Leases

12 Months Ended

Dec. 31, 2023

9. LEASES

The Company utilizes operating and finance leases for the use of certain hospitals, medical office buildings, and medical equipment. All lease agreements generally require the Company to pay maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Such costs are not included in the determination of the ROU asset or lease liability. Variable lease cost also includes escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measures of cost inflation. Most leases include one or more options to renew the lease at the end of the initial term, with renewal terms that generally extend the lease at the then market rate of rental payment. Certain leases also include an option to buy the underlying asset at or a short time prior to the termination of the lease. All such options are at the Company’s discretion and are evaluated at the commencement of the lease, with only those that are reasonably certain of exercise included in determining the appropriate lease term.

The components of lease cost and rent expense for the years ended December 31, 2023, 2022 and 2021 are as follows (in millions):


	Year Ended December 31,
Lease Cost	2023			2022			2021
Operating lease cost:
Operating lease cost	$	211		$	211		$	196
Short-term rent expense		90			87			92
Variable lease cost		23			24			25
Sublease income		(5	)		(5	)		(5	)
Total operating lease cost	$	319		$	317		$	308
Finance lease cost:
Amortization of ROU assets	$	13		$	13		$	9
Interest on finance lease liabilities		13			15			9
Total finance lease cost	$	26		$	28		$	18

Supplemental balance sheet information related to leases was as follows (in millions):


	Balance Sheet Classification	December 31, 2023			December 31, 2022
Operating Leases:
Operating Lease ROU Assets	Other assets, net	$	665		$	738

Finance Leases:
Finance Lease ROU Assets	Property and equipment
	Land and improvements	$	—		$	—
	Buildings and improvements		246			261
	Equipment and fixtures		10			12
	Property and equipment		256			273
	Less accumulated depreciation and amortization		(55	)		(56	)
	Property and equipment, net	$	201		$	217

Current finance lease liabilities	Current maturities of long-term debt	$	2		$	3
Long-term finance lease liabilities	Long-term debt		214			220

Supplemental cash flow information related to leases for the years ended December 31, 2023, 2022 and 2021 are as follows (in millions):


	Year Ended December 31,
Cash flow information	2023			2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	200		$	204		$	197
Operating cash flows from finance leases		13			15			9
Financing cash flows from finance leases		3			9			4
ROU assets obtained in exchange for new finance lease liabilities		1			42			166
ROU assets obtained in exchange for new operating lease liabilities		102			195			143
Weighted-average remaining lease term:
Operating leases	9 years			8 years			6 years
Finance leases	30 years			31 years			30 years
Weighted-average discount rate:
Operating leases		8.8	%		8.0	%		8.1	%
Finance leases		6.2	%		6.4	%		6.3	%

(1)

Included in the change in other operating assets and liabilities in the consolidated statements of cash flows.

Commitments relating to noncancellable operating and finance leases and financing obligations for each of the next five years and thereafter are as follows (in millions):


							Financing
Year Ending December 31,	Operating			Finance			Obligations
2024	$	181		$	16		$	13
2025		144			15			13
2026		118			16			13
2027		92			16			13
2028		75			16			14
Thereafter		467			472			59
Total minimum future payments		1,077			551			125
Less: Imputed interest		(390	)		(335	)		26
Total liabilities		687			216			151
Less: Current portion		(124	)		(2	)		(3	)
Long-term liabilities	$	563		$	214		$	148

As of December 31, 2023, there were approximately $36 million of assets underlying approved but pending leases that have not yet commenced, primarily for leases of various real-estate and medical equipment.