10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

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

For the fiscal year ended December 31, 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 (State or Other Jurisdiction of Incorporation or Organization)	52-2165845 (I.R.S. Employer Identification No.)
103 Powell Court, Suite 200 Brentwood, Tennessee (Address Of Principal Executive Offices)	37027 (Zip Code)

(615) 372-8500
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share
(Title of Class) Preferred Stock Purchase Rights
(Title of Class)

     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 þ No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ No o

     The aggregate market value of the shares of Common Stock of LifePoint Hospitals, Inc. held by non-affiliates as of June 30, 2004, was approximately $1.2 billion.

     As of February 16, 2005, the number of outstanding shares of Common Stock of LifePoint Hospitals, Inc. was 39,142,535.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive proxy statement for our 2005 annual meeting of stockholders are incorporated by reference into Part III of this report.

TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings.
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures about Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
	Item 9A. Controls and Procedures
	Item 9B. Other Information
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
	Item 14. Principal Accounting Fees and Services
PART IV
	Item 15. Exhibits, Financial Statement Schedules
SIGNATURES
Exhibit Index
EX-10.24 LETTER DATED 12/18/03
EX-10.25 LETTER DATED 3/3/04
EX-10.30 EMPLOYMENT AGREEMENT OF KENNETH C. DONAHEY
EX-10.33 COMPREHENSIVE SERVICE AGREEMENT
EX-21.1 LIST OF SUBSIDIARIES
EX-23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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

Item 1. Business.

General

     LifePoint Hospitals, Inc. is a holding company. Its subsidiaries and affiliates own, lease and operate their respective facilities and other assets. Unless the context otherwise indicates, references in this report to “LifePoint,” the “Company,” “we,” “our” or “us” are references to LifePoint Hospitals, Inc., and/or its wholly-owned and majority-owned subsidiaries, including Lakers Holding Corp., which will be renamed LifePoint Hospitals, Inc. upon the consummation of the proposed transaction with Province Healthcare Company (described below). Any reference herein to our hospitals, facilities or employees refers to the hospitals, facilities or employees of subsidiaries or affiliates of LifePoint Hospitals, Inc.

     We were formed as a division of HCA Inc. (“HCA”) in November 1997 to operate general acute care hospitals in non-urban communities. We became an independent, publicly traded company on May 11, 1999 when HCA distributed all outstanding shares of our common stock to its stockholders.

     We operate 30 general acute care hospitals with an aggregate of 2,744 licensed beds in non-urban communities. In all but one of our communities, we are the only provider of acute care hospital services. Our hospitals are located in Alabama, Florida, Kansas, Kentucky, Louisiana, Tennessee, Utah, West Virginia and Wyoming. We generated $996.9 million in revenues from continuing operations during 2004.

     We announced on August 16, 2004 that we entered into a definitive agreement to acquire Province Healthcare Company (“Province”) for approximately $1.7 billion in cash, stock and the assumption of debt. Province is a healthcare services company focused on operating acute care hospitals located in non-urban markets throughout the United States. As of December 31, 2004, Province owned or leased 21 general acute care hospitals in 13 states, with a total of approximately 2,533 licensed beds. Province generated $882.9 million in revenues from continuing operations during 2004. Province’s objective has been to be the primary provider of quality healthcare services in the selected non-urban communities that it serves. If consummated, the proposed Province transaction will create a hospital company focused on providing healthcare services in non-urban communities, with 51 hospitals, of which 48 are located in markets where the combined company will be the sole hospital provider in the community. The transaction is expected to close in the first half of 2005.

     Our website is www.lifepointhospitals.com. We make available free of charge on this website under “Investor Relations — SEC Filings” our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the United States Securities and Exchange Commission (“SEC”).

The Non-Urban Healthcare Market

     We believe that non-urban healthcare markets are attractive because of the following factors:

•   Less Competition. Non-urban communities have smaller populations with fewer hospitals and other healthcare service providers. We believe that the smaller populations and relative significance of the hospitals in these markets may lessen the likelihood of the entry of other hospitals or alternate non-hospital providers, including outpatient surgery centers, rehabilitation centers and diagnostic imaging centers.

•   Community Focus. We believe that non-urban areas generally view the local hospital as an integral part of the community. Therefore, we believe patients and physicians tend to be more loyal to the hospital.

•   Acquisition Opportunities. Currently, not-for-profit and governmental entities own most non-urban hospitals. These entities often have limited access to the capital needed to keep pace with advances in medical technology. In addition, these entities sometimes lack the management resources necessary to control hospital expenses, recruit and retain physicians, expand healthcare services and comply with increasingly complex reimbursement and managed care requirements. As a result, patients may migrate to,

may be referred by local physicians to, or may be encouraged by managed care plans to travel to, hospitals in larger, urban markets. We believe that, as a result of these pressures, many not-for-profit and governmental owners of non-urban hospitals who wish to preserve the local availability of quality healthcare services are interested in selling or leasing these hospitals to companies, like ours, that are committed to the local delivery of healthcare and that have greater access to capital and management resources. Of the twelve hospitals that we have acquired since our spin-off from HCA in 1999, eight were acquired from either not-for-profit or governmental entities.

Operating Philosophy

     We are committed to operating general, acute care hospitals in growing, non-urban markets. As a result, we adhere to an operating philosophy that is focused on the unique patient and provider needs and opportunities in these communities. This philosophy includes a commitment to:

•   improving and increasing the scope of available healthcare services;

•   providing physicians a positive environment in which to practice medicine, with access to necessary equipment, office space and resources;

•   providing an outstanding work environment for employees;

•   recognizing and expanding the hospital’s role as a community asset; and

•   continuing to improve each hospital’s financial performance.

Business Strategy

     We manage our hospitals in accordance with our operating philosophy and have developed the following strategies tailored for each of our markets:

•   Expand Breadth of Services and Attract Community Patients. We strive to increase revenues by improving and broadening the scope of healthcare services available at our facilities, and to recruit physicians with a broader range of specialties. We believe that our expansion of available treatments and our community focus will encourage residents in the non-urban markets we serve to seek care locally at our facilities rather than at facilities outside the area. We have undertaken projects in a majority of our hospitals that are targeted at expanding specialty services. Capital expenditures related to these projects for continuing operations are as follows (dollars in millions):

	Number
	Of
	Projects in
	Years
Expansion or Renovation Project	Presented		2000		2001		2002		2003		2004
Operating room expansions		11	$	6.4	$	11.9	$	10.2	$	8.4	$	0.7
MRI additions		17		3.0		4.1		8.5		4.9		3.0
CT scanner additions		10		0.6		3.6		0.6		—		2.1
Emergency room expansions		5		1.7		0.7		0.5		3.3		7.5
Rehabilitation additions		7		—		0.5		2.8		1.7		2.3
Cardiac catheterization lab additions		5		—		—		3.1		2.0		—
Patient room additions		2		—		—		1.4		7.2		9.3
Medical office building additions		12		—		1.2		4.7		6.2		4.0
Miscellaneous expansions		11		0.1		0.5		5.6		8.8		22.1

•   Strengthen Physician Recruiting and Retention. We believe that recruiting physicians in local communities is critical to increasing the quality of healthcare and the breadth of available services at our facilities. Our physician

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	recruitment program is currently focused on recruiting additional specialty care physicians and primary care physicians. Our management is focused on working more effectively with individual physicians and physician practices. We believe that expansion of the range of available treatments at our hospitals should also assist in physician recruiting and contribute to the sense that our hospitals are community assets.
•	Improve Expense Management. We seek to control costs by, among other things, attempting to improve labor productivity and decrease the use of contract labor, controlling supply expenses through the use of a group purchasing organization, controlling professional and general liability insurance expenses through the utilization of risk management and quality care programs, and reducing uncollectible revenues. We have implemented cost control initiatives that include appropriately adjusting staffing levels according to patient volumes, modifying supply purchases according to usage patterns and providing support to hospital staff in more efficient billing and collection processes. We believe that as our company grows, we should benefit from our ability to spread fixed administrative costs over a larger base of operations.
•	Retain and Develop Stable Management. We seek to retain the executive teams at our hospitals to enhance medical staff relations and maintain continuity of relationships within the community. We focus our recruitment of managers on those who wish to live and practice in the communities in which our hospitals are located and we allow our hospital managers to participate in our stock incentive plans.
•	Improve Managed Care Position. We continue to strive to improve our revenues from managed care plans by negotiating facility-specific contracts with these payors on terms appropriate for smaller, non-urban markets.
•	Acquire Other Hospitals. We continue to pursue a disciplined acquisition strategy and seek to identify and acquire hospitals in non-urban markets that are the sole or significant market provider of healthcare services in the community. By implementing our operating strategies, we believe that we may attract many of the patients in these markets that historically have sought care elsewhere.

     We believe that our strategic goals align our interests with those of the local communities served by our hospitals. We believe that the following qualities enable us to successfully compete for acquisitions:

•   our commitment to maintaining the local availability of healthcare services;

•   our reputation for providing market-specific, broader-based healthcare;

•   our focus on physician recruiting and retention;

•   our management’s operating experience;

•   our access to financing and our liquidity; and

•   our ability to provide the necessary equipment and resources for physicians.

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     Since our inception in 1999, we have acquired the following twelve hospitals (dollars in millions):

			Purchase		Licensed Beds at
Hospital Name	Acquisition Date	Location	Price (a)		Acquisition Date
River Parishes Hospital	July 1, 2004	LaPlace, LA	$	24.0	106
Spring View Hospital (b)	October 1, 2003	Lebanon, KY		16.1	113
Logan Regional Medical Center (b)	December 1, 2002	Logan, WV		87.5	151
and Guyan Valley Hospital (b)
Lakeland Community Hospital (b)	December 1, 2002	Haleyville, AL		22.1	170
and Northwest Medical Center (b)		and Winfield, AL
Russellville Hospital (b)	October 3, 2002	Russellville, AL		19.8	100
Ville Platte Medical Center (b)	December 1, 2001	Ville Platte, LA		11.1	116
Athens Regional Medical Center	October 1, 2001	Athens, TN		17.0	118
Bluegrass Community Hospital (b), (c)	January 2, 2001	Versailles, KY		3.0	25
Lander Valley Medical Center	July 1, 2000	Lander, WY		29.8	102
Putnam Community Medical Center	June 16, 2000	Palatka, FL		43.5	141

(a)	Excluding working capital.
(b)	Previously owned by a not-for-profit or governmental entity.
(c)	Initially an operating lease; we exercised our option to purchase Bluegrass Community Hospital for $3.2 million in January 2005.

Operations

     Our general, acute care hospitals usually provide the range of medical and surgical services commonly available in hospitals in non-urban markets. Services provided by our hospitals also include diagnostic and emergency services, as well as outpatient and ancillary services including outpatient surgery, laboratory, radiology, respiratory therapy and physical therapy.

     Each of our hospitals has a local board of trustees that includes members of the hospital’s medical staff as well as community leaders. The board establishes policies concerning medical, professional and ethical practices, monitors these practices, and is responsible for ensuring that these practices conform to established standards. We maintain quality assurance programs to support and monitor quality of care standards and to meet accreditation and regulatory requirements. We also monitor patient care evaluations and other quality of care assessment activities on a regular basis.

     Like most hospitals located in non-urban areas, our hospitals do not engage in extensive medical research and medical education programs. However, ten of our hospitals have an affiliation with medical schools, including the clinical rotation of medical students.

     In addition to providing access to capital resources, we make available a variety of management services to our healthcare facilities. These services include, among other things:

•   information and clinical systems;

•   accounting, financial, tax, managed care and reimbursement support;

•   legal support;

•   human resources support;

•   risk management;

•   corporate compliance;

•   clinical support;

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•   physician recruiting;

•   education and training;

•   HIPAA compliance;

•   construction oversight and management;

•   internal auditing; and

•   materials management.

     We participate along with other healthcare companies in a group purchasing organization, HealthTrust Purchasing Group, which makes certain national supply and equipment contracts available to our facilities. We own approximately a 2% equity interest in this group purchasing organization.

Properties

     The following table lists the hospitals we operated as of December 31, 2004:

					Acquisition Date/
Hospital Name	City	State	Licensed Beds		Lease Inception	Own/Lease
Andalusia Regional Hospital	Andalusia	AL		113	HCA Spin-off	Own
Lakeland Community Hospital	Haleyville	AL		50	12/1/2002	Own
Russellville Hospital	Russellville	AL		100	10/3/2002	Own
Northwest Medical Center (a)	Winfield	AL		71	12/1/2002	Own
Bartow Memorial Hospital (b)	Bartow	FL		56	HCA Spin-off	Own
Putnam Community Medical Center	Palatka	FL		141	6/16/2000	Own
Western Plains Regional Hospital	Dodge City	KS		110	HCA Spin-off	Own
Georgetown Community Hospital	Georgetown	KY		75	HCA Spin-off	Own
Spring View Hospital	Lebanon	KY		75	10/1/2003	Own
Jackson Purchase Medical Center	Mayfield	KY		107	HCA Spin-off	Own
Meadowview Regional Medical Center	Maysville	KY		101	HCA Spin-off	Own
Bourbon Community Hospital	Paris	KY		58	HCA Spin-off	Own
Logan Memorial Hospital	Russellville	KY		92	HCA Spin-off	Own
Lake Cumberland Regional Hospital	Somerset	KY		234	HCA Spin-off	Own
Bluegrass Community Hospital (c), (d)	Versailles	KY		25	1/2/2001	Lease
River Parishes Hospital	LaPlace	LA		106	7/1/2004	Own
Ville Platte Medical Center	Ville Platte	LA		102	12/1/2001	Own
Athens Regional Medical Center	Athens	TN		118	10/1/2001	Own
Smith County Memorial Hospital	Carthage	TN		63	HCA Spin-off	Own
Crockett Hospital	Lawrenceburg	TN		107	HCA Spin-off	Own
Livingston Regional Hospital	Livingston	TN		114	HCA Spin-off	Own
Hillside Hospital	Pulaski	TN		95	HCA Spin-off	Own
Emerald-Hodgson Hospital (e)	Sewanee	TN		41	HCA Spin-off	Own
Southern Tennessee Medical Center	Winchester	TN		157	HCA Spin-off	Own
Castleview Hospital	Price	UT		84	HCA Spin-off	Own
Ashley Valley Medical Center	Vernal	UT		39	HCA Spin-off	Own
Logan Regional Medical Center	Logan	WV		132	12/1/2002	Own
Guyan Valley Hospital (d)	Logan	WV		19	12/1/2002	Own
Lander Valley Medical Center (f)	Lander	WY		89	7/1/2000	Own
Riverton Memorial Hospital	Riverton	WY		70	HCA Spin-off	Own
				2,744

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(a)	We lease certain real estate associated with Northwest Medical Center from The Medical Clinic Board of the City of Winfield pursuant to a ground lease that expires on June 30, 2041.
(b)	During 2004, we committed to divest Bartow Memorial Hospital (“Bartow”) and expect to sell this facility during 2005. The operations of Bartow have been reflected as discontinued operations, as further discussed in Note 3 to our consolidated financial statements included in this report.
(c)	We exercised our option to purchase Bluegrass Community Hospital for $3.2 million in January 2005. We previously leased Bluegrass Community Hospital from Woodford Healthcare, Inc., a Kentucky not-for-profit corporation, pursuant to a lease agreement.
(d)	Critical-access hospital.
(e)	We lease the real estate associated with Emerald-Hodgson Hospital from the University of the South pursuant to a lease agreement that expires on May 7, 2020.
(f)	We lease the real estate associated with Lander Valley Medical Center from the City of Lander, Wyoming pursuant to a ground lease that expires on December 31, 2073.

     We operate medical office buildings in conjunction with many of our hospitals. These office buildings are primarily occupied by physicians who practice at our hospitals.

     Our corporate headquarters are located in approximately 41,900 square feet of leased space in one office building in Brentwood, Tennessee. Our corporate headquarters, hospitals and other facilities are suitable for their respective uses and are, in general, adequate for our present needs. Our obligations under our bank credit facility are secured by a pledge of substantially all of our assets, including first priority mortgages on most of our hospitals.

     The following are brief narratives of each of our hospitals, describing their location relative to the nearest urban area and nearest competitors.

     Andalusia Regional Hospital is located approximately 90 miles south of Montgomery, Alabama. Its nearest competitors are Mizell Memorial Hospital, which is located approximately 14 miles away and Florala Memorial Hospital, which is located approximately 23 miles away.

     Lakeland Community Hospital is located approximately 80 miles northwest of Birmingham, Alabama. Lakeland Community Hospital is located approximately 20 miles away from our own Russellville Hospital. Its nearest competitor is Marion Regional Medical Center, which is located approximately 24 miles away.

     Russellville Hospital is located approximately 100 miles northwest of Birmingham, Alabama. Its nearest competitor is Shoals Hospital, which is located approximately 16 miles away.

     Northwest Medical Center is located approximately 75 miles northwest of Birmingham, Alabama. Its nearest competitors are Fayette Medical Center, which is located approximately 15 miles away, and Marion Regional Medical Center, which is located approximately 17 miles away.

     Bartow Memorial Hospital, which we are expecting to sell during 2005, is located approximately 50 miles east of Tampa and approximately 60 miles southwest of Orlando. Its two nearest competitors are Winter Haven Hospital, which is located approximately 10 miles away, and Lakeland Regional Medical Center, which is located approximately 12 miles away.

     Putnam Community Medical Center is located approximately 45 miles southeast of Gainesville, Florida and 65 miles south of Jacksonville, Florida. Its nearest competitor is Flagler Hospital, which is located approximately 30 miles away.

     Western Plains Regional Hospital is located approximately 150 miles west of Wichita, Kansas. Its nearest competitor is Minneola District Hospital, which is located approximately 25 miles away.

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     Georgetown Community Hospital is located approximately 11 miles northwest of Lexington, Kentucky. Georgetown Community Hospital is 13 miles from our own Bourbon Community Hospital. Its nearest competitor is Eastern State Hospital, which is located approximately 10 miles away.

     Spring View Hospital, acquired by us in October 2003, is located approximately 65 miles southwest of Lexington, Kentucky. Its two nearest competitors are Taylor County Hospital, which is located approximately 15 miles away, and Flaget Memorial Hospital, which is located approximately 20 miles away.

     Jackson Purchase Medical Center (“JPMC”) is located approximately 150 miles northwest of Nashville, Tennessee. JPMC’s nearest competitors are Lourdes Hospital and Western Baptist Hospital, both of which are located approximately 20 miles away, and Murray-Calloway County Hospital, which is located approximately 25 miles away.

     Meadowview Regional Medical Center is located approximately 64 miles southeast of Cincinnati, Ohio. Its nearest competitors include Fleming County Hospital, which is located approximately 15 miles away, and Brown County General Hospital, which is located approximately 16 miles away.

     Bourbon Community Hospital is located approximately 20 miles northeast of Lexington, Kentucky. Its nearest competitor is Saint Joseph Hospital, which is located approximately 20 miles away.

     Logan Memorial Hospital is located approximately 50 miles north of Nashville, Tennessee. Its nearest competitors are Greenview Regional Hospital and The Medical Center at Bowling Green, which are both located approximately 30 miles away.

     Lake Cumberland Regional Hospital is located approximately 80 miles south of Lexington, Kentucky. Its nearest competitor is Wayne County Hospital, which is located approximately 23 miles away.

     Bluegrass Community Hospital (“Bluegrass”) is located approximately 13 miles west of Lexington, Kentucky. Bluegrass is located approximately 13 miles from our own Georgetown Community Hospital. Its nearest competitor is Saint Joseph Hospital, which is located approximately 11 miles away.

     River Parishes Hospital, acquired by us in July 2004, is located approximately 30 miles west of New Orleans, Louisiana. Its nearest competitors are St. James Parish Hospital, which is located approximately 13 miles away, St. Charles Parish Hospital, which is located approximately 12 miles away, and Kenner Regional Medical Center, which is located approximately 20 miles away.

     Ville Platte Medical Center is located approximately 95 miles northwest of Baton Rouge, Louisiana. Its nearest competitor is Savoy Medical Center, which is located approximately 10 miles away.

     Athens Regional Medical Center is located between Knoxville, Tennessee and Chattanooga, Tennessee, which are both approximately 50 miles away from Athens, Tennessee. Its nearest competitors are Sweetwater Hospital, which is located approximately 18 miles away and Woods Memorial Hospital, which is located approximately 12 miles away.

     Smith County Memorial Hospital is located approximately 60 miles east of Nashville, Tennessee. Its nearest competitor is Carthage General Hospital, a critical access hospital, located approximately 4 miles away.

     Crockett Hospital is located approximately 85 miles southwest of Nashville, Tennessee. Its nearest competitor is Maury Regional Hospital, which is located approximately 40 miles away.

     Livingston Regional Hospital is located approximately 100 miles east of Nashville, Tennessee. Its nearest competitors are Cumberland River Hospital, which is located approximately 15 miles away, and Cookeville Regional Medical Center, which is located approximately 18 miles away.

     Hillside Hospital is located approximately 80 miles south of Nashville, Tennessee. Its nearest competitor is Maury Regional Hospital, which is located approximately 23 miles away.

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     Southern Tennessee Medical Center (“STMC”) and its satellite facility, Emerald-Hodgson Hospital (“EHH”), are located approximately 80 miles southeast of Nashville, Tennessee and approximately 50 miles northwest of Chattanooga, Tennessee. STMC and EHH are approximately 13 miles apart. Their nearest competitor is Harton Regional Hospital, which is located approximately 20 miles away.

     Castleview Hospital is located approximately 119 miles southeast of Salt Lake City. Its nearest competitors are Utah Valley Medical Center, which is located approximately 75 miles away, and Mountain View Hospital, which is located approximately 73 miles away.

     Ashley Valley Medical Center is located approximately 180 miles southeast of Salt Lake City. Its nearest competitor is Unitah Basin Medical Center, which is located approximately 30 miles away.

     Logan Regional Medical Center (“LRMC”) and Guyan Valley Hospital, are located approximately 60 miles southwest of Charleston, West Virginia. Both LRMC and Guyan Valley Hospital are located in Logan, West Virginia. Their nearest competitor is Boone Memorial Hospital, a critical access facility, which is located approximately 20 miles away.

     Lander Valley Medical Center is located approximately 150 miles west of Casper, Wyoming. Lander Valley Medical Center shares the service area population with our own Riverton Memorial Hospital located approximately 22 miles away. Its nearest competitor is Wyoming Medical Center, which is located approximately 150 miles away.

     Riverton Memorial Hospital is located approximately 125 miles west of Casper, Wyoming. The nearest non-LifePoint hospital is Wyoming Medical Center, which is located approximately 125 miles away.

Services and Utilization

     We believe that the most important factors relating to the overall utilization of a hospital are the breadth of services, market position of the hospital, level of technology, emphasis on patient care, convenience for patients and physicians and the number, quality and specialties of physicians providing patient care within the facility.

     Other factors which impact the ability of a hospital to meet the healthcare needs of its community include:

•   the size of and growth in local population;

•   local economic conditions;

•   physician availability and expertise;

•   the availability of reimbursement programs such as Medicare and Medicaid;

•   the ability to negotiate contracts with managed care organizations that are appropriate for non-urban markets;

•   necessary medical equipment to perform clinical procedures;

•   improved treatment protocols as a result of advances in medical technology and pharmacology; and

•   the intensity and timing of yearly flu outbreaks.

     Our hospitals have experienced long-term growth in outpatient care services. We believe outpatient services provided at our hospitals have increased for three primary reasons. First, because of our ongoing recruiting efforts, new physicians tend to provide primarily outpatient care services until they become established in the community and develop a patient base. Second, hospital payment changes by Medicare, Medicaid, insurance companies and self-insured employers have also resulted in increased outpatient care services relative to inpatient care services. These hospital payment changes generally encourage the utilization of outpatient, rather than inpatient, services

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whenever possible, and shortened lengths of stay for inpatient care. Third, outpatient services continue to grow because of improvements in technology and clinical practices.

     In response to this increasing demand for outpatient care, we are continuing to reconfigure some of our hospitals to more effectively accommodate outpatient services and diagnostics. We are also restructuring existing surgical capacity in some of our hospitals to permit additional outpatient volume and a greater variety of outpatient services.

Sources of Revenue

     Our hospitals receive payment for patient services from the federal government primarily under the Medicare program, state governments under their respective Medicaid programs, health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”), and other private insurers, as well as directly from patients. The approximate percentages of total revenues from continuing operations from these sources during the years specified below were as follows:

	2001			2002			2003			2004
Medicare		35.7	%		35.4	%		35.9	%		36.9	%
Medicaid		10.9			11.6			10.9			11.2
HMOs, PPOs and other private insurers		42.3			43.0			40.5			38.7
Self pay		7.7			8.1			8.6			9.3
Other		3.4			1.9			4.1			3.9
Total		100.0	%		100.0	%		100.0	%		100.0	%

     Patients are generally not responsible for any difference between customary hospital charges and amounts reimbursed for the services under Medicare, Medicaid, some private insurance plans, HMOs or PPOs, but are responsible for services not covered by these plans, exclusions, deductibles or co-insurance features of their coverage. The amount of exclusions, deductibles and co-insurance has generally been increasing each year as employers have been shifting a higher percentage of healthcare costs to employees.

Medicare

     Medicare provides hospital and medical insurance benefits to persons age 65 and over, some disabled persons and persons with end-stage renal disease. All of our hospitals are certified as providers of Medicare services. Amounts received under the Medicare program are generally significantly less than the hospital’s customary charges for the services provided.

     With the passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“MMA”), which was signed into law on December 8, 2003, Congress passed sweeping changes to the Medicare program. This legislation offers a prescription drug benefit for Medicare beneficiaries and also provides a number of benefits to hospitals, particularly rural hospitals. The major hospital provisions of MMA are discussed in the subsections below.

     Diagnosis Related Group Payments. Payments from Medicare for inpatient hospital services are generally made under the prospective payment system, commonly known as “PPS.” Under PPS, our hospitals are paid a prospectively determined amount for each hospital discharge based on the patient’s diagnosis. Specifically, each diagnosis is assigned a diagnosis related group, commonly known as a “DRG”. Each DRG is assigned a payment rate that is prospectively set using national average costs per case for treating a patient for a particular diagnosis. DRG payments do not consider the actual costs incurred by a hospital in providing a particular inpatient service. This DRG assignment also affects the prospectively determined capital rate paid with each DRG. DRG and capital payments are adjusted by a predetermined geographic adjustment factor assigned to the geographic area in which the hospital is located.

     The DRG rates are adjusted by an update factor each federal fiscal year, which begins on October 1. The index used to adjust the DRG rates, known as the “hospital market basket index,” gives consideration to the inflation experienced by hospitals in purchasing goods and services. Generally, however, the percentage increases in the DRG payments have been lower than the projected increase in the cost of goods and services purchased by hospitals. Historical DRG rate increases were as follows:

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Federal Fiscal Year	% Increase
2000		1.10%
2001		3.40
2002		2.75
2003		2.95
2004		3.40
2005		3.30

     MMA allowed hospitals to receive full market basket updates for federal fiscal years 2005, 2006 and 2007 if hospitals provide the Centers for Medicare and Medicaid Services (“CMS”) specific data relating to the quality of services provided. We fully complied with this requirement for payments relating to federal fiscal year 2005 and intend to fully comply for future periods.

     MMA also made a permanent increase in the base DRG payment rate (1.6%) for rural hospitals and urban hospitals in smaller metropolitan areas. In addition, MMA provided for payment relief to the wage index component of the base DRG rate. Effective October 1, 2004, MMA lowered the percentage of the DRG subject to a wage adjustment from 71% to 62% for hospitals in areas with a wage index below the national average. A majority of our hospitals will benefit from the MMA provisions adjusting the DRG payment rates.

     Outlier and Disproportionate Share Payments. In addition to DRG and capital payments, hospitals may qualify for “outlier” payments when a Medicare patient’s treatment costs exceed a specified threshold. We anticipate outlier payments to increase slightly in 2005 as a result of a reduction in the outlier threshold from $31,000 to $25,800.

     Hospitals qualify for disproportionate share payments when their percentage of low-income patients exceeds 15%. Under the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (“BIPA”), a majority of our hospitals qualify to receive disproportionate share payments. Effective April 1, 2004, MMA raised the cap on the disproportionate share payment adjustment percentage from 5.25% to 12.0% for rural and small urban hospitals and specified that payments to all hospitals be based on the same conversion factor, regardless of geographic location. A majority of our hospitals have benefited from these provisions. The following table lists our historical disproportionate share payments and outlier payments from Medicare from our continuing operations:

	Other Medicare Payments
	(In Millions)
	2000		2001		2002		2003		2004
Disproportionate share payments	$	3.0	$	6.8	$	9.0	$	10.0	$	21.2
Outlier payments		1.2		1.6		0.7		0.4		0.6

     Outpatient Payments. The Balanced Budget Refinement Act of 1999 (“BBRA”) established a PPS for outpatient hospital services that commenced on August 1, 2000. Outpatient services are assigned ambulatory payment classifications (“APCs”), with associated specific relative weights, which are multiplied by an APC conversion factor. The APC conversion factors are $52.151, $54.561 and $56.983 for 2003, 2004 and 2005, respectively. Prior to August 1, 2000, outpatient services were paid at the lower of customary charges or on a reasonable cost basis.

     BBRA eliminated the anticipated average reduction of 5.7% for various Medicare outpatient payments under the Balanced Budget Act of 1997 (“BBA”). Under BBRA, outpatient payment reductions for non-urban hospitals with 100 beds or less were postponed until December 31, 2003. Fifteen of our hospitals qualified for this “hold harmless” relief. Payment reductions under Medicare outpatient PPS for non-urban hospitals with greater than 100 beds and urban hospitals were mitigated through a corridor reimbursement approach, pursuant to which a percentage of such reductions were reimbursed through December 31, 2003. Substantially all of our remaining hospitals qualified for relief under this provision. MMA extended the hold harmless provision for non-urban hospitals with 100 beds or less and expanded the provision to include sole community hospitals for cost reporting periods beginning in 2004, until December 31, 2005. Eighteen of our hospitals qualify for this relief.

     Inpatient Psychiatric, Rehabilitation and Skilled Nursing Payments. As of December 31, 2004, we operated six inpatient psychiatric units, eight inpatient rehabilitation units, four hospital-based skilled nursing facility units, three rural health clinics, four home health agencies and twenty hospitals utilizing swing beds. Prior to the implementation of the prospective payment systems, payments to exempt hospitals and units, such as inpatient

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psychiatric, rehabilitation and skilled nursing services, were based upon reasonable costs, subject to a cost per discharge target and maintenance of minimum levels of care.

     In November 2004, CMS issued a new Medicare PPS final rule for inpatient psychiatric facilities. This system, mandated by BBRA, replaces the current cost-based payment system by implementing a per diem PPS. CMS is phasing in the PPS for existing facilities over a three-year period for cost reporting periods beginning on or after January 1, 2005. Facilities in rural areas will receive a 17% increase. We anticipate our revenue from Medicare psychiatric payments to decrease slightly in 2005 as a result of this new rule.

     BBA mandated a PPS for inpatient rehabilitation hospital services. A PPS system for Medicare inpatient rehabilitation services was phased in over two years beginning January 1, 2002. Our inpatient rehabilitation units have fully transitioned to PPS-based Case-Mix Groups (“CMGs”). The inpatient rehabilitation PPS CMG update factor for federal fiscal year 2005 is 3.1%, which is to be increased by 0.35% for a budget-neutral wage adjustment. This results in the 2005 base CMG increasing from $12,525 to $12,958.

     On November 20, 2004, Congress passed the FY 2005 Omnibus Appropriations bill. Included in this bill was a provision delaying the inpatient rehabilitation facility (“IRF”) 75% rule (the “IRF 75% Rule”) up to 60 days after a Government Accountability Office (“GAO”) report is completed on this issue. The IRF 75% Rule, implemented in 1983, is one of the key eligibility criteria for IRFs. In May 2004, CMS issued a final rule that included restrictive changes to the conditions that qualify under the IRF 75% Rule. This rule requires that beginning July 1, 2004, at least 50% of Medicare patients are classified in one of 13 medical categories. The threshold increases to 60% beginning July 1, 2005, 65% on July 1, 2006, and up to the original 75% on July 1, 2007. A hospital not meeting these thresholds will receive reduced payments based on Medicare DRGs instead of IRF payments. We anticipate release of the GAO report during the first quarter of 2005, and in the interim, intend to fully comply with the provisions of the May 2004 final rule.

     BBA established a PPS for Medicare skilled nursing facilities that commenced in July 1998 and was implemented progressively over a three-year term. As a result, we have experienced reductions in payments for our skilled nursing services. However, BIPA increased the reimbursement amount for each resource utilization group nursing component of the skilled nursing facility PPS by 16.7% for services rendered between April 1, 2001 and September 30, 2002. Additionally, BIPA increased the skilled nursing facility PPS update to the skilled nursing facility market basket minus 0.5% for fiscal years 2002 and 2003. BIPA also increased rates for certain categories by 6.7% effective April 1, 2001. BBRA provided for a 20% increase for certain categories effective April 1, 2000. The skilled nursing facility market basket increase for federal fiscal year 2005 is 2.8%.

     Home Health Payments. Home health payments are reimbursed based on a PPS. For a two-year period beginning April 1, 2001, BIPA increased Medicare payments 10.0% for home health services furnished in specific rural areas. This provision expired on March 31, 2003. Home health PPS rates for 2003, which became effective October 1, 2002, were effectively decreased by 4.9%. The market basket rate increase for calendar year 2005 is 3.1%, which was reduced 0.8% as mandated by MMA, and results in a net increase of the episode rate of 2.3%. MMA included several changes to home health services, including a 5% additional payment for those home health services furnished in rural areas for one year, effective April 1, 2004.

Medicaid

     Medicaid, a joint federal-state program that is administered by the states, provides hospital benefits to qualifying individuals who are unable to afford care. Amounts received under the Medicaid program are generally significantly less than the hospital’s customary charges for the services provided. Most state Medicaid payments are made under a PPS or under programs that negotiate payment levels with individual hospitals. The federal government and many states may significantly reduce Medicaid funding. This could adversely affect future levels of Medicaid payments received by our hospitals.

     The following table summarizes our Medicaid revenues from continuing operations, reimbursement methodologies, and cost reporting requirements by state:

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	Medicaid Revenues (in millions)								Medicaid Reimbursement Methodologies		Cost Reporting
State	2001		2002		2003		2004		Inpatient	Outpatient	Requirements
Alabama	$	1.0	$	1.7	$	5.8	$	6.6	Cost-related rates, not retrospective	Fee schedule	Informational only
Florida		5.0		3.4		3.0		4.5	Per diem	Per visit/per line item	Informational only
Kansas		1.9		1.6		2.1		1.8	DRG-based	Fee schedule	Informational only
Kentucky		26.7		36.0		32.4		40.5	DRG-based	Cost-based, flat rate, fee schedule	Outpatient cost settled
Louisiana		0.4		3.7		3.6		4.3	Cost per discharge	Primarily 83% of allowable cost and fee schedule	Outpatient cost settled
Tennessee		18.0		23.1		24.6		26.5	DRG-based	Fee schedule	None
Utah		7.6		7.9		8.4		8.7	Negotiated percentage of charges	Primarily 93% of charges and fee schedule	None
West Virginia		-		0.6		9.3		9.4	DRG-based	Fee schedule	Informational only
Wyoming		4.2		4.8		5.2		5.5	Prospective, based on per discharge	Fee schedule	None
	$	64.8	$	82.8	$	94.4	$	107.8

     The following table lists our historical disproportionate share payments from Medicaid from our continuing operations, which are included in the Medicaid revenues listed in the above table (in millions):

	Medicaid Disproportionate Share Payments
State	2001		2002		2003		2004
Alabama	$	0.3	$	0.3	$	0.6	$	1.7
Florida		—		—		—		—
Kansas		—		—		—		—
Kentucky		4.4		5.9		3.4		4.9
Louisiana		—		0.1		0.1		—
Tennessee		1.3		0.2		0.9		1.7
Utah		—		—		—		—
West Virginia		—		—		0.7		0.8
Wyoming		—		—		0.1		—
	$	6.0	$	6.5	$	5.8	$	9.1

Annual Cost Reports

     Hospitals participating in the Medicare and some Medicaid programs, whether paid on a reasonable cost basis or under a PPS, are required to meet certain financial reporting requirements. Federal and, where applicable, state regulations require submission of annual cost reports identifying medical costs and expenses associated with the services provided by each hospital to Medicare beneficiaries and Medicaid recipients.

     Annual cost reports required under the Medicare and some Medicaid programs are subject to routine governmental audits. These audits may result in adjustments to the amounts ultimately determined to be payable to us under these reimbursement programs. Finalization of these audits often takes several years. Providers may appeal any final determination made in connection with an audit.

HMOs, PPOs and other private insurers

     In addition to government programs, our hospitals are reimbursed by private payors including HMOs, PPOs, private insurance companies and employers. To attract additional volume, most of our hospitals offer discounts from established charges to certain large group purchasers of healthcare services. These discount programs often limit our ability to increase charges in response to increasing costs. Generally, patients covered by HMOs, PPOs and other private insurers will be responsible for certain co-payments and deductibles.

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Self Pay

     Self-pay revenues are derived from patients who do not have any form of health care coverage. The revenues associated with self-pay patients are generally reported at our gross charges. We evaluate these patients, after the patient’s medical condition is determined to be stable, for their ability to pay based upon federal and state poverty guidelines, qualifications for Medicaid or other state assistance programs, as well as our local hospital’s policy for indigent care.

Competition

     The hospital industry is highly competitive. We compete with other hospitals and healthcare providers for patients. The competition among hospitals and other healthcare providers for patients has intensified in recent years. In all but one of our communities, our hospitals face no direct hospital competition because there are no other hospitals in these communities. However, these hospitals do face competition from hospitals outside of their communities, including hospitals in the market area and nearby urban areas that may provide more comprehensive services. Patients in our primary service areas may travel to these other hospitals for a variety of reasons, including the need for services we do not offer or physician referrals. Some of these competing hospitals use equipment and services more specialized than those available at our hospitals. Patients who require specialized services from these other hospitals may subsequently shift their preferences to those hospitals for services we provide. 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, in some instances, are not required to pay sales, property and income taxes.

     We also face increasing competition from other specialized care providers, including outpatient surgery, 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. Some of our hospitals have developed specialized outpatient facilities where necessary to compete with these other providers.

     State certificate of need laws, which place limitations on a hospital’s ability to expand hospital services and add new equipment, also may have the effect of restricting competition. Of the nine states where we own hospitals, Alabama, Florida, Kentucky, Tennessee and West Virginia have certificate of need laws. The application process for approval of additional covered services, new facilities, changes in operations and capital expenditures is, therefore, highly competitive in these states.

     The number and quality of the physicians on a hospital’s staff are important factors in determining a hospital’s competitive advantage. Physicians decide whether a patient is admitted to the hospital and the procedures to be performed. We believe that physicians refer patients to a hospital primarily on the basis of the patient’s needs, the quality of other physicians on the medical staff, the location of the hospital and the breadth and scope of services offered at the hospital’s facilities.

     One element of our business strategy is expansion through the acquisition of acute care hospitals in growing, non-urban markets. The competition to acquire rural hospitals is significant. We intend to acquire, on a selective basis, hospitals that are similar to those we currently own and operate by adhering to our disciplined acquisition strategy.

Employees and Medical Staff

     At December 31, 2004, our subsidiaries had approximately 9,900 employees, including approximately 2,600 part-time employees. None of our employees are subject to collective bargaining agreements. We consider our employee relations to be good. While some of our hospitals experience union organizing activity from time to time, we do not expect these efforts to materially affect our future operations.

     Our hospitals are staffed by licensed physicians who have been admitted to the medical staff of our individual hospitals. Any licensed physician may apply to be admitted to the medical staff of any of our hospitals, but admission to the medical staff must be approved by the hospital’s medical staff and the governing board of the hospital in accordance with established credentialing criteria. In certain cases, physicians are employed by our hospitals.

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Government Regulation

     Overview. All participants in the healthcare industry are required to comply with extensive government regulations at the federal, state and local levels. Under these laws and regulations, hospitals must meet requirements for licensure and qualify to participate in government programs, including the Medicare and Medicaid programs. These requirements relate to the adequacy of medical care, equipment, personnel, operating policies and procedures, maintenance of adequate records, hospital use, rate-setting, compliance with building codes and environmental protection laws. If we fail to comply with applicable laws and regulations, we may be subject to criminal penalties and civil sanctions and our hospitals may lose their licenses and ability to participate in government programs. In addition, government regulations frequently change. When regulations change, we may be required to make changes in our facilities, equipment, personnel and services so that our hospitals remain licensed and qualified to participate in these programs. We believe that our hospitals are in substantial compliance with current federal, state and local regulations and standards.

     Hospitals are subject to periodic inspection by federal, state, and local authorities to determine their compliance with applicable regulations and requirements necessary for licensing and certification. All of our hospitals are licensed under appropriate state laws and are qualified to participate in Medicare and Medicaid programs. In addition, as of December 31, 2004, all of our hospitals were accredited by the Joint Commission on Accreditation of Healthcare Organizations (“JCAHO”), except for our two critical-access hospitals. This accreditation indicates that a hospital satisfies the applicable health and administrative standards to participate in Medicare and Medicaid. JCAHO has offered an accreditation program for critical-access hospitals for approximately two years, but JCAHO accreditation for such hospitals is voluntary and not required for participation in the Medicare and Medicaid programs. Nevertheless, we currently follow the JCAHO standards at each critical-access hospital.

     Fraud and Abuse Laws. Participation in the Medicare and/or Medicaid programs is heavily regulated by federal statutes and regulations. If a hospital fails to comply substantially with the numerous federal laws governing a facility’s activities, the hospital’s participation in the Medicare and/or Medicaid programs may be terminated and/or civil or criminal penalties may be imposed. For example, a hospital may lose its ability to participate in the Medicare and/or Medicaid programs if it performs any of the following acts:

•   making claims to Medicare and/or Medicaid for services not provided or misrepresenting actual services provided in order to obtain higher payments;

•   paying money to induce the referral of patients or purchase of items or services where such items or services are reimbursable under a federal or state health program; or

•   failing to provide appropriate emergency medical screening services to any individual who comes to a hospital’s campus or otherwise failing to properly treat and transfer emergency patients.

     The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) broadened the scope of the fraud and abuse laws by adding several criminal statutes that are not related to receipt of payments from a federal healthcare program. HIPAA created civil penalties for proscribed conduct, including upcoding and billing for medically unnecessary goods or services. HIPAA established new enforcement mechanisms to combat fraud and abuse. These new mechanisms include a bounty system, where a portion of the payments recovered is returned to the government agencies, as well as a whistleblower program. HIPAA also expanded the categories of persons that may be excluded from participation in federal and state healthcare programs.

     The anti-kickback provision of the Social Security Act prohibits the payment, receipt, offer or solicitation of money with the intent of generating referrals or orders for services or items covered by a federal or state healthcare program. Violations of the anti-kickback statute may be punished by criminal and civil fines, exclusion from federal and state healthcare programs, imprisonment and damages up to three times the total dollar amount involved.

     The Office of Inspector General (“OIG”) of the Department of Health and Human Services (“DHHS”) is responsible for identifying fraud and abuse activities in government programs. In order to fulfill its duties, the OIG performs audits, investigations and inspections. In addition, it provides guidance to healthcare providers by

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identifying types of activities that could violate the anti-kickback statute. The OIG has identified the following hospital/physician incentive arrangements as potential violations:

•   payment of any incentive by a hospital each time a physician refers a patient to the hospital;

•   use of free or significantly discounted office space or equipment in facilities usually located close to the hospital;

•   provision of free or significantly discounted billing, nursing or other staff services;

•   free training (other than compliance training) for a physician’s office staff, including management and laboratory technique training;

•   guarantees which provide that if a physician’s income fails to reach a predetermined level, the hospital will pay any portion of the remainder;

•   low-interest or interest-free loans, or loans which may be forgiven if a physician refers patients to the hospital;

•   payment of the costs for a physician’s travel and expenses for conferences;

•   payment of services which require few, if any, substantive duties by the physician or which are in excess of the fair market value of the services rendered; or

•   purchasing goods or services from physicians at prices in excess of their fair market value.

     We have a variety of financial relationships with physicians who refer patients to our hospitals, including employment contracts, leases, joint ventures, independent contractor agreements and professional service agreements. Physicians may also own our stock. We provide financial incentives to recruit physicians to relocate to communities served by our hospitals. These incentives for relocation include minimum revenue guarantees and, in some cases, loans. The OIG is authorized to publish regulations outlining activities and business relationships that would be deemed not to violate the anti-kickback statute. These regulations are known as “safe harbor” regulations. Failure to comply with the safe harbor regulations does not make conduct illegal, but instead the safe harbors delineate standards that, if complied with, protect conduct that might otherwise be deemed in violation of the anti-kickback statute. We use our best efforts to structure each of our arrangements, especially each of our business arrangements with physicians, to fit as closely as possible within an applicable safe harbor. However, not all of our business arrangements fit wholly within safe harbors, so we cannot guarantee that these arrangements will not be scrutinized by government authorities or, if scrutinized, that they will be determined to be in compliance with the anti-kickback statute or other applicable laws. The failure of a particular activity to comply with the safe harbor regulations does not mean that the activity violates the anti-kickback statute. We believe that all of our business arrangements are in full compliance with the anti-kickback statute. If we violate the anti-kickback statute, we would be subject to criminal and civil penalties and/or possible exclusion from participating in Medicare, Medicaid or other governmental healthcare programs.

     The Social Security Act also includes a provision commonly known as the “Stark law.” This law prohibits physicians from referring Medicare and Medicaid patients to selected types of healthcare entities in which they or any of their immediate family members have ownership or other financial interests. These types of referrals are commonly known as “self referrals.” Sanctions for violating the Stark law include civil monetary penalties, assessments equal to twice the dollar value of each service rendered for an impermissible referral and exclusion from Medicare and Medicaid programs. There are ownership and compensation arrangement exceptions to the self-referral prohibition. One exception allows a physician to make a referral to a hospital that is not a specialty hospital if the physician owns an interest in the entire hospital, as opposed to an ownership interest in a department of the hospital. Another exception allows a physician to refer patients to a healthcare entity in which the physician has an ownership interest if the entity is located in a rural area, as defined in the statute. There are also exceptions for many of the customary financial arrangements between physicians and facilities, including employment contracts, leases

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and recruitment agreements. We have structured our financial arrangements with physicians to comply with the statutory exceptions included in the Stark law and regulations.

     Many states in which we operate also have adopted, or are considering adopting, laws similar to the federal anti-kickback and Stark laws. Some of these state laws apply even if the government is not the payor. These statutes typically provide criminal and civil penalties as remedies. While there is little precedent for the interpretation or enforcement of these state laws, we have attempted to structure our financial relationships with physicians and others in light of these laws. However, if a state determines that we have violated such a law, we would be subject to criminal and civil penalties.

     Corporate Practice of Medicine and Fee-Splitting. Some states have laws that prohibit unlicensed persons or business entities, including corporations or business organizations that own hospitals, from employing physicians. Some states also have adopted laws that prohibit direct or indirect payments or fee-splitting arrangements between physicians and unlicensed persons or business entities. Possible sanctions for violations of these restrictions include loss of a physician’s license, civil and criminal penalties and rescission of business arrangements. These laws vary from state to state, are often vague and have seldom been interpreted by the courts or regulatory agencies. We attempt to structure our arrangements with healthcare providers to comply with the relevant state laws and the few available regulatory interpretations.

     Emergency Medical Treatment and Active Labor Act. All of our facilities are subject to the Emergency Medical Treatment and Active Labor Act (“EMTALA”). This federal law requires any hospital that participates in the Medicare program to conduct an appropriate medical screening examination of every person who presents to the hospital’s emergency department for treatment and, if the patient is suffering from an emergency medical condition, to either stabilize that condition or make an appropriate transfer of the patient to a facility that can handle the condition. The obligation to screen and stabilize emergency medical conditions exists regardless of a patient’s ability to pay for treatment. There are severe penalties under EMTALA if a hospital fails to screen or appropriately stabilize or transfer a patient or if the hospital delays appropriate treatment in order to first inquire about the patient’s ability to pay. Penalties for violations of EMTALA include civil monetary penalties and exclusion from participation in the Medicare program. In addition, an injured patient, the patient’s family or a medical facility that suffers a financial loss as a direct result of another hospital’s violation of the law can bring a civil suit against the hospital.

     On September 9, 2003, CMS published a final rule which became effective November 10, 2003, clarifying a hospital’s duties under EMTALA. In the final rule, CMS clarified when a patient is considered to be on a hospital’s property for purposes of treating the person pursuant to EMTALA. CMS stated that off-campus facilities such as specialty clinics, surgery centers and other facilities that lack emergency departments should not be subject to EMTALA, but that these locations must have a plan explaining how the location should proceed in an emergency situation such as transferring the patient to the closest hospital with an emergency department. CMS further clarified that hospital-owned ambulances could transport a patient to the closest emergency department instead of to the hospital that owns the ambulance.

     CMS’ rules did not specify “on-call” physician requirements for an emergency department, but provided a subjective standard stating that “on-call” hospital schedules should meet the hospital’s and community’s needs. CMS also did not directly address whether EMTALA applies to direct admissions, individuals who come to a hospital pursuant to a physician’s orders for a routine procedure, individuals who present themselves at a hospital’s psychiatric department or delivery/labor department and whether screening requirements apply to patients transferred from other facilities. Although we believe that our hospitals comply with EMTALA, we cannot predict whether CMS will implement new requirements in the future and whether we will comply with any new requirements.

     Federal False Claims Act. The federal False Claims Act prohibits providers from knowingly submitting false claims for payment to the federal government. This law has been used not only by the federal government, but also by individuals who bring an action on behalf of the government under the law’s “qui tam” or “whistleblower” provisions. When a private party brings a qui tam action under the federal False Claims Act, the defendant will generally not be aware of the lawsuit until the government makes a determination whether it will intervene and take a lead in the litigation.

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     Civil liability under the federal False Claims Act can be up to three times the actual damages sustained by the government plus civil penalties for each separate false claim. There are many potential bases for liability under the federal False Claims Act, including claims submitted pursuant to a referral found to violate the anti-kickback statute. Although liability under the federal False Claims Act arises when an entity knowingly submits a false claim for reimbursement to the federal government, the federal False Claims Act defines the term “knowingly” broadly. Although simple negligence generally will not give rise to liability under the federal False Claims Act, submitting a claim with reckless disregard to its truth or falsity can constitute “knowingly” submitting a false claim.

     Healthcare Reform. The healthcare industry continues to attract much legislative interest and public attention. MMA introduced changes to the Medicare program. Many of MMA’s changes will not go into effect until January 1, 2006. MMA establishes a voluntary prescription drug benefit, provides federal subsidies to plan sponsors that provide prescription drug benefits to Medicare-eligible retirees, substantially adjusts Medicare+Choice and provides favorable payment adjustments for rural hospitals. MMA also provides favorable tax treatment for individual health savings accounts. In addition, MMA authorizes MedPAC to study the effects of home health and rural hospital reimbursement effects in current and anticipated reimbursement methodologies. On the state level, Tennessee Governor Phil Bredesen proposed a plan to modify the state’s TennCare (Medicaid) program and decrease the state TennCare budget. The proposed plan includes such measures as establishing co-payments for enrollees other than pregnant women, children and disabled individuals (as determined under Social Security standards), requiring enrollees to use the lowest-cost prescription drugs significantly decreasing the eligibility criteria or reverting to a traditional Medicaid model. The proposed changes to TennCare have been challenged by advocacy groups. Currently, we cannot predict when and in what form Governor Bredesen’s proposals will be implemented or how they will affect payments to our hospitals in Tennessee. We anticipate that the federal and state governments will continue to introduce legislative proposals to modify the cost and efficiency of the health care delivery system.

     Conversion Legislation. Many states have adopted legislation regarding the sale or other disposition of hospitals operated by not-for-profit entities. In other states that do not have such legislation, the attorneys general have demonstrated an interest in these transactions under their general obligations to protect charitable assets. These legislative and administrative efforts primarily focus on the appropriate valuation of the assets divested and the use of the proceeds of the sale by the not-for-profit seller. These reviews and, in some instances, approval processes can add additional time to the closing of a not-for-profit hospital acquisition. Future actions by state legislators or attorneys general may seriously delay or even prevent our ability to acquire certain hospitals.

     Certificates of Need. The construction of new facilities, the acquisition or expansion of existing facilities and the addition of new services and expensive equipment at our facilities may be subject to state laws that require prior approval by state regulatory agencies. These certificate of need laws generally require that a state agency determine the public need and give approval prior to the construction or acquisition of facilities or the addition of new services. We operate hospitals in five states that have adopted certificate of need laws — Alabama, Florida, Kentucky, Tennessee and West Virginia. If we fail to obtain necessary state approval, we will not be able to expand our facilities, complete acquisitions or add new services in these states. Violation of these state laws may result in the imposition of civil sanctions or the revocation of hospital licenses.

     HIPAA Transaction, Privacy and Security Requirements. Federal regulations issued pursuant to HIPAA contain, among other measures, provisions that require us to implement very significant and potentially expensive new computer systems, employee training programs and business procedures. The federal regulations are intended to encourage electronic commerce in the healthcare industry.

     Among other things, HIPAA requires healthcare facilities to use standard data formats and code sets established by DHHS when electronically transmitting information in connection with several transactions, including health claims and equivalent encounter information, health care payment and remittance advice and health claim status. We have implemented or upgraded computer systems utilizing a third party vendor, as appropriate, at our facilities and at our corporate headquarters to comply with the new transaction and code set regulations and have tested these systems with several of our payors. In certain cases, we have noted a slow-down in cash payments as a result of acceptability of information.

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     HIPAA also requires DHHS to issue regulations establishing standard unique health identifiers for individuals, employers, health plans and health care providers to be used in connection with the standard electronic transactions. All healthcare providers, including our facilities, will be required to obtain a new National Provider Identifier (“NPI”) to be used in standard transactions instead of other numerical identifiers beginning no later than May 23, 2007; healthcare providers may begin applying for NPIs on May 23, 2005. We cannot predict whether our facilities may experience payment delays during the transition to the new identifier. Our facilities have fully implemented use of the Employer Identification Number as the standard unique health identifier for employers. DHHS has not yet issued proposed rules that establish the standard for unique health identifiers for health plans or individuals. Once these regulations are issued in final form, we expect to have approximately two years to become fully compliant, but cannot predict the impact of such changes at this time.

     HIPAA regulations also require our facilities to comply with standards to protect the confidentiality, availability and integrity of patient health information, by establishing and maintaining reasonable and appropriate administrative, technical and physical safeguards to ensure the integrity, confidentiality and the availability of electronic health and related financial information. The security standards were designed to protect electronic information against reasonably anticipated threats or hazards to the security or integrity of the information and to protect the information against unauthorized use or disclosure. We expect that the security standards will require our facilities to implement business procedures and training programs, though the regulations do not mandate use of a specific technology.

     DHHS has also established standards for the privacy of individually identifiable health information. These privacy standards apply to all health plans, all health care clearinghouses and health care providers, such as our facilities, that transmit health information in an electronic form in connection with standard transactions, and apply to individually identifiable information held or disclosed by a covered entity in any form. These standards impose extensive administrative requirements on our facilities and require compliance with rules governing the use and disclosure of this health information, and they require our facilities to impose these rules, by contract, on any business associate to whom we disclose such information in order to perform functions on their behalf. In addition, our facilities will continue to remain subject to any state laws that are more restrictive than the privacy regulations issued under HIPAA. These laws vary by state and could impose additional penalties.

     A violation of the HIPAA regulations could result in civil money penalties of $100 per incident, up to a maximum of $25,000 per person per year per standard. HIPAA also provides for criminal penalties of up to $50,000 and one year in prison for knowingly and improperly obtaining or disclosing protected health information, up to $100,000 and five years in prison for obtaining protected health information under false pretenses, and up to $250,000 and ten years in prison for obtaining or disclosing protected health information with the intent to sell, transfer or use such information for commercial advantage, personal gain or malicious harm. Since there is no significant history of enforcement efforts by the federal government at this time, it is not possible to ascertain the likelihood of enforcement efforts in connection with the HIPAA regulations or the potential for fines and penalties, which may result from the violation of the regulations.

     Compliance with these standards requires significant commitment and action by us and our facilities. Because some of the HIPAA regulations are proposed regulations, we cannot predict the total financial impact of the regulations on our operations.

Regulatory Compliance Program

     It is our policy to conduct our business with integrity and in compliance with the law. We have in place and continue to develop a company-wide compliance program, which focuses on all areas of regulatory compliance, including billing, reimbursement and cost reporting practices.

     This regulatory compliance program is intended to ensure that high standards of conduct are maintained in the operation of our business and to help ensure that policies and procedures are implemented so that employees act in full compliance with all applicable laws, regulations and company policies. Under the regulatory compliance program, we provide initial and periodic legal compliance and ethics training to every employee and certain contractors involved in patient care, coding and billing, review various areas of our operations and develop and implement policies and procedures designed to foster compliance with the law. We regularly monitor our ongoing

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compliance efforts. The program also includes a mechanism for employees to report, without fear of retaliation, any suspected legal or ethical violations to their supervisors or designated compliance officers in our hospitals.

     In December 2000, we entered into a five-year corporate integrity agreement with the OIG and agreed to maintain our compliance program in accordance with the corporate integrity agreement. This agreement has been amended four times since then. Violations of this agreement could subject us to substantial monetary penalties. The compliance measures and reporting and auditing requirements contained in the corporate integrity agreement include:

•   continuing the duties and activities of our audit and compliance committee, corporate compliance officer, internal audit and compliance department, local hospital ethics and compliance officers, corporate compliance committee and hospital compliance committees;

•   maintaining our written code of conduct, which sets out our commitment to full compliance with all statutes, regulations and guidelines applicable to federal healthcare programs;

•   maintaining our written policies and procedures addressing the operation of our compliance program;

•   providing general training on the compliance program;

•   providing specific training for the appropriate personnel on billing, coding and cost report issues;

•   performing internal coding reviews of our facilities and having an independent third party conduct periodic audits of those reviews;

•   continuing our confidential disclosure program and compliance hotline to enable employees or others to disclose issues or questions regarding possible inappropriate policies or behavior;

•   enhancing our screening program to ensure that we do not hire or engage employees or contractors who have been sanctioned or excluded from participation in federal healthcare programs;

•   reporting and making the appropriate refund for any material deficiency which resulted in an overpayment to us by a federal healthcare program;

•   reporting any healthcare related fraud involving any federally funded program; and

•   submitting annual reports to the OIG which describe in detail the operations of our corporate compliance program for the past year.

Arrangements Relating to the Distribution

     Immediately prior to HCA’s distribution of our common stock, we entered into agreements with HCA to define our ongoing relationships after the distribution and to allocate tax, employee benefits and other liabilities and obligations arising from periods prior to the distribution date.

     Distribution Agreement. We entered into a distribution agreement with HCA and Triad Hospitals, Inc. (“Triad”) which governed the corporate transactions required to effect the distribution and other arrangements between the parties after the distribution. The distribution agreement also allocated financial responsibility between the parties for liabilities arising out of the assets and entities that constitute our company, including liabilities arising out of the transfer of the assets and entities to us. HCA agreed in the distribution agreement to indemnify us for any losses arising from the governmental investigations of HCA’s business practices prior to the date of the distribution and losses arising from legal proceedings, present or future, related to the investigation or actions engaged in prior to the distribution that relate to the investigation.

     Tax Sharing and Indemnification Agreement. We also entered into a tax sharing and indemnification agreement with HCA and Triad, which allocated tax liabilities among the parties and addressed other tax matters, including

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responsibility for filing tax returns, control of and cooperation in tax litigation and qualification of the distribution as a tax-free transaction. Generally, HCA is responsible for taxes that are allocable to periods before the distribution date and each of HCA, LifePoint and Triad is responsible for its own tax liabilities, including its allocable portion of taxes shown on any consolidated, combined or other tax return filed by HCA, for periods after the distribution date. The tax sharing and indemnification agreement prohibits us from taking actions that could jeopardize the tax treatment of the distribution or the restructuring that preceded the distribution, and requires us to indemnify HCA and Triad for any taxes or other losses that result from our actions. Further, we must remit to HCA any tax benefits we realize as a result of an increased tax basis in assets resulting from a settlement of HCA’s ongoing tax litigation and examination by the Internal Revenue Service (“IRS”). The IRS has suspended the examination of our company pending the outcome of HCA’s tax litigation, and, as a result, we are not able to determine currently our future obligations under the tax sharing agreement.

     Insurance Allocation and Administration Agreement. Before the distribution, HCA maintained various insurance policies for the benefit of the facilities that now comprise our company. We are indemnified by HCA for losses related to insured risks incurred prior to the distribution date.

     Computer and Data Processing Services Agreement. HCA’s wholly-owned subsidiary, HCA-Information Technology and Services, Inc. (“HCA-IT”), entered into a computer and data processing services agreement with us. HCA-IT provides computer installation, support, training, maintenance, data processing and other related services to us until December 2009. HCA-IT charges us fees for services provided under this agreement.

     The fees that HCA-IT charged us for the five-year period ended December 31, 2004, including the discontinued operations of Bartow, are as follows (in millions):

2000	$	10.1
2001		10.3
2002		11.5
2003		14.2
2004		16.3
Total	$	62.4

     Other Agreements. HCA entered into agreements with us to share telecommunications services with us under HCA’s agreements with its telecommunications services provider and make account collection services available to us.

Item 2. Properties.

     Information with respect to our hospitals and our other properties can be found in Item 1 of this report under the caption, “Business — Properties.”

Item 3. Legal Proceedings.

     General. We are, 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 contracts, wrongful restriction of or interference with physicians’ staff privileges and employment related claims. In certain of these actions, plaintiffs request payment for damages, including punitive damages that may not be covered by insurance. We are currently not a party to any proceeding, which, in management’s opinion, would have a material adverse effect on our business, financial condition or results of operations.

     Americans with Disabilities Act Claim. On January 12, 2001, Access Now, Inc., a disability rights organization, filed a class action lawsuit against each of our hospitals alleging non-compliance with the accessibility guidelines under the Americans with Disabilities Act (“ADA”). The lawsuit, filed in the United States District Court for the Eastern District of Tennessee, does not seek any monetary damages but, instead, seeks only injunctive relief requiring facility modification, where necessary to meet the ADA guidelines, along with attorneys’ fees and costs. We are currently unable to estimate the costs that could be associated with modifying these facilities because these costs are negotiated and determined on a facility-by-facility basis and, therefore, have varied and will continue to

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vary significantly among facilities. 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. We intend to vigorously defend the lawsuit, recognizing our obligation to correct any deficiencies in order to comply with the ADA. As of December 31, 2004, the plaintiffs have conducted inspections at 22 of our hospitals. On July 19, 2004, the United States District Court approved the settlement agreements between the parties relating to two of our 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, and we currently anticipate that the costs associated with modifying these two facilities will be approximately $1.0 million.

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

     No matters were submitted to a vote of the stockholders during the fourth quarter ended December 31, 2004.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

     Our common stock is quoted on the NASDAQ National Market under the symbol “LPNT.” The high and low common stock bid prices per share were as follows:

	High		Low
2003
First Quarter	$	30.65	$	19.60
Second Quarter		25.71		16.55
Third Quarter		29.40		20.55
Fourth Quarter		31.04		22.51
2004
First Quarter	$	37.32	$	29.41
Second Quarter		39.16		32.23
Third Quarter		38.60		26.60
Fourth Quarter		37.74		28.50
2005
First Quarter (through February 16, 2005)	$	40.66	$	33.24

     On February 16, 2005, the last reported sales price for our common stock on the NASDAQ National Market was $40.20 per share. As of February 16, 2005, there were 39,142,535 shares of our common stock held by 5,040 holders of record.

     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 credit facilities impose restrictions on our ability to pay dividends. Please refer to the “Liquidity and Capital Resources” section in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report for more information.

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Item 6. Selected Financial Data.

     The following table contains selected financial data of our company for, or as the end of, each of the five years ended December 31, 2004. The selected financial data are derived from our audited financial statements. The timing of acquisitions and divestitures completed during the years presented affects the comparability of the selected financial data. The summary of operations, financial position and other operating data excludes the operations as well as assets and liabilities that are expected to be sold related to Bartow Memorial Hospital, which is held for sale and reflected as discontinued operations in our consolidated financial statements. You should read this table in conjunction with the consolidated financial statements and related notes included elsewhere in this report and in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

	Years Ended December 31,
	2000			2001			2002		2003		2004
	(Dollars in millions, except revenues per equivalent admission and per share amounts)
Summary of Operations:
Revenues	$	532.8		$	591.3		$	714.9	$	875.6	$	996.9
Salaries and benefits		214.3			232.5			280.0		352.3		399.4
Supplies		64.4			74.9			88.7		114.2		129.1
Other operating expenses		112.3			115.0			129.6		155.4		166.8
Provision for doubtful accounts		37.4			39.7			49.8		74.1		86.2
Depreciation and amortization		31.4			32.0			35.0		43.1		48.1
Interest expense, net		30.7			18.1			13.3		12.8		12.6
Debt retirement costs		—			2.6			31.0		—		1.5
ESOP expense		7.1			10.4			9.7		6.9		9.4
Gain on impairment of long-lived assets		(1.4	)		(0.5	)		—		—		—
		496.2			524.7			637.1		758.8		853.1
Income from continuing operations before minority interests and income taxes		36.6			66.6			77.8		116.8		143.8
Minority interests in earnings of consolidated entities		2.2			2.7			2.2		0.7		1.0
Income from continuing operations before income taxes		34.4			63.9			75.6		116.1		142.8
Provision for income taxes		15.7			30.3			32.7		45.9		56.0
Income from continuing operations	$	18.7		$	33.6		$	42.9	$	70.2	$	86.8
Income from continuing operations per share:
Basic	$	0.59		$	0.94		$	1.14	$	1.89	$	2.34
Diluted	$	0.57		$	0.91		$	1.10	$	1.80	$	2.20
Weighted average shares outstanding:
Basic		31.6			35.7			37.5		37.2		37.0
Diluted		32.9			37.1			38.6		43.3		42.8
Financial Position (as of End of Year):
Working capital, excluding assets and liabilities held for sale	$	65.0		$	82.4		$	67.5	$	102.1	$	115.9
Property and equipment, net		284.1			307.8			409.6		443.9		501.1
Total assets (including assets held for sale)		496.3			554.3			733.5		799.0		887.3
Long-term debt, including amounts due within one year		289.4			150.0			250.0		270.0		221.0
Stockholders’ equity		128.4			295.0			357.6		394.3		509.5
Other Operating Data:
Capital expenditures	$	28.7		$	35.0		$	57.5	$	68.3	$	82.0
Number of hospitals at end of year		19			22			27		28		29
Number of licensed beds at end of year (a)		1,907			2,141			2,561		2,681		2,688
Weighted average licensed beds (b)		2,000			1,955			2,192		2,595		2,692
Admissions (c)		63,168			67,452			74,488		88,695		91,772
Equivalent admissions (d)		114,081			122,560			142,570		175,439		183,819
Revenues per equivalent admission	$	4,670		$	4,825		$	5,015	$	4,991	$	5,423
Average length of stay (days) (e)		4.1			4.1			4.1		4.0		4.0
Emergency room visits (f)		274,012			288,793			329,922		408,321		416,060
Inpatient surgeries		16,236			17,584			20,480		24,528		26,235
Outpatient surgeries (g)		45,072			51,697			59,950		71,488		75,508
Total surgeries		61,308			69,281			80,430		96,016		101,743

(a) Licensed beds are those beds for which a facility has been granted approval to operate from the applicable state licensing agency.

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(b)	Represents the average number of licensed beds weighted based on periods operated.
(c)	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.
(d)	Management and investors use equivalent admissions as a general measure of combined inpatient and outpatient volume. Equivalent admissions are computed 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.
(e)	Represents the average number of days admitted patients stay in our hospitals.
(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.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

     You should read this discussion together with our consolidated financial statements and related notes included elsewhere in this report.

Executive Overview

     This was another challenging year for both the healthcare services industry and our company. We believe that we produced positive financial results after considering all of the factors affecting our industry. This year was negatively impacted by lower patient volumes that were experienced by most healthcare providers as a result of the lack of flu-related cases in late 2004. We also experienced the continuation of higher co-payments and deductibles for patients and more patients electing not to be covered by a health insurance program, resulting in increased collection pressures on providers. We believe that our financial results for 2004 reflect our disciplined operating strategy that addressed these industry challenges. We are guardedly optimistic regarding our outlook for 2005 as a result of the improved reimbursement environment and patient volumes more in line with historical trends and our future acquisition of Province. During 2005, we will continue to focus on physician recruiting and retention, investing capital in our hospitals and seeking selected hospital acquisitions that fit our non-urban strategy and complement our existing portfolio of hospitals. In addition, upon closing of the Province transaction, we will work to integrate the Province facilities. The following table reflects our summarized operating results:

	Years Ended December 31,
	2002		2003		2004
Number of hospitals in continuing operations at end of period		27		28		29
Revenues from continuing operations (in millions)	$	714.9	$	875.6	$	996.9
Income from continuing operations (in millions)	$	42.9	$	70.2	$	86.8
Diluted earnings per share from continuing operations	$	1.10	$	1.80	$	2.20

Anticipated Acquisition of Province Healthcare Company

     We announced on August 16, 2004 that we entered into a definitive agreement to acquire Province Healthcare Company for approximately $1.7 billion in cash, stock and the assumption of debt. Province is a healthcare services company focused on operating acute care hospitals located in non-urban markets throughout the United States. As of December 31, 2004, Province owned or leased 21 general acute care hospitals in 13 states, with a total of approximately 2,533 licensed beds. Province generated $882.9 million in revenues from continuing operations during 2004. Province’s objective has been to be the primary provider of quality healthcare services in the selected non-urban communities that it serves. If consummated, the proposed Province transaction will create a hospital company focused on providing healthcare services in non-urban communities, with 51 hospitals, of which 48 are located in markets where the combined company will be the sole hospital provider in the community. The transaction is expected to close in the first half of 2005.

     Based on $40.20, the closing price of a share of our common stock on February 16, 2005 and the number of shares of Province common stock outstanding on such date, we will issue approximately 14.6 million shares of our common stock to Province stockholders and will pay approximately $571.2 million in cash.

Discontinued Operations

     During 2004, we committed to a plan to divest Bartow. Please refer to Note 3 of our consolidated financial statements included elsewhere in this report for a discussion of our discontinued operations of Bartow. We expect to sell Bartow during 2005. Unless otherwise indicated, all relevant financial and statistical information included herein relates to our continuing operations.

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Hospital Acquisitions

     We seek to identify and acquire additional hospitals in non-urban areas. The proposed Province transaction gives us a unique opportunity to acquire 21 additional hospitals in non-urban areas. Additionally, we plan on pursuing a disciplined acquisition strategy that is focused on attempting to acquire one to three additional hospitals each year. We seek to acquire hospitals that are the sole or significant market provider of healthcare services in their community. In evaluating a hospital for acquisition, we focus on a variety of factors. One factor we consider is the number of patients that are traveling outside of the community for healthcare services. Another factor we consider is the hospital’s prior operating history and our ability to implement new healthcare services. Upon acquiring a facility, we work to quickly integrate the hospital into our operating practices. Please refer to Note 2 to our consolidated financial statements included in this report for further discussion of acquisitions that we made in 2002, 2003 and 2004. In addition, please refer to the “Business Strategy” section in Part I, Item 1. Business, in this report for a table of our hospital acquisitions since our inception.

Revenue Sources

     Our hospitals generate revenues by providing healthcare services to our patients. We are paid for these healthcare services from a number of different sources, depending upon the patient’s medical insurance coverage. Primarily, we are paid by governmental Medicare and Medicaid programs, by commercial insurance, including managed care organizations, and directly by the patient. The amounts we are paid for providing healthcare services to our patients vary depending upon the payor. Governmental payors generally pay significantly less than the hospital’s customary charges for the services provided. Please refer to the “Sources of Revenue” section in Part I, Item 1. Business in this report for a detailed discussion of our revenue sources.

     Revenues from governmental payors, such as Medicare and Medicaid, are controlled by complex rules and regulations that stipulate the amount a hospital is paid for providing healthcare services. These rules and regulations require an extensive amount of effort to ensure our compliance with the requirements to participate in these governmental programs. In addition, these rules and regulations are subject to frequent changes as a result of legislative and administrative action on both the federal and state level. For these reasons, revenues from governmental payors change frequently and require us to regularly monitor the environment in which these governmental programs operate. For example, MMA increased the payments received by non-urban healthcare providers beginning in 2004.

     Revenues from HMOs, PPOs and other private insurers are subject to contracts and other arrangements that require us to discount the amounts we customarily charge for healthcare services. These discounted arrangements often limit our ability to increase charges in response to increasing costs. We actively negotiate with these payors to ensure we are appropriately pricing our healthcare services. Insured patients are generally not responsible for any difference between customary hospital charges and the amounts received from commercial insurance payors. However, the patient is responsible for payments related to amounts not covered by insurance, such as exclusions, deductibles and co-payments.

     Self-pay revenues are generated through the treatment of uninsured patients. Our hospitals experienced an increase in self-pay revenues during the past two years.

Revenues/Volume Trends

     The key metrics we use internally to evaluate our revenues are equivalent admissions, which equate to volume, and revenue per equivalent admission, which relates to pricing and acuity. We anticipate our patient volumes and related revenues will continue to increase as a result of 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 signed 85 admitting physicians during 2004, all of which started work at our hospitals in 2004. In addition, we recruited 18 non-admitting physicians such as emergency room physicians, anesthesiologists, dermatologists, allergists and other important specialists who are vital to meeting community needs and often use hospital outpatient services. During 2005, we anticipate recruiting an additional 92 admitting physicians to start in 2005.

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•   Capital Expenditures. Increases in capital expenditures in our hospitals should increase our local market share and help persuade patients to obtain healthcare services within their communities. The following table reflects our capital expenditures:

	Capital Expenditures (in millions)
	2002		2003		2004
Capital Projects	$	38.8	$	45.6	$	60.4
Routine		18.7		22.7		21.6
Total	$	57.5	$	68.3	$	82.0

•   Medicare Rate Increases. MMA provides a prescription drug benefit for Medicare beneficiaries and also provides numerous provisions that provide incremental funding to hospitals. The earliest provisions of MMA were effective in 2004. Please refer to the “Sources of Revenue” section in Part I, Item 1. Business in this report for a discussion of MMA’s provisions that affect our reimbursement.

     Although we anticipate that our patient volumes will increase, the resulting revenues will likely be partially offset by the following factors:

•   Growth in Outpatient Services. We anticipate that the long-term growth trend in outpatient services will continue. 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. 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:

	Revenues
	2002			2003			2004
Outpatient		50.2	%		50.4	%		51.5	%
Inpatient		48.2			48.4			47.3
Other		1.6			1.2			1.2
Total		100.0	%		100.0	%		100.0	%

•   Efforts to Reduce Payments. Revenues from HMOs, PPOs and other private insurance programs are subject to contracts and other arrangements that require us to discount the amounts we customarily charge for healthcare services. These discounted arrangements often limit our ability to increase charges in response to increasing costs during the term of the contracts.

•   States Implementing Medicaid Cost Containment Measures. A number of states have incurred budget deficits within recent years. To close these budget gaps, certain states have reduced spending and increased taxes. State cost containment activity continues to focus on reducing provider payments and limiting eligible enrollees under the state Medicaid programs.

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Other Trends

•   Increases in Provision for Doubtful Accounts. We experienced an increase in our provision for doubtful accounts during the past two years. The increase was the result of a combination of broad economic factors, including an increased number of uninsured patients, and health care plan design changes that resulted in increased co-payments and deductibles. Our provision for doubtful accounts was as follows (in millions):

	Provision for Doubtful Accounts
	2002		2003		2004
First Quarter	$	12.2	$	15.8	$	20.7
Second Quarter		11.7		15.1		18.9
Third Quarter		10.9		22.4		24.4
Fourth Quarter		15.0		20.8		22.2
Total	$	49.8	$	74.1	$	86.2

The provision for doubtful accounts relates primarily to self-pay revenues. The following table reflects our quarterly self-pay revenue activity which exhibits these trends (in millions):

	Self-Pay Revenues
	2002		2003		2004
First Quarter	$	13.7	$	17.6	$	21.0
Second Quarter		15.5		16.6		21.4
Third Quarter		13.0		21.4		26.8
Fourth Quarter		15.4		20.1		23.7
Total	$	57.6	$	75.7	$	92.9

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/indigent care policy. The following table reflects our charity and indigent care write-offs (in millions):

	Charity and Indigent Care Write-Offs
	2002		2003		2004
First Quarter	$	0.7	$	1.0	$	1.9
Second Quarter		0.8		1.4		2.4
Third Quarter		1.0		1.0		1.7
Fourth Quarter		1.0		1.8		1.8
Total	$	3.5	$	5.2	$	7.8

The following table shows our revenue days in our consolidated accounts receivable:

	Revenue Days in
	Accounts Receivable
	2003		2004
March 31		39.8		39.1
June 30		38.7		38.8
September 30		37.7		40.6
December 31		39.3		38.8

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

	December 31, 2003			December 31, 2004
Insured receivables		41.1	%		40.9	%
Uninsured receivables (including co-payments and deductibles)		58.9			59.1
Total		100.0	%		100.0	%

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

	December 31, 2003			December 31, 2004
0 to 60 days		47.5	%		52.5	%
61 to 150 days		23.6			20.8
Over 150 days		28.9			26.7
Total		100.0	%		100.0	%

We anticipate that our provision for doubtful accounts for the next several quarters will remain at approximately 8.5% — 9% of revenues, excluding the Province hospitals. We implemented a number of operating strategies during 2004 that improved our cash collections of self-pay revenues. However, if the trend of increasing self-pay revenues continues, then this trend could have a material adverse effect on our results of operations and financial position in the future.

•   Increased Purchase Prices for Acquisitions. As previously discussed, we attempt to make acquisitions in a highly competitive environment. We have seen higher prices being paid for hospital acquisitions in the past few years. In some cases, the cost of an acquisition could result in a dilutive effect on our results of operations for up to two years depending on various factors, including the acquired hospital’s results of operations, allocations 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. We rely heavily on HCA-IT for information systems integration as part of our contractual arrangement for information technology services.

•   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. These strategies are working as we experienced a $1.2 million, or 8.9%, decrease in contract labor costs in 2004 compared to 2003. However, we expect that the staffing issues related to nurses and other clinical personnel will continue in the near term.

•   Increases in Supply Costs. During the past few years, we have experienced an increase in supply costs as a percentage of revenues, especially in the areas of pharmaceutical, orthopaedic, and cardiac supplies. We participate in a group purchasing organization in an attempt to achieve optimum supply costs from our vendors. Because of the fixed reimbursement nature of most governmental and commercial payor arrangements, we may not be able to recover supply cost increases through increased revenues.

•   Challenges in professional and general liability costs. In recent years, we have incurred favorable loss experience, as reflected in our external actuarial reports. We implemented enhanced risk management processes for monitoring professional and general liability claims and managing in high-risk areas. Professional and general liability costs remain a challenge to us, and we expect this pressure to continue in the near term.

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Outlook

     We expect to continue increasing our revenues and net income by continuing to selectively acquire hospitals and increasing the operating results of the hospitals we currently own, including the hospitals we expect to acquire from Province. We plan to adhere to our disciplined acquisition strategy as we seek to selectively acquire hospitals. We intend to continue to invest in additional healthcare services in our facilities and implement our operating strategies.

     The Province acquisition will require significant attention from our management to integrate the business practices and operations of Province’s hospitals. In order for us to increase revenues and profitability of our hospitals, there are a number of on-going challenges that we must effectively manage, such as:

•   competition from other healthcare providers, including physicians in our communities;

•   recruiting and retaining quality physicians;

•   increasing the volume of patients in our facilities;

•   staffing issues related to the shortage of clinical personnel and the use of contract labor;

•   identifying and acquiring hospitals at appropriate prices;

•   the integration of new acquisitions into our operating systems and practices;

•   pricing pressures from government and commercial payors; and

•   increased bad debt risk as a result of the increased number of uninsured patients and increased co-payments and deductibles due from insured patients.

     By successfully focusing on each of these challenges, we anticipate increasing our revenues and profitability on both a short-term and long-term basis. These challenges are intensified by our inability to control related trends and the associated risks. Therefore, our actual results may differ from our expectations. To maintain or improve operating margins in the future, we must, among other things, increase patient volumes through physician recruiting while controlling the costs of providing services.

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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.

     The table that follows presents information about our critical accounting estimates, as well as the effects of hypothetical changes in the material assumptions used to develop each estimate:

Balance Sheet or
Income Statement Caption /
Nature of Critical Estimate Item	Assumptions / Approach Used	Sensitivity Analysis
Allowance for doubtful accounts and provision for doubtful accounts
Accounts receivable primarily consist of amounts due from third- party payors and patients. Our ability to collect outstanding receivables is critical to our results of operations and cash flows. To provide for accounts receivable that could become uncollectible in the future, we establish an allowance for doubtful accounts to reduce the carrying value of such receivables to their estimated net realizable value. The primary uncertainty lies with uninsured patient receivables and deductibles, co-payments or other amounts due from individual patients. Our allowance for doubtful accounts, included in our balance sheets as of December 31 was as follows (in millions):     •      2004 - $103.6; and     •      2003 - $111.7. Our provision for doubtful accounts, included in our results of operations, was as follows (in millions):     •      2004 - $86.2;     •      2003 - $74.1; and     •      2002 - $49.8.	The largest component of bad debts in our patient accounts receivable relates to accounts for which patients are responsible, which we refer to as patient responsibility accounts. These accounts include both amounts payable by uninsured patients and co-payments and deductibles payable by insured patients. In general, our policy is to collect deductibles, co-payments and self-pay accounts prior to or at the time of service for non-emergency care. If we do not collect these patient responsibility accounts prior to the delivery of care, the accounts are handled through our billing and collections processes. We verify each patients insurance coverage as early as possible before a scheduled admission or procedure, including with respect to eligibility, benefits and authorization/pre- certification requirements, in order to notify patients of the amounts for which they will be responsible. We verify insurance coverage within a reasonable amount of time for all emergency room visits and urgent admissions in compliance with the Emergency Medical Treatment and Active Labor Act.	If self-pay revenues during 2004 were changed by 1%, our 2004 after- tax income from continuing operations would change by approximately $0.6 million. This is only one example of reasonably possible sensitivity scenarios. The process of determining the allowance requires us to estimate uncollectible patient accounts that are highly uncertain and requires a high degree of judgment. It is impacted by changes in regional economic conditions, business office operations, payor mix and trends in federal or state governmental healthcare coverage. A significant increase in our provision for doubtful accounts (as a percentage of revenues) would lower our earnings. This would adversely affect our results of operations, financial condition, liquidity and future access to capital.

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Balance Sheet or
Income Statement Caption /
Nature of Critical Estimate Item		Assumptions / Approach Used	Sensitivity Analysis
	In general, we go through the following steps in collecting accounts receivable:
	•	cash collection of deductibles, co-payments and self-pay accounts prior to or at the time service is provided;
	•	billing and follow-up with third party payors;
	•	collection calls;
	•	utilization of collection agencies; and
	•	if collection efforts are unsuccessful, write off of the accounts.
	Our policy is to write off accounts after all collection efforts have failed, which is typically no longer than one year after the date of discharge of the patient. Patient responsibility accounts represent the majority of our write-offs. All of our hospitals retain third-party collection agencies for billing and collection of delinquent accounts. At most of our hospitals, more than one collection agency is used to promote competition and improve performance results. The selection of collection agencies and the timing of referral of an account to a collection agency varies among hospitals. Generally, we do not write off accounts prior to utilizing the services of a collection agency. Once collection efforts have proven unsuccessful, an account is written off from our patient accounting system against the allowance for doubtful accounts.
	We determine the adequacy of the allowance for doubtful accounts utilizing a number of analytical tools and benchmarks to determine the adequacy of the consolidated allowance. No single statistic or measurement determines the adequacy of the allowance.

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Balance Sheet or
Income Statement Caption /
Nature of Critical Estimate Item	Assumptions / Approach Used	Sensitivity Analysis
	As it relates to our recently-acquired hospitals, we monitor trends in revenues and collections on a monthly basis for 18 to 24 months subsequent to the acquisition on a facility-by-facility basis. As it relates to our core hospitals, which we refer to as same- hospital, we monitor the revenue trends by payor classification on a month-by-month basis along with the composition of our accounts receivable agings. This review is focused primarily on trends in self- pay revenues, accounts receivable, co-payment receivables and historical payment patterns. In addition, we analyze other factors such as revenue days in accounts receivable and reviewing admissions and charges by physicians, primarily focusing on recently recruited physicians.
Revenue recognition / Allowance for contractual discounts We recognize revenues in the period in which services are performed. Accounts receivable primarily consist of amounts due from third- party payors and patients. Amounts we receive for treatment of patients covered by governmental programs, such as Medicare and Medicaid, and other third-party payors such as HMOs, PPOs and other private insurers, are generally less than our established billing rates. Accordingly, our gross revenues and accounts receivable are reduced to net realizable value through an allowance for contractual discounts. Approximately 86.8% of our revenues during 2004 relate to discounted charges. The sources of these revenues were as follows (as a percentage of total revenues):     •      Medicare – 36.9%;	Revenues are recorded at estimated net amounts due from patients, third- party payors and others for health care services provided. We utilize multiple patient accounting systems. Therefore, estimates for contractual allowances are calculated using computerized and manual processes depending on the type of payor involved and the patient accounting system used by each of our hospitals. In certain hospitals, the contractual allowances are calculated by a computerized system based on payment terms for each payor. In other hospitals, the contractual allowances are determined manually using historical collections for each type of payor. For all hospitals, certain manual estimates are used in calculating contractual allowances based on historical collections from payors that are not significant or have not

33

Balance Sheet or
Income Statement Caption /
Nature of Critical Estimate Item	Assumptions / Approach Used	Sensitivity Analysis
•      Medicaid – 11.2%; and     •      Managed Care – 38.7%.	entered into a contract with us. All contractual adjustments regardless of type of payor or method of calculation, are reviewed and compared to actual experience.
	Governmental payors	Governmental payors
	The majority of services performed on Medicare and Medicaid patients are reimbursed at predetermined reimbursement rates. The differences between the established billing rates (i.e., gross charges) and the predetermined reimbursement rates are recorded as contractual discounts and deducted from gross charges. Under a prospective reimbursement system, there is no adjustment or settlement of the difference between the actual cost to provide the service and the predetermined reimbursement rates. Discounts for retrospectively cost- based revenues, which were more prevalent in periods before 2000, are estimated based on historical and current factors and are adjusted in future periods when settlements of filed cost reports are received. Final settlements under these programs are subject to adjustment based on administrative review and audit by third party intermediaries, which can take several years to resolve completely.	Because the laws and regulations governing the Medicare and Medicaid programs are complex and subject to change, the estimates we record could change by material amounts. Adjustments related to final settlements increased our revenues by the following amounts (in millions): •      2004 - $7.5; •      2003 - $6.0; and •      2002 - $13.0.
	Managed Care	Managed Care
	For most managed care plans, estimated contractual allowances are adjusted to actual contractual allowances as cash is received and claims are reconciled. We evaluate the following criteria in developing the estimated contractual allowance percentages each month: historical contractual allowance trends based on actual claims paid by managed care payors; review of contractual allowance information reflecting	If our overall estimated contractual discount percentage on all of our managed care revenues were changed by 1%, our 2004 after-tax income from continuing operations would change by approximately $4.5 million. This is only one example of reasonably possible sensitivity scenarios. The process of determining the allowance requires

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Balance Sheet or
Income Statement Caption /
Nature of Critical Estimate Item	Assumptions / Approach Used	Sensitivity Analysis
	current contract terms; consideration and analysis of changes in payor mix reimbursement levels; and other issues that may impact contractual allowances.	us to estimate the amount expected to be received and requires a high degree of judgment. It is impacted by changes in managed care contracts and other related factors.
		A significant increase in our estimate of contractual discounts would lower our earnings. This would adversely affect our results of operations, financial condition, liquidity and future access to capital.
Professional and general liability claims
We are subject to potential medical malpractice lawsuits and other claims as part of providing healthcare services. To mitigate a portion of this risk, we maintained insurance for individual malpractice claims exceeding $1.0 million for 2001. For 2002, we increased our self-insured retention level to $10.0 million on individual malpractice claims. For 2003, we lowered our self-insured retention level to $5.0 million on individual malpractice claims and for 2004, we increased our self-insured retention level back to $10.0 million. Each year, we obtain quotes from various malpractice insurers with respect to the cost of obtaining medical malpractice insurance coverage. We compare these quotes to our most recent actuarially determined estimates of losses at various self-insured retention levels. Accordingly, changes in insurance costs affect the self-insurance retention level we choose each year. As insurance costs have increased in recent years, we have accepted a higher level of risk in self-insured retention levels .	Our 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 the determination of reserve estimates. Reserve estimates are discounted to present value using a 5.0% discount rate. We revise our reserve estimates twice each year based upon the calculations performed by our independent actuaries. Our estimated reserve for professional and general liability claims will be significantly affected if current and future claims differ from historical trends. While we monitor reported claims closely and consider potential outcomes as estimated by our independent actuaries when determining our 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. In addition, certain states have passed varying forms of tort reform limiting the amount of medical malpractice losses. If such laws are passed in the states where our hospitals are located, our loss estimates could decrease.	During 2004, we ceased receiving reserve estimates from one of the three actuaries that had historically been used to calculate loss reserve estimates. This change in our estimation process reduced our reserve levels and related professional and general liability insurance expense for 2004 by $4.0 million, on a pretax basis, or $0.06 per diluted share. We continue to derive our estimates for financial reporting purposes by using a mathematical average of the actuarial valuations from our other two actuaries. The results of the updated actuarial valuations from these two actuaries reduced our reserve estimates for years prior to 2004 by $2.4 million on a pretax basis, or $0.03 per diluted share, which reduced our professional and general liability expense in 2004. Additionally, actuarial calculations include a large number of variables that may significantly impact the estimate of ultimate losses that are recorded during a reporting period. Professional judgment is used by each actuary in determining their loss estimates by selecting factors that are considered appropriate by the actuary for our specific circumstances. Changes in assumptions used by our independent actuaries with respect to demographics, industry trends and

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Balance Sheet or
Income Statement Caption /
Nature of Critical Estimate Item	Assumptions / Approach Used	Sensitivity Analysis
The reserve for professional and general liability claims, included in our balance sheets as of December 31 was as follows (in millions):      •      2004 - $27.2; and      •      2003 - $27.5. The reserve for professional and general liability claims as of the balance sheet dates reflects management’s current estimate of all outstanding losses, including incurred but not reported losses, based upon actuarial calculations. The loss estimates included in the actuarial calculations may change in the future based upon updated facts and circumstances. The total cost of professional and general liability coverage, included in our results of operations, was as follows (in millions):	We implemented enhanced risk management processes for monitoring professional and general liability claims and managing losses in high-risk areas during 2002 and 2003 to attempt to reduce loss levels and appropriately manage risk. We refined our estimation process for determining our reserves for professional and general liability claims during 2003 by expanding from using one actuary to using multiple actuaries. We use the calculations of each actuary and average their results in determining our recorded reserve levels. This averaging process results in a refined estimation approach that we believe produces a more reliable estimate of ultimate losses.	judgmental selection of factors may impact our recorded reserve levels and our results of operations. We derive our estimates for financial reporting purposes by using a mathematical average of our actuarial results. Changes in our initial estimates of professional and general liability claims are non-cash charges and accordingly, there would be no material impact on our liquidity or capital resources.
•      2004 - $5.4;      •      2003 - $8.3; and      •      2002 - $10.8.
Our cost for professional and general liability coverage each year includes the actuarially determined estimate of losses for the current year, including claims incurred but not reported; the change in the estimate of losses for prior years based upon actual claims development experience as compared to prior actuarial projections; the insurance premiums for losses in excess of our self-insured retention levels; the administrative costs of the insurance program and interest expense related to the discounted portion of the liability.
Accounting for income taxes
Deferred tax assets generally represent items that will result in a tax deduction in future years for which we have already recorded the tax benefit in our income statement.	The first step in determining the deferred tax asset valuation allowance is identifying reporting jurisdictions where we have a history of tax and operating losses or	Our deferred tax liabilities exceeded our deferred tax assets by $26.6 million as of December 31, 2004, excluding the impact of valuation allowances. Historically, we have

36

Balance Sheet or
Income Statement Caption /
Nature of Critical Estimate Item	Assumptions / Approach Used	Sensitivity Analysis
We assess the likelihood that deferred tax assets will be recovered from future taxable income. To the extent we believe that recovery is not probable, a valuation allowance is established. To the extent we establish a valuation allowance or increase this allowance, we must include an expense as part of the income tax provision in our results of operations. Our deferred tax asset balances in our balance sheets as of December 31 were as follows (in millions):      •      2004 - $51.7; and      •      2003 - $36.3. Our valuation allowances for deferred tax assets in our balance sheets as of December 31 were as follows (in millions):      •      2004 - $3.4; and      •      2003 - $4.0. In addition, significant judgment is required in determining and assessing the impact of certain tax- related contingencies. We establish accruals when, despite our belief that our tax return positions are fully supportable, it is probable that we have incurred a loss related to tax contingencies and the loss or range of loss can be reasonably estimated. We adjust the accruals related to tax contingencies as part of our provision for income taxes in our results of operations based upon changing facts and circumstances, such as progress of a tax audit, development of industry related examination issues, as well as legislative, regulatory or judicial developments. A number of years may elapse before a particular matter, for which we have established an accrual, is audited and resolved.	are projected to have losses in future periods as a result of changes in operational performance. We then determine if a valuation allowance should be established against the deferred tax assets for that reporting jurisdiction. The second step is to determine the amount of the valuation allowance. We will generally establish a valuation allowance equal to the net deferred tax asset (deferred tax assets less deferred tax liabilities) related to the jurisdiction identified in step one of the analysis. In certain cases, we may not reduce the valuation allowance by the amount of the deferred tax liabilities depending on the nature and timing of future taxable income attributable to deferred tax liabilities. In assessing tax contingencies, we identify tax issues that we believe may be challenged upon examination by the taxing authorities. We also assess the likelihood of sustaining tax benefits associated with tax planning strategies and reduce tax benefits based on management’s judgment regarding such likelihood. We compute the tax and related interest on each contingency. We then determine the amount of loss, or reduction in tax benefits based upon the foregoing and reflect such amount as a component of the provision for income taxes in the reporting period. During each reporting period, we assess the facts and circumstances related to recorded tax contingencies. If tax contingencies are no longer deemed probable based upon new facts and circumstances, the contingency is reflected as a reduction of the provision for income taxes in the current period.	produced federal taxable income. Therefore, the likelihood of our not realizing the federal tax benefit of our deferred tax assets is remote. However, we do have subsidiaries with a history of tax losses in certain state jurisdictions.If our assertion regarding the future profitability of those subsidiaries were incorrect, then our deferred tax assets would be understated by the amount of the valuation allowance of $3.4 million at December 31, 2004. The IRS may propose adjustments for items we have failed to identify as tax contingencies. If the IRS were to propose and sustain assessments equal to 10% of our taxable income for 2004, we would incur $5.0 million of additional tax payments plus applicable penalties and interest.

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     Our management has discussed the development and selection of these critical accounting estimates with the audit committee of our Board of Directors and the audit committee has reviewed the disclosure presented above relating to our critical accounting estimates.

     The above table of critical accounting estimates is not intended to be a comprehensive list of all of our accounting policies that require estimates. We believe that of our significant accounting policies, as discussed in Note 1 of our consolidated financial statements, the estimates discussed above involve a higher degree of judgment and complexity. We believe the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations and our financial condition.

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Results of Operations

Operating Results Summary

     The following tables present summaries of results of operations for the three months ended December 31, 2003 and 2004 and for the years ended December 31, 2002, 2003, and 2004 (dollars in millions, except revenues per equivalent admission):

	Three Months Ended
	December 31,
	2003		2004		Change		% Change
Revenues	$	229.2	$	257.5	$	28.3		12.4	%
Salaries and benefits (a)		90.1		102.7		12.6		14.0
Supplies (b)		30.9		33.7		2.8		9.3
Other operating expenses (c)		39.3		42.9		3.6		9.1
Provision for doubtful accounts		20.8		22.2		1.4		6.6
Depreciation and amortization		11.6		13.6		2.0		17.1
Interest expense, net		2.9		2.9		—		(1.0	)
ESOP expense		2.0		2.3		0.3		23.0
		197.6		220.3		22.7		11.5
Income from continuing operations before minority interests and income taxes		31.6		37.2		5.6		17.3
Minority interests in earnings of consolidated entities		0.2		0.3		0.1		(9.6	)
Income from continuing operations before income taxes		31.4		36.9		5.5		17.6
Provision for income taxes		11.7		13.9		2.2		17.8
Income from continuing operations	$	19.7	$	23.0	$	3.3		17.5

	Three Months Ended December 31,
	2003			2004
	% of Revenues			% of Revenues
Revenues		100.0	%		100.0	%
Salaries and benefits (a)		39.3			39.9
Supplies (b)		13.5			13.1
Other operating expenses (c)		17.1			16.6
Provision for doubtful accounts		9.1			8.6
Depreciation and amortization		5.1			5.4
Interest expense, net		1.3			1.1
ESOP expense		0.8			0.9
		86.2			85.6
Income from continuing operations before minority interests and income taxes		13.8			14.4
Minority interests in earnings of consolidated entities		0.1			0.1
Income from continuing operations before income taxes		13.7			14.3
Provision for income taxes		5.1			5.3
Income from continuing operations		8.6	%		9.0	%

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	Three Months Ended December 31,
	2003					2004
			% Change					% Change
	Amount		from Prior Year			Amount		from Prior Year
Continuing Operations (j)
Number of hospitals at end of period		28		3.7			29		3.6
Admissions (d)		23,722		20.9			22,769		(4.0	)
Equivalent admissions (e)		46,338		22.9			45,744		(1.3	)
Revenues per equivalent admission	$	4,946		(4.2	)	$	5,630		13.8
Outpatient factor (e)		1.96		2.1			2.01		2.6
Emergency room visits (f)		110,842		28.0			103,852		(6.3	)
Inpatient surgeries		6,281		18.2			6,500		3.5
Outpatient surgeries (g)		18,277		18.1			19,133		4.7
Total surgeries		24,558		18.1			25,633		4.4
Medicare case mix index (i)		1.17		1.7			1.20		2.6
Same-hospital (h):
Revenues	$	222.7		N/M		$	241.0		8.2
Number of hospitals at end of period		27		N/M			27		—
Admissions (d)		23,135		N/M			21,621		(6.5	)
Equivalent admissions (e)		44,912		N/M			42,721		(4.9	)
Revenues per equivalent admission	$	4,961		N/M		$	5,641		13.7
Outpatient factor (e)		1.94		N/M			1.98		2.1
Emergency room visits (f)		107,289		N/M			95,763		(10.7	)
Inpatient surgeries		6,115		N/M			6,063		(0.9	)
Outpatient surgeries (g)		17,610		N/M			17,582		(0.2	)
Total surgeries		23,725		N/M			23,645		(0.3	)
Medicare case mix index (i)		1.16		N/M			1.19		2.6

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	Years Ended December 31,
	2003		2004		Change			% Change
Revenues	$	875.6	$	996.9	$	121.3			13.9	%
Salaries and benefits (a)		352.3		399.4		47.1			13.4
Supplies (b)		114.2		129.1		14.9			13.1
Other operating expenses (c)		155.4		166.8		11.4			7.4
Provision for doubtful accounts		74.1		86.2		12.1			16.3
Depreciation and amortization		43.1		48.1		5.0			11.6
Interest expense, net		12.8		12.6		(0.2	)		(1.2	)
Debt retirement costs		—		1.5		1.5			N/M
ESOP expense		6.9		9.4		2.5			37.5
		758.8		853.1		94.3			12.4
Income from continuing operations before minority interests and income taxes		116.8		143.8		27.0			23.0
Minority interests in earnings of consolidated entities		0.7		1.0		0.3			33.6
Income from continuing operations before income taxes		116.1		142.8		26.7			22.9
Provision for income taxes		45.9		56.0		10.1			21.7
Income from continuing operations	$	70.2	$	86.8	$	16.6			23.7

	Years Ended December 31,
	2002		2003		Change			% Change
Revenues	$	714.9	$	875.6	$	160.7			22.5	%
Salaries and benefits (a)		280.0		352.3		72.3			25.9
Supplies (b)		88.7		114.2		25.5			28.7
Other operating expenses (c)		129.6		155.4		25.8			19.8
Provision for doubtful accounts		49.8		74.1		24.3			48.9
Depreciation and amortization		35.0		43.1		8.1			23.0
Interest expense, net		13.3		12.8		(0.5	)		(4.0	)
Debt retirement costs		31.0		¾		(31.0	)		(100.0	)
ESOP expense		9.7		6.9		(2.8	)		(29.1	)
		637.1		758.8		121.7			19.1
Income from continuing operations before minority interests and income taxes		77.8		116.8		39.0			50.3
Minority interests in earnings of consolidated entities		2.2		0.7		(1.5	)		(66.7	)
Income from continuing operations before income taxes		75.6		116.1		40.5			53.7
Provision for income taxes		32.7		45.9		13.2			40.6
Income from continuing operations	$	42.9	$	70.2	$	27.3			63.8

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	Year Ended December 31,
	2002			2003			2004
	% of			% of			% of
	Revenues			Revenues			Revenues
Revenues		100.0	%		100.0	%		100.0	%
Salaries and benefits (a)		39.2			40.2			40.1
Supplies (b)		12.4			13.0			12.9
Other operating expenses (c)		18.1			17.8			16.7
Provision for doubtful accounts		7.0			8.5			8.7
Depreciation and amortization		4.8			4.8			4.9
Interest expense, net		1.9			1.5			1.3
Debt retirement costs		4.3			—			0.1
ESOP expense		1.4			0.8			0.9
		89.1			86.6			85.6
Income from continuing operations before minority interests and income taxes		10.9			13.4			14.4
Minority interests in earnings of consolidated entities		0.3			0.1			0.1
Income from continuing operations before income taxes		10.6			13.3			14.3
Provision for income taxes		4.6			5.3			5.6
Income from continuing operations		6.0	%		8.0	%		8.7	%

	Year Ended December 31,
	2002				2003					2004
			% Change				% Change					% Change
			from				from					from
	Amount		Prior Year		Amount		Prior Year			Amount		Prior Year
Continuing Operations (j):
Number of hospitals at end of period		27		22.7		28		3.7			29		3.6
Admissions (d)		74,488		10.4		88,695		19.1			91,772		3.5
Equivalent admissions (e)		142,570		16.3		175,439		23.1			183,819		4.8
Revenues per equivalent admission	$	5,015		3.9	$	4,991		(0.5	)	$	5,423		8.7
Outpatient factor (e)		1.91		4.9		1.98		3.7			2.0		1.0
Emergency room visits (f)		329,922		14.2		408,321		23.8			416,060		1.9
Inpatient surgeries		20,480		16.5		24,528		19.8			26,235		7.0
Outpatient surgeries (g)		59,950		16.0		71,488		19.2			75,508		5.6
Total surgeries		80,430		16.1		96,016		19.4			101,743		6.0
Medicare case mix index (i)		1.15		—		1.17		1.7			1.18		0.9
Same-hospital (h):
Revenues		N/M		N/M	$	869.1		N/M		$	951.7		9.5
Number of hospitals at end of period		N/M		N/M		27		N/M			27		—
Admissions (d)		N/M		N/M		88,108		N/M			88,461		0.4
Equivalent admissions (e)		N/M		N/M		174,013		N/M			175,064		0.6
Revenues per equivalent admission		N/M		N/M	$	4,995		N/M		$	5,436		8.8
Outpatient factor (e)		N/M		N/M		1.98		N/M			1.98		—
Emergency room visits (f)		N/M		N/M		404,768		N/M			392,422		(3.1	)
Inpatient surgeries		N/M		N/M		24,362		N/M			25,030		2.7
Outpatient surgeries (g)		N/M		N/M		70,821		N/M			71,077		0.4
Total surgeries		N/M		N/M		95,183		N/M			96,107		1.0
Medicare case mix index (i)		N/M		N/M		1.17		N/M			1.18		0.9

N/M – not meaningful.

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(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, 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 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 and Bartow, which is held for sale. The costs of corporate overhead are included in same-hospital information.
(i)	Refers to the acuity or severity of illness of an average Medicare patient at our hospitals.
(j)	Continuing operations information excludes the operations of Bartow, which we plan to sell and is classified as held for sale. All historical amounts have been restated to exclude the operations of Bartow. Please refer to Note 3 of our consolidated financial statements included elsewhere herein for a discussion of this potential asset sale.

For the Quarters Ended December 31, 2003 and 2004

     Revenues

     Our revenues for the quarter ended December 31, 2004 increased by $28.3 million, or 12.4%, to $229.2 million compared to the quarter ended December 31, 2003. This increase is attributable to a number of factors, including:

•   $18.3 million from our same-hospital revenues; and

•   $10.0 million from our 2003 acquisition of Spring View Hospital and 2004 acquisition of River Parishes Hospital.

     Adjustments to estimated reimbursement amounts increased our revenues by $3.7 million for the quarter ended December 31, 2004 compared to decreasing our revenues by $0.1 million for the quarter ended December 31, 2003. Of the $3.7 million in revenues during the quarter ended December 31, 2004, $2.3 million related to Medicaid settlements, which covered a number of settlement years at one of our rural health clinics. We employ the physicians at this clinic and these settlements also increased their salary and wages. The net impact on our income from continuing operations before income taxes was only $0.2 million. Our DSH payments from Medicare for the quarter ended December 31, 2004 were $6.5 million, an increase of $4.1 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 December 31, 2004 increased by $3.2 million, or 2.8%, to $118.1 million compared to the quarter ended December 31, 2003. However, our same-hospital admissions decreased by 6.5% in the quarter ended December 31, 2004 as compared to the quarter ended December 31, 2003.

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The primary factor that caused this volume decrease was a 28.8% decrease in respiratory or flu-related admissions in the quarter ended December 31, 2004 as compared to the same period in 2003. This decrease was partially offset by increases in musculoskeletal and circulatory admissions, which involve higher intensity procedures. The increase in higher intensity procedures is the result of capital spending at our facilities and strong physician recruitment in the past year. Although our inpatient surgery cases decreased slightly in the quarter ended December 31, 2004 as compared to the same period in 2003, our higher acuity cases such as orthopaedic and cardiovascular surgeries increased.

     Our same-hospital outpatient revenues for the quarter ended December 31, 2004 increased by $15.5 million, or 14.8%, to $120.3 million compared to the quarter ended December 31, 2003. This outpatient growth was largely driven by an increase in radiology procedures such as CT-scans and MRIs, cardiac catheterization procedures and nuclear medicine cases. This increase was partially offset by a slight decrease in same-hospital outpatient surgeries and a 10.7% decrease in same-hospital emergency room visits. This large decrease was primarily the result of a decline in flu-related cases. Outpatient surgeries declined slightly, primarily as a result of competition with a new physician-owned surgery center near our Dodge City, Kansas hospital.

     After factoring all of the above, our equivalent admissions decreased on a same-hospital basis for the quarter ended December 31, 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 December 31, 2004 increased by $680 per equivalent admission over the same period in 2003, reflecting positive reimbursement trends and higher intensity procedures, as discussed above.

     The table below shows the sources of our revenues for the quarters ended December 31, expressed as percentages of total revenues, including adjustments to estimated reimbursement amounts:

	Continuing Operations						Same-hospital
	2003			2004			2003			2004
Medicare		36.6	%		36.5	%		36.7	%		37.1	%
Medicaid		11.0			11.4			11.0			11.7
HMOs, PPOs and other private insurers		39.8			38.8			39.8			38.8
Self Pay		8.7			9.2			8.5			8.9
Other		3.9			4.1			4.0			3.5
Total		100.0	%		100.0	%		100.0	%		100.0	%

     Expenses

     Salaries and benefits as a percentage of revenues increased from 39.3% for the quarter ended December 31, 2003 to 39.9% for the quarter ended December 31, 2004, primarily as a result of our recent acquisition of River Parishes Hospital, which had higher salaries and benefits as a percentage of revenues than our average and the increases in salaries to the employed physicians at the rural health clinic as a result of the Medicaid settlements described in “Revenues” above. Man-hours per equivalent admission increased 5.9% for the quarter ended December 31, 2004 over the same period last year. We had a 9.1% increase in salaries and benefits per man-hour in the quarter ended December 31, 2004 compared to the same period in 2003, primarily because of an increase in employee benefit costs. However, our contract labor costs decreased by 11.2% to $2.7 million in the quarter ended December 31, 2004 compared to $3.0 million in the quarter ended December 31, 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 decreased from 13.5% for the quarter ended December 31, 2003 to 13.1% for the quarter ended December 31, 2004, on a consolidated basis. On a consolidated and same-hospital basis, our cost of supplies per equivalent admission increased 10.7% and 10.5%, respectively, in the quarter ended December 31, 2004 as a result of rising supply costs compared to the same period in 2003, particularly in the pharmaceutical, cardiac and orthopaedic hip and joint implant areas. This was partially offset because our same-hospital surgeries,

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which generally incur higher supply costs per equivalent admission, decreased for the quarter ended December 31, 2004 over the same period in 2003.

     Other operating expenses as a percentage of revenues decreased from 17.1% for the quarter ended December 31, 2003 to 16.6% for the quarter ended December 31, 2004, primarily as a result of the 12.4% increase in our revenues, which grew at a faster rate than our other operating expenses. This is because a portion of our other operating expenses are fixed and not volume driven. Our professional and general liability insurance expense was a negative $1.1 million during the quarter ended December 31, 2004 compared to $0.7 million in the quarter ended December 31, 2003. This decrease relates to favorable loss experience as reflected in our year-end external actuarial reports and our 2004 change to cease using one of our actuaries to estimate projected losses under the self-insured portion of our insurance program, as further discussed above in the “Critical Accounting Estimates.” We believe the favorable loss experience was a direct result of our implementation of risk management programs, risk assessment surveys and follow-up, and quality care programs instituted. Our physician recruiting costs increased from $3.5 million in the quarter ended December 31, 2003 to $4.6 million in the quarter ended December 31, 2004 as a result of our increased number of recruited physicians. Our HCA information technology services expenses for the quarter ended December 31, 2004 was $4.7 million compared to $3.8 million for the same period in 2003 as a result of an increased number of hospitals and information system conversion fees.

     Provision for doubtful accounts as a percentage of revenues decreased from 9.1% for the quarter ended December 31, 2003 to 8.6% for the quarter ended December 31, 2004. We have implemented numerous programs at our facilities to increase cash collections prior to or at the time the service is provided without limiting the access to healthcare services for those unable to pay for such services. 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 18.9% from $20.1 million for the quarter ended December 31, 2003 to $23.7 million for the quarter ended December 31, 2004. The factors influencing this increase are primarily a combination of broad economic factors, including the increased number of uninsured patients and health care plan design changes that resulted in increased co-payments and deductibles.

     Depreciation and amortization expense increased to $13.6 million in the quarter ended December 31, 2004 from $11.6 million in the quarter ended December 31, 2003, primarily as a result of our acquisitions and depreciation associated with recently completed capital improvements at our facilities.

     The provision for income taxes from continuing operations increased to $13.9 million in the quarter ended December 31, 2004 from $11.7 million in the quarter ended December 31, 2003. The income tax provisions from continuing operations reflected an effective income tax rate of 37.5% for the quarter ended December 31, 2004 compared to 37.4% for the quarter ended December 31, 2003.

For the Years Ended December 31, 2003 and 2004

     Revenues

     Our revenues for 2004 increased by $121.3 million, or 13.9%, to $996.9 million compared to 2003. This increase is attributable to:

•   $82.6 million increase in our same-hospital revenues; and

•   $38.7 million in revenues from our 2003 acquisition of Spring View Hospital and 2004 acquisition of River Parishes Hospital.

     Adjustments to estimated reimbursement amounts increased our revenues by $7.5 million for 2004 compared to $6.0 million for 2003. In addition, as discussed in Note 1 to our consolidated financial statements, we recognized $3.2 million in additional revenues during 2004 following the confirmation by CMS of a Medicare disproportionate share (“DSH”) designation at one of our hospitals. Our DSH payments from Medicare for 2004 were $21.2 million, an increase of $11.2 million over 2003. This increase is primarily the result of the DSH payment increases under MMA.

     Our same-hospital inpatient revenues for 2004 increased by $42.3 million, or 10.0%, to $463.4 million compared

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to 2003. The primary factors causing this change were increases in admissions and inpatient surgeries, which involve higher intensity procedures. The increase in higher intensity procedures is the result of capital spending at our facilities and strong physician recruitment in the past year.

     Our same-hospital outpatient revenues for 2004 increased by $40.2 million, or 9.2%, to $477.7 million compared to 2003. This outpatient growth was largely driven by a 0.4% increase in same-hospital outpatient surgeries, an increase in radiology procedures such as CT-scans and MRIs, as well as cardiac catheterization procedures. In addition, the $40.2 million increase in revenues includes $3.2 million from the Medicare DSH designation described in Note 1 to our consolidated financial statements in this report.

     After factoring all of the above, our equivalent admissions increased by 0.6% on a same-hospital basis for 2004 compared to 2003. As it relates to pricing and acuity, our same-hospital revenues per equivalent admission for 2004 increased 8.8%, or $441 per equivalent admission, over 2003 reflecting positive reimbursement trends and higher intensity procedures as discussed above.

     The table below shows the sources of our revenues for the years ended December 31, expressed as percentages of total revenues:

	Continuing Operations						Same-hospital
	2003			2004			2003			2004
Medicare		35.9	%		36.9	%		36.6	%		37.3	%
Medicaid		10.9			11.2			10.9			11.3
HMOs, PPOs and other private insurers		40.5			38.7			39.8			38.7
Self Pay		8.6			9.3			8.6			9.0
Other		4.1			3.9			4.1			3.7
Total		100.0	%		100.0	%		100.0	%		100.0	%

     Expenses

     Salaries and benefits decreased slightly as a percentage of revenues for 2004 as compared to 2003, primarily as a result of the 13.9% increase in our revenues. Man-hours per equivalent admission increased 1.2% for 2004 over 2003. In addition, we had a 6.1% increase in salaries and benefits per man-hour in 2004 compared to 2003. However, our contract labor costs decreased by 8.9% to $12.2 million in 2004 compared to $13.4 million in 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 decreased slightly for 2004 as compared to 2003, primarily as a result of the increase in our revenues. On both a consolidated and same-hospital basis, our cost of supplies per equivalent admission increased 7.9% in 2004 as a result of rising supply costs compared to 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 1.0% for 2004 over 2003.

     Other operating expenses as a percentage of revenues decreased from 17.8% in 2003 to 16.7% in 2004, primarily as a result of the 13.9% increase in our revenues and a $2.9 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 $5.4 million during 2004 compared to $8.3 million in 2003. This decrease relates to favorable loss experience as reflected in our year-end external actuarial reports and our estimate changes regarding the use of multiple actuaries to estimate projected losses under the self-insured portion of our insurance program, as further discussed above in the “Critical Accounting Estimates,” included elsewhere herein. However, our physician recruiting costs increased from $12.0 million in 2003 to $14.8 million in 2004 as a result of our increased number of recruited physicians. Our HCA information technology services expense for 2004 increased to $15.8 million compared to $13.7 million in 2003 as a result of an increased number of hospitals and information system conversion fees.

     Provision for doubtful accounts increased as a percentage of revenues from 8.5% in 2003 to 8.7% in 2004. 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 22.7% from $75.7 million for 2003 to $92.9 million for 2004. The factors influencing this increase are primarily a combination of broad economic factors,

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including the increased number of uninsured patients and plan design changes increasing co-payments and deductibles. On a same-hospital basis, the provision for doubtful accounts remained constant as a percentage of revenues at 8.5% for both 2004 and 2003. We have implemented numerous programs at our facilities to increase cash collections prior to or at the time the service is provided without limiting the access to healthcare services for those unable to pay for such services.

     Depreciation and amortization expense increased to $48.1 million in 2004 from $43.1 million in 2003, primarily as a result of our acquisitions and depreciation associated with recently completed capital improvements at our facilities.

     The provision for income taxes from continuing operations increased to $56.0 million in 2004 from $45.9 million in 2003. The income tax provisions from continuing operations reflected an effective income tax rate of 39.2% for 2004 compared to 39.6% for 2003. The effective tax rate decreased primarily as a result of decreases to valuation allowances attributable to state net operating losses.

For the Years Ended December 31, 2002 and 2003

     Revenues

     Our revenues for 2003 increased by $160.7 million, or 22.5%, to $875.6 million compared to 2002. This increase is attributable to a number of factors, including:

•   $34.8 million from our same-hospital revenues, excluding adjustments to estimated reimbursement amounts and including a $2.9 million decrease in non-patient revenues;

•   $126.5 million increase from our 2002 acquisitions (our 2002 acquisitions had revenues of $140.1 million and $13.6 million in 2003 and 2002, respectively);

•   $6.4 million from our 2003 acquisition of Spring View Hospital; and

•   $7.0 million net decrease in our adjustments to estimated reimbursement amounts. Adjustments to estimated reimbursement amounts resulted in an increase to net revenues of $6.0 million in 2003 compared to $13.0 million in 2002. Net adjustments of $5.0 million of the $13.0 million in 2002 related to the favorable settlement of a Kentucky inpatient Medicaid rate appeal that covered the period January 1, 1996 through June 30, 2002. The remaining $8.0 million of adjustments related primarily to cost reports that were delayed by outpatient PPS. The adjustments to estimated reimbursement amounts had a favorable diluted earnings per share effect of $0.08 for 2003 and $0.17 for 2002.

     Our same-hospital inpatient revenues, excluding adjustments to estimated reimbursement amounts, in 2003 increased by $16.6 million, or 5.1%, to $344.9 million compared to 2002. Our same-hospital Medicare case mix increased from 1.16 in 2002 to 1.18 in 2003. A primary driver in the case mix increase was our open-heart program at Lake Cumberland Regional Hospital that opened in the fourth quarter of 2002. In addition, we had a 0.8% increase in our inpatient surgeries in 2003 compared to 2002, on a same-hospital basis.

     Our same-hospital outpatient revenues, excluding adjustments to estimated reimbursement amounts, in 2003 increased by $21.8 million, or 6.3%, to $369.3 million compared to 2002. This outpatient growth was largely driven by a 1.5% increase in same-hospital outpatient surgeries and a 1.9% increase in same-hospital emergency room visits.

     After factoring all of the above, our equivalent admissions increased by 1.0% on a same-hospital basis in 2003 compared to 2002. As it relates to pricing and acuity, our same-hospital revenues per equivalent admission for 2003 were up 2.9%, or $148 per equivalent admission, over 2002. Revenues per equivalent admission on our 2002 acquisitions were approximately $1,000 less than our same-hospital revenues per equivalent admission during 2003 because our 2002 acquisitions are located in states with lower reimbursement levels.

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     The table below shows the sources of our revenues for the years ended December 31, expressed as percentages of total revenues, including adjustments to estimated reimbursement amounts:

	Continuing Operations						Same-hospital
	2002			2003			2002			2003
Medicare		35.4	%		35.9	%		35.5	%		36.2	%
Medicaid		11.6			10.9			11.7			11.1
HMOs, PPOs and other private insurers		43.0			40.5			43.1			42.5
Self Pay		8.1			8.6			7.9			8.1
Other		1.9			4.1			1.8			2.1
Total		100.0	%		100.0	%		100.0	%		100.0	%

     Expenses

     Salaries and benefits increased as a percentage of revenues primarily as a result of our 2002 acquisitions, which had higher than average salaries and benefits as a percentage of our revenues. Salaries and benefits in 2003 were approximately 45.3% as a percentage of revenues for our 2002 acquisitions. On a same-hospital basis, salaries and benefits increased as a percentage of revenues to 39.2% in 2003 compared to 38.9% in 2002. This was primarily due to a 4.8% increase in same-hospital salaries and benefits per man-hour in 2003 compared to 2002. However, our productivity improved with a 1.0% decrease in our man-hours per equivalent admission. In addition, our same-hospital contract labor increased by 12.4% to $12.1 million in 2003 compared to $10.7 million in 2002 as a result of continuing clinical labor shortages in some of our communities.

     Supply costs as a percentage of revenues increased in 2003 compared to 2002. On a same-hospital basis, supply costs increased as a percentage of revenues to 12.9% in 2003 from 12.3% in 2002. On a same-hospital basis, our cost of supplies per equivalent admission increased 7.4% as a result of rising supply costs, particularly in the pharmaceutical and cardiac areas. In addition, we opened our new open-heart unit at Lake Cumberland Regional Hospital during the fourth quarter of 2002, which also contributed to the increase in our supply costs per equivalent admission. We utilize the group-purchasing and supplies management services of HealthTrust Purchasing Group, which makes certain national supply and equipment contracts available to our facilities.

     Other operating expenses decreased as a percentage of revenues in 2003 from 2002. On a same-hospital basis, other operating expenses decreased as a percentage of revenues to 17.5% in 2003 from 18.0% in 2002 primarily as a result of lower professional and general liability insurance expense. Our professional and general liability insurance expense was $8.3 million during 2003 compared to $10.8 million in 2002. This decrease relates to favorable loss experience as reflected in our external actuarial reports and our 2003 change to using multiple actuaries to estimate projected losses under the self-insured portion of our insurance program, as discussed above in the “Critical Accounting Estimates.” Our physician recruiting costs increased from $5.8 million in 2002 to $12.0 million in 2003 as a result of our increased number of recruited physicians.

     Provision for doubtful accounts increased as a percentage of revenues in 2003 compared to 2002. The provision for doubtful accounts related primarily to self-pay amounts due from patients. Our self-pay revenues for 2003 increased by 31.4% to $75.7 million compared to $57.6 million in 2002. The factors influencing this increase are a combination of broad economic factors, including the increased number of uninsured patients, employers shifting costs to employees through higher co-payments and higher unemployment rates. In addition, our 2002 acquisitions had a higher than average provision for doubtful accounts as a percentage of our revenues. Provision for doubtful accounts as a percentage of revenues for our 2002 acquisitions was 14.8% for 2003. On a same-hospital basis, the provision for doubtful accounts also increased as a percentage of revenues to 7.2% in 2003 from 6.8% in 2002 as a result of the same factors described above.

     Depreciation and amortization expense increased in 2003 compared to 2002, primarily as a result of our 2002 and 2003 acquisitions and depreciation associated with capital improvements at our facilities. Depreciation expense

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associated with our 2002 and 2003 acquisitions was $6.6 million for 2003. Same-hospital depreciation and amortization expense was $36.5 million in 2003 compared to $34.5 million in 2002.

     We repurchased all of our $150.0 million 10 3/4% Senior Subordinated Notes during 2002. In connection with these repurchases, we incurred debt retirement costs of $31.0 million which consisted of $26.5 million in premiums, commissions and fees paid for the repurchases and $4.5 million in non-cash net deferred loan cost write-offs.

     The provision for income taxes increased in 2003 compared to 2002. The income tax provisions reflected an effective income tax rate from continuing operations of 39.6% for 2003 compared to 43.3% for 2002. The effective tax rate decrease was attributable to a decrease in the ESOP permanent difference and a reduction in tax contingencies relating to adjustments to IRS examination issues as a result of the IRS issuing its findings during 2003. Please refer to Note 5 to our consolidated financial statements in this report for more information related to the IRS findings.

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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 2003 and 2004 was derived primarily from net cash provided by operating activities.

     Cash flows from continuing operations for the years ended December 31 were as follows (in millions):

Source (use) of cash flows	2002			2003			2004
Operating activities	$	114.3		$	105.0		$	148.6
Investing activities		(221.5	)		( 84.2	)		(113.6	)
Financing activities		75.7			(21.0	)		(37.8	)
Net change in cash and cash equivalents from continuing operations	$	(31.5	)	$	(0.2	)	$	(2.8	)
Interest payments	$	16.3		$	12.4		$	12.1
Income taxes paid, net	$	21.0		$	41.4		$	44.6
Working capital as of December 31, excluding assets and liabilities held for sale	$	67.5		$	102.1		$	115.9

2004

     Operating activities

     The $43.6 million increase in cash flows provided by continuing operating activities for 2004 as compared to 2003 is primarily a result of:

•   increased income from continuing operations of $16.6 million in 2004 as compared to 2003; and

•   improved cash flows from operations related to changes in working capital of $20.1 million in 2004 as compared to 2003, partially because of the collection of receivables that were delayed in 2003 from the difficulties that some of our Medicare intermediaries experienced complying with HIPAA. However, we paid $3.2 million more in income taxes during 2004 as compared to 2003 as a result of an increase in our net income.

     Investing activities

     Cash used in continuing investing activities during 2004 consisted primarily of capital improvement costs of $82.0 million, the $24.8 million purchase price and direct transaction costs of River Parishes Hospital, the $0.5 million direct transaction costs and working capital settlement of Spring View Hospital, the $3.6 million direct transaction costs related to the Province acquisition, and $1.5 million related to our purchase of a surgery center in Sulligent, Alabama. Our routine capital expenditures decreased from $22.7 million in 2003 to $21.6 million in 2004 as a result of a higher number of routine projects during 2003. Cash used in investing activities for 2003 primarily consisted of capital improvement costs of $68.3 million and the initial purchase price of Spring View Hospital of $15.7 million.

     Financing activities

     Cash used in continuing financing activities during 2004 consisted primarily of $29.9 million used to repurchase our convertible notes, including $0.9 million in cash premium costs, and $50.0 million repayments under our revolving credit facility. These activities were partially offset by $30.0 million borrowed under our revolving credit

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facility and $10.2 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 million revolving credit facility borrowing to acquire River Parishes Hospital.

2003

     Operating activities

     The decrease in cash flows from continuing operating activities in 2003 compared to 2002 primarily reflects:

•   Higher tax payments of approximately $20.4 million in 2003, primarily as a result of the tax benefit associated with our debt retirement costs during 2002, which reduced income tax payments in 2002, and approximately $6.6 million of prepaid tax payments related to our pending IRS examination settlement, as discussed in Note 5 to our consolidated financial statements in this report.

•   Higher revenues in December 2003 compared to December 2002 as a result of higher admissions in December 2003. In addition, some of our Medicare intermediaries experienced some technical difficulties complying with HIPAA as we electronically submitted our bills, thereby slowing our collections. These factors led to a $16.4 million increase in our consolidated accounts receivable balance as of December 31, 2003 compared to December 31, 2002.

•   An increase in our working capital, excluding assets and liabilities held for sale, by $34.6 million from December 31, 2002 to December 31, 2003. This increase was primarily the result of the increases in accounts receivable and income taxes receivable, as discussed above. The increase in accounts receivable increased our net revenue days in accounts receivable at December 31, 2003, exclusive of our 2002 and 2003 acquisitions, to 37.5 days compared to 35.4 days at December 31, 2002.

     Investing activities

     Cash used in continuing investing activities primarily consisted of capital improvement costs of $68.3 million and the purchase of Spring View Hospital for $15.8 million, including direct transaction costs and working capital. We used our available cash to finance the cost of this acquisition. Our routine capital expenditures increased from $18.7 million in 2002 to $22.7 million in 2003 as a result of an increased base of fixed assets.

     Financing activities

     Cash used in continuing financing activities consisted primarily of $45.7 million in repurchases of common stock, partially offset by $20.0 million borrowed under our revolving credit facility.

Capital Resources

     Revolving Credit Facility

     Our revolving credit facility provides for borrowings up to $200.0 million, expires in June 2006, 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 December 31, 2004
Maximum permitted consolidated leverage ratio	<3.50 to 1.00	1.06 to 1.00
Maximum permitted consolidated senior leverage ratio	<2.50 to 1.00	0.04 to 1.00
Minimum permitted consolidated interest coverage ratio	>3.50 to 1.00	15.51 to 1.00
Minimum permitted consolidated net worth	>$269.9 million	$509.5 million
Maximum capital expenditures – last twelve months	<$136.1 million	$82.3 million

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     The revolving credit facility also requires that we comply with 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, with respect to all of which we were in compliance as of December 31, 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 December 31, 2004, we had no outstanding indebtedness under our revolving credit facility and letters of credit in the aggregate amount of $8.3 million outstanding, leaving $191.7 million available under our revolving credit facility. We repaid the $20.0 million of indebtedness outstanding under our revolving credit facility in February 2004 with our available cash. In addition, we borrowed $30.0 million under our revolving credit facility in 2004 to fund our acquisition of River Parishes Hospital and for general corporate purposes. Subsequently during 2004, we used our available cash to repay the $30.0 million of indebtedness outstanding under the revolving credit facility.

     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.

     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 December 31, 2004 were 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	Watch, Negative	Positive

     Standard & Poor’s placed our ratings on credit watch with negative implications on August 16, 2004, after we announced our agreement to acquire Province.

     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 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, as defined. 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.

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     We repurchased $29.0 million of our $250.0 million Convertible Notes during 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 have received a commitment from Citigroup North America, Inc. and its affiliates (“Citigroup”) to finance the cash consideration for the acquisition of Province, to refinance Province’s existing debt and to provide for the ongoing working capital and general corporate needs of our newly combined company. The commitment provides for up to $1.325 billion in term loans and up to $400 million in revolving loans on customary terms and conditions.

     We expect the level of capital expenditures in 2005 to be in a range of $150.0 million to $160.0 million, including Province’s facilities. 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 December 31, 2004, we had projects under construction with an estimated additional cost to complete and equip of approximately $71.5 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 credit facilities impose restrictions on our ability to pay dividends. During 2003, we repurchased approximately 2.1 million shares of our common stock for an aggregate price of approximately $45.7 million, which computes to an average price paid per share of $22.10.

     We believe that cash flows from operations, amounts available under our revolving credit facility, amounts committed from Citigroup, and our anticipated access to capital markets are sufficient to fund the purchase price for the acquisition of Province and potential other acquisitions, meet expected liquidity needs, including repayment of all of our and Province’s debt obligations at or prior to maturity, planned capital expenditures and other expected operating needs over the next three years.

Contractual Obligations, Commitments and Off-Balance Sheet Arrangements

     Contractual Obligations

     We have various contractual obligations, which are recorded as liabilities in our consolidated financial statements. Other items, such as certain purchase commitments and other executory contracts, are not recognized as liabilities in our consolidated financial statements but are required to be disclosed. For example, we are required to make certain minimum lease payments for the use of property under certain of our operating lease agreements.

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     The following table summarizes our significant contractual obligations as of December 31, 2004 and the future periods in which such obligations are expected to be settled in cash (in millions):

	Payments Due by Period
Contractual Obligations	Total		2005		2006-2007		2008-2009		After 2009
Long-term debt obligations (a)	$	264.9	$	9.9	$	19.9	$	235.1	$	—
Capital lease obligations		0.1		0.1		—		—		—
Operating lease obligations (b)		20.5		5.3		7.6		3.9		3.7
Other long-term liabilities (c)		—		—		—		—		—
Purchase obligations (d)		120.5		45.9		40.6		34.0		—
Total	$	406.0	$	61.2	$	68.1	$	273.0	$	3.7

(a)	Included in long-term debt obligations are principal and interest owed on our Convertible Notes. This obligation is explained further in Note 6 to our consolidated financial statements in this report.
(b)	We enter into operating leases in the normal course of business. Substantially all of our lease agreements have fixed payment terms based on the passage of time. Some lease agreements provide us with the option to renew the lease. Our future operating lease obligations would change if we exercised these renewal options and if we entered into additional operating lease agreements. The above table reflects our future minimum operating lease payments. Please refer to Note 8 to our consolidated financial statements in this report for more information regarding our operating leases.
(c)	We had a $28.4 million other long-term liability balance on our consolidated balance sheet as of December 31, 2004. This balance reflected a $27.2 million reserve for professional and general liability claims and $1.2 million related to other liabilities. We excluded the $27.2 million reserve for professional and general liability claims and $1.2 million of other liabilities from this table due to the uncertainty of the dollar amounts to be ultimately paid as well as the timing of such amounts. Please refer to the “Critical Accounting Estimates – Professional and General Liability Reserves” above for more information..
(d)	The following table summarizes our significant purchase obligations as of December 31, 2004 and the future periods in which such obligations are expected to be settled in cash (in millions):

	Payments Due by Period
Purchase Obligations	Total		2005		2006-2007		2008-2009		After 2009
HCA-IT services (e)	$	77.5	$	14.3	$	30.4	$	32.8	$	—
Capital expenditure obligations (f), (g)		11.8		9.1		2.7		—		—
Physician commitments (h)		9.5		9.3		0.2		—		—
GEMS obligations (i)		2.9		2.9		—		—		—
Other purchase obligations (j)		18.8		10.3		7.3		1.2		—
Total	$	120.5	$	45.9	$	40.6	$	34.0	$	—

(e)   HCA-IT provides various information systems services, including, but not limited to, financial, clinical, patient accounting and network information services to us under a contract that was recently extended through December 31, 2009. Please refer to the “Arrangements Relating to the Distribution” section in Part I, Business in this report for more information. The amounts in the above table are based on estimated fees that will be charged to our 30 hospitals as of December 31, 2004 with an annual fee increase that is capped by the consumer price index increase. We used a 4.0% annual rate increase as the estimated consumer price index increase for the contract period. These fees will increase if we acquire additional

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	hospitals (including the acquisition of Province) and use HCA-IT for information system conversion services at the acquired hospitals.
(f)	Pursuant to the asset purchase agreement for Logan Regional Medical Center, we have 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. We have incurred approximately $8.2 million of the required capital improvements as of December 31, 2004.
(g)	We had projects under construction with an estimated additional cost to complete and equip of approximately $71.5 million as of December 31, 2004. Since we can terminate substantially all of the related construction contracts at any time without paying a termination fee, such cost is excluded from the above table except for the amounts disclosed in footnote (f) above. In addition, as discussed in Part I, Item 3, Legal Proceedings of this report, we may be required to make significant expenditures in order to bring our facilities into compliance with the ADA. We are currently unable to estimate the costs that could be associated with modifying our facilities because these costs are negotiated and determined on a facility-by-facility basis and, therefore, have varied and will continue to vary significantly among facilities.
(h)	In consideration for a physician relocating to one of our communities and agreeing to engage in private practice for the benefit of the respective community, we may loan certain amounts to a physician, normally over a period of one year, to assist in establishing his or her practice. We have committed to advance a maximum amount of approximately $23.7 million as of December 31, 2004. The actual amount of such commitments to be advanced often depends upon the financial results of a physician’s private practice during the loan period. The physician commitment amounts reflected in the above table were estimated based on our historical amounts actually paid to physicians.
(i)	General Electric Medical Services (“GEMS”) provides diagnostic imaging equipment maintenance and bio-medical services to us pursuant to a contract that expires in the first quarter of 2005. The amounts in the above table reflect our obligation based on the equipment we owned as of December 31, 2004. During the first quarter of 2005, we have entered into a new contract with GEMS that is effective for the period April 1, 2005 through March 31, 2008. We are still assessing the impact of this new contract on our contractual obligations, and we plan to disclose that impact in our first quarter 2005 Form 10-Q.
(j)	Reflects our minimum commitments to purchase goods or services under non-cancelable contracts as of December 31, 2004.

     Province Commitment

     As described previously in our “Executive Summary”, we entered into a definitive agreement to acquire Province Healthcare Company for approximately $1.7 billion in cash, stock, and the assumption of debt. This transaction is subject to the approval by each company’s stockholders, receipt of necessary financing and certain other conditions. We will incur indebtedness to pay the cash portion of the consideration to be paid to Province stockholders and to refinance certain existing debt of both companies.

     Legal and Tax Matters

     As disclosed in Note 5 and Note 8 to our consolidated financial statements in this report, we have exposure for certain legal and tax matters.

     Off-Balance Sheet Arrangements

     We had standby letters of credit outstanding of approximately $8.3 million as of December 31, 2004. Of this amount, $8.2 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 $0.1 million was related to obligations to certain utility companies.

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Recently Issued Accounting Pronouncements

     The Financial Accounting Standards Board (“FASB”) issued SFAS No. 145 “Rescission of FASB Statements Nos. 4, 44 and 64, Amendment of FASB No. 13, and Technical Corrections” (“SFAS No. 145”) in April 2002. We adopted SFAS No. 145 effective January 1, 2003, which required a reclassification of debt retirement costs from an extraordinary loss to a component of income before income taxes. Under certain provisions of SFAS No. 145, gains and losses related to the extinguishment of debt are no longer segregated on the income statement as extraordinary items net of the effect of income taxes. Instead, these gains and losses are included as a component of income before income taxes. The provisions of SFAS No. 145 were effective for fiscal years beginning after May 15, 2002. Any gain or loss on early extinguishment of debt that was classified as an extraordinary item in prior periods presented that did not meet the criteria in APB Opinion No. 30 for classification as an extraordinary item was reclassified upon adoption.

     In December 2003, the 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 was 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.

     In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payments” (“SFAS No. 123R”), a revision of SFAS No. 123, “Accounting for Stock-Based Compensation”, which addresses financial accounting and reporting for costs associated with stock-based compensation. SFAS No. 123R addresses all forms of share-based payment awards, including shares issued under employee stock purchase plans, stock options and restricted stock. SFAS No. 123R will require us to recognize compensation expense beginning July 1, 2005, in an amount equal to the fair value of share-based payments related to unvested share-based payment awards over the applicable vesting period. Under the Modified Prospective Method, we do not anticipate recording a material amount of compensation expense at the time of adoption since almost all options then previously granted will be fully vested as a result of the impendent acquisition of Province, as further discussed in Note 2 to our consolidated financial statements included elsewhere herein.

Seasonality

     We typically experience higher patient volumes and revenues in the first and fourth quarters of each year. We typically experience such seasonal volume and revenue peaks because more people generally become ill during the winter months, which in turn results in significant increases in the number of patients we treat during those months.

Inflation

     The healthcare industry is labor intensive. Wages and other expenses increase during periods of inflation and when labor shortages in marketplaces occur. In addition, suppliers and insurers pass along rising costs to us in the form of higher prices. Our ability to pass on these increased costs is limited because of increasing regulatory and competitive pressures. Accordingly, inflationary pressures could have a material adverse effect on our results of operations.

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;

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•   forecasts of our future economic performance; and

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

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

•   completion and integration of the Province acquisition;

•   future financial performance;

•   future liquidity;

•   future debt and equity structure;

•   future acquisitions;

•   industry trends;

•   reimbursement changes;

•   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 (see, for example, “Liquidity and Capital Resources” and Item 7A). Any factor described in this report 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 that could cause results to differ from our expectations.

Risk Factors

Issuances of our common stock in connection with and following the consummation of the proposed Province transaction may cause the market price for shares of our common stock to fall.

     As of February 16, 2005, we expect that approximately 14.6 million shares of our common stock will be issued in connection with the proposed Province transaction, assuming a hypothetical exchange ratio of 0.2917 and based upon the number of outstanding shares of Province common stock and our common stock as of February 16, 2005. The issuance of these shares of common stock and the sale of additional shares of our common stock that may become eligible for sale in the public market from time to time upon exercise of options or other rights will increase the total number of shares of our common stock outstanding relative to the total number of shares of our common

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stock outstanding currently. This increase will be substantial relative to the average trading volume of shares of our common stock on the Nasdaq National Market, and could cause the market price for shares of our common stock to fall.

Our directors and executive officers will benefit from early vesting of stock options, restricted shares and purchased restricted shares of our common stock and will have certain other rights that will be triggered upon the effective time of the proposed Province transaction. As a result, their interests in the proposed Province transaction may be different from, or in addition to, your interests as a stockholder.

     The consummation of the proposed Province transaction will constitute a “change in control” under the Company’s 1998 Long-Term Incentive Plan, Management Stock Purchase Plan, Outside Directors Stock and Incentive Compensation Plan, Change in Control Severance Plan and Executive Performance Incentive Plan. As a result, almost all stock options issued under our equity compensation plans and outstanding as of the effective time of the proposed Province transaction that have not previously vested will become fully vested and exercisable upon the effective time of the proposed Province transaction. The aggregate number of unvested options held by our executive officers and directors that will become fully vested and exercisable upon the effective time of the proposed Province transaction is approximately 771,332 shares, having an aggregate “in-the-money” value as of February 16, 2005 of approximately $8.7 million. In addition, upon the effective time of the proposed Province transaction, all transfer restrictions and forfeiture conditions on any restricted shares of common stock held by executive officers and directors, as well as on any restricted shares of common stock purchased by executive officers under the Management Stock Purchase Plan, will lapse, and those shares will become fully vested. The aggregate number of unvested shares of restricted stock granted to executive officers and directors under the 1998 Long-Term Incentive Plan and the Outside Directors Stock and Incentive Compensation Plan that will become fully vested as a result of the consummation of the proposed Province transaction is approximately 186,000 shares, having a value as of February 16, 2005 of approximately $7.5 million. The aggregate number of unvested restricted shares purchased by executive officers under the Management Stock Purchase Plan that will become fully vested as a result of the consummation of the proposed Province transaction is approximately 18,265 shares, having a value as of February 16, 2005 of approximately $734,000. Each of the Company’s directors and executive officers holds stock options, restricted shares or purchased restricted shares, and will therefore benefit from this acceleration. Executive officers and other key members of our management may also become entitled to benefits under the Change in Control Severance Plan and Executive Performance Incentive Plan under certain circumstances upon the effective time of the proposed Province transaction. As a result of the foregoing, the interests of the Company’s directors and executive officers may be different from, or in addition to, your interests as a stockholder.

We may be unable to successfully integrate the operations and business of Province and realize the full cost savings and benefits anticipated from the proposed Province transaction.

     The proposed Province transaction involves the integration of two companies that have previously operated as independent public companies. We will be required to devote significant management attention and resources to integrating the business practices and operations of Province. The potential difficulties that we may encounter in the integration process include the following:

•   complexities associated with managing and coordinating the geographically disparate combined businesses, which will have 51 facilities in 20 states;

•   integrating personnel from Province while maintaining focus on providing consistent, high quality patient care;

•   our inability to achieve the cost savings anticipated in the proposed Province transaction, including increased purchasing efficiencies and cost reductions expected to result from the proposed Province transaction;

•   delays in replacing Province’s information systems with our information systems; and

•   potential unknown liabilities and increased costs associated with the proposed Province transaction.

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     The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of our business following the consummation of the proposed Province transaction, and could also cause the loss of key personnel upon whom our success will depend in large part. The diversion of management’s attention and any delays or difficulties encountered in connection with the proposed Province transaction and the integration of Province’s operations could have an adverse effect on the business, results of operations, financial condition, cash flows or prospects of the Company after consummation of the proposed Province transaction. If encountered, these potential difficulties could result in reduced earnings and revenues compared to operations of LifePoint and Province for periods prior to the proposed Province transaction.

     In addition, among the factors considered by our board of directors in connection with its approval of the merger agreement were the potential for cost savings and efficiencies that could result from the proposed Province transaction. We cannot provide any assurance that these savings will be realized within the time periods contemplated, or even that these savings will be realized at all.

If consummated, the proposed Province transaction may adversely affect our ability to attract and retain key employees.

     Current and prospective employees of Province and LifePoint may experience uncertainty about their future roles at the combined company following the consummation of the proposed Province transaction. In addition, current and prospective Province employees may determine that they do not desire to work for the Company, for a variety of possible reasons. These factors may adversely affect our ability to attract and retain key management, marketing and other personnel. Of the key Province employees whom we intend to retain following consummation of the proposed Province transaction, we are not currently aware of any who intend to depart Province as a result of the proposed Province transaction.

We will incur significant expenses in connection with the proposed Province transaction and the related financing.

     We expect to incur pretax charges to operations, currently estimated to total approximately $59.1 million, to reflect costs associated with the proposed refinancing of $38.8 million, a one-time charge of approximately $15.0 million as a result of conforming Province’s critical accounting policies to our policies and $5.3 million related to the vesting of the Company’s stock awards that will vest as a result of the proposed Province transaction. In addition, we expect to incur approximately $36.5 million of capitalized direct transaction costs and $82.1 million of costs associated with severance and stock option payments to Province employees that will be treated as part of the purchase price for Province. The majority of these fees and costs will be recorded after the consummation of the proposed Province transaction. Additional unanticipated costs may be incurred in the integration of the business of Province. If the benefits of the proposed Province transaction do not exceed its associated costs, our financial results could be adversely affected.

Obtaining required approvals and satisfying closing conditions may delay or prevent completion of the proposed Province transaction.

     Completion of the proposed Province transaction is conditioned upon, among other things, the receipt of all consents, approvals, authorizations, clearances, exemptions, waivers or the like, filings and registrations with, and notifications to, all regulatory authorities required for consummation of the proposed Province transaction. We intend to vigorously pursue all required approvals. The requirement for these approvals could delay or prevent the completion of the proposed Province transaction. In addition, antitrust authorities may impose conditions in connection with the proposed Province transaction that may adversely affect our operations after consummation of the proposed Province transaction. Moreover, notwithstanding the expiration of the waiting period under the Hart-Scott-Rodino Act on September 27, 2004, the Federal Trade Commission, the Department of Justice, a state or a private person or entity could seek, under federal or state antitrust laws, among other things, to enjoin or rescind the proposed Province transaction. We cannot assure you that these consents and approvals will be obtained, or that their terms, conditions and timing will not be detrimental to the Company.

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We will incur indebtedness to pay the cash portion of the merger consideration to Province stockholders and to refinance certain existing debt of both LifePoint and Province. Moreover, we may incur additional indebtedness in the future, which could affect our ability to finance operations, pursue desirable business opportunities or successfully run our business in the future.

     To finance the proposed Province transaction, we will borrow approximately $1.3 billion to pay the cash portion of the merger consideration and to refinance certain existing debt of both LifePoint and Province. Although our capital structure following consummation of the proposed Province transaction has not yet been finally determined, we currently believe that, immediately following consummation of the proposed Province transaction, our debt to equity ratio will be approximately 1.5, based upon the December 31, 2004 pro forma combined condensed consolidated balance sheet. The annual cost to service this debt will be approximately $55.0 million of cash interest costs based upon the pro forma combined condensed financial statements and approximately $10.0 million of annual required principal repayments. This debt will create substantial post-transaction demands upon our available cash to pay principal and interest. We also may draw upon revolving credit loans in an aggregate principal amount of up to $400 million, and will also have the ability to incur additional debt, subject to the conditions imposed by the terms of our credit facility and the indenture governing the notes. Although we believe that our future operating cash flow, together with available financing arrangements, will be sufficient to fund our operating requirements, our leverage and debt service obligations could have important consequences to you, including the following:

•   the terms of the debt obligations we will incur in connection with the proposed Province transaction will contain numerous restrictive covenants which, among other things, will restrict our ability to pay dividends on or make other distributions or repurchase our capital stock or make other restricted payments, incur additional debt or issue preferred stock, make investments, enter into transactions with affiliates and sell assets or merge with or into other companies or otherwise dispose of all or substantially all of our assets. In addition, we will be required to satisfy and maintain specified financial ratios and tests. Failure to comply with these obligations may cause an event of default which, if not cured or waived, could require us to repay substantial indebtedness immediately. Moreover, if debt payment is accelerated, we will be subject to higher interest rates on our debt obligations as a result of these covenants, and our credit ratings may be adversely impacted;

•   we may be vulnerable in the event of downturns and adverse changes in our business, in our industries, or in the economy generally, such as the implementation by the government of further limitations on reimbursement under Medicare and Medicaid, because of our need for increased cash flow;

•   we may have difficulty obtaining additional financing at favorable interest rates to meet our requirements for working capital, capital expenditures, acquisitions, general corporate or other purposes;

•   we will be required to dedicate a substantial portion of our cash flow to the payment of principal and interest on indebtedness, which will reduce the amount of funds available for operations, capital expenditures and future acquisitions;

•   any borrowings we complete at variable interest rates expose us to increases in interest rates generally; and

•   a breach of any of the restrictions or covenants in our debt agreements could cause a cross-default under other debt agreements. We may be required to pay our indebtedness immediately if we default on any of the numerous financial or other restrictive covenants contained in the debt agreements. It is not certain whether or not we will have, or will be able to obtain, sufficient funds to make these accelerated payments. If any senior debt is accelerated, our assets may not be sufficient to repay indebtedness.

     At December 31, 2004, our consolidated long-term debt was approximately $221.0 million. We also may draw on a revolving credit commitment of up to $200 million under our Revolving Credit Facility, of which $191.7 million was available as of December 31, 2004. In addition, we have the ability to incur additional debt, subject to limitations imposed by our Revolving Credit Facility.

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We may have difficulty acquiring hospitals on favorable terms after the proposed Province transaction and, because of regulatory scrutiny, acquiring not-for-profit 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, and following completion of the proposed transaction, 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 an acquisition could result in a dilutive effect on our results of operations, depending on various factors, including the amount paid for the acquisition, the acquired hospital’s results of operations, allocation of purchase price, effects of subsequent legislation and limitations on rate increases.

     In recent years, the legislatures and attorneys general of several states have become more interested in sales of hospitals by not-for-profit entities. This heightened scrutiny may increase the cost and difficulty, or prevent the completion, of transactions with not-for-profit organizations in the future.

We may encounter numerous business risks in acquiring future additional hospitals after completion of the proposed Province transaction, and may have difficulty operating and integrating those hospitals. As a result, we may be unable to achieve our growth strategy.

     We may be unable to timely and effectively integrate the hospitals that we acquire after the proposed Province transaction 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, negatively affect cash flow and distract management and other key personnel. In addition, acquisition activity requires transitions from, and the integration of, operations and, usually, information systems that are used by acquired hospitals, and we will rely heavily on HCA-IT for information systems integration as part of a contractual arrangement for information technology services. We may not be successful in causing HCA-IT to convert our newly acquired hospitals’ information systems, including those used by the Province hospitals, in a timely manner.

     We also may acquire businesses, including Province, with unknown or contingent liabilities for past activities of acquired businesses, including liabilities for failure to comply with healthcare laws and regulations. We will have policies to conform the practices of acquired facilities to our standards and to applicable law, and generally will seek indemnification from prospective sellers covering these matters. However, we will not be indemnified by Province. Although we have historically obtained, and we will likely obtain, contractual indemnification from sellers covering these matters, this indemnification may be insufficient to cover material claims or liabilities for past activities of acquired businesses.

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

     We have depended on, and will depend on, the services and management experience of Kenneth C. Donahey and our other current executive officers. Effective as of June 25, 2001, we entered into an employment agreement with Mr. Donahey. While the consummation of the proposed Province transaction will constitute a “change in control” under the employment agreement, it is not expected that Mr. Donahey’s employment will be terminated upon the effective time of the proposed Province transaction. In addition, we are not currently aware of any executive officer who intends to resign or retire, or who otherwise will be unable to continue serving the Company. If Mr. Donahey or any of our other executive officers resign or otherwise are unable to serve, our management expertise and ability to deliver healthcare services efficiently could be weakened. If we fail to attract and retain managers at our hospitals and related facilities, our operations will suffer. Moreover, we do not and will not maintain key-man or similar life insurance policies for Mr. Donahey or any other executive officers.

If we fail to effectively recruit and retain physicians, nurses, medical technicians and other healthcare professionals, our ability to deliver healthcare services efficiently will be adversely affected.

     Physicians generally direct the majority of hospital admissions and services. Our success, in part, will depend 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

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non-urban communities where our hospitals are located. The primary method we employ to add or expand medical services will be the recruitment of new physicians into our communities.

     The success of our recruiting efforts will depend on several factors. In general, there is a shortage of specialty care physicians. We will face intense competition in the recruitment of specialists because of the difficulty in convincing these individuals of the benefits of practicing in non-urban communities. Physicians are concerned with the patient volume in non-urban hospitals and whether or not this volume will allow them to generate income comparable to that which they would generate in an urban setting. If the growth rate slows in the non-urban communities where our hospitals operate, 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 field. 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 ability to deliver healthcare services efficiently.

Our revenues may decline if federal or state programs reduce our Medicare or Medicaid payments, or if managed care companies reduce reimbursement amounts. In addition, the financial condition of purchasers of healthcare services and healthcare cost containment initiatives may limit our revenues and profitability.

     In recent years, federal and state governments have 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.

     Employers have also passed more healthcare benefit costs on to employees to reduce the employers’ health insurance expenses. This trend has caused the self-pay/deductible component of healthcare services to become more common. This payor shifting increases collection costs and reduces overall collections.

     During the past several years, major purchasers of healthcare, such as federal and state governments, insurance companies and employers, have undertaken initiatives to revise payment methodologies and monitor healthcare costs. As part of their efforts to contain healthcare costs, purchasers increasingly are demanding discounted fee structures or the assumption by healthcare providers of all or a portion of the financial risk through prepaid capitation arrangements, often in exchange for exclusive or preferred participation in their benefit plans. We expect efforts to impose greater discounts and more stringent cost controls by government and other payors to continue, thereby reducing the payments we receive for our services.

     An increasing number of managed care organizations have experienced financial difficulties in recent years, in some cases resulting in bankruptcy or insolvency. In some instances, organizations, which currently have provider agreements with certain of our hospitals have become insolvent, and the hospitals have been unable to collect the full amounts due from these organizations. Other managed care organizations with whom we do business may encounter similar difficulties in paying claims in the future. We believe that reductions in the payments that we receive for our services, coupled with the increased percentage of patient admissions from organizations offering prepaid and discounted medical services and difficulty in collecting receivables from managed care organizations, could reduce our overall revenues and profitability.

Our revenues are especially concentrated in a small number of states which will make us particularly sensitive to regulatory and economic changes in those states.

     Our revenues are particularly sensitive to regulatory and economic changes in Kentucky and Tennessee. As of December 31, 2004, we operated 30 hospitals with eight located in the commonwealth of Kentucky and seven located in the state of Tennessee. We generated 39.5%, 34.5% and 35.2% of our revenues from continuing operations from our Kentucky hospitals (including 4.1%, 3.7% and 4.2% from state-sponsored Medicaid programs) and 24.6%, 20.5% and 19.5% from our Tennessee hospitals (including 3.2%, 2.8% and 2.7% from the state-sponsored TennCare program) for the years ended December 31, 2002, 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 revenues may encounter similar difficulties in paying claims in the future.

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     If the proposed Province transaction is consummated, our revenues will also be concentrated in Alabama and Louisiana. On a pro forma basis, after giving effect to the proposed Province transaction:

•   Kentucky hospitals generated approximately 18.6% of revenues for the year ended December 31, 2003 and approximately 18.7% of revenues for the year ended December 31, 2004;

•   Tennessee hospitals generated approximately 11.1% of revenues for the year ended December 31, 2003 and approximately 10.3% of revenues for the year ended December 31, 2004;

•   Alabama hospitals generated approximately 10.3% of revenues for the year ended December 31, 2003 and approximately 9.6% of revenues for the year ended December 31, 2004; and

•   Louisiana hospitals generated approximately 9.6% of revenues for the year ended December 31, 2003 and approximately 9.5% for the year ended December 31, 2004.

     Accordingly, any change in the current demographic, economic, competitive or regulatory conditions in Kentucky, Tennessee, Alabama and Louisiana could have a material adverse effect on our business, financial condition, results of operations and/or prospects. In January 2005, Tennessee Governor Phil Bredesen announced a proposal for reductions in the state-sponsored TennCare program. If approved by CMS, these changes could reduce the amount we receive from the TennCare program.

Other hospitals and freestanding outpatient facilities provide services similar to those which we offer, which may raise the level of competition we face and may therefore adversely affect our revenues, profitability and market share.

     In all but one of the communities in which we operate, our hospital is the only hospital in the community. Nonetheless, competition among hospitals and other healthcare providers for patients has intensified in recent years, and we compete with other hospitals, including larger tertiary care centers located in larger metropolitan areas. Although the hospitals which compete with us may be a significant distance away from our facility, patients in our markets may migrate to, may be referred by local physicians to, or may be lured by their health plan to travel to these hospitals. Furthermore, some of the hospitals which compete with us may use equipment and services more specialized than those available at our hospital. Also, some of the hospitals that compete with our facilities are owned by tax-supported governmental agencies or not-for-profit entities supported by endowments and charitable contributions. These hospitals are also exempt from paying sales, property and income taxes.

     We also face competition from other specialized care providers, including outpatient surgery, oncology, physical therapy and diagnostic centers (including many in which physicians may have an ownership interest), as well as competing services rendered in physician offices. Where necessary to effectively compete, some of our hospitals may develop specialized outpatient facilities. However, to the extent that other providers are successful in developing specialized outpatient facilities, our market share for these specialized services will likely decrease in the future. Moreover, many of our current hospitals attempt to attract patients from surrounding counties and communities, including communities in which a competing facility exists. However, if our competitors are able to make capital improvements and expand services at their facilities, we may be unable to attract patients away from these facilities in the future.

We are subject to governmental regulation, and may be subjected to allegations that we have failed to comply with governmental regulations which could result in sanctions that reduce our revenues 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. If we fail to comply with applicable laws and regulations, 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.

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     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 of the DHHS (which is responsible for investigating fraud and abuse activities in government programs) 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 but have not previously been challenged. 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 with which we must comply 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.

     Finally, we are subject to various federal, state and local statutes and ordinances regulating the discharge of materials into the environment. Our current healthcare operations generate and will generate medical waste, such as pharmaceuticals, biological materials and disposable medical instruments, that must be disposed of in compliance with federal, state and local environmental laws, rules and regulations. Our operations also will be subject to various other environmental laws, rules and regulations. Environmental regulations also may apply when we renovate or refurbish hospitals, particularly older facilities.

We may be subjected to actions brought by the government under anti-fraud and abuse provisions, or by individuals on the government’s behalf under the False Claims Act’s “qui tam” or whistleblower provisions.

     Unlike companies in other industries, companies in the healthcare industry are subject to Medicare and Medicaid anti-fraud and abuse provisions, known as the “anti-kickback statute.” As a company in the healthcare industry, we are subject to the anti-kickback statute, which prohibits some business practices and relationships related to items or services reimbursable under Medicare, Medicaid and other federal healthcare programs. For instance, the anti-kickback statute prohibits healthcare service providers from paying or receiving remuneration to induce or arrange for the referral of patients or purchase of items or services covered by a federal or state healthcare program. If regulatory authorities determine that any of our hospitals’ arrangements violate the anti-kickback statute, we could be subject to liabilities under the Social Security Act, including:

•   criminal penalties;

•   civil monetary penalties; and/or

•   exclusion from participation in Medicare, Medicaid or other federal healthcare programs, any of which could impair our ability to operate one or more of our hospitals profitably.

     Whistleblower provisions allow private individuals to bring actions on behalf of the government alleging that the defendant has defrauded the federal government. Defendants found 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,

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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.

     Although we intend and will endeavor to conduct our business in compliance with all applicable federal and state fraud and abuse laws, many of these laws are broadly worded and may be interpreted or applied in ways that cannot be predicted. Therefore, we cannot assure you that our arrangements or business practices will not be subject to government scrutiny or be found to violate applicable fraud and abuse laws.

We may be subject to liabilities because of malpractice and related legal claims brought against our hospitals. If we become subject to these claims, we could be required to pay significant damages, which may not be covered by insurance.

     We will be subject to medical malpractice lawsuits, product liability lawsuits and other legal actions arising out of the operations of our owned and leased hospitals. These actions may involve large claims and significant defense costs. To mitigate a portion of this risk, we maintain professional malpractice liability and general liability insurance coverage for these claims in amounts that we believe are appropriate for our operations. However, some of these claims could exceed the scope of the coverage in effect, or coverage of particular claims could be denied. 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 results of operations, cash flows, financial condition or liquidity. Furthermore, insurance coverage in the future 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.

We may be required to make significant capital expenditures in order to bring our facilities into compliance with the Americans with Disabilities Act.

     The ADA generally requires that public accommodations be made accessible to disabled persons. On January 12, 2001, a class action lawsuit was filed in the United States District Court for the Eastern District of Tennessee against each of our hospitals alleging non-compliance with the accessibility guidelines of the ADA. The lawsuit does not seek any monetary damages, but seeks injunctive relief requiring facility modification, where necessary, to meet ADA guidelines, in addition to attorneys’ fees and costs. We are currently unable to estimate the costs that could be associated with modifying these facilities because these costs are negotiated and determined on a facility-by-facility basis and, therefore, have varied and will continue to vary significantly among facilities. 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. We are vigorously defending the lawsuit, recognizing our obligation to correct any deficiencies in order to comply with the ADA. As of December 31, 2004, the plaintiffs have conducted inspections at 22 of our hospitals. On July 19, 2004, the District Court approved the settlement agreements between the parties relating to two of our 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, and we currently anticipate that the costs associated with modifying these two facilities will be approximately $1.0 million. If the proposed Province transaction is completed, and Province’s facilities become subject to the class action lawsuit, we may be required to expend significant capital expenditures at one or more of these facilities in order to comply with the ADA, and our financial position and results of operations could be adversely affected as a result. Alternatively, noncompliance with the requirements of the ADA could result in the imposition of fines against us by the federal government, or the award of damages to private litigants.

Certificate of need laws and regulations regarding licenses, ownership and operation may impair our future expansion in some states.

     Some states require prior approval for the purchase, construction and expansion of healthcare facilities, based on the state’s determination of need for additional or expanded healthcare facilities or services. Five states in which we

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currently operate hospitals — Alabama, Florida, Kentucky, Tennessee and West Virginia — and four additional states in which Province currently operates hospitals—Mississippi, Nevada, South Carolina and 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 will likely operate facilities after completion of the proposed Province transaction require hospitals and most healthcare providers to maintain one or more licenses. If we fail to obtain any required certificate of need or license, our ability to operate or expand operations in those states could be impaired.

If the proposed Province transaction is completed, we will be required to comply with California seismic standards, which may require significant capital expenditures with respect to Province’s existing California hospitals.

     California has a statute and regulations which require hospital facilities located in California to have the ability to withstand earthquakes of specified magnitudes. Regulated hospitals that do not meet these standards may be required to retrofit their facilities. California law further requires that owners of regulated hospitals evaluate their facilities and develop a plan and schedule for complying with these standards. Province is required, and we will be required following consummation of the proposed Province transaction, to conduct engineering studies of two California facilities to determine whether and to what extent modifications to these facilities will be required. To date, Province has conducted engineering studies and implemented compliance plans for its two California facilities, which satisfy all current requirements. In addition, Province continues to develop plans for compliance with 2008 California requirements. Any facilities not in compliance with California’s additional seismic regulations and standards must be brought into compliance by 2008, or 2013 if the facility obtains an extension. In the event that Province’s two current California facilities are found not to be in compliance with these regulations and standards after consummation the proposed transaction, we may be required to make significant capital expenditures to bring those facilities into compliance, which could adversely impact our earnings and liquidity.

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 will depend 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, and will continue to rely, heavily on HCA-IT for information systems. Under a contract with a term that will expire on December 31, 2009, HCA-IT provides us with financial, clinical, patient accounting and network information services. 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 in the future, we will need to integrate them into our existing systems. Evolving industry and regulatory standards, such as the Health Insurance Portability and Accountability Act of 1996, commonly known as “HIPAA,” may require changes to our information systems in the future. 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 or on a cost-efficient basis. Please refer to Part I, Item 1. Business – Government Regulation in this report 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 the terms of our corporate integrity agreement, we could be required to pay significant monetary penalties.

     Because HCA was under investigation by the OIG at the time of our spinoff from HCA, we agreed to enter into a five-year corporate integrity agreement effective December 2000, on terms that management believed to be customary and commonplace for companies in the healthcare industry that are subject to corporate integrity

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agreements. Our corporate integrity agreement has subsequently been amended, primarily to reduce the level of third-party oversight that is required with respect to the compliance oversight and analysis that is provided internally. Under the terms of the corporate integrity agreement, we currently have an affirmative obligation to report violations of applicable laws and regulations. In particular, the compliance measures and reporting and auditing requirements contained in the corporate integrity agreement include:

•   continuing the duties and activities of our audit and compliance committee, corporate compliance officer, internal audit and compliance department, local hospital ethics and compliance officers, corporate compliance committee and hospital compliance committees;

•   maintaining our written code of conduct, which sets out our commitment to full compliance with all statutes, regulations and guidelines applicable to federal healthcare programs;

•   maintaining our written policies and procedures addressing the operation of our compliance program;

•   providing general training on the compliance program;

•   providing specific training for the appropriate personnel on billing, coding and cost report issues;

•   having an independent third party conduct periodic analyses of our internal audits of our facilities’ diagnosis related group billing and coding;

•   continuing our confidential disclosure program and compliance hotline to enable employees or others to disclose issues or questions regarding possible inappropriate policies or behavior;

•   enhancing our screening program to ensure that we do not hire or engage employees or contractors who have been sanctioned or excluded from participation in federal healthcare programs;

•   reporting any material deficiency which resulted in an overpayment to us by a federal healthcare program;

•   reporting any healthcare related fraud involving any federally funded program; and

•   submitting annual reports to the OIG which describe in detail the operations of our corporate compliance program for the past year.

These obligations could result in greater scrutiny by regulatory authorities after completion of the proposed Province transaction. Integrating the Province hospitals into our processes to achieve ongoing compliance with the corporate integrity agreement will require additional efforts and costs, as described above. Our failure to comply with the terms of the corporate integrity agreement could subject us to significant monetary penalties.

Our anti-takeover provisions may frustrate attempts to replace incumbent members of our board of directors and may discourage acquisitions of control of the Company even though our stockholders may consider these proposals desirable.

     Provisions in our certificate of incorporation and bylaws (and the proposed certificate of incorporation and bylaws to be adopted upon consummation of the proposed Province transaction) may have the effect of frustrating attempts by our stockholders to replace incumbent members of our board of directors and may have the effect of discouraging an acquisition of control not approved by our board of directors. These provisions include:

•   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;

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

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

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

     These provisions may also have the effect of discouraging third parties from making proposals involving our acquisition or a 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 who are not stockholders to cause the replacement of our board of directors.

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

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

We have never paid, and have no current plans to pay, any cash dividends on shares of our common stock.

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

Our revenues and volume trends may be adversely affected by certain factors relevant to the markets in which we will have hospitals.

     Our revenues and volume trends will be predicated on many factors, including physicians’ clinical decisions on patients, physicians’ availability, payor programs shifting to a more outpatient-based environment, whether or not certain services are offered, seasonal weather conditions, the intensity and timing of yearly flu outbreaks, and the judgment of the U.S. Centers for Disease Control on the strains of flu that may circulate in the United States. Any of these factors could have a material adverse effect on our revenues and volume trends, and many of these factors will not be within the control of our management.

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:

•   the proposed transaction with Province;

•   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.

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

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Interest Rates

     The following discusses our exposure to market risk related to changes in interest rates.

     Outstanding debt – As of December 31, 2004, we had outstanding debt of $221.0 million, all of which was our Convertible Notes. Our Convertible Notes bear interest at the annual fixed rate of 4 1/2%. As of December 31, 2004, the fair value of our Convertible Notes was $222.7 million, based on the quoted market price at December 31, 2004. In addition, we have available a $200.0 million revolving credit facility that is subject to variable interest rates. Indebtedness under our revolving credit facility bears interest at 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. In the event we borrow cash under the revolving credit facility and interest rates increase significantly, we expect to take actions to mitigate our exposure to such interest rate increases. We do not currently use derivatives to alter the interest rate characteristics of our debt instruments.

     Cash balances – Certain of our outstanding cash balances are invested overnight with high credit quality financial institutions. We do not have significant exposure to changing interest rates on invested cash at December 31, 2004. As a result, the interest rate market risk implicit in these investments at December 31, 2004, if any, is low.

Item 8. Financial Statements and Supplementary Data.

     Information with respect to this Item is contained in our consolidated financial statements beginning with the index on Page F1 of this report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

     None.

Item 9A. Controls and Procedures.

     Conclusion Regarding the Effectiveness of Disclosure 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.

     Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we have included a report of management’s assessment of the design and operating effectiveness of our internal controls as part of this Annual Report on Form 10-K for the year ended December 31, 2004. Our independent registered public accounting firm also attested to, and reported on, management’s assessment of the effectiveness of internal control over financial reporting. Management’s report and the independent registered public accounting firm’s attestation report are included in our 2004 consolidated financial statements beginning with the index on page F1 of this report under the captions entitled “Management’s Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting”.

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     Changes in Internal Control Over Financial Reporting

     There has been no change in our internal control over financial reporting during the fourth quarter ended December 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

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PART III

Item 10. Directors and Executive Officers of the Registrant.

Executive Officers

     Information with respect to our executive officers is incorporated by reference to the information contained under the caption “Executive Compensation — Executive Officers of the Company” included in our proxy statement relating to our 2005 annual meeting of stockholders.

     Our board of directors expects its members, as well as our officers and employees, to act ethically at all times and to acknowledge in writing their adherence to the policies comprising our Code of Conduct, which is known as “Common Ground, ” and as applicable, in our Code of Ethics for Senior Financial Officers and Chief Executive Officer (“Code of Ethics”). The Code of Ethics is posted on our website located at www.lifepointhospitals.comunder the heading “Corporate Governance-Code of Ethics.” Common Ground is also posted on our website located at www.lifepointhospitals.com under the heading “Ethics & Compliance.” We intend to disclose any amendments to our Code of Ethics and any waiver from a provision of our code, as required by the SEC, on our website within five business days following such amendment or waiver.

Directors

     Information with respect to our directors is incorporated by reference to the information contained under the caption “Election of Directors” included in our proxy statement relating to our 2005 annual meeting of stockholders.

Compliance with Section 16(a) of the Exchange Act

     Information with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated by reference to the information contained under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” included in our proxy statement relating to our 2005 annual meeting of stockholders.

Item 11. Executive Compensation.

     This information is incorporated by reference to the information contained under the captions “Election of Directors – Information Regarding the Board of Directors - Compensation of Directors,” “Executive Compensation,” “Compensation Committee Report on Executive Compensation” and “Comparative Performance” included in our proxy statement relating to our 2005 annual meeting of stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

     This information is incorporated by reference to the information contained under the caption “Voting Securities and Principal Holders Thereof” and “Executive Compensation - Equity Compensation Plan Information” included in our proxy statement relating to our 2005 annual meeting of stockholders.

Item 13. Certain Relationships and Related Transactions.

     This information is incorporated by reference to the information contained under the caption “Certain Transactions” included in our proxy statement relating to our 2005 annual meeting of stockholders.

Item 14. Principal Accounting Fees and Services.

     This information is incorporated by reference to the information contained under the caption “Ratification of Independent Registered Public Accounting Firm” included in our proxy statement relating to our 2005 annual meeting of stockholders.

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PART IV

Item 15. Exhibits, Financial Statement Schedules.

     (a) Index to Consolidated Financial Statements, Financial Statement Schedules and Exhibits:

          (1) Consolidated Financial Statements:

               See Item 8 in this report.

         The consolidated financial statements required to be included in Part II, Item 8, are indexed on Page F1 and submitted as a separate section of this report.

          (2) Consolidated Financial Statement Schedules:

         All schedules are omitted because they are not applicable or not required, or because the required information is included in the consolidated financial statements or notes in this report.

          (3) Exhibits

Exhibit
Number		Description of Exhibits
2.1	—	Agreement and Plan of Merger, dated as of August 15, 2004, by and among LifePoint Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition Corp., Pacers Acquisition Corp. and Province Healthcare Company (a)
2.2	—	Amendment No. 1 to Agreement and Plan of Merger, dated as of January 25, 2005, by and among LifePoint Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition Corp., Pacers Acquisition Corp and Province Healthcare Company (b)
2.3	—	Distribution Agreement dated May 11, 1999 by and among Columbia/HCA, Triad Hospitals, Inc. and LifePoint Hospitals, Inc. (c)
3.1	—	Certificate of Incorporation (c)
3.2	—	Bylaws (c)
3.3	—	First Amendment to the Bylaws (d)
4.1	—	Form of Specimen Stock Certificate (e)
4.2	—	Rights Agreement, dated as of May 11, 1999, between the LifePoint Hospitals, Inc. and National City Bank as Rights Agent (c)
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 (f)
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. (f)
4.5	—	Form of 4 1/2% Convertible Subordinated Note due 2009 of LifePoint Hospitals, Inc. (f)
10.1	—	Tax Sharing and Indemnification Agreement, dated May 11, 1999, by and among Columbia/HCA, LifePoint Hospitals, Inc. and Triad Hospitals, Inc. (c)
10.2	—	Benefits and Employment Matters Agreement, dated May 11, 1999 by and among Columbia/HCA, LifePoint Hospitals, Inc. and Triad Hospitals, Inc. (c)
10.3	—	Insurance Allocation and Administration Agreement, dated May 11, 1999, by and among Columbia/ HCA, LifePoint Hospitals, Inc. and Triad Hospitals, Inc. (c)
10.4	—	Computer and Data Processing Services Agreement dated May 11, 1999 by and between Columbia Information Systems, Inc. and LifePoint Hospitals, Inc. (c)
10.5	—	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. (g)

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Exhibit
Number		Description of Exhibits
10.6	—	LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (c)
10.7	—	Amendment to the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (i)
10.8	—	Second Amendment to the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (i)
10.9	—	Third Amendment to the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (j)
10.10	—	Fourth Amendment to the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (p)
10.11	—	LifePoint Hospitals, Inc. Executive Stock Purchase Plan (c)
10.12	—	Form of Share Purchase Loan and Note Agreement between LifePoint Hospitals and certain executive officers in connection with purchases of Common Stock pursuant to the Executive Stock Purchase Plan (h)
10.13	—	LifePoint Hospitals, Inc. Management Stock Purchase Plan, as amended and restated (j)
10.14	—	LifePoint Hospitals, Inc. Outside Directors Stock and Incentive Compensation Plan (c)
10.15	—	Amendment to the LifePoint Hospitals, Inc. Outside Directors Stock and Incentive Compensation Plan (q)
10.16	—	Amended and Restated Credit Agreement, dated as of June 19, 2001, among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent, 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 (k)
10.17	—	First Amendment to Credit Agreement, dated as of April 30, 2002, among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent, 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 (j)
10.18	—	Second Amendment to Credit Agreement, dated as of October 1, 2002, among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent, 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 (j)
10.19	—	Third Amendment to Credit Agreement, dated as of December 30, 2002, among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent lender, 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 (j)
10.20	—	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 (g)
10.21	—	Corporate Integrity Agreement, dated as of December 21, 2000, by and between the Office of Inspector General of the Department of Health and Human Services and LifePoint Hospitals (l)
10.22	—	Amendment to the Corporate Integrity Agreement, dated April 29, 2002, between the Office of Inspector General of the Department of Health and Human Services and LifePoint Hospitals, Inc. (j)
10.23	—	Letter from the Office of Inspector General of the Department of Health and Human Services, dated October 15, 2002 (j)
10.24	—	Letter from the Office of Inspector General of the Department of Health and Human Services, dated December 18, 2003
10.25	—	Letter from the Office of Inspector General of the Department of Health and Human Services, dated March 3, 2004
10.26	—	LifePoint Hospitals, Inc. Employee Stock Purchase Plan (m)
10.27	—	First Amendment to the LifePoint Hospitals, Inc. Employee Stock Purchase Plan (n)
10.28	—	LifePoint Hospitals, Inc. Change in Control Severance Plan (o)
10.29	—	LifePoint Hospitals, Inc. Executive Performance Incentive Plan (r)
10.30	—	Employment Agreement of Kenneth C. Donahey, as amended and restated
10.31	—	Senior Secured Credit Facilities Commitment Letter, dated as of August 15, 2004, from Citigroup North America, Inc. and Citigroup Global Markets, Inc. to LifePoint Hospitals, Inc. (a)
10.32	—	Consulting Agreement, dated as of August 15, 2004, by and between LifePoint Hospitals, Inc. and Martin S. Rash (b)
10.33	—	Comprehensive Service Agreement for Diagnostic Imaging and Biomedical Services, executed on January 7, 2005, between LifePoint Hospital Holdings, Inc. and GE Healthcare Technologies

73

Exhibit
Number		Description of Exhibits
21.1	—	List of Subsidiaries
23.1	—	Consent of Independent Registered Public Accounting Firm
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 Section 906 of the Sarbanes-Oxley Act of 2002
32.2	—	Certification of the Chief Financial Officer of LifePoint Hospitals, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(a)	Incorporated by reference from exhibits to LifePoint Hospitals’ Current Report on Form 8-K filed on August 16, 2004, File No. 000-29818.
(b)	Incorporated by reference from exhibits to the Registration Statement on Form S-4 filed by Lakers Holding Corp. on February 18, 2005 under the Securities Act of 1933, as amended, File Number 333-119929.
(c)	Incorporated by reference from exhibits to LifePoint Hospitals’ Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, File No. 000-29818.
(d)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 2003, File No. 000-29818.
(e)	Incorporated by reference from exhibits to LifePoint Hospitals’ Registration Statement on Form 10 under the Securities Exchange Act of 1934, as amended, File No. 000-29818.
(f)	Incorporated by reference from exhibits to LifePoint Hospitals’ Registration Statement on Form S-3 under the Securities Act of 1933, as amended, File No. 333-90536.
(g)	Incorporated by reference from exhibits to LifePoint Hospitals’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, File Number 000-29818.
(h)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 1999, File No. 000-29818.
(i)	Incorporated by reference from exhibits to LifePoint Hospitals’ Registration Statement on Form S-8 under the Securities Act of 1933, File No. 333-63140.
(j)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 2002, File No. 000-29818.
(k)	Incorporated by reference from exhibits to LifePoint Hospitals’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, File No. 000-29818.
(l)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 2000, File No. 000-29818.
(m)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 2001, File No. 000-29818.
(n)	Incorporated by reference from exhibits to LifePoint Hospitals’ Registration Statement on Form S-8 under the Securities Act of 1933, File No. 333-105775.
(o)	Incorporated by reference from exhibits to LifePoint Hospitals’ Current Report on Form 8-K dated May 16, 2002, File No. 000-29818.
(p)	Incorporated by reference from Appendix A to LifePoint Hospitals’ Proxy Statement dated April 28, 2004, File No. 000-29818.
(q)	Incorporated by reference from Appendix B to LifePoint Hospitals’ Proxy Statement dated April 28, 2004, File No. 000-29818.
(r)	Incorporated by reference from Appendix C to LifePoint Hospitals’ Proxy Statement dated April 28, 2004, File No. 000-29818.

74

Compensation Plans and Arrangements

     The following is a list of all of our compensation plans and arrangements filed as exhibits to this annual report on Form 10-K:

1.	LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan, as amended (filed as Exhibits 10.6, 10.7, 10.8, 10.9 and 10.10)
2.	LifePoint Hospitals, Inc. Executive Stock Purchase Plan (filed as Exhibit 10.11)
3.	Form of Share Purchase Loan and Note Agreement between LifePoint Hospitals and certain executive officers in connection with purchases of Common Stock pursuant to the Executive Stock Purchase Plan (filed as Exhibit 10.12)
4.	LifePoint Hospitals, Inc. Management Stock Purchase Plan, as amended and restated (filed as Exhibit 10.13)
5.	LifePoint Hospitals, Inc. Outside Directors Stock and Incentive Compensation Plan (filed as Exhibits 10.14 and 10.15)
6.	LifePoint Hospitals, Inc. Employee Stock Purchase Plan, as amended (filed as Exhibits 10.26 and 10.27)
7.	LifePoint Hospitals, Inc. Change in Control Severance Plan (filed as Exhibit 10.28)
8.	LifePoint Hospitals, Inc. Executive Performance Incentive Plan (filed as Exhibit 10.29)
9.	Employment Agreement of Kenneth C. Donahey, as amended and restated (filed as Exhibit 10.30)

75

INDEX TO FINANCIAL STATEMENTS

	Page
Management’s Report on Internal Control Over Financial Reporting	F2
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	F3
Report of Independent Registered Public Accounting Firm	F4
Consolidated Statements of Operations — for the years ended December 31, 2002, 2003 and 2004	F5
Consolidated Balance Sheets — December 31, 2003 and 2004	F6
Consolidated Statements of Cash Flows — for the years ended December 31, 2002, 2003 and 2004	F7
Consolidated Statements of Stockholders’ Equity — for the years ended December 31, 2002, 2003 and 2004	F8
Notes to Consolidated Financial Statements – December 31, 2004	F9

F1

Management’s Report on Internal Control Over Financial Reporting

     Management of LifePoint Hospitals, Inc. is responsible for the preparation, integrity and fair presentation of its published consolidated financial statements. The financial statements have been prepared in accordance with U.S. generally accepted accounting principles and, as such, include amounts based on judgments and estimates made by management. The Company also prepared the other information included in the annual report and is responsible for its accuracy and consistency with the consolidated financial statements.

     Management is also responsible for establishing and maintaining effective internal control over financial reporting. The Company’s internal control over financial reporting includes those policies and procedures that pertain to the Company’s ability to record, process, summarize and report reliable financial data. The Company maintains a system of internal control over financial reporting, which is designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation of reliable published financial statements and safeguarding of the Company’s assets. The system includes a documented organizational structure and division of responsibility, established policies and procedures, including a code of conduct to foster a strong ethical climate, which are communicated throughout the Company, and the careful selection, training and development of our people.

     The Board of Directors, acting through its Audit and Compliance Committee, is responsible for the oversight of the Company’s accounting policies, financial reporting and internal control. The Audit and Compliance Committee of the Board of Directors is comprised entirely of outside directors who are independent of management. The Audit and Compliance Committee is responsible for the appointment and compensation of the independent registered public accounting firm. It meets periodically with management, the independent registered public accounting firm and the internal auditors to ensure that they are carrying out their responsibilities. The Audit and Compliance Committee is also responsible for performing an oversight role by reviewing and monitoring the financial, accounting and auditing procedures of the Company in addition to reviewing the Company’s financial reports. Internal auditors monitor the operation of the internal control system and report findings and recommendations to management and the Audit and Compliance Committee. Corrective actions are taken to address control deficiencies and other opportunities for improving the system as they are identified. The independent registered public accounting firm and the internal auditors have full and unlimited access to the Audit and Compliance Committee, with or without management, to discuss the adequacy of internal control over financial reporting, and any other matters which they believe should be brought to the attention of the Audit and Compliance Committee.

     Management recognizes that there are inherent limitations in the effectiveness of any system of internal control over financial reporting, including the possibility of human error and the circumvention or overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect misstatements. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

     The Company assessed its internal control system as of December 31, 2004 in relation to criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, the Company has determined that, as of December 31, 2004, its system of internal control over financial reporting was effective.

     The consolidated financial statements have been audited by the independent registered public accounting firm, Ernst & Young LLP, which was given unrestricted access to all financial records and related data, including minutes of all meetings of stockholders, the Board of Directors and committees of the Board. Reports of the independent registered public accounting firm, which includes the independent registered public accounting firm’s attestation of management’s assessment of internal controls, are also presented within this document.

/s/ Kenneth C. Donahey Chairman, Chief Executive Officer and President	/s/ Michael J. Culotta Chief Financial Officer
Brentwood, Tennessee February 23, 2005

F2

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

The Board of Directors and Stockholders of LifePoint Hospitals, Inc.

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that LifePoint Hospitals, Inc. (the “Company”) maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of LifePoint Hospitals, Inc. as of December 31, 2003 and 2004, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2004, and our report dated February 23, 2005 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Nashville, Tennessee
February 23, 2005

F3

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of LifePoint Hospitals, Inc.

We have audited the accompanying consolidated balance sheets of LifePoint Hospitals, Inc. (the “Company”) as of December 31, 2003 and 2004, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of LifePoint Hospitals, Inc. at December 31, 2003 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2005 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Nashville, Tennessee
February 23, 2005

F4

LIFEPOINT HOSPITALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2002, 2003 and 2004
(Dollars in millions, except per share amounts)

	2002			2003			2004
Revenues	$	714.9		$	875.6		$	996.9
Salaries and benefits		280.0			352.3			399.4
Supplies		88.7			114.2			129.1
Other operating expenses		129.6			155.4			166.8
Provision for doubtful accounts		49.8			74.1			86.2
Depreciation and amortization		35.0			43.1			48.1
Interest expense, net		13.3			12.8			12.6
Debt retirement costs		31.0			—			1.5
ESOP expense		9.7			6.9			9.4
		637.1			758.8			853.1
Income from continuing operations before minority interests and income taxes		77.8			116.8			143.8
Minority interests in earnings of consolidated entities		2.2			0.7			1.0
Income from continuing operations before income taxes		75.6			116.1			142.8
Provision for income taxes		32.7			45.9			56.0
Income from continuing operations		42.9			70.2			86.8
Loss from discontinued operations, net of income taxes		(1.4	)		(1.7	)		(1.1	)
Net income	$	41.5		$	68.5		$	85.7
Basic earnings (loss) per share:
Continuing operations	$	1.14		$	1.89		$	2.34
Discontinued operations		(0.03	)		(0.05	)		(0.03	)
Net income	$	1.11		$	1.84		$	2.31
Diluted earnings (loss) per share:
Continuing operations	$	1.10		$	1.80		$	2.20
Discontinued operations		(0.03	)		(0.04	)		(0.03	)
Net income	$	1.07		$	1.76		$	2.17

The accompanying notes are an integral part of the consolidated financial statements.

F5

LIFEPOINT HOSPITALS, INC.

CONSOLIDATED BALANCE SHEETS
December 31, 2003 and 2004
(Dollars in millions, except per share amounts)

	2003			2004
ASSETS
Current assets:
Cash and cash equivalents	$	20.6		$	18.6
Accounts receivable, less allowances for doubtful accounts of $111.7 and $103.6 at December 31, 2003 and 2004, respectively		101.4			112.0
Inventories		21.7			25.3
Assets held for sale		34.7			33.0
Income taxes receivable		7.4			7.5
Deferred income taxes and other current assets		19.5			31.4
		205.3			227.8
Property and equipment:
Land		18.5			20.5
Buildings and improvements		347.2			385.4
Equipment		315.7			342.0
Construction in progress (estimated cost to complete and equip after December 31, 2004 is $71.5)		28.2			48.6
		709.6			796.5
Accumulated depreciation		(265.7	)		(295.4	)
		443.9			501.1
Deferred loan costs, net		7.0			4.9
Intangible assets, net		4.2			3.3
Other		—			5.8
Goodwill		138.6			144.4
	$	799.0		$	887.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	30.9		$	29.5
Accrued salaries		25.4			31.2
Liabilities held for sale		0.3			0.3
Other current liabilities		12.2			18.2
		68.8			79.2
Revolving credit facility		20.0			—
Convertible notes		250.0			221.0
Deferred income taxes		35.9			47.9
Professional and general liability claims and other liabilities		28.6			28.4
Minority interests in equity of consolidated entities		1.4			1.3
Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized; no shares issued		—			—
Common stock, $.01 par value; 90,000,000 shares authorized; 39,084,396 shares and 40,123,768 shares issued at December 31, 2003 and 2004, respectively		0.4			0.4
Capital in excess of par value		301.7			332.6
Unearned ESOP compensation		(16.1	)		(12.9	)
Unearned compensation on nonvested stock		—			(4.5	)
Retained earnings		137.2			222.8
Common stock in treasury, at cost, 1,198,800 shares at December 31, 2003 and 2004		(28.9	)		(28.9	)
		394.3			509.5
	$	799.0		$	887.3

The accompanying notes are an integral part of the consolidated financial statements.

F6

LIFEPOINT HOSPITALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2002, 2003 and 2004
(Dollars in millions)

	2002			2003			2004
Cash flows from continuing operating activities:
Net income	$	41.5		$	68.5		$	85.7
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Loss from discontinued operations, net of income taxes		1.4			1.7			1.1
Depreciation and amortization		35.0			43.1			48.1
Debt retirement costs		31.0			—			1.5
ESOP expense		9.7			6.9			9.4
Minority interests in earnings of consolidated entities		2.2			0.7			1.0
Deferred income taxes		3.0			8.9			4.4
Reserve for professional and general liability claims, net		9.2			2.4			(0.2	)
Tax benefit from employee stock plans		1.7			2.3			6.2
Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		(15.4	)		(15.5	)		(11.1	)
Inventories and other current assets		(3.1	)		(4.8	)		(6.6	)
Accounts payable and accrued expenses		1.1			2.2			8.9
Income taxes payable		6.9			(7.5	)		(0.1	)
Estimated third-party payor settlements		(10.2	)		(5.7	)		(2.3	)
Other		0.3			1.8			2.6
Net cash provided by continuing operating activities		114.3			105.0			148.6
Cash flows from continuing investing activities:
Purchase of property and equipment		(57.5	)		(68.3	)		(82.0	)
Acquisitions, net of cash acquired		(137.1	)		(16.5	)		(30.5	)
Purchase of minority interest in joint venture		(25.0	)		—			—
Other		(1.9	)		0.6			(1.1	)
Net cash used in continuing investing activities		(221.5	)		(84.2	)		(113.6	)
Cash flows from continuing financing activities:
Repurchase of convertible notes		—			—			(29.9	)
Repayment under revolving credit facility		—			—			(50.0	)
Borrowing under revolving credit facility		—			20.0			30.0
Repurchase of common stock		—			(45.7	)		—
Proceeds from issuance of convertible notes, net		242.5			—			—
Repurchase of senior subordinated notes		(176.5	)		—			—
Proceeds from exercise of stock options		3.0			3.7			10.2
Proceeds from employee loan repayments		5.7			—			—
Other		1.0			1.0			1.9
Net cash provided by (used in) continuing financing activities		75.7			(21.0	)		(37.8	)
Net cash used in continuing operations		(31.5	)		(0.2	)		(2.8	)
Net cash (used in) provided by discontinued operations		(2.7	)		(2.2	)		0.8
Change in cash and cash equivalents		(34.2	)		(2.4	)		(2.0	)
Cash and cash equivalents at beginning of year		57.2			23.0			20.6
Cash and cash equivalents at end of year	$	23.0		$	20.6		$	18.6
Supplemental disclosure of cash flow information:
Interest payments	$	16.3		$	12.4		$	12.1
Capitalized interest	$	0.8		$	0.8		$	1.1
Income taxes paid, net	$	21.0		$	41.4		$	44.6

The accompanying notes are an integral part of the consolidated financial statements.

F7

LIFEPOINT HOSPITALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2002, 2003 and 2004
(Amounts in millions)

															Notes
												Unearned			receivable
						Capital in			Unearned			Compensation			for Shares
	Common Stock					Excess of			ESOP			on Nonvested			Sold to			Retained			Treasury
	Shares			Amount		Par Value			Compensation			Stock			Employees			Earnings			Stock			Total
Balance at December 31, 2001		39.3		$	0.4	$	285.0		$	(22.5	)	$	–		$	(5.7	)	$	37.8		$	–		$	295.0
Net income		–			–		–			–			–			–			41.5			–			41.5
ESOP compensation earned		–			–		6.5			3.2			–			–			–			–			9.7
Exercise of stock options, including tax benefits and other		0.3			–		4.7			–			–			–			–			–			4.7
Stock issued in connection with employee stock purchase plans		–			–		1.0			–			–			–			–			–			1.0
Proceeds from employee loan repayments		–			–		–			–			–			5.7			–			–			5.7
Balance at December 31, 2002		39.6			0.4		297.2			(19.3	)		–			–			79.3			–			357.6
Net income		–			–		–			–			–			–			68.5			–			68.5
ESOP compensation earned		–			–		3.7			3.2			–			–			–			–			6.9
Exercise of stock options, including tax benefits and other		0.3			–		6.0			–			–			–			–			–			6.0
Stock activity in connection with employee stock purchase plans		0.1			–		1.3			–			–			–			(0.3	)		–			1.0
Repurchases and retirement of common stock		(0.9	)		–		(6.5	)		–			–			–			(10.3	)		–			(16.8	)
Purchases of treasury stock at cost		(1.2	)		–		–			–			–			–			–			(28.9	)		(28.9	)
Balance at December 31, 2003		37.9			0.4		301.7			(16.1	)		–			–			137.2			(28.9	)		394.3
Net income		–			–		–			–			–			–			85.7			–			85.7
ESOP compensation earned		–			–		6.2			3.2			–			–			–			–			9.4
Exercise of stock options, including tax benefits and other		0.8			–		16.4			–			–			–			–			–			16.4
Stock activity in connection with employee stock purchase plans		–			–		1.9			–			–			–			(0.1	)		–			1.8
Unvested stock issued to key employees and outside directors, net of forfeitures		0.2			–		6.4			–			(6.4	)		–			–			–			–
Amortization of unvested stock grants		–			–		–			–			1.9			–			–			–			1.9
Balance at December 31, 2004		38.9		$	0.4	$	332.6		$	(12.9	)	$	(4.5	)	$	–		$	222.8		$	(28.9	)	$	509.5

The accompanying notes are an integral part of the consolidated financial statements.

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LIFEPOINT HOSPITALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004

Note 1. Organization and Summary of Significant Accounting Policies

Organization

     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 December 31, 2004, the Company operated 30 general, acute care hospitals with an aggregate of 2,744 licensed beds in non-urban communities. The Company’s hospitals are located in the states of Alabama, Florida, Kansas, Kentucky, Louisiana, Tennessee, Utah, West Virginia and Wyoming. During the third quarter of 2004, the Company committed to a plan to divest its 56-bed Bartow Memorial Hospital (“Bartow”), located in Bartow, Florida. The operations of Bartow have been reflected as discontinued operations, as further discussed in Note 3. The Company’s remaining 29 hospitals are reported as continuing operations.

     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 $20.8 million, $23.6 million and $29.8 million for the years ended December 31, 2002, 2003 and 2004 respectively.

     The Company became independent and publicly traded on May 11, 1999 when HCA Inc. (“HCA”) distributed all outstanding shares of the Company’s common stock to its stockholders in a spin-off transaction.

Principles of Consolidation

     The accompanying consolidated financial statements include the accounts of the Company and all subsidiaries and entities controlled by the Company through the Company’s direct or indirect ownership of a majority interest and exclusive rights granted to the Company as the sole general partner of such entities. All significant intercompany accounts and transactions within the Company have been eliminated in consolidation.

Fair Value of Financial Instruments

     The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term maturity of these instruments.

     The carrying value of the Company’s 4 1/2% Convertible Subordinated Notes due June 1, 2009 (the “Convertible Notes”) was $221.0 million on December 31, 2004. The fair value of the Company’s Convertible Notes was $222.7 million on December 31, 2004, based on the quoted market price at December 31, 2004.

Revenue Recognition and Allowance for Contractual Discounts

     The Company recognizes revenues in the period in which services are performed. Accounts receivable primarily consist of amounts due from third-party payors and patients. Amounts the Company receives for treatment of patients covered by governmental programs such as Medicare and Medicaid and other third-party payors such as health maintenance organizations, preferred provider organizations and other private insurers are generally less than the Company’s established billing rates. Accordingly, the revenues and accounts receivable reported in the Company’s consolidated financial statements are recorded at the amount expected to be received.

     The Company derives a significant portion of its revenues from Medicare, Medicaid and other payors that receive discounts from our standard charges. The Company must estimate the total amount of these discounts to prepare its consolidated financial statements. The Medicare and Medicaid regulations and various managed care contracts under which these discounts must be calculated are complex and are subject to interpretation and

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adjustment. The Company estimates the allowance for contractual discounts on a payor-specific basis given its interpretation of the applicable regulations or contract terms. These interpretations sometimes result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management. Changes in estimates related to the allowance for contractual discounts affect revenues reported in the Company’s consolidated statements of operations.

     Settlements under reimbursement agreements with third-party payors are estimated and recorded in the period the related services are rendered and are adjusted in future periods as final settlements are determined. There is at least a reasonable possibility that recorded estimates will change by a material amount in the near term. The net adjustments to estimated third-party payor settlements resulted in increases to revenues from continuing operations of $13.0 million, $6.0 million, and $7.5 million (exclusive of the matter discussed in the following paragraph) for the years ended December 31, 2002, 2003, and 2004, respectively. The net estimated third party payor settlements as of December 31, 2003 and 2004 and included in other current liabilities in the accompanying balance sheets approximated $2.5 million and $0.1 million, respectively. Management believes that adequate provisions have been made for adjustments that may result from final determination of amounts earned under these programs.

     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 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 the Centers for Medicare and Medicaid Services (“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.

     During the years ended December 31, 2002, 2003, and 2004, approximately 47.0%, 46.8%, and 48.1%, respectively, of the Company’s revenues from continuing operations related to patients participating in the Medicare and Medicaid programs. Management recognizes that revenues and receivables from government agencies are significant to the Company’s operations, but it does not believe that there are significant credit risks associated with these government agencies. Management does not believe that there are any other significant concentrations of revenues from any particular payor that would subject the Company to any significant credit risks in the collection of its accounts receivable.

     Laws and regulations governing Medicare and Medicaid programs are complex and subject to interpretation. The Company believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing that would have a material effect on the Company’s financial statements. Compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties and exclusion from the Medicare and Medicaid programs.

     The Company’s revenue is particularly sensitive to regulatory and economic changes in Kentucky and Tennessee. As of December 31, 2004, the Company operated 30 hospitals with eight located in the Commonwealth of Kentucky and seven located in the State of Tennessee. The Company generated 39.5%, 34.5% and 35.2% of its revenues from continuing operations from its Kentucky hospitals (including 4.1%, 3.7% and 4.2% from state-sponsored Medicaid programs) and 24.6%, 20.5% and 19.5% from its Tennessee hospitals (including 3.2%, 2.8% and 2.7% from the state-sponsored TennCare program) for the years ended December 31, 2002, 2003 and 2004, respectively.

Cash and Cash Equivalents

     Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three months or less. The Company places its cash in financial institutions that are federally insured.

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Accounts Receivable and Allowance for Doubtful Accounts

     Accounts receivable primarily consist of amounts due from third-party payors and patients. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to their estimated net realizable value. The primary uncertainty of such allowances lies with uninsured patient receivables and deductibles, co-payments or other amounts due from individual patients.

     The Company has an established process to determine the adequacy of the allowance for doubtful accounts that relies on a number of analytical tools and benchmarks to arrive at a reasonable allowance. No single statistic or measurement determines the adequacy of the allowance for doubtful accounts. Some of the analytical tools that the Company utilizes include, but are not limited to, historical cash collection experience, revenue trends by payor classification and revenue days in accounts receivable. Accounts receivable are written off after collection efforts have been followed in accordance with the Company’s policies.

     A summary of activity in the Company’s allowance for doubtful accounts is as follows (in millions):

			Additions		Accounts
	Balances at		Charged to		Written Off,					Balances
	Beginning		Costs and		Net of					at End
	of Year		Expenses (a)		Recoveries			Acquisitions		of Year
Allowance for doubtful accounts:
Year ended December 31, 2002	$	59.0	$	55.2	$	(48.6	)	$	43.5	$	109.1
Year ended December 31, 2003		109.1		81.5		(78.9	)		—		111.7
Year ended December 31, 2004		111.7		94.7		(102.8	)		—		103.6

(a) Additions charged to costs and expenses include amounts related to the Company’s continuing operations and the operations of Bartow, which is reflected as discontinued operations in the Company’s accompanying consolidated financial statements.

Inventories

     Inventories are stated at the lower of cost (first-in, first-out) or market.

Long-Lived Assets

     (a) Property and Equipment

     Property and equipment are stated at cost less accumulated depreciation. Routine maintenance and repairs are charged to expense as incurred. Expenditures that increase capacities or extend useful lives are capitalized. Depreciation is computed by applying the straight-line method over the estimated useful lives of buildings and improvements (10 to 40 years) and equipment (3 to 10 years). Interest on funds used to pay for the construction of major capital additions is included in the cost of each capital addition. Depreciation expense from continuing operations was $34.7 million, $42.4 million and $47.3 million for the years ended December 31, 2002, 2003 and 2004, respectively.

     The Company evaluates its long-lived assets for possible impairment whenever circumstances indicate that the carrying amount of the asset, or related group of assets, may not be recoverable from estimated future cash flows, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impariment or Disposal of Long-Lived Assets” (“SFAS No. 144”). Fair value estimates are derived from independent appraisals, established market values of comparable assets, or internal calculations of estimated future net cash flows. The Company’s estimates of future cash flows are based on assumptions and projections it believes to be reasonable and supportable. The Company’s assumptions take into account revenue and expense growth rates, patient volumes,

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changes in payor mix, and changes in legislation and other payor payment patterns. These assumptions vary by type of facility.

     (b) Goodwill and Intangible Assets

     Under SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed at least annually for impairment. The amortization provisions of SFAS No. 142 applied to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the Company adopted SFAS No. 142, effective January 1, 2002. Pursuant to SFAS No. 142, the Company completed its transition impairment tests of goodwill during the second quarter of 2002 and did not incur an impairment charge. The Company also performed its annual impairment tests as of October 1, 2002, 2003 and 2004, and did not incur an impairment charge.

     The Company’s intangible assets relate to non-competition agreements and certificates of need. Non-competition agreements are amortized over the terms of the agreements. The certificates of need were determined to have indefinite lives by an independent appraiser and, accordingly, are not amortized. See Note 4 for a summary of goodwill and intangible assets and the effects of adopting SFAS No. 142.

Discontinued Operations

     In accordance with the provisions of SFAS No. 144, the Company has presented the operating results, financial position and cash flows of Bartow as discontinued operations in the accompanying consolidated financial statements as of December 31, 2003 and 2004 and for each of the three years in the period ended December 31, 2004. The results of operations of Bartow have been reflected as discontinued operations, net of taxes, in the accompanying consolidated statements of operations and certain assets and liabilities of Bartow that are anticipated to be sold are reflected as assets held for sale and liabilities held for sale in the accompanying consolidated balance sheets, as further described in Note 3.

Income Taxes

     The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company assesses the likelihood that deferred tax assets will be recovered from future taxable income. To the extent the Company believes that recovery is not likely, a valuation allowance is established. To the extent the Company establishes a valuation allowance or increases this allowance, the Company must include an expense within the provision for income taxes in the consolidated statements of operations.

Professional and General Liability Claims

     Given the nature of the Company’s operating environment, the Company is subject to potential medical malpractice lawsuits and other claims as part of providing healthcare services. To mitigate a portion of this risk, the Company maintained insurance for individual malpractice claims exceeding $10.0 million for 2002. For 2003, the Company lowered its self-insured retention level to $5.0 million on individual malpractice claims and for 2004, the Company increased its self-insured retention level back up to $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.

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     The Company implemented enhanced risk management 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 2003, the Company improved its estimation process for determining its reserves for professional and general liability claims by expanding from using one actuary to using multiple actuaries. The Company uses the calculations of each actuary by averaging each actuary’s results into the determination of its recorded reserve levels. This averaging process results in a refined estimation approach that the Company believes produces a more reliable estimate of ultimate losses.

     During 2004, 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 for continuing operations for the year ended December 2004 by $4.0 million, on a pretax basis, or $0.06 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 $2.4 million on a pretax basis, or $0.03 per diluted share, which reduced its professional and general liability expense in the year ended December 31, 2004.

     Actuarial calculations include a large number of variables that may significantly impact the estimate of ultimate losses that are recorded during a reporting period. Professional judgment is used by each actuary in determining the loss estimates by selecting factors that are considered appropriate by the actuary for the Company’s specific circumstances. Changes in assumptions used by the Company’s actuaries with respect to demographics, industry trends and judgmental selection of factors may impact the Company’s recorded reserve levels.

     The reserve for professional and general liability claims as of the balance sheet date reflects the current estimate of all outstanding losses, including incurred but not reported losses, based upon actuarial calculations. The loss estimates included in the actuarial calculations may change in the future based upon updated facts and circumstances. The reserve for professional and general liability claims was $27.5 million and $27.2 million at December 31, 2003 and 2004, respectively.

     The Company’s cost for professional and general liability claims each year includes: the actuarially determined estimate of losses for the current year, including claims incurred but not reported; the change in the estimate of losses for prior years based upon actual claims development experience as compared to prior actuarial projections; the insurance premiums for losses in excess of our self-insured retention level; the administrative costs of the insurance program; and interest expense related to the discounted portion of the liability. The total cost of professional and general liability claims from continuing operations for the years ended December 31, 2002, 2003 and 2004 was approximately $10.8 million, $8.3 million and $5.4 million, respectively.

Physician Recruiting Costs

     Physician recruiting costs are expensed when incurred and are included in other operating expenses in the accompanying consolidated statements of operations. Physician recruiting expenses of continuing operations were $5.8 million, $12.0 million and $14.8 million for the years ended December 31, 2002, 2003 and 2004, respectively. See Note 8 for a discussion on the Company’s commitments to advance amounts to recruited physicians.

Comprehensive Income

     SFAS No. 130, “Reporting Comprehensive Income”, requires that changes in certain amounts that are recorded directly to stockholders’ equity be shown in the financial statements as a component of comprehensive income. For the years ended December 31, 2002, 2003 and 2004, the Company had no items of comprehensive income recorded directly to stockholders’ equity. Therefore, comprehensive income is equivalent to net income.

Segment Reporting

     The Company’s business of providing healthcare services to patients comprises a single reportable operating segment under SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information”.

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Stock-Based Compensation

     In December 2002, the Financial Accounting Standards Board (“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 amended SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair-value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amended the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 had no material impact on the Company. The Company has included the required disclosures below and in Note 7.

     The Company issues stock options and other stock-based awards to key employees and directors as more fully described in Note 7. SFAS No. 123, “Accounting for Stock-Based Compensation,” encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to continue to account for employee stock-based compensation using the intrinsic value method as prescribed in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related FASB Interpretations. 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 if the Company had applied the fair value recognition provisions of SFAS No. 123, as amended, to stock-based compensation for the years ended December 31, 2002, 2003 and 2004 (dollars in millions, except per share amounts):

	2002(a)			2003			2004
Net income, as reported	$	41.5		$	68.5		$	85.7
Add: Stock-based compensation expense included in reported net income, net of related tax effects		—			—			1.1
Less: Stock-based compensation expense determined under fair value based method for all awards, net of related tax effects		(8.2	)		(9.0	)		(9.0	)
Pro forma net income		33.3			59.5			77.8
Interest on Convertible Notes, net of taxes		—			7.8			7.3
Diluted pro forma net income	$	33.3		$	67.3		$	85.1
Denominator for basic earnings per share – weighted average shares		37.5			37.2			37.0
Effect of dilutive securities:
Employee stock benefit plans		1.1			0.8			0.8
Convertible Notes		—			5.3			5.0
Denominator for diluted earnings per share – adjusted weighted average shares		38.6			43.3			42.8
Earnings per share:
Basic – as reported	$	1.11		$	1.84		$	2.31
Basic – pro forma	$	0.89		$	1.60		$	2.10
Diluted – as reported	$	1.07		$	1.76		$	2.17
Diluted – pro forma	$	0.86		$	1.56		$	1.99

(a) The impact of 3.3 million potential weighted average shares of common stock, if converted, and interest expense related to the Convertible Notes was not included in the computation of diluted earnings per share and pro forma diluted earnings per share because the effect would have been anti-dilutive.

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     The per share weighted-average fair value of stock options granted during 2002, 2003 and 2004 was $13.99, $8.02 and $12.66, respectively, on the date of grant using a Black-Scholes option pricing model, assuming no expected dividends and the following weighted average assumptions:

	2002			2003			2004
Risk free interest rate		3.51	%		1.90	%		2.23	%
Expected life, in years		3.0			3.0			3.0
Expected volatility		53.0	%		53.0	%		53.1	%

     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.

Earnings Per Share

     Earnings per share (“EPS”) is based on the weighted average number of common shares outstanding and dilutive stock options, convertible notes and restricted shares, adjusted for the shares issued to the LifePoint Employee Stock Ownership Plan (the “ESOP”). As the ESOP shares are committed to be released, the shares become outstanding for EPS calculations. In addition, the numerator, net income, is adjusted for interest expense related to the Convertible Notes, which is discussed further in Note 6.

Use of Estimates

     The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassifications

     Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications, primarily for the Company’s discontinued operations as described in Note 3, have no impact on total assets, liabilities, stockholders’ equity, net income or cash flows.

Recently Issued Accounting Pronouncements

     In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statement Nos. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS No. 145”). The Company adopted SFAS No. 145 effective January 1, 2003, which required a reclassification of debt retirement costs from an extraordinary loss to a component of income before income taxes. Under certain provisions of SFAS No. 145, gains and losses related to the early extinguishment of debt are no longer segregated on the statement of operations as extraordinary items net of the effect of income taxes. Instead, these gains and losses are included as a component of income before income taxes. Any gain or loss on early extinguishment of debt that was classified as an extraordinary item in prior periods presented that did not meet the criteria in APB Opinion No. 30 for classification as an extraordinary item was reclassified upon adoption.

     In December 2003, the 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 was 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.

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     In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payments” (“SFAS No. 123R”), a revision of SFAS No. 123, “Accounting for Stock-Based Compensation”, which addresses financial accounting and reporting for costs associated with stock-based compensation. SFAS No. 123R addresses all forms of share-based payment (“SBP”) awards, including shares issued under employee stock purchase plans, stock options and restricted stock. SFAS No. 123R will require the Company to recognize compensation expense beginning July 1, 2005, in an amount equal to the fair value of share-based payments related to unvested share-based payment awards over the applicable vesting period. Under the Modified Prospective Method, the Company does not anticipate recording a material amount of compensation expense at the time of adoption since almost all options then previously granted will be fully vested as a result of the impendent acquisition of Province Healthcare Company, as further discussed in Note 2.

Note 2. Acquisitions

Anticipated Acquisition of Province Healthcare Company

     LifePoint announced on August 16, 2004 that it entered into a definitive agreement to acquire Province Healthcare Company (“Province”) for approximately $1.7 billion in cash, stock and the assumption of debt. If consummated, the proposed Province transaction will create a hospital company focused on providing healthcare services in non-urban communities, with 51 hospitals, of which 48 are located in markets where the combined company will be the sole hospital provider in the community. The transaction is expected to close in the first half of 2005.

     Pursuant to the definitive agreement, if the proposed transaction is consummated, the businesses of LifePoint and Province will be combined under a newly formed company, which will be renamed “LifePoint Hospitals, Inc.” (“New LifePoint”). Each Province stockholder will receive a per share consideration comprised of $11.375 in cash and a number of shares of New LifePoint common stock equal to an exchange ratio of between 0.3447 and 0.2917, which will represent a value of $11.375, if the volume weighted average of the daily sale prices for shares of LifePoint common stock for the 20 consecutive trading day period ending at the close of business on the third trading day prior to closing, (the “LifePoint average share price”), is between $33.00 and $39.00. If the LifePoint average share price is $33.00 or less, the exchange ratio will be 0.3477, and if the LifePoint average share price is $39.00 or more, the exchange ratio will be 0.2917.

     Due to the variable nature of the exchange ratio to determine the per share consideration, the measurement date to determine the fair value of New LifePoint common stock to be issued will be determined in accordance with Emerging Issues Task Force Issue Number 99-12, “Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination,” (“EITF No. 99-12”). As stated in paragraph 7 in EITF No. 99-12, the measurement date is the earliest date, from the date the terms of the acquisition are agreed to and announced to the date of final application of the formula pursuant to the acquisition agreement, on which subsequent applications of the formula do not result in a change in the number of shares or the amount of other consideration.

     The agreement provides for alternative structures. While it is anticipated that shares received by Province stockholders will be received in a tax-free exchange, the parties have agreed to a taxable alternative structure at the same price if necessary to complete the acquisition.

     Each of the Boards of Directors of LifePoint and Province have unanimously approved the proposed transaction. Completion of the transaction is subject to approval by each company’s stockholders, receipt of necessary financing and certain other conditions. LifePoint has received a commitment from Citigroup North America and its affiliates (“Citigroup”) to finance the cash consideration of the acquisition, to refinance Province’s and the Company’s existing debt and to provide for the ongoing working capital and general corporate needs of New LifePoint. The commitment provides for up to $1.325 billion in term loans and up to $400 million in revolving loans on customary terms and conditions.

     The consummation of the proposed Province transaction will constitute a “change in control” under the Company’s 1998 Long-Term Incentive Plan, Management Stock Purchase Plan, Outside Directors Stock and Incentive Compensation Plan, Change in Control Severance Plan and Executive Performance Incentive Plan. As a

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result, almost all stock options issued under the Company’s equity compensation plans and outstanding as of the effective time of the proposed Province transaction that have not previously vested will become fully vested and exercisable upon the effective time of the proposed Province transaction.

Acquisition – 2004

     Effective July 1, 2004, the Company acquired the 106-bed River Parishes Hospital in LaPlace, Louisiana from Universal Health Services, Inc. for approximately $24.8 million in cash, including certain working capital and direct acquisition costs. The Company borrowed from its revolving credit facility and paid the purchase price for this acquisition on June 30, 2004. Unaudited revenues for this facility were approximately $21.0 million since the Company’s acquisition on July 1, 2004. The hospital is located approximately 30 miles west of New Orleans, Louisiana and is the only hospital located in St. John the Baptist Parish. The estimated purchase price allocation is pending a final appraisal from an independent third party and is subject to settling amounts related to purchased working capital. Estimated goodwill totaled approximately $5.2 million, all of which is expected to be deductible for tax purposes.

Acquisition – 2003

     Effective October 1, 2003, the Company acquired Spring View Hospital, a 75-bed acute care hospital located in Lebanon, Kentucky. The acquisition also included 38-bed Spring View Nursing Home and Spring View Pediatrics. The consideration for this acquisition was $15.9 million, which consisted of $15.5 million in cash paid at the closing and a $0.4 million net working capital settlement paid in 2004. The Company used its available cash to pay for this acquisition. Goodwill totaled approximately $5.8 million, all of which is expected to be deductible for tax purposes. Intangible assets of $0.6 million relate to the certificates of need issued by the Commonwealth of Kentucky for Spring View Hospital and Spring View Nursing Home. See Note 4 for a discussion of these intangible assets.

Acquisitions – 2002

     Effective December 1, 2002, the Company acquired Northwest Medical Center, a 71-bed acute care hospital located in Winfield, Alabama, and Burdick-West Medical Center (now known as Lakeland Community Hospital), a 99-bed acute care hospital located in Haleyville, Alabama. The consideration for both hospitals totaled $29.5 million, including $6.5 million for net working capital. The consideration consisted of $28.7 million in cash and $0.8 million in assumed liabilities. The Company used its available cash to fund this acquisition. Goodwill totaled approximately $4.2 million, all of which is expected to be deductible for tax purposes.

     Effective December 1, 2002, the Company acquired Logan General Hospital (now known as Logan Regional Medical Center), a 132-bed acute care hospital and Guyan Valley Hospital, a 19-bed critical access hospital both located in Logan, West Virginia. The consideration for both hospitals totaled $89.4 million, which consisted of $87.5 million in cash and a $1.9 million working capital settlement paid in 2004. The Company used its available cash to fund this acquisition. Goodwill totaled approximately $56.2 million, all of which is expected to be deductible for tax purposes.

     Effective October 3, 2002, the Company acquired Russellville Hospital, a 100-bed acute care hospital located in Russellville, Alabama. The consideration for this hospital was $19.8 million in cash. The Company used its available cash to fund this acquisition. Goodwill totaled approximately $7.0 million, all of which is expected to be deductible for tax purposes.

     The Company’s motivation to acquire Northwest Medical Center, Lakeland Community Hospital and Russellville Hospital was to expand the Company’s presence in Alabama. It was also expected that a combined strategy for recruitment of various physician specialties could be achieved. In addition, some managerial positions have been combined for purposes of enhanced operational efficiencies. The Company acquired Logan Regional Medical Center and Guyan Valley Hospital to enter the West Virginia market. The Company’s strategy is to expand healthcare services in Logan and southern West Virginia.

     In October 2002, the Company purchased the outstanding 30% limited partner interest in Dodge City Healthcare Group, L.P., the entity that owns and operates 110-bed Western Plains Regional Hospital in Dodge City, Kansas, for

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$25.0 million in cash. The Company used its available cash to fund this acquisition. Under the terms of the purchase agreement, the Company’s former limited partners have agreed not to compete with the hospital for five years. The non-competition agreements have been valued by an independent third party at $4.0 million and are being amortized over the life of the agreements. Goodwill totaled approximately $16.3 million, all of which is expected to be deductible for tax purposes.

     Intangible assets in the aggregate for acquisitions in 2002 totaled $0.5 million and relate to certificates of need issued by the states in which the Company acquired hospitals. See Note 4 for a discussion of these intangible assets.

Allocations of Purchase Price

     The above acquisitions were accounted for using the purchase method of accounting. The purchase prices of these transactions were allocated to the assets acquired and liabilities assumed based upon their respective fair values and are subject to change during the twelve month period subsequent to the acquisition date. The operating results of the above facilities have been included in the accompanying consolidated statements of operations from the date of each respective facility’s acquisition. The following table summarizes the allocations of the aggregate purchase price of the acquisitions, including assumed liabilities and direct transaction costs, excluding the 2002 purchase of the remaining 30% interest in Dodge City Healthcare Group, L.P., for the years ended December 31, 2002, 2003 and 2004 (in millions):

	2002		2003		2004
Fair value of assets acquired, excluding cash:
Accounts receivable, net	$	11.9	$	—	$	—
Other current assets		2.3		0.5		1.5
Property and equipment		68.4		10.0		19.7
Intangible assets		0.5		0.6		—
Goodwill		67.4		5.8		5.8
	$	150.5	$	16.9	$	27.0

     The pro forma results of operations for the 2003 acquisition of Spring View Hospital and 2004 acquisition of River Parishes Hospital were not included because these acquisitions were not material.

Note 3. Discontinued Operations

     During 2004, the Company committed to a plan to divest its 56-bed Bartow Memorial Hospital located in Bartow, Florida. The Company has reflected Bartow as discontinued operations, consistent with the provisions of SFAS No. 144. The results of operations, net of taxes, and the carrying value of the assets and liabilities of Bartow that are expected to be sold in 2005 have been reflected in the accompanying consolidated financial statements as discontinued operations/assets held for sale/liabilities held for sale in accordance with SFAS No. 144. All prior periods have been reclassified to conform to this presentation for all periods presented. These required reclassifications to the prior period financial statements did not impact total assets, liabilities, stockholders’ equity, net income or cash flows.

     The revenues and loss before income taxes of Bartow reported in discontinued operations for the years ended December 31, 2002, 2003 and 2004 are as follows (in millions):

	2002			2003			2004
Revenues	$	28.7		$	31.5		$	32.8
Loss before income taxes		(2.0	)		(2.5	)		(1.8	)

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     The following assets and liabilities of Bartow to be sold are reported as assets and liabilities held for sale in the accompanying consolidated balance sheets at December 31 (in millions):

	2003		2004
Inventories	$	0.7	$	0.7
Property and equipment, net		30.2		28.5
Goodwill		3.8		3.8
Assets held for sale	$	34.7	$	33.0
Accrued salaries	$	0.3	$	0.3
Liabilities held for sale	$	0.3	$	0.3

Note 4. Goodwill and Intangible Assets

     Pursuant to SFAS No. 142, the Company completed its transitional impairment tests of goodwill during the second quarter of 2002 and did not incur an impairment charge. The Company also performed its annual impairment tests as of October 1, 2002, 2003 and 2004 and did not incur an impairment charge.

     The following table presents the changes in the carrying amount of goodwill for the years ended December 31, 2003 and 2004 (in millions):

Balance at December 31, 2002	$	132.6
Consideration adjustments and finalization of purchase price allocations for acquisitions completed in 2002		0.2
Purchase price allocation for acquisition completed in 2003		5.8
Balance at December 31, 2003		138.6
Purchase price allocations for acquisitions in 2004		5.8
Balance at December 31, 2004	$	144.4

     The following table provides information regarding the Company’s intangible assets, which are included in the accompanying consolidated balance sheets at December 31 (in millions):

	Gross carrying				Accumulated
	amount				Amortization
Class of Intangible Asset	2003		2004		2003		2004
Non-competition agreements	$	4.2	$	4.0	$	1.1	$	1.8
Certificates of need		1.1		1.1		—		—
Total	$	5.3	$	5.1	$	1.1	$	1.8

     Certificates of need were issued by state governments to the hospitals acquired by the Company. An independent appraiser valued each certificate of need. In addition, these intangible assets were determined to have indefinite lives and, accordingly, are not amortized.

     Approximately $4.0 million of the gross carrying amount of the non-competition agreements is related to the Company’s purchase of the outstanding 30% limited partnership interest in Dodge City Healthcare Group, L.P., as discussed in Note 2. The other $0.2 million gross carrying amount of the non-competition agreements expired on December 31, 2004. Amortization expense related to the non-competition agreements for the years ended December 31, 2002, 2003 and 2004 was $0.3 million, $0.7 million, and $0.8 million, respectively. The Company estimates amortization expense for these intangible assets to approximate $0.8 million for each of the years ending December 31, 2005 and 2006, and $0.6 million for the year ending December 31, 2007. The non-competition agreements are amortized on a straight-line basis over the five-year length of the agreements.

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Note 5. Income Taxes

     The provision for income taxes for the years ended December 31, 2002, 2003 and 2004 consists of the following (in millions):

	2002		2003			2004
Current:
Federal	$	27.3	$	34.2		$	48.6
State		2.4		2.8			2.4
		29.7		37.0			51.0
Deferred:
Federal		1.0		9.7			3.7
State		1.2		(1.3	)		2.0
		2.2		8.4			5.7
Increase (decrease) in valuation allowance		0.8		0.5			(0.7	)
Total	$	32.7	$	45.9		$	56.0

     The increases in the valuation allowance in 2002 and 2003 are primarily the result of state net operating loss carryforwards that management believes may not be fully utilized because of the uncertainty regarding the Company’s ability to generate taxable income in certain states. The decrease in the valuation allowance in 2004 was primarily the result of utilization of previously reserved state net operating loss carryforwards. Various subsidiaries have state net operating loss carryforwards in the aggregate of approximately $67.4 million (primarily in the states of Florida, Tennessee and West Virginia) with expiration dates through the year 2024.

     A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate on income before income taxes for the years ended December 31, 2002, 2003 and 2004 follows:

	2002			2003			2004
Federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit		3.3			2.4			2.7
ESOP expense		3.2			1.2			1.5
Valuation allowance		1.1			0.5			(0.3	)
Other items, net		0.7			0.5			0.3
Effective income tax rate		43.3	%		39.6	%		39.2	%

     Deferred income taxes result from temporary differences in the recognition of assets, liabilities, revenues and expenses for financial accounting and tax purposes. Sources of these differences and the related tax effects are as follows (in millions):

	2003			2004
Deferred income tax liabilities:
Depreciation and amortization	$	(46.2	)	$	(62.4	)
Prepaid expenses		(3.7	)		(4.2	)
Other		(7.9	)		(11.7	)
Total deferred income tax liabilities		(57.8	)		(78.3	)
Deferred income tax assets:
Provision for doubtful accounts		13.3			19.5
Employee compensation		3.6			12.7
Professional liability claims		14.1			10.9
Other		5.3			8.6
Total deferred income tax assets		36.3			51.7
Valuation allowance		(4.0	)		(3.4	)
Net deferred income tax assets		32.3			48.3
Net deferred income tax liabilities	$	(25.5	)	$	(30.0	)

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     The balance sheet classification of deferred income tax assets (liabilities) at December 31 is as follows (in millions):

	2003			2004
Current	$	10.4		$	17.9
Long-term		(35.9	)		(47.9	)
Total	$	(25.5	)	$	(30.0	)

     The Company’s income taxes receivable balances were $7.4 million and $7.5 million at December 31, 2003 and 2004, respectively. The tax benefits associated with the Company’s employee stock plans were $1.7 million, $2.3 million, and $6.2 million for the years ended December 31, 2002, 2003 and 2004, respectively. These tax benefits reduced current taxes payable, increased capital in excess of par value, and increased deferred tax assets attributable to state net operating loss carryforwards by $0.5 million in 2004.

     During 2003, the Internal Revenue Service (“IRS”) notified the Company regarding its findings related to the examination of the Company’s tax returns for the years ended December 31, 1999, 2000 and 2001. The Company reached a partial 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. On October 4, 2004, HCA was denied certiorari on its appeal of this matter to the United States Supreme Court. The Company intends to reach resolution of its IRS examination after the final settlement of HCA’s tax years preceding the spin-off of the Company from HCA. Due to the complexity of the computations involved, neither the Company nor HCA is presently able to estimate when the final settlement of these tax years will occur. 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.

     HCA and the Company entered into a tax sharing and indemnification agreement as part of the 1999 spin-off transaction. 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 its 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.

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Note 6. Long-Term Debt

     Long-term debt consists of the following at December 31 (in millions):

	2003		2004
Bank Credit Agreement	$	20.0	$	—
Convertible Notes		250.0		221.0
		270.0		221.0
Less current maturities		—		—
	$	270.0	$	221.0

     Maturities of the Company’s long-term debt at December 31, 2004 were as follows (in millions):

2005 – 2008	$	—
2009		221.0
Thereafter		—
	$	221.0

Bank Credit Agreement

     In June 2001, the Company completed a $200 million, five-year amended and restated credit agreement (the “2001 Agreement”) with a syndicate of lenders, which increased the available credit under the revolving credit agreement from $65 million to $200 million and expires in June 2006. As of December 31, 2004, the Company had no indebtedness outstanding under the 2001 Agreement and $8.3 million in letters of credit outstanding, leaving $191.7 million available under the 2001 Agreement. Of the $8.3 million in letters of credit outstanding as of December 31, 2004, $8.2 million was related to the self-insured retention levels of the Company’s professional and general liability insurance program as security for the payment of claims and $0.1 million was related to certain utility companies. The Company repaid its $20.0 million of indebtedness outstanding at December 31, 2003 under the 2001 Agreement in February 2004 with its available cash. The Company borrowed $30.0 million under its 2001 Agreement in June 2004 to fund the acquisition of River Parishes Hospital, as previously described, and for general corporate purposes. Subsequently, the Company used available cash to repay the $30.0 million of indebtedness outstanding under the 2001 Agreement.

     The applicable interest rate under the 2001 Agreement is based on a rate, at the Company’s 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 the Company’s consolidated total debt to consolidated EBITDA ratio, as defined in the 2001 Agreement, for the most recent four quarters. The Company also pays a commitment fee ranging from 0.3% to 0.5% of the average daily unused balance. The applicable commitment fee rate is based on the Company’s consolidated total debt to consolidated EBITDA ratio, as defined, for the most recent four quarters.

     Obligations under the 2001 Agreement are guaranteed by substantially all of the Company’s current and future subsidiaries and are secured by substantially all of the assets of the Company and its subsidiaries and the stock of the Company’s subsidiaries. The 2001 Agreement requires that the Company comply with various financial ratios and tests and contains covenants, including, but not limited to, restrictions on new indebtedness, the ability to merge or consolidate, asset sales, capital expenditures and dividends, for which the Company is in compliance as of December 31, 2004.

Convertible Notes

     Effective May 22, 2002, the Company sold $250 million of Convertible Subordinated Notes due June 1, 2009 (the “Convertible Notes”). The net proceeds were approximately $242.5 million and were used for acquisitions, capital improvements at the Company’s existing facilities, repurchases of the Company’s 10 3/4% Senior Subordinated Notes discussed below, 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 the Company’s common stock at a conversion price of $47.36 per share. The conversion price is subject to adjustment in certain circumstances. The Company may redeem all or a portion of the Convertible Notes on or after June 3, 2005, at the

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then current redemption prices, plus accrued and unpaid interest. Holders of the Convertible Notes may require the Company 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, as defined. The Convertible Notes are unsecured and subordinated to the Company’s existing and future senior indebtedness and senior subordinated indebtedness. The Convertible Notes rank junior to the Company’s liabilities. The indenture does not contain any financial covenants.

     During 2004, the Company repurchased $29.0 million of its $250.0 million 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 together resulted in a $1.5 million charge in debt retirement costs for the year ended December 31, 2004. The $1.5 million of debt retirement costs had a negative $0.02 per diluted share impact for the year ended December 31, 2004. The $29.0 million repurchase reduced the amount of shares of common stock reserved for issuance upon conversion of the Convertible Notes from 5,278,825 shares to 4,666,481 shares.

Senior Subordinated Notes

     During 2002, the Company repurchased its $150.0 million 10 3/4% Senior Subordinated Notes and paid $26.5 million in premiums, commissions and fees on these repurchases. In connection with these repurchases, the Company recorded debt retirement costs in the year ended December 31, 2002 of $31.0 million.

Deferred Loan Costs

     The Company incurred loan costs of approximately $7.5 million during 2002. The Company capitalized such costs and is amortizing these costs to interest expense over the terms of the related debt (five years for the 2001 Agreement and seven years for the Convertible Notes). The interest expense related to deferred loan cost amortization was approximately $1.4 million, $1.6 million, and $1.5 million during 2002, 2003, and 2004, respectively. During 2002, as a result of the repurchase of the 10 3/4% Senior Subordinated Notes, the Company expensed the remaining deferred loan costs of $4.5 million attributable to the 10 3/4% Senior Subordinated Notes as part of the debt retirement costs in the consolidated income statements.

Note 7. Stockholders’ Equity

Preferred Stock

     The Company’s certificate of incorporation provides up to 10,000,000 shares of preferred stock may be issued, of which 90,000 shares have been designated as Series A Junior Participating Preferred Stock, par value $.01 per share. The Board of Directors has the authority to issue preferred stock in one or more series and to fix for each series the voting powers (full, limited or none), and the designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions on the stock and the number of shares constituting any series and the designations of this series, without any further vote or action by the stockholders. Because the terms of the preferred stock may be fixed by the Board of Directors without stockholder action, the preferred stock could be issued quickly with terms calculated to defeat a proposed takeover or to make the removal of the Company’s management more difficult.

Preferred Stock Purchase Rights

     Pursuant to the Company’s stockholders’ rights plan, each outstanding share of common stock is accompanied by one preferred stock purchase right. Each right entitles the registered holder to purchase one one-thousandth of a share of Series A preferred stock at a price of $35 per one one-thousandth of a share, subject to adjustment.

     Each share of Series A preferred stock will be entitled, when, as and if declared, to a preferential quarterly dividend payment in an amount equal to the greater of $10 or 1,000 times the aggregate of all dividends declared per share of common stock. In the event of liquidation, dissolution or winding up, the holders of Series A preferred stock will be entitled to a minimum preferential liquidation payment equal to $1,000 per share, plus an amount equal to accrued and unpaid dividends and distributions on the stock, whether or not declared, to the date of such payment,

F23

but will be entitled to an aggregate payment of 1,000 times the payment made per share of common stock. The rights are not exercisable until the rights distribution date as defined in the stockholders’ rights plan. The rights will expire on May 7, 2009, unless the expiration date is extended or unless the rights are earlier redeemed or exchanged.

     The rights have certain anti-takeover effects. The rights will cause substantial dilution to a person or group that attempts to acquire the Company on terms not determined by the board of directors to be in the best interests of all stockholders. The rights should not interfere with any merger or other business combination approved by the board of directors.

Common Stock

     Holders of the Company’s common stock are entitled to one vote for each share held of record on all matters on which stockholders may vote. There are no preemptive, conversion, redemption or sinking fund provisions applicable to our common stock. In the event of liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in the assets available for distribution, subject to any prior rights of any holders of preferred stock then outstanding.

Share Repurchase Program

     In April 2003, the Company’s Board of Directors authorized the repurchase of up to $100 million of outstanding shares of the Company’s common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints and other factors, to enable it to take advantage of opportunistic market conditions. This stock repurchase program was publicly announced on April 28, 2003. The Company is not obligated to repurchase any specific number of shares under the program. The program expired on October 28, 2004. The Company repurchased 2,062,400 shares for an aggregate of approximately $45.7 million. Certain of these shares are designated by the Company as treasury stock. The Company retired 863,600 of its 2,062,400 treasury shares during 2003 at a cost of $16.8 million, leaving 1,198,800 shares in treasury at a cost of $28.9 million as of December 31, 2004.

     The following table summarizes the Company’s share repurchase activity, all of which occurred during 2003, by month:

					Total Number
					of Shares
					Purchased as
					Part of a
	Total Number		Average		Publicly
	of Shares		Price Paid		Announced
Period	Purchased		per Share		Program
May 2003		863,600	$	19.43		863,600
June 2003		10,200		19.70		10,200
September 2003		450,000		24.31		450,000
October 2003		738,600		23.92		738,600
Total		2,062,400	$	22.10		2,062,400

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ESOP Compensation

     In connection with the 1999 spin-off transaction, the Company established the ESOP, a defined contribution retirement plan, which covers substantially all employees. The ESOP purchased from the Company approximately 8.3% of the Company’s common stock at fair market value (approximately 2.8 million shares at $11.50 per share). The purchase was primarily financed by the ESOP issuing a promissory note to the Company, which is being repaid annually in equal installments over a 10-year period beginning December 31, 1999. The Company makes contributions to the ESOP which the ESOP uses to repay the loan. The Company’s stock acquired by the ESOP is held in a suspense account and is being allocated to participants at book value from the suspense account as the loan is repaid over a 10-year period.

     The loan to the ESOP is recorded as unearned ESOP compensation in the accompanying consolidated balance sheets. Reductions are made to unearned ESOP compensation as shares are committed to be released to participants at cost. Shares are deemed to be committed to be released ratably during each period as the employees perform services. Shares are allocated ratably to employee accounts over a period of 10 years (1999 through 2008). ESOP expense is recognized using the average market price of shares committed to be released to participants during the accounting period with any difference between the average market price and the cost being charged or credited to capital in excess of par value. As the shares are committed to be released, the shares become outstanding for earnings per share calculations. The non-cash ESOP expense was $9.7 million, $6.9 million and $9.4 million for the years ended December 31, 2002, 2003 and 2004, respectively. The ESOP expense tax deduction is fixed at $3.2 million per year. The fair value of unreleased shares was $39.0 million at December 31, 2004.

     The ESOP shares as of December 31, 2004 were as follows:

Allocated shares	1,525,219
Shares committed to be released	152,813
Unreleased shares	1,118,687
Total ESOP shares	2,796,719

Executive Stock Purchase Plan

     The Company adopted the Executive Stock Purchase Plan in 1999, in which 1,000,000 shares of the Company’s common stock were reserved and issued in 1999. The Executive Stock Purchase Plan granted a right to specified executives of the Company to purchase shares of common stock from the Company. The Company loaned each participant in the plan 100% of the purchase price of the Company’s common stock at the fair value based on the date of purchase (approximately $10.2 million), on a full recourse basis at interest rates ranging from 5.2% to 5.3%. The loans were reflected as notes receivable for shares sold to employees in the accompanying consolidated statements of stockholders’ equity. During the year ended December 31, 2002, the Company’s executives repaid the remaining $5.7 million of such loans, which were fully repaid as of December 31, 2002.

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Management Stock Purchase Plan

     The Company has a Management Stock Purchase Plan (“MSPP”) which provides to certain designated employees an opportunity to purchase restricted shares of the Company’s common stock at a discount through payroll deductions over six month intervals. Shares of the Company’s common stock reserved for this plan were 250,000 at December 31, 2004. Such shares are subject to a three-year cliff-vesting period. All of the outstanding unvested shares of MSPP restricted stock will be fully vested as a result of the impendent acquisition of Province, as further discussed in Note 2. The Company redeems shares from employees upon vesting of the MSPP restricted stock for minimum statutory tax withholding purposes. The Company redeemed 17,669 and 3,760 shares upon vesting of the MSPP restricted stock during 2003 and 2004, respectively. There were no redemptions during 2002 because the MSPP shares vested beginning in 2003. Presented below is a summary of activity under the MSPP for 2002, 2003 and 2004:

	Shares Available
	for Issuance
December 31, 2001		151,573
Forfeitures		29,121
Issuances		(18,994	)
December 31, 2002		161,700
Forfeitures		15,051
Issuances		(32,217	)
December 31, 2003		144,534
Forfeitures		7,704
Issuances		(25,932	)
December 31, 2004		126,306

Employee Stock Purchase Plan

     Effective January 1, 2002, the Company began an Employee Stock Purchase Plan (“ESPP”) which provides an opportunity for substantially all employees to purchase shares of the Company’s common stock at a purchase price equal to 85% of the lower of the closing price on the first day or last day of a six month interval. The Company’s stockholders approved an amendment to the ESPP to increase the number of shares of common stock available for issuance from 100,000 to 300,000 in May 2003. Presented below is a summary of activity under the ESPP for 2002, 2003 and 2004:

	Shares Available
	for Issuance
December 31, 2001		—
Initial allocation		100,000
Issuances		(39,890	)
December 31, 2002		60,110
Additional allocation		200,000
Issuances		(70,787	)
December 31, 2003		189,323
Issuances		(27,924	)
December 31, 2004		161,399

Stock Options

     1998 Long-Term Incentive Plan

     The Company’s 1998 Long-Term Incentive Plan, as amended, authorizes 11,625,000 shares of the Company’s common stock for issuance as of December 31, 2004. In June 2004, the Company’s stockholders approved an amendment to the 1998 Long-Term Incentive Plan to increase the number of shares of common stock available for issuance from 9,625,000 to 11,625,000. The 1998 Long-Term Incentive Plan authorizes the grant of stock options, stock appreciation rights and other stock based awards to officers and employees of the Company. Options to

F26

purchase 914,950, 1,036,850, and 906,300 shares were granted to the Company’s employees during the years ended December 31, 2002, 2003 and 2004, respectively, under this plan with an exercise price equal to the fair market value on the date of grant. These options become exercisable beginning one year from the date of grant to three years after the date of grant. All options granted under this plan expire 10 years from the date of grant.

     During the first quarter of 2004, the Company granted 175,000 shares of nonvested stock awards to certain key executives 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. Unearned compensation is being amortized on a straight-line basis in the statements of operations over the three-year vesting period of the awards. The total cost of the amortization related to these nonvested stock awards was approximately $1.7 million for the year ended December 31, 2004.

     All of the outstanding options, except for those granted in December 2004, and all of the outstanding nonvested stock awards under the 1998 Long-Term Incentive Plan will be fully vested as a result of the impendent acquisition of Province, as further discussed in Note 2.

     Outside Directors Stock and Incentive Plan

     The Company also has an Outside Directors Stock and Incentive Plan (“ODSIP”) for which 375,000 shares of the Company’s common stock have been reserved for issuance. In June 2004, the Company’s stockholders approved an amendment to the ODSIP to increase the number of shares of common stock available for issuance from 175,000 to 375,000. The Company granted 26,000 and 30,000 options under such plan to non-employee directors during the years ended December 31, 2002 and 2003, respectively. There were no options granted under such plan during 2004. These options become exercisable beginning in part from the date of grant to three years after the date of grant and expire 10 years after grant.

     The ODSIP further provides that non-employee directors may elect to receive, in lieu of any portion of their annual retainer (in multiples of 25%), a deferred stock unit award. A deferred stock unit award represents the right to receive a specified number of shares of the Company’s common stock. The shares are paid, subject to the election of the non-employee director, either two years following the date of the award or at the end of the director’s service on the board of directors. The number of shares of the Company’s common stock to be paid under a deferred stock unit award is equal to the value of the cash retainer that the non-employee director has elected to forego, divided by the fair market value of the Company’s common stock on the date of the award.

     During the second quarter of 2004, the Company granted 21,000 shares of nonvested stock awards to its outside directors under the ODSIP. These nonvested stock awards 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 on a straight-line basis in the statements of operations over the three-year vesting period of the awards. The total cost of the amortization related to these nonvested stock awards was approximately $0.2 million for the year ended December 31, 2004.

     All outstanding options and nonvested stock awards under the ODSIP will be fully vested as a result of the impendent acquisition of Province, as further discussed in Note 2.

F27

     Summary

     Presented below is a summary of stock benefit activity for 2002, 2003 and 2004:

				Stock Options					Nonvested Stock
				Outstanding					Outstanding					Deferred
							Weighted					Weighted		Stock Units
	Shares						Average					Average		Outstanding
	Available			Number			Exercise		Number of			Grant Date		Number of
	for Grant			of Shares			Price		Shares			Price		Shares
December 31, 2001		1,683,108			3,439,140		$	19.33		—		$	—		5,817
Increases in shares available (approved by stockholders)		2,500,000			—			N/A		—			—		—
Stock option grants		(940,950	)		940,950			36.11		—			—		—
Deferred stock unit grants		(2,059	)		—			N/A		—			—		2,059
Stock option exercises		—			(265,026	)		11.18		—			—		—
Stock option cancellations		98,645			(98,645	)		19.04		—			—		—
December 31, 2002		3,338,744			4,016,419			23.81		—			—		7,876
Stock option grants		(1,066,850	)		1,066,850			21.60		—			—		—
Deferred stock unit grants		(3,076	)		—			N/A		—			—		3,076
Deferred stock units vested		—			—			N/A		—			—		(1,474	)
Stock option exercises		—			(333,006	)		11.20		—			—		—
Stock option cancellations		356,821			(356,821	)		27.75		—			—		—
Adjustments		14,813			—			—		—			—		—
December 31, 2003		2,640,452			4,393,442			23.91		—			—		9,478
Increases in shares available (approved by stockholders)		2,200,000			—			N/A		—			—		—
Stock option grants		(906,300	)		906,300			33.49		—			—		—
Deferred stock unit grants		(2,376	)		—			N/A		—			—		2,376
Deferred stock units vested		—			—			N/A		—			—		(1,544	)
Nonvested stock grants		(196,000	)		—			N/A		196,000			33.67		—
Stock option exercises		—			(774,635	)		13.23		—			—		—
Stock option cancellations		165,526			(165,526	)		33.64		—			—		—
Nonvested stock cancellations		10,000			—			N/A		(10,000	)		33.17		—
December 31, 2004		3,911,302			4,359,581		$	27.43		186,000		$	33.70		10,310

     The following table summarizes information regarding the stock options outstanding at December 31, 2004:

	Stock Options Outstanding
			Weighted				Exercisable Stock Options
			Average		Weighted
			Remaining		Average				Weighted
	Number of		Contractual		Excercise		Number of		Average
Range of Exercise Prices	Shares		Life		Price		Shares		Exercise Price
$0.07 to $12.90		890,933		4.89	$	10.44		890,933	$	10.44
$14.16 to $17.44		71,833		4.46	$	17.19		71,833	$	17.19
$18.38 to $29.88		924,968		8.80	$	22.01		308,407	$	22.27
$31.05 to $33.17		1,054,529		6.87	$	32.69		261,664	$	31.45
$35.35 to $46.19		1,417,318		7.69	$	38.23		1,104,772	$	38.69
Total		4,359,581		7.10	$	27.43		2,637,609	$	25.92

Note 8. 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

F28

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 Americans with Disabilities Act guidelines, along with attorneys fees and costs. The Company is currently unable to estimate the costs that could be associated with modifying these facilities because these costs are negotiated and determined on a facility-by-facility basis and, therefore, have varied and will continue to vary significantly among facilities. 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 December 31, 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 and the Company currently anticipates that the costs associated with modifying these two facilities will be approximately $1.0 million.

Corporate Integrity Agreement

     In December 2000, the Company entered into a five-year corporate integrity agreement with the Office of Inspector General and agreed to maintain its compliance program in accordance with the corporate integrity agreement. This agreement has been amended four times since 2000. 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 has committed to advance a maximum amount of approximately $23.7 million at December 31, 2004. The actual amount of such commitments to be subsequently advanced to physicians is estimated at $9.5 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 prorata 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 has incurred approximately $48.6 million in uncompleted projects as of December 31, 2004, which is included in construction in progress in its accompanying consolidated balance sheet. At December 31, 2004, the Company had projects under construction with an estimated additional cost to complete and equip of approximately $71.5 million.

     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.

F29

The Company had incurred approximately $8.2 million of the required capital improvements as of December 31, 2004.

Acquisitions

     The Company has acquired and will continue to acquire businesses with prior operating histories. Acquired companies, including Province, may have unknown or contingent liabilities, including liabilities for failure to comply with health care 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.

Leases

     The Company leases real estate properties, buildings, vehicles and equipment under cancelable and non-cancelable leases. Rental expense related to continuing operations for the years ended December 31, 2002, 2003 and 2004 was $7.4 million, $8.4 million, and $9.5 million, respectively.

     Future minimum operating lease payments are as follows at December 31, 2004 (in millions):

2005	$	5.3
2006		4.2
2007		3.4
2008		2.5
2009		1.4
Thereafter		3.7
Total minimum payments	$	20.5

Tax Matters

     See Note 5. Income Taxes for a discussion of contingent tax matters.

F30

Note 9. Earnings (Loss) Per Share

     The following table sets forth the computation of basic and diluted earnings (loss) per share for the years ended December 31, 2002, 2003 and 2004 (dollars and shares in millions, except per share amounts):

	2002 (a)			2003			2004
Numerator:
Numerator for basic earnings per share – income from continuing operations	$	42.9		$	70.2		$	86.8
Interest on convertible notes, net of taxes		—			7.8			7.3
Numerator for diluted earnings per share – income from continuing operations		42.9			78.0			94.1
Loss from discontinued operations, net of income taxes		(1.4	)		(1.7	)		(1.1	)
	$	41.5		$	76.3		$	93.0
Denominator:
Denominator for basic earnings (loss) per share – weighted average shares outstanding		37.5			37.2			37.0
Effect of dilutive securities:
Employee stock benefit plans		1.1			0.8			0.8
Convertible notes		—			5.3			5.0
Denominator for diluted earnings (loss) per share – adjusted weighted average shares		38.6			43.3			42.8
Basic earnings (loss) per share:
Continuing operations	$	1.14		$	1.89		$	2.34
Discontinued operations		(0.03	)		(0.05	)		(0.03	)
Net income	$	1.11		$	1.84		$	2.31
Diluted earnings (loss) per share:
Continuing operations	$	1.10		$	1.80		$	2.20
Discontinued operations		(0.03	)		(0.04	)		(0.03	)
Net income	$	1.07		$	1.76		$	2.17

(a) The impact of 3.3 million potential weighted average shares of common stock, if converted, and interest expense related to the Convertible Notes was not included in the computation of diluted earnings per share because the effect would have been anti–dilutive.

Note 10. Related Party Transactions

     As part of an officer’s relocation package, the Company purchased a house for approximately $0.5 million during 2004, which is in other assets on the Company’s accompanying balance sheet as of December 31, 2004. In addition as part of another officer’s relocation package, the Company purchased a house for approximately $0.6 million in the second quarter of 2002 and subsequently sold it in the fourth quarter of 2002.

     The Company loaned certain Company executives 100% of the purchase price of the Company’s common stock at the fair market value based on the date of purchase during 1999. The loans are reflected as notes receivable for shares sold to employees in the Company’s consolidated statements of stockholders’ equity. During 2002, Company executives repaid $5.7 million of such loans, which were fully repaid as of December 31, 2002.

F31

Note 11. Subsequent Event

     The Company exercised its option to purchase Bluegrass Community Hospital (“Bluegrass”) for $3.2 million in January 2005. The Company had previously leased Bluegrass from Woodford Healthcare, Inc., a Kentucky not-for-profit corporation from January 2001 through December 2004.

Note 12. Unaudited Quarterly Financial Information

     The quarterly interim financial information shown below has been prepared by the Company’s management and is unaudited. It should be read in conjunction with the audited consolidated financial statements appearing herein (dollars in millions, except per share amounts).

	2003
	First			Second			Third			Fourth
Revenues (a)	$	212.9		$	214.1		$	219.4		$	229.2
Income from continuing operations	$	18.1		$	16.0		$	16.4		$	19.7
Loss from discontinued operations		(0.4	)		(0.7	)		(0.2	)		(0.4	)
Net income	$	17.7		$	15.3		$	16.2		$	19.3
Basic earnings (loss) per share:
Continuing operations	$	0.48		$	0.43		$	0.44		$	0.54
Discontinued operations		(0.01	)		(0.02	)		(0.01	)		(0.01	)
Net income	$	0.47		$	0.41		$	0.43		$	0.53
Diluted earnings (loss) per share:
Continuing operations	$	0.46		$	0.41		$	0.42		$	0.51
Discontinued operations		(0.01	)		(0.01	)		—			(0.01	)
Net income	$	0.45		$	0.40		$	0.42		$	0.50

	2004
	First			Second			Third			Fourth
Revenues (b)	$	247.5		$	238.2		$	253.7		$	257.5
Income from continuing operations	$	24.2		$	19.5		$	20.1		$	23.0
Loss from discontinued operations		(0.3	)		(0.8	)		(0.4	)		0.4
Net income	$	23.9		$	18.7		$	19.7		$	23.4
Basic earnings (loss) per share:
Continuing operations	$	0.66		$	0.53		$	0.54		$	0.62
Discontinued operations		(0.01	)		(0.02	)		(0.01	)		0.01
Net income	$	0.65		$	0.51		$	0.53		$	0.63
Diluted earnings (loss) per share:
Continuing operations	$	0.61		$	0.50		$	0.51		$	0.58
Discontinued operations		(0.01	)		(0.02	)		(0.01	)		0.01
Net income	$	0.60		$	0.48		$	0.50		$	0.59

(a)	The net adjustments to estimated third-party payor settlements increased (decreased) revenues by $2.9 million, $1.4 million, $1.9 million and $(0.2) million during the first, second, third and fourth quarters, respectively.
(b)	The net adjustments to estimated third-party payor settlements increased revenues by $1.4 million, $0.8 million, $1.6 million and $3.7 million during the first, second, third and fourth quarters, respectively. In addition, the Company recognized $3.2 million of additional revenues during the first quarter of 2004 related to a Medicare disproportionate share designation confirmation by the CMS.

F32

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Brentwood, State of Tennessee, on February 28, 2005.

LIFEPOINT HOSPITALS, INC.
By:	/s/ KENNETH C. DONAHEY
	Kenneth C. Donahey
	Chairman, Chief Executive Officer and President

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the date indicated.

Name	Title	Date
/s/ KENNETH C. DONAHEY Kenneth C. Donahey	Chairman, Chief Executive Officer and President (Principal Executive Officer)	February 28, 2005
/s/ MICHAEL J. CULOTTA Michael J. Culotta	Chief Financial Officer (Principal Financial and Accounting Officer)	February 28, 2005
/s/ RICKI TIGERT HELFER	Director	February 28, 2005
Ricki Tigert Helfer
/s/ JOHN E. MAUPIN, JR., D.D.S.	Director	February 28, 2005
John E. Maupin, Jr., D.D.S.
/s/ DEWITT EZELL, JR.	Director	February 28, 2005
DeWitt Ezell, Jr.
/s/ WILLIAM V. LAPHAM	Director	February 28, 2005
William V. Lapham
/s/ RICHARD H. EVANS	Director	February 28, 2005
Richard H. Evans
/s/ OWEN G. SHELL, JR.	Director	February 28, 2005
Owen G. Shell, Jr.

Exhibit Index

Exhibit
Number		Description of Exhibits
2.1	—	Agreement and Plan of Merger, dated as of August 15, 2004, by and among LifePoint Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition Corp., Pacers Acquisition Corp. and Province Healthcare Company (a)
2.2	—	Amendment No. 1 to Agreement and Plan of Merger, dated as of January 25, 2005, by and among LifePoint Hospitals, Inc., Lakers Holding Corp., Lakers Acquisition Corp., Pacers Acquisition Corp. and Province Healthcare Company (b)
2.3	—	Distribution Agreement dated May 11, 1999 by and among Columbia/HCA, Triad Hospitals, Inc. and LifePoint Hospitals, Inc. (c)
3.1	—	Certificate of Incorporation (c)
3.2	—	Bylaws (c)
3.3	—	First Amendment to the Bylaws (d)
4.1	—	Form of Specimen Stock Certificate (e)
4.2	—	Rights Agreement, dated as of May 11, 1999, between the LifePoint Hospitals, Inc. and National City Bank as Rights Agent (c)
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 (f)
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. (f)
4.5	—	Form of 4 1/2% Convertible Subordinated Note due 2009 of LifePoint Hospitals, Inc. (f)
10.1	—	Tax Sharing and Indemnification Agreement, dated May 11, 1999, by and among Columbia/HCA, LifePoint Hospitals, Inc. and Triad Hospitals, Inc. (c)
10.2	—	Benefits and Employment Matters Agreement, dated May 11, 1999 by and among Columbia/HCA, LifePoint Hospitals, Inc. and Triad Hospitals, Inc. (c)
10.3	—	Insurance Allocation and Administration Agreement, dated May 11, 1999, by and among Columbia/ HCA, LifePoint Hospitals, Inc. and Triad Hospitals, Inc. (c)
10.4	—	Computer and Data Processing Services Agreement dated May 11, 1999 by and between Columbia Information Systems, Inc. and LifePoint Hospitals, Inc. (c)
10.5	—	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. (g)
10.6	—	LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (c)
10.7	—	Amendment to the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (i)
10.8	—	Second Amendment to the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (i)
10.9	—	Third Amendment to the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (j)
10.10	—	Fourth Amendment to the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan (p)
10.11	—	LifePoint Hospitals, Inc. Executive Stock Purchase Plan (c)
10.12	—	Form of Share Purchase Loan and Note Agreement between LifePoint Hospitals and certain executive officers in connection with purchases of Common Stock pursuant to the Executive Stock Purchase Plan (h)
10.13	—	LifePoint Hospitals, Inc. Management Stock Purchase Plan, as amended and restated (j)
10.14	—	LifePoint Hospitals, Inc. Outside Directors Stock and Incentive Compensation Plan (c)
10.15	—	Amendment to the LifePoint Hospitals, Inc. Outside Directors Stock and Incentive Compensation Plan (q)
10.16	—	Amended and Restated Credit Agreement, dated as of June 19, 2001, among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent, 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 (k)

Exhibit
Number		Description of Exhibits
10.17	—	First Amendment to Credit Agreement, dated as of April 30, 2002, among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent, 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 (j)
10.18	—	Second Amendment to Credit Agreement, dated as of October 1, 2002, among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent, 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 (j)
10.19	—	Third Amendment to Credit Agreement, dated as of December 30, 2002, among LifePoint Hospitals Holdings, Inc., as borrower, Fleet National Bank as administrative agent lender, 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 (j)
10.20	—	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 (g)
10.21	—	Corporate Integrity Agreement, dated as of December 21, 2000, by and between the Office of Inspector General of the Department of Health and Human Services and LifePoint Hospitals (l)
10.22	—	Amendment to the Corporate Integrity Agreement, dated April 29, 2002, between the Office of Inspector General of the Department of Health and Human Services and LifePoint Hospitals, Inc. (j)
10.23	—	Letter from the Office of Inspector General of the Department of Health and Human Services, dated October 15, 2002 (j)
10.24	—	Letter from the Office of Inspector General of the Department of Health and Human Services, dated December 18, 2003
10.25	—	Letter from the Office of Inspector General of the Department of Health and Human Services, dated March 3, 2004
10.26	—	LifePoint Hospitals, Inc. Employee Stock Purchase Plan (m)
10.27	—	First Amendment to the LifePoint Hospitals, Inc. Employee Stock Purchase Plan (n)
10.28	—	LifePoint Hospitals, Inc. Change in Control Severance Plan (o)
10.29	—	LifePoint Hospitals, Inc. Executive Performance Incentive Plan (r)
10.30	—	Employment Agreement of Kenneth C. Donahey, as amended and restated
10.31	—	Senior Secured Credit Facilities Commitment Letter, dated as of August 15, 2004, from Citigroup North America, Inc. and Citigroup Global Markets, Inc. to LifePoint Hospitals, Inc. (a)
10.32	—	Consulting Agreement, dated as of August 15, 2004, by and between LifePoint Hospitals, Inc. and Martin S. Rash (b)
10.33	—	Comprehensive Service Agreement for Diagnostic Imaging and Biomedical Services, executed on January 7, 2005, between LifePoint Hospital Holdings, Inc. and GE Healthcare Technologies
21.1	—	List of Subsidiaries
23.1	—	Consent of Independent Registered Public Accounting Firm
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 Section 906 of the Sarbanes-Oxley Act of 2002
32.2	—	Certification of the Chief Financial Officer of LifePoint Hospitals, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(a)	Incorporated by reference from exhibits to LifePoint Hospitals’ Current Report on Form 8-K filed on August 16, 2004, File No. 000-29818.
(b)	Incorporated by reference from exhibits to the Registration Statement on Form S-4 filed by Lakers Holding Corp. on February 18, 2005 under the Securities Act of 1933, as amended, File Number 333-119929.
(c)	Incorporated by reference from exhibits to LifePoint Hospitals’ Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, File No. 000-29818.

(d)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 2003, File No. 000-29818.
(e)	Incorporated by reference from exhibits to LifePoint Hospitals’ Registration Statement on Form 10 under the Securities Exchange Act of 1934, as amended, File No. 000-29818.
(f)	Incorporated by reference from exhibits to LifePoint Hospitals’ Registration Statement on Form S-3 under the Securities Act of 1933, as amended, File No. 333-90536.
(g)	Incorporated by reference from exhibits to LifePoint Hospitals’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, File Number 000-29818.
(h)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 1999, File No. 000-29818.
(i)	Incorporated by reference from exhibits to LifePoint Hospitals’ Registration Statement on Form S-8 under the Securities Act of 1933, File No. 333-63140.
(j)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 2002, File No. 000-29818.
(k)	Incorporated by reference from exhibits to LifePoint Hospitals’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, File No. 000-29818.
(l)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 2000, File No. 000-29818.
(m)	Incorporated by reference from exhibits to LifePoint Hospitals’ Annual Report on Form 10-K for the year ended December 31, 2001, File No. 000-29818.
(n)	Incorporated by reference from exhibits to LifePoint Hospitals’ Registration Statement on Form S-8 under the Securities Act of 1933, File No. 333-105775.
(o)	Incorporated by reference from exhibits to LifePoint Hospitals’ Current Report on Form 8-K dated May 16, 2002, File No. 000-29818.
(p)	Incorporated by reference from Appendix A to LifePoint Hospitals’ Proxy Statement dated April 28, 2004, File No. 000-29818.
(q)	Incorporated by reference from Appendix B to LifePoint Hospitals’ Proxy Statement dated April 28, 2004, File No. 000-29818.
(r)	Incorporated by reference from Appendix C to LifePoint Hospitals’ Proxy Statement dated April 28, 2004, File No. 000-29818.

EX-10.24

                                                                   EXHIBIT 10.24


(LOGO DEPARTMENT OF HEALTH & HUMAN SERVICES)  OFFICE OF INSPECTOR GENERAL
                                              OFFICE OF COUNSEL TO THE INSPECTOR
                                              GENERAL
- -------------------------------------------------------------------------------

                                             COHEN BUILDING-ROOM 5527
                                             330 INDEPENDENCE AVE., S.W.
                                             WASHINGTON, DC 20201

                                 December 18, 2003

Todd J. Kerr
Senior Vice President of Audit and
    Compliance
LifePoint Hospitals, Inc.
103 Powell Court, Suite 200
Brentwood, TN 37027

          Re: Reportable Events

Dear Todd:

I am writing to confirm our recent conversation concerning LifePoint's Corporate
Integrity Agreement (CIA). As we discussed, we have agreed to your request to
modify the CIA. Under our agreement, Section III.H.2.a(ii) of the CIA would
provide as follows:

          (ii) a matter that a reasonable person would consider a probable
          violation of criminal, civil, or administrative laws applicable to
          any Federal health care program for which penalties or exclusion may
          be authorized.

Please give me a call if you have any questions.


                                                  Sincerely,


                                                  /s/ Barbara A. Frederickson

                                                  Barbara A. Frederickson
                                                  Senior Counsel

EX-10.25

                                                                   EXHIBIT 10.25



LOGO DEPARTMENT OF HEALTH & HUMAN SERVICES    OFFICE OF INSPECTOR GENERAL
                                              OFFICE OF COUNSEL TO THE INSPECTOR
                                              GENERAL
- --------------------------------------------------------------------------------
                                              COHEN BUILDING-ROOM 5527
                                              330 INDEPENDENCE AVE., S.W.
                                              WASHINGTON, DC 20201


                                   March 3, 2004


Todd J. Kerr
Senior Vice President of Audit and
   Compliance
LifePoint Hospitals, Inc.
103 Powell Court, Suite 200
Brentwood, TN 37027

     Re: CIA Reviews

Dear Todd:

I am writing in response to your February 20, 2004 and December 9, 2003 letters
and our February 5, 2004 meeting regarding LifePoint's proposal to replace the
Laboratory Claims Review requirement in the CIA with Medicare APC reviews. We
have no objection to your request to modify the reviews as set forth in the
enclosed document.

Thank you for your assistance.


                                                    Sincerely,



                                                    /s/ Barbara A. Frederickson

                                                    Barbara A. Frederickson
                                                    Senior Counsel

Enclosure



1. APC CLAIMS REVIEWS

     Similar to the previous Laboratory Claims Reviews, the APC Claims review
     will consist only of a 50 item sample with no error rate thresholds or
     sample expansion possibilities. The portion of Appendix referring to
     "Discovery Samples", "Full Samples", and "Claims Systems Reviews" relates
     only to the DRG Claims Reviews. Specifically, the following changes are
     proposed:

     Section III.D.2.b, Laboratory Claims Review, is hereby superceded by the
     following:

     b. APC Claims Review:

        i.     Claims Review. LifePoint shall perform a Claims Review to
               identify any overpayments through an appraisal of outpatient APC
               claims submitted by LifePoint to the Medicare program and paid by
               Medicare. The Claims Reviews shall be performed in accordance
               with the procedures set forth in Appendix A to this CIA. The
               Claims Reviews shall cover the two six-month periods during each
               year covered by the Billing Engagement. LifePoint will perform
               Claims Reviews at a minimum of two hospitals during each
               six-month period (for a minimum of four hospitals each year.)
               The hospitals, and the tests to be reviewed at each hospital,
               will be chosen as set forth in section III.D.2.c.

        ii.    APC Claims Review Report. LifePoint shall prepare a report based
               upon each APC Claims Review performed ("Claims Review Report").
               The Claims Review Report shall be created in accordance with the
               procedures set forth in Appendix A to this CIA.

     Section III.D.2.c.ii., Laboratory Claims Review Hospital Selection, is
     hereby superceded by the attached new section III.D.2.c.ii, APC Claims
     Review Hospital Selection.

        ii.    APC Claims Review Hospital Selection. LifePoint shall select the
               two hospitals subject to review during each six-month period as
               follows:



         A.    One would be chosen based on an internally prepared risk profile.
               Factors used for the risk profile would include facility size,
               results of previous audits, time elapsed since last review,
               acquisition dates, and staff turnover.

         B.    One hospital will be randomly selected using RATSTATS. A
               replacement hospital should be generated in case the hospital
               randomly selected has already been identified under section
               III.d.2.C.ii.A.

     For purposes of the APC Claims Reviews, the definitions in Appendix A
     (April 29, 2002 revision) will apply in the same fashion that they applied
     to the previous Laboratory Claims Reviews. Also, Section A.2.f. shall be
     replaced with the following:

         f.    APC Claims Review Sample. Each APC Claims Review sample shall
               consist of an appraisal of a random sample of 50 Items for each
               hospital for each period under review.

     A summary of the APC Claims Reviews will be submitted with each Annual
     Report.

2. REVIEW & SUMMARY OF SELF-AUDITS

     Also, LifePoint agrees to perform the following annually:

         A.    Summarize the results of all facility laboratory self-audits.

         B.    Select one half of LifePoint's facilities randomly using
               RATSTATS. For each hospital selected, LifePoint will review 5
               claims from the facility's self audits for accuracy. The 5 claims
               will be chosen randomly using RATSTATS.

         C.    Summarize the results of the testing noted in B. above.

     A summary of the Self-Audits and related Reviews will be submitted with
     each Annual Report.

EX-10.30

                                                                   EXHIBIT 10.30

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT (this "Agreement") between LifePoint CSGP, LLC,
a Delaware limited liability company ("LifePoint" or the "Company") and Kenneth
C. Donahey (the "Executive"), effective June 25, 2001 (the "Effective Date"), is
hereby amended and restated effective as of December 31, 2004.

                                  WITNESSETH:

      WHEREAS, LifePoint Executive has served as the Chairman of the Board of
Directors and Chief Executive Officer of the Company and as a member of Board of
Directors and Chief Executive Officer of LifePoint Hospitals, Inc. since the
Effective Date hereof; and

      WHEREAS, the Company desires to amend the terms of the Agreement to
reflect the adoption of certain incentive and benefit programs in which the
Executive participates, including the LifePoint Hospitals, Inc. Executive
Performance and Incentive Plan and the LifePoint Hospitals, Inc. Change in
Control Severance Plan, and to incorporate certain administrative modifications;
and

      WHEREAS, the Executive is willing to continue to serve the Company as the
Chairman of the Board of Directors, and as a member of such Board and Chief
Executive Officer of LifePoint Hospitals, Inc. on the terms and conditions set
forth herein, and to participate in the incentive and benefit programs that have
heretofore been adopted in lieu of the benefits that are or have been the
subject of this Agreement;

      NOW, THEREFORE, in consideration of the premises recited herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby covenant and agree as follows:

      1. TERMS AND CONDITIONS OF EMPLOYMENT

            (a) Employment. LifePoint hereby agrees to employ the Executive and
the Executive hereby agrees to remain in the employ of LifePoint on and subject
to the terms and conditions of this Agreement.

            (b) Positions, Duties and Responsibilities. The Executive at all
times shall serve as, and with the title, office, and authority of, the Chief
Executive Officer of LifePoint, reporting directly to the Board of Directors of
LifePoint Hospitals, Inc. (the "Board of Directors" or "Board") as well as
serving as a member of the Board and as the Chairman of the Board. LifePoint
shall use its best efforts to take such action as may be required to maintain
the Executive's status as such.

            (c) Full-Time Employment. The Executive agrees to devote
substantially all of his professional working time and attention to the benefit
of LifePoint under the terms of this Agreement; provided, however, that nothing
in this Agreement is intended nor shall be construed



as limiting or restricting the Executive's right to engage in any activity that
is unrelated to his position specified in paragraph (b) above, including,
without limitation, managing private, passive investments, engaging in church,
community, and civic activities and other activities approved by the Board, and
serving as a director or a member of an advisory committee of any corporation or
other entity on which the Executive is serving as of the Effective Date or any
other corporation or entity that is not in competition with LifePoint, provided
that such activities do not impinge in any material way upon the requirement
that the Executive devote substantially all of his professional working time and
attention to the Company and perform the duties of his position specified in
paragraph (b) above.

      2. COMPENSATION

            In consideration of the services rendered by the Executive during
the Agreement Term (as defined below), LifePoint shall (except as otherwise
provided in item (iii) of paragraph (b) below), pay or provide the Executive
with the compensation and benefits set forth below.

            (a) Salary. The Executive shall be paid a base salary (the "Base
Salary") equal to $520,000 per annum, payable in bi-weekly installments. The
Executive's Base Salary shall be reviewed not less than once each calendar year
by the Compensation Committee of the Board of Directors of LifePoint and may be
increased, but not decreased, in such Compensation Committee's sole and absolute
discretion.

            (b) Annual Bonus. Notwithstanding anything contained herein,
effective January 1, 2004, and continuing for the duration of this Agreement,
including renewals and extensions hereof, the Executive shall be entitled to
receive an annual bonus payment only to the extent that the Executive becomes
entitled to such pursuant to an award made under the LifePoint Hospitals, Inc.
Executive Performance and Incentive Plan, or pursuant to any other program or
arrangement that is hereafter adopted by the Company as the successor thereto.

            (c) Benefits. The Executive, as of any date, shall be entitled to
participate in the benefit plans offered at such time at a level which is no
less than commensurate with the benefit level offered generally to other senior
executives at such time.

      3. TERM AND TERMINATION OF EMPLOYMENT

            (a) Term. The term of this Agreement shall commence on the Effective
Date and shall end on the third anniversary of the Effective Date (the
"Agreement Term"); provided, however, that the Agreement Term shall be
automatically extended for an additional year on the second anniversary of the
Effective Date and on each succeeding anniversary of the Effective Date, unless
written notice of non-extension is provided by LifePoint or the Executive to the
other party at least 90 days prior to the applicable anniversary.

            (b) Termination of Employment. Nothing in this Agreement shall be
construed to prevent the Executive from voluntarily terminating his employment
with LifePoint at any time or to prevent LifePoint from terminating the
Executive's employment at any time. Upon such termination, the provisions of
Section 4 shall apply.

                                       1


      4. COMPENSATION UPON TERMINATION OF EMPLOYMENT.

            If the Executive's employment with LifePoint is terminated during
the Agreement Term, the Executive shall be entitled to the following in full
satisfaction of his rights under this Agreement, notwithstanding anything
elsewhere in this Agreement; provided, however, upon the occurrence of a
termination event described in this Section 4 that would also entitle Executive
to benefits under the LifePoint Hospitals, Inc. Change in Control Severance Plan
(or any other arrangement established by the Company or an affiliate for the
purpose of providing severance or change in control benefits), the Executive
shall receive the greater (but not both) of: (i) the benefits described in this
Section 4 or, (ii) the benefits under such plan.

            (a) Involuntary Termination Without Cause or Termination for Good
Reason. In the event the Executive's employment is terminated by the Company
other than for Cause, death, or Disability, or is terminated by the Executive
for Good Reason, the Company shall pay the Executive, and provide him with, the
following:

            (i) His earned but unpaid Base Salary through the date of
      termination, any earned but unpaid bonus under Section 2(b) for the
      calendar year that ended prior to the date of termination and amounts due
      to the Executive from the Company as of the date of termination, all of
      which amounts shall be paid in a lump sum no later than fifteen (15) days
      after the date the Executive's employment terminates, and any payments,
      rights and benefits due as of the date of termination under the terms of
      all employee benefit plans and programs (in which he was a participant) in
      accordance with the terms of such plans and programs (collectively the
      "Accrued Rights").

            (ii) Continued payments pursuant to the Company's normal payroll
      practices at an annual rate of 100% of the Base Salary from the date of
      such termination until the second anniversary of such termination (the
      "Cut-Off Date").

            (iii) 75% of Base Salary (based on his Base Salary at the time of
      his termination) for each calendar year or fraction of a calendar year in
      the period from the first day of the calendar year in which such
      termination occurs through the Cut-Off Date, with the amount payable
      hereunder for the calendar year in which the Cut-Off Date occurs to be
      prorated (based on calendar days), all of which amounts shall be paid in a
      lump sum no later than fifteen (15) days after the date the Executive's
      employment terminates.

            (iv) His Insurance Coverage.

            (b) Voluntary Termination; Termination for Cause. In the event the
Executive voluntarily terminates his employment hereunder or is terminated by
the Company for Cause, the Company shall pay the Executive, and provide him
with, any Accrued Rights.

            (c) Disability; Death. In the event the Executive's employment is
terminated by reason of the Executive's death, or the Board of Directors
determines in good faith that the Executive is Disabled, the Company shall pay,
and provide the Executive (or his legal representative) with, the following:

            (i) His Accrued Rights.

                                       2


            (ii) Continued monthly payments at an annual rate of 100% of his
      then Base Salary from the date of such termination until the Cut-Off Date.

            (iii) 75% of his Base Salary (based in each case on the Base Salary
      at the time of his termination) for each calendar year or fraction of a
      calendar year in the period from the first day of the calendar year in
      which such termination occurs through the Cut-Off Date, with the amount
      payable hereunder for the calendar year in which the Cut-Off Date occurs
      to be prorated (based on calendar days) and with the amount payable
      hereunder for any calendar year to be payable as promptly as practicable
      after the close of such calendar year.

            (iv) His Insurance Coverage (if he is Disabled).

            For purposes of this Agreement, "Disability" shall mean the
inability of the Executive, after reasonable accommodation, to perform the
duties required hereunder for a period equal to or in excess of the waiting
period under the Company's long term disability insurance policy, as determined
in good faith by the Board of Directors.

            (d) Termination after Agreement Term. If the Executive's employment
with the Company is terminated upon or following the close of the Agreement
Term, and the Executive is not subject to a written agreement with the Company
that replaces or supersedes this Agreement, he shall be entitled to the
following in full satisfaction of his rights under this Agreement,
notwithstanding anything elsewhere in this Agreement:

            (i) His Accrued Rights.

            (ii) If his employment terminates in the calendar year in which the
      Agreement Term ends and is not for Cause, 75% of his Base Salary prorated
      (based on calendar days) for the portion of such calendar year prior to
      the close of the Agreement Term (based on the Base Salary on the last day
      of the Agreement Term), all of which amounts shall be paid in a lump sum
      no later than fifteen (15) days after the date his employment terminates.

            (e) Stock Options. Any options covering shares of Common Stock held
by the Executive at the time of the Executive's termination of employment shall
be exercisable on or after the date of such termination in accordance with their
terms.

            (f) Taxes. If there is a determination that the payments and other
benefits called for under this Agreement, in combination with any other payments
or benefits to or for the benefit of the Executive from LifePoint or any
predecessor or successor organization, will result in the Executive's being
subject to an excise tax under Section 4999 of the Code and/or if such an excise
tax is assessed against the Executive as a result of such payments or other
benefits, LifePoint shall make a Gross Up Payment (as defined in this Section
4(f)) to or on behalf of the Executive as and when such determination(s) and
assessment(s), as appropriate, are made, provided the Executive takes such
action as LifePoint reasonably requests under the

                                       3


circumstances to mitigate or challenge, or to mitigate and challenge, such tax
and LifePoint complies with its obligations described below in this Section
4(f).

      A "Gross Up Payment" means a payment to or on behalf of the Executive
which shall be sufficient to pay (i) any such excise tax in full, (ii) any
federal, state and local income tax and social security and other employment tax
on the payment made to pay the Executive's excise tax as well as any additional
excise tax on such payment and (iii) any interest or penalties assessed by the
Internal Revenue Service on the Executive if such interest or penalties are
attributable to LifePoint's failure to comply with its obligations under this
Section 4(f) or applicable law. Any determination under this Section 4(f) by
LifePoint or LifePoint's accountants shall be made in accordance with Section
280G of the Code and any applicable related regulations (whether proposed,
temporary or final) and any related Internal Revenue Service rulings and any
related case law and, if LifePoint reasonably requests that the Executive take
action to mitigate or challenge, or to mitigate and challenge, any such tax or
assessment and the Executive complies with such request, LifePoint shall provide
Executive with such information and such expert advice and assistance from
LifePoint's accountants, lawyers and other advisors as he may reasonably request
and shall pay for all expenses incurred in effecting such compliance and any
related fines, penalties, interest and other assessments.

      5. TAX WITHHOLDING

            All compensation payable pursuant to this Agreement shall be subject
to reduction by all applicable withholding, social security and other federal,
state and local taxes and deductions.

      6. RESTRICTIVE COVENANTS

            (a) Confidentiality/Trade Secrets. The Executive acknowledges that
his position with the Company will be one of the highest trust and confidence,
both by reason of his position and by reason of his access to and contact with
the trade secrets and confidential and proprietary business information of the
Company and all of its Affiliates (which term as used in this Agreement shall
include, any person, corporation, partnership, general partner or other entity
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Company), both during the term
of this Agreement and thereafter. The Executive covenants and agrees as follows:

            (i) Protection. That he shall at all times use his best efforts and
      exercise diligence to protect and safeguard the trade secrets and
      confidential and proprietary information of the Company and its
      Affiliates, including, without limitation, the identity of their patients
      or customers (including third-party payers of any kind or nature) and
      suppliers, their arrangements with their patients or customers and
      suppliers, and their technical data, records, compilations of information,
      processes, computer software, and specifications relating to their
      patients or customers, suppliers, products and services.

            (ii) Nondisclosure. That he shall not at any time disclose any of
      such trade secrets and confidential and proprietary information, except as
      Executive reasonably

                                       4


      decides may be required in the course of his employment with the Company
      under Section 1 hereof or as may be required by law.

            (iii) Nonusage. That he shall not at any time use, directly or
      indirectly, for his own benefit or for the benefit of another, any of such
      trade secrets and confidential and proprietary information.

            The covenants contained in this Section 6(a) shall not be applicable
to any information which is in the public domain, other than as a result of
action by the Executive in violation of this Section 6(a), or which was obtained
from sources other than the Company or its Affiliates who are not under a duty
of nondisclosure. All files, records, documents, drawings, specifications,
computer software, memoranda, notes, or other documents relating to the business
of the Company and its Affiliates, whether prepared by the Executive or
otherwise coming into his possession, shall be the exclusive property of the
Company and its Affiliates and shall be delivered to the Company or its
Affiliates as appropriate, and not retained by the Executive, upon termination
of his employment for any reason whatsoever.

            (b) Non-Competition. The Executive covenants and agrees that, so
long as he is employed by the Company, and for a period of two years following
his termination of employment for Cause or his voluntary termination under
Section 4(b), the Executive shall not, without the prior written consent of the
Company, directly or indirectly, as an employee, company, agent, principal,
proprietor, partner, ten percent (10% or more) stockholder, consultant,
director, or corporate officer, engage in any business that is in competition
with the hospitals owned by the Company at the time of termination.

            (c) Modification. If the scope of any of the restrictions contained
in this Section 6 is too broad to permit enforcement of such restrictions to
their full extent, then such restrictions shall be enforced to the maximum
extent permitted by law, and the Executive hereby consents and agrees that such
scope may be modified accordingly in any proceeding brought to enforce such
restrictions.

            (d) Remedies for Breach of Restrictive Covenants. The covenants set
forth in this Section 6 shall continue to be binding upon the Executive
notwithstanding the termination of his employment with the Company for any
reason whatsoever. Such covenants shall be deemed and construed as separate
agreements independent of any other provision of this Agreement. The existence
of any claim or cause of action by the Executive against the Company or any of
its Affiliates, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company or any of its Affiliates
of any or all of such covenants. It is expressly agreed that the remedy at law
for the breach of any such covenant is inadequate and that temporary and
permanent injunctive relief shall be available to prevent the breach or any
threatened breach thereof, without the necessity of proof of actual damages and
without the necessity of posting a bond, cash or otherwise.

      7. SUCCESSORS

            (a) This Agreement shall be binding upon and shall inure to the
benefit of LifePoint, its successors and assigns and any person, firm,
corporation or other entity which

                                       5


succeeds to all or substantially all of the business, assets or property of
LifePoint in accordance with Section 7. Any successor to LifePoint shall be
treated the same as LifePoint under this Agreement. LifePoint will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business, assets or property of
such company, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that such company would be required to
perform it if no such succession had taken place.

            (b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are due and
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid to the legal representatives of the Executive's estate.

      8. NOTICES

            Any notice, demand, or communication required, permitted or desired
to be given hereunder must be in writing to be effective, and shall be deemed
effectively given when personally delivered or mailed by prepaid certified mail,
return receipt requested, addressed as follows:

                 If to the Executive:      Kenneth C. Donahey
                                           5101 Country Club Drive
                                           Brentwood, TN 37027

                 If to LifePoint:          LifePoint Hospitals, Inc.
                                           103 Powell Court, Suite 200
                                           Brentwood, TN 37027
                                           Attn: Executive Vice President

      9. GOVERNING LAW

            This Agreement has been executed and delivered and shall be
interpreted, construed, and enforced in accordance with the laws of the State of
Tennessee.

      10. ENTIRE AGREEMENT

            This Agreement shall constitute the entire agreement of the parties
hereto and may not be amended except in writing signed by all of the parties
hereto. No oral statements or prior written materials not specifically
incorporated herein shall be of any force or effect.

      11. SEVERABILITY

            In the event any provision of this Agreement is held to be
unenforceable or void for any reason, the remainder of this Agreement shall be
unaffected and shall remain in full force and effect in accordance with its
terms.

                                       6


      12. NO ASSIGNMENT BY EXECUTIVE; BINDING EFFECT

            The Executive shall not assign this Agreement to any other party or
parties without the prior written consent of LifePoint. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.

      13. HEADINGS

            The headings used herein are for convenience only and do not limit
the contents of this Agreement.

      14. DEFINITIONS

      (a) For purposes of this Agreement, "Cause" shall mean:

            (i) The conviction of the Executive of a felony under the laws of
      the United States or any state thereof, whether or not appeal is taken, as
      determined by the Board of Directors in good faith.

            (ii) The conviction of the Executive for a violation of criminal law
      involving the Company and its business that materially damages the Company
      as determined by the Board of Directors in good faith.

            (iii) The willful misconduct of the Executive, or the willful or
      continued failure by the Executive (except in the case of a Disability as
      provided in Section 4(c) hereof) to substantially perform his duties
      hereunder, in either case which has a material adverse effect on the
      Company as determined by the Board of Directors in good faith.

            (iv) The willful fraud or material dishonesty of the Executive in
      connection with his performance of his duties to the Company and involving
      the finances of the Company as determined by the Board of Directors in
      good faith.

            (v) Executive's repeated use of alcohol in a manner which in the
      opinion of the Board of Directors materially impairs the ability of the
      Executive to effectively perform the Executive's duties and obligations
      under this Agreement, or the illegal use, possession, or sale of, or
      impaired performance due to the illegal use of, controlled substances.

            (vi) a violation of the Company's policies on sexual or other
      illegal harassment of a Company employee by the Executive as determined by
      the Board of Directors in good faith.

In no event, however, shall the Executive's employment be considered to have
been terminated for "Cause" under this Agreement unless and until the Executive
receives written notice from the Board of Directors stating in detail the acts
or omissions constituting Cause and the Executive has the opportunity to cure to
the Board of Directors' satisfaction any such acts or omissions, in the case of
(iii), (v) or (vi) above, within 30 days of the Executive's receipt of such
notice. The foregoing shall not limit the right of the Board of Directors to
suspend the Executive from his

                                       7


day-to-day responsibilities with the Board of Directors pending the completion
of such notice and cure procedures.

      (b) For purposes of this Agreement, "Good Reason" shall mean: (i) the
assignment to the Executive of any duties inconsistent with the Executive's
position (including the loss of any of his titles or position as Chairman of the
Board, a member of the Board and Chief Executive Officer, and any other status,
offices, titles or reporting relationships), authority, duties or
responsibilities as contemplated by Section 1 hereof, any adverse change in the
Executive's reporting responsibilities, or any action by LifePoint that results
in a diminution in such position, authority, duties or responsibilities, but
excluding for these purposes an isolated and insubstantial action not taken in
bad faith and which is remedied by LifePoint promptly after receipt of notice
thereof given by the Executive; (ii) any diminution in Executive's total
compensation in violation of Section 2; (iii) the relocation, without the
consent of the Executive, of LifePoint's principal executive offices or the
offices of the Executive to a location more than 40 miles from Nashville,
Tennessee, (iv) a termination of Executive's employment for any reason (other
than his death) within twelve months after a Change in Control, or (v) any
breach under Section 7 of this Agreement.

      (c) For purposes of this Agreement, "Change in Control" shall mean:

            (i) An acquisition (other than directly from LifePoint) of any
      voting securities of LifePoint (the "Voting Securities") by any "Person"
      (as the term Person is used for purposes of Section 13(d) or 14(d) of the
      Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately
      after which such Person has "Beneficial Ownership" (within the meaning of
      Rule 13d-3 promulgated under the 1934 Act) of twenty percent (20%) or more
      of the combined voting power of the then outstanding Voting Securities;
      provided, however, that in determining whether a Change in Control has
      occurred, Voting Securities which are acquired in a "Non-Control
      Acquisition" (as hereinafter defined) shall not constitute an acquisition
      which would cause a Change in Control. A "Non-Control Acquisition" shall
      mean an acquisition by (i) an employee benefit plan (or a trust forming a
      part thereof) maintained by (A) LifePoint or (B) any corporation or other
      Person of which a majority of its voting power or its equity securities or
      equity interest is owned directly or indirectly by LifePoint (a
      "Subsidiary") or (ii) LifePoint or any Subsidiary.

            (ii) The individuals who are members of the Board (the "Incumbent
      Board"), cease for any reason to constitute at least two-thirds of the
      Board; provided, however, that if the election or nomination for election
      by LifePoint's stockholders, of any new director was approved by a vote of
      at least two-thirds of the Incumbent Board, such new director shall, for
      purposes of this Agreement, be considered as a member of the Incumbent
      Board; provided further, however, that no individual shall be considered a
      member of the Incumbent Board if (1) such individual initially assumed
      office as a result of either an actual or threatened "Election Contest"
      (as described in Rule 14a-11 promulgated under the 1934 Act) or other
      actual or threatened solicitation of proxies or consents by or on behalf
      of a Person other than the Board (a "Proxy Contest") including by reason
      of any agreement intended to avoid or settle any Election Contest or Proxy
      Contest or (2) such

                                       8


      individual was designated by a Person who has entered into an agreement
      with LifePoint to effect a transaction described in clause (i) or (iii) of
      this Section 14(c); or

            (iii) The consummation, after approval by stockholders of LifePoint,
      of:

            (A) merger, consolidation or reorganization involving LifePoint
unless

                  (1) The stockholders of LifePoint, immediately before such
                  merger, consolidation or reorganization, own, directly or
                  indirectly immediately following such merger, consolidation or
                  reorganization, at least seventy-five percent (75%) of the
                  combined voting power of the outstanding Voting Securities of
                  the corporation resulting from such merger or consolidation or
                  reorganization or its parent corporation (the "Surviving
                  Corporation") in substantially the same proportion as their
                  ownership of the Voting Securities immediately before such
                  merger, consolidation or reorganization;

                  (2) The individuals who were members of the Incumbent Board
                  immediately prior to the execution of the agreement providing
                  for such merger, consolidation or reorganization constitute at
                  least two-thirds of the members of the board of directors of
                  the Surviving Corporation; and

                  (3) No Person (other than LifePoint, any Subsidiary, any
                  employee benefit plan (or any trust forming a part thereof)
                  maintained by LifePoint, the Surviving Corporation or any
                  Subsidiary, or any Person who, immediately prior to such
                  merger, consolidation or reorganization, had Beneficial
                  Ownership of twenty percent (20%) or more of the then
                  outstanding Voting Securities) has Beneficial Ownership of
                  twenty percent (20%) or more of the combined voting power of
                  the Surviving Corporation's then outstanding Voting
                  Securities.

            (B) A complete liquidation or dissolution of LifePoint; or

            (C) An agreement for the sale or other disposition of all or
substantially all of the assets of LifePoint to any Person (other than a
transfer to a Subsidiary).

            Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by LifePoint
which, by reducing the number of Voting Securities outstanding, increased the
proportional number of shares Beneficially Owned by the Subject Person;
provided, however, if a Change in Control would occur (but for the operation of
this sentence) as a result of the acquisition of Voting Securities by LifePoint,
and after such share acquisition by LifePoint, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.

                                       9


      15. COUNTERPARTS

            This Agreement may be executed in counterparts, each of which will
deem to be an original, but all of which together will constitute one in the
same Agreement.

      IN WITNESS WHEREOF, LifePoint has caused this Agreement to be executed and
the Executive has set his hand hereto on the day and year first written above.

                                            LIFEPOINT CSGP, LLC

                                       By:  _________________________________

                                       Its: _________________________________

                                            EXECUTIVE

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


                                       10

EX-10.33

                                                                   EXHIBIT 10.33

                        LIFEPOINT HOSPITAL HOLDINGS, INC.
                                       AND
                           GE HEALTHCARE TECHNOLOGIES

                         COMPREHENSIVE SERVICE AGREEMENT
                                       FOR
                       DIAGNOSTIC IMAGING AND BIOMEDICAL
                                    SERVICES

               EFFECTIVE: OCTOBER 1, 2004 THROUGH MARCH 31, 2008

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       1


TABLE OF CONTENTS



SECTION      TITLE                                                 PAGE#
- -------      --------------------------------------                -----
                                                             
I.           MASTER TERMS AND CONDITIONS                             3

II.          COMPRECARE AGREEMENT ADDITIONAL TERMS                   8
             AND CONDITIONS

III.         GLOSSARY                                               26

IV.          SUPPORT SUMMARIES                                      31


GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       2


                                    SECTION I
                           MASTER TERMS AND CONDITIONS
                         BETWEEN GE MEDICAL SYSTEMS AND
                        LIFEPOINT HOSPITAL HOLDINGS, INC.

                                  Contract No.

1.    AGREEMENT

These Master Terms and Conditions apply to Support provided by General Electric
Company, acting by and through its GE Medical Systems division ("GE") to you, as
described in any Support Summary referencing these Master Terms and Conditions
signed by GE and you during the time period beginning on the date you sign these
Master Terms and Conditions and ending on the date 3 years later. Each such
Support Summary, together with the associated Additional Terms and Conditions,
Glossary, Schedule of Support Coverage Details ("Schedule"), and these Master
Terms and Conditions, constitutes an "Agreement," and each such Agreement is
valid for the term specified in the Support Summary.

2.    SUPPORT

For GE manufactured equipment only, if any, during any Equipment product
warranty period, GE will provide for the Equipment Support as specified in the
product warranty provided with the Equipment, as well as other types of Support
identified on the Schedule. After the Equipment product warranty period and at
all times for all other Equipment, GE will provide Support as specified in the
Schedule.

Subject to the availability of personnel, GE will provide, at your request and
additional expense and subject to these Master Terms and Conditions, service or
other items not specified in the Schedule. The charge for such service or other
items will be the standard Hourly Billed Service Rates for GE and Non-GE
Diagnostic Imaging Services and Biomedical Services then in effect for LifePoint
Hospitals as set forth in Section II (COMPRECARE ADDITIONAL TERMS and
CONDITIONS) of this Agreement, including round trip travel time. Travel time for
general radiology and portable systems for service calls during normal coverage
hours will be billed at the rate as set forth in Section II of this agreement.
Travel time for other modalities and/or during OT/Weekend and Holidays will be
the same as the HBS rate. You will be charged a minimum of 2 hours per call.
Other travel expenses and overnight living expenses will be charged at actual
cost in accordance with GE's standards for business expense remuneration of
employees.

3.    CHARGES, PAYMENTS AND TAXES

The Total Normal Fixed Charges will be paid on an installment basis. GE will
invoice you for each installment according to the Payment Periods specified in
the Support Summary, as well as for any other payments due under any Agreement.
All applicable taxes will be added to each invoice, unless you provide to GE a
tax exemption certificate acceptable to the taxing authorities. You will not be
obligated to pay any federal, state, or local tax imposed upon or measured by
GE's net income. Each payment is due within 30 days of the date of the invoice.
Late payments will be subject to a late fee equal to 1% per month (or the amount
allowed by law, whichever is less) on the outstanding amount. Any credits that
may be due to you under an Agreement will be applied first to any outstanding
balance. Per LifePoint Hospital Holdings request, all invoicing for contractual
and hourly billed service will be processed through the corporate offices.

4.    YOUR RESPONSIBILITIES

During the Term of each Agreement, you agree to do the following:

4.1.  Provide a suitable location for the Equipment and maintain the Site and
environment (including temperature and humidity control, incoming power quality,
and fire protection system) in a condition suitable for operation of and service
to the Equipment; provide a secured and protected area for storage of GE tools
and equipment near the Equipment location; and keep the Site clean and free of
dust, sand and other particles or debris.

4.2   Ensure the Equipment is used solely in accordance with the requirements of
the Equipment Operation Manual by properly qualified and licensed personnel.

4.3.  Make the Equipment available without restriction for Support in accordance
with a mutually acceptable Support appointment schedule.

4.4.  Facilitate GE's performance of remote diagnostic and repair Support by
providing remote access methods reasonably requested by GE, e.g., modem line,
internet connection, broadband internet connection, where available.

4.5.  Designate a Site Manager and alternate as GE's Support contact who each
have necessary expertise to reasonably assist GE's technical engineers in
diagnosis of service problems.

4.6.  Place Support calls and requests to GE in accordance with any protocols
that GE provides to you in writing.

4.7.  Ensure the security of networked Equipment on your Site by taking
appropriate measures to prevent unauthorized access to networked Equipment and
the interception of communications between GE's service center and the networked
Equipment, including

GE PROPRIETARY INFORMATION
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                                       3


isolating networked Equipment from other networks, setting up firewalls, and
taking any other measures that GE reasonably believes are necessary to ensure
the security of the networked Equipment and related communications.

4.8   Make Equipment available to GE as needed for the performance of Support.

4.9.  Promptly notify GE in writing of any change in the Customer Information
specified on the Support Summary, location of Equipment, or your ownership or
management control.

5.    EXCLUSIONS

No Agreement covers the following:

5.1.  The repair, replacement, or disposal of any accessories, power supply
equipment, or consumable items, including but not limited to batteries,
printers, cassettes, copier drums, electrodes, fiber optics, fiber optic
bundles, filters, laser tubes, film magazines, paddles, patient cables,
radiation sources, refrigeration, compressors, non-GE MR coils, styli, software,
top assemblies of transducers, PACS, networks unless explicitly listed on the
Schedule.

5.2.  The provision, payment, or reimbursement of any rigging or facility cost.

5.3.  Consultation or training to assist your development or modification of any
software or protocols not provided by GE.

5.4.  Material and labor costs associated with reusing existing facilities
(wire, termination fields, network facilities, equipment room, peripherals,
adjuncts) and temporary installation of Equipment for testing, training, and
other purposes.

5.5   Any non-GE hardware or software that was not commercially available from
the Original Equipment Manufacturer on the date such hardware or software was
installed, including but not limited to experimental and proprietary hardware or
software.

5.6.  Any service, components or parts replacement, or downtime required as the
result of (a) a design, specification, software program, protocol, or
instruction provided by you or your representative; (b) your failure to fulfill
any of your obligations or responsibilities under any Agreement; (c) the failure
of anyone other than GE or its contractor to comply with GE's written
instructions or recommendations; (d) your combining the Equipment with any item
of others or with any incompatible GE item; (e) any alteration or improper
storage, handling, use, or maintenance of any part of the Equipment by anyone
other than GE or its contractor; (f) design or manufacturing defects,
specifications, or functionalities in any item of others; and (g) anything
external to the Equipment, including building, van, or trailer structural
deficiency, power surge, fluctuation or failure, dust, sand or other particles
or debris at the Site, or air conditioning failure.

5.7.  Any additional service required due to moves, additions, or changes to the
Equipment, unless GE has been notified in writing at least 30 days in advance
and concurred with such moves, additions, or changes

5.8.  The cost of factory reconditioning of the Equipment or any Covered
Component if reasonably necessary because repair or parts replacement by GE at
the Site cannot maintain it in satisfactory operating condition. Such factory
reconditioning will be done on a mutually agreeable schedule.

5.9.  The cost of repair or parts replacement per item of Equipment per occasion
in excess of 50 percent of that item of Equipment's then-current value. We will
provide you a written itemized estimate of the cost of repair or parts
replacement for any item of Equipment should such cost per occasion exceed this
limit.

6.    INFLATION ADJUSTMENTS

GE agrees to hold prices firm for the term of this Agreement.

7.    RENEWAL

For the initial term of this Agreement, this section is deleted.

8.    ELECTRONIC TRANSFER OF FUNDS

If a Support Summary indicates that you authorized electronic transfer of funds,
you will promptly take the steps necessary to permit the electronic transfer to
GE in the manner specified by GE of all Total Normal Fixed Charges specified on
such Support Summary, in accordance with the terms of the Agreement of which the
Support Summary is a part.

9.    END OF SERVICE LIFE (EOSL) ANNOUNCEMENT

In the event GE or the applicable OEM makes a general commercial announcement
that it will no longer offer Support agreements for an item of Equipment or
Covered Component or provide a particular Support agreement feature or option as
a result of factors beyond its reasonable control, then upon no less than 12
months' prior written notice to you, GE may, at its option, remove any such
item(s) of Equipment, Covered Component(s), feature(s), or option(s) from all
Agreements, with an appropriate adjustment of charges, without

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       4


otherwise affecting such Agreements. In some cases, such Equipment may be
eligible for PM Only coverage as described in Part II of this Agreement. For
systems identified as EOSL and not eligible for contractual coverage, LifePoint
Hospitals retains the option of seeking service arrangements with other service
providers.

10.   EXCUSABLE DELAYS AND PERFORMANCE ISSUES

Neither party is liable for delays or failures in performance of any obligations
under an Agreement, other than payment obligations, due to a cause beyond its
reasonable control.

11.   DEFAULT

If you materially breach an Agreement and such breach is not cured within 20
days after written notice of it, you shall be in default under such Agreement,
and GE may at its option, in addition to using the dispute resolution procedure
in Section 19, (a) suspend performance under any or all Agreements until a
reasonable time after all defaults have been cured; (b) declare all sums due and
to become due under all Agreements to be immediately due and payable; and/or (c)
recover possession of any GE materials in your possession or control. Should GE
suspend performance under any Agreement in accordance with subsection (a) of
this Section, it is expressly understood that GE shall not be responsible for
the completion of planned maintenance scheduled or due to be performed under
such Agreement during the period of suspension, and any Equipment downtime
during such suspension will not be included in the calculation of our uptime
commitment under an Agreement. In addition, GE shall not be obligated, after you
cure the default(s) giving rise to such suspension, to perform planned
maintenance that was not performed during the period of suspension, unless
otherwise expressly agreed by the parties in writing.

12.   LIMITED WARRANTIES

GE will perform Support in a workmanlike manner. Parts for which you pay a
separate charge come with GE's then-prevailing standard Direct Customer Order
Service Warranties for New and Exchange Parts. All other parts and items are
provided AS IS. THE WARRANTIES IN THIS SECTION ARE EXCLUSIVE AND IN LIEU OF ALL
OTHER WARRANTIES. GE EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

13.   LIMITATIONS OF REMEDIES AND DAMAGES

For any claim that Support was not performed in a workmanlike manner in
accordance with the limited warranty in Section 12, your sole and exclusive
remedy is for GE to reperform that Support. For all other claims, GE's liability
for actual, proven damages in connection with each Agreement, whether arising
under contract, tort, or any other theory of law, will not in the aggregate
exceed an amount equal to 3 times the last payment of Normal Fixed Charges that
was due before the incident on which any claim is based. You will be barred from
any remedy for any claim unless you give GE prompt written notice of the
problem. In no event will GE be liable for any consequential, special, indirect,
incidental, or punitive loss, damage, or expense, even if GE was advised of the
possible occurrence; for any assistance not required under an Agreement; or for
anything occurring after the end of an Agreement (except with regard to the
obligations in Section 21).

NEITHER PARTY HAS ANY TORT LIABILITY TO THE OTHER ARISING FROM ANY AGREEMENT,
EXCEPT TO THE EXTENT EITHER PARTY COMMITS GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. This limitation does not affect claims by third parties for personal
injury due to either party's negligence or product liability.

14.   SUPPORT MATERIAL AND DATA ACCESS

14.1  In connection with the installation, configuration, maintenance, repair,
and/or deinstallation of the Equipment, GE might deliver to the Site, along with
the Equipment or separately, and store at the Site, attach to or install on the
Equipment, and use, materials that have not been purchased by or licensed to
you. You hereby consent to (a) this delivery, storage, attachment, installation,
and use, (b) the presence of GE's locked cabinet or box on the Site for storage
of this property, and (c) GE's removal of all or any part of this property at
any reasonable time, all without charge to GE. The presence of this property
within the Site will not give you any right or title to this property or any
license or other right to access, use, or decompile this property. Any access to
or use of this property (except in compliance with GE's written direction to you
to determine Equipment performance on GE's behalf) and any decompilation of this
property by anyone other than GE's personnel is prohibited. You agree that you
will use reasonable efforts to protect this property against damage or loss and
to prevent any access to or use or decompilation of this property contrary to
this prohibition.

14.2  You agree to permit GE to connect to the Equipment, or to otherwise access
data related to the Equipment or the Support provided, to allow GE to gather,
aggregate, compile, and use Equipment and resource usage data in various ways,
including quality initiatives, benchmarking, and reporting services. The data
collected by GE will be used, during and after the term of any Agreement, in a
manner that will maintain patient and customer level confidentiality.

15.   INDEPENDENT CONTRACTOR; SOLICITATION OF OUR EMPLOYEES

GE provides Support under each Agreement as an independent contractor. GE
employees are under GE's exclusive direction and control, contractors' employees
are under their exclusive direction and control, and your employees are under
your exclusive direction and control.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       5


The provision of Support under any Agreement will not result in any partnership,
joint venture, trust, or employment relationship between GE or its contractors
and you.

For the duration of any Support Summary, and for 90 days after expiration of any
Support Summary, you agree that you and your controlled affiliates will not
directly or indirectly solicit any employees of ours or our subsidiaries who are
engaged in providing services to you or your affiliates under this Agreement. In
the event of a breach of this provision, you agree to pay us a sum equal to
twelve (12) months pay for each solicited employee at the rate we or our
subsidiary paid the person during his or her last full month of employment with
us.

16.   RECORD RETENTION

If Section 1861(v) (1) (I) of the Social Security Act applies to an Agreement,
subsections (i) and (ii) of that section are made a part of such Agreement. In
such an event, GE agrees to retain and make available and to insert the
requisite clause in each applicable subcontract requiring GE's subcontractor to
retain and make available the contract(s), book(s), document(s) and record(s) to
the person(s), upon the request(s), and for the period(s) of time as required by
these subsections.

17.   REGULATORY COST REPORTING

You will fully and accurately account for, and report in any applicable cost
reports, all Support and items received from GE under each Agreement in a way
that complies with all applicable laws, including the federal Social Security
Act and implementing regulations relating to Medicare, Medicaid, and other
federal and state health care programs.

18.   SURVIVAL, WAIVER, SEVERABILITY, AND CHOICE OF LAW

The terms of any Agreement that by their nature are intended to survive its
expiration, including without limitation Sections 3, 13, and 19 of the Master
Terms and Conditions, will continue in full force and effect after the
expiration of such Agreement. Any failure to enforce any provision of an
Agreement is not a waiver of that provision or of either party's right to later
enforce each and every provision. If any provision of an Agreement is found to
be invalid, it will be enforced to the extent permitted by law, and the
remainder of such Agreement will not be affected. Each Agreement will be
governed by and construed in accordance with the law of the state where the
Support is provided, without giving effect to that state's choice of law rules

19.   DISPUTE RESOLUTION

Any claim or controversy arising out of or relating to any Agreement must be
submitted and settled as set forth in this Section 19. If any party to an
Agreement alleges that any other party to such Agreement has breached any of the
terms of such Agreement, then the party alleging breach will inform the other
party of such breach in writing. Upon receipt of such notice, the allegedly
nonperforming party will have 20 days to cure the alleged breach. If the parties
do not agree that effective cure has been accomplished by the end of the 20-day
period, then upon written request of any party, a senior manager from each party
will meet in person and confer in good faith to resolve the dispute within 15
days of the expiration of the prior 20-day period. If, after the above
procedure, the dispute remains unresolved, the dispute will be submitted to the
office of the American Arbitration Association ("AAA") located closest to
Nashville, Tennessee, for binding arbitration in accordance with the AAA's
Commercial Arbitration Rules then in effect, as amended by the Agreement. The
law applicable to the arbitration, including the administration and enforcement
thereof, is the Federal Arbitration Act, 9 U.S.C. Sections 1-16, as amended from
time to time. The cost of the arbitration, including the fees and expenses of
the arbitrator(s), will be shared equally by the parties, with each party paying
its own attorneys' fees. The arbitrator(s) will have the authority to apportion
liability between the parties, but will not have the authority to award any
damages not available under the Agreement. The arbitration award will be
presented to the parties in writing, and upon the request of either party, will
include findings of fact and conclusions of law. The award may be confirmed and
enforced in any court of competent jurisdiction. Any post-award proceedings will
be governed by the Federal Arbitration Act.

In addition, if, for any reason, you believe that GE is not meeting your Support
needs under an Agreement, you may notify GE in writing, and GE's area service
manager and a representative of yours will meet in person to develop an
appropriate action plan to resolve your concerns. If the parties are unable to
develop a mutually acceptable action plan or otherwise resolve the issue(s)
within 20 days, the issue(s) will be submitted to a senior manager from each
party for resolution. If the issue(s) remains unresolved, or if the parties are
unable to develop a mutually acceptable action plan, 20 days after submittal to
senior management, either party may submit the issue for arbitration in
accordance with the preceding paragraph. The notice and cure periods in the
preceding paragraph will not apply should the issue be submitted for arbitration
under this paragraph.

20.   SUBCONTRACTS AND ASSIGNMENTS

GE may subcontract to contractor(s) of its choice any of its Support obligations
to you. No such subcontract will release GE from those obligations to you. Any
assignment of an Agreement will be void without the other party's prior written
consent.

21.   CONFIDENTIAL INFORMATION

GE and its contractors will treat patient information as confidential and comply
with any applicable laws concerning the confidentiality of patient information.
GEMS and Customer acknowledge that certain portions of the Administrative
Simplification section of the Health Insurance Portability and Accountability
Act of 1996, as codified at 42 U.S.C. Section 1320d through d-8 ("HIPAA"), and
certain regulations promulgated or to be promulgated pursuant thereto
(collectively, "HIPAA Regulations") may apply to GEMS, Customer, and their
relationships and operations under this Agreement. GEMS and Customer acknowledge
and agree that they have entered into, or will enter into, such Business
Associate Agreements and/or other similar agreements (collectively, "HIPAA
Agreements") that are required to satisfy the respective obligations of both
parties under the applicable provisions of HIPAA and the HIPAA Regulations.
Notwithstanding any other

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provision in this Agreement to the contrary, to the extent the terms of such
HIPAA Agreements relate to GEMS' performance under this Agreement, the terms of
such HIPAA Agreements shall control over the terms of this Agreement to the
extent required to allow both parties to comply with the applicable provisions
of HIPAA and the HIPAA Regulations. In addition, each party (the "receiving
party") will treat the other party's written, proprietary business information
as confidential for a period of 3 years from the date of receipt by the
receiving party as long as it is marked as confidential and/or proprietary prior
to its disclosure and is not otherwise available to the receiving party from a
lawful source.

22.   ENTIRE AGREEMENT

The Agreement(s) between the parties are the complete and exclusive statement of
the terms of the contracts between the parties. No prior proposals, statements,
course of dealing, or usage of the trade will be a part of any Agreement. If any
terms of the Master Terms and Conditions conflict with any Support Summary,
Additional Terms and Conditions, Glossary, or Schedule, then unless otherwise
explicitly provided, these Master Terms and Conditions take precedence, followed
in order by the Additional Terms and Conditions, Glossary, Schedule, and Support
Summary. The Agreements may be entered into and modified only by a writing
signed by authorized representatives of each party. Each party has caused the
Master Terms and Conditions to be executed by a duly authorized representative
on the date below that party's signature. In the event LifePoint Hospital
Holdings, INC. divests an owned facility, GE will extend to the new owning
entity a 60 day grace period where this agreement may remain in place. A signed
copy of any Agreement delivered by facsimile machine is binding and enforceable
on both parties.

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                                       7


                                   SECTION II
              COMPRECARE AGREEMENT ADDITIONAL TERMS AND CONDITIONS
                         BETWEEN GE MEDICAL SYSTEMS AND
                        LIFEPOINT HOSPITAL HOLDINGS, INC

                                  Contract No.

ADDITIONAL TERMS FOR ALL OFFERINGS

In some cases, a GE subsidiary may be solely responsible to provide Service
Support for some Equipment (usually Biomedical Equipment) identified in a
Support Summary. In these cases, (a) the name of the GE subsidiary will be
prominently shown on the Support Summary, or applicable exhibits to the Support
Summary, and (b) you and we agree that the identified GE subsidiary is solely
responsible to provide Service Support for that Equipment under such Support
Summary just as if you had entered into that Support Summary directly with the
GE subsidiary.

NEW ADDITIONAL TERMS AND CONDITIONS

For the purposes of this Agreement only, the following new additional terms and
conditions are added:

SERVICE DELIVERY COMPONENTS

The GE service program ("Choice Program") in this Agreement offers LifePoint
Hospitals the flexibility to achieve fixed-cost savings in exchange for the
assumption of certain service risks. This Choice Program allows LifePoint to
select coverage levels ranging from Full Service to Preventative Maintenance
("PM") Only for diagnostic imaging ("DI") services and provides coverage level
flexibility for biomedical equipment services as described further below. This
program caps LifePoint's DI services cost for each contract year at a price
determined as set forth below. This total, or "captivated," cost is based on the
inventory of diagnostic imaging equipment installed at LifePoint facilities
participating under this Agreement and is used to limit LifePoint's financial
exposure to unbudgeted charges for non-contract services. The details of this
capitation feature are detailed under Service Cost Capitation Computation,
Service Cost Capitation Exclusions, and Service Cost Capitation Review. In all
service offerings, GE will fully implement new procedures consistent with
impending JCAHO process changes by 2006.

SERVICE COVERAGE ELECTIONS

Service coverage levels under the Choice Program shall be made for entire
modalities across all LifePoint facilities. Service coverage elections cannot be
made for individual facilities or systems. These coverage elections will be in
effect for the term of this Agreement. Coverage level selections for DI systems
available under the Choice Program are as follows (Systems identified as EOPL
Schedule A are only eligible for PM Only coverage):

      -     Full Service including Glass and Probes coverage

      -     Full Service Only on base systems (no glass ware or probes)

      -     Preventative Maintenance (PM) Only

      -     GlassPro Tube Coverage (in conjunction with the Full Service Only
            election)

For the initial six months of this Agreement (Oct 1, 2004 to Mar 31, 2005), all
diagnostic imaging systems under the Comprehensive Program Agreement dated
_October 1, 1999 between the parties ("Pre-Existing Contract") will remain at
the Full Service with Glass and Probes coverage level. Beginning Apr 1, 2005,
the Choice Program coverage elections set forth in Schedule A will go into
effect and will apply for the term of the Agreement. The initial base cost for
the Choice Program coverage levels in Schedule A for the affected equipment is
$6,747,514/yr and excludes all expenses and costs for equipment that has been
declared to be at end of product life.

SERVICE COST CAPITATION COMPUTATION

GE will cap LifePoint's annual service expenditure for DI services at a
not-to-exceed threshold based on the current installed base. The total capitated
annual DI service expenditure shall be the sum of the individual system
capitated costs and will be adjusted for additions and deletions to the
inventory by the corresponding system capitated cost. For "high-end" modality
systems (MR, CT, Vasc & PET) where a flexible offering has been elected (i.e.
GlassPro or PM Only), the capitated cost will be 104% of the Full Service with
Glass and Probe fee applicable to such equipment. For all other DI modalities,
the capitated amount will be 102% of the Full Service with Glass and Probe
coverage fee. For DI systems under Full Service with Glass and Probes coverage,
the capitated fee shall be equal to the annual service fee, without any
adjustment.

                   Add examples of system capitation costs here

SERVICE COST CAPITATION EXCLUSIONS

LifePoint's service expenditures for systems that have been declared as end of
product or end of service life (either status, "EOL"), either by GE or the
system manufacturer, are not eligible for and not included in the annual service
capitated price. Probe purchases for Non-GE Ultrasound systems that are not
purchased through GE are excluded from the annual capitated service price.
Additionally, requests for

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remedial maintenance for non-EOL systems outside of the normal coverage hours
(i.e. overtime) are not included in the annual capitated price.

SERVICE COST CAPITATION REVIEW

GE and LifePoint will review each quarter the annual service expenditure
capitated pricing. As part of the review, GE will review inventory changes to
determine the accuracy of the capitated price and will also summarize the
non-contract charges that have been applied toward the annual capitated amount.

BIOMEDICAL SERVICES

The biomedical services program will allow for specific coverage level
flexibility as outlined below.

Coverage Levels:

      -     Full Service with Parts (FSWP)

      -     Full Service No Parts (FSNP)

      -     Planned Maintenance with Planned Parts (PMWP)

      -     Planned Maintenance No Parts (PMNP)

      -     Electrical Safety No Parts (includes inventory tracking) (ESNP)

Coverage Level Matrix (see below):

Section 1:        Purchased, equipment still in warranty

                  Purchased, equipment out of warranty

Section 2:        Equipment is leased, rented, borrowed, a demo, or loaned
                  without third-party Service

                  Equipment is leased, rented, borrowed, a demo, or loaned with
                  third-party Service



                                    PURCHASED
- --------------------------------------------------------------------------------
WARRANTY STATUS
OEM/VENDOR CVG                     IN WARRANTY                 OUT OF WARRANTY
- ------------------     ------------------------------------    ---------------
                                             
PMs Covered            Yes      No      No      No      No            N/A
PM Parts Covered       Yes     Yes      No      No      No            N/A
Labor Covered          Yes     Yes     Yes      No      No            N/A
Parts Covered          Yes     Yes     Yes     Yes      No            N/A
GE cvg (All Risks)     ESNP    PMNP    PMWP    FSNP    FSWP          FSWP




                      LEASE, RENTED, BORROWED, DEMO, LOANED
- --------------------------------------------------------------------------------
OEM/VENDOR CVG
                                              
PMs Covered            Yes      No      No      No      No
PM Parts Covered       Yes     Yes      No      No      No
                                                                No Documentation
Labor Covered          Yes     Yes     Yes      No      No
Parts Covered          Yes     Yes     Yes     Yes      No
GE cvg (All Risks)     ESNP    PMNP    PMWP    FSNP    FSWP           FSWP


GE is currently developing new pricing for biomedical equipment service to allow
greater consistency in pricing from facility to facility and device to device.
The new pricing will be based on a make/model approach and includes new
procedures for adding and dropping equipment from Service coverage designed to
enhance inventory and billing accuracy. The transition to make/model pricing
will be based on the December 2004 invoice and will result in a net zero
financial impact from the previous pricing model. The biomedical service pricing
offered LifePoint as part of the biomedical service program in this Agreement
will move to the new make/model pricing when made available (expected transition
completion by March 2005) by GE. The related add/drop procedures are described
in the Clinical Asset Entry/Exit section of this Agreement and are effective
immediately.

GE AND NON-GE DIAGNOSTIC IMAGING HOURLY BILLED SERVICES RATES

For the purpose of this Agreement only, the hourly billed service ("HBS"), also
known as time and materials, billing rates listed below will apply for all
diagnostic imaging services performed by GE that are not included in the elected
level of Service Support ("non-contract services") for such Equipment.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       9




                                            DIAGNOSTIC IMAGING LABOR RATES
- ---------------------------------------------------------------------------------------------------------------------
                                 LIFEPOINT WEEKDAY RATES (NORMAL CVG            LIFEPOINT          LIFEPOINT SUNDAY &
                                                HRS)                        OT/SATURDAY RATES        HOLIDAY RATES
                                 ------------------------------------       -----------------      ------------------
   PRODUCT TYPE      MODALITY    TRAVEL TIME        GE           MV          GE         MV           GE          MV
- -----------------    --------    -----------       ---           ---        ---         ---         ---         ---
                                                                                        
     IIS & AW                                      265                      265                     395
    ULTRASOUND                                     220           220        220         220         330         330
        CT                                         325           325        325         325         490         490
BONE DENSITOMETRY                                  195                      195                     325
       PET                                         325                      325                     490
        MR                                         325           325        325         325         490         490
     NUCLEAR                                       265           265        265         265         395         395
      OTHER                                                      185                    185                     275
       XRAY             XR            92           185           185        185         185         275         275
                        XV                         265           250        265         250         395         375


DIAGNOSTIC IMAGING SERVICE SUPPORT COVERAGE HOURS (MR, CT, PET, ANGIO, CATH)

         8AM to 9PM

         8AM to 5PM (During Warranty Period)

         Monday through Friday (Excluding GE Holidays)

SERVICE SUPPORT COVERAGE HOURS FOR ALL OTHER DIAGNOSTIC IMAGING EQUIPMENT IS AS
FOLLOWS:

         8AM to 5PM

         Monday through Friday (Excluding GE Holidays)

BIOMEDICAL SERVICES T&M LABOR RATES

For the purpose of this Agreement only, the below-listed HBS rates will be used
for all non-contract services for biomedical equipment.



                                                   LIFEPOINT
                             BIOMEDICAL HOURLY BILLED SERVICE RATES BY PRODUCT LINE
- ---------------------------------------------------------------------------------------------------------------------
I. LifePoint Charge for                                 Laboratory Analyzers                        Laser (Hourly )
 Contracts or Warranty       Biomedical                      Monitoring           Biomedical        (Used when less
        Period                General     Anesthesia    Respiratory Therapy     Laser Per Call    than per call rate)
- -----------------------      ----------   ----------    --------------------    --------------    -------------------
                                                                                   
During Normal Work Week      $      118   $      151        $        157           $    806           $       186
and Saturday
Sundays and Holidays         $      207   $      267        $        306           $  1,419           $       373


BIOMEDICAL SERVICE SUPPORT COVERAGE HOURS

Service support coverage hours for biomedical equipment is as follows:

         8AM to 5PM

         Monday through Friday (Excluding GE Holidays)

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       10


SERVICE SUPPORT

INVENTORY VERIFICATION

Within 90 days of assuming service responsibility for facilities that are not
receiving Service from GE under the Pre-Existing Contract and for all facilities
that are added to this Agreement, we will complete a physical inventory of the
Equipment to ensure the accuracy of the equipment schedule. Equipment that we
are unable to locate during the inventory will be removed from the initial
equipment Schedule. Equipment belonging to the categories of covered Equipment
will be added to the initial equipment Schedule. In each case, an appropriate
adjustment to Normal Fixed Charges will be made. Following completion of the
inventory, we will provide you a copy of the revised equipment Schedule, and
upon signed acceptance by you the revised equipment Schedule will replace the
initial Schedule to become part of the Agreement. Initial billing of periodic
charges will reflect the periodic amount set out in the Support Summary. Upon
completion of the inventory and the appropriate adjustments to Total Normal
Fixed Charges, if any, we will perform a reconciliation of prior invoices. We
reserve the right to perform one additional audit each year to confirm
then-existing inventory.

EQUIPMENT INSPECTION

Equipment to be covered under this Agreement must be in safe, normal operating
condition and substantially in compliance with OEM ("Original Equipment
Manufacturer") specifications ("Operating Condition"). We will inspect each item
of Equipment within 90 days of assuming service responsibility. If our
inspection reveals an item of Equipment that is inoperative or otherwise in need
of repair, we will notify you within the next 90 days, and you will be
responsible for bringing that item of Equipment into Operating Condition. In
addition, for each item of Equipment, if our first significant service call for
such item of Equipment, including PM call, reveals that the item of Equipment is
in need of a repair that we could not reasonably have discovered during the
90-day inspection period, you will be responsible for bringing that item of
Equipment into Operating Condition. If you request, we will make necessary
repairs in accordance with our standard contract-customer rates and policies
then in effect for such service. We will be responsible for all other necessary
repairs, subject to the terms and condition of this Agreement, including the
service coverage level you have selected. Except for equipment receiving service
under a GE Healthcare service contract immediately prior to the date the
equipment is added to this Agreement, if any Equipment is added to this
Agreement for any reason, including failure to identify the Equipment initially
on the Exhibit to Support Summary or because the Equipment was previously in
storage, not in use, or otherwise not available for inspection during the 90-day
inspection period, you are responsible for repairs necessary to bring that item
of Equipment into Operating Condition.

You agree to provide us with evidence of a satisfactory power and grounding
audit for all Equipment, including any report. If you are unable to provide us
with the proper evidence, we will perform a power and grounding audit for you at
additional charge.

Service Support will consist of the following, except to the extent specifically
described in the "Exclusions" and "Your Responsibilities" sections of the Master
Terms and Conditions and any specific exclusions or responsibilities specified
in a Support Summary.

PLANNED MAINTENANCE SERVICE

We or our Service Suppliers(s) will provide, during the coverage hours of a
Support Summary, the following planned maintenance service for the Equipment
covered by the Support Summary, if applicable:

An electrical and hydraulic system inspection, CPU and Software functionality
test, magnetic tape and disc drive alignment, patient light and laser alignment,
leakage current test and adjustment, power supply adjustment, mechanical
interlock and assembly check, Equipment lubrication and filter replacement if
applicable.

We or our Service Supplier(s) will provide for service call dispatch, and will
assist you in your capital asset management and JCAHO compliance, for all
Equipment listed in a Support Summary.

REMEDIAL MAINTENANCE SERVICE

We or our Service Supplier(s) will provide, during the coverage hours of a
Support Summary, the following remedial maintenance service for the Equipment
covered by the Support Summary:

Remedial maintenance is unscheduled repair service as required for Equipment
covered under a Support Summary. Replacement parts as required (including x-ray
tubes if elected by you) are provided on a new, exchange (refurbished), or
functionally equivalent used part basis with installation labor included.
Replaced parts become our property and will be promptly removed by us from the
Site.

BIOMEDICAL SERVICE

Biomedical equipment covered under this proposal is limited to the devices
utilized for the diagnosis and treatment of a diseased state. Covered categories
of equipment generally covered include:

         Anesthesia
         Cameras (clinical)
         Cardiac Support

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       11


        Cataract Extraction Units
        Computers (clinical)
        Dialysis
        ECG/EEG/EKG
        General Biomedical
        Laboratory/Clinical Analyzers
        Laboratory/General
        Lasers
        Lights and Tables
        Operating Microscopes
        Physical Therapy
        Physiological Monitoring
        Respiratory Therapy/Cardio-Pulmonary
        Sterilizers
        Test Equipment
        Ventilators
        Washers

Categories of biomedical equipment not covered under this Agreement include:

        Bed/Stretchers/Wheelchairs
        Diagnostic Imaging Equipment
        Equipment at end of product life as determined by the OEM
        Equipment not generally considered to be Biomedical in nature or purpose
        Expendable components of equipment
        Flexible & Rigid Scopes
        Laser Imagers
        Nuclear Medicine Equipment
        Patient Televisions
        PET Scanners
        Radiation Therapy Equipment

During inventory inspection, GE may identify other items not covered for
service.

PERIODIC PERFORMANCE REVIEW

We will provide you reports of the current operational and technical performance
of the Equipment on a mutually agreed upon schedule. We will also conduct with
your approved representative an Equipment review of operational and technical
performance on a mutually agreed upon schedule.

AGENCY AUTHORIZATION

By signing the attached Support Summary (ies) and/or Master Terms and
Conditions, you designate GE as your duly authorized agent to act on your behalf
to conduct the following business matters: (i) negotiate and enter into service
agreements for the Equipment; (ii) obtain service support, parts, parts pricing,
technical information (including manuals, software, etc.), service histories,
and time and material cost for the Equipment; and/or (iii) obtain or develop and
negotiate and enter into training agreements for the Equipment.

DIAGNOSTIC IMAGING EQUIPMENT ADDITIONS AND REMOVALS

Any Equipment added to your inventory during the Term of this Agreement of the
type identified under "Service Options" on the Support Summary hereto will be
added to the appropriate Schedule. The effective date of such addition shall be
no later than thirty (30) days after the addition of such equipment to your
inventory or the expiration of any applicable warranty. The Normal Fixed Charge
for the added Equipment will be based on the then-current list price for the
specified level of Service Support.

Upon receipt of any equipment of the type identified under "Service Options" on
the Support Summary, you shall provide GE with all available warranty
documentation for such equipment, including warranty duration, OEM maintenance
requirements, and the name of the party responsible for such maintenance
obligations during the warranty period.

You may remove an item of Equipment from a Schedule upon at least 30 days' prior
written notice in the event you permanently remove such Equipment from service
at your facility. The Total Normal Fixed Charge applicable to such Equipment
will be discontinued on the date the Equipment is removed from service or 30
days after the date of written notice, whichever is later. For diagnostic
imaging equipment only, you may initiate such deletion by calling 1-866-GEBILLS.
The maximum invoice credit for diagnostic imaging Equipment that has been
removed from service shall be 30 days.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       12


GE may remove an item of Equipment from a Schedule upon written notice to you
that in GE's reasonable opinion, the Equipment can no longer be effectively or
safely maintained or repaired. In addition, if during any 12-month period our
cost to provide Service Support for any item of Equipment exceeds 150% of the
amount you pay GE for such Service Support, we may, at our option, remove such
item of Equipment from coverage or, reprice Service Support for such item of
Equipment, under this Agreement upon 60 days' written notice to you. Equipment
removals will be addressed by an addendum to the appropriate Support Summary and
Schedule. The Normal Fixed Charge applicable to such Equipment will be
discontinued on the effective date of removal.

CLINICAL EQUIPMENT ASSET ENTRY/EXIT

Additions and removals of Clinical Equipment will be reflected in monthly
amendments to the Transaction Schedule. All such additions and removals will be
reflected in the subsequent monthly billing. The following procedures will apply
to the addition and removal of biomedical equipment from coverage under this
Agreement:

CLINICAL EQUIPMENT ADDITIONS: For biomedical equipment that GE discovers onsite
and in use that was not at the time of discovery identified as included in
service coverage under this Agreement, GE will:

      -     Add any equipment under warranty to GEHC's inventory tracking system
            with appropriate coverage to begin upon warranty expiration date,
            and

      -     Add all equipment not under warranty to GEHC's inventory tracking
            system effective as of the earlier of (i) the date such equipment
            was placed in service according to reliable records or (ii) the date
            the equipment was found in use or (iii) the date the facility CFO
            signs the Inventory Billing Modification in the event a physical
            inventory was performed.

CLINICAL EQUIPMENT REMOVALS. For situations in which GEHC is unable to locate
onsite a piece of biomedical equipment included in GEHC's inventory records and
Buyer is unable to provide reliable written evidence of the actual equipment
removal date, GEHC will:

      -     Remove the affected items of equipment from GEMS' inventory tracking
            system effective as of the later of (i) the date such equipment was
            removed from service according to reliable records or (ii) the date
            the Buyer informed GE the equipment had been removed or (iii) the
            date the facility CFO signs the Inventory Billing Modification in
            the event a physical inventory was performed.

END OF SERVICE LIFE ANNOUNCEMENT

In the event GE or the applicable OEM makes a general commercial announcement
that it will no longer offer Support agreements for an item of Equipment or
Covered Component or provide a particular Support agreement feature or option as
a result of factors beyond its reasonable control, then upon no less than 12
months' prior written notice to you, GE may, at its option, remove any such
item(s) of Equipment, Covered Component(s), feature(s), or option(s) from all
Agreements, with an appropriate adjustment of charges, without otherwise
affecting such Agreements. In some cases, such Equipment may be eligible for PM
Only coverage as described in Part II of this Agreement. For systems identified
as EOSL and not eligible for contractual coverage, LifePoint Hospitals retains
the option of seeking service arrangements with other service providers

EXISTING SERVICE ARRANGEMENTS

If you have continuing service arrangements with other vendors for service on
any item of Equipment identified in a Schedule, or if any Equipment is covered
by a warranty from another vendor, the terms and conditions of those
arrangements or warranties are not altered in any way by this Agreement and GE
is not assuming any obligations under those arrangements or warranties. The
terms and conditions of this Agreement do not apply to Equipment covered by such
arrangements or warranties until the expiration or legally permissible and
proper termination of such arrangements or warranties. Inasmuch as you have
chosen GE as your comprehensive service provider as provided herein, and have
asked GE to include such Equipment on the Schedule, you agree to evaluate and
pursue all reasonable avenues for expeditious, legally permissible and proper
termination of any such service arrangements and to take no steps to cause the
premature termination of any such warranties.

WARRANTY SUBCONTRACT

Upon the expiration of a Support Summary, we will assign to you the unexpired
portion of any product or service warranty we have received from an Equipment
manufacturer or Service Supplier regarding Equipment covered by our Service
Support under a Support Summary, to the extent the warranty is assignable.

YOUR ADDITIONAL RESPONSIBILITIES

In addition to "Your Responsibilities" listed in Section 4 of the Master Terms
and Conditions, you agree to do the following during the term of each Agreement:

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       13


Subject to the terms of any licenses or other agreements, provide us all
operating and maintenance manuals and related materials pertaining to each item
of Equipment in your possession. We will acquire any additional necessary
operating and maintenance materials that are available at your expense. All such
operating and maintenance materials will remain or become your property.

Assume full responsibility for ensuring that all personnel other than GE's or
GE's service supplier's personnel who are permitted to operate the Equipment are
adequately trained in the proper operation of the Equipment.

Make normal operator adjustments to the Equipment as specified in the Equipment
operation manuals.

Provide our on-site personnel suitable parking facilities at no charge, and
provide a suitable delivery dock and storage capability at the Site for GE's
use.

Where GE's on-site personnel are needed, provide GE at no charge a secure
working area, telephone with outside access, broadband Internet access (where
available), utilities and furnishings such that GE's personnel may safely and
efficiently service the Equipment. All such facilities, utilities and
furnishings will remain your property.

ADDITIONAL EXCLUSIONS

In addition to the "Exclusions" Section 5 of the Master Terms and Conditions, no
Agreement covers the following:

Replacement of MR surface coils, other than the body coil, on non-GE systems.

Service required under a manufacturer's warranty or with respect to Equipment
upgrades, installations, certification surveys or Equipment relocation.

DEFAULT

In addition to the "Default" Section 11 of the Master Terms and Conditions, the
following shall apply:

You may terminate an item of Equipment from this Agreement in the event we fail
to remedy a material breach of our obligations under this Agreement for such
Equipment, which failure will continue for 60 days after our receipt of written
notice from you of such a breach. However, if curing the material breach within
60 days is not possible under the circumstances using commercially reasonable
efforts, there will be an addition of time not to exceed 30 days in which we may
remedy the situation. Upon termination of the item of Equipment, neither party
will have any further obligations under this Agreement for such service except
for (i) payment obligations arising prior to the date of termination and (ii)
obligations, promises or covenants contained in this Agreement which by their
terms must extend beyond the termination date. Termination of an item of
Equipment under this paragraph will not be deemed a material breach of this
Agreement.

PLANNED MAINTENANCE  COMPLIANCE COMMITMENT

We will provide planned maintenance on each item of covered DI and Biomedical
Equipment at recommended intervals and at mutually agreeable times during
Coverage Hours, as set forth on the Schedule. Planned maintenance will be
performed pursuant to OEM's applicable specifications for such item of
Equipment. Such specifications may change during the Term of the Agreement.

The foregoing Planned Maintenance Compliance includes the following components:

      -     PMs will be provided for all DI And Biomedical Equipment under this
            Agreement

      -     PMs will be performed in compliance with applicable JCAHO standards

      -     The PM Commitment includes PMs for "Cannot Locates" and "Not
            Availables"* (see below)

      -     95%+ PM Compliance

      -     PM Compliance will be measured per participating facility

      -     Penalties for any failure to meet the PM Commitment will be paid
            twice per year

GE will provide LifePoint with a quarterly "Dashboard" report showing the
Equipment for which PMs have been completed according to their applicable
OEM-recommended cycle as a percentage of the number of PM devices under this
Agreement. Should GE fail to meet its commitment as set forth in this section,
GE will credit to the facility a percentage of the facility's Annual Fixed
Charge for the applicable 12-month measurement period, such penalty to be
calculated and paid on a semi-annual basis.



PM COMPLIANCE            PENALTY (Semi-Annual)
- -------------            --------------------
                      
  90% - 95%                      1.0%*
       <90%                      2.5%


GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       14


*To be eligible for the PM Commitment and the above penalty, a facility must
maintain the level of DI and/or biomedical equipment that cannot be located or
is unavailable for service at less than 1% of the facilities total DI and
biomedical equipment inventory.

Exclusion:

      -     Planned Maintenance scheduled for DI & Biomedical equipment that is
            not in operating condition or is in unsuitable condition for
            maintenance due to non-service related issues will be excluded (i.e.
            not counted as either completed or not completed) in this
            calculation.

UPTIME PERFORMANCE

SERVICE DELIVERY INDEX

For all DI systems under a Full Service coverage option, GE will furnish the
facility a quarterly report, the Facility Dashboard Report, showing the average
uptime ("Service Delivery Index" or "SDI") of all covered DI Equipment within
the participating facility over a rolling 12 month period. Backup details by
individual system will be made available for review upon request. The Service
Delivery Index is calculated by dividing the time in hours the item of DI
Equipment achieved uptime by the total number of available coverage hours (based
on a 24 hour day, 7 days a week, 365 days a year, less hours in PMs). The DI
service guarantees and penalties are detailed in the charts below. Based on the
chart below, GE will credit back to the facility a percentage of the Annual
Fixed Charge for the applicable 12-month measurement period, calculated and paid
on a semi-annual basis.

GE DIAGNOSTIC IMAGING EQUIPMENT

                                                                      
For GE DI Equipment, if the Service
Delivery Index is:
                                           90% - 94.99%     85% - 89.99%       Less than 85%
GE will pay the following
semi-annual percentage of the
Annual Fixed Charge applicable to
that piece of GE DI Equipment:                     2.5%             5.0%                7.5%



NON-GE DIAGNOSTIC IMAGING EQUIPMENT

                                                                      
For Non-GE DI Equipment, if the Service
Delivery Index is:
                                           90% - 94.99%     85% - 89.99%       Less than 85%
GE will pay the following
semi-annual percentage of the Annual
Fixed Charge applicable to that
piece of non-GE DI Equipment:                      2.5%             7.5%                 10%



Exclusions:

      -     Peripheral equipment such as remote console, magnetic tape drive,
            hard copy devices, multi-format and laser cameras

      -     Planned maintenance time

      -     Diagnostic Imaging Equipment that cannot be located, is unavailable
            or in unsuitable condition for service, or is not in operating
            condition due to non-service related issues will be deemed to have
            achieved Uptime.

      -     Should the facility give GE notice of the need for service and GE is
            ready to service the equipment, but the facility defers or delays
            service or visit, then the extent of this deferral or delay shall be
            considered Uptime.

      -     The time necessary for repair and adjustments required for other
            than normal equipment failure will be counted as Uptime, including
            damage through misuse, operator error, inadequate environmental and
            air conditioning protection or failure, power failure and Acts of
            God.

      -     DI Equipment that is added (or is returned) to Full Service Coverage
            for the first 90 days after such addition (or return).

      -     Systems identified as EOL or non-conforming, i.e. [INSERT
            DEFINITION].

ADDITIONAL CHARGES FOR CT OFFERINGS

ANNUAL CT SLICE USAGE ADJUSTMENT

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       15


Within 90 days after the end of each one-year anniversary date of this
Agreement, GE will review your CT slice usage during the prior 12-month period,
and will adjust, as appropriate, your coverage level effective the first day of
the next contract year. Corresponding adjustments will be made to your Total
Normal Fixed Charges and Periodic Charges, effective on such date, to reflect
your new coverage level.

USAGE ADJUSTMENT

Once in any calendar year, you may increase or decrease the Estimated Usage set
forth in the Schedule by providing written notice to GE of any adjustment you
wish to make. Upon receipt of your notice, GE will provide you with its
prevailing rate then in effect for the new estimated usage you have specified
and will request your confirmation to proceed with the adjustment. A confirmed
estimated usage adjustment will go into effect for the next payment period
invoiced by GE after confirmation.

ADDITIONAL CHARGES FOR MR OFFERINGS

MR SUPER CONDUCTING MAGNET MAINTENANCE AND CRYOGEN SUPPORT FOR LHE/LN AND SHIELD
COOLER CONFIGURED MAGNETS

If elected GE will:

      1.    Monitor the level of cryogens within the magnet's cryostat, based on
            your cryostat meter readings.

      2.    Perform cryostat vacuum repumping at intervals OEM deems
            appropriate.

      3.    Adjust, repair, or replace, at GE's option, Covered Components and
            refill the cryostat with cryogens as necessary.

      4.    Perform magnetic field homogeneity adjustments to the extent
            required by a magnet ramping and/or Covered Component adjustment,
            repair, or replacement.

      5.    Schedule the delivery of and deliver cryogens in non-magnetic dewar
            containers to the Site (unless you exclude Cryogen Support).

      6.    Transfer cryogens from non-magnetic dewar containers to the
            Equipment's cryostat. GE will typically perform this cryogen
            transfill service between the hours of 9 PM and 6 AM. GE is not
            liable for any loss of cryogens during transfer to the cryostat, and
            GE makes no representation regarding transfer efficiency.

If elected you will:

1.    Provide all transfer fill lines and cryogens in non-magnetic dewar
      containers in the quantities, quality, and in accordance with the delivery
      schedule OEM specifies; inform GE in writing of your Designated Cryogen
      Representative for the delivery of cryogens to the Site; and authorize
      your Designated Cryogen Representative to act with your full authority to
      provide GE accurate cryostat meter readings and receive notifications from
      GE relative to cryogen quantity and delivery schedules.

2.    Provide an appropriate delivery dock and storage facility.

3.    Ensure that any cryo-cooler system of the Equipment (including those in
      vans or trailers in transit) is in operation at all times and that GE is
      immediately notified if it is not.

4.    Ensure that the water chiller system used in conjunction with the
      cryo-cooler system of the Equipment (including those in vans or trailers
      in transit) is in operation at all times and suitably maintained.

CRYOGEN COST INCREASES:

In the event that GE's cost for cryogens increases by more than 15 percent, as
measured against GE's cost as of the date of this Agreement or the cost to GE on
the date of the most recent adjustment, if any, under this paragraph, GE may
increase your Normal Fixed Charges under this Agreement in an amount equal to
such cost increase upon no less than 60 days' prior written notice to you.

MR SUPER CONDUCTING MAGNET MAINTENANCE AND CRYOGEN SUPPORT FOR CONDENSER
CONFIGURED MAGNETS (K4 TECHNOLOGY)

If elected GE will:

1.    Monitor the level of cryogens within the magnet's cryostat, based on your
      cryostat meter readings.

2.    Perform cryostat vacuum repumping at intervals OEM deems appropriate.

3.    Adjust, repair, or replace, at GE's option, Covered Components and refill
      the cryostat with cryogens as necessary.

4.    Perform magnetic field homogeneity adjustments to the extent required by a
      magnet ramping and/or Covered Component adjustment, repair, or
      replacement.

5.    Schedule the delivery of and deliver cryogens in non-magnetic dewar
      containers to the Site.

6.    Transfer cryogens from the non-magnetic dewar containers to the
      Equipment's cryostat, not to exceed one 1000-liter (four dewars) refill in
      a 3-year period, or 250 liters (one dewar) per year for Agreement terms
      less than 3 years. GE will typically perform this cryogen transfill
      service between the hours of 9 PM and 6 AM. GE is not liable for any loss
      of cryogens during transfer to the cryostat, and GE makes no
      representation regarding transfer efficiency.

If elected you will:

1.    Ensure that any cyro-cooler system of the Equipment (including those in
      vans or trailers in transit) is in operation at all times and that GE is
      immediately notified if it is not.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       16


2.   Ensure that the water chiller system used in conjunction with the
     cryo-cooler system of the Equipment (including those in vans or trailers in
     transit) is in operation at all times and suitably maintained.

3.   Provide an appropriate delivery dock and storage facility.

CRYOGEN COST INCREASES:

In the event that GE's cost for cryogens increases by more than 15 percent, as
measured against GE's cost as of the date of this Agreement or the cost to GE on
the date of the most recent adjustment, if any, under this paragraph, GE may
increase your Normal Fixed Charges under this Agreement in an amount equal to
such cost increase upon no less than 60 days' prior written notice to you.

MR SYSTEMS WITH PERMANENT MAGNETS

If magnet maintenance is elected, GE will:

Perform magnetic field homogeneity adjustments to the extent required by a
Covered Component adjustment, repair, or replacement.

TIP-TV SATELLITE TRAINING NETWORK SUBSCRIPTION

YOUR RIGHT TO USE THE BROADCASTS

You are granted during the term of this subscription a limited, non-exclusive,
non-transferable license to do the following:

Use GE's Satellite Dish and IRD's to receive and decode GE's Broadcasts.

Receive your selected Broadcasts and, when applicable, obtain one set of printed
supplementary material for the sole use and educational use of your Health Care
Employees. Certain supplementary materials on the Broadcast may be made
available to non-employees with GE's prior written consent.

Make one videotape copy of each Broadcast solely for the educational use of your
Health Care Employees and retain it for the life of the copy. You may not copy,
edit, alter, sell, rent, or part with possession of your videotape copy of the
Broadcasts.

Internally display Broadcasts through a transmission system (preferably through
a central television distribution system) located within your Site. The
Broadcasts may neither be transmitted to nor shown at other geographic locations
outside of your Site, nor shown in any public or patient areas of your Site or
to anyone other than your Health Care employees. Non-employees may view certain
Broadcasts with GE's prior written consent.

The Broadcasts are protected by the copyright laws of the United States and by
applicable international treaties. No right under copyright is transferred to
you by virtue of this subscription, except as specifically provided in this
subscription.

The rights granted to you under this subscription will not affect the exclusive
ownership by GE and/or GE's vendors of any trademarks, copyrights, patents, or
common law property rights pertaining to the Satellite System, including the
Dish and IRD, or the Broadcasts.

GE makes no representation or warranty with respect to and has no liability to
you or your employees regarding the accuracy or completeness of any information
contained in any Broadcast. GE will use reasonable efforts to make an
appropriate correction if GE determines there is an inaccuracy in any Broadcast.
GE does not promote or otherwise recommend any procedure suggested in any
Broadcast unless it is also described in a GE User Manual. Accordingly, your use
of such a procedure shall be at your sole risk. Posted schedules, program
formats, and content are subject to change at GE's discretion without prior
notice. GE and its representatives have no liability for any claim of
infringement of patents or other intellectual property rights caused by your use
of a procedure not described in a GE User Manual.

YOUR TIP-TV SUBSCRIPTION RESPONSIBILITIES:

You agree, during the term of this subscription to:

- -     Assist GE or its agents to determine the compatibility of your existing
      Satellite System or necessary, the requirements of a new Satellite System
      to receive GE Broadcasts through use of GE's satellite system;

- -     Assist GE or its agents in obtaining all federal, state and local
      variances , permits and authorizations to install and use the Satellite
      System necessary to receive GE's Broadcasts at the Site;

- -     Obtain and maintain all facilities necessary to receive GE's Broadcasts at
      the Site through the use of GE's Satellite System, including viewing room,
      television or monitor, telephone, and VCR (if desired) needed for Health
      Care Employees to participate in Broadcasts.;

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       17


- -     Designate one or more employee/s to act as a Diagnostic Imaging Broadcast
      Coordinator, an Education Coordinator, Audio-Visual Coordinator and
      Patient Education Coordinator (if applicable) for each Site receiving
      Broadcasts;

- -     Maintain GE's Satellite System in operational condition and replace any
      inoperable Satellite System that fails for reasons other than a design or
      manufacturing defect or normal wear and tear.

- -     Return GE's Satellite System to GE in operational condition and pay for
      deinstallation and freight expenses, all within 30 days after the
      effective dat of expiration of this subscription. If GE's Satellite system
      are not returned within 30 days, GE will bill you and you agree to pay a
      charge of $100 for each day of delay beyond the 30-day period

GE'S TIP SUBSCRIPTION  RESPONSIBILITIES

GE WILL PROVIDE TO YOU DURING THE TERM OF THIS SUBSCRIPTION:

Unless otherwise agreed, use of GE's Satellite System, toll-free help desk
support during normal business hours, and detailed specifications and
instructions for your installation of GE's Satellite System.

- -     Standard Installation of GE's Satellite System, at your request (you will
      be responsible for costs and any expenses due to special circumstances
      including without limitation government permitting and licensing
      requirements).

- -     Toll-free help desk support for GE's Satellite System during your
      subscription.

- -     A replacement for any Satellite System owned by GE that fails to properly
      operate solely because of a design or manufacturing defect or normal wear
      and tear.atellite dishSatellite System during your subscription.

TIP-TV TITLE AND RISK OF LOSS

GE will keep title to the Satellite System, Broadcasts, and any copies of
Broadcasts. You will preserve GE's title in these items free and clear of all
claims, encumbrances, and liens and will not transfer custody of them to a third
party without our GE's prior written consent. You may not alter any part of the
Satellite system or allow others outside the Site access to the Satellite
System. You are responsible for risk of loss or damage to the Satellite System
from the time GE delivers them to you until the time you return them, at your
expense, to GE at the end of the subscription.

You agree that GE has no liability with respect to GE's Satellite System
licensed to you except to replace it at GE's expense, in the event it fails to
operate solely because of a design or manufacturing defect or normal wear and
tear.

TIP-TV TAXES

You will not be obligated to pay any federal, state or local tax imposed upon or
measured by our net income. Any other applicable tax will be invoiced to and
payable by you, along with the Subscription Fee, unless we receive a tax
exemption certificate from you, which is acceptable to the taxing authorities.

EXCUSABLE DELAYS RELATING TO TIP-TV

We are not liable for delays in performance due to a cause beyond our reasonable
control. These causes include, without limitation, any delay of sources to
supply materials and equipment, government priorities, and labor or
transportation problems. If such a delay occurs, we may extend our performance
time by a period of time equal to the delay.

TIP-TV DISCLAIMER OF PRODUCT WARRANTIES

You agree that we will have no liability to you or your employees with respect
to our Satellite Dish or IRD licensed to you except to replace it at our
expense, after you return it to us, if it should fail to operate solely because
of a design or manufacturing defect or normal wear and tear.

Otherwise, our Satellite Dish, IRD and Broadcasts are provided AS IS. NO OTHER
WARRANTY, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, APPLIES TO ANY THING PROVIDED BY US WITH
RESPECT TO THIS SUBSCRIPTION.

THE PATIENT CHANNEL SUBSCRIPTION

The Patient Channel is a broadcast offering of GE TiP-TV, providing 24 hour per
day, 7 day per week transmission of medical programming intended for a patient
audience. Eligibility is restricted to US hospitals with patient beds. By
acceptance of a The Patient Channel subscription, you confirm that you will make
the programming available throughout your Site to all television-equipped
patient rooms as a standard channel selection, 24 hours per day, 7 days per
week. You will appoint a representative to facilitate the installation of the
equipment necessary to receive and distribute The Patient Channel programming at
your Site on a channel accessible by patients and separate from the

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       18


channel(s) you use for GE TiP-TV broadcasts for healthcare professionals.
Equipment used to upgrade the current installed satellite equipment will be
provided and installed at no additional charge to you by GE Medical Systems
and/or its contractors.

Periodically, the facility will provide opportunities for GE Medical Systems to
collect viewership data.

GE believes the information contained in The Patient Channel broadcasts is
accurate and current. However, it is intended for general informational purposes
only, is not a substitute for professional medical advice, diagnosis or
treatment, and should not be relied upon, used or characterized as information
to aid in any persons' individual healthcare diagnosis, practices or decisions.
GE shall have no liability for any persons' use of the information contained in
The Patient Channel broadcasts. GE is not liable for the accuracy of content
provided by third parties.

ICENTER(TM) SUBSCRIPTION

THE ICENTER PORTAL

The iCenter portal facilitates access to 3 types of decision support information
related to diagnostic imaging equipment: equipment management, imaging
performance, and continuing education. If indicated on Schedule A, you will
receive the following:

- -     Equipment Manager Information: Information focused on your diagnostic
      imaging Equipment's availability, maintenance history, and contract and
      billing details.

- -     Imaging Performance Information: Information designed to facilitate
      productivity enhancements, such as how and when the Equipment is being
      used, who is using it, and how its use compares to the use of similar
      equipment at your Site and other facilities.

- -     Education Manager Information: Information focused on enhancing your
      professional development and knowledge, including on-line continuing
      education and, if specified, the Show Me Video library.

The 3 types of decision support information are collectively referred to as the
"Information."

ICENTER SUBSCRIPTION

GE will provide you a subscription allowing you to access Information for the
Equipment through the iCenter web site specified by GE. You may purchase
subscriptions for additional GE diagnostic imaging systems at any time, but may
not substitute a new system for an existing piece of Equipment except on the
annual anniversary of your subscription.

During the term of your subscription, you are granted a limited, non-exclusive,
non-transferable right to search, retrieve, display, download, print and use the
Information solely at the Site for internal business use only. Access to the
Information will be controlled by user ID and password or other security process
defined by GE. You will manage password assignment and confidentiality.

Except as expressly permitted above, you will not (i) de-compile or reverse
engineer any of the associated software and other content and materials related
to the Information ("Related Materials"); (ii) sell, sub-license, distribute, or
commercially exploit the Information or the Related Materials; (iii) make the
Information or any of the Related Materials available to any third party through
any means or media; or (iv) modify, publish, transmit, participate in the
license, transfer, or sale of, reproduce, create derivative works from,
distribute, perform, display, or in any way exploit the Information or any of
the Related Materials, in whole or in part, without the prior written consent of
GE.

GE reserves the right to upgrade, modify, replace or delete portions of the
Information, web site, and Related Materials at any time during the Term.

ICENTER OWNERSHIP AND USE OF INTELLECTUAL PROPERTY RIGHTS

The Information and Related Materials are the property of GE and are protected
by copyright and other intellectual property laws of the United States and by
applicable international treaties. All rights with regard to the Information are
reserved to GE. No rights are transferred to you by virtue of this subscription
except as specifically provided in this subscription. You agree to abide by all
copyright notices, information, or restrictions.

ICENTER THIRD PARTY CONTENTS AND LINKS

GE may provide through this subscription third party content or links to third
party content. GE is not responsible for this content and may remove such
content at any time during the Term. The terms and conditions for use of such
content, including privacy policies applicable to such content, are determined
solely by the third party, and not by GE.

YOUR ADDITIONAL ICENTER RESPONSIBILITIES
YOU WILL:

Provide all assistance reasonably requested by GE or its agents to assist in
gathering data from your Equipment or other equipment or systems, and use
commercially reasonable efforts to provide accurate and complete data where any
data is provided by you.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       19


Provide and maintain a dedicated telephone line or other connection to your
Equipment as specified by GE, to allow GE to access your Equipment remotely at
all times.

Comply with the requirements of any implementation guidelines, security
procedures or other instructions provided by GE, including any requirements to
have access to any commercially available software, media player or other
technology reasonably necessary for access to or use of the Information.

Use the Information and Related Materials solely in accordance with this
Agreement and in accordance with applicable law.

Not rely on the Information or Related Materials in your preparation of any
reimbursement claim, cost report or similar reports.

Recognize that all clinical and medical diagnostic decisions are the
responsibility of your professional health care providers. The Information and
Related Materials are no substitute for their professional judgment and GE
disclaims all responsibility for your clinical and medical diagnostic
evaluations and decisions.

Not add or link to the web site any content or links that infringe the
trademark, copyright, patent or other rights of any third party.

GE'S ADDITIONAL ICENTER RESPONSIBILITIES
GE WILL:

Provide you access to and use of the Information and Related Materials during
the Term consistent with this Agreement.

Use commercially reasonable efforts to make available during your business hours
the Information and Related Materials during the Term.

Use commercially reasonable efforts to gather data contemplated this Agreement
from your Equipment and other systems.

Provide the Information and Related Materials solely in accordance with this
subscription agreement and in accordance with applicable law.

ICENTER DISCLAIMER OF WARRANTIES

NOTWITHSTANDING THE LIMITED WARRANTIES SECTION IN THE MASTER TERMS AND
CONDITIONS, GE EXPRESSLY DISCLAIMS ALL WARRANTIES AND REPRESENTATIONS OF ANY
KIND WITH RESPECT TO THE INFORMATION AND RELATED MATERIALS, WHETHER EXPRESSED OR
IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT, NON-INTERFERENCE WITH ENJOYMENT, AND
TITLE. DUE TO THE NUMBER OF SOURCES FROM WHICH INFORMATION IS OBTAINED, AND THE
INHERENT HAZARDS OF ELECTRONIC DISTRIBUTION, THERE MAY BE DELAYS, OMISSIONS, OR
INACCURACIES. THE INFORMATION AND RELATED MATERIALS COULD INCLUDE TECHNICAL OR
OTHER INACCURACIES OR TYPOGRAPHICAL ERRORS, AND MAY NOT BE AVAILABLE WITHOUT
INTERRUPTION.

ICENTER TRAINING

At your request and in conjunction with the activation of your initial
subscription, GE or its agent will provide application training for 2
individuals in the use of the Information and Related Materials (regardless of
the number of pieces of Equipment for which you have a subscription). Additional
applications training may be purchased separately and charges for such training
will be in accordance with the prevailing rates then in effect for such services

ELECTED SERVICE SUPPORT LEVELS FOR DIAGNOSTIC IMAGING EQUIPMENT (OFFERINGS)

PM ONLY

This coverage is limited to low-end general radiology systems and those systems
that have been identified as EOL. We will provide the following Service Support
for Equipment listed on the attached Schedule if elected and designated as "PM
Only" coverage:

      Planned maintenance (PM) inspections (labor only) pursuant to the
      manufacturer's specifications or as otherwise agreed.

      Inspection, calibration and verification of the operability of the
      Equipment.

      PMs will be performed from 8:00 a.m. to 5:00 p.m. Monday through Friday.

      Remedial labor for problems identified during the PM inspection (parts
      will be charged at then prevailing rates).

      The number of systems which can be placed under this coverage
      classification is limited to no more than 20% of a CompreCare contract's
      annual value

      Additional parts and labor at standard GE Hourly Billed Service rates.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       20



      No "Uptime Guarantee".

GLASSPRO

For Equipment listed on the attached Schedule and identified as "GlassPro"
Equipment, we will provide the following:

      Replacement tubes on an exchange basis for Equipment listed in the GE
      Medical Systems Support Summary at the GlassPro Exchange. You agree to pay
      the GlassPro Exchange Tube Price listed in the GE Medical Systems Support
      Summary.

     Tube Replacement Period as follows:



         Replacement Tubes            Tube Replacement Period*
- ------------------------------------  ------------------------
                                   
Mammography, Mobile, Rad, R&F               12 months

Cardiac, Angio, MX150
Applications                                 6 months

CT Max, Pace/Sytec, 9800, HLA,
Sytec SR/i. Sytec Synergy                    3 months

CT ProSpeed, HiSPeed Advantage,
HiSpeed CT/I                                 4 months

Performix Applications and all other
CT, GE and non-GE                            6 months


       Tube Replacement Period is based on the timeframe of the last purchased
       tube. When a tube fails during the Tube Replacement Period, there is no
       charge. When a tube fails after the Tube Replacement Period, a
       replacement tube is sold at the GlassPro price. A tube replaced at no
       charge does not carry a "new" warranty

During the term of this Agreement, the annual enrollment fee for systems covered
under the Glass Pro tube program is waived provided (i) this Agreement remains
in effect and LifePoint is not in default, (ii) GE is LifePoint's sole provider
for Service, including HBS services, and (iii) LifePoint obtains all of its
tubes from GE. Tube pricing under the Glass Pro program for the term of this
agreement is as follows:

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       21





SYSTEM/EQUIPMENT                               CHARGE/SYSTEM
- ---------------------------------------------  -------------
                                            
Mammo (Seno, Mammoview)                           $  7,400
Mammo (DMR)                                       $ 11,400
Mobile (Portable)                                 $  3,900
Mobile (C-Arm)                                    $ 14,700
Mobile (Other C-Arm)                              $  9,700
Rad (MX-75)                                       $  4,400
Rad/R&F (MX-100/over)                             $  5,900
R&F (MX-100/under)                                $  5,900
R&F, Angio (MX150)                                $ 35,000
Vascular Angiography, Single or Biplane (HTG)     $ 16,200
Innova 4100 & Innova 3100 (MX160)                 $ 55,000
CT Max                                            $  8,500
Pace/Sytec 2-4000                                 $ 14,800
9800 - Xenon                                      $ 13,000
9800 - HiLight                                    $ 17,500
9800 - HLA                                        $ 17,500
HiLight Advantage                                 $ 17,500
Sytec SRI/Sytec Synergy                           $ 17,500
CT/e, CT/e Dual                                   $ 17,500
ProSpeed                                          $ 20,000
HiSpeed Advantage                                 $ 20,000
HiSpeed DX/I, FX/I, LX/I                          $ 20,000
HiSpeed CT/I w/ HSA Tube                          $ 20,000
NX/I w/3.5 MHU/Solarix                            $ 20,000
NX/I w/Performix 630                              $ 20,000
HiSpeed CT/I w/Performix Tube 630                 $ 75,000
HiSpeed QX/I w/Performix ADV Tube                 $ 75,000
HiSpeed QX/I w/ Performix Ultra                   $ 75,000
LightSpeed QX/I w/ Performix ADV                  $ 75,000
All LightSpeeds w/ Performix Ultra                $ 90,000
LightSpeed RT w/ Performix Pro                    $100,000
LightSpeed Pro 16 w/ Performix Pro                $100,000
Discovery LS, ST w/ Performix Tube                $ 90,000


      Installation labor and calibration for X-Ray and CT tubes normally sold by
      us to replace failed tubes in your Equipment as listed on the Schedule.
      Installation labor and calibration will not be provided on tubes not
      obtained through the GE parts network.

      Performance of a basic Equipment inspection to verify the overall
      condition of the Equipment immediately before our installation and
      calibration service. If we determine the Equipment has a problem which has
      affected or could materially affect tube operation or usage, the problem
      must be corrected before we will install a replacement tube.

      The listed services will be provided Monday through Friday during normal
      coverage hours, excluding our observed holidays. We can provide, at your
      expense, service outside of these service hours per our then discounted
      Hourly Billed Service overtime rates for contract customers.

Tubes in GE Equipment not covered under "GlassPro" must be covered under another
type of tube agreement with GE.

EDUCATION PACKAGE

GE will provide you with the following educational services and resources for
the Term of your Agreement:

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       22



Healthcare Learning Package :

TiP-TV(TM) Satellite Training Network Subscription

Access to online CE/CME/CNE Courses via TiP On-Demand

Access to the Patient Channel (Hospital Customers Only)

Access to the GE Healthcare Learning System

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       23



                                         CUSTOMER

GE MEDICAL SYSTEMS                       LIFEPOINT HOSPITAL HOLDINGS, INC
                                         ________________________________
Approved by Thomas Ewing                   (Typed Name of Customer)
            ------------------------
             (Typed or Printed Name)

Title National Service Sale Manager      By William M. Gracey
      ------------------------------        ----------------------------------
               (Typed or Printed)           (Typed or Printed Authorized Name)

Signature /s/ Thomas Ewing               Signature /s/ William M. Gracey
          ----------------------------             ----------------------------
            (Authorized Signature)                   (Authorized Signature)

Date 1/7/05                              Title COO
                                               --------------------------------
                                              (Typed or Printed)

Prepared by __________________________   Date 1/7/05
             (Typed or Printed Name)

Title ________________________________   P.O. # (Fixed Billing) _______________
               (Typed or Printed)                   (For billing purposes only)

Date _________________________________   P.O.  #   (Variable  Billing)
                                             _______________________________
Return to (Street) ___________________        (For billing purposes only)

Return to (City, State, Zip)__________

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       24



                               GE MEDICAL SYSTEMS
                         AGENCY AUTHORIZATION AGREEMENT

LIFEPOINT HOSPITAL HOLDINGS, INC hereby designates GE Medical Systems as its
duly authorized agent to act on LIFEPOINT HOSPITAL HOLDINGS, INC behalf to
conduct the following business matters

- -     Negotiate and enter into service agreements for the equipment specified in
      the attached proposal or contract.

- -     Obtain service support, parts, parts pricing, technical information
      (including manuals, software, etc.), service histories, and time and
      material cost for the equipment specified in the attached proposal or
      contract.

- -     Obtain or develop and negotiate and enter into training agreements for the
      equipment covered by the attached proposal or contract.

This agency authorization is effective as of the date shown below and continues
in force until MARCH 31, 2008, unless previously revoked by an authorized
representative of LIFEPOINT HOSPITAL HOLDINGS, INC in writing.

                           CUSTOMER NAME AND ADDRESS:

                        LIFEPOINT HOSPITAL HOLDINGS, INC

By:

/s/ William M. Gracey
- --------------------------
(Authorized Signature)
__________________________

Name:

William M. Gracey
- --------------------------
(Typed or Printed)
__________________________

Title: COO
       -------------------

Date: 1/7/05

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       25



SECTION III

COMPRECARE GLOSSARY

"ACCESSORIES DISCOUNT" means the discount (if any) for orders of GE accessories,
as specified in the applicable Schedule.

"ANNUAL ALLOWANCE AMOUNT" means the maximum amount of charges that may be
accrued for Replacement Parts during a specified twelve-month period of this
Agreement, as specified on Schedule.

"ANNUAL UPGRADE PROGRAM" means, for the LOGIQ 700 Expert Series, GE Ultrasound's
LOGIQ 700 Expert Series Annual Breakthrough Program.

"ADVANCED SERVICE DOCUMENTATION" means GE's proprietary and copyrighted service
documentation which embodies advanced information developed by or provided to GE
for the installation, maintenance, repair or deinstallation of the Equipment as
well as any upgrades or revisions of this material, which bear a yellow cover or
label or incorporate or display a notice that states substantially the
following:
                         "ADVANCED SERVICE DOCUMENTATION
                                 PROPERTY OF GE.
USE OF THESE MATERIALS LIMITED TO AGENTS AND EMPLOYEES OF GE MEDICAL SYSTEMS OR
 OTHER PARTIES EXPRESSLY LICENSED BY GE UNLICENSED USE IS STRICTLY PROHIBITED"

"ADVANCED SERVICE PACKAGE" means Advanced Service Documentation, Advanced
Service Software and Advanced Service Tools identified in this License.

"ADVANCED SERVICE SOFTWARE" means GE's proprietary and copyrighted advanced
service Software described above which was developed by or provided to GE for
the installation, maintenance, repair or de-installation of the Equipment as
well as any upgrades or revisions of this material, which bear a yellow cover or
label or incorporate or display a notice that states substantially the
following:

                           "ADVANCED SERVICE SOFTWARE
                                 PROPERTY OF GE.
                    USE OF THESE MATERIALS LIMITED TO AGENTS
  AND EMPLOYEES OF GE MEDICAL SYSTEMS OR OTHER PARTIES EXPRESSLY LICENSED BY GE
                     UNLICENSED USE IS STRICTLY PROHIBITED"

"ADVANCED SERVICE TOOLS" means GE's proprietary, tangible advanced service
instruments or instrument combinations which have been developed by or provided
to GE for the installation, maintenance, repair or de-installation of the
Equipment as well as any upgrades or revisions of this material, which either
bear or are maintained in a container which bears a yellow label or a notice
that states substantially the following:

                             "ADVANCED SERVICE TOOL
                                 PROPERTY OF GE.
                    USE OF THESE MATERIALS LIMITED TO AGENTS
  AND EMPLOYEES OF GE MEDICAL SYSTEMS OR OTHER PARTIES EXPRESSLY LICENSED BY GE
                     UNLICENSED USE IS STRICTLY PROHIBITED"

"ADVANCED SERVICE TRAINING" means training GE may make available to your Service
Employees which relates to their use of the Advanced Service Package in
repairing and maintaining the Equipment, as further provided herein.

"BLOCK OF OVERTIME ("OT") HOURS" means labor and travel hours pre-purchased at a
discounted rate to be used in the specified contract year for Support incurred
outside of Coverage Hours. Unused OT Hours expire at the end of the contract
year for which they were purchased.

"BLOCK OF HOURS" means the number of prepaid on-site Support hours (including
both labor and travel) selected by you on Schedule to be used during the
contract year and covering the equipment specified on Schedule. Unused hours
expire at the end of the contract year for which they were purchased.

"BROADCAST" means a program provided via TiP-TV, GE's fee-based subscription
satellite TV service that provides continuing education for healthcare
professions. Programs include those provided on TiP Focus on Healthcare, TiP
Diagnostic Imaging, The Health Channel and The Patient Channel, along with any
supplementary materials.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       26



"BROADCAST COORDINATOR" means the person designated by you in this Subscription
to be the ongoing liaison with our staff during the Term of this Subscription.
This person will be responsible for coordinating Education, Training and
Business Programs viewership, videotaping, returning necessary Site information,
and performing other duties we reasonably deem to be necessary with respect to
this Subscription.

"CANNOT LOCATE EQUIPMENT" means GE's field engineer is unable to service the
equipment because you or your representative are unable to locate the equipment
scheduled for service.

"CE/CME/CNE COURSES" means the world-wide-web accessible accredited continuous
education, continuous medical education and continuous nursing education courses
listed in GE's on-line course catalog. You may complete up to 500 courses in
each contract year.

"COMMON LEGAL CONTROL" in reference to two or more legal persons, means that one
such person, whether directly or indirectly, (i) has control of the other
person, (ii) is controlled by the other person, or (iii) is, together with the
other person, under common control of another person.

"COMPLIANCE SOLUTIONS" means a collection of video training materials designed
by GE, in partnership with Medical Consultants Network Inc. (MCN), to assist
your staff in complying with regulatory requirements. Compliance Solutions
materials are made available through CD-ROM, videotape and/or TiP-TV satellite
broadcasts, supplemented by automatic e-mail notification of regulatory changes
and internet access to an archived library of implementation tools. All
materials in Compliance Solutions are for your internal use only. Videotape
copying, CD replication and commercial reuse for sale of any materials are not
permitted. GE believes the information contained in Compliance Solutions is
accurate and current. Although the Compliance Solutions is based on published
standards of the federal regulatory agencies, the content contains
recommendations and suggestions for compliance with these agencies. All policies
and procedures, worksheets and forms should be made specific to the individual
healthcare facility. The Compliance Solutions is not a substitute for legal
advice nor is it designed to meet any state or local regulations. Neither GE nor
MCN shall have liability for any persons' use of the information contained in
Compliance Solutions. Courses for Compliance Solutions may be approved for CE
credit (nursing and/or radiological technologist), with course accreditation
identified in the Order Form.

"CORRECTIVE SERVICE" means labor to provide repair service on Covered Components
of the Equipment.

"COVERAGE HOURS" means the specific hours and days GE will provide Support under
the Agreement. Coverage Hours are local time (continental U.S.), and exclude
holidays recognized by GE.

"COVERED COMPONENTS" means components of the Equipment for which Support is
provided under an agreement. Subject to exclusions listed in the Agreement,
"Covered Components" are:

      FOR MR SYSTEMS WITH SUPER CONDUCTING MAGNETS: All MR system components
      except the MR magnet, cryostat, coldhead, cyro-cooler compressor, shim
      coils, cryogens, non-GE supplied water chillers, and non-GE coils.

      FOR MR SYSTEMS WITH PERMANENT MAGNETS: All MR system components, including
      GE coils, the MR magnet and its related components.

      FOR MR SUPER CONDUCTING MAGNETS WITH MAGNET MAINTENANCE AND CRYOGEN
      COVERAGE: MR Magnet, cryostat, coldhead, cryo-cooler compressor, shim
      coils, GE coils, cryogens, GE supplied water chillers.

      FOR CT SYSTEMS: All CT system components except tubes. Pick-up tubes are
      considered to be a system component, not a tube. Tubes are included only
      when coverage is purchased and noted on the Schedule.

      FOR X-RAY SYSTEMS: All X-Ray system components except tubes and image
      intensifiers. Pick-up tubes are considered to be a system component, not a
      tube. Digital Detectors are covered under the Quantacare and In-House
      Complete programs. Tubes and Image Intensifiers are included only when
      coverage is purchased and noted on the Schedule.

      FOR NUCLEAR SYSTEMS: All Nuclear system components including tables and
      crystals.

      FOR PET SYSTEMS: All PET system components. Transmission Pin Sources are
      included only when coverage is purchased and noted on the Schedule.

      FOR ULTRASOUND SYSTEMS: All ultrasound system components, including any
      transducers and peripherals specifically identified on the Schedule.

      FOR NETWORK SYSTEM: All network system components specifically identified
      on the Schedule.

"EDUCATION COORDINATOR" means the person designated by you in this Subscription
to disseminate information about Education, Training and Business programs for
Staff and Patients.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       27



"EDUCATION TRACKING SYSTEM" means GE's internet-accessible Education Tracking
and Training Management System providing online (i) TiP-TV CE and Radiology
Fundamental eLearning Course testing and results tracking and (ii) access to the
Show Me Library.

"EQUIPMENT" means the hardware and all additions, modifications, substitutions,
and replacements identified in the Schedule(s), but does not include the
Advanced Service Package, the InSite Package, or any parts of those packages.

"EQUIPMENT OPERATION MANUAL" means the operation manual and related materials
delivered by the manufacturer with the Equipment.

"FE COVERAGE WEEKDAYS" MEANS the Coverage Hours on weekdays (except GE Holidays)
during which onsite labor for Corrective Service is included under the
Agreement. Corrective Service provided outside Coverage Hours on weekdays is
billed at standard contract overtime rates or may be charged against a Block of
OT Hours (if applicable).

"FE COVERAGE WEEKENDS AND HOLIDAYS" means the Coverage Hours on weekends and GE
holidays during which onsite labor for Corrective Service is included under the
Agreement. Corrective Service provided outside of Coverage Hours on weekends and
holidays is billed at standard applicable contract overtime rates or may be
charged against a Block of OT Hours (if applicable).

"FE ONSITE RESPONSE" means the typical response time during Coverage Hours from
your initial call for Corrective Service to FE arrival at the Site to begin
servicing the Equipment. If you request faster response, GE will charge an
expediting fee.

"HEALTHCARE EDUCATION LEARNING PACKAGE" means GE's internet-accessible education
tracking and management system providing online course access, testing,
recording, results tracking and printing. This includes access to Tip-TV, TiP-TV
OnDemand (web version), The Patient Channel (U.S. hospitals only) and the
healthcare learning system for on line course registration, testing, and
certificates

"HEALTH CARE EMPLOYEE" means any person employed by you at the Site whose
primary responsibility is to provide health care directly to human beings.

"HEALTH CARE PROVIDER" means an entity that directly uses the Equipment to
provide health care to human beings.

"ILINQ" means a communication tool that resides on the Equipment operator
console. This tool provides the following features: (i) Contact GE, which
provides a direct link to GE via an interface on the operator console for you to
request Support and for GE to respond; (ii) Messaging, which provides a status
report and historic log of your Contact GE requests and allows GE to send
information to your operator console; and (iii) The Applications Wizard, which
provides the capability to search the GE database for applications information
and guidance related to the Equipment.

"INFORMATION SUPPLIERS" means entities that have licensed the information and
content which forms part of the Information.

"IN-HOUSE CHOICE BASE OFFERING" means that suite of Support offerings specified
as the In-House Choice Base Offering on a Schedule.

"IN-HOUSE ENGINEER TELEPHONE SUPPORT LINE" means the telephone number given to
In-House Choice customers for support.

"INSITE" means GE's proprietary remote OnLine Center call support or dial-up
remote diagnostic troubleshooting capability available on certain Equipment
models.

"INSITE COVERAGE HOURS" means the hours and days you select for InSite coverage.
InSite Support provided outside Insite Coverage Hours will be billed at
applicable contract overtime rates.

"INSITE RESPONSE TIME" means the typical response time from your initial call to
phone response by a GE engineer located at the OnLine Center to begin servicing
your call. If you request faster response, GE will charge an expediting fee.

"INSTALLATION COORDINATOR" means the person designated by you in this
Subscription to facilitate a Satellite System installation, including the
obtaining of all necessary permits, licenses, and other approvals. This person
must work with our staff to complete a signal test and provide Site information
requested by us.

"IRD" means an integrated receiver decoder that will be licensed by us to you
under this Subscription and used to decode our Education, Training and Business
Programs.

"LEARNING SOLUTIONS ONLINE" means a web-based continuing education resource for
Healthcare professionals

"MAGNET MONITORING" means proactive monitoring of the magnet using remote
diagnostic capability. You will receive alerts when certain pre-defined magnet
thresholds are exceeded.

"MASTER TERMS AND CONDITIONS" means the Master Terms and Conditions, signed by
you and GE.

"MODALITY" means the specific equipment group (e.g., MR, ultrasound, etc.) into
which the Equipment is categorized.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       28



"MULTI-VENDOR ELECTRONIC PERFORMANCE SUPPORT TOOLS" means GE's proprietary,
CD-based, functional documentation support tools which have been developed by or
provided to GE for the installation, maintenance, repair or de-installation of
the Multi-Vendor [Equipment not manufactured by GE] diagnostic Equipment as well
as any upgrades or revisions of this material, which either bear or are
maintained in a container which bears a [red/yellow] label or a notice that
states substantially the following:

                "MULTI-VENDOR ELECTRONIC PERFORMANCE SUPPORT TOOL
                                 PROPERTY OF GE
                    USE OF THESE MATERIALS LIMITED TO AGENTS
  AND EMPLOYEES OF GE MEDICAL SYSTEMS OR OTHER PARTIES EXPRESSLY LICENSED BY GE
                     UNLICENSED USE IS STRICTLY PROHIBITED"

"MULTI-VENDOR TRAINING" means training GE may make available to your Service
Employees which relates to their use of the Multi-Vendor Electronic Performance
Support Tools in repairing and maintaining the Equipment, as further provided
herein.

"NORMAL FIXED CHARGES" means the amount of the periodic payments for Support, as
specified in the Agreement. They do not include additional charges for services
or other items not covered by the Agreement but requested by you or any variable
charges.

"ONLINE CENTER" means GE's central facility from which Support is provided.

"ORIGINAL EQUIPMENT MANUFACTURER" or "OEM" means the original equipment
manufacturer of any non-GE equipment, software or parts included in the
definition of Equipment.

"PARTS DELIVERY TIME" means the typical time from the part order to delivery of
the part to the Site. If you request faster delivery, GE will charge an
expediting fee.

"PARTS ON-SITE COVERAGE" shall mean that coverage offering described in these
Additional Terms and Conditions under the heading "Parts On-Site Offering."

"PAYMENT PERIOD" means the payment periods for Normal Fixed Charges specified in
the Support Summary.

"PLANNED MAINTENANCE INSPECTION ("PM")" means an inspection of the Equipment
performed at a mutually agreeable time during the Coverage Hours in accordance
with OEM's Equipment specifications at recommended intervals.

"PM WEEKDAY EXECUTION" means Coverage Hours agreed to between you and GE during
which PMs will be performed on weekdays (not including GE holidays).

"PM WEEKEND AND HOLIDAY EXECUTION" means Coverage Hours agreed to between you
and GE during which PMs will be performed on weekends and holidays.

"REPLACEMENT PARTS" means replacement parts required to repair or maintain
Equipment. Replacement Parts may be provided on a new or exchange (refurbished)
basis. Functionally equivalent used parts may also be used when necessary to
maintain the operation of the Equipment. Parts that are replaced become GE
property and are removed from the Site. Replacement parts do not include tubes
and Ultrasound transducers.

"SATELLITE DISH" includes fiberglass compressed metal satellite receive-only
dish reflector, non-penetrating roof mount, single polarity feed horn adapter,
feed horn cover, single pole digital Ku-band LNB (low noise block) and roof
padding for roof mount that will be licensed by us to you under this
Subscription for you to receive our Education, Training and Business Programs.
The Satellite Dish will be installed at the premises of the subscribing facility
at our expense excluding extraordinarys.

"SATELLITE SYSTEM" means a the Satellite Dish, IRD, and channel filters if
required.

"SERVICE AGENT" means a person retained by you to maintain and repair the
Equipment who is not a Service Employee.

"SERVICE EMPLOYEE" means a full-time employee of you or of an entity under
Common Legal Control with you who is employed and paid by you or by an entity
under Common Legal Control with you to maintain and repair the Equipment, has
the ability and knowledge to maintain and repair the Equipment, and is managed
and supervised by other full time employees of you or full-time employees of an
entity under Common Legal Control. "Service Employee" does not include part-time
employees, employees paid by persons or entities other than those described
above, or persons employed by others including those placed on your payroll or
the payroll of an entity under Common Legal Control with you for the purpose of
obtaining access to the Licensed Materials or admission to GE Advanced Service
Training.

"SITE" means the specific geographic location where the Equipment is located for
patient care.

"SITE MANAGER" means the site manager designated by you pursuant to Section 4.5
of the Master Terms and Conditions.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       29



"SOFTWARE" means a computer program or compilation of data that is fixed in any
tangible medium of expression or any storage medium from which the program may
be perceived, reproduced or otherwise communicated, either directly or with the
aid of a machine or device.

"STANDARD INSTALLATION" means the placing of a TiP-TV satellite receiver/decoder
and 1.2 meter satellite dish at your site and consists of a site survey,
installation of the dish and non-penetrating roof mount, peak of dish on GE-3
satellite, up to 200-foot run of RG-11 plenum cable to IRD, and testing and
authorization of the satellite system.

"SUBSCRIPTION FEE" means the monetary amount which is payable by you to us, as
specified in this Subscription, for your license of our IRD and your right to
receive our Education, Training and Business Programs in accordance with this
Subscription.

"SUPPORT" means maintenance, repair, productivity, and other services, as well
as software, hardware, and other items, described on the Support Summary and
Schedule.

"SUPPORT SUMMARY" means the document entitled "Support Summary" included with
these Additional Terms and Conditions.

"THE PATIENT CHANNEL (TM)" means GE's TiP-TV 24-hour-per-day, 7-day-per-week
broadcast offering of medical programming intended for a patient audience. You
agree to make the programming available throughout your Site to all
television-equipped patient rooms as a standard channel selection, 24 hours per
day, 7 days per week and to appoint a representative to facilitate the
installation of the equipment necessary to receive and distribute The Patient
Channel programming at your Site on a channel accessible by patients and
separate from the channel(s) you use for GE TiP-TV broadcasts for healthcare
professionals. GE will provide the Equipment needed to upgrade the your standard
current TiP-TV satellite equipment installation at no additional charge.

"TIP ANSWER LINE" means your access to an 800 number staffed by applications
specialists for non-emergency GE clinical applications assistance.

"TIP-TV" means GE's TiP-TV satellite broadcast offering of medical programming
intended for healthcare professionals, including Focus on Healthcare and
Diagnostic Imaging programming.

"TIP-TV (TM) ONDEMAND" means the TiP-TV content made available by GE in
streaming audio and/or video forms. TiP-TV OnDemand content may also include
slides, handouts, and text transcriptions, is time-coded and searchable, and
includes note-taking and bookmarking abilities.

"TIP ONSITE APPLICATIONS" means dedicated applications training provided by GE's
applications specialist at the Site. Training content may be customized by you.

"TOTAL NORMAL FIXED CHARGES" means the total fixed amount to be paid under an
Agreement for Support. It does not include additional charges for services and
other items not covered by the Agreement but requested by you or any variable
charges.

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       30



                         SECTION IV : SUPPORT SUMMARIES

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       31



GE MEDICAL SYSTEMS DIAGNOSTIC IMAGING SUPPORT SUMMARY

GE MEDICAL SYSTEMS COMPRECARE AGREEMENT #____

This Support Summary is attached to and made a part of the GE Medical Systems
CompreCare Agreement identified above, and sets forth specific terms and
conditions in addition to those in the Agreement.

CUSTOMER NAME

NAME: LIFEPOINT HOSPITAL HOLDINGS, INC  ADDRESS:    CITY:    STATE:    ZIP

FED ID or SS#______

SITE  INFORMATION (if different from above)


FIXED SITE      SITE          STREET          CITY           STATE          ZIP
                NAME

               VEHICLE DESCRIPTION AND GEOGRAPHIC OPERATING AREA

MOBILE SITE

TERM AND PERIODIC CHARGE

The Support and prices quoted below are valid provided the customer signs and
return this quote to GE Medical Systems by .

TERM

The Term of this Support Summary will commence on OCTOBER 1, 2004, and will
expire on MARCH 31, 2008.

PERIODIC CHARGE

The Total Normal Fixed Charge is $24,978,792, plus applicable taxes. Your annual
charge is $ 8,326,264, plus applicable taxes. The total charge is payable in 42
periodic installment(s) as follows: Months 1-6 @ $717,992 and months 7-42
@ $574,190.

The first installment will be due when the term begins. One installment will be
due on the same day of each consecutive payment period until the total charge
and all applicable taxes are paid in full. We will invoice you for payment of
each installment and all applicable taxes.

EQUIPMENT COVERAGE

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       32



See attached Schedule (s) to this Support Summary for the description of the
Equipment, Service Support coverages and hours, and periodic charges applicable
to this Support Summary.

SERVICE OPTIONS (SELECT ALL THAT APPLY)

      [X]   Diagnostic Imaging Service

      [X]   Diagnostic Imaging Service Options (X-Ray Tubes, Image Intensifiers,
            and Ultrasound Transducers/Probes, etc.) as detailed on attached
            Exhibits to this Support Summary.

      [X]   TiP-TV Broadcast Subscription COMPLETED CONTACT INFORMATION FORM
            MUST BE FORWARDED TO TIPTV

      [X]   Compliance Solutions COMPLETED CONTACT INFORMATION FORM MUST BE
            FORWARDED TO TIPTV

      [X]   Healthcare Learning Package COMPLETED CONTACT INFORMATION FORM MUST
            BE FORWARDED TO TIPTV

      [ ]   Other:____

GE MEDICAL SYSTEMS                       CUSTOMER NAME

Prepared by Thomas Ewing                    LIFEPOINT HOSPITAL HOLDINGS, INC
            ______________________          ________________________________
            (Typed or Printed)              (Name of Customer)

Title       National Service Sales        By /s/ William M. Gracey
             Manager - HPG                   -------------------------------
                                             (Authorized Signature)

Approved
by        /s/ Thomas Ewing                Name  William M. Gracey
          ------------------------              ----------------------------
                                                (Typed or Printed)

Title     National Service Sales Manager  Title  COO
          ------------------------------         ---------------------------

Date      1/7/05                          Date   1/7/05

GE MEDICAL SYSTEMS BIOMEDICAL SUPPORT SUMMARY

GE MEDICAL SYSTEMS COMPRECARE AGREEMENT # __________

This Support Summary is attached to and made a part of the GE Medical Systems
CompreCare Agreement identified above, and sets forth specific terms and
conditions in addition to those in the Agreement.

CUSTOMER NAME

NAME: LIFEPOINT HOSPITAL HOLDINGS, INC    ADDRESS:  CITY   STATE:____ ZIP:_____
FED ID or SS# ____

SITE INFORMATION (if different from above)


     FIXED SITE           SITE        STREET        CITY        STATE        ZIP
                          NAME

                          VEHICLE DESCRIPTION AND GEOGRAPHIC OPERATING AREA

MOBILE SITE

TERM AND PERIODIC CHARGE

The Support and prices quoted below are valid provided the customer signs and
return this quote to GE Medical Systems by .

TERM

The Term of this Support Summary will commence on OCTOBER 1, 2004, and will
expire on MARCH 31, 2008.

PERIODIC CHARGE

The Total Normal Fixed Charge is $11,425,659, plus applicable taxes. Your annual
charge is $3,264,474, plus applicable taxes. The total charge is payable in 42
periodic installment(s) of $ 272,040.

Submitted to Customer: ____mo/____ day/ _______year. GEMS Initials _____________

The first installment will be due when the term begins. One installment will be
due on the same day of each consecutive payment period until the total charge
and all applicable taxes are paid in full. We will invoice you for payment of
each installment and all applicable taxes.

EQUIPMENT COVERAGE

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       33



See attached Schedule(s) to this Support Summary for the description of the
Equipment, Service Support coverage and hours, and periodic charges applicable
to this Support Summary.

SERVICE OPTIONS (SELECT ALL THAT APPLY)


[X] Biomedical Full Service        [ ] Biomedical  Preventative
     with Parts                        Maintenance with Parts
    (Monday - Friday, 8:00 a.m.       (Monday - Friday, 8:00 a.m.
     - 4:30 p.m.)                      - 4:30 p.m.)

[ ] Biomedical Service Estimate    [ ] Other:_____________
    ($_______________)

    Biomedical Inventory Fee,
    if applicable ($____________)

GE MEDICAL SYSTEMS                       CUSTOMER NAME

Prepared by Thomas Ewing                     LIFEPOINT HOSPITAL HOLDINGS, INC
            ___________________________      ________________________________
             (Typed or Printed)              (Name of Customer)

Title       National Service Sales        By /s/ William M. Gracey
              Manager - HPG                  -------------------------------
                                              (Authorized Signature)

Approved
by          /s/ Thomas Ewing              Name  William M. Gracey
            ---------------------------         -----------------------------
                                                  (Typed or Printed)

Title      ____________________________   Title COO
                                                -----------------------------

Date      1/7/05                           Date  1/7/05


CONTACT INFORMATION FOR LEARNING SOLUTIONS EDUCATION PRODUCTS

EDUCATION COORDINATOR

THIS PERSON WILL BE THE CONTACT AT THE CUSTOMER SITE FOR FULFILLMENT OF ALL
EDUCATIONAL PRODUCTS OUTLINED IN THIS CONTRACT. FULFILLMENT OF THESE EDUCATIONAL
PRODUCTS WILL NOT COMMENCE UNLESS THIS INFORMATION IS COMPLETE.

Contact Name ___________________________________________________________________

Title __________________________________________________________________________

Facility _______________________________________________________________________

Street Address (no P.O. Boxes please) __________________________________________

Department _____________________________________________________________________

Telephone #_____________________________FAX # __________________________________

Email Address (If available) ___________________________________________________

                          COMPLIANCE SOLUTIONS OPTIONS

PLEASE CHECK THE CUSTOMER'S DELIVERY PREFERENCE. IF THIS INFORMATION IS NOT
CHECKED THE CUSTOMER WILL RECEIVE THE VIDEOTAPE AND SATELLITE BROADCAST OPTION

      [ ]   Videotape and Satellite Broadcast

      [ ]   CD-ROM and Satellite Broadcast

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       34



                             GE CONTACT INFORMATION

THIS INFORMATION WILL BE HELPFUL FOR QUESTIONS RELATED TO THIS CONTRACT.

Contact Name ___________________________________________________________________

Title __________________________________________________________________________

Telephone # ____________________________FAX # __________________________________

Email Address (If available) ___________________________________________________

GE REPRESENTATIVE - PLEASE FAX COMPLETED FORM IMMEDIATELY TO: ATTN: TIPTV, FAX #
262-574-8789

GE PROPRIETARY INFORMATION
REVISED 10/2004

                                       35

EX-21.1

                                                                               .
                                                                               .
                                                                               .
                                                                    Exhibit 21.1



                                                                       State of
                                                                    Incorporation or
         Name of Entity                                               Organization
         --------------                                               ------------
                                                                 
America Group Offices, LLC                                              Delaware
America Management Companies, LLC                                       Delaware
AMG - Crockett, LLC                                                     Delaware
AMG - Hilcrest, LLC                                                     Delaware
AMG - Hillside, LLC                                                     Delaware
AMG - Livingston, LLC                                                   Delaware
AMG - Logan, LLC                                                        Delaware
AMG - Southern Tennessee, LLC                                           Delaware
AMG - Trinity, LLC                                                      Delaware
Ashley Valley Medical Center, LLC                                       Delaware
Ashley Valley Physician Practice, LLC                                   Delaware
Athens Physician Practice, LLC                                          Delaware
Athens Regional Medical Center, LLC                                     Delaware
Barrow Medical Center, LLC                                              Delaware
Bartow General Partner, LLC                                             Delaware
Bartow Healthcare System Ltd.                                           Florida
Bartow Memorial Limited Partner, LLC                                    Delaware
Bourbon Community Hospital, LLC                                         Delaware
Bourbon Physician Practice, LLC                                         Delaware
Buffalo Trace Radiation Oncology Associates, LLC                        Kentucky
Castleview Hospital, LLC                                                Delaware
Castleview Medical, LLC                                                 Delaware
Castleview Physician Practice, LLC                                      Delaware
Community Hospital of Andalusia, Inc.                                   Alabama
Community Medical, LLC                                                  Delaware
Crockett Hospital, LLC                                                  Delaware
Crockett PHO, LLC                                                       Delaware
Danville Regional Medical Center, LLC                                   Delaware
Dodge City Healthcare Group, LP                                         Kansas
Dodge City Healthcare Partner, Inc.                                     Kansas
Georgetown Community Hospital, LLC                                      Delaware
Georgetown Rehabilitation, LLC                                          Delaware
Guyan Valley Hospital, LLC                                              Delaware
Halstead Hospital, LLC                                                  Delaware
HCK Logan Memorial, LLC                                                 Delaware
HDP Andalusia, LLC                                                      Delaware
HDP Georgetown, LLC                                                     Delaware
Hillside Hospital, LLC                                                  Delaware
HST Physician Practice, LLC                                             Delaware
HTI Georgetown, LLC                                                     Delaware
HTI PineLake, LLC                                                       Delaware
Integrated Physician Services, LLC                                      Delaware
Kansas Healthcare Management Company, Inc.                              Kansas
Kansas Healthcare Management Services, LLC                              Kansas
Kentucky Hospital, LLC                                                  Delaware
Kentucky Medserv, LLC                                                   Delaware





                                                                     
Kentucky MSO, LLC                                                       Delaware
Kentucky Physician Services, Inc.                                       Kentucky
Lake Cumberland Regional Hospital, LLC                                  Delaware
Lake Cumberland Regional Physician Hospital Organization, LLC           Delaware
Lake Cumberland Surgery Center, LP (57%)                                Delaware
Lakeland Community Hospital, LLC                                        Delaware
Lakeland Physician Practices, LLC                                       Delaware
Lamar Surgery Center, LP (90%)                                          Delaware
Lander Valley Medical Center, LLC                                       Delaware
Lander Valley Physician Practices, LLC                                  Delaware
LHSC, LLC                                                               Delaware
LifePoint Asset Management Company, Inc.                                Delaware
LifePoint Corporate Services, General Partnership                       Delaware
LifePoint CSGP, LLC                                                     Delaware
LifePoint CSLP, LLC                                                     Delaware
LifePoint Holdings 2, LLC                                               Delaware
LifePoint Holdings 3, Inc.                                              Delaware
LifePoint Hospitals Holdings, Inc.                                      Delaware
LifePoint Medical Group - Hillside, Inc.                                Tennessee
LifePoint of GAGP, LLC                                                  Delaware
LifePoint of Georgia, Limited Partnership                               Delaware
LifePoint of Kentucky, LLC                                              Delaware
LifePoint of Lake Cumberland, LLC                                       Delaware
LifePoint RC, Inc.                                                      Delaware
Livingston Regional Hospital, LLC                                       Delaware
Logan General Hospital, LLC                                             Delaware
Logan Healthcare Partner, LLC                                           Delaware
Logan Medical, LLC                                                      Delaware
Logan Memorial Hospital, LLC                                            Delaware
Logan Physician Practice, LLC                                           Delaware
Meadowview Physician Practice, LLC                                      Delaware
Meadowview Regional Medical Center, LLC                                 Delaware
Meadowview Rights, LLC                                                  Delaware
Northwest Medical Center- Winfield, LLC                                 Delaware
NWMC-Winfield Physician Practices, LLC                                  Delaware
PineLake Physician Practice, LLC                                        Delaware
PineLake Regional Hospital, LLC                                         Delaware
Poitras Practice, LLC                                                   Delaware
Putnam Ambulatory Surgery Center, LLC                                   Delaware
Putnam Community Medical Center, LLC                                    Delaware
R. Kendall Brown Practice, LLC                                          Delaware
River Parishes Holdings, LLC                                            Delaware
River Parishes Hospital, LLC                                            Delaware
River Parishes Physician Practice, LLC                                  Delaware
Riverton Memorial Hospital, LLC                                         Delaware
Riverton Physician Practices, LLC                                       Delaware
Riverview Medical Center, LLC                                           Delaware
Russellville Hospital, LLC                                              Delaware
Russellville Physician Practices, LLC                                   Delaware
Select Healthcare, LLC                                                  Delaware
Siletchnik Practice, LLC                                                Delaware
Smith County Memorial Hospital, LLC                                     Delaware
Somerset Surgery Partner, LLC                                           Delaware






                                                                     
Southern Tennessee EMS, LLC                                             Delaware
Southern Tennessee Medical Center, LLC                                  Delaware
Southern Tennessee PHO, LLC                                             Delaware
Spring View Hospital, LLC                                               Delaware
Springhill Medical Center, LLC                                          Delaware
Springhill MOB, LLC                                                     Delaware
Springhill Physician Practice, LLC                                      Delaware
Springhill Physician Practice, LLC                                      Delaware
The MRI Center of Northwest Alabama, LLC                                Delaware
THM Physician Practice, LLC                                             Delaware
Ville Platte Medical Center, LLC                                        Delaware
West Virginia Physician Practice, LLC                                   Delaware
Western Plains Regional Hospital, LLC                                   Delaware
Williamson Memorial Hospital, LLC                                       Delaware
Woodford Hospital, LLC                                                  Delaware
Wyoming Holdings, LLC                                                   Delaware
Wythe County Community Hospital, LLC                                    Delaware




ACQUISITION SUBSIDIARIES:
Lakers Holding Corp.                                                    Delaware
Lakers Acquisition Corp.                                                Delaware
Pacers Acquisition Corp.                                                Delaware

EX-23.1

                                                                    EXHIBIT 23.1

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration
Statements:

      (i)   Form S-8 No. 333-78221 pertaining to the LifePoint Hospitals, Inc.
            Retirement Plan;

      (ii)  Form S-8 No. 333-78187 pertaining to the LifePoint Hospitals, Inc.
            1998 Long-Term Incentive Plan;

      (iii) Form S-8 No. 333-78185 pertaining to the LifePoint Hospitals, Inc.
            Management Stock Purchase Plan and LifePoint Hospitals, Inc. Outside
            Director's Stock and Incentive Plan;

      (iv)  Form S-3 No. 333-42634 pertaining to 340,000 shares of LifePoint
            Hospitals, Inc. common stock issuable upon exercise of options;

      (v)   Form S-8 No. 333-63140 pertaining to the LifePoint Hospitals, Inc.
            1998 Long-Term Incentive Plan, as amended;

      (vi)  Form S-8 No. 333-66378 pertaining to the LifePoint Hospitals, Inc.
            Executive Stock Purchase Plan;

      (vii) Form S-8 No. 333-91732 pertaining to the LifePoint Hospitals, Inc.
            Employee Stock Purchase Plan;

     (viii) Form S-3 No. 333-90536 pertaining to the LifePoint Hospitals, Inc.
            4 1/2% Convertible Subordinated Notes due 2009, as amended;

      (ix)  Form S-3 No. 333-55824 pertaining to LifePoint Hospitals, Inc.'s
            secondary offering of common stock, as amended;

      (x)   Form S-8 No. 333-105775 pertaining to the LifePoint Hospitals, Inc.
            1998 Long-Term Incentive Plan, as amended, and the LifePoint
            Hospitals, Inc. Employee Stock Purchase Plan, as amended; and

      (xi)  Form S-4 No. 333-119929 and related joint proxy statement/prospectus
            of Lakers Holding Corp. related to LifePoint Hospitals, Inc.'s
            Merger with Province Healthcare Company;

of our reports dated February 23, 2005, with respect to the consolidated
financial statements of LifePoint Hospitals, Inc.; LifePoint Hospitals, Inc.
management's assessment of the effectiveness of internal control over financial
reporting; and the effectiveness of internal control over financial reporting of
LifePoint Hospitals, Inc., included in this Annual Report (Form 10-K) for the
year ended December 31, 2004.

/s/ Ernst & Young LLP

Nashville, Tennessee
February 23, 2005

EX-31.1

                                                                    EXHIBIT 31.1
                            LIFEPOINT HOSPITALS, INC.

                                  CERTIFICATION

I, Kenneth C. Donahey, certify that:

      1. I have reviewed this annual report on Form 10-K 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)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;

            c) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report, based on such evaluation; and

            d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's fourth
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: February 28, 2005
                                /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 annual report on Form 10-K 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)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;

            c) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report, based on such evaluation; and

            d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's fourth
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: February 28, 2005
                                /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 Annual Report of LifePoint Hospitals, Inc. (the
"Company") on Form 10-K for the year ended December 31, 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: February 28, 2005
                                /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 Annual Report of LifePoint Hospitals, Inc. (the
"Company") on Form 10-K for the year ended December 31, 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: February 28, 2005
                                /s/  Michael J. Culotta
                                -----------------------
                                Michael J. Culotta
                                Chief Financial Officer