10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

or

o 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: 0-29818

(Exact name of registrant as specified in its charter)

Delaware	52-2165845
(State or other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)
103 Powell Court, Suite 200	37027
Brentwood, Tennessee	(Zip Code)
(Address of principal executive offices)

(615) 372-8500
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)

     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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

     As of July 21, 2004, the number of outstanding shares of Common Stock of LifePoint Hospitals, Inc. was 38,703,332.

TABLE OF CONTENTS

PART I-FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONDENSED CONSOLIDATED STATEMENTS OF INCOME
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
	Item 4. Controls and Procedures
PART II-OTHER INFORMATION
	Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
EX-10.1 AMENDMENT TO SERVICES AGREEMENT
EX-10.2 FOURTH AMENDMENT TO CREDIT AGREEMENT
EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32.1 SECTION 906 CERTIFICATION OF THE CEO
EX-32.2 SECTION 906 CERTIFICATION OF THE CFO

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

LIFEPOINT HOSPITALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(Dollars in millions, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2003		2004		2003		2004
Revenues	$	221.6	$	246.4	$	442.5	$	503.0
Salaries and benefits		90.8		101.5		181.1		202.2
Supplies		28.7		32.1		57.2		65.5
Other operating expenses		43.1		40.6		81.7		83.2
Provision for doubtful accounts		16.9		21.1		34.4		44.1
Depreciation and amortization		11.4		12.0		22.6		23.6
Interest expense, net		3.3		3.2		6.6		6.6
Debt retirement costs		—		1.5		—		1.5
ESOP expense		1.5		2.5		3.1		4.8
		195.7		214.5		386.7		431.5
Income before minority interests and income taxes		25.9		31.9		55.8		71.5
Minority interests in earnings of consolidated entities		0.2		0.3		0.2		0.6
Income before income taxes		25.7		31.6		55.6		70.9
Provision for income taxes		10.4		12.9		22.6		28.3
Net income	$	15.3	$	18.7	$	33.0	$	42.6
Basic earnings per share	$	0.41	$	0.51	$	0.88	$	1.16
Diluted earnings per share	$	0.40	$	0.48	$	0.85	$	1.08
Weighted average shares and dilutive securities outstanding (in thousands):
Basic		37,402		36,925		37,639		36,754
Diluted		43,345		43,097		43,628		42,950

See accompanying notes.

2

LIFEPOINT HOSPITALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except per share amounts)

	December 31,			June 30,
	2003			2004
	(1)			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	20.6		$	18.4
Accounts receivable, less allowances for doubtful accounts of $111.7 at December 31, 2003 and $99.5 at June 30, 2004		101.4			104.9
Inventories		22.3			22.5
Income taxes receivable		7.4			12.5
Deferred income taxes and other current assets		19.5			23.2
		171.2			181.5
Property and equipment:
Land		19.0			20.2
Buildings and improvements		357.1			368.8
Equipment		337.2			346.0
Construction in progress (estimated cost to complete and equip after June 30, 2004 is $79.6)		28.3			45.7
		741.6			780.7
Accumulated depreciation		(277.4	)		(293.4	)
		464.2			487.3
Deferred loan costs, net		7.0			5.6
Unallocated purchase price		16.4			26.1
Intangible assets, net		3.6			3.7
Other		—			0.2
Goodwill		136.6			142.5
	$	799.0		$	846.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	30.9		$	25.3
Accrued salaries		25.7			26.1
Other current liabilities		9.7			22.3
Estimated third-party payor settlements		2.5			1.3
		68.8			75.0
Revolving credit facility		20.0			30.0
Convertible notes		250.0			221.0
Deferred income taxes		35.9			35.5
Professional and general liability claims and other liabilities		28.6			29.0
Minority interests in equity of consolidated entities		1.4			1.4
Stockholders’ equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued		—			—
Common stock, $0.01 par value; 90,000,000 shares authorized; 39,084,396 shares and 39,864,502 shares issued at December 31, 2003 and June 30, 2004, respectively		0.4			0.4
Capital in excess of par value		301.7			324.1
Unearned ESOP compensation		(16.1	)		(14.5	)
Unearned compensation on nonvested stock		—			(5.9	)
Retained earnings		137.2			179.8
Common stock in treasury, at cost, 1,198,800 shares at December 31, 2003 and June 30, 2004		(28.9	)		(28.9	)
		394.3			455.0
	$	799.0		$	846.9

(1) Derived from audited financial statements.

See accompanying notes.

3

LIFEPOINT HOSPITALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In millions)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2003			2004			2003			2004
Cash flows from operating activities:
Net income	$	15.3		$	18.7		$	33.0		$	42.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11.4			12.0			22.6			23.6
Debt retirement costs		—			1.5			—			1.5
ESOP expense		1.5			2.5			3.1			4.8
Minority interests in earnings of consolidated entities		0.2			0.3			0.2			0.6
Deferred income taxes (benefit)		2.2			(0.4	)		2.1			(0.9	)
Reserve for professional and general liability claims, net		2.6			(2.2	)		3.8			0.5
Tax benefit from employee stock plans		0.2			3.8			0.2			4.3
Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		3.2			5.3			(7.9	)		(3.2	)
Inventories and other current assets		(0.6	)		(3.2	)		(3.4	)		(3.3	)
Accounts payable and accrued expenses		(0.4	)		1.6			2.0			6.5
Income taxes payable		(16.1	)		(19.7	)		(4.3	)		(5.1	)
Estimated third-party payor settlements		(3.7	)		(1.1	)		(2.3	)		(1.2	)
Other		0.1			0.6			1.0			1.2
Net cash provided by operating activities		15.9			19.7			50.1			71.9
Cash flows from investing activities:
Purchase of property and equipment		(20.8	)		(20.3	)		(38.0	)		(35.4	)
Purchase of facilities, net of cash acquired		—			(24.8	)		—			(26.5	)
Other		0.6			(0.3	)		0.4			(0.6	)
Net cash used in investing activities		(20.2	)		(45.4	)		(37.6	)		(62.5	)
Cash flows from financing activities:
Repurchase of convertible notes		—			(29.9	)		—			(29.9	)
Borrowing under revolving credit facility		—			30.0			—			30.0
Repayment under revolving credit facility		—			—			—			(20.0	)
Repurchase of common stock		(17.0	)		—			(17.0	)		—
Proceeds from exercise of stock options		0.3			5.9			0.5			7.5
Other		0.2			—			0.5			0.8
Net cash (used in) provided by financing activities		(16.5	)		6.0			(16.0	)		(11.6	)
Change in cash and cash equivalents		(20.8	)		(19.7	)		(3.5	)		(2.2	)
Cash and cash equivalents at beginning of period		40.3			38.1			23.0			20.6
Cash and cash equivalents at end of period	$	19.5		$	18.4		$	19.5		$	18.4
Interest payments	$	6.1		$	6.1		$	6.3		$	6.7
Income taxes paid, net	$	24.3		$	29.1		$	24.7		$	30.0

See accompanying notes.

4

LIFEPOINT HOSPITALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2004
UNAUDITED

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

     LifePoint Hospitals, Inc. is a holding company. Its subsidiaries own, lease and operate their respective facilities and other assets. The term “LifePoint” or the “Company” as used herein refers to LifePoint Hospitals, Inc. and its subsidiaries, unless otherwise stated or indicated by context. As of June 30, 2004, the Company operated 29 general, acute care hospitals with an aggregate of 2,687 licensed beds in non-urban communities. The Company acquired the 106-bed River Parishes Hospital in LaPlace, Louisiana effective July 1, 2004, as discussed in Note 9. The Company’s hospitals are located in the states of Alabama, Florida, Kansas, Kentucky, Louisiana, Tennessee, Utah, West Virginia and Wyoming.

     The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) and disclosures considered necessary for a fair presentation have been included. Operating results for the three months and six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

     The majority of the Company’s expenses are “cost of revenue” items. Costs that could be classified as “general and administrative” by the Company would include the LifePoint corporate office costs, which were $6.7 million and $7.9 million for the three months ended June 30, 2003 and 2004, respectively, and $11.5 million and $13.7 million for the six months ended June 30, 2003 and 2004, respectively.

     Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no impact on total assets, liabilities, stockholders’ equity, net income or cash flows.

NOTE 2 - EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted earnings per share (dollars in millions, except per share amounts, and shares in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2003		2004		2003		2004
Numerator:
Numerator for basic earnings per share – net income	$	15.3	$	18.7	$	33.0	$	42.6
Interest on convertible notes, net of taxes		2.0		1.8		3.9		3.8
Numerator for diluted earnings per share	$	17.3	$	20.5	$	36.9	$	46.4
Denominator:
Denominator for basic earnings per share – weighted average shares outstanding		37,402		36,925		37,639		36,754
Effect of dilutive securities:
Employee stock benefit plans		664		955		710		948
Convertible notes		5,279		5,217		5,279		5,248
Denominator for diluted earnings per share – adjusted weighted average shares		43,345		43,097		43,628		42,950
Basic earnings per share	$	0.41	$	0.51	$	0.88	$	1.16
Diluted earnings per share	$	0.40	$	0.48	$	0.85	$	1.08

5

     For the second quarter of 2004, approximately 0.9 million of the Company’s stock options outstanding (1.3 million for the first half of 2004) were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average share price for the quarter and six month period, and therefore their inclusion would have been anti-dilutive. These options could be dilutive in the future if the average share price increases and is greater than the exercise price of these options. For the second quarter of 2003, approximately 2.3 million of the Company’s stock options outstanding (2.1 million for the first half of 2003) were excluded from the calculation of dilutive earnings per share.

NOTE 3 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In December 2003, the Financial Accounting Standards Board (“FASB”) issued Revised Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46R”), which requires the consolidation of variable interest entities. FIN 46R, as revised, was applicable to financial statements of companies that had interests in “special purpose entities” during 2003. Effective as of the first quarter of 2004, FIN 46R is applicable to financial statements of companies that have interests in all other types of entities. Adoption of FIN 46R had no effect on the Company’s financial position, results of operations or cash flows.

     The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“SFAS No. 150”), on July 1, 2003. SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity, such as redeemable preferred stock and certain equity derivatives that frequently are used in connection with share repurchase programs. On October 29, 2003, the FASB voted to defer for an indefinite period the application of SFAS No. 150 to classification of noncontrolling interests of limited-life subsidiaries. Neither the adoption of SFAS No. 150 nor the deferral had a material impact on the Company’s results of operations or financial position.

NOTE 4 – STOCK BENEFIT PLANS

     The Company issues stock options and other stock-based awards to key employees and directors under stock-based compensation plans, which are described more fully in Note 6 (stockholders’ equity) to the consolidated financial statements in the Company’s 2003 Annual Report on Form 10-K. SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, an Amendment of FASB Statement No. 123” (“SFAS No. 148”). SFAS No. 148 amends SFAS No. 123 to provide alternative methods of transition for companies making a voluntary change to fair value-based accounting for stock-based employee compensation. The Company continues to account for its stock-based compensation plans under the intrinsic value recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. SFAS No. 148 also requires disclosure of pro-forma results on a quarterly basis as if the Company had applied the fair value recognition provisions of SFAS No. 123.

     The Company granted 175,000 shares of nonvested stock awards to certain key executives during the first quarter of 2004, under the Company’s 1998 Long-Term Incentive Plan. The nonvested stock awards vest three years from the grant date and contain no vesting requirements other than continued employment of the executive. The fair market value at the date of grant of these nonvested stock awards was $33.17 per share and was recorded as unearned compensation as a component of stockholders’ equity. In addition, the Company granted 21,000 shares of nonvested stock awards to its outside directors during the second quarter of 2004, under the Company’s Outside Directors Stock and Incentive Plan. These nonvested stock awards also vest three years from the grant date and contain no vesting requirements other than continued service of the director. The fair market value at the date of grant of these nonvested stock awards was $37.86 and was recorded as unearned compensation as a component of stockholders’ equity. Unearned compensation is being amortized straight-line in the statements of income over the three-year vesting period of the awards.

     Since the exercise price of all options granted under the Company’s incentive plans was equal to the market price of the underlying common stock on the grant date, no stock-based employee compensation is recognized in net income related to stock options. The following table illustrates the effect on net income and earnings per share (in

6

millions, except per share amounts) if the Company had applied the fair value recognition provisions of SFAS No. 123, as amended, to options granted under the stock option plans. For purposes of this pro-forma disclosure, the value of the options is estimated using a Black-Scholes option pricing model and amortized ratably to expense over the options’ vesting periods. Because the estimated value is determined as of the date of grant, the actual value ultimately realized by the employee may be significantly different.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2003			2004			2003			2004
Net income, as reported	$	15.3		$	18.7		$	33.0		$	42.6
Add: Stock-based compensation expense included in reported net income, net of related tax effects		—			0.3			—			0.5
Less: Stock-based compensation expense determined under fair value based method for all awards, net of related tax effects		(2.4	)		(2.4	)		(4.7	)		(4.7	)
Pro forma net income		12.9			16.6			28.3			38.4
Interest on convertible notes, net of taxes		2.0			1.8			3.9			3.8
Diluted pro forma net income	$	14.9		$	18.4		$	32.2		$	42.2
Denominator for basic earnings per share – weighted average shares		37.4			36.9			37.6			36.8
Effect of dilutive securities:
Employee stock benefit plans		0.6			1.0			0.7			0.9
Convertible notes		5.3			5.2			5.3			5.2
Denominator for diluted earnings per share – adjusted weighted average shares		43.3			43.1			43.6			42.9
Earnings per share:
Basic – as reported	$	0.41		$	0.51		$	0.88		$	1.16
Basic – pro forma	$	0.35		$	0.45		$	0.75		$	1.05
Diluted – as reported	$	0.40		$	0.48		$	0.85		$	1.08
Diluted – pro forma	$	0.34		$	0.43		$	0.74		$	0.98

     The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective assumptions including the expected stock price volatility. The Company’s employee stock options have characteristics significantly different from those of traded options. Changes in the subjective input assumptions can materially affect the fair value estimate. Other option valuation models may produce significantly different fair values of the Company’s employee stock options.

     The weighted average estimated value of stock options granted during the second quarter of 2004 was $14.47 ($7.82 for the second quarter of 2003) and for the first half of 2004 was $12.56 ($7.82 for the first half of 2003). These options were granted with an exercise price equal to the market price at the date of grant. These options become exercisable beginning in part from one year after the date of grant to three years after the date of grant and expire 10 years after the grant date. The above table includes the impact of these additional stock options for the period subsequent to their grant. The values were estimated at the date of grant using the following weighted average assumptions:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2003			2004			2003			2004
Expected life (in years)		3.0			3.0			3.0			3.0
Risk free interest rate		1.67	%		3.17	%		1.85	%		2.19	%
Volatility		53	%		53	%		53	%		53	%
Forfeiture rate		5.7	%		5.7	%		5.7	%		5.7	%

7

     Additional information with respect to stock benefit plan activity in the Company’s 1998 Long-Term Incentive Plan and Outside Directors Stock and Incentive Plan is as follows:

				Outstanding Options
	Shares						Weighted
	Available for			Number of			Average
	Grant			Shares			Exercise Price
December 31, 2002		3,366,700			4,016,400		$	23.81
Stock Option Grants		(1,066,800	)		1,066,800		$	21.60
Stock Option Exercises		—			(333,000	)	$	11.20
Stock Option Cancellations		356,800			(356,800	)	$	27.75
December 31, 2003		2,656,700			4,393,400		$	23.91
Increase in Shares Available for Grant (Approved by Stockholders)		2,200,000			—			N/A
Stock Option Grants		(860,900	)		860,900		$	33.50
Nonvested Stock Grants		(196,000	)		—		$	33.67
Stock Option Exercises		—			(542,500	)	$	13.80
Adjustments		(16,200	)		—			N/A
Stock Option Cancellations		76,400			(76,400	)	$	38.03
June 30, 2004		3,860,000			4,635,400		$	26.64

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Americans with Disabilities Act Claim

     On January 12, 2001, Access Now, Inc., a disability rights organization, filed a class action lawsuit against each of the Company’s hospitals alleging non-compliance with the accessibility guidelines under the Americans with Disabilities Act (the “ADA”). The lawsuit, filed in the United States District Court for the Eastern District of Tennessee, seeks injunctive relief requiring facility modification, where necessary, to meet the ADA guidelines, along with attorneys fees and costs. In January 2002, the District Court certified the class action and issued a scheduling order that requires the parties to complete discovery and inspection for approximately six facilities per year. The Company intends to vigorously defend the lawsuit, recognizing the Company’s obligation to correct any deficiencies in order to comply with the ADA. As of June 30, 2004, the plaintiffs have conducted inspections at 22 of the Company’s hospitals. On July 19, 2004, the United States District Court approved the settlement agreements between the parties relating to two of the Company’s facilities. These facilities have completed the litigation process and now will move forward in implementing facility modifications in accordance with the terms of the settlement.

HCA Investigations, Litigation and Indemnification Rights

     HCA Inc. (“HCA”) has been the subject of various federal and state investigations, qui tam actions, shareholder derivative and class action suits, patient/payor actions and general liability claims. These investigations, actions and claims relate to HCA and its subsidiaries, including subsidiaries that, before the Company’s formation as an independent company, owned many of the facilities that the Company now owns.

     In June 2003, HCA announced agreements with the Department of Justice (“DOJ”) that settled all federal criminal and civil litigation brought by the DOJ against HCA with respect to cost reports, physician relations and wound care issues. The settlement of these issues does not affect qui tam actions in which the DOJ has not intervened. Additionally, HCA has announced that it made payments to the Centers for Medicare and Medicaid Services (“CMS”) in accordance with an agreement to resolve all Medicare cost report, home office cost statement and appeal issues.

     HCA has agreed to indemnify the Company for any losses, other than consequential damages, arising from the governmental investigations of HCA’s business practices prior to the date of the distribution of the outstanding shares of the Company’s common stock to the stockholders of HCA and losses arising from legal proceedings, present or future, related to the investigation or actions engaged in before the distribution that relate to the investigation. However, the Company could be held responsible for any claims that are not covered by the agreements reached with the federal government or for which HCA is not required to, or fails to, indemnify the Company.

8

Corporate Integrity Agreement

     In December 2000, the Company entered into a corporate integrity agreement with the Office of Inspector General (“OIG”) and agreed to maintain its compliance program in accordance with the corporate integrity agreement. This agreement was amended in April 2002. Complying with the compliance measures and reporting and auditing requirements of the corporate integrity agreement requires additional efforts and costs. Failure to comply with the terms of the corporate integrity agreement could subject the Company to significant monetary penalties.

Legal Proceedings and General Liability Claims

     The Company is, from time to time, subject to claims and suits arising in the ordinary course of business, including claims for damages for personal injuries, medical malpractice, breach of management contracts, wrongful restriction of or interference with physicians’ staff privileges and employment related claims. In certain of these actions, plaintiffs request punitive or other damages against the Company which may not be covered by insurance. The Company is currently not a party to any proceeding which, in management’s opinion, would have a material adverse effect on the Company’s business, financial condition or results of operations.

Physician Commitments

     The Company has committed to provide certain financial assistance pursuant to recruiting agreements with various physicians practicing in the communities it serves. In consideration for a physician relocating to one of its communities and agreeing to engage in private practice for the benefit of the respective community, the Company may loan certain amounts of money to a physician, normally over a period of one year, to assist in establishing his or her practice. The Company had committed to advance a maximum amount of approximately $24.1 million at June 30, 2004. The actual amount of such commitments to be subsequently advanced to physicians is estimated at $9.6 million and often depends upon the financial results of a physician’s private practice during the guaranteed period. Generally, amounts advanced under the recruiting agreements may be forgiven pro rata over a period of 48 months, contingent upon the physician continuing to practice in the respective community.

Capital Expenditure Commitments

     The Company is reconfiguring some of its facilities to accommodate more effectively patient services and restructuring existing surgical capacity in some of its hospitals to permit additional patient volume and a greater variety of services. The Company had incurred approximately $45.7 million in uncompleted projects as of June 30, 2004, which is included in construction in progress in the Company’s accompanying condensed consolidated balance sheet. At June 30, 2004, the Company had projects under construction with an estimated additional cost to complete and equip of approximately $79.6 million.

     Pursuant to the asset purchase agreement for Ville Platte Medical Center, the Company has agreed to make certain capital improvements, the cost of which, together with the initial cash payment, defeasance of certain bonds and liabilities assumed, is not required to exceed $25.0 million. The capital improvements must be completed by December 1, 2004. The initial cash payment and liabilities assumed totaled $15.1 million, which leaves $9.9 million required for capital improvements. The Company had incurred approximately $4.5 million of the required capital improvements as of June 30, 2004.

     Pursuant to the asset purchase agreement for Logan Regional Medical Center, the Company has agreed to expend, regardless of the results of the hospital’s operations, at least $20.0 million in the aggregate for capital expenditures and improvements during the ten-year period following the date of acquisition of December 1, 2002. The Company had incurred approximately $5.3 million of the required capital improvements as of June 30, 2004.

9

Tax Matters

     During 2003, the Internal Revenue Service (“IRS”) notified the Company regarding its findings related to the examination of the Company’s federal income tax returns for the years ended December 31, 1999, 2000 and 2001. The Company reached a settlement with the IRS on all issues except for the Company’s method of determining its bad debt deduction for which the IRS has proposed an additional assessment of $7.4 million. All of the adjustments proposed by the IRS are temporary differences. The IRS has delayed final settlement of this assessment until resolution of certain pending court proceedings related to the use of this bad debt deduction method by HCA. HCA filed a petition with the United States Supreme Court on May 17, 2004 to appeal the ruling of the lower court on the bad debt deduction method. The Company applied its 2002 federal income tax refund in the amount of $6.6 million as a deposit against any potential settlement to forestall the tolling of interest on such settlement beyond the March 15, 2003 deposit date. Management believes that adequate provisions have been reflected in the consolidated financial statements to satisfy final resolution of the remaining disputed issue based upon current facts and circumstances and that final resolution of this dispute will not have a material adverse impact on the Company’s results of operations or financial position.

     HCA and the Company entered into a tax sharing and indemnification agreement as part of the Company’s 1999 spin-off from HCA. Under the agreement, HCA maintains full control and absolute discretion with regard to any combined or consolidated tax filings for periods prior to the 1999 spin-off transaction. In addition, the agreement provides that HCA will generally be responsible for all taxes that are allocable to periods prior to the 1999 spin-off transaction and HCA and the Company will each be responsible for their own tax liabilities for periods after the 1999 spin-off transaction. The tax sharing and indemnification agreement does not have an impact on the realization of deferred tax assets or the payment of deferred tax liabilities of the Company, except to the extent that the temporary differences give rise to such deferred tax assets and liabilities after the 1999 spin-off transaction and are adjusted as a result of final tax settlements after the 1999 spin-off transaction. In the event of such adjustments, the tax sharing and indemnification agreement provides for certain payments between HCA and the Company, as appropriate.

Acquisitions

     The Company has acquired and will continue to acquire businesses with prior operating histories. Acquired companies may have unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations, such as billing and reimbursement, fraud and abuse and similar anti-referral laws. Although the Company institutes policies designed to conform practices to its standards following completion of acquisitions, there can be no assurance that the Company will not become liable for past activities that may later be asserted to be improper by private plaintiffs or government agencies. Although the Company generally seeks to obtain indemnification from prospective sellers covering such matters, there can be no assurance that any such matter will be covered by indemnification, or if covered, that such indemnification will be adequate to cover potential losses and fines.

NOTE 6 – LONG-TERM DEBT

     Long-term debt consists of the following (in millions):

	December 31, 2003		June 30, 2004
Revolving Credit Facility	$	20.0	$	30.0
Convertible Notes		250.0		221.0
	$	270.0	$	251.0

     During the second quarter of 2004, the Company repurchased $29.0 million of its $250.0 million 4 1/2% Convertible Subordinated Notes due 2009 (the “Convertible Notes”) and paid a $0.9 million premium on these repurchases. In connection with these repurchases, the Company expensed $0.6 million of deferred loan costs attributable to the $29.0 million Convertible Note repurchases. The deferred loan cost charge and the $0.9 million premium paid comprise the $1.5 million debt retirement costs in the Company’s accompanying condensed consolidated statements of income for the three and six months ended June 30, 2004. The $1.5 million of debt retirement costs had a negative $0.02 per diluted share impact for the three and six months ended June 30, 2004.

     The Company borrowed $30.0 million under its $200.0 million, five-year amended and restated credit agreement (“Revolving Credit Facility”) in June 2004 to fund the acquisition of River Parishes Hospital, as described in Note 9,

10

and for general corporate purposes. The interest rate related to borrowings under the Revolving Credit Facility was 4.0% at June 30, 2004. In February 2004, the Company used available cash to repay the $20.0 million of indebtedness outstanding at December 31, 2003 under the Revolving Credit Facility.

NOTE 7 – PROFESSIONAL AND GENERAL LIABILITY RESERVES

     The Company is subject to medical malpractice lawsuits and other claims as part of providing healthcare services. To mitigate a portion of this risk, the Company maintains insurance for individual malpractice claims exceeding $10.0 million. The Company’s reserves for professional and general liability claims are based upon independent actuarial calculations, which consider historical claims data, demographic considerations, severity factors and other actuarial assumptions in determining reserve estimates. Reserve estimates are discounted to present value using a 5.0% discount rate and are revised twice each year by the Company’s independent actuaries. The estimated reserve for professional and general liability claims will be significantly affected if current and future claims differ from historical trends. While management monitors reported claims closely and considers potential outcomes as estimated by its actuaries when determining its professional and general liability reserves, the complexity of the claims, the extended period of time to settle the claims and the wide range of potential outcomes complicates the estimation process.

     The Company implemented enhanced processes in monitoring claims and managing losses in high risk areas during 2002 and 2003 to attempt to reduce loss levels and appropriately manage risk. During the second quarter of 2004, the Company received revised reserve estimates for professional and general liability claims from its actuaries based upon more current loss experience information. In addition, the Company ceased receiving reserve estimates from one of the three actuaries that had historically been used to calculate loss reserve estimates. This change in the Company’s estimation process reduced its reserve levels and related professional and general liability insurance expense in the second quarter of 2004 by $1.4 million on a pretax basis, or $0.02 per diluted share. The Company continues to derive its estimates for financial reporting purposes by using a mathematical average of the actuarial valuations from its other two actuaries. The results of the updated actuarial valuations from these two actuaries reduced the Company’s reserve estimates for years prior to 2004 by $1.0 million on a pretax basis, or $0.01 per diluted share, which reduced its professional and general liability expense in the second quarter of 2004.

     The reserve for professional and general liability claims was $27.5 million and $28.0 million at December 31, 2003 and June 30, 2004, respectively. The total cost of professional and general liability coverage, including the changes discussed above, for the three months ended June 30, 2003 and 2004 was $3.8 million and $1.2 million, respectively. The total cost of professional and general liability coverage, including the changes discussed above, for the six months ended June 30, 2003 and 2004 was $7.5 million and $4.8 million, respectively.

     The Company currently estimates that its professional and general liability expense for the year ended December 31, 2004 will be approximately $9 million to $11 million based upon current loss experience information. The Company’s reserve levels are monitored throughout the year and will be reassessed at year-end based upon updated actuarial estimates.

NOTE 8 – MEDICARE REIMBURSEMENT

     During the third quarter of 2003, the Company received correspondence from one of its fiscal intermediaries questioning a particular Medicare disproportionate share designation at one of its hospitals. This hospital has had this designation since 2001 and was previously approved for this designation by its fiscal intermediary. The Company and the fiscal intermediary worked together and contacted CMS for resolution of the designation. The Company reduced revenues by $3.0 million and $0.2 million during the third and fourth quarters of 2003, respectively, representing the three-year difference in reimbursement from this change in designation. The Company received notification from CMS late in the first quarter of 2004 reconfirming the original designation. Based upon the favorable resolution of this issue, the Company increased revenues by $3.2 million in the first quarter of 2004.

NOTE 9 – ACQUISITION OF RIVER PARISHES HOSPITAL

     Effective July 1, 2004, the Company acquired the 106-bed River Parishes Hospital in LaPlace, Louisiana from Universal Health Services, Inc. for approximately $24.5 million in cash, including certain working capital, which is

11

included in unallocated purchase price on the Company’s accompanying condensed consolidated balance sheet as of June 30, 2004. The Company borrowed from its Revolving Credit Facility and paid the purchase price for this acquisition on June 30, 2004. Revenues for this facility were approximately $36.0 million during 2003, exclusive of physician revenues. The hospital is located approximately 30 miles west of New Orleans, Louisiana and is the only hospital located in St. John the Baptist Parish.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

     We recommend that you read this discussion together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report.

     This report, including the condensed consolidated financial statements and related notes, contains forward-looking statements about the Company. Broadly speaking, forward-looking statements include forecasts of future financial results and conditions, expectations for future operations and business, and any assumptions underlying those forecasts and expectations. You should not unduly rely on forward-looking statements. Actual outcomes and results might differ significantly from forecasts and expectations. Please refer to “Factors that May Affect Future Results” later in this report for a discussion of some of the factors that may cause results to differ.

Executive Overview

     The first six months of 2004 were encouraging because of our solid operating performance and increased patient volume levels, including strong growth in inpatient surgeries. We continue to be guardedly optimistic regarding our outlook for the remainder of 2004 as a result of the improved reimbursement environment resulting from the passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“MMA”) and patient volumes more consistent with historical trends. During 2004, we are continuing to focus on physician recruiting and retention, investing capital in our hospitals and seeking additional hospital acquisitions that fit our non-urban strategy. As part of that strategy, we acquired the 106-bed River Parishes Hospital in LaPlace, Louisiana effective July 1, 2004, for approximately $24.5 million. The following table reflects our summarized operating results:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2003		2004		2003		2004
Number of hospitals at end of period		28		29		28		29
Revenues (in millions)	$	221.6	$	246.4	$	442.5	$	503.0
Net income (in millions)	$	15.3	$	18.7	$	33.0	$	42.6
Diluted earnings per share	$	0.40	$	0.48	$	0.85	$	1.08

Revenue/Volume Trends

     The key metrics we use internally to evaluate our revenues are equivalent admissions, which equate to volume, and revenues per equivalent admission, which relate to pricing and acuity. We anticipate our patient volumes and related revenues will continue to be impacted by the following factors:

• Physician Recruitment and Retention. Recruiting and retaining both primary care physicians and specialists for our non-urban communities is a key to increasing revenues and patient volumes. Continuing to add specialists should help our hospitals increase volumes by offering new services. We recruited 62 admitting physicians during the first six months of 2004. Of these 62 physicians recruited, 28 started in the first six months of 2004 and 34 are scheduled to start in the remainder of 2004.

• Medicare Rate Increases. MMA provides a prescription drug benefit for Medicare beneficiaries and also contains numerous provisions that provide incremental funding to hospitals. Hospitals qualify for Medicare disproportionate share hospital (“DSH”) payments when their percentage of low-income patients exceeds 15%. A majority of our hospitals qualify to receive DSH payments. Effective April 1, 2004, MMA raised the cap on the DSH payment adjustment percentage from 5.25% to 12.0% for rural and small urban hospitals and specified that payments to all hospitals are based on the same conversion factor, regardless of geographic location. A majority of our hospitals are benefiting from these provisions.

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The following table lists our DSH payments from Medicare (in millions):

	Medicare DSH Payments
	2003		2004
First Quarter	$	2.4	$	3.2
Second Quarter		2.7		5.6
First Half	$	5.1	$	8.8

Please refer to our 2003 Annual Report on Form 10-K for a discussion of other MMA provisions that affect our reimbursement.

•

Growth in Outpatient Services. A number of procedures once performed only on an inpatient basis have been, and will continue to be, converted to outpatient procedures. This conversion has occurred through continuing advances in pharmaceutical and medical technologies, and as a result of efforts made by payors to control costs. We anticipate that the long-term growth trend in outpatient services will continue. Generally, the payments we receive for outpatient procedures are less than those for similar procedures performed in an inpatient setting. The following table shows net outpatient, inpatient and other revenues as a percentage of our total revenues:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2003			2004			2003			2004
Outpatient		50.9	%		50.1	%		50.5	%		50.0	%
Inpatient		48.1			48.7			48.3			48.9
Other		1.0			1.2			1.2			1.1
Total		100.0	%		100.0	%		100.0	%		100.0	%

Other Trends

• Increases in Provision for Doubtful Accounts. We continued to experience an increase in our provision for doubtful accounts during the first six months of 2004. The increase was the result of a combination of broad economic factors, including an increased number of uninsured patients and plan design changes increasing copayments and deductibles. The provision for doubtful accounts relates primarily to self-pay revenues. The following table reflects our self-pay revenues, net of charity and indigent care write-offs (in millions):

	Self-Pay Revenues
	2003		2004
First Quarter	$	18.8	$	23.1
Second Quarter		18.1		23.3
First Half	$	36.9	$	46.4

Our revenues are reduced when we write-off patient accounts identified as charity and indigent care. Our hospitals write-off a portion of a patient’s account upon the determination that the patient qualifies under a hospital’s charity and indigent care policy. The following table reflects our charity and indigent care write-offs (in millions):

	Charity and Indigent Care Write-Offs
	2003		2004
First Quarter	$	1.0	$	1.9
Second Quarter		1.4		2.4
First Half	$	2.4	$	4.3

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The approximate percentages of billed hospital receivables (which is a component of total receivables) is summarized as follows:

	December 31, 2003			March 31, 2004			June 30, 2004
Insured receivables		41.1	%		41.3	%		42.5	%
Uninsured receivables (including copayments and deductibles)		58.9			58.7			57.5
Total		100.0	%		100.0	%		100.0	%

The approximate percentages of billed hospital receivables in summarized aging categories is as follows:

	December 31, 2003			March 31, 2004			June 30, 2004
0 to 60 days		47.5	%		51.6	%		51.8	%
61 to 150 days		23.6			17.5			20.4
Over 150 days		28.9			30.9			27.8
Total		100.0	%		100.0	%		100.0	%

For the next several quarters, we anticipate that our provision for doubtful accounts will be approximately 9% to 10% of revenues. We are implementing a number of operating strategies which should increase our cash collections of self-pay revenues. If this trend of increasing self-pay revenues continues, it could have a material adverse effect on our results of operations and financial position in the future.

• Shortage of Clinical Personnel and Increased Contract Labor Usage. In recent years, many hospitals, including the hospitals we own, have encountered difficulty in recruiting and retaining nursing and other clinical personnel. When we are unable to staff our nursing and clinical positions, we are required to use contract labor to ensure adequate patient care. Contract labor generally costs more per hour than employed labor. We have adopted a number of human resources strategies in an attempt to improve our ability to recruit and retain nursing and other clinical personnel. We expect that the staffing shortage related to nurses and other clinical personnel will continue in the near term.

Critical Accounting Estimates

     The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect reported amounts and related disclosures. We consider an accounting estimate to be critical if:

• it requires assumptions to be made that were uncertain at the time the estimate was made; and

• changes in the estimate or different estimates that could have been made could have a material impact on our consolidated results of operations or financial condition.

     Our critical accounting estimates are more fully described in our 2003 Annual Report on Form 10-K and continue to include the following areas:

• Allowance for doubtful accounts and provision for doubtful accounts;

• Revenue recognition and allowance for contractual discounts;

• Professional and general liability claims; and

• Accounting for income taxes.

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     Update of Critical Accounting Estimates. Please refer to Note 7 of our condensed consolidated financial statements included elsewhere herein for a discussion of the impact of recent changes in our reserve for professional and general liability claims.

Results of Operations

Operating Results Summary

     The following tables present summaries of results of operations for the three and six months ended June 30, 2003 and 2004 (dollars in millions, except for revenues per equivalent admission):

	Three Months Ended June 30,
	2003					2004
	Amount		% of Revenues			Amount		% of Revenues
Revenues	$	221.6		100.0	%	$	246.4		100.0	%
Salaries and benefits (a)		90.8		41.0			101.5		41.2
Supplies (b)		28.7		13.0			32.1		13.0
Other operating expenses (c)		43.1		19.4			40.6		16.5
Provision for doubtful accounts		16.9		7.6			21.1		8.6
Depreciation and amortization		11.4		5.1			12.0		4.9
Interest expense, net		3.3		1.5			3.2		1.3
Debt retirement costs		—		—			1.5		0.6
ESOP expense		1.5		0.7			2.5		1.0
		195.7		88.3			214.5		87.1
Income before minority interests and income taxes		25.9		11.7			31.9		12.9
Minority interests in earnings of consolidated entities		0.2		0.1			0.3		0.1
Income before income taxes		25.7		11.6			31.6		12.8
Provision for income taxes		10.4		4.7			12.9		5.2
Net income	$	15.3		6.9	%	$	18.7		7.6	%

	Three Months Ended June 30,
	2003			2004			% Change
	Amount			Amount			From Prior Year
Consolidated:
Number of hospitals at end of period		28			29			3.6	%
Admissions (d)		22,337			22,851			2.3
Equivalent admissions (e)		44,654			46,051			3.1
Revenues per equivalent admission	$	4,962		$	5,349			7.8
Outpatient factor (e)		2.00			2.02			1.0
Emergency room visits (f)		106,305			109,613			3.1
Inpatient surgeries (j)		6,390			7,049			10.3
Outpatient surgeries (g), (j)		18,479			19,113			3.4
Total surgeries (j)		24,869			26,162			5.2
Licensed beds at end of period		2,624			2,687			2.4
Weighted average licensed beds		2,624			2,692			2.6
Average daily census		997			1,006			0.9
Average length of stay (days)		4.1			4.0			(2.4	)
Outpatient revenues as a percentage of total revenues		50.9	%		50.1	%		N/M
Medicare case mix index (i)		1.18			1.18			—

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	Three Months Ended June 30,
	2003			2004			% Change
	Amount			Amount			From Prior Year
Same-Hospital (h):
Revenues	$	221.6		$	240.1			8.4	%
Number of hospitals at end of period		28			28			—
Admissions (d)		22,337			22,375			0.2
Equivalent admissions (e)		44,654			44,703			0.1
Revenues per equivalent admission	$	4,962		$	5,370			8.2
Outpatient factor (e)		2.00			2.00			—
Emergency room visits (f)		106,305			105,745			(0.5	)
Inpatient surgeries (j)		6,390			6,888			7.8
Outpatient surgeries (g), (j)		18,479			18,422			(0.3	)
Total surgeries (j)		24,869			25,310			1.8
Licensed beds at end of period		2,624			2,612			(0.5	)
Weighted average licensed beds		2,624			2,617			(0.3	)
Average daily census		997			988			(0.9	)
Average length of stay (days)		4.1			4.0			(2.4	)
Outpatient revenues as a percentage of total revenues		50.9	%		49.7	%		N/M
Medicare case mix index (i)		1.18			1.18			—

17

	Six Months Ended June 30,
	2003					2004
			% of					% of
	Amount		Revenues			Amount		Revenues
Revenues	$	442.5		100.0	%	$	503.0		100.0	%
Salaries and benefits (a)		181.1		40.9			202.2		40.2
Supplies (b)		57.2		12.9			65.5		13.0
Other operating expenses (c)		81.7		18.5			83.2		16.5
Provision for doubtful accounts		34.4		7.8			44.1		8.8
Depreciation and amortization		22.6		5.1			23.6		4.7
Interest expense, net		6.6		1.5			6.6		1.3
Debt retirement costs		—		—			1.5		0.3
ESOP expense		3.1		0.7			4.8		1.0
		386.7		87.4			431.5		85.8
Income before minority interests and income taxes		55.8		12.6			71.5		14.2
Minority interests in earnings of consolidated entities		0.2		—			0.6		0.1
Income before income taxes		55.6		12.6			70.9		14.1
Provision for income taxes		22.6		5.1			28.3		5.6
Net income	$	33.0		7.5	%	$	42.6		8.5	%

	Six Months Ended June 30,
	2003			2004			% Change
	Amount			Amount			From Prior Year
Consolidated:
Number of hospitals at end of period		28			29			3.6	%
Admissions (d)		45,814			48,316			5.5
Equivalent admissions (e)		89,566			94,893			5.9
Revenues per equivalent admission	$	4,940		$	5,300			7.3
Outpatient factor (e)		1.96			1.96			—
Emergency room visits (f)		206,043			215,367			4.5
Inpatient surgeries (j)		12,690			14,121			11.3
Outpatient surgeries (g), (j)		36,619			38,455			5.0
Total surgeries (j)		49,309			52,576			6.6
Licensed beds at end of period		2,624			2,687			2.4
Weighted average licensed beds		2,622			2,711			3.4
Average daily census		1,026			1,081			5.4
Average length of stay (days)		4.1			4.1			—
Outpatient revenues as a percentage of total revenues		50.5	%		50.0	%		N/M
Medicare case mix index (i)		1.19			1.17			(1.7	)

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	Six Months Ended June 30,
	2003		2004		% Change From
	Amount		Amount		Prior Year
Same-Hospital (h):
Revenues	$	442.5	$	490.1		10.8	%
Number of hospitals at end of period		28		28		—
Admissions (d)		45,814		47,238		3.1
Equivalent admissions (e)		89,566		92,067		2.8
Revenues per equivalent admission	$	4,940	$	5,324		7.8
Outpatient factor (e)		1.96		1.95		(0.5	)
Emergency room visits (f)		206,043		208,273		1.1
Inpatient surgeries (j)		12,690		13,753		8.4
Outpatient surgeries (g), (j)		36,619		37,060		1.2
Total surgeries (j)		49,309		50,813		3.1
Licensed beds at end of period		2,624		2,612		(0.5	)
Weighted average licensed beds		2,622		2,617		(0.2	)
Average daily census		1,026		1,060		3.3
Average length of stay (days)		4.1		4.1		—
Outpatient revenues as a percentage of total revenues		50.5		49.7		N/M
Medicare case mix index (i)		1.19		1.17		(1.7	)

N/M - Not Meaningful

(a)	Represents our cost of salaries and benefits, including employee health benefits and workers compensation insurance, for all hospital and corporate employees and contract labor.
(b)	Includes our hospitals’ costs for pharmaceuticals, blood, surgical instruments and all general supply items, including the cost of freight.
(c)	Consists primarily of contract services, physician recruitment, professional fees, repairs and maintenance, rents and leases, utilities, insurance, information systems fees paid to HCA Information Technology and Services, Inc. (“HCA-IT”), marketing and non-income taxes.
(d)	Represents the total number of patients admitted (in the facility for a period in excess of 23 hours) to our hospitals and is used by management and investors as a general measure of inpatient volume.
(e)	Management and investors use equivalent admissions as a general measure of combined inpatient and outpatient volume. We compute equivalent admissions by multiplying admissions (inpatient volume) by the outpatient factor (the sum of gross inpatient revenue and gross outpatient revenue and then dividing the resulting amount by gross inpatient revenue). The equivalent admissions computation “equates” outpatient revenue to the volume measure (admissions) used to measure inpatient volume resulting in a general measure of combined inpatient and outpatient volume.
(f)	Represents the total number of hospital-based emergency room visits.
(g)	Outpatient surgeries are those surgeries that do not require admission to our hospitals.
(h)	Same-hospital information excludes the operations of hospitals that we acquired after January 1, 2003.
(i)	Refers to acuity or severity of illness of an average Medicare patient at our hospitals.
(j)	Inpatient and outpatient surgeries for 2003 and the first quarter of 2004 were restated to reflect appropriate amounts during these periods. This change produced no impact on our historical results of operations.

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For the Quarters Ended June 30, 2003 and 2004

Revenues

     Our revenues for the quarter ended June 30, 2004 increased by $24.8 million, or 11.2%, to $246.4 million compared to the quarter ended June 30, 2003. This increase is attributable to a number of factors, including:

• $18.5 million increase in our same-hospital revenues; and

• $6.3 million in revenues from our 2003 acquisition of Spring View Hospital.

     Adjustments to estimated reimbursement amounts increased our revenues by $0.8 million for the quarter ended June 30, 2004 compared to $1.4 million for the same period in 2003. Our DSH payments from Medicare for the quarter ended June 30, 2004 were $5.6 million, an increase of $2.9 million over the same period in 2003. This increase is primarily the result of the DSH payment increases under MMA.

     Our same-hospital inpatient revenues for the quarter ended June 30, 2004 increased by $11.1 million, or 10.4%, to $117.8 million compared to the quarter ended June 30, 2003. The primary factor causing this change was a 7.8% increase in same-hospital inpatient surgeries, which involve higher intensive procedures. The increase in higher intensive procedures is the result of capital spending at our facilities and strong physician recruitment in the past year.

     Our same-hospital outpatient revenues for the quarter ended June 30, 2004 increased by $6.6 million, or 5.9%, to $119.4 million compared to the quarter ended June 30, 2003. This outpatient growth was largely driven by an increase in radiology procedures such as CT-scans and MRIs, as well as cardiac catheterization procedures. This increase was partially offset by a 0.3% decrease in same-hospital outpatient surgeries and a 0.5% decrease in same-hospital emergency room visits.

     After factoring all of the above, our equivalent admissions increased by 0.1% on a same-hospital basis for the quarter ended June 30, 2004 compared to the same period in 2003. As it relates to pricing and acuity, our same-hospital revenues per equivalent admission for the quarter ended June 30, 2004 increased 8.2%, or $408 per equivalent admission, over the same period in 2003, reflecting positive pricing trends and higher intensive procedures as discussed above.

     The table below shows the sources of our revenues for the quarters ended June 30, expressed as percentages of total revenues:

	Consolidated						Same-hospital
	2003			2004			2003			2004
Medicare		36.9	%		38.1	%		36.9	%		38.3	%
Medicaid		11.0			10.3			11.0			10.2
HMOs, PPOs and other private insurers		39.6			38.3			39.6			38.2
Self Pay		8.2			9.5			8.2			9.4
Other		4.3			3.8			4.3			3.9
Total		100.0	%		100.0	%		100.0	%		100.0	%

     Our historical sources of revenues table in our quarterly and annual reports filed with the Securities and Exchange Commission (the “SEC”) prior to our 2003 Annual Report on Form 10-K required certain reclassifications. Specifically, contractual discounts relating to certain Medicaid state managed care programs were historically classified incorrectly as HMOs, PPOs and other private insurers revenues, instead of as Medicaid revenues. This change produced no impact on our historical results of operations. Generally, these reclassifications reduced Medicaid as a percentage of total revenues and increased HMOs, PPOs and other private insurers as a percentage of total revenues.

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Expenses

     Salaries and benefits increased as a percentage of revenues to 41.2% for the quarter ended June 30, 2004 from 41.0% for the quarter ended June 30, 2003, primarily as a result of an increase in resource-intensive services provided. Man-hours per equivalent admission increased 2.0% for the quarter ended June 30, 2004 over the same period last year. We had a 6.2% increase in salaries and benefits per man-hour in the quarter ended June 30, 2004 compared to the same period in 2003. However, our contract labor costs decreased by 9.2% to $3.7 million in the quarter ended June 30, 2004 compared to $4.1 million in the quarter ended June 30, 2003. Appropriate staffing and minimizing the use of contract labor will continue to be a significant initiative for us.

     Supply costs as a percentage of revenues remained constant at 13.0% in the quarter ended June 30, 2004 as compared to the quarter ended June 30, 2003, on both a consolidated and same-hospital basis. On a consolidated and same-hospital basis, our cost of supplies per equivalent admission increased 8.3% and 8.8%, respectively, in the quarter ended June 30, 2004 as a result of rising supply costs compared to the same period in 2003, particularly in the pharmaceutical, cardiac and spine and joint implant areas. In addition, our same-hospital surgeries, which generally incur higher supply costs per equivalent admission, increased by 1.8% for the quarter ended June 30, 2004 over the same period last year.

     Other operating expenses decreased as a percentage of revenues to 16.5% in the quarter ended June 30, 2004 from 19.4% in the quarter ended June 30, 2003, primarily as a result of the 11.2% increase in our revenues and a $2.6 million decrease in our professional and general liability insurance expense. A portion of our other operating expenses are fixed and not volume driven. Our professional and general liability insurance expense was $1.2 million during the quarter ended June 30, 2004 compared to $3.8 million in the quarter ended June 30, 2003. This decrease relates to favorable loss experience as reflected in our external actuarial reports and a change in actuaries used to estimate projected losses under the self-insured portion of our insurance program, as further discussed in Note 7 of our condensed consolidated financial statements included elsewhere herein. In addition, our physician recruiting costs decreased from $2.9 million in the quarter ended June 30, 2003 to $2.1 million in the quarter ended June 30, 2004 as a result of a $0.7 million cash collection from a departed physician.

     Provision for doubtful accounts increased as a percentage of revenues to 8.6% in the quarter ended June 30, 2004 from 7.6% in the quarter ended June 30, 2003. The provision for doubtful accounts related primarily to self-pay amounts due from patients. Our self-pay revenues, net of charity and indigent care write-offs, increased by 28.8% from $18.1 million for the quarter ended June 30, 2003 to $23.3 million for the quarter ended June 30, 2004. The factors influencing this increase are primarily a combination of broad economic factors, including the increased number of uninsured patients and plan design changes increasing copayments and deductibles. On a same-hospital basis, the provision for doubtful accounts increased as a percentage of revenues to 8.5% in the quarter ended June 30, 2004 from 7.6% in the quarter ended June 30, 2003.

     Depreciation and amortization expense increased to $12.0 million in the quarter ended June 30, 2004 from $11.4 million in the quarter ended June 30, 2003, primarily as a result of our acquisition of Spring View Hospital in the fourth quarter of 2003 and depreciation associated with recently completed capital improvements at our facilities.

     The provision for income taxes increased to $12.9 million in the quarter ended June 30, 2004 from $10.4 million in the quarter ended June 30, 2003. The income tax provisions reflected an effective income tax rate of 40.7% for the quarter ended June 30, 2004 compared to 40.3% for the quarter ended June 30, 2003. The effective tax rate increased primarily as a result of the increase in the nondeductible ESOP expense, which increased by $1.0 million in the quarter ended June 30, 2004, as compared to the same period in 2003.

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For the Six Months Ended June 30, 2003 and 2004

Revenues

     Our revenues for the six months ended June 30, 2004 increased by $60.5 million, or 13.7%, to $503.0 million compared to the six months ended June 30, 2003. This increase is attributable to a number of factors, including:

• $47.6 million increase in our same-hospital revenues; and

• $12.9 million in revenues from our 2003 acquisition of Spring View Hospital.

     Adjustments to estimated reimbursement amounts increased our revenues by $2.2 million for the six months ended June 30, 2004 compared to $4.3 million for the same period in 2003. In addition, as discussed in Note 8 to our condensed consolidated financial statements, we recognized $3.2 million in additional revenues for the quarter ended March 31, 2004 following the confirmation by CMS of a Medicare DSH designation at one of our hospitals. Our DSH payments from Medicare for the six months ended June 30, 2004 were $8.8 million, an increase of $3.7 million over the same period in 2003. This increase is primarily the result of the DSH payment increases under MMA.

     Our same-hospital inpatient revenues for the six months ended June 30, 2004 increased by $27.2 million, or 12.7%, to $241.0 million compared to the six months ended June 30, 2003. The primary factors causing this change were increases in admissions and inpatient surgeries, which involve higher intensive procedures. The increase in higher intensive procedures is the result of capital spending at our facilities and strong physician recruitment in the past year.

     Our same-hospital outpatient revenues for the six months ended June 30, 2004 increased by $19.8 million, or 8.8%, to $243.4 million compared to the six months ended June 30, 2003. This outpatient growth was largely driven by a 1.2% increase in same-hospital outpatient surgeries, a 1.1% increase in same-hospital emergency room visits and an increase in radiology procedures such as CT-scans and MRIs, as well as cardiac catheterization procedures. In addition, the $19.8 million increase in revenues includes $3.2 million from the Medicare DSH designation described in Note 8 to our condensed consolidated financial statements.

     After factoring all of the above, our equivalent admissions increased by 2.8% on a same-hospital basis for the six months ended June 30, 2004 compared to the same period in 2003. As it relates to pricing and acuity, our same-hospital revenues per equivalent admission for the six months ended June 30, 2004 increased 7.8%, or $384 per equivalent admission, over the same period in 2003 reflecting positive pricing trends and higher intensive procedures as discussed above.

     The table below shows the sources of our revenues for the six months ended June 30, expressed as percentages of total revenues:

	Consolidated						Same-hospital
	2003			2004			2003			2004
Medicare		37.2	%		37.9	%		37.2	%		38.1	%
Medicaid		10.9			10.6			10.9			10.5
HMOs, PPOs and other private insurers		39.5			38.6			39.5			38.5
Self Pay		8.3			9.2			8.3			9.1
Other		4.1			3.7			4.1			3.8
Total		100.0	%		100.0	%		100.0	%		100.0	%

     Our historical sources of revenues table in our quarterly and annual reports filed with the SEC prior to our 2003 Annual Report on Form 10-K required certain reclassifications. Specifically, contractual discounts relating to certain Medicaid state managed care programs were historically classified incorrectly as HMOs, PPOs and other private insurers revenues, instead of as Medicaid revenues. This change produced no impact on our historical results of operations. Generally, these reclassifications reduced Medicaid as a percentage of total revenues and increased HMOs, PPOs and other private insurers as a percentage of total revenues.

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Expenses

     Salaries and benefits decreased as a percentage of revenues to 40.2% for the six months ended June 30, 2004 from 40.9% for the six months ended June 30, 2003, primarily as a result of improvements in labor productivity and the 13.7% increase in our revenues. Man-hours per equivalent admission decreased 0.6% for the six months ended June 30, 2004 over the same period last year. However, we had a 6.0% increase in salaries and benefits per man-hour in the six months ended June 30, 2004 compared to the same period in 2003. Our contract labor costs decreased by 1.9% to $8.0 million in the six months ended June 30, 2004 compared to $8.2 million in the six months ended June 30, 2003. Appropriate staffing and minimizing the use of contract labor will continue to be a significant initiative for us.

     Supply costs as a percentage of revenues increased slightly to 13.0% in the six months ended June 30, 2004 from 12.9% in the six months ended June 30, 2003, on both a consolidated and same-hospital basis. On a consolidated and same-hospital basis, our cost of supplies per equivalent admission increased 8.1% and 8.3%, respectively, in the six months ended June 30, 2004 as a result of rising supply costs compared to the same period in 2003, particularly in the pharmaceutical, cardiac and spine and joint implant areas. In addition, our same-hospital surgeries, which generally incur higher supply costs per equivalent admission, increased by 3.1% for the six months ended June 30, 2004 over the same period last year.

     Other operating expenses decreased as a percentage of revenues to 16.5% in the six months ended June 30, 2004 from 18.5% in the six months ended June 30, 2003, primarily as a result of the 13.7% increase in our revenues and a $2.7 million decrease in our professional and general liability insurance expense. A portion of our other operating expenses are fixed and not volume driven. Our professional and general liability insurance expense was $4.8 million during the six months ended June 30, 2004 compared to $7.5 million in the six months ended June 30, 2003. This decrease relates to favorable loss experience as reflected in our external actuarial reports and a change in actuaries to estimate projected losses under the self-insured portion of our insurance program, as further discussed in Note 7 of our condensed consolidated financial statements included elsewhere herein. However, our physician recruiting costs increased from $5.3 million in the six months ended June 30, 2003 to $5.6 million in the six months ended June 30, 2004 as a result of our increased number of recruited physicians.

     Provision for doubtful accounts increased as a percentage of revenues to 8.8% in the six months ended June 30, 2004 from 7.8% in the six months ended June 30, 2003. The provision for doubtful accounts related primarily to self-pay amounts due from patients. Our self-pay revenues, net of charity and indigent care write-offs, increased by 25.8% from $36.9 million for the six months ended June 30, 2003 to $46.4 million for the six months ended June 30, 2004. The factors influencing this increase are primarily a combination of broad economic factors, including the increased number of uninsured patients and plan design changes increasing copayments and deductibles. On a same-hospital basis, the provision for doubtful accounts increased as a percentage of revenues to 8.7% in the six months ended June 30, 2004 from 7.8% in the six months ended June 30, 2003.

     Depreciation and amortization expense increased to $23.6 million in the six months ended June 30, 2004 from $22.6 million in the six months ended June 30, 2003, primarily as a result of our acquisition of Spring View Hospital in the fourth quarter of 2003 and depreciation associated with recently completed capital improvements at our facilities.

     The provision for income taxes increased to $28.3 million in the six months ended June 30, 2004 from $22.6 million in the six months ended June 30, 2003. The income tax provisions reflected an effective income tax rate of 40.0% for the six months ended June 30, 2004 compared to 40.6% for the six months ended June 30, 2003. The effective tax rate decreased primarily as a result of changes related to state net operating losses.

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Liquidity and Capital Resources

Liquidity

     Our primary sources of liquidity are cash flows provided by our operations and our Revolving Credit Facility. Our liquidity for the six months ended June 30, 2003 and 2004 was derived primarily from net cash provided by operating activities.

     Cash flows for the six months ended June 30 were as follows (in millions):

Source (use) of cash flow	2003			2004
Operating activities	$	50.1		$	71.9
Investing activities		(37.6	)		(62.5	)
Financing activities		(16.0	)		(11.6	)
Net change in cash and cash equivalents	$	(3.5	)	$	(2.2	)
Interest payments	$	6.3		$	6.7
Income taxes paid	$	24.7		$	30.0
Working capital as of June 30	$	82.0		$	106.5

Operating activities

     The $21.8 million increase in cash flows provided by operating activities in the six months ended June 30, 2004 as compared to the same period in 2003 is primarily a result of:

• increased net income of $9.6 million in the six months ended June 30, 2004 as compared to the same period in 2003; and

• improved cash flows from operations related to changes in working capital of $9.6 million provided primarily by increased cash collections related to accounts receivable and increases in accrued salaries and other current liabilities in the first six months of 2004 as compared to the same period in 2003. Our revenue days in patient accounts receivable were 38.8 days at June 30, 2004 compared to 39.3 days at December 31, 2003. However, we paid $5.3 million more in income taxes during the six months ended June 30, 2004 as compared to the six months ended June 30, 2003 as a result of an increase in our net income.

Investing activities

     Cash used in investing activities for the six months ended June 30, 2004 consisted primarily of purchases of equipment of $35.4 million, the purchase price of River Parishes Hospital of $24.5 million, the direct transaction costs and working capital settlement of Spring View Hospital of $0.5 million, and $1.5 million related to our purchase of a surgery center in Sulligent, Alabama. Our routine capital expenditures decreased from $10.9 million in the six months ended June 30, 2003 to $9.6 million in the six months ended June 30, 2004 as a result of a higher number of routine projects during the six months ended June 30, 2003. We did not incur any acquisition costs for the six months ended June 30, 2003.

Financing activities

     Cash used in financing activities for the six months ended June 30, 2004 consisted primarily of $29.9 million in repurchases of our Convertible Notes during the second quarter of 2004, including $0.9 million in premium costs, and a first quarter 2004 $20.0 million repayment under our Revolving Credit Facility. These activities were partially offset by $30.0 million borrowed under our Revolving Credit Facility and $7.5 million in proceeds from stock option exercises and purchases of shares under our employee stock purchase plans. We used approximately $24.5 million of the $30.0 Revolving Credit Facility borrowing to acquire River Parishes Hospital on June 30, 2004.

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Cash used in financing activities for the six months ended June 30, 2003 primarily consisted of $17.0 million in repurchases of our common stock, offset by proceeds from stock option exercises and purchases of shares under our employee stock purchase plans.

Capital Resources

Revolving Credit Facility

     Our Revolving Credit Facility, which expires in June 2006, provides for borrowings up to $200.0 million in the aggregate, is guaranteed by substantially all of our current and future subsidiaries and is secured by substantially all of our assets. The Revolving Credit Facility requires that we comply with certain financial covenants, including:

	Requirement	Level at June 30, 2004
Maximum permitted consolidated leverage ratio	<3.50 to 1.00		1.34 to 1.00
Maximum permitted consolidated senior leverage ratio	<2.50 to 1.00		0.23 to 1.00
Minimum permitted consolidated interest coverage ratio	>3.50 to 1.00		13.88 to 1.00
Minimum permitted consolidated net worth	>$291.3 million	$	455.0 million
Maximum capital expenditures – last twelve months	<$145.1 million	$	67.6 million

     The Revolving Credit Facility also contains various other covenants, including, but not limited to, restrictions on new indebtedness, the ability to merge or consolidate, asset sales, capital expenditures, acquisitions and dividends. We were in compliance with these covenants as of June 30, 2004. During the second quarter of 2004, we entered into an amendment under the Revolving Credit Facility that allows us to repurchase up to $150.0 million of our Convertible Notes. As of June 30, 2004, we had $30.0 million of outstanding indebtedness under our Revolving Credit Facility and letters of credit in the aggregate amount of $16.5 million outstanding, leaving $153.5 million available under our Revolving Credit Facility. We repaid the $20.0 million of indebtedness outstanding at December 31, 2003 under our Revolving Credit Facility in February 2004 with our available cash.

     The applicable interest rate under the Revolving Credit Facility is based on a rate, at our option, equal to either (i) LIBOR plus a margin ranging from 1.25% to 2.25% or (ii) prime plus a margin ranging from 0% to 0.5%, both depending on our consolidated total debt to consolidated EBITDA ratio, as defined, for the most recent four quarters. As of June 30, 2004, the interest rate related to borrowings under our Revolving Credit Facility was 4.0%.

     Our Revolving Credit Facility does not contain provisions that would accelerate the maturity date of our debt upon a downgrade in our credit rating. However, a downgrade in our credit rating could adversely affect our ability to renew our existing credit facility or obtain access to new credit facilities or other capital sources in the future and could increase the cost of such facilities and other capital sources. Our credit ratings as of June 30, 2004 are as follows:

	Standard & Poor’s		Moody’s
Corporate Credit Rating/Senior Implied	BB		Ba3
Senior Secured Bank Credit Facility	BB+		Ba2
Senior Unsecured/Issuer		—		B2
Subordinated		—		B3
Outlook	Stable		Positive

     We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance, special purpose or variable interest entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Accordingly, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Convertible Notes

     On May 22, 2002, we sold 4 1/2% Convertible Subordinated Notes due 2009 in the aggregate principal amount of $250 million (the “Convertible Notes”). The net proceeds of approximately $242.5 million were used for

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acquisitions, capital improvements at our existing facilities, repurchase of our 10 3/4% Senior Subordinated Notes, working capital and general corporate purposes. The Convertible Notes bear interest at the rate of 4 1/2% per year, payable semi-annually on June 1 and December 1. The Convertible Notes are convertible at the option of the holder at any time on or prior to maturity into shares of our common stock at a conversion price of $47.36 per share. The conversion price is subject to adjustment in certain circumstances. We may redeem all or a portion of the Convertible Notes on or after June 3, 2005, at the then current redemption prices, plus accrued and unpaid interest. Holders of the Convertible Notes may require us to repurchase all of the holder’s Convertible Notes at 100% of their principal amount plus accrued and unpaid interest in some circumstances involving a change of control. The Convertible Notes are unsecured and subordinated to our existing and future senior indebtedness and senior subordinated indebtedness. The Convertible Notes rank junior to our other liabilities. The indenture governing the Convertible Notes does not contain any financial covenants.

     We repurchased $29.0 million of our $250.0 million Convertible Notes during the second quarter of 2004 and paid a premium of $0.9 million on these repurchases. These repurchases reduced the number of shares of common stock that were reserved for issuance upon conversion of the Convertible Notes from 5,278,825 shares to 4,666,481 shares.

Liquidity and Capital Resources Outlook

     We expect the level of capital expenditures in 2004 to be approximately $90.0 million, of which $35.4 million has been spent in the first six months. We have large projects in process at a number of our facilities. We are reconfiguring some of our hospitals to more effectively accommodate patient services and restructuring existing surgical capacity in some of our hospitals to permit additional patient volume and a greater variety of services. At June 30, 2004, we had projects under construction with an estimated additional cost to complete and equip of approximately $79.6 million. We anticipate that these projects will be completed over the next three years. We anticipate funding these expenditures through cash provided by operating activities, available cash and borrowings under our Revolving Credit Facility.

     Our business strategy contemplates the acquisition of additional hospitals, and we regularly review potential acquisitions. These acquisitions may, however, require additional financing. We regularly evaluate opportunities to sell additional equity or debt securities, obtain credit facilities from lenders or restructure our long-term debt or equity for strategic reasons or to further strengthen our financial position. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders.

     We have never declared or paid dividends on our common stock. We intend to retain future earnings to finance the growth and development of our business and, accordingly, do not currently intend to declare or pay any dividends on our common stock. Our Board of Directors will evaluate our future earnings, results of operations, financial condition and capital requirements in determining whether to declare or pay cash dividends. Delaware law prohibits us from paying any dividends unless we have capital surplus or net profits available for this purpose. In addition, our Revolving Credit Facility imposes restrictions on our ability to pay dividends. We repurchased approximately 2.1 million shares of our common stock for an aggregate price of approximately $45.7 million during 2003. Please refer to Part II, Item 2. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities elsewhere in this report for a discussion of our share repurchase program.

     We believe that cash flows from operations, amounts available under our Revolving Credit Facility and our anticipated access to capital markets are sufficient to meet expected liquidity needs, planned capital expenditures, potential acquisitions and other expected operating needs over the next three years.

Contractual Obligations

     During the six months ended June 30, 2004, there were no material changes in our contractual obligations presented in our 2003 Annual Report on Form 10-K except for our obligation under our contract with HCA-IT related to the purchase of information technology services, which was recently extended through December 31,

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2009. The following is an update of our contractual obligation to HCA-IT, reflecting our amended agreement, which was signed during the second quarter of 2004 (in millions):

	Payments Due by Period
Purchase Obligation	Total		7/04-12/04		2005-2007		2008-2009		After 2009
HCA-IT services	$	72.7	$	6.2	$	39.1	$	27.4	$	—

Off-Balance Sheet Arrangements

     We had standby letters of credit outstanding of approximately $16.5 million as of June 30, 2004. Of this amount, $16.3 million was related to the self-insured retention levels of our professional and general liability insurance programs as security for the payment of claims and $0.2 million was related to obligations to certain utility companies.

Impact of Recently Issued Accounting Pronouncements

     Please refer to Note 3 of our condensed consolidated financial statements included in this report for a discussion of the impact of recently issued accounting pronouncements.

Contingencies

     Please refer to Note 5 of our condensed consolidated financial statements included in this report for a discussion of our material financial contingencies, including:

• An Americans with Disabilities Act claim;

• HCA investigations, litigation and indemnification rights;

• Our Corporate Integrity Agreement;

• Legal proceedings and general liability claims;

• Physician commitments;

• Capital expenditure commitments;

• Tax matters; and

• Acquisitions.

Factors That May Affect Future Results

     We make forward-looking statements in this report and in other reports and proxy statements we file with the SEC. In addition, our senior management makes forward-looking statements orally to analysts, investors, the media and others. Broadly speaking, forward-looking statements include:

• projections of our revenues, net income, earnings per share, capital expenditures or other financial items;

• descriptions of plans or objectives of our management for future operations or services, including pending acquisitions;

• forecasts of our future economic performance; and

• descriptions of assumptions underlying or relating to any of the foregoing.

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In this report, for example, we make forward-looking statements discussing our expectations about:

• future financial performance;

• future liquidity;

• industry trends;

• patient volumes and related revenues;

• recruiting and retention of clinical personnel;

• future capital expenditures;

• the impact of new accounting standards; and

• physician recruiting.

     Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements often include words such as “can,” “could,” “may,” “should,” “believe,” “will,” “would,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “intend,” “target,” “continue” or similar expressions. Do not unduly rely on forward-looking statements. They give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we might not update them to reflect changes that occur after the date they are made.

     There are several factors, many beyond our control that could cause results to differ significantly from our expectations. Some of these factors are described below under “Risk Factors.” Other factors, such as market, operational, liquidity, interest rate and other risks, are described elsewhere in this report or in our 2003 Annual Report on Form 10-K. Any factor described in this report or in our 2003 Annual Report on Form 10-K could, by itself or together with one or more factors, adversely affect our business, results of operations and/or financial condition. There may be factors not described in this report or in our 2003 Annual Report on Form 10-K that could cause results to differ from our expectations.

Risk Factors

Our revenues may decline if federal or state programs reduce our Medicare or Medicaid payments or managed care companies reduce our reimbursements.

     In recent years, federal and state governments made significant changes in the Medicare and Medicaid programs. A number of states have incurred budget deficits and adopted legislation designed to reduce their Medicaid expenditures and to reduce Medicaid enrollees. In addition, insurance and managed care companies and other third parties from whom we receive payment for our services increasingly attempt to control healthcare costs by requiring that hospitals discount their fees in exchange for exclusive or preferred participation in their benefit plans. We believe that this trend may continue and may reduce the payments we receive for our services.

We may be subjected to allegations that we failed to comply with governmental regulation, which could result in sanctions that reduce our revenue and profitability.

     All participants in the healthcare industry are 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, billing and cost reports, payment for services and supplies, maintenance of adequate records, privacy, compliance with building codes and environmental protection. These laws often contain safe harbor provisions, which describe some of the conduct and business relationships that are immune from prosecution. Not all of our business arrangements fit wholly within safe harbors. This does not automatically render our arrangements illegal. However, we may be subject to scrutiny by enforcement authorities. If we fail to comply with applicable laws and regulations,

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we could suffer civil or criminal penalties, including the loss of our licenses to operate our hospitals and our ability to participate in the Medicare, Medicaid and other federal and state healthcare programs.

     Significant media and public attention recently has focused on the hospital industry as a result of ongoing investigations related to referrals, physician recruiting practices, cost reporting and billing practices, laboratory and home healthcare services and physician ownership and joint ventures involving hospitals. Both federal and state government agencies have announced heightened and coordinated civil and criminal enforcement efforts. In addition, the OIG and the DOJ periodically establish enforcement initiatives that focus on specific billing practices or other suspected areas of abuse. Recent initiatives include a focus on hospital billing practices, rehabilitation and outpatient therapy.

     In public statements, governmental authorities have taken positions on issues for which little official interpretation was previously available. Some of these positions appear to be inconsistent with common practices within the industry and which have not previously been challenged in this manner. Moreover, some government investigations that have in the past been conducted under the civil provisions of federal law are now being conducted as criminal investigations under the Medicare fraud and abuse laws.

     The laws and regulations that we must comply with are complex and subject to change. 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.

We may be subjected to actions brought by individuals on the government’s behalf under the False Claims Act’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. Defendants determined to be liable under the False Claims Act may be required to pay three times the actual damages sustained by the government, plus mandatory civil penalties ranging between $5,500 and $11,000 for each separate false claim.

     There are many potential bases for liability under the False Claims Act. Liability often arises when an entity knowingly submits a false claim for reimbursement to the federal government. The False Claims Act defines the term “knowingly” broadly. Although simple negligence will not give rise to liability under the False Claims Act, submitting a claim with reckless disregard to its truth or falsity constitutes a “knowing” submission under the False Claims Act and, therefore, will qualify for liability.

     In some cases, whistleblowers or the federal government have taken the position that providers who allegedly have violated other statutes, such as the anti-kickback statute and the Stark Law, have thereby submitted false claims under the False Claims Act. In addition, a number of states 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.

If we become subject to malpractice and related legal claims, we could be required to pay significant damages, which may not be covered by insurance.

     Given the nature of our operating environment, we are subject to medical malpractice lawsuits and other claims. To mitigate a portion of this risk, we maintain liability insurance in amounts that we believe are appropriate for our operations. During 2003, we maintained professional and general liability insurance that provided coverage on a claims-made basis for individual claims in excess of $5.0 million. For 2004, the self-insured retention level amount for individual claims is $10.0 million. It is possible that successful claims against us that are within the self-insured retention level amounts, when considered in the aggregate, could have an adverse effect on our financial condition or liquidity. Insurance coverage may not continue to be available at a cost allowing us to maintain adequate levels of insurance with acceptable self-insured retention level amounts. In addition, physicians using our hospitals may be unable to obtain insurance on acceptable terms.

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If we fail to effectively recruit and retain physicians, nurses and medical technicians, our ability to deliver healthcare services efficiently will suffer.

     Physicians generally direct the majority of hospital admissions. Our success, in part, depends on the number and quality of physicians on our hospitals’ medical staffs, the admissions practices of these physicians and the maintenance of good relations with these physicians. Only a limited number of physicians practice in the non-urban communities where our hospitals are located. Our primary method of adding or expanding medical services is the recruitment of new physicians into our communities.

     The success of our recruiting efforts depends on several factors. In general, there is a shortage of specialty care physicians. We face intense competition in the recruitment of specialists because of the difficulty convincing these individuals of the benefits of practicing in a non-urban community. Physicians are concerned with the patient volume in non-urban hospitals and whether the volume will allow them to generate income comparable to that which they would generate in an urban setting. If the growth rate in the non-urban communities where our hospitals operate slows, then we could experience difficulty attracting physicians to practice in our communities.

     There is generally a shortage of nurses and certain medical technicians in the healthcare industry. Our hospitals may be forced to hire expensive contract personnel if they are unable to recruit and retain full-time employees. The shortage of nurses and medical technicians may affect our hospitals’ ability to deliver healthcare services efficiently.

Our revenue is heavily concentrated in Kentucky and Tennessee, which makes us particularly sensitive to regulatory and economic changes in those states.

     Our revenue is particularly sensitive to regulatory and economic changes in Kentucky and Tennessee. As of June 30, 2004, we operated 29 hospitals with eight located in the commonwealth of Kentucky and seven located in the state of Tennessee. We generated 36.0% and 34.3% of our revenues from our Kentucky hospitals (including 3.3% and 3.8% from state-sponsored Medicaid programs) and 20.1% and 18.9% from our Tennessee hospitals (including 2.8% and 2.4% from the state-sponsored TennCare program) for the six months ended June 30, 2003 and 2004, respectively. Certain managed care organizations that participate in the Medicaid programs of Tennessee and Kentucky have been placed in receivership or encountered other financial difficulties. Other managed care organizations in the states in which we derive significant revenue may encounter similar difficulties in paying claims in the future.

We may have difficulty acquiring hospitals on favorable terms and, because of regulatory scrutiny, acquiring nonprofit entities.

     One element of our business strategy is expansion through the acquisition of acute care hospitals in growing, non-urban markets. We face significant competition to acquire other attractive, non-urban hospitals. We may not find suitable acquisitions on favorable terms. We also may incur or assume additional indebtedness as a result of the consummation of acquisitions. Our failure to acquire non-urban hospitals consistent with our growth plans could prevent us from increasing our revenues.

     The cost of acquiring hospitals continues to increase. In some cases, the cost of an acquisition could result in a dilutive effect on our results of operations depending on various factors, including the acquired hospital’s results of operations, allocation of tangible and intangible assets, effects of subsequent legislation changes and limitations on rate increases. In addition, our acquisition activity requires transitions from, and the integration of, various information systems that are used by hospitals we acquire.

     In recent years, the legislatures and attorneys general of several states have become more interested in sales of hospitals by nonprofit entities. This heightened scrutiny may increase the cost and difficulty, or prevent our completion, of transactions with nonprofit organizations in the future.

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We may encounter numerous business risks in acquiring additional hospitals, and may have difficulty operating and integrating those hospitals.

     We may not be able to timely and effectively integrate the hospitals that we acquire with our ongoing operations. We may experience delays in implementing operating procedures and systems in newly acquired hospitals. Integrating a new hospital could be expensive and time consuming and could disrupt our ongoing business and distract our management and other key personnel. In addition, we rely heavily on HCA-IT for information systems integration as part of our contractual arrangement for information technology services.

     We also may acquire businesses with unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations. We have policies to conform the practices of acquired facilities to our standards and applicable law and generally will seek indemnification from prospective sellers covering these matters. We may, however, incur material liabilities for past activities of acquired businesses.

Certificate of need laws and licensing regulations may prohibit or limit any future expansion by us in some states.

     Some states require prior approval for the purchase, construction and expansion of healthcare facilities, based on a state’s determination of need for additional or expanded healthcare facilities or services. Five states in which we currently own hospitals, Alabama, Florida, Kentucky, Tennessee and West Virginia, require a certificate of need for capital expenditures exceeding a prescribed amount, changes in bed capacity or services and certain other matters. We may not be able to obtain certificates of need required for expansion activities in the future. In addition, all of the states in which we operate require hospitals and most healthcare providers to maintain one or more licenses. If we fail to obtain any required certificate of need or licenses, our ability to operate or expand operations in these states could be impaired.

We may be unable to complete our construction projects on a required timetable and within the original cost estimates.

     In certain states, where prior approval is required for the construction and expansion of healthcare facilities, such approval is predicated on a timetable and within a certain cost threshold. In addition, all projects are evaluated internally based on certain rates of return. If costs of raw materials and labor increase dramatically, the originally imputed rates of returns may not materialize. In addition, projects could be delayed pending state approval of cost overruns.

Our ability to increase our indebtedness and become substantially leveraged may limit our ability to successfully run our business.

     At June 30, 2004, our consolidated long-term debt was approximately $251.0 million. We also may draw on a revolving credit commitment of up to $200 million under our Revolving Credit Facility, of which $153.5 million was available as of June 30, 2004. In addition, we have the ability to incur additional debt, subject to limitations imposed by our Revolving Credit Facility. Our leverage and debt service requirements could have important consequences to our stockholders, including the following:

• make us more vulnerable to economic downturns and to adverse changes in business conditions, such as further limitations on reimbursement under Medicare and Medicaid programs;

• limit our ability to obtain additional financing at favorable interest rates in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes;

• require us to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness, reducing the funds available for our operations and capital improvements;

• make us vulnerable to increases in interest rates because our Revolving Credit Facility is at a variable rate of interest; and

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• require us to pay the indebtedness immediately if we default on any of the numerous financial and other restrictive covenants in our Revolving Credit Facility, including restrictions on our payments of dividends, incurrence of indebtedness and sale of assets.

Federal and state investigations of HCA could subject our hospitals and operations to increased governmental scrutiny.

     HCA has been the subject of various federal and state investigations, qui tam actions, shareholder derivative and class action suits, patient/payor actions and general liability claims. These investigations, actions and claims relate to HCA and its subsidiaries, including subsidiaries that, before our formation as an independent company, owned some of the facilities we now own. For additional information about these matters, please refer to Part I, Note 5, Commitments and Contingencies included in this report.

     We could be held responsible for any claims that are not covered by the agreements HCA reached with the federal government or for which HCA is not required to, or fails to, indemnify us. If indemnified matters were asserted successfully against us or any of our facilities, and HCA failed to meet its indemnification obligations, then such an event could have a material adverse effect on our business, financial condition, results of operations, liquidity or prospects.

     We cannot predict with accuracy the extent to which we may or may not continue to be affected by the initiation of additional investigations of HCA, if any. If these matters result in a successful claim against us, it could have a material adverse effect on our business, financial condition, results of operations, liquidity or prospects in future periods.

We depend significantly on key personnel, and the loss of one or more senior or local management personnel could limit our ability to execute our business strategy.

     We depend on the continued services and management experience of Kenneth C. Donahey and our other executive officers. If Mr. Donahey or any of our other executive officers resign their positions or otherwise are unable to serve, our management expertise and ability to deliver healthcare services efficiently could be weakened. In addition, if we fail to attract and retain managers at our hospitals and related facilities, our operations will suffer.

Other hospitals provide similar services, which may raise the level of competition faced by our hospitals.

     Competition among hospitals and other healthcare providers for patients has intensified in recent years. All but one of our hospitals operate in geographic areas where we are currently the sole provider of hospital services in these communities. While our hospitals face less direct competition in our immediate service areas, we do compete with other hospitals, including larger tertiary care centers. Although these competing hospitals may be in excess of 30 to 50 miles away from our facilities, patients in these markets may migrate to, may be referred by local physicians to, or may be lured by incentives from managed care plans to travel to, these distant hospitals. Some of these competing hospitals use equipment and services more specialized than those available at our hospitals. In addition, some of the hospitals that compete with us are owned by tax-supported governmental agencies or not-for-profit entities supported by endowments and charitable contributions. These hospitals can make capital expenditures without paying sales, property and income taxes. We also face competition from other specialized care providers, including outpatient surgery, orthopedic, oncology, physical therapy and diagnostic centers, as well as competing services rendered in physician offices. To the extent that other providers are successful in developing specialized outpatient facilities, our market share for those specialized services will likely decrease. Where necessary to prevent such competition, a few of our hospitals have developed specialized outpatient facilities.

If our access to HCA’s information systems is restricted or we are not able to integrate changes to our existing information systems or information systems of acquired hospitals, our operations could suffer.

     Our business depends significantly on effective information systems to process clinical and financial information. Information systems require an ongoing commitment of significant resources to maintain and enhance existing systems and develop new systems in order to keep pace with continuing changes in information processing technology. We rely heavily on HCA-IT for information systems. Under a contract that was recently amended

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through December 31, 2009, HCA-IT provides financial, clinical, patient accounting and network information services to us. If our access to these systems is limited in the future or if HCA-IT develops systems more appropriate for the urban healthcare market and not suited for our hospitals, our operations could suffer.

     In addition, as new information systems are developed, we must integrate them into our existing systems. Evolving industry and regulatory standards, including the Health Insurance Portability and Accountability Act of 1996, commonly known as “HIPAA,” may require changes to our information systems. We may not be able to integrate new systems or changes required to our existing systems or systems of acquired hospitals in the future effectively. Please refer to Part I, Item 1. Business – Government Regulation in our 2003 Annual Report on Form 10-K for a discussion of HIPAA.

     A key element of our business strategy is growth through the acquisition of additional acute care hospitals. Our acquisition activity requires transitions from, and the integration of, various information systems that are used by the hospitals we acquire. If we experience difficulties with the integration of the information systems of acquired hospitals, we could suffer, among other things, operational disruptions and increases in administrative expenses.

If we fail to comply with our corporate integrity agreement, we could be required to pay significant monetary penalties.

     In December 2000, we entered into a corporate integrity agreement with the OIG. Under this agreement, we have an affirmative obligation to report violations of applicable laws and regulations. This obligation could result in greater scrutiny of us by regulatory authorities. Complying with our corporate integrity agreement requires additional efforts and costs. Our failure to comply with the terms of the corporate integrity agreement could subject us to significant monetary penalties.

Our anti-takeover provisions may discourage acquisitions of control even though our stockholders may consider these proposals desirable.

     Provisions in our certificate of incorporation and bylaws may have the effect of discouraging an acquisition of control not approved by our board of directors. These provisions include:

• the issuance of “blank check” preferred stock by the board of directors without stockholder approval;

• higher stockholder voting requirements for some transactions, including business combinations with related parties (i.e., a “fair price provision”);

• a prohibition on taking actions by the written consent of stockholders;

• restrictions on the persons eligible to call a special meeting of stockholders;

• classification of the board of directors into three classes; and

• the removal of directors only for cause and by a vote of 80% of the outstanding voting power.

     These provisions may also have the effect of discouraging third parties from making proposals involving our acquisition or change of control, although a proposal, if made, might be considered desirable by a majority of our stockholders. These provisions could further have the effect of making it more difficult for third parties to cause the replacement of our board of directors.

     We have also adopted a stockholder rights plan. This stockholder rights plan is designed to protect stockholders in the event of an unsolicited offer and other takeover tactics, which, in the opinion of the board of directors, could impair our ability to represent stockholder interests. The provisions of this stockholder rights plan may render an unsolicited takeover more difficult or might prevent a takeover.

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     We are subject to provisions of Delaware corporate law, which may also restrict some business combination transactions. Delaware law may further discourage, delay or prevent someone from acquiring or merging with us.

We have never paid and have no current plans to pay a dividend on our common shares.

     We have never paid a cash dividend and we do not currently anticipate paying any cash dividends. Our senior credit facility also restricts the payment of cash dividends. If we incur any future indebtedness to refinance our existing indebtedness or to fund our future growth, our ability to pay dividends may be further restricted by the terms of this indebtedness. Our board of directors will evaluate our future earnings, results of operations, financial condition and capital requirements in determining whether to declare or pay cash dividends.

Our stock price has been and may continue to be volatile.

     The trading price of our common stock has been and may continue to be subject to wide fluctuations. Our stock price may fluctuate in response to a number of events and factors, including:

• quarterly variations in operating results;

• changes in financial estimates and recommendations by securities analysts;

• changes in government regulations as it relates to reimbursement and operational policies and procedures;

• the operating and stock price performance of other companies that investors may deem comparable; and

• news reports relating to trends in our markets.

     Broad market and industry fluctuations may adversely affect the price of our common stock, regardless of our operating performance.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

     During the six months ended June 30, 2004, there were no material changes in the quantitative and qualitative disclosures about market risks presented in our 2003 Annual Report on Form 10-K.

Item 4. Controls and Procedures.

     We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us (including our consolidated subsidiaries) in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported on a timely basis. There has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II-OTHER INFORMATION

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

The following table sets forth information regarding repurchases of Convertible Notes by the Company during the second quarter of 2004:

ISSUER PURCHASES OF EQUITY SECURITIES

							Total Principal		Approximate Dollar
							Amount of Convertible		Value of Convertible
	Total Principal						Notes Purchased as		Notes that May Yet Be
	Amount of Convertible						Part of Publicly		Purchased Under the
	Notes Purchased			Average Price Paid			Announced Plans or		Plans or
Period	(in millions)			Per Share			Programs		Programs
April 1, 2004 -
April 30, 2004	$	—		$	—		$	—	$	—
May 1, 2004 -
May 31, 2004	$	—		$	—		$	—	$	—
June 1, 2004 -
June 30, 2004	$	29.0	(1)	$	47.36	(2)	$	—	$	—
Total	$	29.0	(1)	$	47.36	(2)	$	—	$	—

(1)	The total principal amount of these Convertible Notes was convertible into 612,344 shares of the Company’s common stock as of the date of repurchase. These Convertible Notes were repurchased in the open market, and were not purchased through a publicly announced plan or program.
(2)	On an “as converted” basis, the average purchase price paid per share of common stock issuable upon conversion of the Convertible Notes was $47.36, which does not reflect the premium paid to repurchase the Convertible Notes.

     In April 2003, our Board of Directors authorized the repurchase of up to $100 million of our outstanding shares of common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints and other factors, to enable us to take advantage of opportunistic market conditions. Our stock repurchase program was publicly announced on April 28, 2003 and expires on October 28, 2004. As of December 31, 2003, we repurchased 2,062,400 shares for an aggregate of approximately $45.7 million. Thus far in 2004, we have not purchased any shares of common stock under the share repurchase program. We may execute share repurchases from time to time in order to take advantage of attractive share price levels, as determined by management. The timing and terms of the transactions depend on market conditions, our liquidity and other considerations.

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Item 4. Submission of Matters to a Vote of Security Holders.

We held our annual meeting of stockholders on June 15, 2004. At the annual meeting, votes were cast as follows:

			VOTES
			IN				VOTES
			FAVOR		ABSTAINED		AGAINST
(a	)	Election of Class II Directors:
		DeWitt Ezell, Jr.		33,720,951		2,042,241		—
		William V. Lapham;		33,721,212		2,041,980		—
(b	)	Approval of an amendment to the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan;		24,948,187		42,066		7,677,468
(c	)	Approval of an amendment to the LifePoint Hospitals, Inc. Outside Directors Stock and Incentive Compensation Plan;		26,674,468		46,646		5,946,607
(d	)	Approval of the LifePoint Hospitals, Inc. Executive Performance Incentive Plan; and		31,835,922		45,704		786,095
(e	)	Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of our company for the year ending December 31, 2004.		35,453,773		25,268		284,151

     As indicated in the above table, DeWitt Ezell, Jr. and William V. Lapham were elected as Class II directors. The terms of the Class II directors will expire at the annual meeting of stockholders in 2007, but not before their respective successors are elected and qualified. The terms of the following Class III directors will continue until the annual meeting in 2005: Kenneth C. Donahey and Richard H. Evans. The terms of the following Class I directors will continue until the annual meeting in 2006: Ricki Tigert Helfer, John E. Maupin, Jr., D.D.S. and Owen G. Shell, Jr.

Item 6. Exhibits and Reports on Form 8-K.

(a) List of Exhibits:

EXHIBIT NUMBER	DESCRIPTION
3.1	Certificate of Incorporation (a)
3.2	Bylaws (a)
3.3	First Amendment to the Bylaws (b)
4.1	Form of Specimen Stock Certificate (c)
4.2	Rights Agreement dated as of May 11, 1999 between LifePoint Hospitals, Inc. and National City Bank as Rights Agent (a)
4.3	Indenture, dated as of May 22, 2002, between LifePoint Hospitals, Inc. and National City Bank, as trustee, relating to the 4 1/2% Convertible Subordinated Notes due 2009 (d)
4.4	Registration Rights Agreement, dated as of May 22, 2002, among LifePoint Hospitals, Inc., UBS Warburg LLC, Credit Suisse First Boston Corporation, Deutsche Bank Securities, Inc., Lehman Brothers Inc., Salomon Smith Barney Inc., Banc of America Securities LLC, and Fleet Securities, Inc. (d)

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EXHIBIT NUMBER	DESCRIPTION
4.5	Form of 4 1/2% Convertible Subordinated Note due 2009 of LifePoint Hospitals, Inc. (d)
10.1	Amendment to Computer and Data Processing Services Agreement, dated April 28, 2004, by and between HCA-Information Technology and Services, Inc. and LifePoint Hospitals, Inc.
10.2	Fourth Amendment to Credit Agreement, dated as of June 18, 2004, by and among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent for the lenders, the financial institutions or entities from time to time which are parties to the Credit Agreement as lenders, Bank of America, N.A. and Deutsche Banc Alex. Brown Inc., as co-syndication agents, and Credit Lyonnais New York Branch and SunTrust Bank, as co-documentation agents
31.1	Certification of the Chief Executive Officer of LifePoint Hospitals, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer of LifePoint Hospitals, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer of LifePoint Hospitals, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer of LifePoint Hospitals, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(a)	Incorporated by reference from the LifePoint Hospitals, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, File Number 0-29818.
(b)	Incorporated by reference from exhibits to the LifePoint Hospitals, Inc. Annual Report on Form 10-K for the year ended December 31, 2003, File No. 000-29818.
(c)	Incorporated by reference from exhibits to the LifePoint Hospitals, Inc. Registration Statement on Form 10 under the Securities Exchange Act of 1934, as amended, File Number 0-29818.
(d)	Incorporated by reference from the exhibits to the LifePoint Hospitals, Inc. Registration Statement on Form S-3 under the Securities Act of 1933, as amended, File Number 333-90536.

(b) Reports on Form 8-K filed during the three months ended June 30, 2004:

     On April 27, 2004, we furnished a Current Report on Form 8-K pursuant to Item 12 announcing our first quarter 2004 earnings results.

     On April 29, 2004, we filed a Current Report on Form 8-K pursuant to Item 5 confirming our guidance for the remaining quarters of 2004 and announcing the amendment of our Computer and Data Processing Services Agreement with HCA-IT, extending these services through December 31, 2009.

SIGNATURES

     Pursuant to the requirements 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.

Date: July 27, 2004	LifePoint Hospitals, Inc.
	By:	/s/ Michael J. Culotta
			Michael J. Culotta
			Chief Financial Officer (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

EXHIBIT NUMBER	DESCRIPTION
3.1	Certificate of Incorporation (a)
3.2	Bylaws (a)
3.3	First Amendment to the Bylaws (b)
4.1	Form of Specimen Stock Certificate (c)
4.2	Rights Agreement dated as of May 11, 1999 between LifePoint Hospitals, Inc. and National City Bank as Rights Agent (a)
4.3	Indenture, dated as of May 22, 2002, between LifePoint Hospitals, Inc. and National City Bank, as trustee, relating to the 4 1/2% Convertible Subordinated Notes due 2009 (d)
4.4	Registration Rights Agreement, dated as of May 22, 2002, among LifePoint Hospitals, Inc., UBS Warburg LLC, Credit Suisse First Boston Corporation, Deutsche Bank Securities, Inc., Lehman Brothers Inc., Salomon Smith Barney Inc., Banc of America Securities LLC, and Fleet Securities, Inc. (d)
4.5	Form of 4 1/2% Convertible Subordinated Note due 2009 of LifePoint Hospitals, Inc. (d)
10.1	Amendment to Computer and Data Processing Services Agreement, dated April 28, 2004, by and between HCA-Information Technology and Services, Inc. and LifePoint Hospitals, Inc.
10.2	Fourth Amendment to Credit Agreement, dated as of June 18, 2004, by and among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent for the lenders, the financial institutions or entities from time to time which are parties to the Credit Agreement as lenders, Bank of America, N.A. and Deutsche Banc Alex. Brown Inc., as co-syndication agents, and Credit Lyonnais New York Branch and SunTrust Bank, as co-documentation agents
31.1	Certification of the Chief Executive Officer of LifePoint Hospitals, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer of LifePoint Hospitals, Inc. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer of LifePoint Hospitals, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer of LifePoint Hospitals, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(a)	Incorporated by reference from the LifePoint Hospitals, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, File Number 0-29818.
(b)	Incorporated by reference from exhibits to the LifePoint Hospitals, Inc. Annual Report on Form 10-K for the year ended December 31, 2003, File No. 000-29818.
(c)	Incorporated by reference from exhibits to the LifePoint Hospitals, Inc. Registration Statement on Form 10 under the Securities Exchange Act of 1934, as amended, File Number 0-29818.
(d)	Incorporated by reference from the exhibits to the LifePoint Hospitals, Inc. Registration Statement on Form S-3 under the Securities Act of 1933, as amended, File Number 333-90536.

EX-10.1

                                                                    Exhibit 10.1

                                  AMENDMENT TO
                 COMPUTER AND DATA PROCESSING SERVICES AGREEMENT

         This Amendment, effective March 1, 2004, amends the Computer and Data
Processing Services Agreement dated May 11, 1999, by and between Columbia
Information Systems, Inc. and LifePoint Hospitals, Inc., a Delaware corporation
("Customer").

                                   WITNESSETH:

         WHEREAS, HCA-Information Technology & Services, Inc. ("IT&S"), a
Tennessee corporation, is the successor-in-interest to Columbia Information
Systems, Inc.; and

         WHEREAS, IT&S and Customer entered into the Agreement, under which IT&S
provides specified computer and data processing services to Customer Facilities;
and

         WHEREAS, IT&S and Customer now desire to amend the Agreement to extend
its term.

         NOW, THEREFORE, pursuant to Section 14 of the Agreement and in
consideration of the premises, the mutual covenants and obligations set forth
herein, and good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, IT&S and Customer agree as follows:

1.       All references in the Agreement to "Columbia Information Systems, Inc."
are replaced with "HCA - Information Technology & Services, Inc." and all
references to "CIS" are replaced with "IT&S".

2.       The definition of "Initial Term" in Section 1(k) is deleted. A new
definition for "Term" is added as follows: "Term means the period beginning on
the effective date of this Agreement as set forth above and ending on December
31, 2009." All references in the Agreement to "Initial Term" are replaced with
"Term".

3.       All references in the Agreement to "Koala" are replaced with "Atlas".

4.       The term of the Agreement is extended through and including December
31, 2009.

5.       Section 1(e) of the Agreement shall be amended by replacing the phrase
"The Medical component" with the phrase "All Items".

6.       Section 1(i) of the Agreement shall be amended by deleting the phrase
"and listed in Exhibit A hereto."



7.       Section 1(l) of the Agreement shall be amended by replacing "Koala
System" with "ATLAS System."

8.       Section 1(o) of the Agreement shall be amended by replacing "Exhibit B"
with "Exhibit A."

9.       Section 1(r) of the Agreement shall be amended by replacing "Exhibit B"
with "Exhibit A."

10.      Section 2(h)(2) of the Agreement shall be amended by replacing the last
sentence with the following:

         In the event that, during the term of this Agreement, Customer acquires
         from a third party, or constructs, a hospital or health care provider
         establishment, such an establishment shall become a Facility and shall
         begin implementation of the System within twelve (12) months of the
         closing of an acquisition transaction or the first date of operation of
         a newly-constructed Facility. Any such new Facility shall be entitled
         to a discount of fifty percent (50%) on Monthly Processing Fees for
         Clinical Systems and Patient Accounting for the first six (6) full
         calendar months after go-live and a discount of twenty-five percent
         (25%) on Monthly Processing Fees for Clinical Systems and Patient
         Accounting for full calendar months seven through twelve after go-live.
         If the go-live occurs other than on the first day of the month, the
         Monthly Processing Fees will be prorated over the number of days
         remaining in the month and the discounts will be applied beginning with
         the first full calendar month after go-live (For example, a Facility
         with a go-live date of May 15 will be charged a prorated license fee
         for May 15-31, without a discount, and then have the fifty percent
         discount referenced above applied in June through November with the
         twenty-five percent discount applied in December through May). The
         parties acknowledge that the following four (4) Facilities shall be
         entitled to the discounts set forth in the preceding sentence: Ville
         Platte Medical Center, Ville Platt, Louisiana; Lander Valley Medical
         Center, Lander, Wyoming; Logan Regional Medical Center, Logan, West
         Virginia; and Spring View Hospital, Lebanon, Kentucky.

11.      Section 3(d) of the Agreement shall be replaced with the following:

         IT&S may, in its sole discretion, migrate to a new System(s) which
         shall be offered to Customer by IT&S at a price to be determined at the
         end of the Customer Account Management implementation pilot by IT&S. If
         the Customer elects not to purchase such System(s), IT&S shall continue
         to support the current system utilized by Customer at prices to be
         determined by IT&S. The Customer shall make such



         election within sixty (60) days after IT&S provides the pricing as set
         forth above. If Customer elects to continue use of the current system
         utilized by Customer, Customer shall begin paying the specified pricing
         on the date the last IT&S customer which is wholly-owned by HCA, Inc.
         (or one of its subsidiary companies) converts to such new System(s).

12.      Section 6(g) of the Agreement shall be amended by replacing the first
sentence with the following:

         IT&S agrees to make its Wide Area Network available to Customer for
         access and use by Facilities.

13.      The last sentence in Section 10(a) of the Agreement shall be replaced
with the following:

         FURTHERMORE, EACH PARTY'S LIABILITY TO THE OTHER FOR ANY OTHER DAMAGES
         CAUSED BY OR RESULTING FROM THE PERFORMANCE OR BREACH OF THIS
         AGREEMENT, WHETHER IN TORT, CONTRACT OR OTHERWISE, SHALL BE LIMITED IN
         EACH CASE TO $100,000 PER FACILITY AND $250,000 IN THE AGGREGATE, WHICH
         SUMS SHALL BE APPLIED AS A CREDIT AGAINST FEES.

14.      Section 11(d) of the Agreement shall be amended by adding the
following:

         In the event IT&S gives notice of its intention not to renew, the
         Wind-Down Period shall be two (2) years from the date IT&S provides
         notice of its intention not to renew. In the event that either party
         gives notice of its intention not to renew, Customer shall have the
         right to immediately begin an orderly de-installation of the Services
         and the Systems and shall receive a concomitant reduction in fees as
         set forth herein; provided, however, that such a de-installation shall
         not otherwise relieve Customer of its obligations stated elsewhere in
         this Agreement.

15.      Section 12(f) of the Agreement shall be amended by replacing "Client
Services" to "Customer Account Management."


16.      Exhibit A shall be replaced with the attached Exhibit A.



17.      Exhibit B shall be replaced with the attached Exhibit B.

18.      Exhibit C shall be amended by deleting the "Internet Website
Development and Services" section.

19.      Exhibit E shall be replaced with the attached Exhibit E.

20.      Exhibits H, H1, H2 and H3 shall be deleted in their entirety.

21.      All terms of the Agreement not specifically altered by this Amendment
remain in full force and effect.  Any capitalized terms not defined in this
Amendment shall have such meanings as are set forth in the Agreement.




         IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their authorized representatives as of the date set forth above.

HCA - INFORMATION TECHNOLOGY            LIFEPOINT HOSPITALS, INC.
& SERVICES, INC.

By: /s/ Noel Williams                   By: /s/ Kenneth C. Donahey
    ------------------------                ---------------------------
Title: President                        Title: Chairman, CEO and President

Date: 4/28/04                           Date: April 28, 2004



                                    EXHIBIT A

                              SOFTWARE/APPLICATIONS

                                CLINICAL SYSTEMS
                 CLINICAL PATIENT CARE SYSTEM (CPCS) including:

Abstracting                    Office Automation
Admissions                     Operating Room
Blood Bank                     Order Entry
Central Scheduling             Patholology
ED Tracker                     Patient Care Inquiry
Education                      Patient Transportation
Laboratory/Microbiology        Pharmacy
Medical Records                Quality Management
Micromedix                     Radiology
Nursing                        SNO-MED

                           PATIENT ACCOUNTING SYSTEMS

Patient Accounting             CPCM Contract Profiler
3M Encoder                     Electronic Processing
Avega Decision Support         IMAG- Information Management
Casemix/CHOIS/ORYX/Comet       Mainframe Logging
Collections                    On-Line Cashiering

                       FINANCIAL REPORTING/COMMUNICATIONS

Atlas                          General Ledger
Budget                         QMIRS
Exchange/Outlook               VISTA
FIS

                                     PAYROLL

Benefits                       Payroll
Human Resources

                                ACCOUNTS PAYABLE

Accounts Payable               SMART

                             CORPORATE OFFICE (ONLY)

Resource Control/Contracting Corporate Tax



Funds Management               Corporate Employment Tax




                                    EXHIBIT B
                            SYSTEM APPLICATION & FEES

FACILITY APPLICATIONS - CHARGED PER FAMILY*:



                                                          MONTHLY FEES
                               -------------------------------------------------------------------
                                                             ACCOUNTS                     PAYROLL/
                               CLINICAL        PATIENT       PAYABLE/      FINANCIAL       HUMAN
                               SYSTEMS       ACCOUNTING       SMART        REPORTING     RESOURCES
                               -------       ----------       -----        ---------     ---------
                                                                          
  Up to 50 Licensed Beds       $10,350         $ 8,800        $1,525         $1,500        $  700
  51 to 75 Licensed Beds       $14,100         $12,050        $2,075         $2,050        $  950
 76 to 100 Licensed Beds       $17,875         $15,250        $2,625         $2,600        $1,225
101 to 125 Licensed Beds       $21,600         $18,450        $3,200         $3,150        $1,475
126 to 150 Licensed Beds       $25,400         $21,675        $3,750         $3,700        $1,725
151 to 175 Licensed Beds       $29,150         $24,900        $4,300         $4,225        $2,000
176 to 200 Licensed Beds       $32,925         $28,100        $4,850         $4,775        $2,250
201 to 225 Licensed Beds       $36,700         $31,300        $5,400         $5,325        $2,500
226 to 250 Licensed Beds       $40,450         $34,525        $5,975         $5,875        $2,750
  Over 250 Licensed Beds                   TO BE NEGOTIATED FOR INDIVIDUAL FACILITIES


                                                        MONTHLY FEE

                        CHARGE PER ESTABLISHED COID     $   150
CORPORATE OFFICE CHARGES:
        BUDGET/RESOURCE CONTROL & CONTRACTING/QMIRS     $ 8,800
                                                TAX     $ 1,250
                                   ACCOUNTS PAYABLE     $ 1,200
                                     GENERAL LEDGER     $ 1,000
                            PAYROLL/HUMAN RESOURCES     $   600
                                   FUNDS MANAGEMENT     $   350
                                                FIS     $   200
                                     EMPLOYMENT TAX     $   200
OTHER SERVICES & SYSTEMS:
                       CENTRAL STATEMENT PROCESSING     $  0.46 Per Statement
                                    STATE REPORTING     $500 Per Submission
                                    COMET 7TH SCOPE     $350 Per Submission
             HARDWARE MAINTENANCE (EXTERNAL VENDOR)     Cost + 5%
                                 DEPOT MAINTENANCE:
                                   3Com Term Server     T & M
                                       Espirit 125C     $12 Per Device Per Year
                                  Falco 5000 Series     $50 Per Device Per Year
                                Wyse 50, 60 and 150     $50 Per Device Per Year
                                TI 810, 880 and 885     $125 Per Device Per Year
                                             TI 830     $75 Per Device Per Year
                                           HP4 Plus     T & M

- -------------------------
*As used in this Exhibit, "Family" means those entities consolidated in Level 6
in the Company Master (the table which consists of all identifying information
that defines each ledger); provided, however, that each acute care hospital with
a separate Clinical System implementation must be in a separate family.



        LAWSON HR/PR                To be determined; provided, however, that
                                    fees will not exceed charges at conversion
                                    plus fifty percent (50%)



                                    EXHIBIT E

Customer's total base APD's and total cost per APD for computing the minimums:

                                       
Total base APD's:                            495,824

Total cost per APD:                       $    17.64
                                          ----------

                                          $8,746,335
                                          ----------

EX-10.2

                                                                    EXHIBIT 10.2

                      FOURTH AMENDMENT TO CREDIT AGREEMENT

         THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated
as of June 18, 2004 by and among LIFEPOINT HOSPITALS HOLDINGS, INC. (the
"Borrower"); the financial institutions which are now, or in accordance with
SECTION 10.6 of the Credit Agreement (hereinafter described) hereafter, parties
to the Credit Agreement hereto by execution of the signature pages to the Credit
Agreement or otherwise (collectively, the "Lenders" and each individually, a
"Lender"); FLEET NATIONAL BANK, as administrative agent ("Administrative
Agent"), for the Lenders (in such capacity as Administrative Agent, together
with its successors and assigns in such capacity, the "Agent"); CREDIT LYONNAIS
NEW YORK BRANCH and SUNTRUST BANK, as co-documentation agents (in such capacity,
together with their successors and assigns in such capacity, the "Documentation
Agents"); and DEUTSCHE BANK ALEX. BROWN INC. and BANK OF AMERICA, N.A., as
co-syndication agents (in such capacity, together with their successors and
assigns in such capacity, the "Syndication Agents").

                                    RECITALS

         A.       The Borrower, the Lenders, the Agent, the Syndication Agents
and the Documentation Agents are parties to an Amended and Restated Credit
Agreement dated as of June 19, 2001, as amended pursuant to that certain letter
agreement dated as of April 2, 2002, the First Amendment to Credit Agreement
dated as of April 30, 2002, that certain letter agreement dated as of May 16,
2002, the Second Amendment to Credit Agreement dated as of October 1, 2002, the
Third Amendment to Credit Agreement dated as of December 30, 2002, and that
certain letter agreement dated as of November 20, 2003 (as so amended, the
"Credit Agreement"). Capitalized terms used herein without definition have the
meanings assigned to them in the Credit Agreement.

         B.       The Borrower has requested that the Credit Agreement be
amended to permit the prepayment or redemption of certain Subordinated Debt.

         C.       The Lenders signing below are willing to consent to such
amendment on the terms and conditions hereinafter set forth.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

I.       AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction of each of
the conditions set forth herein, the Credit Agreement is hereby amended as
follows:

         A.       Definitions. Section 1.1 of the Credit Agreement is amended as
follows:

                  1.       By inserting the following new definition in
         alphabetical order:



                           "Convertible Subordinated Notes": the $250,000,000 in
                  4.50% Convertible Subordinated Notes due June 1, 2009 issued
                  by LifePoint Parent on or about May 22, 2002.

                  2.       By amending and restating the definition of
         "Subordinated Debt" as follows:

                           "Subordinated Debt": the High Yield Offering, the
                  Convertible Subordinated Notes, and any other Indebtedness of
                  Borrower or any of its Subsidiaries subordinated on terms
                  satisfactory to the Administrative Agent and the Required
                  Lenders pursuant to written agreements in form and substance
                  satisfactory to the Administrative Agent.

         B.       Restricted Payments. Section 7.6 of the Credit Agreement is
hereby amended by deleting the period at the end of subparagraph (j) thereof,
adding the character and word "; and" after such subparagraph (j), and adding
the following subparagraph (k) thereafter:

                  "(k)     Borrower shall be permitted to prepay, redeem,
         defease, repurchase or otherwise acquire up to an aggregate amount of
         $150,000,000 of its Convertible Subordinated Notes, unless on the date
         of any such proposed prepayment, redemption, defeasance, repurchase or
         other acquisition (or, if earlier, on the date Borrower becomes
         obligated to consummate such transaction) or after giving effect
         thereto, an Event of Default shall have occurred and be continuing."

         C.       No Further Amendments. Except as specifically amended hereby,
the text of the Credit Agreement and all other Loan Documents shall remain
unchanged and in full force and effect.

II.      REFERENCES IN SECURITY DOCUMENTS; CONFIRMATION OF SECURITY. All
references to the "Credit Agreement" in all Security Documents, and in any other
Loan Documents shall, from and after the date hereof, refer to the Credit
Agreement, as amended by this Amendment, and all obligations of the Loan Parties
under the Loan Documents shall be secured by and be entitled to the benefits of
said Security Documents and such other Loan Documents. All Security Documents
heretofore executed by any of the Loan Parties shall remain in full force and
effect and, by the Borrower's signature hereto and each other Loan Party's
consent hereto, such Security Documents are hereby ratified and affirmed.

III.     REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER. The Borrower
hereby represents and warrants to, and covenants and agrees with, the Lenders
that:

         A.       The execution and delivery of this Amendment have been duly
authorized by all requisite company action on the part of the Borrower.

         B.       The representations and warranties of each of the Loan Parties
contained in the Credit Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of this Amendment as
though made at and as of such date. Since the Closing

                                     - 2 -



Date, no event or circumstance has occurred or existed which could reasonably be
expected to have a Material Adverse Effect. As of the date hereof and after
giving effect to this Amendment, no Default has occurred and is continuing.

         C.       No Loan Party is required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
governmental instrumentality or other agency or any other person or entity in
connection with or as a condition to the execution, delivery or performance of
this Amendment.

         D.       This Amendment constitutes the legal, valid and binding
obligation of each Loan Party signatory hereto, enforceable against it in
accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights and remedies of
creditors generally or the application of principles of equity, whether in any
action at law or proceeding in equity, and subject to the availability of the
remedy of specific performance or of any other equitable remedy or relief to
enforce any right thereunder.

         E.       The Borrower will satisfy all of the conditions set forth in
SECTION IV.

IV.      CONDITIONS. The willingness of the Agent and the Lenders to amend the
Credit Agreement as provided above is subject to the following conditions
precedent and subsequent:

         A.       The Borrower shall have executed and delivered to the Agent
(or shall have caused to be executed and delivered to the Agent by the
appropriate persons) the following:

                  1.       On or before the date hereof:

                           (a) This Amendment;

                           (b) The Consent and Confirmation of Security of
                  Parent and the Consent and Confirmation of Security of
                  Subsidiaries attached hereto; and

                           (c) True and complete copies of any required
                  stockholders' and/or directors' consents and/or resolutions,
                  authorizing the execution and delivery of this Amendment,
                  certified by the Secretary of the Borrower.

                  2.       Such other supporting documents and certificates as
         the Agent or its counsel may reasonably request within the time
         period(s) reasonably designated by the Agent or its counsel.

         B.       All legal matters incident to the transactions hereby
contemplated shall be reasonably satisfactory to the Agent's counsel.

V.       MISCELLANEOUS.

         A.       As provided in the Credit Agreement, the Borrower agrees to
reimburse the Agent upon demand for all reasonable fees and disbursements of
counsel to the Agent incurred in connection with the preparation of this
Amendment.

                                     - 3 -



         B.       This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.

         C.       This Amendment may be executed by the parties hereto in
several counterparts hereof and by the different parties hereto on separate
counterparts hereof, all of which counterparts shall together constitute one and
the same agreement. Delivery of an executed signature page of this Amendment by
facsimile transmission shall be effective as an in-hand delivery of an original
executed counterpart hereof.

                    [The next pages are the signature pages.]

                                     - 4 -



         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as a sealed instrument by their duly authorized representatives,
all as of the day and year first above written.

                                   LIFEPOINT HOSPITALS HOLDINGS, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   FLEET NATIONAL BANK,
                                   as Administrative Agent and a Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   BANK OF AMERICA, N.A.,
                                   as Co-Syndication Agent and a Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   DEUTSCHE BANK SECURITIES INC.,
                                   as Co-Syndication Agent

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   CREDIT LYONNAIS NEW YORK BRANCH,
                                   as Co-Documentation Agent and a Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                             (signatures continued)

                                              Signature Page to Fourth Amendment



                                   SUNTRUST BANK,
                                   as Co-Documentation Agent and a Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   DEUTSCHE BANK TRUST COMPANY AMERICAS,
                                   as a Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   CREDIT SUISSE FIRST BOSTON,
                                   as a Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   U.S. BANK NATIONAL
                                   ASSOCIATION, as a Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                             (signatures continued)

                                              Signature Page to Fourth Amendment



                                   NATIONAL CITY BANK OF KENTUCKY,
                                   as a Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   MERRILL LYNCH CAPITAL CORPORATION, as a
                                   Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   GENERAL ELECTRIC CAPITAL CORPORATION, as a
                                   Lender

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                              Signature Page to Fourth Amendment



                 CONSENT AND CONFIRMATION OF SECURITY OF PARENT

         The undersigned, LIFEPOINT HOSPITALS, INC., which owns all of the
issued and outstanding equity interests in the Borrower, hereby joins in the
execution of the foregoing Fourth Amendment to Credit Agreement dated as of June
18, 2004 (the "Amendment") to which this Consent is attached (1) to confirm its
consent to all of the transactions contemplated by the Amendment, and (2) to
confirm and ratify its Amended and Restated Guarantee Agreement and Security
Agreement entered into as required under such Credit Agreement and dated as of
June 19, 2001 in favor of the Agent and the Lenders which remains in full force
and effect.

                                   LIFEPOINT HOSPITALS, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________



              CONSENT AND CONFIRMATION OF SECURITY OF SUBSIDIARIES

         Each of the undersigned Subsidiaries of the Borrower hereby joins in
the execution of the foregoing Fourth Amendment to Credit Agreement dated as of
June 18, 2004 (the "Amendment") to which this Consent and Confirmation of
Security of Subsidiaries is attached (1) to confirm its consent, to the extent
required, to all of the transactions contemplated by the Amendment, and (2) to
confirm and ratify, as applicable, its Amended and Restated Guarantee and
Security Agreement entered into as required under such Credit Agreement and
dated as of June 19, 2001 with the Agent, on behalf of the Lenders, or its
Guarantee and Pledge Agreement entered into under such Credit Agreement and
dated as of July 30, 2001, each of which remain in full force and effect with
respect to all of the Borrower Obligations and Grantor Obligations (as defined
therein).

                                           AMERICA GROUP OFFICES, LLC
                                           AMERICA MANAGEMENT COMPANIES, LLC
                                           AMG-CROCKETT, LLC
                                           AMG-HILCREST, LLC
                                           AMG-HILLSIDE, LLC
                                           AMG-LIVINGSTON, LLC
                                           AMG-LOGAN, LLC
                                           AMG-SOUTHERN TENNESSEE, LLC
                                           AMG-TRINITY, LLC
                                           ASHLEY VALLEY MEDICAL CENTER, LLC
                                           ASHLEY VALLEY PHYSICIAN PRACTICE, LLC
                                           ATHENS PHYSICIAN PRACTICE, LLC
                                           ATHENS REGIONAL MEDICAL CENTER, LLC
                                           BARROW MEDICAL CENTER, LLC
                                           BARTOW GENERAL PARTNER, LLC
                                           BARTOW HEALTHCARE SYSTEM LTD
                                           BARTOW MEMORIAL LIMITED PARTNER, LLC
                                           BOURBON COMMUNITY HOSPITAL, LLC
                                           BOURBON PHYSICIAN PRACTICE, LLC
                                           BUFFALO TRACE RADIATION ONCOLOGY
                                              ASSOCIATES, LLC
                                           BURDICK WEST PHYSICIAN PRACTICE, LLC
                                           CASTLEVIEW HOSPITAL, LLC
                                           CASTLEVIEW MEDICAL, LLC
                                           CASTLEVIEW PHYSICIAN PRACTICE, LLC
                                           COMMUNITY HOSPITAL OF ANDALUSIA, INC.
                                           COMMUNITY MEDICAL, LLC
                                           CROCKETT HOSPITAL, LLC
                                           CROCKETT PHO, LLC
                                           DODGE CITY HEALTHCARE GROUP, L.P.
                                           DODGE CITY HEALTHCARE PARTNER, INC.

                             (signatures continued)



                                        GEORGETOWN COMMUNITY HOSPITAL, LLC
                                        GEORGETOWN REHABILITATION, LLC
                                        GUYAN VALLEY HOSPITAL, LLC
                                        HALSTEAD HOSPITAL, LLC
                                        HCK LOGAN MEMORIAL, LLC
                                        HDP ANDALUSIA, LLC
                                        HDP GEORGETOWN, LLC
                                        HILLSIDE HOSPITAL, LLC
                                        HST PHYSICIAN PRACTICE, LLC
                                        HTI GEORGETOWN, LLC
                                        HTI PINELAKE, LLC
                                        INTEGRATED PHYSICIAN SERVICES, LLC
                                        KANSAS HEALTHCARE MANAGEMENT
                                          COMPANY, INC.
                                        KANSAS HEALTHCARE MANAGEMENT
                                           SERVICES, LLC
                                        KENTUCKY HOSPITAL, LLC
                                        KENTUCKY MEDSERV, LLC
                                        KENTUCKY MSO, LLC
                                        KENTUCKY PHYSICIANS SERVICES, INC.
                                        LAKE CUMBERLAND REGIONAL HOSPITAL,
                                           LLC
                                        LAKE CUMBERLAND REGIONAL PHYSICIAN
                                           HOSPITAL ORGANIZATION, LLC
                                        LAKELAND COMMUNITY HOSPITAL, LLC
                                        LANDER VALLEY MEDICAL CENTER, LLC
                                        LANDER VALLEY PHYSICIAN PRACTICE, LLC
                                        LHSC, LLC
                                        LIFEPOINT ASSET MANAGEMENT COMPANY, INC.
                                        LIFEPOINT CORPORATE SERVICES, GENERAL
                                           PARTNERSHIP
                                        LIFEPOINT CSGP, LLC
                                        LIFEPOINT CSLP, LLC
                                        LIFEPOINT HOLDINGS 2, LLC
                                        LIFEPOINT HOLDINGS 3, INC.
                                        LIFEPOINT OF GAGP, LLC
                                        LIFEPOINT OF GEORGIA, LIMITED
                                           PARTNERSHIP
                                        LIFEPOINT OF KENTUCKY, LLC
                                        LIFEPOINT OF LAKE CUMBERLAND, LLC
                                        LIFEPOINT MEDICAL GROUP-HILLSIDE, INC.
                                        LIFEPOINT RC, INC.
                                        LIVINGSTON REGIONAL HOSPITAL, LLC
                                        LOGAN GENERAL HOSPITAL, LLC

                             (signatures continued)



                                        LOGAN HEALTHCARE PARTNER, LLC
                                        LOGAN MEDICAL, LLC
                                        LOGAN MEMORIAL HOSPITAL, LLC
                                        LOGAN PHYSICIAN PRACTICE, LLC
                                        MEADOWVIEW PHYSICIAN PRACTICE, LLC
                                        MEADOWVIEW REGIONAL MEDICAL CENTER, LLC
                                        MEADOWVIEW RIGHTS, LLC
                                        NORTHWEST MEDICAL CENTER-WINFIELD, LLC
                                        NWMC-WINFIELD PHYSICIAN PRACTICE, LLC
                                        PINELAKE PHYSICIAN PRACTICE, LLC
                                        PINELAKE REGIONAL HOSPITAL, LLC
                                        POITRAS PRACTICE, LLC
                                        PUTNAM COMMUNITY MEDICAL CENTER, LLC
                                        R. KENDALL BROWN PRACTICE, LLC
                                        RIVERTON MEMORIAL HOSPITAL, LLC
                                        RIVERTON PHYSICIAN PRACTICES, LLC
                                        RIVERVIEW MEDICAL CENTER, LLC
                                        RUSSELLVILLE HOSPITAL, LLC
                                        RUSSELLVILLE PHYSICIAN PRACTICES, LLC
                                        SELECT HEALTHCARE, LLC
                                        SILETCHNIK PRACTICE, LLC
                                        SMITH COUNTY MEMORIAL HOSPITAL, LLC
                                        SOMERSET SURGERY PARTNER, LLC
                                        SOUTHERN TENNESSEE EMS, LLC
                                        SOUTHERN TENNESSEE MEDICAL CENTER, LLC
                                        SOUTHERN TENNESSEE PHO, LLC
                                        SPRINGHILL MEDICAL CENTER, LLC
                                        SPRINGHILL MOB, LLC
                                        SPRINGHILL PHYSICIAN PRACTICE LLC
                                        SPRING VIEW HOSPITAL, LLC
                                        THM PHYSICIAN PRACTICE, LLC
                                        VILLE PLATTE MEDICAL CENTER, LLC
                                        WEST VIRGINIA PHYSICIAN PRACTICE, LLC
                                        WESTERN PLAINS REGIONAL HOSPITAL, LLC
                                        WOODFORD HOSPITAL, LLC
                                        WYOMING HOLDINGS, LLC


                                   By: _________________________________________
                                        Name: __________________________________
                                        Title: _________________________________
                                        (duly authorized signatory as to all)

EX-31.1

                                                                    EXHIBIT 31.1

                            LIFEPOINT HOSPITALS, INC.

                                  CERTIFICATION

I, Kenneth C. Donahey, certify that:

         1. I have reviewed this quarterly report on Form 10-Q of LifePoint
Hospitals, 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)) for the registrant and 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) 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

                  c) 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 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 (or persons performing the equivalent
functions):

                  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.

Date: July 27, 2004

                                                  /s/ Kenneth C. Donahey
                                                  ----------------------

                                                       Kenneth C. Donahey
                                                       Chairman, Chief Executive
                                                       Officer and President

EX-31.2

                                                                    EXHIBIT 31.2

                            LIFEPOINT HOSPITALS, INC.

                                  CERTIFICATION

I, Michael J. Culotta, certify that:

         1. I have reviewed this quarterly report on Form 10-Q of LifePoint
Hospitals, 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)) for the registrant and 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) 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

                  c) 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 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 (or persons performing the equivalent
functions):

                  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.

Date: July 27, 2004

                                                   /s/  Michael J. Culotta
                                                   ----------------------

                                                        Michael J. Culotta
                                                        Chief Financial Officer

EX-32.1

                                                                    EXHIBIT 32.1

                            LIFEPOINT HOSPITALS, INC.

                            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 Report of LifePoint Hospitals, Inc. (the "Company") on
Form 10-Q for the quarter ended June 30, 2004, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Kenneth C. Donahey,
Chairman, Chief Executive Officer and President of the Company, certify,
pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 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) Information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

Date: July 27, 2004

                                              /s/  Kenneth C. Donahey
                                              -----------------------
                                                   Kenneth C. Donahey
                                                   Chairman, Chief Executive
                                                   Officer and President

EX-32.2

                                                                    EXHIBIT 32.2

                            LIFEPOINT HOSPITALS, INC.

                            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 Report of LifePoint Hospitals, Inc. (the "Company") on
Form 10-Q for the quarter ended June 30, 2004, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Michael J. Culotta,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec.
1350, as adopted pursuant to Sec. 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) Information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

Date: July 27, 2004

                                                     /s/ Michael J. Culotta
                                                     --------------------------
                                                         Michael J. Culotta
                                                         Chief Financial Officer