Leases

12 Months Ended

Dec. 31, 2022

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, 2022, 2021 and 2020 are as follows (in millions):

	Year Ended December 31,
Lease Cost	2022			2021			2020
Operating lease cost:
Operating lease cost	$	211		$	196		$	203
Short-term rent expense		87			92			104
Variable lease cost		24			25			26
Sublease income		(5	)		(5	)		(6	)
Total operating lease cost	$	317		$	308		$	327
Finance lease cost:
Amortization of ROU assets	$	13		$	9		$	10
Interest on finance lease liabilities		15			9			8
Total finance lease cost	$	28		$	18		$	18

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

	Balance Sheet Classification	December 31, 2022			December 31, 2021
Operating Leases:
Operating Lease ROU Assets	Other assets, net	$	738		$	668

Finance Leases:
Finance Lease ROU Assets	Property and equipment
	Land and improvements	$	—		$	8
	Buildings and improvements		261			289
	Equipment and fixtures		12			17
	Property and equipment		273			314
	Less accumulated depreciation and amortization		(56	)		(54	)
	Property and equipment, net	$	217		$	260

Current finance lease liabilities	Current maturities of long-term debt	$	3		$	8
Long-term finance lease liabilities	Long-term debt		220			233

Supplemental cash flow information related to leases for the years ended December 31, 2022, 2021 and 2020 are as follows (in millions):

	Year Ended December 31,
Cash flow information	2022			2021			2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	204		$	197		$	188
Operating cash flows from finance leases		15			9			8
Financing cash flows from finance leases		9			4			7
ROU assets obtained in exchange for new finance lease liabilities		42			166			22
ROU assets obtained in exchange for new operating lease liabilities		195			143			150
Weighted-average remaining lease term:
Operating leases	8 years			6 years			7 years
Finance leases	31 years			30 years			19 years
Weighted-average discount rate:
Operating leases		8.0	%		8.1	%		9.0	%
Finance leases		6.4	%		6.3	%		8.4	%

(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
2023	$	205		$	16		$	13
2024		157			16			13
2025		126			15			13
2026		102			16			13
2027		76			16			14
Thereafter		385			488			75
Total minimum future payments		1,051			567			141
Less: Imputed interest		(298	)		(344	)		16
Total liabilities		753			223			157
Less: Current portion		(148	)		(3	)		(3	)
Long-term liabilities	$	605		$	220		$	154

As of December 31, 2022, there were approximately $28 million of assets underlying approved but pending leases that have not yet commenced, primarily for leases of various real-estate and medical equipment.