Leases

9 Months Ended

Sep. 30, 2020

9. LEASES

The Company utilizes operating and finance leases for the use of certain hospitals, medical office buildings, and medical equipment. The Company has elected to account for COVID-19 related concessions as though the enforceable rights and obligations for those concessions are explicit within the underlying contract. During the three and nine months ended September 30, 2020, concessions of approximately $4 million and $6 million, respectively, were recognized as a reduction to variable rent expense.

The components of lease cost and rent expense for the three and nine months ended September 30, 2020 and 2019 are as follows (in millions):

	Three Months Ended September 30,						Nine Months Ended September 30,
Lease Cost	2020			2019			2020			2019
Operating lease cost:
Operating lease cost	$	50		$	49		$	152		$	143
Short-term rent expense		27			28			80			87
Variable lease cost		9			3			20			13
Sublease income		(1	)		(1	)		(4	)		(3	)
Total operating lease cost	$	85		$	79		$	248		$	240
Finance lease cost:
Amortization of right-of-use assets	$	2		$	3		$	8		$	9
Interest on finance lease liabilities		2			2			6			6
Total finance lease cost	$	4		$	5		$	14		$	15

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

	Balance Sheet Classification	September 30, 2020			December 31, 2019
Operating Leases:
Operating Lease ROU Assets	Other assets, net	$	633		$	607

Finance Leases:
Finance Lease ROU Assets	Property and equipment
	Land and improvements	$	8		$	8
	Buildings and improvements		134			154
	Equipment and fixtures		9			11
	Property and equipment		151			173
	Less accumulated depreciation and amortization		(45	)		(56	)
	Property and equipment, net	$	106		$	117

Current finance lease liabilities	Current maturities of long-term debt	$	5		$	6
Long-term finance lease liabilities	Long-term debt		75			107

Supplemental cash flow information related to leases for the nine months ended September 30, 2020 and 2019 are as follows (in millions):

	Nine Months Ended September 30,
Cash flow information	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases ⁽¹⁾	$	141	$	127
Operating cash flows from finance leases		6		6
Financing cash flows from finance leases		5		7
Right-of-use assets obtained in exchange for new finance lease liabilities		22		2
Right-of-use assets obtained in exchange for new operating lease liabilities		119		86

(1)	Included in the change in other operating assets and liabilities in the condensed consolidated statement of cash flows.