Three Rivers Medical Clinics, Inc.	  	 	
Timberland Medical Group	  	 	
Tomball Ambulatory Surgery Center, L.P.*	  	 	
Tomball Clinic Asset Holding Company, LLC	  	 	
Tomball Equipment Leasing Company, LLC*	  	 	
Tomball Texas Equipment Ventures, LLC	  	 	
Tomball Texas Holdings, LLC	  	 	
Tomball Texas Home Care Services, LLC	  	 	
Tomball Texas Hospital Company, LLC	  	d/b/a Tomball Regional Medical Center	
Tomball Texas Ventures, LLC	  	 	
Tooele Clinic Corp.	  	 	
Tooele Home Care Services, LLC	  	 	
Tooele Hospital Corporation	  	d/b/a Mountain West Medical Center	
Triad Corporate Services, Limited Partnership	  	 	
Triad CSGP, LLC	  	 	
Triad CSLP, LLC	  	 	
Triad Healthcare Corporation	  	 	
Triad Healthcare System of Phoenix, L.P.	  	 	
Triad Holdings III, LLC	  	 	
Triad Holdings IV, LLC	  	 	
Triad Holdings V, LLC	  	 	
Triad Holdings VI, Inc.	  	 	
Triad Indiana Holdings, LLC*	  	 	
Triad Nevada Holdings, LLC	  	 	
Triad of Alabama, LLC	  	d/b/a Flowers Hospital	
Triad of Arizona (L.P.), Inc.	  	 	
Triad of Oregon, LLC	  	 	
Triad of Phoenix, Inc.	  	 	

 	 	 	
Triad RC, Inc.	  	 	
Triad-Arizona I, Inc.	  	 	
Triad-ARMC, LLC	  	 	
Triad-Denton Hospital GP, LLC	  	 	
Triad-Denton Hospital, L.P.	  	 	
Triad-El Dorado, Inc.	  	 	
Triad-Navarro Regional Hospital Subsidiary, LLC	  	 	
Triad-South Tulsa Hospital Company, Inc.	  	 	
Triad-Willow Creek, LLC	  	 	
Tri-Irish, Inc.	  	 	
Tri-World, LLC	  	 	
TROSCO, LLC	  	 	
Troy Hospital Corporation	  	 	
Tucson Gateway Investors, LLLP#	  	 	
Tunkhannock Clinic Company, LLC	  	 	
Tunkhannock Hospital Company, LLC	  	d/b/a Tyler Memorial Hospital	
Tunkhannock Hospital Physician Services, LLC	  	 	
Tuscora Park Medical Specialists, LLC	  	 	
Upper Delaware Valley Cancer Center Associates#	  	 	
Valley Advanced Imaging, LLC#	  	 	
Valley Advanced MRI, LLC#	  	 	
Valley Health System, LLC#	  	 	
Vanderbilt-Gateway Cancer Center, G.P.#	  	 	
VHC Holdings, LLC	  	 	
VHC Medical, LLC	  	 	
Vicksburg Healthcare, LLC	  	d/b/a River Region Medical Center	
Vicksburg Surgical Center, LLC	  	 	
Victoria Hospital, LLC	  	 	
Victoria of Texas, L.P.	  	d/b/a DeTar Hospital Navarro; DeTar Hospital North	
Victoria Texas Home Care Services, LLC	  	 	
Village Medical Center Associates, LLC	  	 	
Virginia Hospital Company, LLC	  	 	
WA-SPOK DH CRNA, LLC	  	 	
WA-SPOK DH Urgent Care, LLC	  	 	
WA-SPOK Kidney Care, LLC	  	 	
WA-SPOK Medical Care, LLC	  	 	
WA-SPOK Primary Care, LLC	  	 	
WA-SPOK Pulmonary & Critical Care, LLC	  	 	
WA-SPOK VH CRNA, LLC	  	 	
WA-SPOK VH Urgent Care, LLC	  	 	
Warren Ohio Hospital Company, LLC	  	d/b/a Trumbull Memorial Hospital	
Warren Ohio Rehab Hospital Company, LLC	  	 	
Warsaw Health System, LLC*	  	d/b/a Kosciusko Community Hospital	
Washington Clinic Corp.	  	 	

 	 	 	
Washington Hospital Corporation	  	 	
Washington Physician Corp.	  	 	
Watsonville Hospital Corporation	  	d/b/a Watsonville Community Hospital	
Waukegan Clinic Corp.	  	 	
Waukegan Hospice Corp.	  	 	
Waukegan Hospital Corporation	  	 	
Waukegan Illinois Hospital Company, LLC	  	d/b/a Vista Medical Center East; Vista Medical Center West	
Weatherford Home Care Services, LLC	  	 	
Weatherford Hospital Corporation	  	 	
Weatherford Texas Hospital Company, LLC	  	d/b/a Weatherford Regional Medical Center	
Webb County Texas Home Care Services, LLC	  	 	
Webb Hospital Corporation	  	 	
Webb Hospital Holdings, LLC	  	 	
Wesley Health System, LLC	  	d/b/a Wesley Medical Center	
Wesley HealthTrust, Inc.	  	 	
Wesley Physician Services, LLC	  	 	
West Anaheim Medical Center, LLC	  	 	
West Anaheim, LLC	  	 	
West Grove Clinic Company, LLC	  	 	
West Grove Family Practice, LLC	  	 	
West Grove Home Care, LLC	  	 	
West Grove Hospital Company, LLC	  	d/b/a Jennersville Regional Hospital	
Western Arizona Regional Home Health and Hospice, Inc.	  	 	
Western Illinois Kidney Center, L.L.C.#	  	 	
Western Reserve Health Education, Inc.	  	 	
Wharton Medco, LLC	  	 	
WHMC, LLC	  	 	
Wichita Falls Texas Home Care Corporation	  	 	
Wichita Falls Texas Private Duty Corporation	  	 	
Wilkes-Barre Academic Medicine, LLC	  	 	
Wilkes-Barre Behavioral Hospital Company, LLC	  	 	
Wilkes-Barre Behavioral Ventures, LLC	  	 	
Wilkes-Barre Clinic Company, LLC	  	 	
Wilkes-Barre Community Residential Unit, LLC	  	 	
Wilkes-Barre Holdings, LLC	  	 	
Wilkes-Barre Home Care Services, LLC	  	 	
Wilkes-Barre Hospital Company, LLC	  	d/b/a Wilkes-Barre General Hospital	
Wilkes-Barre Intermountain Clinic, LLC	  	 	
Wilkes-Barre Personal Care Services, LLC	  	 	
Wilkes-Barre Skilled Nursing Services, LLC	  	 	
Willamette Community Medical Group, LLC	  	 	
Williamston Clinic Corp.	  	 	
Williamston Hospital Corporation	  	d/b/a Martin General Hospital	
Wiregrass Clinic, LLC	  	 	

 	 	 	
Women & Children’s Hospital, LLC	  	d/b/a Women & Children’s Hospital	
Women’s Health Partners, LLC	  	 	
Woodland Heights Medical Center, LLC	  	 	
Woodward Clinic Company, LLC	  	 	
Woodward Health System, LLC	  	d/b/a Woodward Hospital	
Woodward Home Care Services, LLC	  	 	
York Clinic Company, LLC	  	 	
York Home Care Services, LLC	  	 	
York Pennsylvania Holdings, LLC	  	 	
York Pennsylvania Hospital Company, LLC	  	 	
Youngstown Home Care Services, LLC	  	 	
Youngstown Ohio Hospital Company, LLC	  	d/b/a Northside Medical Center	
Youngstown Ohio Laboratory Services Company, LLC	  	 	
Youngstown Ohio Outpatient Services Company, LLC	  	 	
Youngstown Ohio Physician Services Company, LLC	  	 	
Youngstown Ohio PSC, LLC	  	 	

Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-156405 on Form S-3 and Registration Nos. 333-44870, 333-61614, 333-100349, 333-107810, 333-121282, 333-121283, 333-144525, 333-163688, 333-163689, 333-163690, 333-163691 and 333-176893 on Form S-8 of our reports dated February 22, 2012, relating to the consolidated financial statements and consolidated financial statement schedule of Community Health Systems, Inc. and subsidiaries, and the effectiveness of Community Health Systems, Inc. and subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Community Health Systems, Inc. and subsidiaries for the year ended December 31, 2011.
/s/ Deloitte & Touche LLP
Nashville, Tennessee
February 22, 2012

Exhibit 31.1
I, Wayne T. Smith, certify that:
1. I have reviewed this annual report on Form 10-K of Community Health Systems, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Wayne T. Smith	
Wayne T. Smith	
Chairman of the Board, President
and Chief Executive Officer	
Date: February 22, 2012

Exhibit 31.2
I, W. Larry Cash, certify that:
1. I have reviewed this annual report on Form 10-K of Community Health Systems, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ W. Larry Cash	
W. Larry Cash	
Executive Vice President,	
Chief Financial Officer and Director	
Date: February 22, 2012

Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Community Health Systems, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wayne T. Smith, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ WAYNE T. SMITH	
Wayne T. Smith	
Chairman of the Board, President and	
Chief Executive Officer	
February 22, 2012

Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Community Health Systems, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, W. Larry Cash, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ W. LARRY CASH	
W. Larry Cash	
Executive Vice President, Chief Financial
Officer and Director	
February 22, 2012