10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended September 30, 2019

OR

☐ 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 1-10765

UNIVERSAL HEALTH SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware	23-2077891
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

UNIVERSAL CORPORATE CENTER

367 SOUTH GULPH ROAD

KING OF PRUSSIA, Pennsylvania 19406

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (610) 768-3300

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class B Common Stock, $0.01 par value	UHS	New York Stock Exchange

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ‘emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer		☐
Non-accelerated filer	☐	Smaller reporting company		☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common shares outstanding, as of October 31, 2019:

Class A	6,577,100
Class B	80,324,970
Class C	661,688
Class D	18,511

UNIVERSAL HEALTH SERVICES, INC.

INDEX

	PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Income - Three and Nine Months Ended September 30, 2019 and 2018	3
Condensed Consolidated Statements of Comprehensive Income - Three and Nine Months Ended September 30, 2019 and 2018	4
Condensed Consolidated Balance Sheets - September 30, 2019 and December 31, 2018	5
Condensed Consolidated Statements of Changes in Equity - Three and Nine Months Ended September 30, 2019 and 2018	6
Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2019 and 2018	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	59
Item 4. Controls and Procedures	59
PART II. Other Information
Item 1. Legal Proceedings	61
Item 1A. Risk Factors	64
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 6. Exhibits	65
Signatures	66

This Quarterly Report on Form 10-Q is for the quarter ended September 30, 2019. This Report modifies and supersedes documents filed prior to this Report. Information that we file with the Securities and Exchange Commission (the “SEC”) in the future will automatically update and supersede information contained in this Report.

In this Quarterly Report, “we,” “us,” “our” “UHS” and the “Company” refer to Universal Health Services, Inc. and its subsidiaries. UHS is a registered trademark of UHS of Delaware, Inc., the management company for, and a wholly-owned subsidiary of Universal Health Services, Inc. Universal Health Services, Inc. is a holding company and operates through its subsidiaries including its management company, UHS of Delaware, Inc. All healthcare and management operations are conducted by subsidiaries of Universal Health Services, Inc. To the extent any reference to “UHS” or “UHS facilities” in this report including letters, narratives or other forms contained herein relates to our healthcare or management operations it is referring to Universal Health Services, Inc.’s subsidiaries including UHS of Delaware, Inc. Further, the terms “we,” “us,” “our” or the “Company” in such context similarly refer to the operations of Universal Health Services Inc.’s subsidiaries including UHS of Delaware, Inc. Any reference to employees or employment contained herein refers to employment with or employees of the subsidiaries of Universal Health Services, Inc. including UHS of Delaware, Inc.

2

PART I. FINANCIAL INFORMATION

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except per share amounts)

(unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2019		2018			2019		2018
Net revenues	$	2,822,453	$	2,648,913		$	8,482,012		8,017,782
Operating charges:
Salaries, wages and benefits		1,408,226		1,316,710			4,157,253		3,922,832
Other operating expenses		762,174		651,442			2,079,518		1,896,745
Supplies expense		313,936		285,201			927,256		867,863
Depreciation and amortization		121,528		112,286			362,736		334,970
Lease and rental expense		27,660		26,110			80,320		79,932
		2,633,524		2,391,749			7,607,083		7,102,342
Income from operations		188,929		257,164			874,929		915,440
Interest expense, net		41,447		39,506			123,574		115,082
Other (income) expense, net		9,407		(11,409	)		6,176		(26,717	)
Income before income taxes		138,075		229,067			745,179		827,075
Provision for income taxes		37,205		54,186			165,646		192,814
Net income		100,870		174,881			579,533		634,261
Less: Net income attributable to noncontrolling interests		3,680		3,135			9,855		12,631
Net income attributable to UHS	$	97,190	$	171,746		$	569,678	$	621,630
Basic earnings per share attributable to UHS	$	1.10	$	1.85		$	6.36	$	6.63
Diluted earnings per share attributable to UHS	$	1.10	$	1.84		$	6.35	$	6.60
Weighted average number of common shares - basic		87,952		92,849			89,288		93,639
Add: Other share equivalents		403		481			231		459
Weighted average number of common shares and    equivalents - diluted		88,355		93,330			89,519		94,098

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

3

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands, unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net income	$	100,870		$	174,881		$	579,533		$	634,261
Other comprehensive income (loss):
Unrealized derivative gains (losses) on cash flow hedges		-			(1,924	)		(3,925	)		(345	)
Foreign currency translation adjustment		(10,089	)		(12,323	)		(19,192	)		(15,480	)
Other comprehensive income (loss) before tax		(10,089	)		(14,247	)		(23,117	)		(15,825	)
Income tax expense (benefit) related to items of other    comprehensive income (loss)		174			(457	)		(676	)		(82	)
Total other comprehensive income (loss), net of tax		(10,263	)		(13,790	)		(22,441	)		(15,743	)
Comprehensive income		90,607			161,091			557,092			618,518
Less: Comprehensive income attributable to noncontrolling    interests		3,680			3,135			9,855			12,631
Comprehensive income attributable to UHS	$	86,927		$	157,956		$	547,237		$	605,887

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

4

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, unaudited)

	September 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	58,905		$	105,220
Accounts receivable, net		1,544,077			1,509,909
Supplies		156,285			148,206
Other current assets		171,360			174,467
Total current assets		1,930,627			1,937,802
Property and equipment		8,967,340			8,563,455
Less: accumulated depreciation		(4,008,931	)		(3,715,515	)
		4,958,409			4,847,940
Other assets:
Goodwill		3,827,867			3,844,628
Deferred income taxes		19,199			5,280
Right of use assets-operating leases		329,328			0
Deferred charges		6,926			8,772
Other		522,045			621,058
Total Assets	$	11,594,401		$	11,265,480
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	78,077		$	63,446
Accounts payable and accrued liabilities		1,343,922			1,253,714
Legal reserves		144,120			129,150
Operating lease liabilities		55,080			0
Federal and state taxes		570			2,428
Total current liabilities		1,621,769			1,448,738
Other noncurrent liabilities		338,871			361,809
Operating lease liabilities noncurrent		274,248			0
Long-term debt		3,870,294			3,935,187
Deferred income taxes		21,213			49,661
Redeemable noncontrolling interests		4,061			4,292
Equity:
UHS common stockholders’ equity		5,389,215			5,389,262
Noncontrolling interest		74,730			76,531
Total equity		5,463,945			5,465,793
Total Liabilities and Stockholders’ Equity	$	11,594,401		$	11,265,480

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

5

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Nine Months ended September 30, 2019

(amounts in thousands, unaudited)

																			Accumulated			UHS
	Redeemable																		Other			Common
	Noncontrolling			Class A		Class B			Class C		Class D		Cumulative			Retained			Comprehensive			Stockholders'			Noncontrolling
	Interest			Common		Common			Common		Common		Dividends			Earnings			Income (Loss)			Equity			Interest			Total
Balance, January 1, 2019	$	4,292		$	66	$	841		$	7	$	0	$	(409,156	)	$	5,793,262		$	4,242		$	5,389,262		$	76,531		$	5,465,793
Common Stock
Issued/(converted)		—			—		10			—		—		—			8,373			—			8,383			—			8,383
Repurchased		—			—		(44	)		—		—		—			(571,355	)		—			(571,399	)		—			(571,399	)
Restricted share-based compensation expense		—			—		—			—		—		—			5,950			—			5,950			—			5,950
Dividends paid		—			—		—			—		—		(35,556	)		—			—			(35,556	)		—			(35,556	)
Stock option expense		—			—		—			—		—		—			45,338			—			45,338			—			45,338
Distributions to noncontrolling interests		(500	)		—		—			—		—		—			—			—			—			(11,555	)		(11,555	)
Purchase of noncontrolling interest		—			—		—			—		—		—			—			—			—			168			168
Comprehensive income:
Net income to UHS / noncontrolling interests		269			—		—			—		—		—			569,678			—			569,678			9,586			579,264
Foreign currency translation adjustments, net of income tax		—			—		—			—		—		—			—			(19,444	)		(19,444	)		—			(19,444	)
Unrealized derivative losses on cash flow hedges, net of income tax		—			—		—			—		—		—			—			(2,997	)		(2,997	)		—			(2,997	)
Subtotal - comprehensive income		269			—		—			—		—		—			569,678			(22,441	)		547,237			9,586			556,823
Balance, September 30, 2019	$	4,061		$	66	$	807		$	7	$	0	$	(444,712	)	$	5,851,246		$	(18,199	)	$	5,389,215		$	74,730		$	5,463,945
																			Accumulated			UHS
	Redeemable																		Other			Common
	Noncontrolling			Class A		Class B			Class C		Class D		Cumulative			Retained			Comprehensive			Stockholders'			Noncontrolling
	Interest			Common		Common			Common		Common		Dividends			Earnings			Income (Loss)			Equity			Interest			Total
Balance, July 1, 2019	$	3,986		$	66	$	810		$	7	$	0	$	(427,109	)	$	5,827,251		$	(7,936	)	$	5,393,089		$	71,362		$	5,464,451
Common Stock
Issued/(converted)		—			—		4			—		—		—			2,974			—			2,978			—			2,978
Repurchased		—			—		(7	)		—		—		—			(93,320	)		—			(93,327	)		—			(93,327	)
Restricted share-based compensation expense		—			—		—			—		—		—			2,291			—			2,291			—			2,291
Dividends paid		—			—		—			—		—		(17,603	)		—			—			(17,603	)		—			(17,603	)
Stock option expense		—			—		—			—		—		—			14,860			—			14,860			—			14,860
Distributions to noncontrolling interests		—			—		—			—		—		—			—			—			—			(405	)		(405	)
Purchase of noncontrolling interest		—			—		—			—		—		—			—			—			—			168			168
Comprehensive income:
Net income to UHS / noncontrolling interests		75			—		—			—		—		—			97,190			—			97,190			3,605			100,795
Foreign currency translation adjustments, net of income tax		—			—		—			—		—		—			—			(10,263	)		(10,263	)		—			(10,263	)
Unrealized derivative losses on cash flow hedges, net of income tax		—			—		—			—		—		—			—			—			—			—			—
Subtotal - comprehensive income		75			—		—			—		—		—			97,190			(10,263	)		86,927			3,605			90,532
Balance, September 30, 2019	$	4,061		$	66	$	807		$	7	$	0	$	(444,712	)	$	5,851,246		$	(18,199	)	$	5,389,215		$	74,730		$	5,463,945

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

6

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Nine Months ended September 30, 2018

(amounts in thousands, unaudited)

																			Accumulated			UHS
	Redeemable																		Other			Common
	Noncontrolling			Class A		Class B			Class C		Class D		Cumulative			Retained			Comprehensive			Stockholders'			Noncontrolling
	Interest			Common		Common			Common		Common		Dividends			Earnings			Income (Loss)			Equity			Interest			Total
Balance, January 1, 2018	$	6,702		$	66	$	869		$	7	$	0	$	(371,814	)	$	5,353,209		$	7,177		$	4,989,514		$	61,922		$	5,051,436
Common Stock
Issued/(converted)		—			—		5			—		—		—			7,855			—			7,860			—			7,860
Repurchased		—			—		(22	)		—		—		—			(261,234	)		—			(261,256	)		—			(261,256	)
Restricted share-based compensation expense		—			—		—			—		—		—			3,120			—			3,120			—			3,120
Dividends paid		—			—		—			—		—		(28,086	)		—			—			(28,086	)		—			(28,086	)
Stock option expense		—			—		—			—		—		—			46,706			—			46,706			—			46,706
Distributions to noncontrolling interests		(500	)		—		—			—		—		—			—			—			—			(7,742	)		(7,742	)
Purchase of noncontrolling interest		1			—		—			—		—		—			—			—			—			8,762			8,762
Comprehensive income:
Net income to UHS / noncontrolling interests		138			—		—			—		—		—			621,630			—			621,630			12,443			634,073
Foreign currency translation adjustments		—			—		—			—		—		—			—			(263	)		(263	)		—			(263	)
Other, net of income tax		—			—		—			—		—		—			—			(15,480	)		(15,480	)		—			(15,480	)
Unrealized derivative gains on cash flow hedges, net of income tax		—			—		—			—		—		—			—			—			—			—			—
Subtotal - comprehensive income		138			—		—			—		—		—			621,630			(15,743	)		605,887			12,443			618,330
Balance, September 30, 2018	$	6,341		$	66	$	852		$	7	$	0	$	(399,900	)	$	5,771,286		$	(8,566	)	$	5,363,745		$	75,385		$	5,439,130
																			Accumulated			UHS
	Redeemable																		Other			Common
	Noncontrolling			Class A		Class B			Class C		Class D		Cumulative			Retained			Comprehensive			Stockholders'			Noncontrolling
	Interest			Common		Common			Common		Common		Dividends			Earnings			Income (Loss)			Equity			Interest			Total
Balance, July 1, 2018	$	6,341		$	66	$	861		$	7	$	0	$	(390,618	)	$	5,702,043		$	5,224		$	5,317,583		$	72,627		$	5,390,210
Common Stock
Issued/(converted)		—			—		1			—		—		—			2,734			—			2,735			—			2,735
Repurchased		—			—		(10	)		—		—		—			(120,859	)		—			(120,869	)		—			(120,869	)
Restricted share-based compensation expense		—			—		—			—		—		—			1,420			—			1,420			—			1,420
Dividends paid		—			—		—			—		—		(9,282	)		—			—			(9,282	)		—			(9,282	)
Stock option expense		—			—		—			—		—		—			14,202			—			14,202			—			14,202
Distributions to noncontrolling interests		—			—		—			—		—		—			—			—			—			(327	)		(327	)
Purchase of noncontrolling interest		—			—		—			—		—		—			—			—			—			—			—
Comprehensive income:
Net income to UHS / noncontrolling interests		—			—		—			—		—		—			171,746			—			171,746			3,085			174,831
Foreign currency translation adjustments		—			—		—			—		—		—			—			2,894			2,894			—			2,894
Other, net of income tax		—			—		—			—		—		—			—			(16,684	)		(16,684	)		—			(16,684	)
Unrealized derivative gains on cash flow hedges, net of income tax		—			—		—			—		—		—			—			—			—			—			—
Subtotal - comprehensive income		—			—		—			—		—		—			171,746			(13,790	)		157,956			3,085			161,041
Balance, September 30, 2018	$	6,341		$	66	$	852		$	7	$	0	$	(399,900	)	$	5,771,286		$	(8,566	)	$	5,363,745		$	75,385		$	5,439,130

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

7

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands, unaudited)

	Nine months ended September 30,
	2019			2018
Cash Flows from Operating Activities:
Net income	$	579,533		$	634,261
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation & amortization		362,736			335,002
Stock-based compensation expense		52,167			50,645
Gain on sale of assets and businesses		(5,982	)		(2,513	)
Provision for asset impairment		97,631			0
Changes in assets & liabilities, net of effects from acquisitions and dispositions:
Accounts receivable		(37,332	)		(74,129	)
Accrued interest		(2,962	)		(5,808	)
Accrued and deferred income taxes		(53,714	)		(53,165	)
Other working capital accounts		90,262			89,157
Other assets and deferred charges		15,237			(37,133	)
Other		(56,465	)		(3,080	)
Accrued insurance expense, net of commercial premiums paid		76,245			69,386
Payments made in settlement of self-insurance claims		(68,046	)		(53,223	)
Net cash provided by operating activities		1,049,310			949,400
Cash Flows from Investing Activities:
Property and equipment additions, net of disposals		(480,247	)		(521,349	)
Acquisition of property and businesses		0			(108,016	)
Inflows from foreign exchange contracts that hedge our net U.K. investment		90,286			26,088
Proceeds received from sales of assets and businesses		7,497			13,502
Costs incurred for purchase and implementation of information technology applications		(18,240	)		(25,487	)
Decrease in capital reserves of commercial insurance subsidiary		0			100
Investment in, and advances to, joint ventures and other		(11,949	)		(13,910	)
Net cash used in investing activities		(412,653	)		(629,072	)
Cash Flows from Financing Activities:
Reduction of long-term debt		(68,175	)		(99,969	)
Additional borrowings		15,100			82,400
Financing costs		0			(774	)
Repurchase of common shares		(587,976	)		(261,256	)
Dividends paid		(35,556	)		(28,086	)
Issuance of common stock		8,248			7,737
Profit distributions to noncontrolling interests		(11,887	)		(8,243	)
Net cash used in financing activities		(680,246	)		(308,191	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(1,259	)		(1,742	)
(Decrease) Increase in cash, cash equivalents and restricted cash		(44,848	)		10,395
Cash, cash equivalents and restricted cash, beginning of period		199,685			167,297
Cash, cash equivalents and restricted cash, end of period	$	154,837		$	177,692
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	122,699		$	114,162
Income taxes paid, net of refunds	$	221,298		$	247,486
Noncash purchases of property and equipment	$	83,552		$	88,932
Right-of-use assets obtained in exchange for lease obligations	$	364,453		$	-

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

8

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) General

This Quarterly Report on Form 10-Q is for the quarterly period ended September 30, 2019. In this Quarterly Report, “we,” “us,” “our” “UHS” and the “Company” refer to Universal Health Services, Inc. and its subsidiaries.

The condensed consolidated interim financial statements include the accounts of our majority-owned subsidiaries and partnerships and limited liability companies controlled by us, or our subsidiaries, as managing general partner or managing member. The condensed consolidated interim financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and reflect all adjustments (consisting only of normal recurring adjustments) which, in our opinion, are necessary to fairly state results for the interim periods. Certain information and footnote disclosures normally included in audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although we believe that the accompanying disclosures are adequate to make the information presented not misleading. These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements, significant accounting policies and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

Provision for Asset Impairment-Foundations Recovery Network:

Our financial results for the three and nine-month periods ended September 30, 2019, include an aggregate pre-tax provision for asset impairment of $97.6 million recorded in connection with Foundations Recovery Network, L.L.C. (“Foundations”), which was acquired by us in 2015. This pre-tax provision for asset impairment includes: (i) a $74.9 million impairment provision to write-off the carrying value of the Foundations’ tradename intangible asset, and; (ii) a $22.7 million impairment provision to reduce the carrying value of real property assets of certain Foundations’ facilities.

This provision for asset impairment, which is included in other operating expenses in our consolidated statements of income and the behavioral health services operating segment for the three and nine-month periods ended September 30, 2019, was recorded after evaluation of the estimated fair value of the Foundations’ tradename using the income approach as well as certain related real property assets using the market approach. The provision for asset impairment was impacted by the following: (i) recent decisions made by management to cancel the opening of future planned de novo facilities; (ii) further reductions in projected future patient volumes, revenues and cash flows based upon the operating trends and financial results experienced by existing facilities, and; (iii) competitive pressures experienced in certain markets.

(2) Relationship with Universal Health Realty Income Trust and Related Party Transactions

Relationship with Universal Health Realty Income Trust:

At September 30, 2019, we held approximately 5.7% of the outstanding shares of Universal Health Realty Income Trust (the “Trust”). We serve as Advisor to the Trust under an annually renewable advisory agreement, which is scheduled to expire on December 31^st of each year, pursuant to the terms of which we conduct the Trust’s day-to-day affairs, provide administrative services and present investment opportunities. The advisory agreement was Amended and Restated effective January 1, 2019.  Among other things, the Amended and Restated Advisory Agreement (the “Agreement”) eliminated the 20% annual incentive fee clause which we were previously entitled to under certain conditions (the incentive fee requirements have never been achieved).  The advisory agreement was renewed by the Trust for 2019 at the same rate as the prior three years, providing for an advisory fee computation at 0.70% of the Trust’s average invested real estate assets. We earned an advisory fee from the Trust, which is included in net revenues in the accompanying consolidated statements of income, of approximately $1.0 million, during each of the three-month periods ended September 30, 2019 and 2018, and approximately $3.0 million and $2.8 million during the nine-month periods ended September 30, 2019 and 2018, respectively.  

In addition, certain of our officers and directors are also officers and/or directors of the Trust. Management believes that it has the ability to exercise significant influence over the Trust, therefore we account for our investment in the Trust using the equity method of accounting.

Our pre-tax share of income from the Trust, which is included in other income in the accompanying consolidated statements of income, was approximately $300,000 and $260,000 during the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $700,000 and $1.1 million during the nine-month periods ended September 30, 2019 and 2018, respectively. Included in our share of the Trust’s income for the nine months ended September 30, 2018 is income realized by the Trust in connection with the hurricane-related insurance proceeds received in connection with the damage sustained from Hurricane Harvey in August, 2017.   We earned dividends from the Trust amounting to $536,000 and $528,000 during the three-month periods ended September 30, 2019 and 2018, respectively, and $1.6 million during each of the nine-month periods ended September 30, 2019 and 2018.  The carrying value of our investment in the Trust was approximately $6.6 million and $7.5 million at September 30, 2019 and

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December 31, 2018, respectively, and is included in other assets in the accompanying consolidated balance sheets. The market value of our investment in the Trust was $81.0 million at September 30, 2019 and $48.3 million at December 31, 2018, based on the closing price of the Trust’s stock on the respective dates.

The Trust commenced operations in 1986 by purchasing certain properties from us and immediately leasing the properties back to our respective subsidiaries. Most of the leases were entered into at the time the Trust commenced operations and provided for initial terms of 13 to 15 years with up to six additional 5-year renewal terms. Each lease also provided for additional or bonus rental, as discussed below. The base rents are paid monthly and the bonus rents are computed and paid on a quarterly basis, based upon a computation that compares current quarter revenue to a corresponding quarter in the base year. The leases with those subsidiaries are unconditionally guaranteed by us and are cross-defaulted with one another. 

Total rent expense under the operating leases on the three hospital facilities reflected in the table below was approximately $4 million during each of the three months ended September 30, 2019 and 2018, and approximately $12 million for each of the nine-month periods ended September 30, 2019 and 2018.  Pursuant to the terms of the three hospital leases with the Trust, we have the option to renew the leases at the lease terms described above and below by providing notice to the Trust at least 90 days prior to the termination of the then current term. We also have the right to purchase the respective leased hospitals at the end of the lease terms or any renewal terms at their appraised fair market value as well as purchase any or all of the three leased hospital properties at the appraised fair market value upon one month’s notice should a change of control of the Trust occur. In addition, we have rights of first refusal to: (i) purchase the respective leased facilities during and for 180 days after the lease terms at the same price, terms and conditions of any third-party offer, or; (ii) renew the lease on the respective leased facility at the end of, and for 180 days after, the lease term at the same terms and conditions pursuant to any third-party offer. 

The table below details the renewal options and terms for each of our three acute care hospital facilities leased from the Trust: 

Hospital Name	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	$	5,485,000	December, 2026	5(a)
Wellington Regional Medical Center	$	3,030,000	December, 2021	10(b)
Southwest Healthcare System, Inland Valley Campus	$	2,648,000	December, 2021	10(b)

(a)     We have one 5-year renewal option at existing lease rates (through 2031).

(b)     We have two 5-year renewal options at fair market value lease rates (2022 through 2031).

In addition, certain of our subsidiaries are tenants in several medical office buildings and two FEDs owned by the Trust or by limited liability companies in which the Trust holds 95% to 100% of the ownership interest.  During the third quarter of 2019, the Trust commenced construction on a new 75,000 rentable square feet medical office building (“MOB”) that will be located on the campus of Texoma Medical Center, a hospital that is owned and operated by one of our subsidiaries.  In connection with this MOB, a master flex lease has been executed between a wholly-owned subsidiary of ours and a Trust limited partnership that owns the MOB. Pursuant to the terms of this master flex lease, our subsidiary will master lease approximately 50% of the square rentable feet of the MOB, which could be reduced during the term if certain conditions are met, for a ten-year term at an initial minimum annual rent of $644,000.

During the third quarter of 2019, a joint-venture agreement between us and a non-related third-party was finalized in connection with the development of a newly constructed behavioral health care facility located in Clive, Iowa. Pursuant to the terms of the agreement, we hold a majority ownership interest in the venture and will act as manager of the facility when completed and opened. This joint-venture also entered into an agreement with the Trust whereby a wholly-owned subsidiary of the Trust will construct the 108-bed behavioral health care hospital and, upon completion and issuance of the certificate of occupancy, the joint-venture will lease the facility from the Trust pursuant to a 20-year, triple net lease with five, 10-year renewal options. Construction of the approximately 80,000 square foot hospital, for which a wholly-owned subsidiary of ours will act as project manager for an aggregate fee of approximately $750,000, is expected to be completed in the fall of 2020. The approximate cost of the project is estimated at $37.5 million and the initial annual rent is estimated at approximately $2.7 million.

Other Related Party Transactions:

In December, 2010, our Board of Directors approved the Company’s entering into supplemental life insurance plans and agreements on the lives of Alan B. Miller (our chief executive officer (“CEO”) and his wife. As a result of these agreements, as amended in October, 2016, based on actuarial tables and other assumptions, during the life expectancies of the insureds, we would pay approximately $28 million in premiums, and certain trusts owned by our CEO, would pay approximately $9 million in premiums. Based on the projected premiums mentioned above, and assuming the policies remain in effect until the death of the insureds, we will be entitled to receive death benefit proceeds of no less than approximately $37 million representing the $28 million of aggregate premiums paid by us as well as the $9 million of aggregate premiums paid by the trusts. In connection with these policies, we will pay/we paid approximately $1.1 million, net, in premium payments during each of the 2019 and 2018 years.

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In August, 2015, Marc D. Miller, our President and member of our Board of Directors, was appointed to the Board of Directors of Premier, Inc. (“Premier”), a healthcare performance improvement alliance.  During 2013, we entered into a new group purchasing organization agreement (“GPO”) with Premier. In conjunction with the GPO agreement, we acquired a minority interest in Premier for a nominal amount. During the fourth quarter of 2013, in connection with the completion of an initial public offering of the stock of Premier, we received cash proceeds for the sale of a portion of our ownership interest in the GPO. Also in connection with this GPO agreement, we received shares of restricted stock of Premier which vest ratably over a seven-year period (2014 through 2020), contingent upon our continued participation and minority ownership interest in the GPO.  We have elected to retain a portion of the previously vested shares of Premier, the market value of which is included in other assets on our consolidated balance sheet.  Based upon the closing price of Premier’s stock on each respective date, the market value of our shares of Premier on which the restrictions have lapsed was $43 million as of September 30, 2019 and $56 million as of December 31, 2018.    In connection with our adoption of ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”, since our vested shares of Premier are held for investment and classified as available for sale, the $13 million decrease in market value of these shares since December 31, 2018 was recorded as an unrealized loss and included in “Other (income) expense, net” on our condensed consolidated statements of income for the nine-month period ended September 30, 2019.  

A member of our Board of Directors and member of the Executive Committee and Finance Committee is a partner in Norton Rose Fulbright US LLP, a law firm engaged by us for a variety of legal services.  The Board member and his law firm also provide personal legal services to our CEO and acts as trustee of certain trusts for the benefit of our CEO and his family.

(3) Other Noncurrent liabilities and Redeemable/Noncontrolling Interests

Other noncurrent liabilities include the long-term portion of our professional and general liability, workers’ compensation reserves, pension and deferred compensation liabilities, and liabilities incurred in connection with split-dollar life insurance agreements on the lives of our chief executive officer and his wife.

As of September 30, 2019, outside owners held noncontrolling, minority ownership interests of: (i) 20% in an acute care facility located in Washington, D.C.; (ii) approximately 11% in an acute care facility located in Texas; (iii) 20% and 30% in two behavioral health care facilities located in Pennsylvania and Ohio, respectively; (iv) approximately 5% in an acute care facility located in Nevada, and; (v) approximately 20% in a behavioral health care facility located in Spokane, Washington.  The noncontrolling interest and redeemable noncontrolling interest balances of $75 million and $4 million, respectively, as of September 30, 2019, consist primarily of the third-party ownership interests in these hospitals.

In connection with the two behavioral health care facilities located in Pennsylvania and Ohio, the minority ownership interests of which are reflected as redeemable noncontrolling interests on our Condensed Consolidated Balance Sheet, the outside owners have “put options” to put their entire ownership interest to us at any time. If exercised, the put option requires us to purchase the minority member’s interest at fair market value.

(4) Treasury

Credit Facilities and Outstanding Debt Securities:

On October 23, 2018, we entered into a  Sixth Amendment (the “Sixth Amendment”) to our credit agreement dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014 and June 7, 2016, among UHS, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto (the “Senior Credit Agreement”). The Sixth Amendment became effective on October 23, 2018.

The Sixth Amendment amended the Senior Credit Agreement to, among other things: (i) increase the aggregate amount of the revolving credit facility to $1 billion (increase of $200 million over the $800 million previous commitment); (ii) increase the aggregate amount of the tranche A term loan commitments to $2 billion (increase of approximately $290 million over the $1.71 billion of outstanding borrowings prior to the amendment), and; (iii) extended the maturity date of the revolving credit and tranche A term loan facilities to October 23, 2023 from August 7, 2019.

On October 31, 2018, we added a seven-year tranche B term loan facility in the aggregate principal amount of $500 million pursuant to the Senior Credit Agreement. The tranche B term loan matures on October 31, 2025.  We used the proceeds to repay borrowings under the revolving credit facility, the Securitization (as defined below), to redeem our $300 million, 3.75% Senior Notes that were scheduled to mature in 2019 and for general corporate purposes.  

As of September 30, 2019, we had no borrowings outstanding pursuant to our $1 billion revolving credit facility and we had $967 million of available borrowing capacity net of $12 million of outstanding letters of credit and $21 million of outstanding borrowings pursuant to a short-term credit facility.

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Pursuant to the terms of the Sixth Amendment, the tranche A term loan, which had $1.963 billion of borrowings outstanding as of September 30, 2019, provides for eight installment payments of $12.5 million per quarter which commenced in March of 2019 and are scheduled to continue through December of 2020.  Thereafter, payments of $25 million per quarter are scheduled, commencing in March of 2021 until maturity in October of 2023, when all outstanding amounts will be due.

The tranche B term loan, which had $496 million of borrowings outstanding as of September 30, 2019, provides for installment payments of $1.25 million per quarter, which commenced on March 31, 2019 and are scheduled to continue until maturity in October of 2025, when all outstanding amounts will be due.    

Borrowings under the Senior Credit Agreement bear interest at our election at either (1) the ABR rate which is defined as the rate per annum equal to the greatest of (a) the lender’s prime rate, (b) the weighted average of the federal funds rate, plus 0.5% and (c) one month LIBOR rate plus 1%, in each case, plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 0.375% to 0.625% for revolving credit and term loan A borrowings and 0.75% for tranche B borrowings, or (2) the one, two, three or six month LIBOR rate (at our election), plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 1.375% to 1.625% for revolving credit and term loan A borrowings and 1.75% for the tranche B term loan. As of September 30, 2019, the applicable margins were 0.50% for ABR-based loans and 1.50% for LIBOR-based loans under the revolving credit and term loan A facilities.  The revolving credit facility includes a $125 million sub-limit for letters of credit. The Senior Credit Agreement is secured by certain assets of the Company and our material subsidiaries (which generally excludes asset classes such as substantially all of the patient-related accounts receivable of our acute care hospitals, and certain real estate assets and assets held in joint-ventures with third parties) and is guaranteed by our material subsidiaries.

The Senior Credit Agreement includes a material adverse change clause that must be represented at each draw. The Senior Credit Agreement contains covenants that include a limitation on sales of assets, mergers, change of ownership, liens and indebtedness, transactions with affiliates, dividends and stock repurchases; and requires compliance with financial covenants including maximum leverage. We are in compliance with all required covenants as of September 30, 2019 and December 31, 2018.

In late April, 2018, we entered into the sixth amendment to our accounts receivable securitization program (“Securitization”) dated as of October 27, 2010 with a group of conduit lenders, liquidity banks, and PNC Bank, National Association, as administrative agent, which provides for borrowings outstanding from time to time by certain of our subsidiaries in exchange for undivided security interests in their respective accounts receivable. The sixth amendment, among other things, extended the term of the Securitization program through April 26, 2021 and increased the borrowing capacity to $450 million (from $440 million previously). Although the program fee and certain other fees were adjusted in connection with the sixth amendment, substantially all other provisions of the Securitization program remained unchanged.  Pursuant to the terms of our Securitization program, substantially all of the patient-related accounts receivable of our acute care hospitals (“Receivables”) serve as collateral for the outstanding borrowings. We have accounted for this Securitization as borrowings. We maintain effective control over the Receivables since, pursuant to the terms of the Securitization, the Receivables are sold from certain of our subsidiaries to special purpose entities that are wholly-owned by us. The Receivables, however, are owned by the special purpose entities, can be used only to satisfy the debts of the wholly-owned special purpose entities, and thus are not available to us except through our ownership interest in the special purpose entities. The wholly-owned special purpose entities use the Receivables to collateralize the loans obtained from the group of third-party conduit lenders and liquidity banks. The group of third-party conduit lenders and liquidity banks do not have recourse to us beyond the assets of the wholly-owned special purpose entities that securitize the loans. At September 30, 2019, we had $365 million of outstanding borrowings pursuant to the terms of the Securitization and $85 million of available borrowing capacity.  

As of September 30, 2019, we had combined aggregate principal of $1.1 billion from the following senior secured notes:

• $700 million aggregate principal amount of 4.75% senior secured notes due in August, 2022 (“2022 Notes”) which were issued as follows:

• $300 million aggregate principal amount issued on August 7, 2014 at par.

• $400 million aggregate principal amount issued on June 3, 2016 at 101.5% to yield 4.35%.

• $400 million aggregate principal amount of 5.00% senior secured notes due in June, 2026 (“2026 Notes”) which were issued on June 3, 2016.

Interest on the 2022 Notes is payable on February 1 and August 1 of each year until the maturity date of August 1, 2022.  Interest on the 2026 Notes is payable on June 1 and December 1 until the maturity date of June 1, 2026. The 2022 Notes and 2026 Notes were offered only to qualified institutional buyers under Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The 2022 Notes and 2026 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

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On November 26, 2018 we redeemed the $300 million aggregate principal, 3.75% Senior Notes due in 2019. The 2019 Notes were redeemed for an aggregate price equal to 100.485% of the principal amount, resulting in a premium paid of approximately $1 million, plus accrued interest to the redemption date.  

At September 30, 2019, the carrying value and fair value of our debt were approximately $3.95 billion and $3.97 billion, respectively.  At December 31, 2018, the carrying value and fair value of our debt were each approximately $4.0 billion. The fair value of our debt was computed based upon quotes received from financial institutions. We consider these to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with debt instruments.

Cash Flow Hedges:

We manage our ratio of fixed and floating rate debt with the objective of achieving a mix that management believes is appropriate. To manage this risk in a cost-effective manner, we, from time to time, enter into interest rate swap agreements in which we agree to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts. We account for our derivative and hedging activities using the Financial Accounting Standard Board’s (“FASB”) guidance which requires all derivative instruments, including certain derivative instruments embedded in other contracts, to be carried at fair value on the balance sheet. For derivative transactions designated as hedges, we formally document all relationships between the hedging instrument and the related hedged item, as well as its risk-management objective and strategy for undertaking each hedge transaction.

Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or liability, with a corresponding amount recorded in accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Amounts are reclassified from AOCI to the income statement in the period or periods the hedged transaction affects earnings. From time to time, we use interest rate derivatives in our cash flow hedge transactions. Such derivatives are designed to be highly effective in offsetting changes in the cash flows related to the hedged liability.

For hedge transactions that do not qualify for the short-cut method, at the hedge’s inception and on a regular basis thereafter, a formal assessment is performed to determine whether changes in the fair values or cash flows of the derivative instruments have been highly effective in offsetting changes in cash flows of the hedged items and whether they are expected to be highly effective in the future.

The fair value of interest rate swap agreements approximates the amount at which they could be settled, based on estimates obtained from the counterparties. We assess the effectiveness of our hedge instruments on a quarterly basis. We performed periodic assessments of the cash flow hedge instruments during the first nine months of 2019 and the full year of 2018 and determined the hedges to be highly effective. Although we do not anticipate nonperformance by our counterparties to interest rate swap agreements, the counterparties expose us to credit risk in the event of nonperformance. We do not hold or issue derivative financial instruments for trading purposes.

During 2015, we entered into nine forward starting interest rate swaps whereby we paid a fixed rate on a total notional amount of $1.0 billion and received one-month LIBOR. The average fixed rate payable on these swaps, all of which matured on April 15, 2019, was 1.31%. These interest rates swaps consisted of:

•Four forward starting interest rate swaps, entered into during the second quarter of 2015, whereby we paid a fixed rate on a total notional amount of $500 million and received one-month LIBOR. Each of the four swaps became effective on July 15, 2015 and matured on April 15, 2019. The average fixed rate payable on these swaps was 1.40%;

•Four forward starting interest rate swaps, entered into during the third quarter of 2015, whereby we paid a fixed rate on a total notional amount of $400 million and received one-month LIBOR. One swap on a notional amount of $100 million became effective on July 15, 2015, two swaps on a total notional amount of $200 million became effective on September 15, 2015 and another swap on a notional amount of $100 million became effective on December 15, 2015. All of these swaps matured on April 15, 2019 and the average fixed rate payable was 1.23%, and;

•One interest rate swap, entered into during the fourth quarter of 2015, whereby we paid a fixed rate on a total notional amount of $100 million and received one-month LIBOR. The swap became effective on December 15, 2015 and matured on April 15, 2019.  The fixed rate payable on this swap was 1.21%.

Foreign Currency Forward Exchange Contracts:

In August 2017, the FASB issued new guidance on hedge accounting (ASU 2017-12) that is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to

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the scope and results of hedging programs. The new guidance amends the presentation and disclosure requirements, and changes how companies assess effectiveness. We adopted this guidance as of January 1, 2019 and applied to all existing hedges as of the adoption date.

We use forward exchange contracts to hedge our net investment in foreign operations against movements in exchange rates. The effective portion of the unrealized gains or losses on these contracts is recorded in foreign currency translation adjustment within accumulated other comprehensive income and remains there until either the sale or liquidation of the subsidiary. In conjunction with the January 1, 2019 adoption of ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities”, we reclassified our presentation of the net cash inflows or outflows, which were received or paid in connection with foreign exchange contracts that hedge our net investment in foreign operations against movements in exchange rates, to investing cash flows on the consolidated statements of cash flows.  As previously disclosed within our footnotes, these cash flows were formerly reported as operating activities.  Prior period amounts have been reclassified from net cash provided by operating activities to net cash used in investing activities to conform with the current year presentation on the consolidated statements of cash flows. In connection with these forward exchange contracts, we recorded net cash inflows of $90 million and $26 million during the nine-month periods ended September 30, 2019 and 2018, respectively.   

Derivatives Hedging Relationships:

The following table presents the effects of our interest rate swap agreements and our foreign currency foreign exchange contracts on our results of operations for the three and nine month periods ended September 30, 2019 and 2018 (in thousands):

	Gain/(Loss) recognized in AOCI
	Three months ended					Nine months ended
	September 30,		September 30,			September 30,			September 30,
	2019		2018			2019			2018
Cash Flow Hedge relationships
Interest rate swap agreements (a)	$	0	$	(1,924	)	$	(3,925	)	$	(345	)
Net Investment Hedge relationships
Foreign currency foreign exchange contracts (b)	$	33,927	$	3,790		$	79,584		$	26,088

(a) The amount of gain reclassified out of AOCI into Interest expense, net was $0 and $2.0 million during the three-month periods ended September 30, 2019 and 2018, respectively, and $3.4 million and $4.2 million during the nine-month periods ended September 30, 2019 and 2018, respectively.

(b) The amount reclassified out of AOCI into Other (income) expense, net includes the net effect of a $1.1 million gain offset by a $1.1 million loss recorded on repatriation of cash related to our net investment in the U.K. for the three-month period ended September 30, 2019, and a $5.7 million gain offset by a $5.7 million loss recorded on repatriation of cash related to our net investment in the U.K. during the nine-month period ended September 30, 2019.  There were no amounts reclassified out of AOCI for the three and nine-month periods ended September 30, 2018.

No other gains or losses were recognized in income related to derivatives in Subtopic 815-20.

Cash, Cash Equivalents and Restricted Cash:

Cash, cash equivalents, and restricted cash as reported in the condensed consolidated statements of cash flows are presented separately on our condensed consolidated balance sheets as follow (in thousands):

	September 30,		December 31,
	2019		2018
Cash and cash equivalents	$	58,905	$	105,220
Restricted cash and cash equivalents (a)		95,932		94,465
Total cash, cash equivalents and restricted cash	$	154,837	$	199,685
(a) Restricted cash and cash equivalents is included in other assets on the accompanying consolidated balance sheet.

(5) Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  The following fair value hierarchy classifies the inputs to valuation techniques used to measure fair value into one of three levels:

• Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

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• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.  These included quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

• Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The following tables present the assets and liabilities recorded at fair value on a recurring basis:

	Balance at			Balance Sheet	Basis of Fair Value Measurement
(in thousands)	September 30, 2019			Location	Level 1		Level 2			Level 3
Assets:
Money market mutual funds	$	111,652		Other assets		111,652
Certificates of deposit		2,202		Other assets		2,202
Available for sale securities		43,046		Other assets		43,046
Deferred compensation assets		33,871		Other assets		33,871
Interest rate swap agreements		-		Accounts Receivable, net				-
Foreign currency exchange contracts		(1,794	)	Other current assets				(1,794	)
	$	188,977				190,771		(1,794	)		-
Liabilities:
Deferred compensation liability		33,871		Other noncurrent liabilities		33,871
	$	33,871				33,871		-			-
	Balance at			Balance Sheet	Basis of Fair Value Measurement
(in thousands)	December 31, 2018			Location	Level 1		Level 2			Level 3
Assets:
Money market mutual funds	$	106,530		Other assets		106,530
Certificates of deposit		5,415		Other assets		5,415
Available for sale securities		55,594		Other assets		55,594
Deferred compensation assets		32,998		Other assets		32,998
Interest rate swap agreements		3,925		Accounts Receivable, net				3,925
Foreign currency exchange contracts		8,908		Other current assets				8,908
	$	213,370				200,537		12,833			-
Liabilities:
Deferred compensation liability	$	32,998		Other noncurrent liabilities		32,998
	$	32,998				32,998		-			-

The fair value of our money market mutual funds, certificates of deposit and available for sale securities are computed based upon quoted market prices in active market. The fair value of deferred compensation assets and offsetting liability are computed based on market prices in an active market held in a rabbi trust.  The fair value of our interest rate swaps are based on quotes from our counter parties.  The fair value of our foreign currency exchange contracts is valued using quoted forward exchange rates and spot rates at the reporting date.

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(6) Commitments and Contingencies

Professional and General Liability, Workers’ Compensation Liability

Effective January, 2017, the vast majority of our subsidiaries are self-insured for professional and general liability exposure up to $5 million and $3 million per occurrence, respectively, subject to certain aggregate limitations.  Prior to January, 2017, the vast majority of our subsidiaries were self-insured for professional and general liability exposure up to $10 million and $3 million per occurrence, respectively. These subsidiaries are provided with several excess policies through commercial insurance carriers which provide for coverage in excess of the applicable per occurrence self-insured retention or underlying policy limits up to $250 million per occurrence and in the aggregate for claims incurred after 2013 and up to $200 million per occurrence and in the aggregate for claims incurred from 2011 through 2013. We remain liable for 10%, up to an annual aggregate limitation of $5 million ($8.5 million for facilities located in the U.K.), of the claims paid pursuant to the commercially insured excess coverage. In addition, from time to time based upon marketplace conditions, we may elect to purchase additional commercial coverage for certain of our facilities or businesses.  Our behavioral health care facilities located in the U.K. have policies through a commercial insurance carrier located in the U.K. that provides for £10 million of professional liability coverage and £25 million of general liability coverage.

As of September 30, 2019, the total accrual for our professional and general liability claims was $248 million, of which $42 million was included in current liabilities.  As of December 31, 2018, the total accrual for our professional and general liability claims was $243 million, of which $42 million was included in current liabilities.

As of September 30, 2019, the total accrual for our workers’ compensation liability claims was $75 million, of which $40 million was included in current liabilities.  As of December 31, 2018, the total accrual for our workers’ compensation liability claims was $72 million, of which $40 million was included in current liabilities.

Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents, estimates of losses for these claims based on recent and historical settlement amounts, estimates of incurred but not reported claims based on historical experience, and estimates of amounts recoverable under our commercial insurance policies. While we continuously monitor these factors, our ultimate liability for professional and general liability claims could change materially from our current estimates due to inherent uncertainties involved in making this estimate. Given our significant self-insured exposure for professional and general liability claims, there can be no assurance that a sharp increase in the number and/or severity of claims asserted against us will not have a material adverse effect on our future results of operations. Although we are unable to predict whether or not our future financial statements will include adjustments to our prior year reserves for self-insured general and professional and workers’ compensation claims, given the relatively unpredictable nature of the these potential liabilities and the factors impacting these reserves, as discussed above, it is reasonably likely that our future financial results may include material adjustments to prior period reserves.

Property Insurance:

We have commercial property insurance policies for our properties covering catastrophic losses, including windstorm damage, up to a $1 billion policy limit, subject to a deductible ranging from $50,000 to $250,000 per occurrence. Losses resulting from named windstorms are subject to deductibles between 3% and 5% of the total insurable value of the property. In addition, we have commercial property insurance policies covering catastrophic losses resulting from earthquake and flood damage, each subject to aggregated loss limits (as opposed to per occurrence losses). Commercially insured earthquake coverage for our facilities is subject to various deductibles and limitations including: (i) $500 million limitation for our facilities located in Nevada; (ii) $130 million limitation for our facilities located in California; (iii) $100 million limitation for our facilities located in fault zones within the United States; (iv) $40 million limitation for our facilities located in Puerto Rico, and; (v) $250 million limitation for many of our facilities located in other states. Our commercially insured flood coverage has a limit of $100 million annually. There is also a $10 million sublimit for one of our facilities located in Houston, Texas, and a $1 million sublimit for our facilities located in Puerto Rico. Deductibles for flood losses vary in amount, up to a maximum of $500,000, based upon location of the facility. Since certain of our facilities have been designated by our insurer as flood prone, we have elected to purchase policies from The National Flood Insurance Program.  Property insurance for our behavioral health facilities located in the U.K. are provided on an all risk basis up to a £1.29 billion policy limit, with coverage caps per location, that includes coverage for real and personal property as well as business interruption losses.

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Other

Our accounts receivable as of September 30, 2019 and December 31, 2018 include amounts due from Illinois of approximately $29 million and $32 million, respectively. Collection of the outstanding receivables continues to be delayed due to state budgetary and funding pressures. Approximately $13 million as of September 30, 2019 and $18 million as of December 31, 2018, of the receivables due from Illinois were outstanding in excess of 60 days, as of each respective date. Although the accounts receivable due from Illinois could remain outstanding for the foreseeable future, since we expect to eventually collect all amounts due to us, no related reserves have been established in our consolidated financial statements. However, we can provide no assurance that we will eventually collect all amounts due to us from Illinois. Failure to ultimately collect all outstanding amounts due to us from Illinois would have an adverse impact on our future consolidated results of operations and cash flows.

Legal Proceedings

We operate in a highly regulated and litigious industry which subjects us to various claims and lawsuits in the ordinary course of business as well as regulatory proceedings and government investigations. These claims or suits include claims for damages for personal injuries, medical malpractice, commercial/contractual disputes, wrongful restriction of, or interference with, physicians’ staff privileges, and employment related claims. In addition, health care companies are subject to investigations and/or actions by various state and federal governmental agencies or those bringing claims on their behalf. Government action has increased with respect to investigations and/or allegations against healthcare providers concerning possible violations of fraud and abuse and false claims statutes as well as compliance with clinical and operational regulations. Currently, and from time to time, we and some of our facilities are subjected to inquiries in the form of subpoenas, Civil Investigative Demands, audits and other document requests from various federal and state agencies. These inquiries can lead to notices and/or actions including repayment obligations from state and federal government agencies associated with potential non-compliance with laws and regulations. Further, the federal False Claims Act allows private individuals to bring lawsuits (qui tam actions) against healthcare providers that submit claims for payments to the government. Various states have also adopted similar statutes. When such a claim is filed, the government will investigate the matter and decide if they are going to intervene in the pending case. These qui tam lawsuits are placed under seal by the court to comply with the False Claims Act’s requirements. If the government chooses not to intervene, the private individual(s) can proceed independently on behalf of the government. Health care providers that are found to violate the False Claims Act may be subject to substantial monetary fines/penalties as well as face potential exclusion from participating in government health care programs or be required to comply with Corporate Integrity Agreements as a condition of a settlement of a False Claims Act matter. In September 2014, the Criminal Division of the Department of Justice (“DOJ”) announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened. The DOJ has also announced an intention to pursue civil and criminal actions against individuals within a company as well as the corporate entity or entities. In addition, health care facilities are subject to monitoring by state and federal surveyors to ensure compliance with program Conditions of Participation. In the event a facility is found to be out of compliance with a Condition of Participation and unable to remedy the alleged deficiency(s), the facility faces termination from the Medicare and Medicaid programs or compliance with a System Improvement Agreement to remedy deficiencies and ensure compliance.

The laws and regulations governing the healthcare industry are complex covering, among other things, government healthcare participation requirements, licensure, certification and accreditation, privacy of patient information, reimbursement for patient services as well as fraud and abuse compliance. These laws and regulations are constantly evolving and expanding. Further, the Affordable Care Act has added additional obligations on healthcare providers to report and refund overpayments by government healthcare programs and authorizes the suspension of Medicare and Medicaid payments “pending an investigation of a credible allegation of fraud.” We monitor our business and have developed an ethics and compliance program with respect to these complex laws, rules and regulations. Although we believe our policies, procedures and practices comply with government regulations, there is no assurance that we will not be faced with the sanctions referenced above which include fines, penalties and/or substantial damages, repayment obligations, payment suspensions, licensure revocation, and expulsion from government healthcare programs. Even if we were to ultimately prevail in any action brought against us or our facilities or in responding to any inquiry, such action or inquiry could have a material adverse effect on us.

Certain legal matters are described below:

Government Investigations:

UHS Behavioral Health

In February, 2013, the Office of Inspector General for the United States Department of Health and Human Services (“OIG”) served a subpoena requesting various documents from January, 2008 to the date of the subpoena directed at Universal Health Services, Inc. (“UHS”) concerning it and UHS of Delaware, Inc., and certain UHS owned behavioral health facilities including: Keys of Carolina, Old Vineyard Behavioral Health, The Meadows Psychiatric Center, Streamwood Behavioral Health, Hartgrove Hospital, Rock River Academy and Residential Treatment Center, Roxbury Treatment Center, Harbor Point Behavioral Health Center, f/k/a The Pines Residential Treatment Center, including the Crawford, Brighton and Kempsville campuses, Wekiva Springs Center and River Point Behavioral Health.   Prior to receipt of this subpoena, some of these facilities had received independent subpoenas from state or federal agencies. Subsequent to the February 2013 subpoenas, some of the facilities above have received additional, specific

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subpoenas or other document and information requests.  In addition to the OIG, the DOJ and various U.S. Attorneys’ and state Attorneys’ General Offices are also involved in this matter. Since February 2013, additional facilities have also received subpoenas and/or document and information requests or we have been notified are included in the omnibus investigation.  Those facilities include: National Deaf Academy, Arbour-HRI Hospital, Behavioral Hospital of Bellaire, St. Simons By the Sea, Turning Point Care Center, Salt Lake Behavioral Health, Central Florida Behavioral Hospital, University Behavioral Center, Arbour Hospital, Arbour-Fuller Hospital, Pembroke Hospital, Westwood Lodge, Coastal Harbor Health System, Shadow Mountain Behavioral Health, Cedar Hills Hospital, Mayhill Hospital, Southern Crescent Behavioral Health (Anchor Hospital and Crescent Pines campuses), Valley Hospital (AZ), Peachford Behavioral Health System of Atlanta, University Behavioral Health of Denton, El Paso Behavioral Health System, Newport News Behavioral Health Center, The Hughes Center, Forest View Hospital and Havenwyck Hospital.

In October, 2013, we were advised that the DOJ’s Criminal Frauds Section had opened an investigation of River Point Behavioral Health and Wekiva Springs Center. We were subsequently notified that the Criminal Frauds section opened investigations of National Deaf Academy, Hartgrove Hospital and UHS as a corporate entity. In April 2017, the DOJ’s Criminal Division issued a subpoena requesting documentation from Shadow Mountain Behavioral Health. In August 2017, Kempsville Center of Behavioral Health (a part of Harbor Point Behavioral Health previously identified above) received a subpoena requesting documentation. We have recently been advised that the investigations being conducted by the DOJ’s Criminal Frauds Section and corresponding U.S. Attorneys’ Offices, of UHS and the above referenced facilities, have been closed.

In April, 2014, the Centers for Medicare and Medicaid Services (“CMS”) instituted a Medicare payment suspension at River Point Behavioral Health in accordance with federal regulations regarding suspension of payments during certain investigations. The Florida Agency for Health Care Administration (“AHCA”) subsequently issued a Medicaid payment suspension for the facility. River Point Behavioral Health submitted a rebuttal statement disputing the basis of the suspension and requesting revocation of the suspension. Notwithstanding, CMS continued the payment suspension. River Point Behavioral Health provided additional information to CMS in an effort to obtain relief from the payment suspension but the Medicare suspension remains in effect. In June 2017, AHCA advised that while they were maintaining the suspension for dual eligible and cross-over Medicare beneficiaries, the Medicaid payment suspension was lifted effective June 27, 2017. From inception through September 30, 2019, the aggregate funds withheld from us in connection with the River Point Behavioral Health payment suspension amounted to approximately $8.6 million. We anticipate a resolution of the payment suspension will be part of the overall settlement agreement(s) to be drafted and finalized.  Although the operating results of River Point Behavioral Health did not have a material impact on our consolidated results of operations during the nine-month period ended September 30, 2019 or the year ended December 31, 2018, the payment suspension has had a material adverse effect on the facility’s results of operations and financial condition.

The DOJ has advised us that the civil aspect of the coordinated investigation referenced above is a False Claims Act investigation focused on billings submitted to government payers in relation to services provided at those facilities. While there have been various matters raised by DOJ during the pendency of this investigation, DOJ Civil has advised that the focus of their investigation is on medical necessity issues and billing for services not eligible for payment due to non-compliance with regulatory requirements relating to, among other things, admission eligibility, discharge decisions, length of stay and patient care issues. It is our understanding that the DOJ Criminal Fraud Section was investigating similar issues prior to the closure of their investigation. UHS denies any fraudulent billings were submitted to government payers.  

In July 2019, we reached an agreement in principle with the DOJ’s Civil Division, and on behalf of various states’ attorneys general offices, to resolve the civil aspects of the government’s investigation of our behavioral health care facilities for $127 million subject to requisite approvals and preparation and execution of definitive settlement and related agreements. We are also negotiating a corporate integrity agreement with the Office of Inspector General for the United States Department of Health and Human Services (“OIG”) which we expect will be part of the overall settlement of this matter.  

In connection with this agreement in principle, during the nine-month period ended September 30, 2019, we recorded a pre-tax increase of approximately $11 million to the reserve established in connection with the civil aspects of these matters (“DOJ Reserve”), which includes related fees and costs due to or on behalf of third-parties. The aggregate pre-tax DOJ Reserve amounted to $134 million as of September 30, 2019 and $123 million as of December 31, 2018 (including $48 million and $70 million recorded during the three and nine-month periods ended September 30, 2018, respectively).

In late August, 2019, we received the initial draft of the settlement agreement from the DOJ’s Civil Division. Negotiations regarding the terms and conditions of the settlement agreement continue. Based upon the terms and provisions included in the draft settlement agreement, and related subsequent discussions, our financial statements for each of the three and nine-month periods ended September 30, 2019 include an unfavorable provision for income taxes of approximately $6 million resulting from the net estimated federal and state income taxes due on the portion of the pre-tax DOJ Reserve that is estimated to be non-deductible for income tax purposes.  

Since the agreement in principle with the DOJ’s Civil Division is subject to certain required approvals and negotiation and execution of definitive settlement agreements, as well as negotiation and execution of a corporate integrity agreement with the OIG, we can provide no assurance that definitive agreements will ultimately be finalized. We therefore can provide no assurance that final amounts paid in settlement or otherwise, or associated costs, or the income tax deductibility of such payments, will not differ materially from our established reserve and assumptions related to income tax deductibility.

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DOJ investigation of Turning Point Hospital.

During the fourth quarter of 2018, we were notified that the DOJ Civil Division in conjunction with the U.S. Attorney’s Office for the Northern District of Georgia and the Georgia Attorney General’s Office opened an investigation of Turning Point Hospital in Moultrie, GA.  The DOJ Civil Division has advised us that they are primarily investigating transportation and housing financial assistance provided to patients receiving treatment at the facility. The DOJ issued a civil investigative demand to the facility requesting various documents and other information. In September, 2019, we reached a settlement in principle of this matter pending negotiation, finalization and execution of definitive settlement agreements. As of September 30, 2019, our financial statements include an estimated reserve in connection with the potential settlement of this matter, which did not have material impact on our results of operations and financial condition.

Litigation:

U.S. ex rel Escobar v. Universal Health Services, Inc. et.al.

This is a False Claims Act case filed against Universal Health Services, Inc., UHS of Delaware, Inc. and HRI Clinics, Inc. d/b/a Arbour Counseling Services in U.S. District Court for the District of Massachusetts.  This qui tam action primarily alleges that Arbour Counseling Services failed to appropriately supervise certain clinical providers in contravention of  regulatory requirements and the submission of claims to Medicaid were subsequently improper.  Relators make other claims of improper billing to Medicaid associated with alleged failures of Arbour Counseling to comply with state regulations.  The U.S. Attorney’s Office and the Massachusetts Attorney General’s Office initially declined to intervene.  UHS filed a motion to dismiss and the trial court originally granted the motion dismissing the case.  The First Circuit Court of Appeals (“First Circuit”) reversed the trial court’s dismissal of the case.  The United States Supreme Court subsequently vacated the First Circuit’s opinion and remanded the case for further consideration under the new legal standards established by the Supreme Court for False Claims Act cases.  During the 4^th quarter of 2016, the First Circuit issued a revised opinion upholding their reversal of the trial court’s dismissal.  The case was then remanded to the trial court for further proceedings.  In January 2017, the U.S. Attorney’s Office and Massachusetts Attorney General’s Office advised of the potential for intervention in the case.  The Massachusetts Attorney General’s Office subsequently filed its motion to intervene which was granted and, in April 2017, filed their Complaint in Intervention. We are defending this case vigorously. This matter is included in the above-mentioned agreement in principle reached with the DOJ’s Civil Division, and on behalf of various states’ attorneys general offices, to resolve the civil aspects of the government’s investigation of our behavioral health care facilities, subject to requisite approvals and preparation and execution of definitive settlement and related agreements.

Shareholder Class Action

In December 2016 a purported shareholder class action lawsuit was filed in U.S. District Court for the Central District of California against UHS and certain UHS officers alleging violations of the federal securities laws. The case was originally filed as Heed v. Universal Health Services, Inc. et. al. (Case No. 2:16-CV-09499-PSG-JC). The court subsequently appointed Teamsters Local 456 Pension Fund and Teamsters Local 456 Annuity Fund to serve as lead plaintiffs.  The case has been transferred to the U.S. District Court for the Eastern District of Pennsylvania and the style of the case has been changed to Teamsters Local 456 Pension Fund, et. al. v. Universal Health Services, Inc. et. al. (Case No. 2:17-CV-02817-LS). In September, 2017, Teamsters Local 456 Pension Fund filed an amended complaint. The amended class action complaint alleges violations of federal securities laws relating to disclosures made in public filings associated with alleged practices and operations at our behavioral health facilities.  Plaintiffs seek monetary damages for shareholders during the defined class period as a result of the decrease in share price following various public disclosures or reports. In December, 2017, we filed a motion to dismiss the amended complaint. In August, 2019, the court granted our motion to dismiss. Plaintiffs have filed a motion with the court seeking leave to file a second amended complaint. Should the court deny plaintiffs’ motion, we anticipate an appeal of the dismissal of the case. We deny liability and intend to defend ourselves vigorously. At this time, we are uncertain as to potential liability or financial exposure, if any, which may be associated with this matter.

Shareholder Derivative Cases  

In March 2017, a shareholder derivative suit was filed by plaintiff David Heed in the Court of Common Pleas of Philadelphia County. A notice of removal to the United States District Court for the Eastern District of Pennsylvania was filed (Case No. 2:17-cv-01476-LS). Plaintiff filed a motion to remand. In December 2017, the Court denied plaintiff’s motion to remand and has retained the case in federal court. In May, June and July 2017, additional shareholder derivative suits were filed in the United States District Court for the Eastern District of Pennsylvania. The plaintiffs in those cases are: Central Laborers’ Pension Fund (Case No. 17-cv-02187-LS); Firemen’s Retirement System of St. Louis (Case No. 17—cv-02317-LS); Waterford Township Police & Fire Retirement System (Case No. 17-cv-02595-LS); and Amalgamated Bank Longview Funds (Case No. 17-cv-03404-LS). The Fireman’s Retirement System case has since been voluntarily dismissed. The federal court has consolidated all of the cases pending in the Eastern District of Pennsylvania and has appointed co-lead plaintiffs and co-lead counsel. Lead Plaintiffs have filed a consolidated, amended complaint. We have filed a motion to dismiss the amended complaint.  In addition, a shareholder derivative case was filed in Chancery Court in Delaware by the Delaware County Employees’ Retirement Fund (Case No. 2017-0475-JTL). In December 2017, the Chancery Court stayed this case pending resolution of other contemporaneous matters. Each of these cases have named certain current and former members of the Board of Directors individually and certain officers of Universal Health Services, Inc. as defendants.  UHS has also been named as a nominal defendant in these cases. The derivative cases make substantially similar allegations and claims as the

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shareholder class action relating to practices at our behavioral health facilities and board and corporate oversight of these facilities as well as claims relating to the stock trading by the individual defendants and company repurchase of shares during the relevant time period. The cases make claims of breaches of fiduciary duties by the named board members and officers; alleged violations of federal securities laws; and common law causes of action against the individual defendants including unjust enrichment, corporate waste, abuse of control, constructive fraud and gross mismanagement. The cases seek monetary damages allegedly incurred by the company; restitution and disgorgement of profits, benefits and other compensation from the individual defendants and various forms of equitable relief relating to corporate governance matters. In August, 2019, the court granted our motion to dismiss. Plaintiffs have filed a motion with the court seeking leave to file a second amended complaint. Should the court deny plaintiffs’ motion, we anticipate an appeal of the dismissal of the case.  The defendants deny liability and intend to defend these cases vigorously. At this time, we are uncertain as to potential liability or financial exposure, if any, which may be associated with these matters.

Disproportionate Share Hospital Payment Matter:

In late September, 2015, many hospitals in Pennsylvania, including certain of our behavioral health care hospitals located in the state, received letters from the Pennsylvania Department of Human Services (the “Department”) demanding repayment of allegedly excess Medicaid Disproportionate Share Hospital payments (“DSH”), primarily consisting of managed care payments characterized as DSH payments, for the federal fiscal year (“FFY”) 2011 amounting to approximately $4 million in the aggregate. Since that time, certain of our behavioral health care hospitals in Pennsylvania have received similar requests for repayment for alleged DSH overpayments for FFYs 2012 through 2015. For FFY 2012, the claimed overpayment amounts to approximately $4 million. For FFY 2013, the claimed overpayments were initially approximately $7 million but have since been reduced to approximately $2 million due to a change in the Department’s calculations of the hospital specific DSH upper payment limit. For FFY 2014, the claimed overpayments were approximately $7 million and for FFY 2015, the claimed overpayments were approximately $5 million. We filed administrative appeals for all of our facilities contesting the recoupment efforts for FFYs 2011 through 2015 as we believe the Department’s calculation methodology is inaccurate and conflicts with applicable federal and state laws and regulations. The Department has agreed to postpone the recoupment of the state’s share of the DSH payments until all hospital appeals are resolved but started recoupment of the federal share. We understand that starting in FFY 2016, the first full fiscal year after the January 1, 2015 effective date of Medicaid expansion in Pennsylvania, the Department will no longer characterize managed care payments received by the hospitals as DSH payments. We can provide no assurance that we will ultimately be successful in our legal and administrative appeals related to the Department’s repayment demands.  If our legal and administrative appeals are unsuccessful, our future consolidated results of operations and financial condition could be adversely impacted by these repayments.        

Other Matters:

Various other suits, claims and investigations, including government subpoenas, arising against, or issued to, us are pending and additional such matters may arise in the future. Management will consider additional disclosure from time to time to the extent it believes such matters may be or become material. The outcome of any current or future litigation or governmental or internal investigations, including the matters described above, cannot be accurately predicted, nor can we predict any resulting penalties, fines or other sanctions that may be imposed at the discretion of federal or state regulatory authorities. We record accruals for such contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made at this time regarding the matters described above or that are otherwise pending because the inherently unpredictable nature of legal proceedings may be exacerbated by various factors, including, but not limited to: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the matter  is in its early stages; (iv) the matters present legal uncertainties; (v) there are significant facts in dispute; (vi) there are a large number of parties, or; (vii) there is a wide range of potential outcomes. It is possible that the outcome of these matters could have a material adverse impact on our future results of operations, financial position, cash flows and, potentially, our reputation.

(7) Segment Reporting

Our reportable operating segments consist of acute care hospital services and behavioral health care services. The “Other” segment column below includes centralized services including, but not limited to, information technology, purchasing, reimbursement, accounting and finance, taxation, legal, advertising and design and construction. The chief operating decision making group for our acute care services and behavioral health care services is comprised of our Chief Executive Officer, the President and the Presidents of each operating segment. The Presidents for each operating segment also manage the profitability of each respective segment’s various facilities. The operating segments are managed separately because each operating segment represents a business unit that offers different types of healthcare services or operates in different healthcare environments. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2018. The corporate overhead allocations, as reflected below, are utilized for internal reporting purposes and are comprised of each period’s projected corporate-level operating expenses (excluding interest expense). The overhead expenses are captured and allocated directly to each segment to the extent possible, and overhead expenses incurred on behalf of both segments are captured and allocated to each segment based upon each segment’s respective percentage of total operating expenses.

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	Three months ended September 30, 2019
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	7,004,832		$	2,536,504		$	0		$	9,541,336
Gross outpatient revenues	$	4,477,277		$	257,690		$	0		$	4,734,967
Total net revenues	$	1,528,535		$	1,291,816		$	2,102		$	2,822,453
Income/(loss) before allocation of corporate overhead and    income taxes	$	148,085		$	138,019		$	(148,029	)	$	138,075
Allocation of corporate overhead	$	(57,578	)	$	(41,651	)	$	99,229		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	90,507		$	96,368		$	(48,800	)	$	138,075
Total assets as of September 30, 2019	$	4,395,259		$	6,919,100		$	280,042		$	11,594,401
	Nine months ended September 30, 2019
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	21,220,471		$	7,568,129		$	0		$	28,788,600
Gross outpatient revenues	$	13,137,199		$	792,929		$	0		$	13,930,128
Total net revenues	$	4,575,088		$	3,898,440		$	8,484		$	8,482,012
Income/(loss) before allocation of corporate overhead and    income taxes	$	528,455		$	648,173		$	(431,449	)	$	745,179
Allocation of corporate overhead	$	(172,606	)	$	(124,936	)	$	297,542		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	355,849		$	523,237		$	(133,907	)	$	745,179
Total assets as of September 30, 2019	$	4,395,259		$	6,919,100		$	280,042		$	11,594,401
	Three months ended September 30, 2018
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	6,009,303		$	2,459,078		$	0		$	8,468,381
Gross outpatient revenues	$	3,694,389		$	242,167		$	0		$	3,936,556
Total net revenues	$	1,383,050		$	1,262,472		$	3,391		$	2,648,913
Income/(loss) before allocation of corporate overhead and    income taxes	$	147,448		$	234,170		$	(152,551	)	$	229,067
Allocation of corporate overhead	$	(49,967	)	$	(40,244	)	$	90,211		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	97,481		$	193,926		$	(62,340	)	$	229,067
Total assets as of September 30, 2018	$	4,027,573		$	6,871,765		$	374,247		$	11,273,585
	Nine months ended September 30, 2018
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	18,535,079		$	7,310,230		$	0		$	25,845,309
Gross outpatient revenues	$	11,169,376		$	764,885		$	0		$	11,934,261
Total net revenues	$	4,232,673		$	3,774,551		$	10,558		$	8,017,782
Income/(loss) before allocation of corporate overhead and    income taxes	$	513,174		$	734,362		$	(420,461	)	$	827,075
Allocation of corporate overhead	$	(149,760	)	$	(120,822	)	$	270,582		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	363,414		$	613,540		$	(149,879	)	$	827,075
Total assets as of September 30, 2018	$	4,027,573		$	6,871,765		$	374,247		$	11,273,585

(a) Includes net revenues generated from our behavioral health care facilities located in the U.K. amounting to approximately $135 million and $130 million for the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $415 million and $364 million for the nine-month periods ended September 30, 2019 and 2018, respectively.  Total assets at our U.K. behavioral health care facilities were approximately $1.175 billion and $1.231 billion as of September 30, 2019 and 2018, respectively.

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(8) Earnings Per Share Data (“EPS”) and Stock Based Compensation

Basic earnings per share are based on the weighted average number of common shares outstanding during the period. Diluted earnings per share are based on the weighted average number of common shares outstanding during the period adjusted to give effect to common stock equivalents.

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data): 

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Basic and Diluted:
Net income attributable to UHS	$	97,190		$	171,746		$	569,678		$	621,630
Less: Net income attributable to unvested restricted share    grants		(243	)		(317	)		(1,414	)		(813	)
Net income attributable to UHS – basic and diluted	$	96,947		$	171,429		$	568,264		$	620,817
Weighted average number of common shares - basic		87,952			92,849			89,288			93,639
Net effect of dilutive stock options and grants based on the    treasury stock method		403			481			231			459
Weighted average number of common shares and    equivalents - diluted		88,355			93,330			89,519			94,098
Earnings per basic share attributable to UHS:	$	1.10		$	1.85		$	6.36		$	6.63
Earnings per diluted share attributable to UHS:	$	1.10		$	1.84		$	6.35		$	6.60

The “Net effect of dilutive stock options and grants based on the treasury stock method”, for all periods presented above, excludes certain outstanding stock options applicable to each period since the effect would have been anti-dilutive. The excluded weighted-average stock options totaled 4.3 million for the three months ended September 30, 2019 and 6.6 million for the nine months ended September 30, 2019. The excluded weighted-average stock options totaled 7.3 million for the three months ended September 30, 2018 and 8.2 million for the nine months ended September 30, 2018. All classes of our common stock have the same dividend rights.

The decrease in our basic and diluted weighted number of common shares outstanding for the three and nine months ended September 30, 2019, as compared to the comparable prior year three and nine months, was due primarily to the impact of shares repurchased by us since January 1, 2018.

Stock-Based Compensation:

During the three-month periods ended September 30, 2019 and 2018, pre-tax compensation cost of $14.9 million and $14.2 million, respectively, was recognized related to outstanding stock options.  During the nine-month periods ended September 30, 2019 and 2018, pre-tax compensation costs of $45.4 million and $46.7 million, respectively, was recognized related to outstanding stock options.  In addition, during the three-month periods ended September 30, 2019 and 2018, pre-tax compensation cost of approximately $2.3 million and $1.4 million  (net of cancellations), respectively, was recognized related to restricted stock.  During the nine-month periods ended September 30, 2019 and 2018, pre-tax compensation costs of approximately $6.0 million and $3.1 million (net of cancellations), respectively, was recognized related to restricted stock.  As of September  30, 2019 there was approximately $140.6 million of unrecognized compensation cost related to unvested options and restricted stock which is expected to be recognized over the remaining weighted average vesting period of 2.7 years. There were 2,456,015 stock options granted during the first nine months of 2019 with a weighted-average grant date fair value of $30.40 per share.  There were 145,076 shares of restricted shares granted during the first nine months of 2019 with a weighted-average grant date fair value of $133.98 per share.

The expense associated with stock-based compensation arrangements is a non-cash charge. In the Condensed Consolidated Statements of Cash Flows, stock-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities and aggregated to $52.2 million and $50.6 million during the nine-month periods ended September 30, 2019 and 2018, respectively. 

(9) Dispositions and acquisitions

Nine-month period ended September 30, 2019:

Acquisitions:

During the first nine months of 2019, there were no acquisitions. 

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Divestitures:

During the first nine months of 2019, we received approximately $7 million from the divestiture of the real property of a previously closed behavioral health care facility.

Nine-month period ended September 30, 2018:

Acquisitions:

During the first nine months of 2018, we paid approximately $108 million to acquire businesses and property consisting primarily of the acquisition of: (i) The Danshell Group, consisting of 25 behavioral health facilities located in the U.K. (acquired during the third quarter of 2018), and; (ii) a 109-bed behavioral health care facility located in Gulfport, Mississippi (acquired during the first quarter).

Divestitures:

During the first nine months of 2018, we received approximately $14 million in connection with: (i) the required divestiture of an 18-bed behavioral health care facility located in the U.K. (pursuant to the final ruling of The Competition and Markets Authority in connection with our acquisition of Cambian Group, PLC), and; (ii) the real property of a closed behavioral health facility.

(10) Dividends

We declared and paid dividends of $17.6 million, or $.20 per share, during the third quarter of 2019 and $9.3 million or $.10 per share during the third quarter of 2018.  We declared and paid dividends of $35.6 million and $28.1 million during the nine-month periods ended September 30, 2019 and 2018, respectively.  

(11) Income Taxes

Our effective income tax rates were 26.9% and 23.7% during the three-month periods ended September 30, 2019 and 2018, respectively, and 22.2% and 23.3% during the nine-month periods ended September 30, 2019, and 2018, respectively.  The increase in the effective tax rate during the three-month period ended September 30, 2019, as compared to the comparable quarter of 2018, was primarily due to $6 million of tax expense related to non-deductible DOJ Reserve offset by $2 million of tax benefit attributable to employee share-based payments during the third quarter of 2019.  The net decrease in the effective tax rate during the nine-month period ended September 30, 2019, compared with the same period in 2018, was primarily due to an $11 million tax benefit attributable to employee share-based payments, a $4 million tax benefit related to the effects of a change in state tax law enacted during 2019 offset by $6 million of tax expense due to non-deductible DOJ Reserve during the third quarter of 2019 as compared to $1 million of tax benefit attributable to employee share-based payments during the first nine months of 2018.

The global intangible low-taxed income (“GILTI”) provisions from the TCJA-17 require the inclusion of the earnings of certain foreign subsidiaries in excess of an acceptable rate of return on certain assets of the respective subsidiaries in our U.S. tax return for tax years beginning after December 31, 2017.  An accounting policy election was made during 2018 to treat taxes related to GILTI as a period cost when the tax is incurred. We recorded a GILTI tax provision of less than $1 million for the nine-month periods ended September 30, 2019 and 2018, respectively.

As of January 1, 2019, our unrecognized tax benefits were approximately $2 million. The amount, if recognized, that would favorably affect the effective tax rate is approximately $1 million. During the nine months ended September 30, 2019, changes to the estimated liabilities for uncertain tax positions (including accrued interest) relating to tax positions taken during prior and current periods did not have a material impact on our financial statements.

We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of September 30, 2019, we have less than $1 million of accrued interest and penalties. The U.S. federal statute of limitations remains open for 2016 and subsequent years. Foreign and U.S. state and local jurisdictions have statutes of limitations generally ranging from 3 to 4 years. The statute of limitations on certain jurisdictions could expire within the next twelve months.  It is reasonably possible that the amount of uncertain tax benefits will change during the next 12 months, however, it is anticipated that any such change, if it were to occur, would not have a material impact on our results of operations.

We operate in multiple jurisdictions with varying tax laws. We are subject to audits by any of these taxing authorities. Our tax returns have been examined by the Internal Revenue Service (“IRS”) through the year ended December 31, 2006. We believe that adequate accruals have been provided for federal, foreign and state taxes.

(12) Revenue

In May 2014 and March 2016, the FASB issued ASU 2014-09 and ASU 2016-08, “Revenue from Contracts with Customers (Topic 606)” and “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”,

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respectively, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Under the new standards, our estimate for amounts not expected to be collected based on historical experience will continue to be recognized as a reduction to net revenue. However, subsequent changes in estimate of collectability due to a change in the financial status of a payer, for example a bankruptcy, will be recognized as bad debt expense in operating charges.

The performance obligation is separately identifiable from other promises in the customer contract. As the performance obligations are met (i.e.: room, board, ancillary services, level of care), revenue is recognized based upon allocated transaction price. The transaction price is allocated to separate performance obligations based upon the relative standalone selling price. In instances where we determine there are multiple performance obligations across multiple months, the transaction price will be allocated by applying an estimated implicit and explicit rate to gross charges based on the separate performance obligations.

In assessing collectability, we have elected the portfolio approach.  This portfolio approach is being used as we have large volume of similar contracts with similar classes of customers. We reasonably expect that the effect of applying a portfolio approach to a group of contracts would not differ materially from considering each contract separately.  Management’s judgment to group the contracts by portfolio is based on the payment behavior expected in each portfolio category.  As a result, aggregating all of the contracts (which are at the patient level) by the particular payer or group of payers, will result in the recognition of the same amount of revenue as applying the analysis at the individual patient level.

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We group our revenues into categories based on payment behaviors.  Each component has its own reimbursement structure which allows us to disaggregate the revenue into categories that share the nature and timing of payments.  The other patient revenue consists primarily of self-pay, government-funded non-Medicaid, and other.

The following table disaggregates our revenue by major source for the three and nine month periods ended September 30, 2019 and 2018 (in thousands):

	For the three months ended September 30, 2019
	Acute Care				Behavioral Health				Other		Total
Medicare	$	333,777	22	%	$	143,514	11	%			$	477,291	17	%
Managed Medicare		197,993	13	%		60,801	5	%				258,794	9	%
Medicaid		148,570	10	%		168,871	13	%				317,441	11	%
Managed Medicaid		133,906	9	%		278,888	22	%				412,794	15	%
Managed Care (HMO and PPOs)		554,341	36	%		324,140	25	%				878,481	31	%
UK Revenue		0	0	%		134,905	10	%				134,905	5	%
Other patient revenue and adjustments, net		45,918	3	%		130,964	10	%				176,882	6	%
Other non-patient revenue		114,030	7	%		49,733	4	%		2,102		165,865	6	%
Total Net Revenue	$	1,528,535	100	%	$	1,291,816	100	%	$	2,102		2,822,453	100	%
	For the nine months ended September 30, 2019
	Acute Care				Behavioral Health				Other		Total
Medicare	$	988,746	22	%	$	420,218	11	%			$	1,408,964	17	%
Managed Medicare		618,756	14	%		167,212	4	%				785,968	9	%
Medicaid		391,762	9	%		525,350	13	%				917,112	11	%
Managed Medicaid		413,607	9	%		821,413	21	%				1,235,020	15	%
Managed Care (HMO and PPOs)		1,690,889	37	%		1,018,739	26	%				2,709,628	32	%
UK Revenue		0	0	%		415,407	11	%				415,407	5	%
Other patient revenue and adjustments, net		133,962	3	%		381,345	10	%				515,307	6	%
Other non-patient revenue		337,366	7	%		148,756	4	%		8,484		494,606	6	%
Total Net Revenue	$	4,575,088	100	%	$	3,898,440	100	%	$	8,484		8,482,012	100	%
	For the three months ended September 30, 2018
	Acute Care				Behavioral Health				Other		Total
Medicare	$	295,691	21	%	$	155,642	12	%			$	451,333	17	%
Managed Medicare		175,248	13	%		55,285	4	%				230,533	9	%
Medicaid		126,977	9	%		169,614	13	%				296,591	11	%
Managed Medicaid		123,296	9	%		242,233	19	%				365,529	14	%
Managed Care (HMO and PPOs)		500,688	36	%		333,585	26	%				834,273	31	%
UK Revenue		0	0	%		129,965	10	%				129,965	5	%
Other patient revenue and adjustments, net		62,055	4	%		126,157	10	%				188,212	7	%
Other non-patient revenue		99,095	7	%		49,991	4	%		3,391		152,477	6	%
Total Net Revenue	$	1,383,050	100	%	$	1,262,472	100	%	$	3,391		2,648,913	100	%
	For the nine months ended September 30, 2018
	Acute Care				Behavioral Health				Other		Total
Medicare	$	972,073	23	%	$	444,812	12	%			$	1,416,885	18	%
Managed Medicare		550,683	13	%		151,323	4	%				702,006	9	%
Medicaid		349,794	8	%		522,916	14	%				872,710	11	%
Managed Medicaid		410,243	10	%		720,285	19	%				1,130,528	14	%
Managed Care (HMO and PPOs)		1,547,496	37	%		1,052,694	28	%				2,600,190	32	%
UK Revenue		0	0	%		364,163	10	%				364,163	5	%
Other patient revenue and adjustments, net		104,926	2	%		364,534	10	%				469,460	6	%
Other non-patient revenue		297,458	7	%		153,824	4	%		10,558		461,840	6	%
Total Net Revenue	$	4,232,673	100	%	$	3,774,551	100	%	$	10,558		8,017,782	100	%

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(13) Lease Accounting

In February 2016, the FASB issued ASU 2016-02 (Topic 842) "Leases." Topic 842 supersedes the lease requirements in Accounting Standards Codification Topic 840, "Leases." Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will be classified as either finance or operating.

We adopted Topic 842 effective January 1, 2019. We applied Topic 842 to all leases as of January 1, 2019 with comparative periods continuing to be reported under Topic 840. We have elected the practical expedient package to not reassess at adoption (i) expired or existing contracts for whether they are or contain a lease, (ii) the lease classification of any existing leases or (iii) initial indirect costs for existing leases. We have also elected the policy exemption that allows lessees to choose to not separate lease and non-lease components by class of underlying asset and are applying this expedient to all relevant asset classes.

We determine if an arrangement is or contains a lease at inception of the contract. Our right-of-use assets represent our right to use the underlying assets for the lease term and our lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We use the implicit rate noted within the contract.  If not readily available, we use our estimated incremental borrowing rate, which is derived using a collateralized borrowing rate for the same currency and term as the associated lease. A right-of-use asset and lease liability is not recognized for leases with an initial term of 12 months or less and we recognize lease expense for these leases on a straight-line basis over the lease term within lease and rental expense.

Our operating leases are primarily for real estate, including certain acute care facilities, off-campus outpatient facilities, medical office buildings, and corporate and other administrative offices.  Our real estate lease agreements typically have initial terms of five to 10 years.  These real estate leases may include one or more options to renew, with renewals that can extend the lease term from five to 10 years. The exercise of lease renewal options is at our sole discretion. When determining the lease term, we included options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The components of lease expense for the three and nine month periods ended September 30, 2019 are as follows (in thousands):

	Three months ended September 30,		Nine months ended September 30,
	2019		2019
Operating lease cost	$	17,849	$	54,188
Variable and short term lease cost (a)		9,811		26,132
Total lease cost	$	27,660	$	80,320
Finance lease cost:
Amortization of right-of-use-assets	$	481	$	1,444
Interest on lease liabilities		464		1,422
Total finance lease cost	$	945	$	2,866

(a) Includes equipment, month-to-month and leases with a maturity of less than 12 months.

Supplemental cash flow information related to leases for the nine month period ended September 30, 2019 are as follows (in thousands):

	Nine months ended September 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	79,598
Operating cash flows from finance leases	$	1,589
Financing cash flows from finance leases	$	1,435
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	364,453
Finance leases	0

Included in the $364 million of right-of-use assets obtained in exchange for operating lease obligations is $14.0 million of new operating leases entered into during the nine month period ended September 30, 2019.

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Supplemental balance sheet information related to leases as of September 30, 2019 are as follows (in thousands):

	September 30,
	2019
Operating Leases
Right of use assets-operating leases	$	329,328
Operating lease liabilities	$	55,080
Operating lease liabilities noncurrent		274,248
Total operating lease liabilities	$	329,328
Finance Leases
Property and equipment	$	23,250
Accumulated depreciation		(10,844	)
Property and equipment, net	$	12,406
Current maturities of long-term debt	$	1,591
Long-term debt		16,790
Total finance lease liabilities	$	18,381
Weighted Average remaining lease term, years
Operating leases		9.9
Finance leases		7.5
Weighted Average discount rate
Operating leases		4.7	%
Finance leases		10.4	%

Future maturities of lease liabilities as of September 30, 2019 are as follows (in thousands):

	Operating Leases			Finance Leases
Year ending December 31,
2019 (remaining 3 months)	$	17,887		$	826
2020		66,595			3,375
2021		59,317			3,257
2022		48,633			3,559
2023		43,843			3,654
Later years		186,908			12,130
Total lease payments		423,183			26,801
less imputed interest		(93,855	)		(8,420	)
Total	$	329,328		$	18,381

Future minimum rental payments under lease commitments with a term of more than one year as of December 31, 2018, prior to our adoption of ASU 2016-02 are as follows (amounts in thousands):

Year	Capital Leases			Operating Leases
2019	$	3,996		$	72,353
2020		3,345			59,492
2021		3,227			48,891
2022		3,508			35,233
2023		3,624			28,839
Later years		12,070			123,039
Total minimum rental	$	29,770		$	367,847
Less: Amount representing interest		(9,829	)
Present value of minimum rental commitments		19,941
Less: Current portion of capital lease obligations		(2,128	)
Long-term portion of capital lease obligations	$	17,813

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(14) Recent Accounting Standards

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. The standard will be effective for us in fiscal years beginning after December 15, 2019. We are currently evaluating the impact that the adoption of the new standard will have on our consolidated financial statements.

In January, 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment” (“ASU 2017-04”), which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  ASU 2017-04 is effective for the annual and interim periods beginning January 1, 2020 with early adoption permitted, and applied prospectively.  We do not expect ASU 2017-04 to have a material impact on our financial statements.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" and subsequent related updates. The amendments in this update expand and refine hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The ASU amends the presentation and disclosure requirements and changes how entities assess effectiveness. The ASU eliminates the requirement to separately measure and report hedge ineffectiveness and requires all items that affect earnings be presented in the same income statement line as the hedged items. The amendments in this guidance permit the use of the Overnight Index Swap rate based on Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rate for hedge accounting purposes to facilitate the LIBOR to SOFR transition. This guidance was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and we adopted effective January 1, 2019. The amended presentation and disclosure guidance was required only prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements.  

From time to time, new accounting guidance is issued by the FASB or other standard setting bodies that is adopted by the Company as of the effective date or, in some cases where early adoption is permitted, in advance of the effective date. The Company has assessed the recently issued guidance that is not yet effective and, unless otherwise indicated above, believes the new guidance will not have a material impact on our results of operations, cash flows or financial position.

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

Overview

Our principal business is owning and operating, through our subsidiaries, acute care hospitals and outpatient facilities and behavioral health care facilities.  

As of September 30, 2019, we owned and/or operated 353 inpatient facilities and 40 outpatient and other facilities including the following located in 37 states, Washington, D.C., the United Kingdom and Puerto Rico:

Acute care facilities located in the U.S.:

• 26 inpatient acute care hospitals;

• 12 free-standing emergency departments, and;

• 6 outpatient centers & 1 surgical hospital.

Behavioral health care facilities (327 inpatient facilities and 21 outpatient facilities):

Located in the U.S.:

• 186 inpatient behavioral health care facilities, and;

• 19 outpatient behavioral health care facilities.

Located in the U.K.:

• 138 inpatient behavioral health care facilities, and;

• 2 outpatient behavioral health care facilities.

Located in Puerto Rico:

• 3 inpatient behavioral health care facilities.

As a percentage of our consolidated net revenues, net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 54% and 52% during the three-month periods ended September 30, 2019 and 2018, respectively, and 54% and 53% during the nine-month period ended September 30, 2019 and 2018, respectively.  Net revenues from our behavioral health care facilities and commercial health insurer accounted for 46% and 48% of our consolidated net revenues during the three-month periods ended September 30, 2019 and 2018, respectively, and 46% and 47% during the nine-month periods ended September 30, 2019 and 2018, respectively.  

Our behavioral health care facilities located in the U.K. generated net revenues of approximately $135 million and $130 million during the three-month periods ended September 30, 2019 and 2018, respectively, and $415 million and $364 million for the nine-month periods ended September 30, 2019 and 2018, respectively.  Total assets at our U.K. behavioral health care facilities were approximately $1.175 billion as of September 30, 2019 and $1.224 billion as of December 31, 2018.  

Services provided by our hospitals include general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. We provide capital resources as well as a variety of management services to our facilities, including central purchasing, information services, finance and control systems, facilities planning, physician recruitment services, administrative personnel management, marketing and public relations.

Forward-Looking Statements and Risk Factors

You should carefully review the information contained in this Quarterly Report, and should particularly consider any risk factors that we set forth in this Quarterly Report and in other reports or documents that we file from time to time with the Securities and Exchange Commission (the “SEC”). In this Quarterly Report, we state our beliefs of future events and of our future financial performance. This Quarterly Report contains “forward-looking statements” that reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, and statements of our goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, as well as statements in future tense, identify forward-looking statements. In evaluating those statements, you should specifically consider various factors, including the risks related to healthcare industry trends and those detailed in our filings with the SEC including those set forth herein and in our Annual Report on Form 10-K for the year ended December 31, 2018 in Item 1A. Risk Factors and in Item 7.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations-Forward Looking Statements and Risk Factors.  Those factors may cause our actual results to differ materially from any of our forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking information is based on information available at the time and/or our good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Such factors include, among other things, the following:

• our ability to comply with the existing laws and government regulations, and/or changes in laws and government regulations;

• an increasing number of legislative initiatives have been passed into law that may result in major changes in the health care delivery system on a national or state level. Legislation has already been enacted that has eliminated the penalty for failing to maintain health coverage that was part of the original Legislation. President Trump has already taken executive actions: (i) requiring all federal agencies with authorities and responsibilities under the Legislation to “exercise all authority and discretion available to them to waiver, defer, grant exemptions from, or delay” parts of the Legislation that place “unwarranted economic and regulatory burdens” on states, individuals or health care providers; (ii) the issuance of a final rule in June, 2018 by the Department of Labor to enable the formation of association health plans that would be exempt from certain Legislation requirements such as the provision of essential health benefits; (iii) the issuance of a final rule in August, 2018 by the Department of Labor, Treasury, and Health and Human Services to expand the availability of short-term, limited duration health insurance, (iv) eliminating cost-sharing reduction payments to insurers that would otherwise offset deductibles and other out-of-pocket expenses for health plan enrollees at or below 250 percent of the federal poverty level; (v) relaxing requirements for state innovation waivers that could reduce enrollment in the individual and small group markets and lead to additional enrollment in short-term, limited duration insurance and association health plans; (vi) the issuance of a final rule in June, 2019 by the Departments of Labor, Treasury, and Health and Human Services that would incentivize the use of health reimbursement arrangements by employers to permit employees to purchase health insurance in the individual market, and; (vii) directing the issuance of federal rulemaking by executive agencies to increase transparency of healthcare price and quality information.  The uncertainty resulting from these Executive Branch policies has led to reduced Exchange enrollment in 2018 and 2019 and is expected to further worsen the individual and small group market risk pools in future years.  It is also anticipated that these and future policies may create additional cost and reimbursement pressures on hospitals, including ours. In addition, while attempts to repeal the entirety of the Affordable Care Act (“ACA”) have not been successful to date, a key provision of the ACA was repealed as part of the Tax Cuts and Jobs Act and on December 14, 2018, a federal U.S. District Court Judge in Texas ruled the entire ACA is unconstitutional.  While that ruling is stayed and has been appealed, it has caused greater uncertainty regarding the future status of the ACA. If all or any parts of the ACA are found to be unconstitutional, it could have a material adverse effect on our business, financial condition and results of operations. See below in Sources of Revenue and Health Care Reform for additional disclosure;

• possible unfavorable changes in the levels and terms of reimbursement for our charges by third party payers or government based payers, including Medicare or Medicaid in the United States, and government based payers in the United Kingdom;

• our ability to enter into managed care provider agreements on acceptable terms and the ability of our competitors to do the same, including contracts with United/Sierra Healthcare in Las Vegas, Nevada;

• the outcome of known and unknown litigation, government investigations, false claims act allegations, and liabilities and other claims asserted against us and other matters as disclosed in Item 1. Legal Proceedings, and the effects of adverse publicity relating to such matters;

• the potential unfavorable impact on our business of deterioration in national, regional and local economic and business conditions, including a worsening of unfavorable credit market conditions;

• competition from other healthcare providers (including physician owned facilities) in certain markets;

• technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for healthcare;

• our ability to attract and retain qualified personnel, nurses, physicians and other healthcare professionals and the impact on our labor expenses resulting from a shortage of nurses and other healthcare professionals;

• demographic changes;

• the availability of suitable acquisition and divestiture opportunities and our ability to successfully integrate and improve our acquisitions since failure to achieve expected acquisition benefits from certain of our prior or future acquisitions could result in impairment charges for goodwill and purchased intangibles;

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• the impact of severe weather conditions, including the effects of hurricanes;

• as discussed below in Sources of Revenue, we receive revenues from various state and county based programs, including Medicaid in all the states in which we operate (we receive Medicaid revenues in excess of $100 million annually from each of California, Texas, Nevada, Washington, D.C., Pennsylvania and Illinois); CMS-approved Medicaid supplemental programs in certain states including Texas, Mississippi, Illinois, Oklahoma, Nevada, Arkansas, California and Indiana, and; state Medicaid disproportionate share hospital payments in certain states including Texas and South Carolina. We are therefore particularly sensitive to potential reductions in Medicaid and other state based revenue programs as well as regulatory, economic, environmental and competitive changes in those states. We can provide no assurance that reductions to revenues earned pursuant to these programs, particularly in the above-mentioned states, will not have a material adverse effect on our future results of operations;

• our ability to continue to obtain capital on acceptable terms, including borrowed funds, to fund the future growth of our business;

• our inpatient acute care and behavioral health care facilities may experience decreasing admission and length of stay trends;

• our financial statements reflect large amounts due from various commercial and private payers and there can be no assurance that failure of the payers to remit amounts due to us will not have a material adverse effect on our future results of operations;

• in August, 2011, the Budget Control Act of 2011 (the “2011 Act”) was enacted into law. The 2011 Act imposed annual spending limits for most federal agencies and programs aimed at reducing budget deficits by $917 billion between 2012 and 2021, according to a report released by the Congressional Budget Office. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Select Committee on Deficit Reduction (the “Joint Committee”), which was tasked with making recommendations aimed at reducing future federal budget deficits by an additional $1.5 trillion over 10 years. The Joint Committee was unable to reach an agreement by the November 23, 2011 deadline and, as a result, across-the-board cuts to discretionary, national defense and Medicare spending were implemented on March 1, 2013 resulting in Medicare payment reductions of up to 2% per fiscal year with a uniform percentage reduction across all Medicare programs. The Bipartisan Budget Act of 2015, enacted on November 2, 2015, continued the 2% reductions to Medicare reimbursement imposed under the 2011 Act. We cannot predict whether Congress will restructure the implemented Medicare payment reductions or what other federal budget deficit reduction initiatives may be proposed by Congress going forward;

• uninsured and self-pay patients treated at our acute care facilities unfavorably impact our ability to satisfactorily and timely collect our self-pay patient accounts;

• changes in our business strategies or development plans;

• in June, 2016, the United Kingdom affirmatively voted in a non-binding referendum in favor of the exit of the United Kingdom from the European Union (the “Brexit”) and it has been approved by vote of the British legislature. On March 29, 2017, the United Kingdom triggered Article 50 of the Lisbon Treaty, formally starting negotiations regarding its exit from the European Union, currently scheduled for January 31, 2020. The government of the United Kingdom and the European Union have negotiated an agreement by which the United Kingdom would withdraw from the European Union, but on October 22, 2019, the British legislature rejected the government’s timetable for ratifying the withdrawal agreement, necessitating the most recent postponement of Brexit.  As a result, the United Kingdom’s government decided to set aside the bill to ratify and implement the withdrawal agreement and to call for a general election, which is scheduled for December 12, 2019. When or whether the United Kingdom will actually exit the European Union continues to be uncertain. The actual exit of the United Kingdom from the European Union could cause disruptions to and create uncertainty surrounding our business. Any of these effects of Brexit (and the announcement thereof), and others we cannot anticipate, could harm our business, financial condition and results of operations;  

• fluctuations in the value of our common stock, and;

• other factors referenced herein or in our other filings with the Securities and Exchange Commission.

Given these uncertainties, risks and assumptions, as outlined above, you are cautioned not to place undue reliance on such forward-looking statements. Our actual results and financial condition could differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We assume no obligation to publicly update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as may be required by law. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

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Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We consider our critical accounting policies to be those that require us to make significant judgments and estimates when we prepare our consolidated financial statements. For a summary of our significant accounting policies, please see Note 1 to the Consolidated Financial Statements as included in our Annual Report on Form 10-K for the year ended December 31, 2018.

Revenue Recognition:  On January 1, 2018, we adopted, using the modified retrospective approach, ASU 2014-09 and ASU 2016-08, “Revenue from Contracts with Customers (Topic 606)” and “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, respectively, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The most significant change from the adoption of the new standard relates to our estimation for the allowance for doubtful accounts. Under the previous standards, our estimate for amounts not expected to be collected based upon our historical experience, were reflected as provision for doubtful accounts, included within net revenue. Under the new standard, our estimate for amounts not expected to be collected based on historical experience will continue to be recognized as a reduction to net revenue, however, not reflected separately as provision for doubtful accounts. Under the new standard, subsequent changes in estimate of collectability due to a change in the financial status of a payer, for example a bankruptcy, will be recognized as bad debt expense in operating charges. The adoption of this ASU in 2018, and amounts recognized as bad debt expense and included in other operating expenses, did not have a material impact on our consolidated financial statements.  

See Note 12 to the Consolidated Financial Statements-Revenue, for additional disclosure related to our revenues including a disaggregation of our consolidated net revenues by major source for each of the periods presented herein.    

Charity Care, Uninsured Discounts and Other Adjustments to Revenue:  Collection of receivables from third-party payers and patients is our primary source of cash and is critical to our operating performance. Our primary collection risks relate to uninsured patients and the portion of the bill which is the patient’s responsibility, primarily co-payments and deductibles. We estimate our revenue adjustments for implicit price concessions based on general factors such as payer mix, the agings of the receivables and historical collection experience, consistent with our estimates for provisions for doubtful accounts under ASC 605.  We routinely review accounts receivable balances in conjunction with these factors and other economic conditions which might ultimately affect the collectability of the patient accounts and make adjustments to our allowances as warranted. At our acute care hospitals, third party liability accounts are pursued until all payment and adjustments are posted to the patient account. For those accounts with a patient balance after third party liability is finalized or accounts for uninsured patients, the patient receives statements and collection letters.

Under ASC 605, our hospitals established a partial reserve for self-pay accounts in the allowance for doubtful accounts for both unbilled balances and those that have been billed and were under 90 days old. All self-pay accounts were fully reserved at 90 days from the date of discharge. Third party liability accounts were fully reserved in the allowance for doubtful accounts when the balance aged past 180 days from the date of discharge. Patients that express an inability to pay were reviewed for potential sources of financial assistance including our charity care policy. If the patient was deemed unwilling to pay, the account was written-off as bad debt and transferred to an outside collection agency for additional collection effort.  Under ASC 606, while similar processes and methodologies are considered, these revenue adjustments are considered at the time the services are provided in determination of the transaction price.

Historically, a significant portion of the patients treated throughout our portfolio of acute care hospitals are uninsured patients which, in part, has resulted from patients who are employed but do not have health insurance or who have policies with relatively high deductibles. Patients treated at our hospitals for non-elective services, who have gross income less than 400% of the federal poverty guidelines, are deemed eligible for charity care. The federal poverty guidelines are established by the federal government and are based on income and family size. Because we do not pursue collection of amounts that qualify as charity care, the transaction price is fully adjusted and there is no impact in our net revenues or in our accounts receivable, net.

A portion of the accounts receivable at our acute care facilities are comprised of Medicaid accounts that are pending approval from third-party payers but we also have smaller amounts due from other miscellaneous payers such as county indigent programs in certain states. Our patient registration process includes an interview of the patient or the patient’s responsible party at the time of registration. At that time, an insurance eligibility determination is made and an insurance plan code is assigned. There are various pre-established insurance profiles in our patient accounting system which determine the expected insurance reimbursement for each patient based on the insurance plan code assigned and the services rendered. Certain patients may be classified as Medicaid pending at registration based upon a screening evaluation if we are unable to definitively determine if they are currently Medicaid eligible. When a patient is registered as Medicaid eligible or Medicaid pending, our patient accounting system records net revenues for services provided to that patient based upon the established Medicaid reimbursement rates, subject to the ultimate disposition of the patient’s Medicaid

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eligibility. When the patient’s ultimate eligibility is determined, reclassifications may occur which impacts net revenues in future periods. Although the patient’s ultimate eligibility determination may result in adjustments to net revenues, these adjustments do not have a material impact on our results of operations during the three or nine-month periods ended September 30, 2019 or the year ended December 31, 2018 since our facilities make estimates at each financial reporting period to adjust revenue based on historical collections.  Under ASC 605, these estimates were reported in the provision for doubtful accounts.

We also provide discounts to uninsured patients (included in “uninsured discounts” amounts below) who do not qualify for Medicaid or charity care. Because we do not pursue collection of amounts classified as uninsured discounts, the transaction price is fully adjusted and there is no impact in our net revenues or in our net accounts receivable. In implementing the discount policy, we first attempt to qualify uninsured patients for governmental programs, charity care or any other discount program. If an uninsured patient does not qualify for these programs, the uninsured discount is applied.

The following tables show the amounts recorded at our acute care hospitals for charity care and uninsured discounts, based on charges at established rates, for the three and nine-month periods ended September 30, 2019 and 2018:

Uncompensated care:

Amounts in millions	Three Months Ended										Nine Months Ended
	September 30,					September 30,					September 30,					September 30,
		2019	%				2018	%				2019	%				2018	%
Charity care	$	152		26	%	$	204		41	%	$	438		27	%	$	536		39	%
Uninsured discounts	424			74	%	297			59	%	1157			73	%	848			61	%
Total uncompensated care	$	576		100	%	$	501		100	%	$	1,595		100	%	$	1,384		100	%

Estimated cost of providing uncompensated care:

The estimated costs of providing uncompensated care as reflected below were based on a calculation which multiplied the percentage of operating expenses for our acute care hospitals to gross charges for those hospitals by the above-mentioned total uncompensated care amounts.  The percentage of cost to gross charges is calculated based on the total operating expenses for our acute care facilities divided by gross patient service revenue for those facilities.

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
Amounts in millions		2019		2018		2019		2018
Estimated cost of providing charity care	$	18	$	26	$	51	$	66
Estimated cost of providing uninsured discounts related care	50		37		133		104
Estimated cost of providing uncompensated care	$	68	$	63	$	184	$	170

Self-Insured/Other Insurance Risks: We provide for self-insured risks including general and professional liability claims, workers’ compensation claims and healthcare and dental claims. Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents, estimates of losses for these claims based on recent and historical settlement amounts, estimate of incurred but not reported claims based on historical experience, and estimates of amounts recoverable under our commercial insurance policies. All relevant information, including our own historical experience is used in estimating the expected amount of claims. While we continuously monitor these factors, our ultimate liability for professional and general liability claims could change materially from our current estimates due to inherent uncertainties involved in making this estimate. Our estimated self-insured reserves are reviewed and changed, if necessary, at each reporting date and changes are recognized currently as additional expense or as a reduction of expense. In addition, we also: (i) own commercial health insurers headquartered in Reno, Nevada, and Puerto Rico and; (ii) maintain self-insured employee benefits programs for employee healthcare and dental claims. The ultimate costs related to these programs/operations include expenses for claims incurred and paid in addition to an accrual for the estimated expenses incurred in connection with claims incurred but not yet reported. Given our significant insurance-related exposure, there can be no assurance that a sharp increase in the number and/or severity of claims asserted against us will not have a material adverse effect on our future results of operations.  

See Note 6 to the Consolidated Financial Statements-Commitments and Contingencies, for additional disclosure related to our professional and general liability, workers’ compensation liability and property insurance.  

The total accrual for our professional and general liability claims and workers’ compensation claims was $323 million as of September 30, 2019, of which $82 million is included in current liabilities. The total accrual for our professional and general liability

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claims and workers’ compensation claims was $315 million as of December 31, 2018, of which $82 million is included in current liabilities.

Recent Accounting Standards: For a summary of accounting standards, please see Note 14 to the Consolidated Financial Statements, as included herein.

Results of Operations

Three-month periods ended September 30, 2019 and 2018:

The following table summarizes our results of operations and is used in the discussion below for the three-month periods ended September 30, 2019 and 2018 (dollar amounts in thousands):

	Three months ended September 30, 2019					Three months ended September 30, 2018
	Amount		% of Net Revenues			Amount			% of Net Revenues
Net revenues	$	2,822,453		100.0	%	$	2,648,913			100.0	%
Operating charges:
Salaries, wages and benefits		1,408,226		49.9	%		1,316,710			49.7	%
Other operating expenses		762,174		27.0	%		651,442			24.6	%
Supplies expense		313,936		11.1	%		285,201			10.8	%
Depreciation and amortization		121,528		4.3	%		112,286			4.2	%
Lease and rental expense		27,660		1.0	%		26,110			1.0	%
Subtotal-operating expenses		2,633,524		93.3	%		2,391,749			90.3	%
Income from operations		188,929		6.7	%		257,164			9.7	%
Interest expense, net		41,447		1.5	%		39,506			1.5	%
Other (income) expense, net		9,407		0.3	%		(11,409	)		(0.4	)%
Income before income taxes		138,075		4.9	%		229,067			8.6	%
Provision for income taxes		37,205		1.3	%		54,186			2.0	%
Net income		100,870		3.6	%		174,881			6.6	%
Less: Income attributable to noncontrolling interests		3,680		0.1	%		3,135			0.1	%
Net income attributable to UHS	$	97,190		3.4	%	$	171,746			6.5	%

Net revenues increased 6.6%, or $174 million, to $2.82 billion during the three-month period ended September 30, 2019 as compared to $2.65 billion during the third quarter of 2018. The net increase was primarily attributable to: (i) a $153 million or 6.0% increase in net revenues generated from our acute care hospital services and behavioral health services operated during both periods (which we refer to as “same facility”), and; (ii) $21 million of other combined net increases due primarily to an increase in provider tax assessments which had no impact on net income attributable to UHS as reflected above since the amounts offset between net revenues and other operating expenses..  

Income before income taxes (before deduction for income attributable to noncontrolling interests) decreased $91 million to $138 million during the three-month period ended September 30, 2019 as compared to $229 million during the comparable quarter of 2018. The $91 million net decrease was due to:

• a decrease of $98 million resulting from a provision for asset impairment recorded during the third quarter of 2019, as discussed below in Other Operating Results - Provision for Asset Impairment-Foundations Recovery Network;

• an increase of $48 million due to the increase recorded during the third quarter of 2018 to the reserve established in connection with the civil aspects of the government’s investigation of certain of our behavioral health care facilities, see Item 1 - Legal Proceedings for additional disclosure;

• a net decrease of $21 million due to a decrease in Other income/expense, net, due primarily to: (i) a $26 million unfavorable change market value of shares of certain marketable securities held for investment and classified as available for sale (a pre-tax unrealized loss of $15 million incurred during the third quarter of 2019 as compared to a pre-tax unrealized gain of $11 million recorded during the third quarter of 2018), partially offset by; (ii) $5 million of other combined net favorable changes consisting primarily of a $6 million gain on asset disposal recorded during the third quarter of 2019;  

• an increase of $1 million at our acute care facilities as discussed below in Acute Care Hospital Services

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• an increase of $1 million at our behavioral health care facilities, as discussed below in Behavioral Health Services (excluding the impact of the above-mentioned $98 million provision for asset impairment recorded during the third quarter of 2019 in connection with Foundations Recovery Network, LLC);

• a decrease of $2 million due to an increase in interest expense, as discussed below in Other Operating Results-Interest Expense, and;

• $20 million of other combined net decreases.

Net income attributable to UHS decreased $75 million to $97 million during the three-month period ended September 30, 2019 as compared to $172 million during the comparable prior year quarter. This decrease was attributable to:

• a $91 million decrease in income before income taxes, as discussed above;

• a decrease of $1 million due to an increase in income attributable to noncontrolling interests, and;

• an increase of $17 million resulting from a decrease in the provision for income taxes due primarily to: (i) the income tax benefit recorded in connection with the $92 million decrease in pre-tax income; (ii) a decrease of $2 million resulting from our adoption of ASU 2016-09, partially offset by; (iii)  a $6 million increase in the provision for income taxes recorded during the third quarter of 2019 resulting from the net estimated federal and state income taxes due on the portion of the reserve established in connection with the civil aspects of the government’s investigation of certain of our behavioral health care facilities that is estimated to be non-deductible for income tax purposes (see additional disclosure below in Other Operating Results-Provision for Income Taxes and Effective Tax Rates)

Nine-month periods ended September 30, 2019 and 2018:

The following table summarizes our results of operations and is used in the discussion below for the nine-month periods ended September 30, 2019 and 2018 (dollar amounts in thousands):

	Nine months ended September 30, 2019					Nine months ended September 30, 2018
	Amount		% of Net Revenues			Amount			% of Net Revenues
Net revenues	$	8,482,012		100.0	%	$	8,017,782			100.0	%
Operating charges:
Salaries, wages and benefits		4,157,253		49.0	%		3,922,832			48.9	%
Other operating expenses		2,079,518		24.5	%		1,896,745			23.7	%
Supplies expense		927,256		10.9	%		867,863			10.8	%
Depreciation and amortization		362,736		4.3	%		334,970			4.2	%
Lease and rental expense		80,320		0.9	%		79,932			1.0	%
Subtotal-operating expenses		7,607,083		89.7	%		7,102,342			88.6	%
Income from operations		874,929		10.3	%		915,440			11.4	%
Interest expense, net		123,574		1.5	%		115,082			1.4	%
Other (income) expense, net		6,176		0.1	%		(26,717	)		(0.3	)%
Income before income taxes		745,179		8.8	%		827,075			10.3	%
Provision for income taxes		165,646		2.0	%		192,814			2.4	%
Net income		579,533		6.8	%		634,261			7.9	%
Less: Income attributable to noncontrolling interests		9,855		0.1	%		12,631			0.2	%
Net income attributable to UHS	$	569,678		6.7	%	$	621,630			7.8	%

Net revenues increased 5.8%, or $464 million, to $8.48 billion during the nine-month period ended September 30, 2019 as compared to $8.02 billion during the first nine months of 2018. The net increase was primarily attributable to: (i) a $414 million or 5.3% increase in net revenues generated from our acute care hospital services and behavioral health services operated during both periods, and; (ii) $50 million of other combined net increases due primarily to the revenues generated at 25 behavioral health facilities located in the U.K. acquired during the third quarter of 2018 in connection with our acquisition of The Danshell Group, and an increase in provider tax assessments which had no impact on net income attributable to UHS as reflected above since the amounts offset between net revenues and other operating expenses.  

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Income before income taxes (before deduction for income attributable to noncontrolling interests) decreased $82 million to $745 million during the nine-month period ended September 30, 2019 as compared to $827 million during the comparable period of 2018. The $82 million net decrease was due to:

• a decrease of $98 million resulting from a provision for asset impairment recorded during the third quarter of 2019, as discussed below in Other Operating Results - Provision for Asset Impairment-Foundations Recovery Network;

• a net increase of $59 million due to a favorable change in the pre-tax increases recorded during each of the nine-month periods ended September 30, 2019 and 2018 to the reserve established in connection with the civil aspects of the government’s investigation of certain of our behavioral health care facilities ($11 million pre-tax reserve increase recorded during the first nine months of 2019 as compared to a $70 million pre-tax reserve increase recorded during the first nine months of 2018), see Item 1 - Legal Proceedings for additional disclosure;

• a net decrease of $33 million due to a decrease in Other income/expense, net, due primarily to: (i) a $31 million unfavorable change in the market value of shares of certain marketable securities held for investment and classified as available for sale (a pre-tax unrealized loss of $13 million incurred during the first nine months of 2019 as compared to a pre-tax unrealized gain of $18 million recorded during the first nine months of 2018), and; (ii) $2 million of other combined net unfavorable changes consisting primarily of a $3 million decrease in gains on asset disposals;  

• an increase of $15 million at our acute care facilities as discussed below in Acute Care Hospital Services

• an increase of $12 million at our behavioral health care facilities, as discussed below in Behavioral Health Services (excluding the impact of the above-mentioned $98 million provision for asset impairment recorded during the third quarter of 2019 in connection with Foundations Recovery Network, LLC);

• a decrease of $8 million due to an increase in interest expense, as discussed below in Other Operating Results-Interest Expense, and;

• $29 million of other combined net decreases.

Net income attributable to UHS decreased $52 million to $570 million during the nine-month period ended September 30, 2019 as compared to $622 million during the comparable prior year period. This increase was attributable to:

• an $82 million decrease in income before income taxes, as discussed above;

• an increase of $3 million due to a decrease in income attributable to noncontrolling interests, and;

• an increase of $27 million resulting from a decrease in the provision for income taxes due primarily to: (i) the income tax benefit recorded in connection with the $85 million decrease in pre-tax income; (ii) a decrease of $11 million resulting from our adoption of ASU 2016-09 which decreased our provision for income taxes by approximately $12 million during the first nine months of 2019, as compared to a decrease of approximately $1 million during the first nine months of 2018, partially offset by; (iii) a $6 million increase in the provision for income taxes recorded during the nine-month ended September 30, 2019 (recorded during the third quarter of 2019) resulting from the net estimated federal and state income taxes due on the portion of the reserve established in connection with the civil aspects of the government’s investigation of certain of our behavioral health care facilities that is estimated to be non-deductible for income tax purposes (see additional disclosure below in Other Operating Results-Provision for Income Taxes and Effective Tax Rates)

Acute Care Hospital Services

Same Facility Basis Acute Care Hospital Services

We believe that providing our results on a “Same Facility” basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable) the effect of items that are non-operational in nature including items such as, but not limited to, gains/losses on sales of assets and businesses, impacts of settlements, legal judgments and lawsuits, impairments of long-lived and intangible assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. Our Same Facility basis results reflected on the tables below also exclude from net revenues and other operating expenses, provider tax assessments incurred in each period as discussed below Sources of Revenue-Various State Medicaid Supplemental Payment Programs. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table below under All Acute Care Hospital Services. The provider tax assessments had no impact on the income before income taxes as reflected on the tables below since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in this Quarterly Report on Form 10-Q.  

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The following table summarizes the results of operations for our acute care facilities on a same facility basis and is used in the discussion below for the three and nine-month periods ended September 30, 2019 and 2018 (dollar amounts in thousands):

	Three months ended					Three months ended					Nine months ended						Nine months ended
	September 30, 2019					September 30, 2018					September 30, 2019						September 30, 2018
	Amount		% of Net Revenues			Amount		% of Net Revenues			Amount			% of Net Revenues			Amount			% of Net Revenues
Net revenues	$	1,502,383		100.0	%	$	1,375,116		100.0	%	$	4,491,738			100.0	%	$	4,173,618			100.0	%
Operating charges:
Salaries, wages and benefits		652,804		43.5	%		596,903		43.4	%		1,894,713			42.2	%		1,762,797			42.2	%
Other operating expenses		343,845		22.9	%		312,383		22.7	%		1,015,237			22.6	%		929,224			22.3	%
Supplies expense		263,198		17.5	%		235,272		17.1	%		776,231			17.3	%		718,543			17.2	%
Depreciation and amortization		76,028		5.1	%		68,647		5.0	%		225,624			5.0	%		207,962			5.0	%
Lease and rental expense		16,168		1.1	%		14,052		1.0	%		45,078			1.0	%		43,043			1.0	%
Subtotal-operating expenses		1,352,043		90.0	%		1,227,257		89.2	%		3,956,883			88.1	%		3,661,569			87.7	%
Income from operations		150,340		10.0	%		147,859		10.8	%		534,855			11.9	%		512,049			12.3	%
Interest expense, net		305		0.0	%		382		0.0	%		828			0.0	%		1,344			0.0	%
Other (income) expense, net		13		0.0	%		-		—			(32	)		(0.0	)%		(2,498	)		(0.1	)%
Income before income taxes	$	150,022		10.0	%	$	147,477		10.7	%	$	534,059			11.9	%	$	513,203			12.3	%

Three-month periods ended September 30, 2019 and 2018:

During the three-month period ended September 30, 2019, as compared to the comparable prior year quarter, net revenues from our acute care hospital services, on a same facility basis, increased $127 million or 9.3%. Income before income taxes (and before income attributable to noncontrolling interests) increased $3 million, or 2%, amounting to $150 million or 10.0% of net revenues during the third quarter of 2019 as compared to $147 million or 10.7% of net revenues during the third quarter of 2018. Despite the increased net revenues experienced at our acute care hospitals during the third quarter of 2019, as compared to the comparable quarter of 2018, the income before income taxes generated at these facilities increased only slightly due to disproportionate increases to salaries, wages and benefits and certain other operating expenses associated with providing services to an increased volume of patients.    

During the three-month period ended September 30, 2019, net revenue per adjusted admission increased 1.6% while net revenue per adjusted patient day increased 2.0%, as compared to the comparable quarter of 2018. During the three-month period ended September 30, 2019, as compared to the comparable prior year quarter, inpatient admissions to our acute care hospitals increased 6.6% and adjusted admissions (adjusted for outpatient activity) increased 7.4%. Patient days at these facilities increased 6.2% and adjusted patient days increased 7.0% during the three-month period ended September 30, 2019 as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 4.5 days during each of the three-month periods ended September 30, 2019 and 2018. The occupancy rate, based on the average available beds at these facilities, was 63% and 61% during the three-month periods ended September 30, 2019 and 2018, respectively.    

Nine-month periods ended September 30, 2019 and 2018:

During the nine-month period ended September 30, 2019, as compared to the comparable prior year period, net revenues from our acute care hospital services, on a same facility basis, increased $318 million or 7.6%. Income before income taxes (and before income attributable to noncontrolling interests) increased $21 million, or 4%, amounting to $534 million or 11.9% of net revenues during the first nine months 2019 as compared to $513 million or 12.3% of net revenues during the comparable period of 2018.

During the nine-month period ended September 30, 2019, net revenue per adjusted admission increased 1.5% while net revenue per adjusted patient day increased 1.7%, as compared to the comparable period of 2018. During the nine-month period ended September 30, 2019, as compared to the comparable prior year period, inpatient admissions to our acute care hospitals increased 5.7% and adjusted admissions (adjusted for outpatient activity) increased 5.8%. Patient days at these facilities increased 5.4% and adjusted patient days increased 5.5% during the nine-month period ended September 30, 2019 as compared to the comparable prior year period. The average length of inpatient stay at these facilities was 4.5 days and 4.6 days during the nine-month periods ended September 30, 2019 and 2018, respectively. The occupancy rate, based on the average available beds at these facilities, was 64% and 63% during the nine-month periods ended September 30, 2019 and 2018, respectively.    

All Acute Care Hospitals

The following table summarizes the results of operations for all our acute care operations during the three and nine-month periods ended September 30, 2019 and 2018. These amounts include: (i) our acute care results on a same facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income

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before income taxes, and; (iii) certain other amounts including, if applicable, the results of recently acquired/opened ancillary businesses. Dollar amounts below are reflected in thousands.

	Three months ended September 30, 2019					Three months ended September 30, 2018					Nine months ended September 30, 2019						Nine months ended September 30, 2018
	Amount		% of Net Revenues			Amount		% of Net Revenues			Amount			% of Net Revenues			Amount			% of Net Revenues
Net revenues	$	1,528,535		100.0	%	$	1,383,050		100.0	%	$	4,575,088			100.0	%	$	4,232,673			100.0	%
Operating charges:
Salaries, wages and benefits		653,792		42.8	%		596,932		43.2	%		1,897,144			41.5	%		1,762,826			41.6	%
Other operating expenses		370,325		24.2	%		320,317		23.2	%		1,099,625			24.0	%		988,279			23.3	%
Supplies expense		263,462		17.2	%		235,272		17.0	%		777,309			17.0	%		718,543			17.0	%
Depreciation and amortization		76,318		5.0	%		68,647		5.0	%		226,489			5.0	%		207,962			4.9	%
Lease and rental expense		16,235		1.1	%		14,052		1.0	%		45,270			1.0	%		43,043			1.0	%
Subtotal-operating expenses		1,380,132		90.3	%		1,235,220		89.3	%		4,045,837			88.4	%		3,720,653			87.9	%
Income from operations		148,403		9.7	%		147,830		10.7	%		529,251			11.6	%		512,020			12.1	%
Interest expense, net		305		0.0	%		382		0.0	%		828			0.0	%		1,344			0.0	%
Other (income) expense, net		13		0.0	%		0		—			(32	)		(0.0	)%		(2,498	)		(0.1	)%
Income before income taxes	$	148,085		9.7	%	$	147,448		10.7	%	$	528,455			11.6	%	$	513,174			12.1	%

Three-month periods ended September 30, 2019 and 2018:

During the three-month period ended September 30, 2019, as compared to the comparable prior year quarter, net revenues from our acute care hospital services increased $145 million or 10.5% to $1.53 billion as compared to $1.38 billion due to: (i) a $127 million, or 9.3%, increase same facility revenues, as discussed above, and; (ii) other combined net increase of $18 million due primarily to increased provider tax assessments incurred during the third quarter of 2019 as compared to the third quarter of 2018.    

Income before income taxes increased $1 million, or less than 1%, to $148 million or 9.7% of net revenues during the third quarter of 2019 as compared to $147 million or 10.7% of net revenues during the third quarter of 2018. The $3 million increase in income before income taxes from our acute care hospital services, on a same facility basis, was partially offset by $2 million of other combined net unfavorable changes.

Nine-month periods ended September 30, 2019 and 2018:

During the nine-month period ended September 30, 2019, as compared to the comparable prior year period, net revenues from our acute care hospital services increased $342 million or 8.1% to $4.58 billion as compared to $4.23 billion due to: (i) a $318 million, or 7.6%, increase same facility revenues, as discussed above, and; (ii) other combined net increase of $24 million due primarily to increased provider tax assessments incurred during the first nine months of 2019 as compared to the comparable period of 2018.    

Income before income taxes increased $15 million, or 3%, to $528 million or 11.6% of net revenues during the first nine months of 2019 as compared to $513 million or 12.1% of net revenues during the comparable period of 2018. The increase resulted primarily from the $21 million increase in income before income taxes from our acute care hospital services, on a same facility basis, as discussed above, partially offset by $5 million of other combined net unfavorable changes.

Behavioral Health Services

Our Same Facility basis results (which is a non-GAAP measure), which include the operating results for facilities and businesses operated in both the current year and prior year period, neutralize (if applicable) the effect of items that are non-operational in nature including items such as, but not limited to, gains/losses on sales of assets and businesses, impact of the reserve established in connection with the civil aspects of the government’s investigation of certain of our behavioral health care facilities, impacts of settlements, legal judgments and lawsuits, impairments of long-lived and intangible assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. Our Same Facility basis results reflected on the table below also excludes from net revenues and other operating expenses, provider tax assessments incurred in each period as discussed below Sources of Revenue-Various State Medicaid Supplemental Payment Programs. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table below under All Behavioral Health Care Services. The provider tax assessments had no impact on the income before income taxes as reflected on the tables below since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in this Quarterly Report on Form 10-Q.  

The following table summarizes the results of operations for our behavioral health care facilities, on a same facility basis, and is used in the discussions below for the three and nine-month periods ended September 30, 2019 and 2018 (dollar amounts in thousands):

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Same Facility—Behavioral Health

	Three months ended September 30, 2019					Three months ended September 30, 2018					Nine months ended September 30, 2019					Nine months ended September 30, 2018
	Amount		% of Net Revenues			Amount		% of Net Revenues			Amount		% of Net Revenues			Amount		% of Net Revenues
Net revenues	$	1,256,549		100.0	%	$	1,230,406		100.0	%	$	3,770,023		100.0	%	$	3,673,717		100.0	%
Operating charges:
Salaries, wages and benefits		679,995		54.1	%		651,145		52.9	%		2,000,128		53.1	%		1,924,344		52.4	%
Other operating expenses		238,637		19.0	%		237,698		19.3	%		707,624		18.8	%		701,869		19.1	%
Supplies expense		50,301		4.0	%		49,291		4.0	%		148,418		3.9	%		146,842		4.0	%
Depreciation and amortization		40,688		3.2	%		39,134		3.2	%		119,655		3.2	%		113,606		3.1	%
Lease and rental expense		11,202		0.9	%		11,296		0.9	%		33,125		0.9	%		34,520		0.9	%
Subtotal-operating expenses		1,020,823		81.2	%		988,564		80.3	%		3,008,950		79.8	%		2,921,181		79.5	%
Income from operations		235,726		18.8	%		241,842		19.7	%		761,073		20.2	%		752,536		20.5	%
Interest expense, net		359		0.0	%		397		0.0	%		1,103		0.0	%		1,234		0.0	%
Other (income) expense, net		1,058		0.1	%		1,325		0.1	%		1,058		0.0	%		1,325		0.0	%
Income before income taxes	$	234,309		18.6	%	$	240,120		19.5	%	$	758,912		20.1	%	$	749,977		20.4	%

Three-month periods ended September 30, 2019 and 2018:

On a same facility basis during the third quarter of 2019, as compared to the third quarter of 2018, net revenues generated from our behavioral health services increased $26 million, or 2.1%, to $1.26 billion from $1.23 billion. Income before income taxes decreased $6 million, or 2%, to $234 million or 18.6% of net revenues during the three-month period ended September 30, 2019, as compared to $240 million or 19.5% of net revenues during the comparable quarter of 2018.       

During the three-month period ended September 30, 2019, net revenue per adjusted admission increased 2.0% and net revenue per adjusted patient day increased 2.2%, as compared to the comparable quarter of 2018. On a same facility basis, inpatient admissions and adjusted admissions to our behavioral health facilities increased 0.1% and 0.5%, respectively, during the three-month period ended September 30, 2019 as compared to the comparable quarter of 2018. Patient days were unchanged and adjusted patient days increased 0.4% during the three-month period ended September 30, 2019, respectively, as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 13.1 days and 13.2 days during the three-month periods ended September 30, 2019 and 2018, respectively. The occupancy rate, based on the average available beds at these facilities, was 75% and 76% during the three-month periods ended September 30, 2019 and 2018, respectively.

Although the average length of inpatient stay at these facilities was relatively flat during the third quarter of 2019, as compared to the third quarter of 2018, admission growth slowed, in part, due to labor shortages in selected geographies which reduced our ability to fully meet the demand of patients eligible for admission.

Nine-month periods ended September 30, 2019 and 2018:

On a same facility basis during the first nine months of 2019, as compared to the comparable period of 2018, net revenues generated from our behavioral health services increased $96 million, or 2.6%, to $3.77 billion from $3.67 billion. Income before income taxes increased $9 million, or 1%, to $759 million or 20.1% of net revenues during the nine-month period ended September 30, 2019, as compared to $750 million or 20.4% of net revenues during the comparable period of 2018.       

During the nine-month period ended September 30, 2019, net revenue per adjusted admission increased 1.5% and net revenue per adjusted patient day increased 2.3%, as compared to the comparable period of 2018. On a same facility basis, inpatient admissions and adjusted admissions to our behavioral health facilities increased 1.2% and 1.3%, respectively, during the nine-month period ended September 30, 2019, as compared to the comparable period of 2018. Patient days and adjusted patient days increased 0.4% and 0.5% during the nine-month period ended September 30, 2019, as compared to the comparable prior year period. The average length of inpatient stay at these facilities was 13.1 days and 13.2 days during the nine-month periods ended September 30, 2019 and 2018, respectively. The occupancy rate, based on the average available beds at these facilities, was 76% and 77% during the nine-month periods ended September 30, 2019 and 2018.  

All Behavioral Health Care Facilities

The following table summarizes the results of operations for all our behavioral health care services during the three and nine-month periods ended September 30, 2019 and 2018. These amounts include: (i) our behavioral health care results on a same facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes; (iii) a provision for asset impairment recorded during the third quarter of 2019 (included in other operating expenses) in connection with Foundations Recovery Network, LLC, and; (iv) certain other amounts including the results of facilities acquired or opened during the past year as well as the results of certain facilities that were closed or restructured during the past year. Dollar amounts below are reflected in thousands.

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	Three months ended September 30, 2019						Three months ended September 30, 2018					Nine months ended September 30, 2019						Nine months ended September 30, 2018
	Amount			% of Net Revenues			Amount		% of Net Revenues			Amount			% of Net Revenues			Amount		% of Net Revenues
Net revenues	$	1,291,816			100.0	%	$	1,262,472		100.0	%	$	3,898,440			100.0	%	$	3,774,551		100.0	%
Operating charges:
Salaries, wages and benefits		690,084			53.4	%		661,240		52.4	%		2,049,731			52.6	%		1,955,220		51.8	%
Other operating expenses		363,328			28.1	%		262,337		20.8	%		891,250			22.9	%		778,698		20.6	%
Supplies expense		50,692			3.9	%		49,958		4.0	%		149,809			3.8	%		148,965		3.9	%
Depreciation and amortization		42,436			3.3	%		40,718		3.2	%		127,327			3.3	%		118,948		3.2	%
Lease and rental expense		11,822			0.9	%		11,931		0.9	%		35,185			0.9	%		36,489		1.0	%
Subtotal-operating expenses		1,158,362			89.7	%		1,026,184		81.3	%		3,253,302			83.5	%		3,038,320		80.5	%
Income from operations		133,454			10.3	%		236,288		18.7	%		645,138			16.5	%		736,231		19.5	%
Interest expense, net		359			0.0	%		397		0.0	%		1,103			0.0	%		1,234		0.0	%
Other (income) expense, net		(4,924	)		(0.4	)%		1,721		0.1	%		(4,138	)		(0.1	)%		636		0.0	%
Income before income taxes	$	138,019			10.7	%	$	234,170		18.5	%	$	648,173			16.6	%	$	734,361		19.5	%

Three-month periods ended September 30, 2019 and 2018:

During the three-month period ended September 30, 2019, as compared to the comparable prior year quarter, net revenues generated from our behavioral health services increased $29 million or 2.3% due to primarily to: (i) the above-mentioned $26 million or 2.1% increase in net revenues on a same facility basis, and; (ii) a $3 million other combined net increase.       

Income before income taxes decreased $96 million, or 41%, to $138 million or 10.7% of net revenues during the third quarter of 2019 as compared to $234 million or 18.5% of net revenues during the third quarter of 2018. The decrease in income before income taxes at our behavioral health facilities was attributable to:

• a $6 million decrease at our behavioral health facilities on a same facility basis, as discussed above;

• a $98 million decrease from a provision for asset impairment recorded in connection with Foundations Recovery Network, LLC, which was acquired by us in 2015, as discussed below in Other Operating Results - Provision for Asset Impairment-Foundations Recovery Network, and;

• $8 million of other combined net increases including a $6 million gain on asset disposal recorded during the third quarter of 2019.

Nine-month periods ended September 30, 2019 and 2018:

During the nine-month period ended September 30, 2019, as compared to the comparable prior year period, net revenues generated from our behavioral health services increased $124 million or 3.3% due to primarily to: (i) the above-mentioned $96 million or 2.6% increase in net revenues on a same facility basis, and; (ii) an $28 million other combined net increase due primarily to the revenues generated at 25 behavioral health facilities located in the U.K. acquired during the third quarter of 2018 in connection with our acquisition of The Danshell Group.      

Income before income taxes decreased $86 million, or 12%, to $648 million or 16.6% of net revenues during the first nine months of 2019 as compared to $734 million or 19.5% of net revenues during the comparable period of 2018. The decrease in income before income taxes at our behavioral health facilities was attributable to:

• a $9 million increase at our behavioral health facilities on a same facility basis, as discussed above;

• a $98 million decrease from a provision for asset impairment recorded in connection with Foundations Recovery Network, LLC, which was acquired by us in 2015, as discussed below in Other Operating Results - Provision for Asset Impairment-Foundations Recovery Network, and;

• $3 million of other combined net increases including a $6 million gain on asset disposal recorded during the third quarter of 2019.

Sources of Revenue

Overview: We receive payments for services rendered from private insurers, including managed care plans, the federal government under the Medicare program, state governments under their respective Medicaid programs and directly from patients.

Hospital revenues depend upon inpatient occupancy levels, the medical and ancillary services and therapy programs ordered by physicians and provided to patients, the volume of outpatient procedures and the charges or negotiated payment rates for such services. Charges and reimbursement rates for inpatient routine services vary depending on the type of services provided (e.g.,

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medical/surgical, intensive care or behavioral health) and the geographic location of the hospital. Inpatient occupancy levels fluctuate for various reasons, many of which are beyond our control. The percentage of patient service revenue attributable to outpatient services has generally increased in recent years, primarily as a result of advances in medical technology that allow more services to be provided on an outpatient basis, as well as increased pressure from Medicare, Medicaid and private insurers to reduce hospital stays and provide services, where possible, on a less expensive outpatient basis. We believe that our experience with respect to our increased outpatient levels mirrors the general trend occurring in the health care industry and we are unable to predict the rate of growth and resulting impact on our future revenues.

Patients are generally not responsible for any difference between customary hospital charges and amounts reimbursed for such services under Medicare, Medicaid, some private insurance plans, and managed care plans, but are responsible for services not covered by such plans, exclusions, deductibles or co-insurance features of their coverage. The amount of such exclusions, deductibles and co-insurance has generally been increasing each year. Indications from recent federal and state legislation are that this trend will continue. Collection of amounts due from individuals is typically more difficult than from governmental or business payers which unfavorably impacts the collectability of our patient accounts.

Sources of Revenues and Health Care Reform: Given increasing budget deficits, the federal government and many states are currently considering additional ways to limit increases in levels of Medicare and Medicaid funding, which could also adversely affect future payments received by our hospitals. In addition, the uncertainty and fiscal pressures placed upon the federal government as a result of, among other things, economic recovery stimulus packages, responses to natural disasters, and the federal budget deficit in general may affect the availability of federal funds to provide additional relief in the future. We are unable to predict the effect of future policy changes on our operations.

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (the “ACA”). The Healthcare and Education Reconciliation Act of 2010 (the “Reconciliation Act”), which contains a number of amendments to the ACA, was signed into law on March 30, 2010. Two primary goals of the ACA, combined with the Reconciliation Act (collectively referred to as the “Legislation”), are to provide for increased access to coverage for healthcare and to reduce healthcare-related expenses.

The Legislation revises reimbursement under the Medicare and Medicaid programs to emphasize the efficient delivery of high quality care and contains a number of incentives and penalties under these programs to achieve these goals. The Legislation provides for decreases in the annual market basket update for federal fiscal years 2010 through 2019, a productivity offset to the market basket update beginning October 1, 2011 for Medicare Part B reimbursable items and services and beginning October 1, 2012 for Medicare inpatient hospital services. The Legislation and subsequent revisions provide for reductions to both Medicare DSH and Medicaid DSH payments. The Medicare DSH reductions began in October, 2013 while the Medicaid DSH reductions are scheduled to begin in 2020. The Legislation implements a value-based purchasing program, which will reward the delivery of efficient care. Conversely, certain facilities will receive reduced reimbursement for failing to meet quality parameters; such hospitals will include those with excessive readmission or hospital-acquired condition rates.

A 2012 U.S. Supreme Court ruling limited the federal government’s ability to expand health insurance coverage by holding unconstitutional sections of the Legislation that sought to withdraw federal funding for state noncompliance with certain Medicaid coverage requirements. Pursuant to that decision, the federal government may not penalize states that choose not to participate in the Medicaid expansion program by reducing their existing Medicaid funding. Therefore, states can choose to accept or not to participate without risking the loss of federal Medicaid funding. As a result, many states, including Texas, have not expanded their Medicaid programs without the threat of loss of federal funding. CMS has granted, and is expected to grant additional, section 1115 demonstration waivers providing for work and community engagement requirements for certain Medicaid eligible individuals. It is anticipated this will lead to reductions in coverage, and likely increases in uncompensated care, in states where these demonstration waivers are granted.

On December 14, 2018, a Texas Federal District Court deemed the ACA to be unconstitutional in its entirety. The Court concluded that the Individual Mandate is no longer permissible under Congress’s taxing power as a result of the Tax Cut and Jobs Act of 2017 (“TCJA”) reducing the Individual Mandate’s tax to $0 (i.e., it no longer produces revenue, which is an essential feature of a tax), rendering the ACA unconstitutional.  The court also held that because the individual mandate is “essential” to the ACA and is inseverable from the rest of the law, the entire ACA is unconstitutional. Because the court issued a declaratory judgment and did not enjoin the law, the ACA remains in place pending its appeal.  The District Court for the Northern District of Texas ruling has been appealed to the U.S. Court of Appeals for the Fifth Circuit, and will likely be appealed to the United States Supreme Court. We are unable to predict the final outcome of this legal challenge and its financial impact on our future results of operation.

The various provisions in the Legislation that directly or indirectly affect Medicare and Medicaid reimbursement are scheduled to take effect over a number of years. The impact of the Legislation on healthcare providers will be subject to implementing regulations, interpretive guidance and possible future legislation or legal challenges. Certain Legislation provisions, such as that creating the

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Medicare Shared Savings Program creates uncertainty in how healthcare may be reimbursed by federal programs in the future. Thus, we cannot predict the impact of the Legislation on our future reimbursement at this time and we can provide no assurance that the Legislation will not have a material adverse effect on our future results of operations.

The Legislation also contained provisions aimed at reducing fraud and abuse in healthcare. The Legislation amends several existing laws, including the federal Anti-Kickback Statute and the False Claims Act, making it easier for government agencies and private plaintiffs to prevail in lawsuits brought against healthcare providers. While Congress had previously revised the intent requirement of the Anti-Kickback Statute to provide that a person is not required to “have actual knowledge or specific intent to commit a violation of” the Anti-Kickback Statute in order to be found in violation of such law, the Legislation also provides that any claims for items or services that violate the Anti-Kickback Statute are also considered false claims for purposes of the federal civil False Claims Act. The Legislation provides that a healthcare provider that retains an overpayment in excess of 60 days is subject to the federal civil False Claims Act. The Legislation also expands the Recovery Audit Contractor program to Medicaid. These amendments also make it easier for severe fines and penalties to be imposed on healthcare providers that violate applicable laws and regulations.

We have partnered with local physicians in the ownership of certain of our facilities. These investments have been permitted under an exception to the physician self-referral law. The Legislation permits existing physician investments in a hospital to continue under a “grandfather” clause if the arrangement satisfies certain requirements and restrictions, but physicians are prohibited from increasing the aggregate percentage of their ownership in the hospital. The Legislation also imposes certain compliance and disclosure requirements upon existing physician-owned hospitals and restricts the ability of physician-owned hospitals to expand the capacity of their facilities.  As discussed below, should the Legislation be repealed in its entirety, this aspect of the Legislation would also be repealed restoring physician ownership of hospitals and expansion right to its position and practice as it existed prior to the Legislation.    

The impact of the Legislation on each of our hospitals may vary. Because Legislation provisions are effective at various times over the next several years, we anticipate that many of the provisions in the Legislation may be subject to further revision. Initiatives to repeal the Legislation, in whole or in part, to delay elements of implementation or funding, and to offer amendments or supplements to modify its provisions have been persistent. The ultimate outcomes of legislative attempts to repeal or amend the Legislation and legal challenges to the Legislation are unknown.  Legislation has already been enacted that eliminated the penalty, effective January 1, 2019, related to the individual mandate to obtain health insurance that was part of the original Legislation. In addition, Congress previously considered legislation that would, in material part: (i) eliminate the large employer mandate to offer health insurance coverage to full-time employees; (ii) permit insurers to impose a surcharge up to 30 percent on individuals who go uninsured for more than two months and then purchase coverage; (iii) provide tax credits towards the purchase of health insurance, with a phase-out of tax credits accordingly to income level; (iv) expand health savings accounts; (v) impose a per capita cap on federal funding of state Medicaid programs, or, if elected by a state, transition federal funding to block grants, and; (vi) permit states to seek a waiver of certain federal requirements that would allow such state to define essential health benefits differently from federal standards and that would allow certain commercial health plans to take health status, including pre-existing conditions, into account in setting premiums.  

In addition to legislative changes, the Legislation can be significantly impacted by executive branch actions.  In relevant part, President Trump has already taken executive actions: (i) requiring all federal agencies with authorities and responsibilities under the Legislation to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay” parts of the Legislation that place “unwarranted economic and regulatory burdens” on states, individuals or health care providers; (ii) the issuance of a final rule in June, 2018 by the Department of Labor to enable the formation of health plans that would be exempt from certain Legislation essential health benefits requirements; (iii) the issuance of a final rule in August, 2018 by the Department of Labor, Treasury, and Health and Human Services to expand the availability of short-term, limited duration health insurance; (iv) eliminating cost-sharing reduction payments to insurers that would otherwise offset deductibles and other out-of-pocket expenses for health plan enrollees at or below 250 percent of the federal poverty level, (v) relaxing requirements for state innovation waivers that could reduce enrollment in the individual and small group markets and lead to additional enrollment in short-term, limited duration insurance and association health plans; (vi) the issuance of a final rule in June, 2019 by the Departments of Labor, Treasury, and Health and Human Services that would incentivize the use of health reimbursement arrangements by employers to permit employees to purchase health insurance in the individual market, and; (vii) directing the issuance of federal rulemaking by executive agencies to increase transparency of healthcare price and quality information. The uncertainty resulting from these Executive Branch policies led to reduced Exchange enrollment in 2018 and 2019 and is expected to further worsen the individual and small group market risk pools in future years.  In May, 2019, the Congressional Budget Office projected that 32 million people will be uninsured in 2020. It is also anticipated that these and future policies may create additional cost and reimbursement pressures on hospitals.  

It remains unclear what portions of the Legislation may remain, or whether any replacement or alternative programs may be created by any future legislation.  Any such future repeal or replacement may have significant impact on the reimbursement for healthcare services generally, and may create reimbursement for services competing with the services offered by our hospitals.  Accordingly,

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there can be no assurance that the adoption of any future federal or state healthcare reform legislation will not have a negative financial impact on our hospitals, including their ability to compete with alternative healthcare services funded by such potential legislation, or for our hospitals to receive payment for services.

For additional disclosure related to our revenues including a disaggregation of our consolidated net revenues by major source for each of the periods presented herein, please see Note 12 to the Consolidated Financial Statements-Revenue.    

Medicare: Medicare is a federal program that provides certain hospital and medical insurance benefits to persons aged 65 and over, some disabled persons and persons with end-stage renal disease. All of our acute care hospitals and many of our behavioral health centers are certified as providers of Medicare services by the appropriate governmental authorities. Amounts received under the Medicare program are generally significantly less than a hospital’s customary charges for services provided. Since a substantial portion of our revenues will come from patients under the Medicare program, our ability to operate our business successfully in the future will depend in large measure on our ability to adapt to changes in this program.

Under the Medicare program, for inpatient services, our general acute care hospitals receive reimbursement under the inpatient prospective payment system (“IPPS”). Under the IPPS, hospitals are paid a predetermined fixed payment amount for each hospital discharge. The fixed payment amount is based upon each patient’s Medicare severity diagnosis related group (“MS-DRG”). Every MS-DRG is assigned a payment rate based upon the estimated intensity of hospital resources necessary to treat the average patient with that particular diagnosis. The MS-DRG payment rates are based upon historical national average costs and do not consider the actual costs incurred by a hospital in providing care. This MS-DRG assignment also affects the predetermined capital rate paid with each MS-DRG. The MS-DRG and capital payment rates are adjusted annually by the predetermined geographic adjustment factor for the geographic region in which a particular hospital is located and are weighted based upon a statistically normal distribution of severity. While we generally will not receive payment from Medicare for inpatient services, other than the MS-DRG payment, a hospital may qualify for an “outlier” payment if a particular patient’s treatment costs are extraordinarily high and exceed a specified threshold. MS-DRG rates are adjusted by an update factor each federal fiscal year, which begins on October 1. The index used to adjust the MS-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 MS-DRG payments have been lower than the projected increase in the cost of goods and services purchased by hospitals.

In August, 2019, CMS published its IPPS 2020 final payment rule which provides for a 3.0% market basket increase to the base Medicare MS-DRG blended rate. When statutorily mandated budget neutrality factors, annual geographic wage index updates, documenting and coding adjustments ACA-mandated adjustments are considered, without consideration for changes related to the required Medicare DSH payment changes and increase to the Medicare Outlier threshold, the overall increase in IPPS payments is approximately 2.8%. Including DSH payments and certain other adjustments, we estimate our overall increase from the final IPPS 2020 rule (covering the period of October 1, 2019 through September 30, 2020) will approximate 2.1%. This projected impact from the IPPS 2020 final rule includes an increase of approximately 0.5% to partially restore cuts made as a result of the American Taxpayer Relief Act of 2012 (“ATRA”), as required by the 21st Century Cures Act but excludes the impact of the sequestration reductions related to the Budget Control Act of 2011, Bipartisan Budget Act of 2015, and Bipartisan Budget Act of 2018, as discussed below. CMS completed its full phase-in to use uncompensated care data from the 2015 Worksheet S-10 hospital cost reports to allocate approximately $8.5 billion in the DSH Uncompensated Care Pool.  

In June, 2019, the Supreme Court of the United States issued a decision favorable to hospitals impacting prior year Medicare DSH payments (Azar v. Allina Health Services, No. 17-1484 (U.S. Jun. 3, 2019)).  In Allina, the hospitals challenged the Medicare DSH adjustments for federal fiscal year 2012, specifically challenging CMS’s decision to include inpatient hospital days attributable to Medicare Part C enrollee patients in the numerator and denominator of the Medicare/SSI fraction used to calculate a hospital’s DSH payments.  This ruling addresses CMS’s attempts to impose the policy espoused in its vacated 2004 rulemaking to a fiscal year in the 2004–2013 time period without using notice-and-comment rulemaking. This decision should require CMS to recalculate hospitals’ DSH Medicare/SSI fractions, with Medicare Part C days excluded, for at least federal fiscal year 2012, but likely federal fiscal years 2005 through 2013.  Although we can provide no assurance that we will ultimately receive additional funds, we estimate that the favorable impact of this court ruling on certain prior year hospital Medicare DSH payments could range between $18 million to $28 million in the aggregate.

In August, 2018, CMS published its IPPS 2019 final payment rule which provides for a 2.9% market basket increase to the base Medicare MS-DRG blended rate. When statutorily mandated budget neutrality factors, annual geographic wage index updates, documenting and coding adjustments ACA-mandated adjustments are considered, without consideration for the decreases related to the required Medicare DSH payment changes and decrease to the Medicare Outlier threshold, the overall increase in IPPS payments is approximately 0.5%. Including the estimated increase to our DSH payments (approximating 2.1%) and certain other adjustments, we estimate our overall increase from the final IPPS 2019 rule (covering the period of October 1, 2018 through September 30, 2019) will

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approximate 2.7%. This projected impact from the IPPS 2019 final rule includes an increase of approximately 0.5% to partially restore cuts made as a result of the ATRA, as required by the 21st Century Cures Act but excludes the impact of the sequestration reductions related to the Budget Control Act of 2011, Bipartisan Budget Act of 2015, and Bipartisan Budget Act of 2018, as discussed below.  CMS continued to phase-in the use of uncompensated care data from both the 2014 and 2015 Worksheet S-10 hospital cost reports, two-third weighting as part of the proxy methodology to allocate approximately $8 billion in the DSH Uncompensated Care Pool.

In August, 2017, CMS published its IPPS 2018 final payment rule which provides for a 2.9% market basket increase to the base Medicare MS-DRG blended rate. When statutorily mandated budget neutrality factors, annual geographic wage index updates, documenting and coding adjustments and ACA-mandated adjustments are considered, without consideration for the decreases related to the required Medicare DSH payment changes and increase to the Medicare Outlier threshold, the overall increase in IPPS payments would approximate 2.3%. Including the estimated decrease to our DSH payments (approximating 0.1%) and certain other adjustments, we estimate our overall increase from the final IPPS 2018 rule (covering the period of October 1, 2017 through September 30, 2018) will approximate 1.8%. This projected impact from the IPPS 2018 final rule includes an increase of approximately 0.5% to partially restore cuts made as a result of the ATRA, as required by the 21st Century Cures Act but excludes the impact of the sequestration reductions related to the Budget Control Act of 2011, Bipartisan Budget Act of 2015, and Bipartisan Budget Act of 2018, as discussed below.  CMS began using uncompensated care data from the 2014 hospital cost report Worksheet S-10, one-third weighting as part of the proxy methodology to allocate approximately $7 billion in the DSH Uncompensated Care Pool. This final rule change resulted in wide variations among all hospitals nationwide in the distribution of these DSH funds compared to previous years.

In August, 2011, the Budget Control Act of 2011 (the “2011 Act”) was enacted into law. Included in this law are the imposition of annual spending limits for most federal agencies and programs aimed at reducing budget deficits by $917 billion between 2012 and 2021, according to a report released by the Congressional Budget Office. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Committee, which was responsible for developing recommendations aimed at reducing future federal budget deficits by an additional $1.5 trillion over 10 years. The Joint Committee was unable to reach an agreement by the November 23, 2011 deadline and, as a result, across-the-board cuts to discretionary, national defense and Medicare spending were implemented on March 1, 2013 resulting in Medicare payment reductions of up to 2% per fiscal year.  The Bipartisan Budget Act of 2015, enacted on November 2, 2015, and the Bipartisan Budget Act of 2019, enacted on August 2, 2019, continued the 2% reductions to Medicare reimbursement imposed under the 2011 Act through 2029.  

Inpatient services furnished by psychiatric hospitals under the Medicare program are paid under a Psychiatric Prospective Payment System (“Psych PPS”). Medicare payments to psychiatric hospitals are based on a prospective per diem rate with adjustments to account for certain facility and patient characteristics. The Psych PPS also contains provisions for outlier payments and an adjustment to a psychiatric hospital’s base payment if it maintains a full-service emergency department.

In July, 2019, CMS published its Psych PPS final rule for the federal fiscal year 2020. Under this final rule, payments to our psychiatric hospitals and units are estimated to increase by 1.7% compared to federal fiscal year 2019. This amount includes the effect of the 2.9% market basket update less a 0.75% adjustment as required by the ACA and a 0.4% productivity adjustment.

In August, 2018, CMS published its Psych PPS final rule for the federal fiscal year 2019. Under this final rule, payments to our psychiatric hospitals and units are estimated to increase by 1.35% compared to federal fiscal year 2018. This amount includes the effect of the 2.90% market basket update less a 0.75% adjustment as required by the ACA and a 0.8% productivity adjustment.

In August, 2017, CMS published its Psych PPS final rule for the federal fiscal year 2018. Under this final rule, payments to our psychiatric hospitals and units are estimated to increase by 1.25% compared to federal fiscal year 2017. This amount includes the effect of the 2.6% market basket update less a 0.75% adjustment as required by the ACA and a 0.6% productivity adjustment.

In December, 2018, the U.S. District Court for the District of Columbia ruled that the U.S. Department of Health and Human Services (“HHS”) did not have statutory authority to implement the 2018 Medicare OPPS rate reduction related to hospitals that qualify for drug discounts under the federal 340B Drug Discount Program and granted a permanent injunction against the payment reduction. In May, 2019, the U.S. District Court for the District of Columbia directed CMS to determine a remedy as well as provide a status report on this remedy by early August, 2019 for this Medicare OPPS payment matter. However, recognizing both the complexity of the OPPS payment system as well as its budget neutral rate setting system, the Court refrained from imposing a remedy.  Instead the Judge in the case called for additional briefing from the Plaintiffs and Defendants on the proper scope and implementation for relief.  The case has been appealed by HHS.  In the 2020 OPPS final rule, CMS retained the rate reduction in dispute, but indicated their intent to potentially use the results of a future 340B hospital survey to collect drug acquisition cost data for CY 2018 and 2019 when crafting a remedy. In the event this 340B hospital survey data is not used to devise a remedy, CMS also indicated that it intends

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to consider the public input to inform of the steps they would take to propose a remedy for CY 2018 and 2019 in the CY 2021 rulemaking. We are unable to predict the ultimate outcome of any appeal and the type of relief that may be ordered by the Courts. We estimate that the CMS 2018 change in the 340B payment policy increased our 2018 Medicare OPPS payments by approximately $8 million, which has been fully reserved in our results of operations for the year, and estimate that a comparable amount was scheduled to be earned during 2019.

In November, 2019, CMS published its OPPS final rule for 2020. The hospital market basket increase is 3.0%. The Medicare statute requires a productivity adjustment reduction of 0.4% to the 2020 OPPS market basket resulting in a 2020 update to OPPS payment rates by 2.6%. When other statutorily required adjustments and hospital patient service mix are considered, we estimate that our overall Medicare OPPS update for 2020 will aggregate to a net increase of 2.7% which includes a 7.7% increase to behavioral health division partial hospitalization rates. When the behavioral health division’s partial hospitalization rate impact is excluded, we estimate that our Medicare 2020 OPPS payments will result in a 1.9% increase in payment levels for our acute care division, as compared to 2019.  For CY 2020, CMS will use the FY 2020 hospital IPPS post-reclassified wage index for urban and rural areas as the wage index for the OPPS to determine the wage adjustments for both the OPPS payment rate and the copayment standardized amount.

In the 2020 Medicare OPPS proposed rule, CMS indicated its intent to implement certain Price Transparency rules as required by the June 24, 2019 Presidential Executive Order related to Improving Price and Quality Transparency in American Healthcare to Put Patients First.  CMS proposed that (1) hospitals make public their standard changes (both gross charges and payer-specific negotiated charges) for all items and services online in a machine-readable format, and; (2) requirements for hospitals to make public standard charge data for a limited set of “shoppable services” the hospital provides in a form and manner that is more consumer friendly. In the 2020 OPPS final rule, CMS indicated that it had received numerous comments on its proposed requirements, and that it intends to summarize and respond to public comments on the proposed policies in a forthcoming final rule.  

In November, 2018, CMS published its OPPS final rule for 2019. The hospital market basket increase is 2.9%. The Medicare statute requires a productivity adjustment reduction of 0.8% and 0.75% reduction to the 2019 OPPS market basket resulting in a 2019 update to OPPS payment rates by 1.35%. When other statutorily required adjustments and hospital patient service mix are considered, we estimate that our overall Medicare OPPS update for 2019 will aggregate to a net increase of 1.1% which includes a 5.7% increase to behavioral health division partial hospitalization rates. When the behavioral health division’s partial hospitalization rate impact is excluded, we estimate that our Medicare 2019 OPPS payments will result in a 0.4% increase in payment levels for our acute care division, as compared to 2018.  

In November, 2017, CMS published its OPPS final rule for 2018. The hospital market basket increase is 2.7%. The Medicare statute requires a productivity adjustment reduction of 0.6% and 0.75% reduction to the 2018 OPPS market basket resulting in a 2018 OPPS market basket update at 1.35%. When other statutorily required adjustments and hospital patient service mix are considered, we estimate that our overall Medicare OPPS update for 2018 will aggregate to a net increase of 4.2% which includes a 0.8% increase to behavioral health division partial hospitalization rates. When the behavioral health division’s partial hospitalization rate impact is excluded, we estimate that our Medicare 2018 OPPS payments will result in a 4.8% increase in payment levels for our acute care division, as compared to 2017.  Additionally, the Medicare inpatient-only (IPO) list includes procedures that are only paid under the Hospital Inpatient Prospective Payment System. Each year, CMS uses established criteria to review the IPO list and determine whether or not any procedures should be removed from the list. CMS removed total knee arthroplasty (TKA) from the IPO list effective January 1, 2018. Additionally, CMS redistributed $1.6 billion in cost savings within the OPPS system attributable to changes in the federal 340B hospital drug pricing payment methodology in 2018 but, as discussed above, this 340B-related payment methodology is currently under legal challenge. The impact of these IPO and 340B changes are reflected in the above noted estimated acute care division percentage change in OPPS reimbursement.

In November, 2016, CMS published its OPPS final rule for 2017. The hospital market basket increase is 2.7%. The Medicare statute requires a productivity adjustment reduction of 0.3% and 0.75% reduction to the 2017 OPPS market basket resulting in a 2017 OPPS market basket update at 1.65%. When other statutorily required adjustments and hospital patient service mix are considered, we estimate that our overall Medicare OPPS update for 2017 resulted in a net increase of 1.5% which included a -1.3% decrease to behavioral health division partial hospitalization rates. When the behavioral health division’s partial hospitalization rate impact is excluded, we estimate that our Medicare 2017 OPPS payments resulted in a 2.1% increase in payment levels for our acute care division, as compared to 2016.

Medicaid: Medicaid is a joint federal-state funded health care benefit program that is administered by the states to provide benefits to qualifying individuals. Most state Medicaid payments are made under a PPS-like system, or under programs that negotiate payment levels with individual hospitals. Amounts received under the Medicaid program are generally significantly less than a hospital’s customary charges for services provided. In addition to revenues received pursuant to the Medicare program, we receive a large

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portion of our revenues either directly from Medicaid programs or from managed care companies managing Medicaid. All of our acute care hospitals and most of our behavioral health centers are certified as providers of Medicaid services by the appropriate governmental authorities.

We receive revenues from various state and county based programs, including Medicaid in all the states in which we operate (we receive Medicaid revenues in excess of $100 million annually from each of California, Texas, Nevada, Washington, D.C., Pennsylvania and Illinois); CMS-approved Medicaid supplemental programs in certain states including Texas, Mississippi, Illinois, Oklahoma, Nevada, Arkansas, California and Indiana, and; state Medicaid disproportionate share hospital payments in certain states including Texas and South Carolina. We are therefore particularly sensitive to potential reductions in Medicaid and other state based revenue programs as well as regulatory, economic, environmental and competitive changes in those states. We can provide no assurance that reductions to revenues earned pursuant to these programs, particularly in the above-mentioned states, will not have a material adverse effect on our future results of operations.

The ACA substantially increases the federally and state-funded Medicaid insurance program, and authorizes states to establish federally subsidized non-Medicaid health plans for low-income residents not eligible for Medicaid starting in 2014. However, the Supreme Court has struck down portions of the ACA requiring states to expand their Medicaid programs in exchange for increased federal funding. Accordingly, many states in which we operate have not expanded Medicaid coverage to individuals at 133% of the federal poverty level. Facilities in states not opting to expand Medicaid coverage under the ACA may be additionally penalized by corresponding reductions to Medicaid disproportionate share hospital payments beginning in 2020, as discussed below. We can provide no assurance that further reductions to Medicaid revenues, particularly in the above-mentioned states, will not have a material adverse effect on our future results of operations.

Various State Medicaid Supplemental Payment Programs:

We incur health-care related taxes (“Provider Taxes”) imposed by states in the form of a licensing fee, assessment or other mandatory payment which are related to: (i) healthcare items or services; (ii) the provision of, or the authority to provide, the health care items or services, or; (iii) the payment for the health care items or services. Such Provider Taxes are subject to various federal regulations that limit the scope and amount of the taxes that can be levied by states in order to secure federal matching funds as part of their respective state Medicaid programs. As outlined below, we derive a related Medicaid reimbursement benefit from assessed Provider Taxes in the form of Medicaid claims based payment increases and/or lump sum Medicaid supplemental payments.  

Included in these Provider Tax programs are reimbursements received in connection with the Texas Uncompensated Care/Upper Payment Limit program (“UC/UPL”) and Texas Delivery System Reform Incentive Payments program (“DSRIP”).  Additional disclosure related to the Texas UC/UPL and DSRIP programs is provided below.

Texas Uncompensated Care/Upper Payment Limit Payments:

Certain of our acute care hospitals located in various counties of Texas (Grayson, Hidalgo, Maverick, Potter and Webb) participate in Medicaid supplemental payment Section 1115 Waiver indigent care programs. Section 1115 Waiver Uncompensated Care (“UC”) payments replace the former Upper Payment Limit (“UPL”) payments. These hospitals also have affiliation agreements with third-party hospitals to provide free hospital and physician care to qualifying indigent residents of these counties. Our hospitals receive both supplemental payments from the Medicaid program and indigent care payments from third-party, affiliated hospitals. The supplemental payments are contingent on the county or hospital district making an Inter-Governmental Transfer (“IGT”) to the state Medicaid program while the indigent care payment is contingent on a transfer of funds from the applicable affiliated hospitals. However, the county or hospital district is prohibited from entering into an agreement to condition any IGT on the amount of any private hospital’s indigent care obligation.  

For state fiscal year 2017, Texas Medicaid continued to operate under a CMS-approved Section 1115 five-year Medicaid waiver demonstration program extended by CMS for fifteen months to December 31, 2017. During the first five years of this program that started in state fiscal year 2012, the THHSC transitioned away from UPL payments to new waiver incentive payment programs, UC and DSRIP payments. During demonstration periods ending December 31, 2017, THHSC continued to, make incentive payments under the program after certain qualifying criteria were met by hospitals. Supplemental payments are also subject to aggregate statewide caps based on CMS approved Medicaid waiver amounts.

On December 21, 2017, CMS approved the 1115 Waiver for the period January 1, 2018 to September 30, 2022. The Waiver continued to include UC and DSRIP payment pools with modifications and new state specific reporting deadlines that if not met by THHSC will result in material decreases in the size of the UC and DSRIP pools.  For UC during the initial two years of this renewal, the UC program will remain relatively the same in size and allocation methodology.  For year three of this waiver renewal, FFY 2020, and through FFY 2022, the size and distribution of the UC pool will be determined based on charity care costs reported to HHSC in accordance with Medicare cost report Worksheet S-10 principles.  In September 2019, CMS approved the annual UC pool size in the

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amount of $3.9 billion for demonstration years (“DYs”) 9, 10 and 11 (October 1, 2019 to September 30, 2022). We estimate the impact on of these UC program changes could result in a 5% to 10% increase to UC payments in DYs 9 to 11 as compared to our DY 8 UC payments.

Effective April 1, 2018, certain of our acute care hospitals located in Texas began to receive Medicaid managed care rate enhancements under the Uniform Hospital Rate Increase Program (“UHRIP”).  The non-federal share component of these UHRIP rate enhancements are financed by Provider Taxes.  The Texas 1115 Waiver rules require UHRIP rate enhancements be considered in the Texas UC payment methodology which results in a reduction to our UC payments.  The UC amounts reported in the State Medicaid Supplemental Payment Program Table below reflect the impact of this new UHRIP program.

On November 16, 2018, THHSC published a final rule effective in federal fiscal years 2018 and 2019 that changes the definition of a rural hospital for the purposes of determining Texas UC payments and the applicable UC payment reduction. The application of UC payment reduction allows the THHSC to comply with the overall statewide UC payment cap required under the special terms and condition of the approved 1115 Waiver.  Two of our acute care hospitals, which have been designated as a Rural Referral Center by CMS and which are located in an urban Metropolitan Statistical Area, recorded: (i) increased UC payments/revenue for the federal fiscal year ending September 30, 2018, and; (ii) decreased UC payments/revenue for the federal fiscal year beginning October 1, 2018. The net impact of these changes had a favorable impact on our 2018 results of operations and are included in the amounts reflected below in the State Medicaid Supplemental Payment Program table.

Texas Delivery System Reform Incentive Payments:

In addition, the Texas Medicaid Section 1115 Waiver includes a DSRIP pool to incentivize hospitals and other providers to transform their service delivery practices to improve quality, health status, patient experience, coordination, and cost-effectiveness. DSRIP pool payments are incentive payments to hospitals and other providers that develop programs or strategies to enhance access to health care, increase the quality of care, the cost-effectiveness of care provided and the health of the patients and families served. In May, 2014, CMS formally approved specific DSRIP projects for certain of our hospitals for demonstration years 3 to 5 (our facilities did not materially participate in the DSRIP pool during demonstration years 1 or 2). DSRIP payments are contingent on the hospital meeting certain pre-determined milestones, metrics and clinical outcomes. Additionally, DSRIP payments are contingent on a governmental entity providing an IGT for the non-federal share component of the DSRIP payment. THHSC generally approves DSRIP reported metrics, milestones and clinical outcomes on a semi-annual basis in June and December.  Under the CMS approval noted above, the Waiver renewal requires the transition of the DSRIP program to one focused on "health system performance measurement and improvement." THHSC must submit a transition plan describing "how it will further develop its delivery system reforms without DSRIP funding and/or phase out DSRIP funded activities and meet mutually agreeable milestones to demonstrate its ongoing progress."  The size of the DSRIP pool will remain unchanged for the initial two years of the waiver renewal with unspecified decreases in years three and four of the renewal, FFY 2020 and 2021, respectively.  In FFY 2022, DSRIP funding under the waiver is eliminated. For FFY 2020 and 2021, we estimate these changes will result in a $3 million and $4 million decrease in DSRIP payments, respectively.  For FFY 2022, we will no longer receive DSRIP funds due to the elimination of this funding source by CMS in the Waiver renewal. In September 2019, HHSC submitted a DSRIP Transition Plan to CMS as required by the 1115 Waiver Special Terms and Conditions #37 that outlines a transition from the current DSRIP program to a Value-Based Purchasing (“VBP”) type payment model. The draft plan will be finalized with CMS by March 31, 2020.  The effective date of the new VBP payment model (if approved by CMS) is not yet known. Similarly, details of the VBP model are still under development.  As a result, we are unable to estimate the financial impact of this payment change.

Summary of Amounts Related To The Above-Mentioned Various State Medicaid Supplemental Payment Programs:

The following table summarizes the revenues, Provider Taxes and net benefit related to each of the above-mentioned Medicaid supplemental programs for the three and nine-month periods ended September 30, 2019 and 2018. The Provider Taxes are recorded in other operating expenses on the Condensed Consolidated Statements of Income as included herein.  

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	(amounts in millions)
	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018
Texas UC/UPL:
Revenues	$	41		$	39		$	94		$	83
Provider Taxes		(13	)		(12	)		(35	)		(29	)
Net benefit	$	28		$	27		$	59		$	54
Texas DSRIP:
Revenues	$	0		$	0		$	23		$	13
Provider Taxes		2			0			(8	)		(5	)
Net benefit	$	2		$	0		$	15		$	8
Various other state programs:
Revenues	$	76		$	53		$	202		$	165
Provider Taxes		(35	)		(16	)		(103	)		(86	)
Net benefit	$	41		$	37		$	99		$	79
Total all Provider Tax programs:
Revenues	$	117		$	92		$	319		$	261
Provider Taxes		(46	)		(28	)		(146	)		(120	)
Net benefit	$	71		$	64		$	173		$	141

Included in the Texas UC/UPL amounts reflected above for the three and nine-month periods ended September 30, 2019, was approximately $12 million received during the third quarter of 2019 (approximately $3 million of which relates to prior years). We estimate that our aggregate net benefit from the Texas and various other state Medicaid supplemental payment programs will approximate $225 million (net of Provider Taxes of $193 million) during the year ending December 31, 2019. This estimate is based upon various terms and conditions that are out of our control including, but not limited to, the states’/CMS’s continued approval of the programs and the applicable hospital district or county making IGTs consistent with 2018 levels. Future changes to these terms and conditions could materially reduce our net benefit derived from the programs which could have a material adverse impact on our future consolidated results of operations.  In addition, Provider Taxes are governed by both federal and state laws and are subject to future legislative changes that, if reduced from current rates in several states, could have a material adverse impact on our future consolidated results of operations.

Texas and South Carolina Medicaid Disproportionate Share Hospital Payments:

Hospitals that have an unusually large number of low-income patients (i.e., those with a Medicaid utilization rate of at least one standard deviation above the mean Medicaid utilization, or having a low income patient utilization rate exceeding 25%) are eligible to receive a DSH adjustment. Congress established a national limit on DSH adjustments. Although this legislation and the resulting state broad-based provider taxes have affected the payments we receive under the Medicaid program, to date the net impact has not been materially adverse.

Upon meeting certain conditions and serving a disproportionately high share of Texas’ and South Carolina’s low income patients, five of our facilities located in Texas and one facility located in South Carolina received additional reimbursement from each state’s DSH fund. The South Carolina and Texas DSH programs were renewed for each state’s 2020 DSH fiscal year (covering the period of October 1, 2019 through September 30, 2020).

In connection with these DSH programs, included in our financial results (including our behavioral health care facilities located in Texas) was an aggregate of approximately $12 million and $9 million during the three-month periods ended September 30, 2019 and 2018, respectfully, and $40 million and $28 million during the nine-month periods ended September 30, 2019 and 2018, respectively.  We expect the aggregate reimbursements to our hospitals pursuant to the Texas and South Carolina 2019 fiscal year programs to be approximately $48 million.  

The ACA and subsequent federal legislation provides for a significant reduction in Medicaid disproportionate share payments in federal fiscal year 2020 (see below in Sources of Revenues and Health Care Reform-Medicaid Revisions for additional disclosure). The U.S. Department of Health and Human Services is to determine the amount of Medicaid DSH payment cuts imposed on each state based on a defined methodology. As Medicaid DSH payments to states will be cut, consequently, payments to Medicaid-participating

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providers, including our hospitals in Texas and South Carolina, will be reduced in the coming years. Based on the CMS final rule published in September, 2019, Medicaid DSH payments in South Carolina and Texas could be reduced by approximately 32% and 23%, respectively, from projected 2019 DSH payment levels beginning in FFY 2020.  

Our behavioral health care facilities in Texas have been receiving Medicaid DSH payments since FFY 2016.  As with all Medicaid DSH payments, hospitals are subject to state audits that typically occur up to three years after their receipt. DSH payments are subject to a federal Hospital Specific Limit (“HSL”) and are not fully known until the DSH audit results are concluded.  In general, freestanding psychiatric hospitals tend to provide significantly less charity care than acute care hospitals and therefore are at more risk for retroactive recoupment of prior year DSH payments in excess of their respective HSL.  In light of the retroactive HSL audit risk for freestanding psychiatric hospitals, we have established DSH reserves for our facilities that have been receiving funds since FFY 2016. These DSH reserves are also impacted by the resolution of federal DSH litigation related to Children’s Hospital Association of Texas v. Azar (“CHAT”), No. 17-cv-844 (D.D.C. March 2, 2018), appeal docketed, No. 18-5135 (D.C. Cir. May 9, 2018) where the calculation of HSL was being challenged. In August, 2019, DC Circuit Court of Appeals issued a unanimous decision in CHAT and reversed the judgment of the district court in favor of CMS and ordered that CMS’s “2017 Rule” (regarding Medicaid DSH Payments—Treatment of Third Party Payers in Calculating Uncompensated Care Costs) be reinstated. CMS has not issued any additional guidance post the ruling and it is unclear if the plaintiffs in the case will appeal the decision to the Supreme Court of the United States. Separate legal challenges on this same issue are pending in circuit courts in the Fifth, Sixth, and Eighth Circuits which may impact CMS’s guidance on the 2017 Rule regarding the federal HSL. Including $5 million of UC reimbursements received in September, 2019, which are also potentially subject to the CHAT litigation, the cumulative Medicaid DSH and UC reimbursements related to our behavioral health hospitals located in Texas, that have been reserved for in our financial statements, amounted to $28 million and $14 million as of September 30, 2019 and 2018, respectively.

Nevada SPA:

In Nevada, CMS approved a state plan amendment (“SPA”) in August, 2014 that implemented a hospital supplemental payment program retroactive to January 1, 2014. This SPA has been approved for additional state fiscal years including the 2020 fiscal year covering the period of July 1, 2019 through June 30, 2020.

In connection with this program, included in our financial results was approximately $7 million during each of the three-month periods ended September 30, 2019 and 2018, respectively, and $21 million and $19 million during the nine-month periods ended September 30, 2019 and 2018, respectively. We estimate that our reimbursements pursuant to this program will approximate $28 million during the year ended December 31, 2019.  

California SPA:

In California, CMS issued formal approval of the 2017-19 Hospital Fee Program in December, 2017 retroactive to January 1, 2017 through June 30, 2019. This approval included the Medicaid inpatient and outpatient fee-for-service supplemental payments and the overall provider tax structure but did not yet include the approval of the managed care payment component. Upon approval by CMS, the managed care payment component will consist of two categories of payments, “pass-through” payments and “directed” payments. The pass-through payments will be similar in nature to the prior Hospital Fee Program payment method whereas the directed payment method will be based on actual concurrent hospital Medicaid managed care in-network patient volume. CMS has approved the “directed” payment component methodology for the period of July 1, 2017 through June 30, 2019. The timing of CMS’s approval of the “pass through” component is uncertain.  In September, 2019, the state submitted a request to renew the Hospital Fee Program for the period July 1, 2019 to December 31, 2021. The timing of CMS’s approval of this new program is uncertain. In connection with the existing program, included in our financial results was approximately $15 million and $17 million during the three-month periods ended September 30, 2019 and 2018, respectively, and $23 million ($7 million relates to prior years) and $22 million ($7 million related to prior years) during the nine-month periods ended September 30, 2019 and 2018, respectively. We estimate that our reimbursements pursuant to this program will approximate $29 million during the year ended December 31, 2019. The aggregate impact of the California supplemental payment program, as outlined above, is included in the above State Medicaid Supplemental Payment Program table.

Risk Factors Related To State Supplemental Medicaid Payments:

As outlined above, we receive substantial reimbursement from multiple states in connection with various supplemental Medicaid payment programs. The states include, but are not limited to, Texas, Mississippi, Illinois, Nevada, Arkansas, California and Indiana. Failure to renew these programs beyond their scheduled termination dates, failure of the public hospitals to provide the necessary IGTs for the states’ share of the DSH programs, failure of our hospitals that currently receive supplemental Medicaid revenues to qualify for future funds under these programs, or reductions in reimbursements, could have a material adverse effect on our future results of operations.

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In April, 2016, CMS published its final Medicaid Managed Care Rule which explicitly permits but phases out the use of pass-through payments (including supplemental payments) by Medicaid Managed Care Organizations (“MCO”) to hospitals over ten years but allows for a transition of the pass-through payments into value-based payment structures, delivery system reform initiatives or payments tied to services under a MCO contract.  Since we are unable to determine the financial impact of this aspect of the final rule, we can provide no assurance that the final rule will not have a material adverse effect on our future results of operations.  In November, 2018, CMS issued a proposed rule that would permit pass-through supplemental provider payments during a time-limited period when states transition populations or services from fee-for-service Medicaid to managed care.

HITECH Act: In July 2010, the Department of Health and Human Services (“HHS”) published final regulations implementing the health information technology (“HIT”) provisions of the American Recovery and Reinvestment Act (referred to as the “HITECH Act”). The final regulation defines the “meaningful use” of Electronic Health Records (“EHR”) and establishes the requirements for the Medicare and Medicaid EHR payment incentive programs. The final rule established an initial set of standards and certification criteria. The implementation period for these new Medicare and Medicaid incentive payments started in federal fiscal year 2011 and can end as late as 2016 for Medicare and 2021 for the state Medicaid programs. State Medicaid program participation in this federally funded incentive program is voluntary but all of the states in which our eligible hospitals operate have chosen to participate. Our acute care hospitals qualified for these EHR incentive payments upon implementation of the EHR application assuming they meet the “meaningful use” criteria. The government’s ultimate goal is to promote more effective (quality) and efficient healthcare delivery through the use of technology to reduce the total cost of healthcare for all Americans and utilizing the cost savings to expand access to the healthcare system.

Pursuant to HITECH Act regulations, hospitals that do not qualify as a meaningful user of EHR by 2015 are subject to a reduced market basket update to the IPPS standardized amount in 2015 and each subsequent fiscal year. We believe that all of our acute care hospitals have met the applicable meaningful use criteria and therefore are not subject to a reduced market basked update to the IPPS standardized amount in federal fiscal year 2015. However, under the HITECH Act, hospitals must continue to meet the applicable meaningful use criteria in each fiscal year or they will be subject to a market basket update reduction in a subsequent fiscal year. Failure of our acute care hospitals to continue to meet the applicable meaningful use criteria would have an adverse effect on our future net revenues and results of operations.

Federal regulations require that Medicare EHR incentive payments be computed based on the Medicare cost report that begins in the federal fiscal period in which a hospital meets the applicable “meaningful use” requirements. Since the annual Medicare cost report periods for each of our acute care hospitals ends on December 31^st, we will recognize Medicare EHR incentive income for each hospital during the fourth quarter of the year in which the facility meets the “meaningful use” criteria and during the fourth quarter of each applicable subsequent year.

In the 2019 IPPS final rule, CMS overhauled the Medicare and Medicaid EHR Incentive Program to focus on interoperability, improve flexibility, relieve burden and place emphasis on measures that require the electronic exchange of health information between providers and patients.  We can provide no assurance that the changes will not have a material adverse effect on our future results of operations.

Managed Care: A significant portion of our net patient revenues are generated from managed care companies, which include health maintenance organizations, preferred provider organizations and managed Medicare (referred to as Medicare Part C or Medicare Advantage) and Medicaid programs. In general, we expect the percentage of our business from managed care programs to continue to grow. The consequent growth in managed care networks and the resulting impact of these networks on the operating results of our facilities vary among the markets in which we operate. Typically, we receive lower payments per patient from managed care payers than we do from traditional indemnity insurers, however, during the past few years we have secured price increases from many of our commercial payers including managed care companies.

Commercial Insurance: Our hospitals also provide services to individuals covered by private health care insurance. Private insurance carriers typically make direct payments to hospitals or, in some cases, reimburse their policy holders, based upon the particular hospital’s established charges and the particular coverage provided in the insurance policy. Private insurance reimbursement varies among payers and states and is generally based on contracts negotiated between the hospital and the payer.

Commercial insurers are continuing efforts to limit the payments for hospital services by adopting discounted payment mechanisms, including predetermined payment or DRG-based payment systems, for more inpatient and outpatient services. To the extent that such efforts are successful and reduce the insurers’ reimbursement to hospitals and the costs of providing services to their beneficiaries, such reduced levels of reimbursement may have a negative impact on the operating results of our hospitals.

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Other Sources: Our hospitals provide services to individuals that do not have any form of health care coverage. Such patients are evaluated, at the time of service or shortly thereafter, 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 hospitals’ indigent and charity care policy. Patients without health care coverage who do not qualify for Medicaid or indigent care write-offs are offered substantial discounts in an effort to settle their outstanding account balances.

Health Care Reform: Listed below are the Medicare, Medicaid and other health care industry changes which have been, or are scheduled to be, implemented as a result of the ACA.  

Implemented Medicare Reductions and Reforms:

• The Reconciliation Act reduced the market basket update for inpatient and outpatient hospitals and inpatient behavioral health facilities by 0.25% in each of 2010 and 2011, by 0.10% in each of 2012 and 2013, 0.30% in 2014, 0.20% in each of 2015 and 2016 and 0.75% in each of 2017, 2018 and 2019.

• The ACA implemented certain reforms to Medicare Advantage payments, effective in 2011.

• A Medicare shared savings program, effective in 2012.

• A hospital readmissions reduction program, effective in 2012.

• A value-based purchasing program for hospitals, effective in 2012.

• A national pilot program on payment bundling, effective in 2013.

• Reduction to Medicare DSH payments, effective in 2014, as discussed above.  

Medicaid Revisions:

• Expanded Medicaid eligibility and related special federal payments, effective in 2014.

• The ACA (as amended by subsequent federal legislation) requires annual aggregate reductions in federal DSH funding from federal fiscal year (“FFY”) 2020 through FFY 2025. The aggregate annual reduction amounts are $4.0 billion for FFY 2020 and $8.0 billion for FFY 2021 through FFY 2025.  In September, 2019, federal legislation was enacted which delays the reduction in the Medicaid DSH allotment through November 21, 2019.  

Health Insurance Revisions:

• Large employer insurance reforms, effective in 2015.

• Individual insurance mandate and related federal subsidies, effective in 2014. As noted above in Health Care Reform, the Tax Cuts and Jobs Act enacted into law in December, 2017 eliminated the individual insurance federal mandate penalty after December 31, 2018.

• Federally mandated insurance coverage reforms, effective in 2010 and forward.

The ACA seeks to increase competition among private health insurers by providing for transparent federal and state insurance exchanges. The ACA also prohibits private insurers from adjusting insurance premiums based on health status, gender, or other specified factors. We cannot provide assurance that these provisions will not adversely affect the ability of private insurers to pay for services provided to insured patients, or that these changes will not have a negative material impact on our results of operations going forward.

Value-Based Purchasing:

There is a trend in the healthcare industry toward value-based purchasing of healthcare services. These value-based purchasing programs include both public reporting of quality data and preventable adverse events tied to the quality and efficiency of care provided by facilities. Governmental programs including Medicare and Medicaid currently require hospitals to report certain quality data to receive full reimbursement updates. In addition, Medicare does not reimburse for care related to certain preventable adverse events. Many large commercial payers currently require hospitals to report quality data, and several commercial payers do not reimburse hospitals for certain preventable adverse events.

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The ACA required HHS to implement a value-based purchasing program for inpatient hospital services which became effective on October 1, 2012. The ACA requires HHS to reduce inpatient hospital payments for all discharges by a percentage beginning at 1% in FFY 2013 and increasing by 0.25% each fiscal year up to 2% in FFY 2017 and subsequent years. HHS will pool the amount collected from these reductions to fund payments to reward hospitals that meet or exceed certain quality performance standards established by HHS. HHS will determine the amount each hospital that meets or exceeds the quality performance standards will receive from the pool of dollars created by these payment reductions. In its fiscal year 2016 IPPS final rule, CMS funded the value-based purchasing program by reducing base operating DRG payment amounts to participating hospitals by 1.75%.  For FFY 2017, this reduction was increased to its maximum of 2%.

Hospital Acquired Conditions:

The ACA prohibits the use of federal funds under the Medicaid program to reimburse providers for medical assistance provided to treat hospital acquired conditions (“HAC”). Beginning in FFY 2015, hospitals that fall into the top 25% of national risk-adjusted HAC rates for all hospitals in the previous year will receive a 1% reduction in their total Medicare payments.

Readmission Reduction Program:

In the ACA, Congress also mandated implementation of the hospital readmission reduction program (“HRRP”). Hospitals with excessive readmissions for conditions designated by HHS will receive reduced payments for all inpatient discharges, not just discharges relating to the conditions subject to the excessive readmission standard. The HRRP currently assesses penalties on hospitals having excess readmission rates for heart failure, myocardial infarction, pneumonia, acute exacerbation of chronic obstructive pulmonary disease (COPD) and elective total hip arthroplasty (THA) and/or total knee arthroplasty (TKA), excluding planned readmissions, when compared to expected rates.  In the fiscal year 2015 IPPS final rule, CMS added readmissions for coronary artery bypass graft (CABG) surgical procedures beginning in fiscal year 2017. To account for excess readmissions, an applicable hospital's base operating DRG payment amount is adjusted for each discharge occurring during the fiscal year. Readmissions payment adjustment factors can be no more than a 3 percent reduction.

Accountable Care Organizations:

The ACA requires HHS to establish a Medicare Shared Savings Program that promotes accountability and coordination of care through the creation of accountable care organizations (“ACOs”). The ACO program allows providers (including hospitals), physicians and other designated professionals and suppliers to voluntarily work together to invest in infrastructure and redesign delivery processes to achieve high quality and efficient delivery of services. The program is intended to produce savings as a result of improved quality and operational efficiency. ACOs that achieve quality performance standards established by HHS will be eligible to share in a portion of the amounts saved by the Medicare program.  CMS is also developing and implementing more advanced ACO payment models, such as the Next Generation ACO Model, which require ACOs to assume greater risk for attributed beneficiaries.  On December 21, 2018, CMS published a final rule that, in general, requires ACO participants to take on additional risk associated with participation in the program.  It remains unclear to what extent providers will pursue federal ACO status or whether the required investment would be warranted by increased payment.  

Bundled Payments for Care Improvement Advanced:

The Center for Medicare & Medicaid Innovation (“CMMI”) is responsible for establishing demonstration projects and other initiatives aimed to develop, test and encourage the adoption of new methods for delivery and payment for health care that create savings under the Federal Medicare and state Medicaid programs while improving quality of care. For example, providers participating in bundled payment initiatives agree to receive one payment for services provided to Medicare beneficiaries for certain medical conditions or episodes of care, accepting accountability for costs and quality of care across the continuum of care. By rewarding providers for increasing quality and reducing costs, and penalizing providers if costs exceed a set amount, these models are intended to lead to higher quality and more coordinated care at a lower cost to the Medicare beneficiary and overall program.  The CMMI has previously implemented a voluntary bundled payment program known as the Bundled Payment for Care Improvement (“BPCI”).  Substantially all of our acute care hospitals were participants in the BPCI program, which ended September 30, 2018.

CMMI implemented a new, second generation voluntary episode payment model, Bundled Payments for Care Improvement Advanced (BPCI-Advanced or the Program), with the first performance period beginning October 1, 2018.  BPCI-Advanced is designed to test a new iteration of bundled payments for 32 Clinical Episodes (29 inpatient and 3 outpatient) with an aim to align incentives among participating health care providers to reduce expenditures and improve quality of care for traditional Medicare beneficiaries. The first cohort of participants entered BPCI-Advanced on October 1, 2018, and agreed to an initial performance period that will run through December 31, 2023.  We have elected to participate in BPCI-Advanced at seventeen (17) of our acute care hospitals across almost two hundred (200) clinical episodes in collaboration with a third-party convener which has extensive experience and success in BPCI. The ultimate success and financial impact of the BPCI-Advanced program is contingent on multiple variables so we are unable to estimate

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the impact.  However, given the breadth and scope of participation of our acute care hospitals in BPCI-Advanced, the impact could be significant (either favorably or unfavorably) depending on actual program results.       

In addition to statutory and regulatory changes to the Medicare and each of the state Medicaid programs, our operations and reimbursement may be affected by administrative rulings, new or novel interpretations and determinations of existing laws and regulations, post-payment audits, requirements for utilization review and new governmental funding restrictions, all of which may materially increase or decrease program payments as well as affect the cost of providing services and the timing of payments to our facilities. The final determination of amounts we receive under the Medicare and Medicaid programs often takes many years, because of audits by the program representatives, providers’ rights of appeal and the application of numerous technical reimbursement provisions. We believe that we have made adequate provisions for such potential adjustments. Nevertheless, until final adjustments are made, certain issues remain unresolved and previously determined allowances could become either inadequate or more than ultimately required.

Finally, we expect continued third-party efforts to aggressively manage reimbursement levels and cost controls. Reductions in reimbursement amounts received from third-party payers could have a material adverse effect on our financial position and our results.

Other Operating Results

Interest Expense:

As reflected on the schedule below, interest expense was $41 million and $40 million during the three-month periods ended September 30, 2019 and 2018, respectively, and $124 million and $115 million during the nine-month periods ended September 30, 2019 and 2018, respectively (amounts in thousands):

	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
Revolving credit & demand notes (a.)	$	813		$	3,880		$	2,403		$	10,362
$300 million, 3.75% Senior Notes due 2019 (b.)		-			2,812			-			8,437
$700 million, 4.75% Senior Notes due 2022, net (c.)		8,069			8,070			24,209			24,210
$400 million, 5.00% Senior Notes due 2026 (d.)		5,000			5,000			15,000			15,000
Term loan facility A (a.)		18,258			15,847			56,827			44,736
Term loan facility B (a.)		5,080			-			15,720			-
Accounts receivable securitization program (e.)		3,226			3,502			9,877			9,379
Subtotal-revolving credit, demand notes, Senior Notes,    term loan facility and accounts receivable    securitization program		40,446			39,111			124,036			112,124
Interest rate swap income, net		-			(1,968	)		(3,400	)		(4,203	)
Amortization of financing fees		1,282			2,242			3,838			6,729
Other combined interest expense		660			782			1,964			2,696
Capitalized interest on major projects		(876	)		(625	)		(2,481	)		(1,579	)
Interest income		(65	)		(36	)		(383	)		(685	)
Interest expense, net	$	41,447		$	39,506		$	123,574		$	115,082

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(a.) In October, 2018, we entered into a sixth amendment to our credit agreement dated November 15, 2010 to, among other things: (i.) increase the aggregate amount of the revolving commitments by $200 million to $1 billion; (ii) increase the aggregate amount of the term loan facility A by approximately $290 million to $2 billion, and; (iii) extend the maturity date of the credit agreement from August 7, 2019 to October 23, 2023. On October 31, 2018, we added a seven-year, Tranche B term loan facility in the aggregate amount of $500 million pursuant to our credit agreement. The Tranche B term loan matures on October 31, 2025.

As of September 30, 2019, we had: (i) $1.963 billion of borrowings outstanding under the term loan A facility; (ii) $496.3 million of borrowings outstanding under the term loan B facility, and; (iii) no outstanding borrowings under the $1 billion revolving credit facility.

(b.) On November 26, 2018 we redeemed the $300 million aggregate principal, 3.75% Senior Notes due 2019. The 2019 Notes were redeemed for an aggregate price equal to 100.485% of the principal amount (premium of approximately $1 million) plus accrued interest to the redemption date.  

(c.) In June, 2016, we completed the offering of an additional $400 million aggregate principal amount of 4.75% Senior Notes due in 2022 (issued at a yield of 4.35%), the terms of which were identical to the terms of our $300 million aggregate principal amount of 4.75% Senior Notes due in 2022, issued in August, 2014. These Senior Notes, combined, are referred to as $700 million, 4.75% Senior Notes due in 2022.

(d.) In June, 2016, we completed the offering of $400 million aggregate principal amount of 5.00% Senior Notes due in 2026.

(e.) In April, 2018, we amended our accounts receivable securitization program, which was scheduled to expire in December, 2018.  Pursuant to the amendment, the term has been extended through April 26, 2021, and the borrowing limit has been increased to $450 million from $440 million ($365 million outstanding as of September 30, 2019).  

Interest expense increased $2 million during the three-month period ended September 30, 2019, as compared to the comparable period of 2018, due primarily to: (i) a net $1 million increase in aggregate interest expense on our revolving credit, demand notes, senior notes, term loan facility and accounts receivable securitization program resulting from an increase in our aggregate average cost of borrowings pursuant to these facilities (4.0% during the three months ended September 30, 2019 as compared to 3.9% in the comparable quarter of 2018), as well as an increase in the aggregate average outstanding borrowings ($4.01 billion during the three months ended September 30, 2019 as compared to $3.98 billion in the comparable 2018 quarter); (ii) $1 million of other combined increases in interest expense consisting primarily of a $2 million unfavorable change in interest rate swap income, partially offset by a $1 million decrease in amortization of financing fees. The average effective interest rate on these facilities, including amortization of deferred financing costs and original issue discounts and designated interest rate swap expense was 4.1% and 3.9% during the three-month periods ended September 30, 2019 and 2018, respectively.

Interest expense increased $8 million during the nine-month period ended September 30, 2019, as compared to the comparable period of 2018, due primarily to: (i) a net $12 million increase in aggregate interest expense on our revolving credit, demand notes, senior notes, term loan facility and accounts receivable securitization program resulting from an increase in our aggregate average cost of borrowings pursuant to these facilities (4.1% during the nine months ended September 30, 2019 as compared to 3.7% in the comparable period of 2018), as well as an increase in the aggregate average outstanding borrowings ($4.01 billion during the nine months ended September 30, 2019 as compared to $3.97 billion in the comparable 2018 period), partially offset by; (ii) $3 million of other combined decreases in interest expense consisting primarily of a $1 million decrease in interest rate swap income, $3 million decrease in amortization of financing fees and a $1 million decrease in other interest expenses.  The average effective interest rate on these facilities, including amortization of deferred financing costs and original issue discounts and designated interest rate swap expense was 4.1% and 3.8% during the nine-month periods ended September 30, 2019 and 2018, respectively.

Provision for Income Taxes and Effective Tax Rates:

The effective tax rates, as calculated by dividing the provision for income taxes by income before income taxes, were as follows for the three and nine-month periods ended September 30, 2019 and 2018 (dollar amounts in thousands): 

	Three months ended						Nine months ended
	September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018
Provision for income taxes	$	37,205		$	54,186		$	165,646		$	192,814
Income before income taxes		138,075			229,067			745,179			827,075
Effective tax rate		26.9	%		23.7	%		22.2	%		23.3	%

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The provision for income taxes decreased $17 million during the three-month period ended September 30, 2019, as compared to the comparable quarter of 2018, due primarily to: (i) a decrease resulting from the tax benefit recorded on the $92 million decrease in pre-tax income during the third quarter of 2019, as compared to the comparable quarter of 2018, as discussed above in Results of Operations, which includes a $98 million aggregate provision for asset impairment recorded during the third quarter of 2019, as discussed below; (ii) a decrease of $2 million resulting from our adoption of ASU 2016-09 which decreased our provision for income taxes by approximately $2 million during the third quarter of 2019, partially offset by; (iii) a $6 million increase recorded during the third quarter of 2019 resulting from the net estimated federal and state income taxes due on the portion of the DOJ Reserve established in connection with the agreement in principle with the Department of Justice, Civil Division, that is estimated to be non-deductible for income tax purposes.    

The provision for income taxes decreased $27 million during the nine-month period ended September 30, 2019, as compared to the comparable period of 2018, due primarily to: (i) a decrease resulting from the tax benefit recorded on the $82 million decrease in pre-tax income, as discussed above in Results of Operations, which includes a $98 million aggregate provision for asset impairment recorded during the third quarter of 2019, as discussed below; (ii) a decrease of $11 million resulting from our adoption of ASU 2016-09 which decreased our provision for income taxes by approximately $12 million during the first nine months of 2019, as compared to a decrease of approximately $1 million during the first nine months of 2018; (iii) a $4 million decrease resulting from a favorable adjustment recorded during the nine-month period ended September 30, 2019 (recorded during the second quarter of 2019) related to a change in state tax law, partially offset by; (iv) a $6 million increase recorded during the nine-month ended September 30, 2019 (recorded during the third quarter of 2019) resulting from the above-mentioned net estimated federal and state income taxes due on the portion of the DOJ Reserve that is estimated to be non-deductible for income tax purposes.

Provision for Asset Impairment-Foundations Recovery Network:

Our financial results for the three and nine-month periods ended September 30, 2019, include an aggregate pre-tax provision for asset impairment of $97.6 million recorded in connection with Foundations Recovery Network, L.L.C. (“Foundations”), which was acquired by us in 2015. This pre-tax provision for asset impairment includes: (i) a $74.9 million impairment provision to write-off the carrying value of the Foundations’ tradename intangible asset, and; (ii) a $22.7 million impairment provision to reduce the carrying value of real property assets of certain Foundations’ facilities.

This provision for asset impairment, which is included in other operating expenses in our consolidated statements of income for the three and nine-month periods ended September 30, 2019, was recorded after evaluation of the estimated fair value of the Foundations’ tradename as well as certain related real property assets. The provision for asset impairment was impacted by the following: (i) recent decisions made by management to cancel the opening of future planned de novo facilities; (ii) reductions in projected future patient volumes, revenues and cash flows based upon the operating trends and financial results experienced by existing facilities, and; (iii) competitive pressures experienced in certain markets.  

Liquidity

Net cash provided by operating activities

Net cash provided by operating activities was $1.049 billion during the nine-month period ended September 30, 2019 and $949 million during the comparable period of 2018. The net increase of $100 million was primarily attributable to the following:

• a favorable change of $69 million resulting from an increase in net income plus/minus depreciation and amortization expense, stock-based compensation, provision for asset impairment and net gains on sales of assets;

• a favorable change of $37 million in accounts receivable, and;

• $6 million of other combined net unfavorable changes.

Days sales outstanding (“DSO”): Our DSO are calculated by dividing our net revenue by the number of days in the nine-month periods. The result is divided into the accounts receivable balance at September 30^th of each year to obtain the DSO. Our DSO were 50 days and 53 days at September 30, 2019 and 2018, respectively.

Our accounts receivable as of September 30, 2019 and December 31, 2018 include amounts due from Illinois of approximately $29 million and $32 million, respectively. Collection of the outstanding receivables continues to be delayed due to state budgetary and funding pressures. Approximately $13 million as of September 30, 2019 and $18 million as of December 31, 2018, of the receivables due from Illinois were outstanding in excess of 60 days, as of each respective date. Although the accounts receivable due from Illinois could remain outstanding for the foreseeable future, since we expect to eventually collect all amounts due to us, no related reserves have been established in our consolidated financial statements. However, we can provide no assurance that we will eventually collect all amounts due to us from Illinois. Failure to ultimately collect all outstanding amounts due to us from Illinois would have an adverse impact on our future consolidated results of operations and cash flows.

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Net cash used in investing activities

During the first nine months of 2019, we used $413 million of net cash in investing activities as follows:

• $480 million spent on capital expenditures including capital expenditures for equipment, renovations and new projects at various existing facilities;

• $90 million received in connection with net cash inflows from forward exchange contracts that hedge our investment in the U.K. against movements in exchange rates;

• $18 million spent on the purchase and implementation of information technology applications;

• $12 million spent to fund investments in and advances to joint ventures and other, and;

• $7 million of proceeds received from sales of assets or businesses.

During the first nine months of 2018, we used $629 million of net cash in investing activities as follows:

• $521 million spent on capital expenditures including capital expenditures for equipment, renovations and new projects at various existing facilities;

• $108 million spent to acquire businesses and property consisting primarily of the acquisition of: (i) The Danshell Group, consisting of 25 behavioral health facilities located in the U.K. (acquired during the third quarter of 2018), and; (ii) a 109-bed behavioral health care facility located in Gulfport, Mississippi (acquired during the first quarter of 2018);

• $25 million spent on the purchase and implementation of information technology applications;

• $26 million received in connection with net cash inflows from forward exchange contracts that hedge our investment in the U.K. against movements in exchange rates;

• $14 million spent to fund construction costs of a new behavioral health care facility which will be jointly owned by us and a third-party, and;

• $13 million received in connection with the sale of a business and property including The Limes, an 18-bed facility located in the U.K.

In conjunction with the January 1, 2019 adoption of ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities”, we reclassified our presentation of the net cash inflows or outflows, which were received or paid in connection with foreign exchange contracts that hedge our net investment in foreign operations against movements in exchange rates, to investing cash flows on the consolidated statements of cash flows.  As previously disclosed within our footnotes, these cash flows were formerly reported as operating activities.  Prior period amounts have been reclassified from net cash provided by operating activities to net cash used in investing activities to conform with the current year presentation on the consolidated statements of cash flows.    

Net cash used in financing activities

During the first nine months of 2019, we used $680 million of net cash in financing activities as follows:

• spent $68 million on net repayments of debt as follows: (i) $37 million related to our term loan A facility; (ii) $25 million related to our accounts receivable securitization program; (iii) $4 million related to our term loan B facility, and; (iv) $2 million related to other debt facilities;

• generated $15 million of proceeds related to new borrowings pursuant to a short-term, on-demand credit facility;

• spent $588 million to repurchase shares of our Class B Common Stock in connection with: (i) open market purchases pursuant to our $2.7 billion stock repurchase program ($542 million), and; (ii) income tax withholding obligations related to stock-based compensation programs ($46 million);

• spent $12 million to pay profit distributions related to noncontrolling interests in majority owned businesses;

• spent $36 million to pay quarterly cash dividends of $.20 per share in September, 2019 and $.10 per share in each of March and June, 2019, and;

• generated $8 million from the issuance of shares of our Class B Common Stock pursuant to the terms of employee stock purchase plans.

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During the first nine months of 2018, we used $308 million of net cash in financing activities as follows:

• spent $100 million on net repayments of debt as follows: (i) $67 million related to our term loan A facility; (ii) $31 million related to a short-term credit facility, and; (iii) $2 million related to other debt facilities;

• generated $82 million of proceeds related to new borrowings pursuant to our revolving credit facility ($77 million) and accounts receivable securitization program ($5 million);

• spent $261 million to repurchase shares of our Class B Common Stock in connection with: (i) open market purchases pursuant to our $1.2 billion stock repurchase program ($252 million), and; (ii) income tax withholding obligations related to stock-based compensation programs ($9 million);

• spent $8 million to pay profit distributions related to noncontrolling interests in majority owned businesses;

• spent $28 million to pay quarterly cash dividends of $.10 per share;

• generated $8 million from the issuance of shares of our Class B Common Stock pursuant to the terms of employee stock purchase plans, and;

• spent $1 million in financing costs.

During the remaining nine months of 2019, we expect to spend approximately $195 million to $245 million on capital expenditures which includes expenditures for capital equipment, renovations and new projects at existing hospitals. We believe that our capital expenditure program is adequate to expand, improve and equip our existing hospitals. We expect to finance all capital expenditures and acquisitions with internally generated funds and/or additional funds, as discussed below.

Capital Resources

Credit Facilities and Outstanding Debt Securities

On October 23, 2018, we entered into a  Sixth Amendment (the “Sixth Amendment”) to our credit agreement dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014 and June 7, 2016, among UHS, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto (the “Senior Credit Agreement”). The Sixth Amendment became effective on October 23, 2018.

The Sixth Amendment amended the Senior Credit Agreement to, among other things: (i) increase the aggregate amount of the revolving credit facility to $1 billion (increase of $200 million over the $800 million previous commitment); (ii) increase the aggregate amount of the tranche A term loan commitments to $2 billion (increase of approximately $290 million over the $1.71 billion of outstanding borrowings prior to the amendment), and; (iii) extended the maturity date of the revolving credit and tranche A term loan facilities to October 23, 2023 from August 7, 2019.

On October 31, 2018, we added a seven-year tranche B term loan facility in the aggregate principal amount of $500 million pursuant to the Senior Credit Agreement. The tranche B term loan matures on October 31, 2025.  We used the proceeds to repay borrowings under the revolving credit facility, the Securitization (as defined below), to redeem our $300 million, 3.75% Senior Notes that were scheduled to mature in 2019 and for general corporate purposes.  

As of September 30, 2019, we had no borrowings outstanding pursuant to our $1 billion revolving credit facility and we had $967 million of available borrowing capacity net of $12 million of outstanding letters of credit and $21 million of outstanding borrowings pursuant to a short-term credit facility.

Pursuant to the terms of the Sixth Amendment, the tranche A term loan, which had $1.963 billion of borrowings outstanding as of September 30, 2019, provides for eight installment payments of $12.5 million per quarter which commenced in March of 2019 and are scheduled to continue through December of 2020.  Thereafter, payments of $25 million per quarter are scheduled, commencing in March of 2021 until maturity in October of 2023, when all outstanding amounts will be due.

The tranche B term loan, which had $496 million of borrowings outstanding as of September 30, 2019, provides for installment payments of $1.25 million per quarter, which commenced on March 31, 2019 and are scheduled to continue until maturity in October of 2025, when all outstanding amounts will be due.    

Borrowings under the Senior Credit Agreement bear interest at our election at either (1) the ABR rate which is defined as the rate per annum equal to the greatest of (a) the lender’s prime rate, (b) the weighted average of the federal funds rate, plus 0.5% and (c) one month LIBOR rate plus 1%, in each case, plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 0.375% to 0.625% for revolving credit and term loan A borrowings and 0.75% for tranche B borrowings, or (2) the one, two, three or six month LIBOR rate (at our election), plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 1.375% to 1.625% for revolving credit and term loan A borrowings and 1.75% for the tranche

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B term loan. As of September 30, 2019, the applicable margins were 0.50% for ABR-based loans and 1.50% for LIBOR-based loans under the revolving credit and term loan A facilities.  The revolving credit facility includes a $125 million sub-limit for letters of credit. The Senior Credit Agreement is secured by certain assets of the Company and our material subsidiaries (which generally excludes asset classes such as substantially all of the patient-related accounts receivable of our acute care hospitals, and certain real estate assets and assets held in joint-ventures with third parties) and is guaranteed by our material subsidiaries.

The Senior Credit Agreement includes a material adverse change clause that must be represented at each draw. The Senior Credit Agreement contains covenants that include a limitation on sales of assets, mergers, change of ownership, liens and indebtedness, transactions with affiliates, dividends and stock repurchases; and requires compliance with financial covenants including maximum leverage. We are in compliance with all required covenants as of September 30, 2019 and December 31, 2018.

In late April, 2018, we entered into the sixth amendment to our accounts receivable securitization program (“Securitization”) dated as of October 27, 2010 with a group of conduit lenders, liquidity banks, and PNC Bank, National Association, as administrative agent, which provides for borrowings outstanding from time to time by certain of our subsidiaries in exchange for undivided security interests in their respective accounts receivable. The sixth amendment, among other things, extended the term of the Securitization program through April 26, 2021 and increased the borrowing capacity to $450 million (from $440 million previously). Although the program fee and certain other fees were adjusted in connection with the sixth amendment, substantially all other provisions of the Securitization program remained unchanged.  Pursuant to the terms of our Securitization program, substantially all of the patient-related accounts receivable of our acute care hospitals (“Receivables”) serve as collateral for the outstanding borrowings. We have accounted for this Securitization as borrowings. We maintain effective control over the Receivables since, pursuant to the terms of the Securitization, the Receivables are sold from certain of our subsidiaries to special purpose entities that are wholly-owned by us. The Receivables, however, are owned by the special purpose entities, can be used only to satisfy the debts of the wholly-owned special purpose entities, and thus are not available to us except through our ownership interest in the special purpose entities. The wholly-owned special purpose entities use the Receivables to collateralize the loans obtained from the group of third-party conduit lenders and liquidity banks. The group of third-party conduit lenders and liquidity banks do not have recourse to us beyond the assets of the wholly-owned special purpose entities that securitize the loans. At September 30, 2019, we had $365 million of outstanding borrowings pursuant to the terms of the Securitization and $85 million of available borrowing capacity.  

As of September 30, 2019, we had combined aggregate principal of $1.1 billion from the following senior secured notes:

• $700 million aggregate principal amount of 4.75% senior secured notes due in August, 2022 (“2022 Notes”) which were issued as follows:

• $300 million aggregate principal amount issued on August 7, 2014 at par.

• $400 million aggregate principal amount issued on June 3, 2016 at 101.5% to yield 4.35%.

• $400 million aggregate principal amount of 5.00% senior secured notes due in June, 2026 (“2026 Notes”) which were issued on June 3, 2016.

Interest on the 2022 Notes is payable on February 1 and August 1 of each year until the maturity date of August 1, 2022.  Interest on the 2026 Notes is payable on June 1 and December 1 until the maturity date of June 1, 2026. The 2022 Notes and 2026 Notes were offered only to qualified institutional buyers under Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The 2022 Notes and 2026 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

On November 26, 2018 we redeemed the $300 million aggregate principal, 3.75% Senior Notes due in 2019. The 2019 Notes were redeemed for an aggregate price equal to 100.485% of the principal amount, resulting in a premium paid of approximately $1 million, plus accrued interest to the redemption date.  

At September 30, 2019, the carrying value and fair value of our debt were approximately $3.95 billion and $3.97 billion, respectively.  At December 31, 2018, the carrying value and fair value of our debt were each approximately $4.0 billion. The fair value of our debt was computed based upon quotes received from financial institutions. We consider these to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with debt instruments.

Our total debt as a percentage of total capitalization was approximately 42% at September 30, 2019 and 43% at December 31, 2018.

During 2015, we entered into nine forward starting interest rate swaps whereby we paid a fixed rate on a total notional amount of $1.0 billion and received one-month LIBOR. The average fixed rate payable on these swaps, all of which matured on April 15, 2019, was 1.31%.  Although we can provide no assurance that we will ultimately do so, we are currently monitoring the interest rate environment

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and evaluating the terms of potential replacement interest rate swaps that we may enter into for a large portion, or potentially all, of the $1 billion total notional amount that expired on April 15, 2019.        

We expect to finance all capital expenditures and acquisitions, pay dividends and potentially repurchase shares of our common stock utilizing internally generated and additional funds. Additional funds may be obtained through: (i) borrowings under our existing revolving credit facility or through refinancing the existing Senior Credit Agreement; (ii) the issuance of other long-term debt, and/or; (iii) the issuance of equity. We believe that our operating cash flows, cash and cash equivalents, as well as access to the capital markets, provide us with sufficient capital resources to fund our operating, investing and financing requirements for the next twelve months, including the refinancing of our above-mentioned Senior Credit Agreement that is scheduled to mature in October, 2023.  However, in the event we need to access the capital markets or other sources of financing, there can be no assurance that we will be able to obtain financing on acceptable terms or within an acceptable time. Our inability to obtain financing on terms acceptable to us could have a material unfavorable impact on our results of operations, financial condition and liquidity.

Off-Balance Sheet Arrangements

During the three months ended September 30, 2019, there have been no material changes in the off-balance sheet arrangements consisting of standby letters of credit and surety bonds. Effective January 1, 2019, we adopted ASU 2016-02 which requires companies to, among other things, recognize lease assets and lease liabilities on the balance sheet. As a result of our adoption of ASU 2016-02, our consolidated balance sheet as of September 30, 2019 includes right of use assets-operating leases ($329.3 million) and operating lease liabilities ($55.1 million current and $274.2 million noncurrent).  Prior period financial statements were not adjusted for the effects of this new standard. Reference is made to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Off-Balance Sheet Arrangements, in our Annual Report on Form 10-K for the year ended December 31, 2018.

As of September 30, 2019 we were party to certain off balance sheet arrangements consisting of standby letters of credit and surety bonds which totaled $108 million consisting of: (i) $104 million related to our self-insurance programs, and; (ii) $4 million of other debt and public utility guarantees.  

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the quantitative and qualitative disclosures during the three months ended September 30, 2019. Reference is made to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2018.

LIBOR Transition

In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee ("ARRC") which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. We are not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

At September 30, 2019, our Senior Credit Agreement was indexed to LIBOR. We are monitoring and evaluating the related risks, which include interest on loans. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans, securities, or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.

If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our contracts is likely to vary by contract. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.

While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Item 4.   Controls and Procedures

As of September 30, 2019, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we performed an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “1934 Act”).

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Based on this evaluation, the CEO and CFO have concluded that our disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by management on a timely basis in order to comply with our disclosure obligations under the 1934 Act and the SEC rules thereunder.

Changes in Internal Control Over Financial Reporting

On January 1, 2019, we adopted ASC 842.  In connection with our adoption of ASC 842 we did implement changes to our internal controls relating to leases.  These changes included the development of new policies, enhanced contract review requirements and other ongoing monitoring activities.  These controls were designed to provide assurance at a reasonable level of the fair presentation of our condensed consolidated financial statements and related disclosures.

There have been no other changes in our internal control over financial reporting or in other factors during the third quarter of 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

We operate in a highly regulated and litigious industry which subjects us to various claims and lawsuits in the ordinary course of business as well as regulatory proceedings and government investigations. These claims or suits include claims for damages for personal injuries, medical malpractice, commercial/contractual disputes, wrongful restriction of, or interference with, physicians’ staff privileges, and employment related claims. In addition, health care companies are subject to investigations and/or actions by various state and federal governmental agencies or those bringing claims on their behalf. Government action has increased with respect to investigations and/or allegations against healthcare providers concerning possible violations of fraud and abuse and false claims statutes as well as compliance with clinical and operational regulations. Currently, and from time to time, we and some of our facilities are subjected to inquiries in the form of subpoenas, Civil Investigative Demands, audits and other document requests from various federal and state agencies. These inquiries can lead to notices and/or actions including repayment obligations from state and federal government agencies associated with potential non-compliance with laws and regulations. Further, the federal False Claims Act allows private individuals to bring lawsuits (qui tam actions) against healthcare providers that submit claims for payments to the government. Various states have also adopted similar statutes. When such a claim is filed, the government will investigate the matter and decide if they are going to intervene in the pending case. These qui tam lawsuits are placed under seal by the court to comply with the False Claims Act’s requirements. If the government chooses not to intervene, the private individual(s) can proceed independently on behalf of the government. Health care providers that are found to violate the False Claims Act may be subject to substantial monetary fines/penalties as well as face potential exclusion from participating in government health care programs or be required to comply with Corporate Integrity Agreements as a condition of a settlement of a False Claims Act matter. In September 2014, the Criminal Division of the Department of Justice (“DOJ”) announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened. The DOJ has also announced an intention to pursue civil and criminal actions against individuals within a company as well as the corporate entity or entities. In addition, health care facilities are subject to monitoring by state and federal surveyors to ensure compliance with program Conditions of Participation. In the event a facility is found to be out of compliance with a Condition of Participation and unable to remedy the alleged deficiency(s), the facility faces termination from the Medicare and Medicaid programs or compliance with a System Improvement Agreement to remedy deficiencies and ensure compliance.

The laws and regulations governing the healthcare industry are complex covering, among other things, government healthcare participation requirements, licensure, certification and accreditation, privacy of patient information, reimbursement for patient services as well as fraud and abuse compliance. These laws and regulations are constantly evolving and expanding. Further, the Affordable Care Act has added additional obligations on healthcare providers to report and refund overpayments by government healthcare programs and authorizes the suspension of Medicare and Medicaid payments “pending an investigation of a credible allegation of fraud.” We monitor our business and have developed an ethics and compliance program with respect to these complex laws, rules and regulations. Although we believe our policies, procedures and practices comply with government regulations, there is no assurance that we will not be faced with the sanctions referenced above which include fines, penalties and/or substantial damages, repayment obligations, payment suspensions, licensure revocation, and expulsion from government healthcare programs. Even if we were to ultimately prevail in any action brought against us or our facilities or in responding to any inquiry, such action or inquiry could have a material adverse effect on us.

Certain legal matters are described below:

Government Investigations:

UHS Behavioral Health

In February, 2013, the Office of Inspector General for the United States Department of Health and Human Services (“OIG”) served a subpoena requesting various documents from January, 2008 to the date of the subpoena directed at Universal Health Services, Inc. (“UHS”) concerning it and UHS of Delaware, Inc., and certain UHS owned behavioral health facilities including: Keys of Carolina, Old Vineyard Behavioral Health, The Meadows Psychiatric Center, Streamwood Behavioral Health, Hartgrove Hospital, Rock River Academy and Residential Treatment Center, Roxbury Treatment Center, Harbor Point Behavioral Health Center, f/k/a The Pines Residential Treatment Center, including the Crawford, Brighton and Kempsville campuses, Wekiva Springs Center and River Point Behavioral Health.   Prior to receipt of this subpoena, some of these facilities had received independent subpoenas from state or federal agencies. Subsequent to the February 2013 subpoenas, some of the facilities above have received additional, specific subpoenas or other document and information requests.  In addition to the OIG, the DOJ and various U.S. Attorneys’ and state Attorneys’ General Offices are also involved in this matter. Since February 2013, additional facilities have also received subpoenas and/or document and information requests or we have been notified are included in the omnibus investigation.  Those facilities include: National Deaf Academy, Arbour-HRI Hospital, Behavioral Hospital of Bellaire, St. Simons By the Sea, Turning Point Care Center, Salt Lake Behavioral Health, Central Florida Behavioral Hospital, University Behavioral Center, Arbour Hospital, Arbour-Fuller Hospital, Pembroke Hospital, Westwood Lodge, Coastal Harbor Health System, Shadow Mountain Behavioral Health, Cedar Hills Hospital, Mayhill Hospital, Southern Crescent Behavioral Health (Anchor Hospital and Crescent Pines campuses), Valley

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Hospital (AZ), Peachford Behavioral Health System of Atlanta, University Behavioral Health of Denton, El Paso Behavioral Health System, Newport News Behavioral Health Center, The Hughes Center, Forest View Hospital and Havenwyck Hospital.

In October, 2013, we were advised that the DOJ’s Criminal Frauds Section had opened an investigation of River Point Behavioral Health and Wekiva Springs Center. We were subsequently notified that the Criminal Frauds section opened investigations of National Deaf Academy, Hartgrove Hospital and UHS as a corporate entity. In April 2017, the DOJ’s Criminal Division issued a subpoena requesting documentation from Shadow Mountain Behavioral Health. In August 2017, Kempsville Center of Behavioral Health (a part of Harbor Point Behavioral Health previously identified above) received a subpoena requesting documentation. We have recently been advised that the investigations being conducted by the DOJ’s Criminal Frauds Section and corresponding U.S. Attorneys’ Offices, of UHS and the above referenced facilities, have been closed.

In April, 2014, the Centers for Medicare and Medicaid Services (“CMS”) instituted a Medicare payment suspension at River Point Behavioral Health in accordance with federal regulations regarding suspension of payments during certain investigations. The Florida Agency for Health Care Administration (“AHCA”) subsequently issued a Medicaid payment suspension for the facility. River Point Behavioral Health submitted a rebuttal statement disputing the basis of the suspension and requesting revocation of the suspension. Notwithstanding, CMS continued the payment suspension. River Point Behavioral Health provided additional information to CMS in an effort to obtain relief from the payment suspension but the Medicare suspension remains in effect. In June 2017, AHCA advised that while they were maintaining the suspension for dual eligible and cross-over Medicare beneficiaries, the Medicaid payment suspension was lifted effective June 27, 2017. From inception through September 30, 2019, the aggregate funds withheld from us in connection with the River Point Behavioral Health payment suspension amounted to approximately $8.6 million. We anticipate a resolution of the payment suspension will be part of the overall settlement agreement(s) to be drafted and finalized.  Although the operating results of River Point Behavioral Health did not have a material impact on our consolidated results of operations during the nine-month period ended September 30, 2019 or the year ended December 31, 2018, the payment suspension has had a material adverse effect on the facility’s results of operations and financial condition.

The DOJ has advised us that the civil aspect of the coordinated investigation referenced above is a False Claims Act investigation focused on billings submitted to government payers in relation to services provided at those facilities. While there have been various matters raised by DOJ during the pendency of this investigation, DOJ Civil has advised that the focus of their investigation is on medical necessity issues and billing for services not eligible for payment due to non-compliance with regulatory requirements relating to, among other things, admission eligibility, discharge decisions, length of stay and patient care issues. It is our understanding that the DOJ Criminal Fraud Section was investigating similar issues prior to the closure of their investigation. UHS denies any fraudulent billings were submitted to government payers.  

In July 2019, we reached an agreement in principle with the DOJ’s Civil Division, and on behalf of various states’ attorneys general offices, to resolve the civil aspects of the government’s investigation of our behavioral health care facilities for $127 million subject to requisite approvals and preparation and execution of definitive settlement and related agreements. We are also negotiating a corporate integrity agreement with the Office of Inspector General for the United States Department of Health and Human Services (“OIG”) which we expect will be part of the overall settlement of this matter.  

In connection with this agreement in principle, during the nine-month period ended September 30, 2019, we recorded a pre-tax increase of approximately $11 million to the reserve established in connection with the civil aspects of these matters (“DOJ Reserve”), which includes related fees and costs due to or on behalf of third-parties. The aggregate pre-tax DOJ Reserve amounted to $134 million as of September 30, 2019 and $123 million as of December 31, 2018 (including $48 million and $70 million recorded during the three and nine-month periods ended September 30, 2018, respectively).

In late August, 2019, we received the initial draft of the settlement agreement from the DOJ’s Civil Division. Negotiations regarding the terms and conditions of the settlement agreement continue. Based upon the terms and provisions included in the draft settlement agreement, and related subsequent discussions, our financial statements for each of the three and nine-month periods ended September 30, 2019 include an unfavorable provision for income taxes of approximately $6 million resulting from the net estimated federal and state income taxes due on the portion of the pre-tax DOJ Reserve that is estimated to be non-deductible for income tax purposes.  

Since the agreement in principle with the DOJ’s Civil Division is subject to certain required approvals and negotiation and execution of definitive settlement agreements, as well as negotiation and execution of a corporate integrity agreement with the OIG, we can provide no assurance that definitive agreements will ultimately be finalized. We therefore can provide no assurance that final amounts paid in settlement or otherwise, or associated costs, or the income tax deductibility of such payments, will not differ materially from our established reserve and assumptions related to income tax deductibility.

DOJ investigation of Turning Point Hospital.

During the fourth quarter of 2018, we were notified that the DOJ Civil Division in conjunction with the U.S. Attorney’s Office for the Northern District of Georgia and the Georgia Attorney General’s Office opened an investigation of Turning Point Hospital in Moultrie, GA.  The DOJ Civil Division has advised us that they are primarily investigating transportation and housing financial assistance provided to patients receiving treatment at the facility. The DOJ issued a civil investigative demand to the facility requesting various documents and other information. In September, 2019, we reached a settlement in principle of this matter pending

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negotiation, finalization and execution of definitive settlement agreements. As of September 30, 2019, our financial statements include an estimated reserve in connection with the potential settlement of this matter, which did not have material impact on our results of operations and financial condition.

Litigation:

U.S. ex rel Escobar v. Universal Health Services, Inc. et.al.

This is a False Claims Act case filed against Universal Health Services, Inc., UHS of Delaware, Inc. and HRI Clinics, Inc. d/b/a Arbour Counseling Services in U.S. District Court for the District of Massachusetts.  This qui tam action primarily alleges that Arbour Counseling Services failed to appropriately supervise certain clinical providers in contravention of  regulatory requirements and the submission of claims to Medicaid were subsequently improper.  Relators make other claims of improper billing to Medicaid associated with alleged failures of Arbour Counseling to comply with state regulations.  The U.S. Attorney’s Office and the Massachusetts Attorney General’s Office initially declined to intervene.  UHS filed a motion to dismiss and the trial court originally granted the motion dismissing the case.  The First Circuit Court of Appeals (“First Circuit”) reversed the trial court’s dismissal of the case.  The United States Supreme Court subsequently vacated the First Circuit’s opinion and remanded the case for further consideration under the new legal standards established by the Supreme Court for False Claims Act cases.  During the 4^th quarter of 2016, the First Circuit issued a revised opinion upholding their reversal of the trial court’s dismissal.  The case was then remanded to the trial court for further proceedings.  In January 2017, the U.S. Attorney’s Office and Massachusetts Attorney General’s Office advised of the potential for intervention in the case.  The Massachusetts Attorney General’s Office subsequently filed its motion to intervene which was granted and, in April 2017, filed their Complaint in Intervention. We are defending this case vigorously. This matter is included in the above-mentioned agreement in principle reached with the DOJ’s Civil Division, and on behalf of various states’ attorneys general offices, to resolve the civil aspects of the government’s investigation of our behavioral health care facilities, subject to requisite approvals and preparation and execution of definitive settlement and related agreements.

Shareholder Class Action

In December 2016 a purported shareholder class action lawsuit was filed in U.S. District Court for the Central District of California against UHS and certain UHS officers alleging violations of the federal securities laws. The case was originally filed as Heed v. Universal Health Services, Inc. et. al. (Case No. 2:16-CV-09499-PSG-JC). The court subsequently appointed Teamsters Local 456 Pension Fund and Teamsters Local 456 Annuity Fund to serve as lead plaintiffs.  The case has been transferred to the U.S. District Court for the Eastern District of Pennsylvania and the style of the case has been changed to Teamsters Local 456 Pension Fund, et. al. v. Universal Health Services, Inc. et. al. (Case No. 2:17-CV-02817-LS). In September, 2017, Teamsters Local 456 Pension Fund filed an amended complaint. The amended class action complaint alleges violations of federal securities laws relating to disclosures made in public filings associated with alleged practices and operations at our behavioral health facilities.  Plaintiffs seek monetary damages for shareholders during the defined class period as a result of the decrease in share price following various public disclosures or reports. In December, 2017, we filed a motion to dismiss the amended complaint. In August, 2019, the court granted our motion to dismiss. Plaintiffs have filed a motion with the court seeking leave to file a second amended complaint. Should the court deny plaintiffs’ motion, we anticipate an appeal of the dismissal of the case. We deny liability and intend to defend ourselves vigorously. At this time, we are uncertain as to potential liability or financial exposure, if any, which may be associated with this matter.

Shareholder Derivative Cases  

In March 2017, a shareholder derivative suit was filed by plaintiff David Heed in the Court of Common Pleas of Philadelphia County. A notice of removal to the United States District Court for the Eastern District of Pennsylvania was filed (Case No. 2:17-cv-01476-LS). Plaintiff filed a motion to remand. In December 2017, the Court denied plaintiff’s motion to remand and has retained the case in federal court. In May, June and July 2017, additional shareholder derivative suits were filed in the United States District Court for the Eastern District of Pennsylvania. The plaintiffs in those cases are: Central Laborers’ Pension Fund (Case No. 17-cv-02187-LS); Firemen’s Retirement System of St. Louis (Case No. 17—cv-02317-LS); Waterford Township Police & Fire Retirement System (Case No. 17-cv-02595-LS); and Amalgamated Bank Longview Funds (Case No. 17-cv-03404-LS). The Fireman’s Retirement System case has since been voluntarily dismissed. The federal court has consolidated all of the cases pending in the Eastern District of Pennsylvania and has appointed co-lead plaintiffs and co-lead counsel. Lead Plaintiffs have filed a consolidated, amended complaint. We have filed a motion to dismiss the amended complaint.  In addition, a shareholder derivative case was filed in Chancery Court in Delaware by the Delaware County Employees’ Retirement Fund (Case No. 2017-0475-JTL). In December 2017, the Chancery Court stayed this case pending resolution of other contemporaneous matters. Each of these cases have named certain current and former members of the Board of Directors individually and certain officers of Universal Health Services, Inc. as defendants.  UHS has also been named as a nominal defendant in these cases. The derivative cases make substantially similar allegations and claims as the shareholder class action relating to practices at our behavioral health facilities and board and corporate oversight of these facilities as well as claims relating to the stock trading by the individual defendants and company repurchase of shares during the relevant time period. The cases make claims of breaches of fiduciary duties by the named board members and officers; alleged violations of federal securities laws; and common law causes of action against the individual defendants including unjust enrichment, corporate waste, abuse of control, constructive fraud and gross mismanagement. The cases seek monetary damages allegedly incurred by the company; restitution and disgorgement of profits, benefits and other compensation from the individual defendants and various forms of equitable

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relief relating to corporate governance matters. In August, 2019, the court granted our motion to dismiss. Plaintiffs have filed a motion with the court seeking leave to file a second amended complaint. Should the court deny plaintiffs’ motion, we anticipate an appeal of the dismissal of the case.  The defendants deny liability and intend to defend these cases vigorously. At this time, we are uncertain as to potential liability or financial exposure, if any, which may be associated with these matters.

Disproportionate Share Hospital Payment Matter:

In late September, 2015, many hospitals in Pennsylvania, including certain of our behavioral health care hospitals located in the state, received letters from the Pennsylvania Department of Human Services (the “Department”) demanding repayment of allegedly excess Medicaid Disproportionate Share Hospital payments (“DSH”), primarily consisting of managed care payments characterized as DSH payments, for the federal fiscal year (“FFY”) 2011 amounting to approximately $4 million in the aggregate. Since that time, certain of our behavioral health care hospitals in Pennsylvania have received similar requests for repayment for alleged DSH overpayments for FFYs 2012 through 2015. For FFY 2012, the claimed overpayment amounts to approximately $4 million. For FFY 2013, the claimed overpayments were initially approximately $7 million but have since been reduced to approximately $2 million due to a change in the Department’s calculations of the hospital specific DSH upper payment limit. For FFY 2014, the claimed overpayments were approximately $7 million and for FFY 2015, the claimed overpayments were approximately $5 million. We filed administrative appeals for all of our facilities contesting the recoupment efforts for FFYs 2011 through 2015 as we believe the Department’s calculation methodology is inaccurate and conflicts with applicable federal and state laws and regulations. The Department has agreed to postpone the recoupment of the state’s share of the DSH payments until all hospital appeals are resolved but started recoupment of the federal share. We understand that starting in FFY 2016, the first full fiscal year after the January 1, 2015 effective date of Medicaid expansion in Pennsylvania, the Department will no longer characterize managed care payments received by the hospitals as DSH payments. We can provide no assurance that we will ultimately be successful in our legal and administrative appeals related to the Department’s repayment demands.  If our legal and administrative appeals are unsuccessful, our future consolidated results of operations and financial condition could be adversely impacted by these repayments.        

Other Matters:

Various other suits, claims and investigations, including government subpoenas, arising against, or issued to, us are pending and additional such matters may arise in the future. Management will consider additional disclosure from time to time to the extent it believes such matters may be or become material. The outcome of any current or future litigation or governmental or internal investigations, including the matters described above, cannot be accurately predicted, nor can we predict any resulting penalties, fines or other sanctions that may be imposed at the discretion of federal or state regulatory authorities. We record accruals for such contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made at this time regarding the matters described above or that are otherwise pending because the inherently unpredictable nature of legal proceedings may be exacerbated by various factors, including, but not limited to: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the matter  is in its early stages; (iv) the matters present legal uncertainties; (v) there are significant facts in dispute; (vi) there are a large number of parties, or; (vii) there is a wide range of potential outcomes. It is possible that the outcome of these matters could have a material adverse impact on our future results of operations, financial position, cash flows and, potentially, our reputation.

Item 1A.   Risk Factors

Our Annual Report on Form 10-K for the year ended December 31, 2018 includes a listing of risk factors to be considered by investors in our securities. There have been no material changes in our risk factors from those set forth in our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

On July 25, 2019, our Board of Directors authorized a $1.0 billion increase to our stock repurchase program, which increased the aggregate authorization to $2.7 billion from the previous $1.7 billion authorization approved in various increments since 2014.   Pursuant to this program, which currently has an aggregate available repurchase authorization of $937.3 million, shares of our Class B Common Stock may be repurchased, from time to time as conditions allow, on the open market or in negotiated private transactions.  There is no expiration date for our stock repurchase program.

As reflected below, in conjunction with our previously approved stock repurchase programs, during the three-month period ended September 30, 2019, 550,564 shares ($79.5 million in the aggregate) were repurchased pursuant to the terms of our stock repurchase program and 92,076 shares were repurchased in connection with income tax withholding obligations resulting from the exercise of stock options and the vesting of restricted stock grants.

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During the period of July 1, 2019 through September 30, 2019, we repurchased the following shares:

	Additional Dollars Authorized For Repurchase (in thousands)		Total number of shares purchased (a.)		Total number of shares cancelled		Average price paid per share for forfeited restricted shares		Total Number of shares purchased as part of publicly announced programs		Average price paid per share for shares purchased as part of publicly announced program		Aggregate purchase price paid for shares purchased as part of publicly announced program (in thousands)		Maximum number of shares that may yet be purchased under the program		Maximum number of dollars that may yet be purchased under the program (in thousands)
July, 2019	$	1,000,000		73,380		1,713	$	0.01		—		—		—		—	$	1,016,790
August, 2019		—		517,628		3,765	$	0.01		512,439	$	144.33	$	73,960		—	$	942,830
September, 2019		—		51,632		2,736	$	0.01		38,125	$	145.00	$	5,528		—	$	937,302
Total July through September, 2019	$	1,000,000		642,640		8,214	$	0.01		550,564	$	144.38	$	79,488

(a.) Includes 8,214 of restricted shares that were forfeited by former employees pursuant to the terms of our restricted stock purchase plan during the third quarter of 2019.

Dividends

During the quarter ended September 30, 2019, we declared and paid dividends of $.20 per share. On July 25, 2019, our Board of Directors authorized a $.10 per share increase in our quarterly cash dividend to $.20 per share, effective with the dividend for the third quarter of 2019.

Item 6.   Exhibits

(a) Exhibits:

11	Statement re computation of per share earnings is set forth in Note 7 of the Notes to Condensed Consolidated Financial Statements.
31.1	Certification of the Company’s Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of the Company’s Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document –the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, has been formatted in Inline XBRL.

65

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Universal Health Services, Inc.
	(Registrant)
Date: November 8, 2019	/s/    Alan B. Miller
	Alan B. Miller, Chairman of the Board and
	Chief Executive Officer
	(Principal Executive Officer)
	/s/    Steve Filton
	Steve Filton, Executive Vice President and
	Chief Financial Officer
	(Principal Financial Officer)

66

EX-31.1

Exhibit 31.1

CERTIFICATION—Chief Executive Officer

I, Alan B. Miller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Health Services, 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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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: November 8, 2019

/s/ Alan B. Miller

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION—Chief Financial Officer

I, Steve Filton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Health Services, 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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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: November 8, 2019

/s/ Steve Filton

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

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 Quarterly Report of Universal Health Services, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan B. Miller, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, and to the best of my knowledge, 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) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the end of, and for the period covered by, the Report.

/s/ Alan B. Miller

Chief Executive Officer

November 8, 2019

A signed original of this written statement required by Section 906 has been provided to Universal Health Services, Inc. and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

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 Quarterly Report of Universal Health Services, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steve Filton, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, and to the best of my knowledge, 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) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the end of, and for the period covered by, the Report.

/s/ Steve Filton

Executive Vice President and Chief Financial Officer

November 8, 2019

A signed original of this written statement required by Section 906 has been provided to Universal Health Services, Inc. and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Trading Symbol	UHS
Entity Registrant Name	UNIVERSAL HEALTH SERVICES INC
Entity Central Index Key	0000352915
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	1-10765
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	23-2077891
Entity Address, Address Line One	UNIVERSAL CORPORATE CENTER
Entity Address, Address Line Two	367 SOUTH GULPH ROAD
Entity Address, City or Town	KING OF PRUSSIA
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19406
City Area Code	610
Local Phone Number	768-3300
Entity Interactive Data Current	Yes
Security Exchange Name	NYSE
Title of 12(b) Security	Class B Common Stock, $0.01 par value
Document Quarterly Report	true
Document Transition Report	false
Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		6,577,100
Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		80,324,970
Class C
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		661,688
Class D
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		18,511

XML

Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Redeemable Noncontrolling Interest	Class A	Class B	Class C	Class D	Cumulative Dividends	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	UHS Common Stockholders' Equity	Noncontrolling Interest
Balance at Dec. 31, 2017	$ 5,051,436		$ 66	$ 869	$ 7	$ 0	$ (371,814)	$ 5,353,209	$ 7,177	$ 4,989,514	$ 61,922
Balance at Dec. 31, 2017		$ 6,702
Common Stock
Issued/(converted)	7,860			5				7,855		7,860
Repurchased	(261,256)			(22)				(261,234)		(261,256)
Restricted share-based compensation expense	3,120							3,120		3,120
Dividends paid	(28,086)						(28,086)			(28,086)
Stock option expense	46,706							46,706		46,706
Distributions to noncontrolling interests	(7,742)	(500)									(7,742)
Purchase of noncontrolling interest	8,762	1									8,762
Comprehensive income:
Net income to UHS / noncontrolling interests	634,073							621,630		621,630	12,443
Net income attributable to redeemable noncontrolling interest		138
Foreign currency translation adjustments, net of income tax	(263)								(263)	(263)
Other, net of income tax	(15,480)								(15,480)	(15,480)
Subtotal - comprehensive income	618,330							621,630	(15,743)	605,887	12,443
Subtotal attributable to redeemable noncontrolling interest		138
Balance at Sep. 30, 2018	5,439,130		66	852	7	0	(399,900)	5,771,286	(8,566)	5,363,745	75,385
Balance at Sep. 30, 2018		6,341
Balance at Jun. 30, 2018	5,390,210		66	861	7	0	(390,618)	5,702,043	5,224	5,317,583	72,627
Balance at Jun. 30, 2018		6,341
Common Stock
Issued/(converted)	2,735			1				2,734		2,735
Repurchased	(120,869)			(10)				(120,859)		(120,869)
Restricted share-based compensation expense	1,420							1,420		1,420
Dividends paid	(9,282)						(9,282)			(9,282)
Stock option expense	14,202							14,202		14,202
Distributions to noncontrolling interests	(327)										(327)
Comprehensive income:
Net income to UHS / noncontrolling interests	174,831							171,746		171,746	3,085
Foreign currency translation adjustments, net of income tax	2,894								2,894	2,894
Other, net of income tax	(16,684)								(16,684)	(16,684)
Subtotal - comprehensive income	161,041							171,746	(13,790)	157,956	3,085
Balance at Sep. 30, 2018	5,439,130		66	852	7	0	(399,900)	5,771,286	(8,566)	5,363,745	75,385
Balance at Sep. 30, 2018		6,341
Balance at Dec. 31, 2018	5,465,793		66	841	7	0	(409,156)	5,793,262	4,242	5,389,262	76,531
Balance at Dec. 31, 2018		4,292
Common Stock
Issued/(converted)	8,383			10				8,373		8,383
Repurchased	(571,399)			(44)				(571,355)		(571,399)
Restricted share-based compensation expense	5,950							5,950		5,950
Dividends paid	(35,556)						(35,556)			(35,556)
Stock option expense	45,338							45,338		45,338
Distributions to noncontrolling interests	(11,555)	(500)									(11,555)
Purchase of noncontrolling interest	168										168
Comprehensive income:
Net income to UHS / noncontrolling interests	579,264							569,678		569,678	9,586
Net income attributable to redeemable noncontrolling interest		269
Foreign currency translation adjustments, net of income tax	(19,444)								(19,444)	(19,444)
Unrealized derivative losses on cash flow hedges, net of income tax	(2,997)								(2,997)	(2,997)
Subtotal - comprehensive income	556,823							569,678	(22,441)	547,237	9,586
Subtotal attributable to redeemable noncontrolling interest		269
Balance at Sep. 30, 2019	5,463,945		66	807	7	0	(444,712)	5,851,246	(18,199)	5,389,215	74,730
Balance at Sep. 30, 2019	4,000	4,061
Balance at Jun. 30, 2019	5,464,451		66	810	7	0	(427,109)	5,827,251	(7,936)	5,393,089	71,362
Balance at Jun. 30, 2019		3,986
Common Stock
Issued/(converted)	2,978			4				2,974		2,978
Repurchased	(93,327)			(7)				(93,320)		(93,327)
Restricted share-based compensation expense	2,291							2,291		2,291
Dividends paid	(17,603)						(17,603)			(17,603)
Stock option expense	14,860							14,860		14,860
Distributions to noncontrolling interests	(405)										(405)
Purchase of noncontrolling interest	168										168
Comprehensive income:
Net income to UHS / noncontrolling interests	100,795							97,190		97,190	3,605
Net income attributable to redeemable noncontrolling interest		75
Foreign currency translation adjustments, net of income tax	(10,263)								(10,263)	(10,263)
Subtotal - comprehensive income	90,532							97,190	(10,263)	86,927	3,605
Subtotal attributable to redeemable noncontrolling interest		75
Balance at Sep. 30, 2019	5,463,945		$ 66	$ 807	$ 7	$ 0	$ (444,712)	$ 5,851,246	$ (18,199)	$ 5,389,215	$ 74,730
Balance at Sep. 30, 2019	$ 4,000	$ 4,061

XML

Other Noncurrent liabilities and Redeemable/Noncontrolling Interests

9 Months Ended

Sep. 30, 2019

Noncontrolling Interest [Abstract]

Other Noncurrent liabilities and Redeemable/Noncontrolling Interests

(3) Other Noncurrent liabilities and Redeemable/Noncontrolling Interests

Other noncurrent liabilities include the long-term portion of our professional and general liability, workers’ compensation reserves, pension and deferred compensation liabilities, and liabilities incurred in connection with split-dollar life insurance agreements on the lives of our chief executive officer and his wife.

As of September 30, 2019, outside owners held noncontrolling, minority ownership interests of: (i) 20% in an acute care facility located in Washington, D.C.; (ii) approximately 11% in an acute care facility located in Texas; (iii) 20% and 30% in two behavioral health care facilities located in Pennsylvania and Ohio, respectively; (iv) approximately 5% in an acute care facility located in Nevada, and; (v) approximately 20% in a behavioral health care facility located in Spokane, Washington.  The noncontrolling interest and redeemable noncontrolling interest balances of $75 million and $4 million, respectively, as of September 30, 2019, consist primarily of the third-party ownership interests in these hospitals.

In connection with the two behavioral health care facilities located in Pennsylvania and Ohio, the minority ownership interests of which are reflected as redeemable noncontrolling interests on our Condensed Consolidated Balance Sheet, the outside owners have “put options” to put their entire ownership interest to us at any time. If exercised, the put option requires us to purchase the minority member’s interest at fair market value.

XML

Fair Value Measurement

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurement

(5) Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  The following fair value hierarchy classifies the inputs to valuation techniques used to measure fair value into one of three levels:

• Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.  These included quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

• Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The following tables present the assets and liabilities recorded at fair value on a recurring basis:

	Balance at			Balance Sheet	Basis of Fair Value Measurement
(in thousands)	September 30, 2019			Location	Level 1		Level 2			Level 3
Assets:
Money market mutual funds	$	111,652		Other assets		111,652
Certificates of deposit		2,202		Other assets		2,202
Available for sale securities		43,046		Other assets		43,046
Deferred compensation assets		33,871		Other assets		33,871
Interest rate swap agreements		-		Accounts Receivable, net				-
Foreign currency exchange contracts		(1,794	)	Other current assets				(1,794	)
	$	188,977				190,771		(1,794	)		-
Liabilities:
Deferred compensation liability		33,871		Other noncurrent liabilities		33,871
	$	33,871				33,871		-			-
	Balance at			Balance Sheet	Basis of Fair Value Measurement
(in thousands)	December 31, 2018			Location	Level 1		Level 2			Level 3
Assets:
Money market mutual funds	$	106,530		Other assets		106,530
Certificates of deposit		5,415		Other assets		5,415
Available for sale securities		55,594		Other assets		55,594
Deferred compensation assets		32,998		Other assets		32,998
Interest rate swap agreements		3,925		Accounts Receivable, net				3,925
Foreign currency exchange contracts		8,908		Other current assets				8,908
	$	213,370				200,537		12,833			-
Liabilities:
Deferred compensation liability	$	32,998		Other noncurrent liabilities		32,998
	$	32,998				32,998		-			-

The fair value of our money market mutual funds, certificates of deposit and available for sale securities are computed based upon quoted market prices in active market. The fair value of deferred compensation assets and offsetting liability are computed based on market prices in an active market held in a rabbi trust.  The fair value of our interest rate swaps are based on quotes from our counter parties.  The fair value of our foreign currency exchange contracts is valued using quoted forward exchange rates and spot rates at the reporting date.

XML

Dispositions and acquisitions

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Dispositions and acquisitions

(9) Dispositions and acquisitions

Nine-month period ended September 30, 2019:

Acquisitions:

During the first nine months of 2019, there were no acquisitions. 

Divestitures:

During the first nine months of 2019, we received approximately $7 million from the divestiture of the real property of a previously closed behavioral health care facility.

Nine-month period ended September 30, 2018:

Acquisitions:

During the first nine months of 2018, we paid approximately $108 million to acquire businesses and property consisting primarily of the acquisition of: (i) The Danshell Group, consisting of 25 behavioral health facilities located in the U.K. (acquired during the third quarter of 2018), and; (ii) a 109-bed behavioral health care facility located in Gulfport, Mississippi (acquired during the first quarter).

Divestitures:

During the first nine months of 2018, we received approximately $14 million in connection with: (i) the required divestiture of an 18-bed behavioral health care facility located in the U.K. (pursuant to the final ruling of The Competition and Markets Authority in connection with our acquisition of Cambian Group, PLC), and; (ii) the real property of a closed behavioral health facility.

XML

Lease Accounting

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Lease Accounting

(13) Lease Accounting

In February 2016, the FASB issued ASU 2016-02 (Topic 842) "Leases." Topic 842 supersedes the lease requirements in Accounting Standards Codification Topic 840, "Leases." Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will be classified as either finance or operating.

We adopted Topic 842 effective January 1, 2019. We applied Topic 842 to all leases as of January 1, 2019 with comparative periods continuing to be reported under Topic 840. We have elected the practical expedient package to not reassess at adoption (i) expired or existing contracts for whether they are or contain a lease, (ii) the lease classification of any existing leases or (iii) initial indirect costs for existing leases. We have also elected the policy exemption that allows lessees to choose to not separate lease and non-lease components by class of underlying asset and are applying this expedient to all relevant asset classes.

We determine if an arrangement is or contains a lease at inception of the contract. Our right-of-use assets represent our right to use the underlying assets for the lease term and our lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We use the implicit rate noted within the contract.  If not readily available, we use our estimated incremental borrowing rate, which is derived using a collateralized borrowing rate for the same currency and term as the associated lease. A right-of-use asset and lease liability is not recognized for leases with an initial term of 12 months or less and we recognize lease expense for these leases on a straight-line basis over the lease term within lease and rental expense.

Our operating leases are primarily for real estate, including certain acute care facilities, off-campus outpatient facilities, medical office buildings, and corporate and other administrative offices.  Our real estate lease agreements typically have initial terms of five to 10 years.  These real estate leases may include one or more options to renew, with renewals that can extend the lease term from five to 10 years. The exercise of lease renewal options is at our sole discretion. When determining the lease term, we included options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The components of lease expense for the three and nine month periods ended September 30, 2019 are as follows (in thousands):

	Three months ended September 30,		Nine months ended September 30,
	2019		2019
Operating lease cost	$	17,849	$	54,188
Variable and short term lease cost (a)		9,811		26,132
Total lease cost	$	27,660	$	80,320
Finance lease cost:
Amortization of right-of-use-assets	$	481	$	1,444
Interest on lease liabilities		464		1,422
Total finance lease cost	$	945	$	2,866

(a) Includes equipment, month-to-month and leases with a maturity of less than 12 months.

Supplemental cash flow information related to leases for the nine month period ended September 30, 2019 are as follows (in thousands):

	Nine months ended September 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	79,598
Operating cash flows from finance leases	$	1,589
Financing cash flows from finance leases	$	1,435
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	364,453
Finance leases	0

Included in the $364 million of right-of-use assets obtained in exchange for operating lease obligations is $14.0 million of new operating leases entered into during the nine month period ended September 30, 2019.

Supplemental balance sheet information related to leases as of September 30, 2019 are as follows (in thousands):

	September 30,
	2019
Operating Leases
Right of use assets-operating leases	$	329,328
Operating lease liabilities	$	55,080
Operating lease liabilities noncurrent		274,248
Total operating lease liabilities	$	329,328
Finance Leases
Property and equipment	$	23,250
Accumulated depreciation		(10,844	)
Property and equipment, net	$	12,406
Current maturities of long-term debt	$	1,591
Long-term debt		16,790
Total finance lease liabilities	$	18,381
Weighted Average remaining lease term, years
Operating leases		9.9
Finance leases		7.5
Weighted Average discount rate
Operating leases		4.7	%
Finance leases		10.4	%

Future maturities of lease liabilities as of September 30, 2019 are as follows (in thousands):

	Operating Leases			Finance Leases
Year ending December 31,
2019 (remaining 3 months)	$	17,887		$	826
2020		66,595			3,375
2021		59,317			3,257
2022		48,633			3,559
2023		43,843			3,654
Later years		186,908			12,130
Total lease payments		423,183			26,801
less imputed interest		(93,855	)		(8,420	)
Total	$	329,328		$	18,381

Future minimum rental payments under lease commitments with a term of more than one year as of December 31, 2018, prior to our adoption of ASU 2016-02 are as follows (amounts in thousands):

Year	Capital Leases			Operating Leases
2019	$	3,996		$	72,353
2020		3,345			59,492
2021		3,227			48,891
2022		3,508			35,233
2023		3,624			28,839
Later years		12,070			123,039
Total minimum rental	$	29,770		$	367,847
Less: Amount representing interest		(9,829	)
Present value of minimum rental commitments		19,941
Less: Current portion of capital lease obligations		(2,128	)
Long-term portion of capital lease obligations	$	17,813

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Summary of Cash, Cash Equivalents and Restricted Cash Reported In Condensed Consolidated Statements of Cash Flows (Detail) - USD ($) $ in Thousands		Sep. 30, 2019	Dec. 31, 2018
Cash And Cash Equivalents Period Increase Decrease [Abstract]
Cash and cash equivalents		$ 58,905	$ 105,220
Restricted cash and cash equivalents	[1]	$ 95,932	$ 94,465
Restricted Cash and Cash Equivalents, Noncurrent, Asset, Statement of Financial Position [Extensible List]		us-gaap:OtherAssetsMiscellaneousNoncurrent	us-gaap:OtherAssetsMiscellaneousNoncurrent
Total cash, cash equivalents and restricted cash		$ 154,837	$ 199,685

[1] Restricted cash and cash equivalents is included in other assets on the accompanying consolidated balance sheet.

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Other Noncurrent Liabilities and Redeemable/Noncontrolling Interests - Additional Information (Detail) $ in Millions	Sep. 30, 2019 USD ($) Facility
Minority Interest [Line Items]
Behavioral health care facilities with outside owners holding non-controlling minority interest | Facility	2
Non-controlling interest balances	$ 75
Redeemable non-controlling interest balances	$ 4
Outside Owners | Acute Care Facility | Washington, District of Columbia
Minority Interest [Line Items]
Percentage of non-controlling, minority ownership interests held by outside owners	20.00%
Outside Owners | Acute Care Facility | Texas
Minority Interest [Line Items]
Percentage of non-controlling, minority ownership interests held by outside owners	11.00%
Outside Owners | Acute Care Facility | Nevada
Minority Interest [Line Items]
Percentage of non-controlling, minority ownership interests held by outside owners	5.00%
Outside Owners | Behavioral Health Care Facility | Pennsylvania
Minority Interest [Line Items]
Percentage of non-controlling, minority ownership interests held by outside owners	20.00%
Outside Owners | Behavioral Health Care Facility | Ohio
Minority Interest [Line Items]
Percentage of non-controlling, minority ownership interests held by outside owners	30.00%
Outside Owners | Behavioral Health Care Facility | Washington
Minority Interest [Line Items]
Percentage of non-controlling, minority ownership interests held by outside owners	20.00%

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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities Recorded at Fair Value on Recurring Basis

The following tables present the assets and liabilities recorded at fair value on a recurring basis:

	Balance at			Balance Sheet	Basis of Fair Value Measurement
(in thousands)	September 30, 2019			Location	Level 1		Level 2			Level 3
Assets:
Money market mutual funds	$	111,652		Other assets		111,652
Certificates of deposit		2,202		Other assets		2,202
Available for sale securities		43,046		Other assets		43,046
Deferred compensation assets		33,871		Other assets		33,871
Interest rate swap agreements		-		Accounts Receivable, net				-
Foreign currency exchange contracts		(1,794	)	Other current assets				(1,794	)
	$	188,977				190,771		(1,794	)		-
Liabilities:
Deferred compensation liability		33,871		Other noncurrent liabilities		33,871
	$	33,871				33,871		-			-
	Balance at			Balance Sheet	Basis of Fair Value Measurement
(in thousands)	December 31, 2018			Location	Level 1		Level 2			Level 3
Assets:
Money market mutual funds	$	106,530		Other assets		106,530
Certificates of deposit		5,415		Other assets		5,415
Available for sale securities		55,594		Other assets		55,594
Deferred compensation assets		32,998		Other assets		32,998
Interest rate swap agreements		3,925		Accounts Receivable, net				3,925
Foreign currency exchange contracts		8,908		Other current assets				8,908
	$	213,370				200,537		12,833			-
Liabilities:
Deferred compensation liability	$	32,998		Other noncurrent liabilities		32,998
	$	32,998				32,998		-			-

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Lease Accounting (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Components of Lease Expense

The components of lease expense for the three and nine month periods ended September 30, 2019 are as follows (in thousands):

	Three months ended September 30,		Nine months ended September 30,
	2019		2019
Operating lease cost	$	17,849	$	54,188
Variable and short term lease cost (a)		9,811		26,132
Total lease cost	$	27,660	$	80,320
Finance lease cost:
Amortization of right-of-use-assets	$	481	$	1,444
Interest on lease liabilities		464		1,422
Total finance lease cost	$	945	$	2,866

(a) Includes equipment, month-to-month and leases with a maturity of less than 12 months.

Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases for the nine month period ended September 30, 2019 are as follows (in thousands):

	Nine months ended September 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	79,598
Operating cash flows from finance leases	$	1,589
Financing cash flows from finance leases	$	1,435
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	364,453
Finance leases	0

Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases as of September 30, 2019 are as follows (in thousands):

	September 30,
	2019
Operating Leases
Right of use assets-operating leases	$	329,328
Operating lease liabilities	$	55,080
Operating lease liabilities noncurrent		274,248
Total operating lease liabilities	$	329,328
Finance Leases
Property and equipment	$	23,250
Accumulated depreciation		(10,844	)
Property and equipment, net	$	12,406
Current maturities of long-term debt	$	1,591
Long-term debt		16,790
Total finance lease liabilities	$	18,381
Weighted Average remaining lease term, years
Operating leases		9.9
Finance leases		7.5
Weighted Average discount rate
Operating leases		4.7	%
Finance leases		10.4	%

Future Maturities of Lease Liabilities

Future maturities of lease liabilities as of September 30, 2019 are as follows (in thousands):

	Operating Leases			Finance Leases
Year ending December 31,
2019 (remaining 3 months)	$	17,887		$	826
2020		66,595			3,375
2021		59,317			3,257
2022		48,633			3,559
2023		43,843			3,654
Later years		186,908			12,130
Total lease payments		423,183			26,801
less imputed interest		(93,855	)		(8,420	)
Total	$	329,328		$	18,381

Future Minimum Rental Payments Under Lease Commitments

Future minimum rental payments under lease commitments with a term of more than one year as of December 31, 2018, prior to our adoption of ASU 2016-02 are as follows (amounts in thousands):

Year	Capital Leases			Operating Leases
2019	$	3,996		$	72,353
2020		3,345			59,492
2021		3,227			48,891
2022		3,508			35,233
2023		3,624			28,839
Later years		12,070			123,039
Total minimum rental	$	29,770		$	367,847
Less: Amount representing interest		(9,829	)
Present value of minimum rental commitments		19,941
Less: Current portion of capital lease obligations		(2,128	)
Long-term portion of capital lease obligations	$	17,813

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Schedule of Disaggregates Revenue by Major Source (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation Of Revenue [Line Items]
Net revenues		$ 2,822,453	$ 2,648,913	$ 8,482,012	$ 8,017,782
Percentage of Net Revenue		100.00%	100.00%	100.00%	100.00%
Medicare
Disaggregation Of Revenue [Line Items]
Net revenues		$ 477,291	$ 451,333	$ 1,408,964	$ 1,416,885
Percentage of Net Revenue		17.00%	17.00%	17.00%	18.00%
Managed Medicare
Disaggregation Of Revenue [Line Items]
Net revenues		$ 258,794	$ 230,533	$ 785,968	$ 702,006
Percentage of Net Revenue		9.00%	9.00%	9.00%	9.00%
Medicaid
Disaggregation Of Revenue [Line Items]
Net revenues		$ 317,441	$ 296,591	$ 917,112	$ 872,710
Percentage of Net Revenue		11.00%	11.00%	11.00%	11.00%
Managed Medicaid
Disaggregation Of Revenue [Line Items]
Net revenues		$ 412,794	$ 365,529	$ 1,235,020	$ 1,130,528
Percentage of Net Revenue		15.00%	14.00%	15.00%	14.00%
Managed Care (HMO and PPOs)
Disaggregation Of Revenue [Line Items]
Net revenues		$ 878,481	$ 834,273	$ 2,709,628	$ 2,600,190
Percentage of Net Revenue		31.00%	31.00%	32.00%	32.00%
UK Revenue
Disaggregation Of Revenue [Line Items]
Net revenues		$ 134,905	$ 129,965	$ 415,407	$ 364,163
Percentage of Net Revenue		5.00%	5.00%	5.00%	5.00%
Other Patient Revenue and Adjustments,Net
Disaggregation Of Revenue [Line Items]
Net revenues		$ 176,882	$ 188,212	$ 515,307	$ 469,460
Percentage of Net Revenue		6.00%	7.00%	6.00%	6.00%
Other Non-patient Revenue
Disaggregation Of Revenue [Line Items]
Net revenues		$ 165,865	$ 152,477	$ 494,606	$ 461,840
Percentage of Net Revenue		6.00%	6.00%	6.00%	6.00%
Acute Care Hospital Services
Disaggregation Of Revenue [Line Items]
Net revenues		$ 1,528,535	$ 1,383,050	$ 4,575,088	$ 4,232,673
Percentage of Net Revenue		100.00%	100.00%	100.00%	100.00%
Acute Care Hospital Services | Medicare
Disaggregation Of Revenue [Line Items]
Net revenues		$ 333,777	$ 295,691	$ 988,746	$ 972,073
Percentage of Net Revenue		22.00%	21.00%	22.00%	23.00%
Acute Care Hospital Services | Managed Medicare
Disaggregation Of Revenue [Line Items]
Net revenues		$ 197,993	$ 175,248	$ 618,756	$ 550,683
Percentage of Net Revenue		13.00%	13.00%	14.00%	13.00%
Acute Care Hospital Services | Medicaid
Disaggregation Of Revenue [Line Items]
Net revenues		$ 148,570	$ 126,977	$ 391,762	$ 349,794
Percentage of Net Revenue		10.00%	9.00%	9.00%	8.00%
Acute Care Hospital Services | Managed Medicaid
Disaggregation Of Revenue [Line Items]
Net revenues		$ 133,906	$ 123,296	$ 413,607	$ 410,243
Percentage of Net Revenue		9.00%	9.00%	9.00%	10.00%
Acute Care Hospital Services | Managed Care (HMO and PPOs)
Disaggregation Of Revenue [Line Items]
Net revenues		$ 554,341	$ 500,688	$ 1,690,889	$ 1,547,496
Percentage of Net Revenue		36.00%	36.00%	37.00%	37.00%
Acute Care Hospital Services | UK Revenue
Disaggregation Of Revenue [Line Items]
Net revenues		$ 0	$ 0	$ 0	$ 0
Percentage of Net Revenue		0.00%	0.00%	0.00%	0.00%
Acute Care Hospital Services | Other Patient Revenue and Adjustments,Net
Disaggregation Of Revenue [Line Items]
Net revenues		$ 45,918	$ 62,055	$ 133,962	$ 104,926
Percentage of Net Revenue		3.00%	4.00%	3.00%	2.00%
Acute Care Hospital Services | Other Non-patient Revenue
Disaggregation Of Revenue [Line Items]
Net revenues		$ 114,030	$ 99,095	$ 337,366	$ 297,458
Percentage of Net Revenue		7.00%	7.00%	7.00%	7.00%
Behavioral Health Services
Disaggregation Of Revenue [Line Items]
Net revenues	[1]	$ 1,291,816	$ 1,262,472	$ 3,898,440	$ 3,774,551
Percentage of Net Revenue		100.00%	100.00%	100.00%	100.00%
Behavioral Health Services | Medicare
Disaggregation Of Revenue [Line Items]
Net revenues		$ 143,514	$ 155,642	$ 420,218	$ 444,812
Percentage of Net Revenue		11.00%	12.00%	11.00%	12.00%
Behavioral Health Services | Managed Medicare
Disaggregation Of Revenue [Line Items]
Net revenues		$ 60,801	$ 55,285	$ 167,212	$ 151,323
Percentage of Net Revenue		5.00%	4.00%	4.00%	4.00%
Behavioral Health Services | Medicaid
Disaggregation Of Revenue [Line Items]
Net revenues		$ 168,871	$ 169,614	$ 525,350	$ 522,916
Percentage of Net Revenue		13.00%	13.00%	13.00%	14.00%
Behavioral Health Services | Managed Medicaid
Disaggregation Of Revenue [Line Items]
Net revenues		$ 278,888	$ 242,233	$ 821,413	$ 720,285
Percentage of Net Revenue		22.00%	19.00%	21.00%	19.00%
Behavioral Health Services | Managed Care (HMO and PPOs)
Disaggregation Of Revenue [Line Items]
Net revenues		$ 324,140	$ 333,585	$ 1,018,739	$ 1,052,694
Percentage of Net Revenue		25.00%	26.00%	26.00%	28.00%
Behavioral Health Services | UK Revenue
Disaggregation Of Revenue [Line Items]
Net revenues		$ 134,905	$ 129,965	$ 415,407	$ 364,163
Percentage of Net Revenue		10.00%	10.00%	11.00%	10.00%
Behavioral Health Services | Other Patient Revenue and Adjustments,Net
Disaggregation Of Revenue [Line Items]
Net revenues		$ 130,964	$ 126,157	$ 381,345	$ 364,534
Percentage of Net Revenue		10.00%	10.00%	10.00%	10.00%
Behavioral Health Services | Other Non-patient Revenue
Disaggregation Of Revenue [Line Items]
Net revenues		$ 49,733	$ 49,991	$ 148,756	$ 153,824
Percentage of Net Revenue		4.00%	4.00%	4.00%	4.00%
Other
Disaggregation Of Revenue [Line Items]
Net revenues		$ 2,102	$ 3,391	$ 8,484	$ 10,558
Other | Other Non-patient Revenue
Disaggregation Of Revenue [Line Items]
Net revenues		$ 2,102	$ 3,391	$ 8,484	$ 10,558

[1] Includes net revenues generated from our behavioral health care facilities located in the U.K. amounting to approximately $135 million and $130 million for the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $415 million and $364 million for the nine-month periods ended September 30, 2019 and 2018, respectively.  Total assets at our U.K. behavioral health care facilities were approximately $1.175 billion and $1.231 billion as of September 30, 2019 and 2018, respectively.

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Earnings Per Share Data ("EPS") and Stock Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Anti-dilutive weighted average stock options excluded from computation of earnings per share	4,300,000	7,300,000	6,600,000	8,200,000
Unrecognized compensation cost related to unvested options and restricted stock	$ 140,600		$ 140,600
Stock options granted during period			2,456,015
Weighted-average grant date fair value, per share			$ 30.40
Compensation cost recognized			$ 52,167	$ 50,645
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost recognized, pre-tax charge	14,900	$ 14,200	45,400	46,700
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost recognized, pre-tax charge	$ 2,300	$ 1,400	$ 6,000	$ 3,100
Unrecognized compensation cost vesting period	2 years 8 months 12 days
Restricted shares granted during period			145,076,000
Weighted-average grant date fair value, per share			$ 133.98
Unvested Stock option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost vesting period	2 years 8 months 12 days

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Treasury (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Summary of Effects of Interest Rate Swap Agreements and Foreign Currency Foreign Exchange Contracts on Result of Operations

The following table presents the effects of our interest rate swap agreements and our foreign currency foreign exchange contracts on our results of operations for the three and nine month periods ended September 30, 2019 and 2018 (in thousands):

	Gain/(Loss) recognized in AOCI
	Three months ended					Nine months ended
	September 30,		September 30,			September 30,			September 30,
	2019		2018			2019			2018
Cash Flow Hedge relationships
Interest rate swap agreements (a)	$	0	$	(1,924	)	$	(3,925	)	$	(345	)
Net Investment Hedge relationships
Foreign currency foreign exchange contracts (b)	$	33,927	$	3,790		$	79,584		$	26,088

(a) The amount of gain reclassified out of AOCI into Interest expense, net was $0 and $2.0 million during the three-month periods ended September 30, 2019 and 2018, respectively, and $3.4 million and $4.2 million during the nine-month periods ended September 30, 2019 and 2018, respectively.

(b) The amount reclassified out of AOCI into Other (income) expense, net includes the net effect of a $1.1 million gain offset by a $1.1 million loss recorded on repatriation of cash related to our net investment in the U.K. for the three-month period ended September 30, 2019, and a $5.7 million gain offset by a $5.7 million loss recorded on repatriation of cash related to our net investment in the U.K. during the nine-month period ended September 30, 2019.  There were no amounts reclassified out of AOCI for the three and nine-month periods ended September 30, 2018.

Summary of Cash, Cash Equivalents and Restricted Cash Reported In Condensed Consolidated Statements of Cash Flows

Cash, cash equivalents, and restricted cash as reported in the condensed consolidated statements of cash flows are presented separately on our condensed consolidated balance sheets as follow (in thousands):

	September 30,		December 31,
	2019		2018
Cash and cash equivalents	$	58,905	$	105,220
Restricted cash and cash equivalents (a)		95,932		94,465
Total cash, cash equivalents and restricted cash	$	154,837	$	199,685
(a) Restricted cash and cash equivalents is included in other assets on the accompanying consolidated balance sheet.

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Revenue (Tables)

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Schedule of Disaggregates Revenue by Major Source

The following table disaggregates our revenue by major source for the three and nine month periods ended September 30, 2019 and 2018 (in thousands):

	For the three months ended September 30, 2019
	Acute Care				Behavioral Health				Other		Total
Medicare	$	333,777	22	%	$	143,514	11	%			$	477,291	17	%
Managed Medicare		197,993	13	%		60,801	5	%				258,794	9	%
Medicaid		148,570	10	%		168,871	13	%				317,441	11	%
Managed Medicaid		133,906	9	%		278,888	22	%				412,794	15	%
Managed Care (HMO and PPOs)		554,341	36	%		324,140	25	%				878,481	31	%
UK Revenue		0	0	%		134,905	10	%				134,905	5	%
Other patient revenue and adjustments, net		45,918	3	%		130,964	10	%				176,882	6	%
Other non-patient revenue		114,030	7	%		49,733	4	%		2,102		165,865	6	%
Total Net Revenue	$	1,528,535	100	%	$	1,291,816	100	%	$	2,102		2,822,453	100	%
	For the nine months ended September 30, 2019
	Acute Care				Behavioral Health				Other		Total
Medicare	$	988,746	22	%	$	420,218	11	%			$	1,408,964	17	%
Managed Medicare		618,756	14	%		167,212	4	%				785,968	9	%
Medicaid		391,762	9	%		525,350	13	%				917,112	11	%
Managed Medicaid		413,607	9	%		821,413	21	%				1,235,020	15	%
Managed Care (HMO and PPOs)		1,690,889	37	%		1,018,739	26	%				2,709,628	32	%
UK Revenue		0	0	%		415,407	11	%				415,407	5	%
Other patient revenue and adjustments, net		133,962	3	%		381,345	10	%				515,307	6	%
Other non-patient revenue		337,366	7	%		148,756	4	%		8,484		494,606	6	%
Total Net Revenue	$	4,575,088	100	%	$	3,898,440	100	%	$	8,484		8,482,012	100	%
	For the three months ended September 30, 2018
	Acute Care				Behavioral Health				Other		Total
Medicare	$	295,691	21	%	$	155,642	12	%			$	451,333	17	%
Managed Medicare		175,248	13	%		55,285	4	%				230,533	9	%
Medicaid		126,977	9	%		169,614	13	%				296,591	11	%
Managed Medicaid		123,296	9	%		242,233	19	%				365,529	14	%
Managed Care (HMO and PPOs)		500,688	36	%		333,585	26	%				834,273	31	%
UK Revenue		0	0	%		129,965	10	%				129,965	5	%
Other patient revenue and adjustments, net		62,055	4	%		126,157	10	%				188,212	7	%
Other non-patient revenue		99,095	7	%		49,991	4	%		3,391		152,477	6	%
Total Net Revenue	$	1,383,050	100	%	$	1,262,472	100	%	$	3,391		2,648,913	100	%
	For the nine months ended September 30, 2018
	Acute Care				Behavioral Health				Other		Total
Medicare	$	972,073	23	%	$	444,812	12	%			$	1,416,885	18	%
Managed Medicare		550,683	13	%		151,323	4	%				702,006	9	%
Medicaid		349,794	8	%		522,916	14	%				872,710	11	%
Managed Medicaid		410,243	10	%		720,285	19	%				1,130,528	14	%
Managed Care (HMO and PPOs)		1,547,496	37	%		1,052,694	28	%				2,600,190	32	%
UK Revenue		0	0	%		364,163	10	%				364,163	5	%
Other patient revenue and adjustments, net		104,926	2	%		364,534	10	%				469,460	6	%
Other non-patient revenue		297,458	7	%		153,824	4	%		10,558		461,840	6	%
Total Net Revenue	$	4,232,673	100	%	$	3,774,551	100	%	$	10,558		8,017,782	100	%

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Lease Accounting - Additional Information (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Lessee Lease Description [Line Items]
Lessee, operating lease, existence of option to extend [true false]	true
Right-of-use assets obtained in exchange for operating lease obligations	$ 364,453
New Operating Leases
Lessee Lease Description [Line Items]
Right-of-use assets obtained in exchange for operating lease obligations	$ 14,000
Minimum
Lessee Lease Description [Line Items]
Initial term of real estate lease	5 years
Real estate leases option to extend lease term	5 years
Maximum
Lessee Lease Description [Line Items]
Initial term of real estate lease	10 years
Real estate leases option to extend lease term	10 years

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Dispositions and Acquisitions - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($) Facility Bed
Business Acquisition [Line Items]
Acquisition, cash paid	$ 0	$ 108,000,000
Located in U.K.
Business Acquisition [Line Items]
Aggregate cash proceeds from divestiture of businesses		$ 14,000,000
Number of beds | Bed		18
Danshell Group [Member] | Located in U.K.
Business Acquisition [Line Items]
Number of behavioral health care facilities | Facility		25
Gulfport Behavioral Health System | Located in Gulfport
Business Acquisition [Line Items]
Number of beds | Bed		109
Behavioral Health Care Facility
Business Acquisition [Line Items]
Aggregate cash proceeds from divestiture of businesses	$ 7,000,000

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Future Minimum Rental Payments under Lease Commitments (Detail) $ in Thousands	Dec. 31, 2018 USD ($)
Capital Leases
2019	$ 3,996
2020	3,345
2021	3,227
2022	3,508
2023	3,624
Later years	12,070
Total minimum rental	29,770
Less: Amount representing interest	(9,829)
Present value of minimum rental commitments	19,941
Less: Current portion of capital lease obligations	(2,128)
Long-term portion of capital lease obligations	17,813
Operating Leases
2019	72,353
2020	59,492
2021	48,891
2022	35,233
2023	28,839
Later years	123,039
Total minimum rental	$ 367,847

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Relationship with Universal Health Realty Income Trust and Related Party Transactions

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Relationship with Universal Health Realty Income Trust and Related Party Transactions

(2) Relationship with Universal Health Realty Income Trust and Related Party Transactions

Relationship with Universal Health Realty Income Trust:

At September 30, 2019, we held approximately 5.7% of the outstanding shares of Universal Health Realty Income Trust (the “Trust”). We serve as Advisor to the Trust under an annually renewable advisory agreement, which is scheduled to expire on December 31^st of each year, pursuant to the terms of which we conduct the Trust’s day-to-day affairs, provide administrative services and present investment opportunities. The advisory agreement was Amended and Restated effective January 1, 2019.  Among other things, the Amended and Restated Advisory Agreement (the “Agreement”) eliminated the 20% annual incentive fee clause which we were previously entitled to under certain conditions (the incentive fee requirements have never been achieved).  The advisory agreement was renewed by the Trust for 2019 at the same rate as the prior three years, providing for an advisory fee computation at 0.70% of the Trust’s average invested real estate assets. We earned an advisory fee from the Trust, which is included in net revenues in the accompanying consolidated statements of income, of approximately $1.0 million, during each of the three-month periods ended September 30, 2019 and 2018, and approximately $3.0 million and $2.8 million during the nine-month periods ended September 30, 2019 and 2018, respectively.  

In addition, certain of our officers and directors are also officers and/or directors of the Trust. Management believes that it has the ability to exercise significant influence over the Trust, therefore we account for our investment in the Trust using the equity method of accounting.

Our pre-tax share of income from the Trust, which is included in other income in the accompanying consolidated statements of income, was approximately $300,000 and $260,000 during the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $700,000 and $1.1 million during the nine-month periods ended September 30, 2019 and 2018, respectively. Included in our share of the Trust’s income for the nine months ended September 30, 2018 is income realized by the Trust in connection with the hurricane-related insurance proceeds received in connection with the damage sustained from Hurricane Harvey in August, 2017.   We earned dividends from the Trust amounting to $536,000 and $528,000 during the three-month periods ended September 30, 2019 and 2018, respectively, and $1.6 million during each of the nine-month periods ended September 30, 2019 and 2018.  The carrying value of our investment in the Trust was approximately $6.6 million and $7.5 million at September 30, 2019 and

December 31, 2018, respectively, and is included in other assets in the accompanying consolidated balance sheets. The market value of our investment in the Trust was $81.0 million at September 30, 2019 and $48.3 million at December 31, 2018, based on the closing price of the Trust’s stock on the respective dates.

The Trust commenced operations in 1986 by purchasing certain properties from us and immediately leasing the properties back to our respective subsidiaries. Most of the leases were entered into at the time the Trust commenced operations and provided for initial terms of 13 to 15 years with up to six additional 5-year renewal terms. Each lease also provided for additional or bonus rental, as discussed below. The base rents are paid monthly and the bonus rents are computed and paid on a quarterly basis, based upon a computation that compares current quarter revenue to a corresponding quarter in the base year. The leases with those subsidiaries are unconditionally guaranteed by us and are cross-defaulted with one another. 

Total rent expense under the operating leases on the three hospital facilities reflected in the table below was approximately $4 million during each of the three months ended September 30, 2019 and 2018, and approximately $12 million for each of the nine-month periods ended September 30, 2019 and 2018.  Pursuant to the terms of the three hospital leases with the Trust, we have the option to renew the leases at the lease terms described above and below by providing notice to the Trust at least 90 days prior to the termination of the then current term. We also have the right to purchase the respective leased hospitals at the end of the lease terms or any renewal terms at their appraised fair market value as well as purchase any or all of the three leased hospital properties at the appraised fair market value upon one month’s notice should a change of control of the Trust occur. In addition, we have rights of first refusal to: (i) purchase the respective leased facilities during and for 180 days after the lease terms at the same price, terms and conditions of any third-party offer, or; (ii) renew the lease on the respective leased facility at the end of, and for 180 days after, the lease term at the same terms and conditions pursuant to any third-party offer. 

The table below details the renewal options and terms for each of our three acute care hospital facilities leased from the Trust: 

Hospital Name	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	$	5,485,000	December, 2026	5(a)
Wellington Regional Medical Center	$	3,030,000	December, 2021	10(b)
Southwest Healthcare System, Inland Valley Campus	$	2,648,000	December, 2021	10(b)

(a)     We have one 5-year renewal option at existing lease rates (through 2031).

(b)     We have two 5-year renewal options at fair market value lease rates (2022 through 2031).

In addition, certain of our subsidiaries are tenants in several medical office buildings and two FEDs owned by the Trust or by limited liability companies in which the Trust holds 95% to 100% of the ownership interest.  During the third quarter of 2019, the Trust commenced construction on a new 75,000 rentable square feet medical office building (“MOB”) that will be located on the campus of Texoma Medical Center, a hospital that is owned and operated by one of our subsidiaries.  In connection with this MOB, a master flex lease has been executed between a wholly-owned subsidiary of ours and a Trust limited partnership that owns the MOB. Pursuant to the terms of this master flex lease, our subsidiary will master lease approximately 50% of the square rentable feet of the MOB, which could be reduced during the term if certain conditions are met, for a ten-year term at an initial minimum annual rent of $644,000.

During the third quarter of 2019, a joint-venture agreement between us and a non-related third-party was finalized in connection with the development of a newly constructed behavioral health care facility located in Clive, Iowa. Pursuant to the terms of the agreement, we hold a majority ownership interest in the venture and will act as manager of the facility when completed and opened. This joint-venture also entered into an agreement with the Trust whereby a wholly-owned subsidiary of the Trust will construct the 108-bed behavioral health care hospital and, upon completion and issuance of the certificate of occupancy, the joint-venture will lease the facility from the Trust pursuant to a 20-year, triple net lease with five, 10-year renewal options. Construction of the approximately 80,000 square foot hospital, for which a wholly-owned subsidiary of ours will act as project manager for an aggregate fee of approximately $750,000, is expected to be completed in the fall of 2020. The approximate cost of the project is estimated at $37.5 million and the initial annual rent is estimated at approximately $2.7 million.

Other Related Party Transactions:

In December, 2010, our Board of Directors approved the Company’s entering into supplemental life insurance plans and agreements on the lives of Alan B. Miller (our chief executive officer (“CEO”) and his wife. As a result of these agreements, as amended in October, 2016, based on actuarial tables and other assumptions, during the life expectancies of the insureds, we would pay approximately $28 million in premiums, and certain trusts owned by our CEO, would pay approximately $9 million in premiums. Based on the projected premiums mentioned above, and assuming the policies remain in effect until the death of the insureds, we will be entitled to receive death benefit proceeds of no less than approximately $37 million representing the $28 million of aggregate premiums paid by us as well as the $9 million of aggregate premiums paid by the trusts. In connection with these policies, we will pay/we paid approximately $1.1 million, net, in premium payments during each of the 2019 and 2018 years.

In August, 2015, Marc D. Miller, our President and member of our Board of Directors, was appointed to the Board of Directors of Premier, Inc. (“Premier”), a healthcare performance improvement alliance.  During 2013, we entered into a new group purchasing organization agreement (“GPO”) with Premier. In conjunction with the GPO agreement, we acquired a minority interest in Premier for a nominal amount. During the fourth quarter of 2013, in connection with the completion of an initial public offering of the stock of Premier, we received cash proceeds for the sale of a portion of our ownership interest in the GPO. Also in connection with this GPO agreement, we received shares of restricted stock of Premier which vest ratably over a seven-year period (2014 through 2020), contingent upon our continued participation and minority ownership interest in the GPO.  We have elected to retain a portion of the previously vested shares of Premier, the market value of which is included in other assets on our consolidated balance sheet.  Based upon the closing price of Premier’s stock on each respective date, the market value of our shares of Premier on which the restrictions have lapsed was $43 million as of September 30, 2019 and $56 million as of December 31, 2018.    In connection with our adoption of ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”, since our vested shares of Premier are held for investment and classified as available for sale, the $13 million decrease in market value of these shares since December 31, 2018 was recorded as an unrealized loss and included in “Other (income) expense, net” on our condensed consolidated statements of income for the nine-month period ended September 30, 2019.  

A member of our Board of Directors and member of the Executive Committee and Finance Committee is a partner in Norton Rose Fulbright US LLP, a law firm engaged by us for a variety of legal services.  The Board member and his law firm also provide personal legal services to our CEO and acts as trustee of certain trusts for the benefit of our CEO and his family.

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 58,905	$ 105,220
Accounts receivable, net	1,544,077	1,509,909
Supplies	156,285	148,206
Other current assets	171,360	174,467
Total current assets	1,930,627	1,937,802
Property and equipment	8,967,340	8,563,455
Less: accumulated depreciation	(4,008,931)	(3,715,515)
Property, plant and equipment, net, Total	4,958,409	4,847,940
Other assets:
Goodwill	3,827,867	3,844,628
Deferred income taxes	19,199	5,280
Right of use assets-operating leases	329,328	0
Deferred charges	6,926	8,772
Other	522,045	621,058
Total Assets	11,594,401	11,265,480
Current liabilities:
Current maturities of long-term debt	78,077	63,446
Accounts payable and accrued liabilities	1,343,922	1,253,714
Legal reserves	144,120	129,150
Operating lease liabilities	55,080	0
Federal and state taxes	570	2,428
Total current liabilities	1,621,769	1,448,738
Other noncurrent liabilities	338,871	361,809
Operating lease liabilities noncurrent	274,248	0
Long-term debt	3,870,294	3,935,187
Deferred income taxes	21,213	49,661
Redeemable noncontrolling interests	4,061	4,292
Equity:
UHS common stockholders’ equity	5,389,215	5,389,262
Noncontrolling interest	74,730	76,531
Total equity	5,463,945	5,465,793
Total Liabilities and Stockholders’ Equity	$ 11,594,401	$ 11,265,480

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Revenue

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Revenue

(12) Revenue

In May 2014 and March 2016, the FASB issued ASU 2014-09 and ASU 2016-08, “Revenue from Contracts with Customers (Topic 606)” and “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”,

respectively, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Under the new standards, our estimate for amounts not expected to be collected based on historical experience will continue to be recognized as a reduction to net revenue. However, subsequent changes in estimate of collectability due to a change in the financial status of a payer, for example a bankruptcy, will be recognized as bad debt expense in operating charges.

The performance obligation is separately identifiable from other promises in the customer contract. As the performance obligations are met (i.e.: room, board, ancillary services, level of care), revenue is recognized based upon allocated transaction price. The transaction price is allocated to separate performance obligations based upon the relative standalone selling price. In instances where we determine there are multiple performance obligations across multiple months, the transaction price will be allocated by applying an estimated implicit and explicit rate to gross charges based on the separate performance obligations.

In assessing collectability, we have elected the portfolio approach.  This portfolio approach is being used as we have large volume of similar contracts with similar classes of customers. We reasonably expect that the effect of applying a portfolio approach to a group of contracts would not differ materially from considering each contract separately.  Management’s judgment to group the contracts by portfolio is based on the payment behavior expected in each portfolio category.  As a result, aggregating all of the contracts (which are at the patient level) by the particular payer or group of payers, will result in the recognition of the same amount of revenue as applying the analysis at the individual patient level.

We group our revenues into categories based on payment behaviors.  Each component has its own reimbursement structure which allows us to disaggregate the revenue into categories that share the nature and timing of payments.  The other patient revenue consists primarily of self-pay, government-funded non-Medicaid, and other.

The following table disaggregates our revenue by major source for the three and nine month periods ended September 30, 2019 and 2018 (in thousands):

	For the three months ended September 30, 2019
	Acute Care				Behavioral Health				Other		Total
Medicare	$	333,777	22	%	$	143,514	11	%			$	477,291	17	%
Managed Medicare		197,993	13	%		60,801	5	%				258,794	9	%
Medicaid		148,570	10	%		168,871	13	%				317,441	11	%
Managed Medicaid		133,906	9	%		278,888	22	%				412,794	15	%
Managed Care (HMO and PPOs)		554,341	36	%		324,140	25	%				878,481	31	%
UK Revenue		0	0	%		134,905	10	%				134,905	5	%
Other patient revenue and adjustments, net		45,918	3	%		130,964	10	%				176,882	6	%
Other non-patient revenue		114,030	7	%		49,733	4	%		2,102		165,865	6	%
Total Net Revenue	$	1,528,535	100	%	$	1,291,816	100	%	$	2,102		2,822,453	100	%
	For the nine months ended September 30, 2019
	Acute Care				Behavioral Health				Other		Total
Medicare	$	988,746	22	%	$	420,218	11	%			$	1,408,964	17	%
Managed Medicare		618,756	14	%		167,212	4	%				785,968	9	%
Medicaid		391,762	9	%		525,350	13	%				917,112	11	%
Managed Medicaid		413,607	9	%		821,413	21	%				1,235,020	15	%
Managed Care (HMO and PPOs)		1,690,889	37	%		1,018,739	26	%				2,709,628	32	%
UK Revenue		0	0	%		415,407	11	%				415,407	5	%
Other patient revenue and adjustments, net		133,962	3	%		381,345	10	%				515,307	6	%
Other non-patient revenue		337,366	7	%		148,756	4	%		8,484		494,606	6	%
Total Net Revenue	$	4,575,088	100	%	$	3,898,440	100	%	$	8,484		8,482,012	100	%
	For the three months ended September 30, 2018
	Acute Care				Behavioral Health				Other		Total
Medicare	$	295,691	21	%	$	155,642	12	%			$	451,333	17	%
Managed Medicare		175,248	13	%		55,285	4	%				230,533	9	%
Medicaid		126,977	9	%		169,614	13	%				296,591	11	%
Managed Medicaid		123,296	9	%		242,233	19	%				365,529	14	%
Managed Care (HMO and PPOs)		500,688	36	%		333,585	26	%				834,273	31	%
UK Revenue		0	0	%		129,965	10	%				129,965	5	%
Other patient revenue and adjustments, net		62,055	4	%		126,157	10	%				188,212	7	%
Other non-patient revenue		99,095	7	%		49,991	4	%		3,391		152,477	6	%
Total Net Revenue	$	1,383,050	100	%	$	1,262,472	100	%	$	3,391		2,648,913	100	%
	For the nine months ended September 30, 2018
	Acute Care				Behavioral Health				Other		Total
Medicare	$	972,073	23	%	$	444,812	12	%			$	1,416,885	18	%
Managed Medicare		550,683	13	%		151,323	4	%				702,006	9	%
Medicaid		349,794	8	%		522,916	14	%				872,710	11	%
Managed Medicaid		410,243	10	%		720,285	19	%				1,130,528	14	%
Managed Care (HMO and PPOs)		1,547,496	37	%		1,052,694	28	%				2,600,190	32	%
UK Revenue		0	0	%		364,163	10	%				364,163	5	%
Other patient revenue and adjustments, net		104,926	2	%		364,534	10	%				469,460	6	%
Other non-patient revenue		297,458	7	%		153,824	4	%		10,558		461,840	6	%
Total Net Revenue	$	4,232,673	100	%	$	3,774,551	100	%	$	10,558		8,017,782	100	%

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Treasury

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Treasury

(4) Treasury

Credit Facilities and Outstanding Debt Securities:

On October 23, 2018, we entered into a  Sixth Amendment (the “Sixth Amendment”) to our credit agreement dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014 and June 7, 2016, among UHS, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto (the “Senior Credit Agreement”). The Sixth Amendment became effective on October 23, 2018.

The Sixth Amendment amended the Senior Credit Agreement to, among other things: (i) increase the aggregate amount of the revolving credit facility to $1 billion (increase of $200 million over the $800 million previous commitment); (ii) increase the aggregate amount of the tranche A term loan commitments to $2 billion (increase of approximately $290 million over the $1.71 billion of outstanding borrowings prior to the amendment), and; (iii) extended the maturity date of the revolving credit and tranche A term loan facilities to October 23, 2023 from August 7, 2019.

On October 31, 2018, we added a seven-year tranche B term loan facility in the aggregate principal amount of $500 million pursuant to the Senior Credit Agreement. The tranche B term loan matures on October 31, 2025.  We used the proceeds to repay borrowings under the revolving credit facility, the Securitization (as defined below), to redeem our $300 million, 3.75% Senior Notes that were scheduled to mature in 2019 and for general corporate purposes.  

As of September 30, 2019, we had no borrowings outstanding pursuant to our $1 billion revolving credit facility and we had $967 million of available borrowing capacity net of $12 million of outstanding letters of credit and $21 million of outstanding borrowings pursuant to a short-term credit facility.

Pursuant to the terms of the Sixth Amendment, the tranche A term loan, which had $1.963 billion of borrowings outstanding as of September 30, 2019, provides for eight installment payments of $12.5 million per quarter which commenced in March of 2019 and are scheduled to continue through December of 2020.  Thereafter, payments of $25 million per quarter are scheduled, commencing in March of 2021 until maturity in October of 2023, when all outstanding amounts will be due.

The tranche B term loan, which had $496 million of borrowings outstanding as of September 30, 2019, provides for installment payments of $1.25 million per quarter, which commenced on March 31, 2019 and are scheduled to continue until maturity in October of 2025, when all outstanding amounts will be due.    

Borrowings under the Senior Credit Agreement bear interest at our election at either (1) the ABR rate which is defined as the rate per annum equal to the greatest of (a) the lender’s prime rate, (b) the weighted average of the federal funds rate, plus 0.5% and (c) one month LIBOR rate plus 1%, in each case, plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 0.375% to 0.625% for revolving credit and term loan A borrowings and 0.75% for tranche B borrowings, or (2) the one, two, three or six month LIBOR rate (at our election), plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 1.375% to 1.625% for revolving credit and term loan A borrowings and 1.75% for the tranche B term loan. As of September 30, 2019, the applicable margins were 0.50% for ABR-based loans and 1.50% for LIBOR-based loans under the revolving credit and term loan A facilities.  The revolving credit facility includes a $125 million sub-limit for letters of credit. The Senior Credit Agreement is secured by certain assets of the Company and our material subsidiaries (which generally excludes asset classes such as substantially all of the patient-related accounts receivable of our acute care hospitals, and certain real estate assets and assets held in joint-ventures with third parties) and is guaranteed by our material subsidiaries.

The Senior Credit Agreement includes a material adverse change clause that must be represented at each draw. The Senior Credit Agreement contains covenants that include a limitation on sales of assets, mergers, change of ownership, liens and indebtedness, transactions with affiliates, dividends and stock repurchases; and requires compliance with financial covenants including maximum leverage. We are in compliance with all required covenants as of September 30, 2019 and December 31, 2018.

In late April, 2018, we entered into the sixth amendment to our accounts receivable securitization program (“Securitization”) dated as of October 27, 2010 with a group of conduit lenders, liquidity banks, and PNC Bank, National Association, as administrative agent, which provides for borrowings outstanding from time to time by certain of our subsidiaries in exchange for undivided security interests in their respective accounts receivable. The sixth amendment, among other things, extended the term of the Securitization program through April 26, 2021 and increased the borrowing capacity to $450 million (from $440 million previously). Although the program fee and certain other fees were adjusted in connection with the sixth amendment, substantially all other provisions of the Securitization program remained unchanged.  Pursuant to the terms of our Securitization program, substantially all of the patient-related accounts receivable of our acute care hospitals (“Receivables”) serve as collateral for the outstanding borrowings. We have accounted for this Securitization as borrowings. We maintain effective control over the Receivables since, pursuant to the terms of the Securitization, the Receivables are sold from certain of our subsidiaries to special purpose entities that are wholly-owned by us. The Receivables, however, are owned by the special purpose entities, can be used only to satisfy the debts of the wholly-owned special purpose entities, and thus are not available to us except through our ownership interest in the special purpose entities. The wholly-owned special purpose entities use the Receivables to collateralize the loans obtained from the group of third-party conduit lenders and liquidity banks. The group of third-party conduit lenders and liquidity banks do not have recourse to us beyond the assets of the wholly-owned special purpose entities that securitize the loans. At September 30, 2019, we had $365 million of outstanding borrowings pursuant to the terms of the Securitization and $85 million of available borrowing capacity.  

As of September 30, 2019, we had combined aggregate principal of $1.1 billion from the following senior secured notes:

• $700 million aggregate principal amount of 4.75% senior secured notes due in August, 2022 (“2022 Notes”) which were issued as follows:

• $300 million aggregate principal amount issued on August 7, 2014 at par.

• $400 million aggregate principal amount issued on June 3, 2016 at 101.5% to yield 4.35%.

• $400 million aggregate principal amount of 5.00% senior secured notes due in June, 2026 (“2026 Notes”) which were issued on June 3, 2016.

Interest on the 2022 Notes is payable on February 1 and August 1 of each year until the maturity date of August 1, 2022.  Interest on the 2026 Notes is payable on June 1 and December 1 until the maturity date of June 1, 2026. The 2022 Notes and 2026 Notes were offered only to qualified institutional buyers under Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The 2022 Notes and 2026 Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

On November 26, 2018 we redeemed the $300 million aggregate principal, 3.75% Senior Notes due in 2019. The 2019 Notes were redeemed for an aggregate price equal to 100.485% of the principal amount, resulting in a premium paid of approximately $1 million, plus accrued interest to the redemption date.  

At September 30, 2019, the carrying value and fair value of our debt were approximately $3.95 billion and $3.97 billion, respectively.  At December 31, 2018, the carrying value and fair value of our debt were each approximately $4.0 billion. The fair value of our debt was computed based upon quotes received from financial institutions. We consider these to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with debt instruments.

Cash Flow Hedges:

We manage our ratio of fixed and floating rate debt with the objective of achieving a mix that management believes is appropriate. To manage this risk in a cost-effective manner, we, from time to time, enter into interest rate swap agreements in which we agree to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts. We account for our derivative and hedging activities using the Financial Accounting Standard Board’s (“FASB”) guidance which requires all derivative instruments, including certain derivative instruments embedded in other contracts, to be carried at fair value on the balance sheet. For derivative transactions designated as hedges, we formally document all relationships between the hedging instrument and the related hedged item, as well as its risk-management objective and strategy for undertaking each hedge transaction.

Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or liability, with a corresponding amount recorded in accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Amounts are reclassified from AOCI to the income statement in the period or periods the hedged transaction affects earnings. From time to time, we use interest rate derivatives in our cash flow hedge transactions. Such derivatives are designed to be highly effective in offsetting changes in the cash flows related to the hedged liability.

For hedge transactions that do not qualify for the short-cut method, at the hedge’s inception and on a regular basis thereafter, a formal assessment is performed to determine whether changes in the fair values or cash flows of the derivative instruments have been highly effective in offsetting changes in cash flows of the hedged items and whether they are expected to be highly effective in the future.

The fair value of interest rate swap agreements approximates the amount at which they could be settled, based on estimates obtained from the counterparties. We assess the effectiveness of our hedge instruments on a quarterly basis. We performed periodic assessments of the cash flow hedge instruments during the first nine months of 2019 and the full year of 2018 and determined the hedges to be highly effective. Although we do not anticipate nonperformance by our counterparties to interest rate swap agreements, the counterparties expose us to credit risk in the event of nonperformance. We do not hold or issue derivative financial instruments for trading purposes.

During 2015, we entered into nine forward starting interest rate swaps whereby we paid a fixed rate on a total notional amount of $1.0 billion and received one-month LIBOR. The average fixed rate payable on these swaps, all of which matured on April 15, 2019, was 1.31%. These interest rates swaps consisted of:

•Four forward starting interest rate swaps, entered into during the second quarter of 2015, whereby we paid a fixed rate on a total notional amount of $500 million and received one-month LIBOR. Each of the four swaps became effective on July 15, 2015 and matured on April 15, 2019. The average fixed rate payable on these swaps was 1.40%;

•Four forward starting interest rate swaps, entered into during the third quarter of 2015, whereby we paid a fixed rate on a total notional amount of $400 million and received one-month LIBOR. One swap on a notional amount of $100 million became effective on July 15, 2015, two swaps on a total notional amount of $200 million became effective on September 15, 2015 and another swap on a notional amount of $100 million became effective on December 15, 2015. All of these swaps matured on April 15, 2019 and the average fixed rate payable was 1.23%, and;

•One interest rate swap, entered into during the fourth quarter of 2015, whereby we paid a fixed rate on a total notional amount of $100 million and received one-month LIBOR. The swap became effective on December 15, 2015 and matured on April 15, 2019.  The fixed rate payable on this swap was 1.21%.

Foreign Currency Forward Exchange Contracts:

In August 2017, the FASB issued new guidance on hedge accounting (ASU 2017-12) that is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to

the scope and results of hedging programs. The new guidance amends the presentation and disclosure requirements, and changes how companies assess effectiveness. We adopted this guidance as of January 1, 2019 and applied to all existing hedges as of the adoption date.

We use forward exchange contracts to hedge our net investment in foreign operations against movements in exchange rates. The effective portion of the unrealized gains or losses on these contracts is recorded in foreign currency translation adjustment within accumulated other comprehensive income and remains there until either the sale or liquidation of the subsidiary. In conjunction with the January 1, 2019 adoption of ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities”, we reclassified our presentation of the net cash inflows or outflows, which were received or paid in connection with foreign exchange contracts that hedge our net investment in foreign operations against movements in exchange rates, to investing cash flows on the consolidated statements of cash flows.  As previously disclosed within our footnotes, these cash flows were formerly reported as operating activities.  Prior period amounts have been reclassified from net cash provided by operating activities to net cash used in investing activities to conform with the current year presentation on the consolidated statements of cash flows. In connection with these forward exchange contracts, we recorded net cash inflows of $90 million and $26 million during the nine-month periods ended September 30, 2019 and 2018, respectively.   

Derivatives Hedging Relationships:

The following table presents the effects of our interest rate swap agreements and our foreign currency foreign exchange contracts on our results of operations for the three and nine month periods ended September 30, 2019 and 2018 (in thousands):

	Gain/(Loss) recognized in AOCI
	Three months ended					Nine months ended
	September 30,		September 30,			September 30,			September 30,
	2019		2018			2019			2018
Cash Flow Hedge relationships
Interest rate swap agreements (a)	$	0	$	(1,924	)	$	(3,925	)	$	(345	)
Net Investment Hedge relationships
Foreign currency foreign exchange contracts (b)	$	33,927	$	3,790		$	79,584		$	26,088

(a) The amount of gain reclassified out of AOCI into Interest expense, net was $0 and $2.0 million during the three-month periods ended September 30, 2019 and 2018, respectively, and $3.4 million and $4.2 million during the nine-month periods ended September 30, 2019 and 2018, respectively.

(b) The amount reclassified out of AOCI into Other (income) expense, net includes the net effect of a $1.1 million gain offset by a $1.1 million loss recorded on repatriation of cash related to our net investment in the U.K. for the three-month period ended September 30, 2019, and a $5.7 million gain offset by a $5.7 million loss recorded on repatriation of cash related to our net investment in the U.K. during the nine-month period ended September 30, 2019.  There were no amounts reclassified out of AOCI for the three and nine-month periods ended September 30, 2018.

No other gains or losses were recognized in income related to derivatives in Subtopic 815-20.

Cash, Cash Equivalents and Restricted Cash:

Cash, cash equivalents, and restricted cash as reported in the condensed consolidated statements of cash flows are presented separately on our condensed consolidated balance sheets as follow (in thousands):

	September 30,		December 31,
	2019		2018
Cash and cash equivalents	$	58,905	$	105,220
Restricted cash and cash equivalents (a)		95,932		94,465
Total cash, cash equivalents and restricted cash	$	154,837	$	199,685
(a) Restricted cash and cash equivalents is included in other assets on the accompanying consolidated balance sheet.

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Earnings Per Share Data ("EPS") and Stock Based Compensation

9 Months Ended

Sep. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Earnings Per Share Data ("EPS") and Stock Based Compensation

(8) Earnings Per Share Data (“EPS”) and Stock Based Compensation

Basic earnings per share are based on the weighted average number of common shares outstanding during the period. Diluted earnings per share are based on the weighted average number of common shares outstanding during the period adjusted to give effect to common stock equivalents.

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data): 

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Basic and Diluted:
Net income attributable to UHS	$	97,190		$	171,746		$	569,678		$	621,630
Less: Net income attributable to unvested restricted share    grants		(243	)		(317	)		(1,414	)		(813	)
Net income attributable to UHS – basic and diluted	$	96,947		$	171,429		$	568,264		$	620,817
Weighted average number of common shares - basic		87,952			92,849			89,288			93,639
Net effect of dilutive stock options and grants based on the    treasury stock method		403			481			231			459
Weighted average number of common shares and    equivalents - diluted		88,355			93,330			89,519			94,098
Earnings per basic share attributable to UHS:	$	1.10		$	1.85		$	6.36		$	6.63
Earnings per diluted share attributable to UHS:	$	1.10		$	1.84		$	6.35		$	6.60

The “Net effect of dilutive stock options and grants based on the treasury stock method”, for all periods presented above, excludes certain outstanding stock options applicable to each period since the effect would have been anti-dilutive. The excluded weighted-average stock options totaled 4.3 million for the three months ended September 30, 2019 and 6.6 million for the nine months ended September 30, 2019. The excluded weighted-average stock options totaled 7.3 million for the three months ended September 30, 2018 and 8.2 million for the nine months ended September 30, 2018. All classes of our common stock have the same dividend rights.

The decrease in our basic and diluted weighted number of common shares outstanding for the three and nine months ended September 30, 2019, as compared to the comparable prior year three and nine months, was due primarily to the impact of shares repurchased by us since January 1, 2018.

Stock-Based Compensation:

During the three-month periods ended September 30, 2019 and 2018, pre-tax compensation cost of $14.9 million and $14.2 million, respectively, was recognized related to outstanding stock options.  During the nine-month periods ended September 30, 2019 and 2018, pre-tax compensation costs of $45.4 million and $46.7 million, respectively, was recognized related to outstanding stock options.  In addition, during the three-month periods ended September 30, 2019 and 2018, pre-tax compensation cost of approximately $2.3 million and $1.4 million  (net of cancellations), respectively, was recognized related to restricted stock.  During the nine-month periods ended September 30, 2019 and 2018, pre-tax compensation costs of approximately $6.0 million and $3.1 million (net of cancellations), respectively, was recognized related to restricted stock.  As of September  30, 2019 there was approximately $140.6 million of unrecognized compensation cost related to unvested options and restricted stock which is expected to be recognized over the remaining weighted average vesting period of 2.7 years. There were 2,456,015 stock options granted during the first nine months of 2019 with a weighted-average grant date fair value of $30.40 per share.  There were 145,076 shares of restricted shares granted during the first nine months of 2019 with a weighted-average grant date fair value of $133.98 per share.

The expense associated with stock-based compensation arrangements is a non-cash charge. In the Condensed Consolidated Statements of Cash Flows, stock-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities and aggregated to $52.2 million and $50.6 million during the nine-month periods ended September 30, 2019 and 2018, respectively. 

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Summary of Assets and Liabilities Recorded at Fair Value on Recurring Basis (Detail) - Recurring - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets:
Assets, fair value	$ 188,977	$ 213,370
Liabilities:
Liabilities, fair value	33,871	32,998
Money Market Mutual Funds | Other Assets
Assets:
Assets, fair value	111,652	106,530
Certificates of Deposit | Other Assets
Assets:
Assets, fair value	2,202	5,415
Available for Sale Securities | Other Assets
Assets:
Assets, fair value	43,046	55,594
Deferred Compensation Assets | Other Assets
Assets:
Assets, fair value	33,871	32,998
Interest Rate Swap Agreements | Accounts Receivable, Net
Assets:
Assets, fair value		3,925
Foreign Currency Foreign Exchange Contracts | Other Current Assets
Assets:
Assets, fair value		8,908
Offsetting of assets, fair value	(1,794)
Deferred Compensation Liability | Other Noncurrent Liabilities
Liabilities:
Liabilities, fair value	33,871	32,998
Basis of Fair Value Measurement, Level 1
Assets:
Assets, fair value	190,771	200,537
Liabilities:
Liabilities, fair value	33,871	32,998
Basis of Fair Value Measurement, Level 1 | Money Market Mutual Funds | Other Assets
Assets:
Assets, fair value	111,652	106,530
Basis of Fair Value Measurement, Level 1 | Certificates of Deposit | Other Assets
Assets:
Assets, fair value	2,202	5,415
Basis of Fair Value Measurement, Level 1 | Available for Sale Securities | Other Assets
Assets:
Assets, fair value	43,046	55,594
Basis of Fair Value Measurement, Level 1 | Deferred Compensation Assets | Other Assets
Assets:
Assets, fair value	33,871	32,998
Basis of Fair Value Measurement, Level 1 | Deferred Compensation Liability | Other Noncurrent Liabilities
Liabilities:
Liabilities, fair value	33,871	32,998
Basis of Fair Value Measurement, Level 2
Assets:
Assets, fair value		12,833
Assets, fair value	(1,794)
Basis of Fair Value Measurement, Level 2 | Interest Rate Swap Agreements | Accounts Receivable, Net
Assets:
Assets, fair value		3,925
Basis of Fair Value Measurement, Level 2 | Foreign Currency Foreign Exchange Contracts | Other Current Assets
Assets:
Assets, fair value		$ 8,908
Offsetting of assets, fair value	$ (1,794)

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Treasury - Additional Information (Detail) $ in Thousands				3 Months Ended			9 Months Ended		12 Months Ended
	Nov. 26, 2018 USD ($)	Oct. 23, 2018 USD ($)	Jun. 07, 2016 USD ($)	Dec. 31, 2015 USD ($) Derivative	Sep. 30, 2015 USD ($) Derivative	Jun. 30, 2015 USD ($) Derivative	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2015 USD ($) Derivative	Dec. 31, 2018 USD ($)	Oct. 31, 2018 USD ($)	Jun. 30, 2018 USD ($)	Apr. 30, 2018 USD ($)	Jun. 03, 2016 USD ($)	Aug. 07, 2014 USD ($)
Equity Class Of Treasury Stock [Line Items]
Line of credit facility, starting date							Oct. 23, 2018
Rate adjustment to weighted average federal funds rate for credit facility borrowings							0.50%
Rate adjustment to one month Eurodollar rate on credit facility borrowings							1.00%
Accounts receivable securitization program credit facility, borrowing capacity												$ 440,000	$ 450,000
Accounts receivable securitization program credit facility, amount outstanding							$ 365,000
Accounts receivable securitization program credit facility, available borrowing capacity							85,000
Debt instrument carrying amount							3,950,000			$ 4,000,000
Fair value of debt							3,970,000			$ 4,000,000
Number of additional forward starting interest rate swaps | Derivative					4
One Point Three One Percent Forward Starting Interest Rate Swaps
Equity Class Of Treasury Stock [Line Items]
Number of additional forward starting interest rate swaps | Derivative									9
Maturity date of interest rate cash flow hedges									Apr. 15, 2019
Fixed rate payable on interest rate swap				1.31%					1.31%
One Point Four Zero Percent Forward Starting Interest Rate Swaps
Equity Class Of Treasury Stock [Line Items]
Number of additional forward starting interest rate swaps | Derivative						4,000,000
Maturity date of interest rate cash flow hedges						Apr. 15, 2019
Average fixed rate payable on interest rate swap						1.40%
Forward Starting Interest Rate Swaps
Equity Class Of Treasury Stock [Line Items]
Maturity date of interest rate cash flow hedges					Apr. 15, 2019
Average fixed rate payable on interest rate swap					1.23%
One Point Two One Percent Forward Starting Interest Rate Swaps
Equity Class Of Treasury Stock [Line Items]
Number of additional forward starting interest rate swaps | Derivative				1
Maturity date of interest rate cash flow hedges				Apr. 15, 2019
Fixed rate payable on interest rate swap				1.21%					1.21%
Foreign Currency Forward Exchange Contracts
Equity Class Of Treasury Stock [Line Items]
Net cash inflows (outflows)							90,000	$ 26,000
Cash Flow Hedging | One Point Three One Percent Forward Starting Interest Rate Swaps
Equity Class Of Treasury Stock [Line Items]
Notional amount of interest rate cash flow hedges				$ 1,000,000					$ 1,000,000
Cash Flow Hedging | One Point Four Zero Percent Forward Starting Interest Rate Swaps
Equity Class Of Treasury Stock [Line Items]
Notional amount of interest rate cash flow hedges						$ 500,000
Cash Flow Hedging | Forward Starting Interest Rate Swaps
Equity Class Of Treasury Stock [Line Items]
Notional amount of interest rate cash flow hedges					$ 400,000
Cash Flow Hedging | One Point Two Three Percent Forward Starting Interest Rate Swaps One
Equity Class Of Treasury Stock [Line Items]
Notional amount of interest rate cash flow hedges					100,000
Cash Flow Hedging | One Point Two Three Percent Forward Starting Interest Rate Swaps Two
Equity Class Of Treasury Stock [Line Items]
Notional amount of interest rate cash flow hedges					200,000
Cash Flow Hedging | One Point Two Three Percent Forward Starting Interest Rate Swaps Three
Equity Class Of Treasury Stock [Line Items]
Notional amount of interest rate cash flow hedges					$ 100,000
Cash Flow Hedging | One Point Two One Percent Forward Starting Interest Rate Swaps
Equity Class Of Treasury Stock [Line Items]
Notional amount of interest rate cash flow hedges				$ 100,000					$ 100,000
Revolving Credit Facility
Equity Class Of Treasury Stock [Line Items]
Line of credit facility, borrowing capacity		$ 1,000,000	$ 800,000				1,000,000
Line of credit facility increased amount		200,000
Line of credit facility, available borrowing capacity							967,000
Line of credit facility amount outstanding							$ 0
Current applicable margins							1.50%
Revolving Credit Facility | ABR-based loans
Equity Class Of Treasury Stock [Line Items]
Current applicable margins							1.75%
Revolving Credit Facility | Minimum | One Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							0.375%
Revolving Credit Facility | Minimum | One Two Three Six Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							1.375%
Revolving Credit Facility | Maximum | One Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							0.625%
Revolving Credit Facility | Maximum | One Two Three Six Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							1.625%
Revolving Credit Facility | Short Term on Demand Credit Facility
Equity Class Of Treasury Stock [Line Items]
Line of credit facility amount outstanding							$ 21,000
Revolving Credit Facility | Letter of Credit
Equity Class Of Treasury Stock [Line Items]
Line of credit facility, borrowing capacity							125,000
Line of credit facility amount outstanding							12,000
Tranche A Term Loan
Equity Class Of Treasury Stock [Line Items]
Line of credit facility, borrowing capacity		2,000,000	$ 1,710,000
Line of credit facility increased amount		$ 290,000
Senior notes, maturity date		Oct. 23, 2023	Aug. 07, 2019
Line of credit facility amount outstanding							1,963,000
Tranche A Term Loan | Quarterly Payment for First Eight Installments
Equity Class Of Treasury Stock [Line Items]
Scheduled principal payments per quarter							$ 12,500
Debt Instrument Periodic Payment, description							commenced in March of 2019 and are scheduled to continue through December of 2020
Tranche A Term Loan | Quarterly Payment after Eight Installments Until Maturity
Equity Class Of Treasury Stock [Line Items]
Scheduled principal payments per quarter							$ 25,000
Debt Instrument Periodic Payment, description							commencing in March of 2021 until maturity in October of 2023
Tranche B Term Loan
Equity Class Of Treasury Stock [Line Items]
Line of credit facility, borrowing capacity											$ 500,000
Senior notes, maturity date							Oct. 31, 2025
Line of credit facility amount outstanding							$ 496,000
Scheduled principal payments per quarter							$ 1,250
Debt Instrument Periodic Payment, description							which commenced on March 31, 2019 and are scheduled to continue until maturity in October of 2025
New Senior Secured Notes
Equity Class Of Treasury Stock [Line Items]
Senior notes, issued							$ 1,100,000
New Senior Secured Notes | 3.75% Senior Secured Notes due 2019
Equity Class Of Treasury Stock [Line Items]
Senior Notes															$ 300,000
Senior notes, interest rate															3.75%
Redemption of senior notes	$ 300,000
Redemption price, percentage	100.485%
Redemption premium paid	$ 1,000
New Senior Secured Notes | 4.75% Senior Secured Notes due 2022
Equity Class Of Treasury Stock [Line Items]
Senior notes, maturity date							Aug. 01, 2022
Senior notes, interest rate							4.75%
Senior notes, issued							$ 700,000
New Senior Secured Notes | 4.75% Senior Secured Notes due 2022 | Senior Secured Notes Issued on August Seven Two Thousand Fourteen
Equity Class Of Treasury Stock [Line Items]
Senior notes, issued							300,000
New Senior Secured Notes | 4.75% Senior Secured Notes due 2022 | Senior Secured Notes Issued on June Three Two Thousand Sixteen
Equity Class Of Treasury Stock [Line Items]
Senior notes, issued							$ 400,000
Senior notes issued percentage							101.50%
Senior notes yield percentage							4.35%
New Senior Secured Notes | 5.00% Senior Secured Notes due 2026
Equity Class Of Treasury Stock [Line Items]
Senior notes, maturity date							Jun. 01, 2026
New Senior Secured Notes | 5.00% Senior Secured Notes due 2026 | Senior Secured Notes Issued on June Three Two Thousand Sixteen
Equity Class Of Treasury Stock [Line Items]
Senior notes, interest rate														5.00%
Senior notes, issued														$ 400,000
Term Loan A
Equity Class Of Treasury Stock [Line Items]
Current applicable margins							1.50%
Term Loan A | ABR-based loans
Equity Class Of Treasury Stock [Line Items]
Current applicable margins							0.50%
Term Loan A | Minimum | One Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							0.375%
Term Loan A | Minimum | One Two Three Six Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							1.375%
Term Loan A | Maximum | One Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							0.625%
Term Loan A | Maximum | One Two Three Six Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							1.625%
Term Loan A | Tranche B Term Loan | One Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							0.75%
Term Loan A | Tranche B Term Loan | One Two Three Six Month Eurodollar Rate Plus Index Based Loans
Equity Class Of Treasury Stock [Line Items]
Consolidated Leverage Ratio							1.75%

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Recent Accounting Standards

9 Months Ended

Sep. 30, 2019

Accounting Changes And Error Corrections [Abstract]

Recent Accounting Standards

(14) Recent Accounting Standards

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that operating lease receivables are outside the scope of the new standard. The standard will be effective for us in fiscal years beginning after December 15, 2019. We are currently evaluating the impact that the adoption of the new standard will have on our consolidated financial statements.

In January, 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment” (“ASU 2017-04”), which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  ASU 2017-04 is effective for the annual and interim periods beginning January 1, 2020 with early adoption permitted, and applied prospectively.  We do not expect ASU 2017-04 to have a material impact on our financial statements.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" and subsequent related updates. The amendments in this update expand and refine hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The ASU amends the presentation and disclosure requirements and changes how entities assess effectiveness. The ASU eliminates the requirement to separately measure and report hedge ineffectiveness and requires all items that affect earnings be presented in the same income statement line as the hedged items. The amendments in this guidance permit the use of the Overnight Index Swap rate based on Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rate for hedge accounting purposes to facilitate the LIBOR to SOFR transition. This guidance was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and we adopted effective January 1, 2019. The amended presentation and disclosure guidance was required only prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements.  

From time to time, new accounting guidance is issued by the FASB or other standard setting bodies that is adopted by the Company as of the effective date or, in some cases where early adoption is permitted, in advance of the effective date. The Company has assessed the recently issued guidance that is not yet effective and, unless otherwise indicated above, believes the new guidance will not have a material impact on our results of operations, cash flows or financial position.

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Reporting

	Three months ended September 30, 2019
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	7,004,832		$	2,536,504		$	0		$	9,541,336
Gross outpatient revenues	$	4,477,277		$	257,690		$	0		$	4,734,967
Total net revenues	$	1,528,535		$	1,291,816		$	2,102		$	2,822,453
Income/(loss) before allocation of corporate overhead and    income taxes	$	148,085		$	138,019		$	(148,029	)	$	138,075
Allocation of corporate overhead	$	(57,578	)	$	(41,651	)	$	99,229		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	90,507		$	96,368		$	(48,800	)	$	138,075
Total assets as of September 30, 2019	$	4,395,259		$	6,919,100		$	280,042		$	11,594,401
	Nine months ended September 30, 2019
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	21,220,471		$	7,568,129		$	0		$	28,788,600
Gross outpatient revenues	$	13,137,199		$	792,929		$	0		$	13,930,128
Total net revenues	$	4,575,088		$	3,898,440		$	8,484		$	8,482,012
Income/(loss) before allocation of corporate overhead and    income taxes	$	528,455		$	648,173		$	(431,449	)	$	745,179
Allocation of corporate overhead	$	(172,606	)	$	(124,936	)	$	297,542		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	355,849		$	523,237		$	(133,907	)	$	745,179
Total assets as of September 30, 2019	$	4,395,259		$	6,919,100		$	280,042		$	11,594,401
	Three months ended September 30, 2018
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	6,009,303		$	2,459,078		$	0		$	8,468,381
Gross outpatient revenues	$	3,694,389		$	242,167		$	0		$	3,936,556
Total net revenues	$	1,383,050		$	1,262,472		$	3,391		$	2,648,913
Income/(loss) before allocation of corporate overhead and    income taxes	$	147,448		$	234,170		$	(152,551	)	$	229,067
Allocation of corporate overhead	$	(49,967	)	$	(40,244	)	$	90,211		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	97,481		$	193,926		$	(62,340	)	$	229,067
Total assets as of September 30, 2018	$	4,027,573		$	6,871,765		$	374,247		$	11,273,585
	Nine months ended September 30, 2018
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	18,535,079		$	7,310,230		$	0		$	25,845,309
Gross outpatient revenues	$	11,169,376		$	764,885		$	0		$	11,934,261
Total net revenues	$	4,232,673		$	3,774,551		$	10,558		$	8,017,782
Income/(loss) before allocation of corporate overhead and    income taxes	$	513,174		$	734,362		$	(420,461	)	$	827,075
Allocation of corporate overhead	$	(149,760	)	$	(120,822	)	$	270,582		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	363,414		$	613,540		$	(149,879	)	$	827,075
Total assets as of September 30, 2018	$	4,027,573		$	6,871,765		$	374,247		$	11,273,585

(a) Includes net revenues generated from our behavioral health care facilities located in the U.K. amounting to approximately $135 million and $130 million for the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $415 million and $364 million for the nine-month periods ended September 30, 2019 and 2018, respectively.  Total assets at our U.K. behavioral health care facilities were approximately $1.175 billion and $1.231 billion as of September 30, 2019 and 2018, respectively.

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General - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018
Finite Lived Intangible Assets [Line Items]
Provision for asset impairment		$ 97,631	$ 0
Foundations
Finite Lived Intangible Assets [Line Items]
Provision for asset impairment	$ 97,600	97,600
Impairment provision for tradename intangible asset	74,900	74,900
Impairment charges for real property assets	$ 22,700	$ 22,700

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Supplemental Cash Flow Information Related to Leases (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 79,598
Operating cash flows from finance leases	1,589
Financing cash flows from finance leases	1,435
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	364,453
Finance leases	$ 0

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Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jan. 01, 2019
Income Taxes [Line Items]
Effective income tax rate	26.90%	23.70%	22.20%	23.30%
Increase (decrease) in provision for income tax related to change in enacted tax law			$ (4,000,000)
Increase(decrease) Provision for income taxes related to share based compensation	$ 2,000,000		(11,000,000)	$ 1,000,000
Increase (decrease) in provision for income tax related to non-deductible DOJ reserve	6,000,000		$ 6,000,000
Unrecognized tax benefits					$ 2,000,000
Impact of unrecognized tax benefits if recognized					$ 1,000,000
Period of expiration of the statute of limitations for certain jurisdictions			within the next twelve months
Jurisdictions statutes of limitations expiration period			12 months
Maximum
Income Taxes [Line Items]
Provisional deferred tax - GILTI			$ 1,000,000	$ 1,000,000
Accrued interest and penalties	$ 1,000,000		$ 1,000,000
Foreign and U.S. state and local jurisdictions have statutes of limitations, in years			4 years
Minimum
Income Taxes [Line Items]
Foreign and U.S. state and local jurisdictions have statutes of limitations, in years			3 years

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Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Basic and Diluted:
Net income attributable to UHS	$ 97,190	$ 171,746	$ 569,678	$ 621,630
Less: Net income attributable to unvested restricted share grants	(243)	(317)	(1,414)	(813)
Net income attributable to UHS – basic and diluted	$ 96,947	$ 171,429	$ 568,264	$ 620,817
Weighted average number of common shares - basic	87,952	92,849	89,288	93,639
Net effect of dilutive stock options and grants based on the treasury stock method	403	481	231	459
Weighted average number of common shares and equivalents - diluted	88,355	93,330	89,519	94,098
Earnings per basic share attributable to UHS:	$ 1.10	$ 1.85	$ 6.36	$ 6.63
Earnings per diluted share attributable to UHS:	$ 1.10	$ 1.84	$ 6.35	$ 6.60

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Supplemental Balance Sheet Information Related to Leases (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Operating Leases
Right of use assets-operating leases	$ 329,328	$ 0
Operating lease liabilities	55,080	0
Operating lease liabilities noncurrent	274,248	0
Total operating lease liabilities	329,328
Finance Leases
Property and equipment	8,967,340	8,563,455
Less: accumulated depreciation	(4,008,931)	(3,715,515)
Property, plant and equipment, net, Total	4,958,409	$ 4,847,940
Current maturities of long-term debt	1,591
Long-term debt	16,790
Total finance lease liabilities	$ 18,381
Weighted Average remaining lease term, years
Operating leases	9 years 10 months 24 days
Finance leases	7 years 6 months
Weighted Average discount rate
Operating leases	4.70%
Finance leases	10.40%
Finance Lease
Finance Leases
Property and equipment	$ 23,250
Less: accumulated depreciation	(10,844)
Property, plant and equipment, net, Total	$ 12,406

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Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Net revenues	$ 2,822,453	$ 2,648,913	$ 8,482,012	$ 8,017,782
Operating charges:
Salaries, wages and benefits	1,408,226	1,316,710	4,157,253	3,922,832
Other operating expenses	762,174	651,442	2,079,518	1,896,745
Supplies expense	313,936	285,201	927,256	867,863
Depreciation and amortization	121,528	112,286	362,736	334,970
Lease and rental expense	27,660	26,110	80,320	79,932
Operating Expenses, Total	2,633,524	2,391,749	7,607,083	7,102,342
Income from operations	188,929	257,164	874,929	915,440
Interest expense, net	41,447	39,506	123,574	115,082
Other (income) expense, net	9,407	(11,409)	6,176	(26,717)
Income before income taxes	138,075	229,067	745,179	827,075
Provision for income taxes	37,205	54,186	165,646	192,814
Net income	100,870	174,881	579,533	634,261
Less: Net income attributable to noncontrolling interests	3,680	3,135	9,855	12,631
Net income attributable to UHS	$ 97,190	$ 171,746	$ 569,678	$ 621,630
Basic earnings per share attributable to UHS	$ 1.10	$ 1.85	$ 6.36	$ 6.63
Diluted earnings per share attributable to UHS	$ 1.10	$ 1.84	$ 6.35	$ 6.60
Weighted average number of common shares - basic	87,952	92,849	89,288	93,639
Add: Other share equivalents	403	481	231	459
Weighted average number of common shares and equivalents - diluted	88,355	93,330	89,519	94,098

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash Flows from Operating Activities:
Net income	$ 579,533	$ 634,261
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation & amortization	362,736	335,002
Stock-based compensation expense	52,167	50,645
Gain on sale of assets and businesses	(5,982)	(2,513)
Provision for asset impairment	97,631	0
Changes in assets & liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	(37,332)	(74,129)
Accrued interest	(2,962)	(5,808)
Accrued and deferred income taxes	(53,714)	(53,165)
Other working capital accounts	90,262	89,157
Other assets and deferred charges	15,237	(37,133)
Other	(56,465)	(3,080)
Accrued insurance expense, net of commercial premiums paid	76,245	69,386
Payments made in settlement of self-insurance claims	(68,046)	(53,223)
Net cash provided by operating activities	1,049,310	949,400
Cash Flows from Investing Activities:
Property and equipment additions, net of disposals	(480,247)	(521,349)
Acquisition of property and businesses	0	(108,016)
Inflows from foreign exchange contracts that hedge our net U.K. investment	90,286	26,088
Proceeds received from sales of assets and businesses	7,497	13,502
Costs incurred for purchase and implementation of information technology applications	(18,240)	(25,487)
Decrease in capital reserves of commercial insurance subsidiary	0	100
Investment in, and advances to, joint ventures and other	(11,949)	(13,910)
Net cash used in investing activities	(412,653)	(629,072)
Cash Flows from Financing Activities:
Reduction of long-term debt	(68,175)	(99,969)
Additional borrowings	15,100	82,400
Financing costs	0	(774)
Repurchase of common shares	(587,976)	(261,256)
Dividends paid	(35,556)	(28,086)
Issuance of common stock	8,248	7,737
Profit distributions to noncontrolling interests	(11,887)	(8,243)
Net cash used in financing activities	(680,246)	(308,191)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,259)	(1,742)
(Decrease) Increase in cash, cash equivalents and restricted cash	(44,848)	10,395
Cash, cash equivalents and restricted cash, beginning of period	199,685	167,297
Cash, cash equivalents and restricted cash, end of period	154,837	177,692
Supplemental Disclosures of Cash Flow Information:
Interest paid	122,699	114,162
Income taxes paid, net of refunds	221,298	247,486
Noncash purchases of property and equipment	83,552	$ 88,932
Right-of-use assets obtained in exchange for lease obligations	$ 364,453

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Segment Reporting (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Gross inpatient revenues		$ 9,541,336	$ 8,468,381	$ 28,788,600	$ 25,845,309
Gross outpatient revenues		4,734,967	3,936,556	13,930,128	11,934,261
Total net revenues		2,822,453	2,648,913	8,482,012	8,017,782
Income/(loss) before allocation of corporate overhead and income taxes		138,075	229,067	745,179	827,075
Allocation of corporate overhead		0	0	0	0
Income before income taxes		138,075	229,067	745,179	827,075
Total assets		11,594,401	11,273,585	11,594,401	11,273,585	$ 11,265,480
Acute Care Hospital Services
Segment Reporting Information [Line Items]
Gross inpatient revenues		7,004,832	6,009,303	21,220,471	18,535,079
Gross outpatient revenues		4,477,277	3,694,389	13,137,199	11,169,376
Total net revenues		1,528,535	1,383,050	4,575,088	4,232,673
Income/(loss) before allocation of corporate overhead and income taxes		148,085	147,448	528,455	513,174
Allocation of corporate overhead		(57,578)	(49,967)	(172,606)	(149,760)
Income before income taxes		90,507	97,481	355,849	363,414
Total assets		4,395,259	4,027,573	4,395,259	4,027,573
Behavioral Health Services
Segment Reporting Information [Line Items]
Gross inpatient revenues	[1]	2,536,504	2,459,078	7,568,129	7,310,230
Gross outpatient revenues	[1]	257,690	242,167	792,929	764,885
Total net revenues	[1]	1,291,816	1,262,472	3,898,440	3,774,551
Income/(loss) before allocation of corporate overhead and income taxes	[1]	138,019	234,170	648,173	734,362
Allocation of corporate overhead	[1]	(41,651)	(40,244)	(124,936)	(120,822)
Income before income taxes	[1]	96,368	193,926	523,237	613,540
Total assets	[1]	6,919,100	6,871,765	6,919,100	6,871,765
Other
Segment Reporting Information [Line Items]
Gross inpatient revenues		0	0	0	0
Gross outpatient revenues		0	0	0	0
Total net revenues		2,102	3,391	8,484	10,558
Income/(loss) before allocation of corporate overhead and income taxes		(148,029)	(152,551)	(431,449)	(420,461)
Allocation of corporate overhead		99,229	90,211	297,542	270,582
Income before income taxes		(48,800)	(62,340)	(133,907)	(149,879)
Total assets		$ 280,042	$ 374,247	$ 280,042	$ 374,247

[1] Includes net revenues generated from our behavioral health care facilities located in the U.K. amounting to approximately $135 million and $130 million for the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $415 million and $364 million for the nine-month periods ended September 30, 2019 and 2018, respectively.  Total assets at our U.K. behavioral health care facilities were approximately $1.175 billion and $1.231 billion as of September 30, 2019 and 2018, respectively.

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Summary of Effects of Interest Rate Swap Agreements and Foreign Currency Foreign Exchange Contracts on Result of Operations (Parenthetical) (Detail) - Designated As Hedging Instrument - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
UK | Net Investment Hedge | Foreign Currency Foreign Exchange Contracts
Derivative Instruments Gain Loss [Line Items]
Loss recorded on repatriation of cash related to investment	$ 1,100,000		$ 5,700,000
Interest Expense, Net | Cash Flow Hedging | Interest Rate Swap
Derivative Instruments Gain Loss [Line Items]
Gain reclassified out of AOCI into other (income) expenses	0	$ 2,000,000.0	3,400,000	$ 4,200,000
Other (Income) Expense, Net | Net Investment Hedge | Foreign Currency Foreign Exchange Contracts
Derivative Instruments Gain Loss [Line Items]
Gain reclassified out of AOCI into other (income) expenses	$ 1,100,000	$ 0	$ 5,700,000	$ 0

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Remaining Renewal Options and Terms for Hospital Facilities Leased from Trust (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2019 RenewalOption
McAllen Medical Center
Property Subject to or Available for Operating Lease [Line Items]
Number of renewal options at existing lease rates	1
Renewal options term at existing lease rates	5 years
McAllen Medical Center | Maximum
Property Subject to or Available for Operating Lease [Line Items]
Renewal options at existing lease rates expiration year	2031
Wellington Regional Medical Center
Property Subject to or Available for Operating Lease [Line Items]
Number of renewal options at fair market lease rates	2
Renewal options term at fair market lease rates	5 years
Wellington Regional Medical Center | Maximum
Property Subject to or Available for Operating Lease [Line Items]
Renewal options at fair market value lease rates expiration year	2031
Wellington Regional Medical Center | Minimum
Property Subject to or Available for Operating Lease [Line Items]
Renewal options at fair market value lease rates expiration year	2022
Southwest Healthcare System, Inland Valley Campus
Property Subject to or Available for Operating Lease [Line Items]
Number of renewal options at fair market lease rates	2
Renewal options term at fair market lease rates	5 years
Southwest Healthcare System, Inland Valley Campus | Maximum
Property Subject to or Available for Operating Lease [Line Items]
Renewal options at fair market value lease rates expiration year	2031
Southwest Healthcare System, Inland Valley Campus | Minimum
Property Subject to or Available for Operating Lease [Line Items]
Renewal options at fair market value lease rates expiration year	2022

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

(6) Commitments and Contingencies

Professional and General Liability, Workers’ Compensation Liability

Effective January, 2017, the vast majority of our subsidiaries are self-insured for professional and general liability exposure up to $5 million and $3 million per occurrence, respectively, subject to certain aggregate limitations.  Prior to January, 2017, the vast majority of our subsidiaries were self-insured for professional and general liability exposure up to $10 million and $3 million per occurrence, respectively. These subsidiaries are provided with several excess policies through commercial insurance carriers which provide for coverage in excess of the applicable per occurrence self-insured retention or underlying policy limits up to $250 million per occurrence and in the aggregate for claims incurred after 2013 and up to $200 million per occurrence and in the aggregate for claims incurred from 2011 through 2013. We remain liable for 10%, up to an annual aggregate limitation of $5 million ($8.5 million for facilities located in the U.K.), of the claims paid pursuant to the commercially insured excess coverage. In addition, from time to time based upon marketplace conditions, we may elect to purchase additional commercial coverage for certain of our facilities or businesses.  Our behavioral health care facilities located in the U.K. have policies through a commercial insurance carrier located in the U.K. that provides for £10 million of professional liability coverage and £25 million of general liability coverage.

As of September 30, 2019, the total accrual for our professional and general liability claims was $248 million, of which $42 million was included in current liabilities.  As of December 31, 2018, the total accrual for our professional and general liability claims was $243 million, of which $42 million was included in current liabilities.

As of September 30, 2019, the total accrual for our workers’ compensation liability claims was $75 million, of which $40 million was included in current liabilities.  As of December 31, 2018, the total accrual for our workers’ compensation liability claims was $72 million, of which $40 million was included in current liabilities.

Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents, estimates of losses for these claims based on recent and historical settlement amounts, estimates of incurred but not reported claims based on historical experience, and estimates of amounts recoverable under our commercial insurance policies. While we continuously monitor these factors, our ultimate liability for professional and general liability claims could change materially from our current estimates due to inherent uncertainties involved in making this estimate. Given our significant self-insured exposure for professional and general liability claims, there can be no assurance that a sharp increase in the number and/or severity of claims asserted against us will not have a material adverse effect on our future results of operations. Although we are unable to predict whether or not our future financial statements will include adjustments to our prior year reserves for self-insured general and professional and workers’ compensation claims, given the relatively unpredictable nature of the these potential liabilities and the factors impacting these reserves, as discussed above, it is reasonably likely that our future financial results may include material adjustments to prior period reserves.

Property Insurance:

We have commercial property insurance policies for our properties covering catastrophic losses, including windstorm damage, up to a $1 billion policy limit, subject to a deductible ranging from $50,000 to $250,000 per occurrence. Losses resulting from named windstorms are subject to deductibles between 3% and 5% of the total insurable value of the property. In addition, we have commercial property insurance policies covering catastrophic losses resulting from earthquake and flood damage, each subject to aggregated loss limits (as opposed to per occurrence losses). Commercially insured earthquake coverage for our facilities is subject to various deductibles and limitations including: (i) $500 million limitation for our facilities located in Nevada; (ii) $130 million limitation for our facilities located in California; (iii) $100 million limitation for our facilities located in fault zones within the United States; (iv) $40 million limitation for our facilities located in Puerto Rico, and; (v) $250 million limitation for many of our facilities located in other states. Our commercially insured flood coverage has a limit of $100 million annually. There is also a $10 million sublimit for one of our facilities located in Houston, Texas, and a $1 million sublimit for our facilities located in Puerto Rico. Deductibles for flood losses vary in amount, up to a maximum of $500,000, based upon location of the facility. Since certain of our facilities have been designated by our insurer as flood prone, we have elected to purchase policies from The National Flood Insurance Program.  Property insurance for our behavioral health facilities located in the U.K. are provided on an all risk basis up to a £1.29 billion policy limit, with coverage caps per location, that includes coverage for real and personal property as well as business interruption losses.

Other

Our accounts receivable as of September 30, 2019 and December 31, 2018 include amounts due from Illinois of approximately $29 million and $32 million, respectively. Collection of the outstanding receivables continues to be delayed due to state budgetary and funding pressures. Approximately $13 million as of September 30, 2019 and $18 million as of December 31, 2018, of the receivables due from Illinois were outstanding in excess of 60 days, as of each respective date. Although the accounts receivable due from Illinois could remain outstanding for the foreseeable future, since we expect to eventually collect all amounts due to us, no related reserves have been established in our consolidated financial statements. However, we can provide no assurance that we will eventually collect all amounts due to us from Illinois. Failure to ultimately collect all outstanding amounts due to us from Illinois would have an adverse impact on our future consolidated results of operations and cash flows.

Legal Proceedings

We operate in a highly regulated and litigious industry which subjects us to various claims and lawsuits in the ordinary course of business as well as regulatory proceedings and government investigations. These claims or suits include claims for damages for personal injuries, medical malpractice, commercial/contractual disputes, wrongful restriction of, or interference with, physicians’ staff privileges, and employment related claims. In addition, health care companies are subject to investigations and/or actions by various state and federal governmental agencies or those bringing claims on their behalf. Government action has increased with respect to investigations and/or allegations against healthcare providers concerning possible violations of fraud and abuse and false claims statutes as well as compliance with clinical and operational regulations. Currently, and from time to time, we and some of our facilities are subjected to inquiries in the form of subpoenas, Civil Investigative Demands, audits and other document requests from various federal and state agencies. These inquiries can lead to notices and/or actions including repayment obligations from state and federal government agencies associated with potential non-compliance with laws and regulations. Further, the federal False Claims Act allows private individuals to bring lawsuits (qui tam actions) against healthcare providers that submit claims for payments to the government. Various states have also adopted similar statutes. When such a claim is filed, the government will investigate the matter and decide if they are going to intervene in the pending case. These qui tam lawsuits are placed under seal by the court to comply with the False Claims Act’s requirements. If the government chooses not to intervene, the private individual(s) can proceed independently on behalf of the government. Health care providers that are found to violate the False Claims Act may be subject to substantial monetary fines/penalties as well as face potential exclusion from participating in government health care programs or be required to comply with Corporate Integrity Agreements as a condition of a settlement of a False Claims Act matter. In September 2014, the Criminal Division of the Department of Justice (“DOJ”) announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened. The DOJ has also announced an intention to pursue civil and criminal actions against individuals within a company as well as the corporate entity or entities. In addition, health care facilities are subject to monitoring by state and federal surveyors to ensure compliance with program Conditions of Participation. In the event a facility is found to be out of compliance with a Condition of Participation and unable to remedy the alleged deficiency(s), the facility faces termination from the Medicare and Medicaid programs or compliance with a System Improvement Agreement to remedy deficiencies and ensure compliance.

The laws and regulations governing the healthcare industry are complex covering, among other things, government healthcare participation requirements, licensure, certification and accreditation, privacy of patient information, reimbursement for patient services as well as fraud and abuse compliance. These laws and regulations are constantly evolving and expanding. Further, the Affordable Care Act has added additional obligations on healthcare providers to report and refund overpayments by government healthcare programs and authorizes the suspension of Medicare and Medicaid payments “pending an investigation of a credible allegation of fraud.” We monitor our business and have developed an ethics and compliance program with respect to these complex laws, rules and regulations. Although we believe our policies, procedures and practices comply with government regulations, there is no assurance that we will not be faced with the sanctions referenced above which include fines, penalties and/or substantial damages, repayment obligations, payment suspensions, licensure revocation, and expulsion from government healthcare programs. Even if we were to ultimately prevail in any action brought against us or our facilities or in responding to any inquiry, such action or inquiry could have a material adverse effect on us.

Certain legal matters are described below:

Government Investigations:

UHS Behavioral Health

In February, 2013, the Office of Inspector General for the United States Department of Health and Human Services (“OIG”) served a subpoena requesting various documents from January, 2008 to the date of the subpoena directed at Universal Health Services, Inc. (“UHS”) concerning it and UHS of Delaware, Inc., and certain UHS owned behavioral health facilities including: Keys of Carolina, Old Vineyard Behavioral Health, The Meadows Psychiatric Center, Streamwood Behavioral Health, Hartgrove Hospital, Rock River Academy and Residential Treatment Center, Roxbury Treatment Center, Harbor Point Behavioral Health Center, f/k/a The Pines Residential Treatment Center, including the Crawford, Brighton and Kempsville campuses, Wekiva Springs Center and River Point Behavioral Health.   Prior to receipt of this subpoena, some of these facilities had received independent subpoenas from state or federal agencies. Subsequent to the February 2013 subpoenas, some of the facilities above have received additional, specific

subpoenas or other document and information requests.  In addition to the OIG, the DOJ and various U.S. Attorneys’ and state Attorneys’ General Offices are also involved in this matter. Since February 2013, additional facilities have also received subpoenas and/or document and information requests or we have been notified are included in the omnibus investigation.  Those facilities include: National Deaf Academy, Arbour-HRI Hospital, Behavioral Hospital of Bellaire, St. Simons By the Sea, Turning Point Care Center, Salt Lake Behavioral Health, Central Florida Behavioral Hospital, University Behavioral Center, Arbour Hospital, Arbour-Fuller Hospital, Pembroke Hospital, Westwood Lodge, Coastal Harbor Health System, Shadow Mountain Behavioral Health, Cedar Hills Hospital, Mayhill Hospital, Southern Crescent Behavioral Health (Anchor Hospital and Crescent Pines campuses), Valley Hospital (AZ), Peachford Behavioral Health System of Atlanta, University Behavioral Health of Denton, El Paso Behavioral Health System, Newport News Behavioral Health Center, The Hughes Center, Forest View Hospital and Havenwyck Hospital.

In October, 2013, we were advised that the DOJ’s Criminal Frauds Section had opened an investigation of River Point Behavioral Health and Wekiva Springs Center. We were subsequently notified that the Criminal Frauds section opened investigations of National Deaf Academy, Hartgrove Hospital and UHS as a corporate entity. In April 2017, the DOJ’s Criminal Division issued a subpoena requesting documentation from Shadow Mountain Behavioral Health. In August 2017, Kempsville Center of Behavioral Health (a part of Harbor Point Behavioral Health previously identified above) received a subpoena requesting documentation. We have recently been advised that the investigations being conducted by the DOJ’s Criminal Frauds Section and corresponding U.S. Attorneys’ Offices, of UHS and the above referenced facilities, have been closed.

In April, 2014, the Centers for Medicare and Medicaid Services (“CMS”) instituted a Medicare payment suspension at River Point Behavioral Health in accordance with federal regulations regarding suspension of payments during certain investigations. The Florida Agency for Health Care Administration (“AHCA”) subsequently issued a Medicaid payment suspension for the facility. River Point Behavioral Health submitted a rebuttal statement disputing the basis of the suspension and requesting revocation of the suspension. Notwithstanding, CMS continued the payment suspension. River Point Behavioral Health provided additional information to CMS in an effort to obtain relief from the payment suspension but the Medicare suspension remains in effect. In June 2017, AHCA advised that while they were maintaining the suspension for dual eligible and cross-over Medicare beneficiaries, the Medicaid payment suspension was lifted effective June 27, 2017. From inception through September 30, 2019, the aggregate funds withheld from us in connection with the River Point Behavioral Health payment suspension amounted to approximately $8.6 million. We anticipate a resolution of the payment suspension will be part of the overall settlement agreement(s) to be drafted and finalized.  Although the operating results of River Point Behavioral Health did not have a material impact on our consolidated results of operations during the nine-month period ended September 30, 2019 or the year ended December 31, 2018, the payment suspension has had a material adverse effect on the facility’s results of operations and financial condition.

The DOJ has advised us that the civil aspect of the coordinated investigation referenced above is a False Claims Act investigation focused on billings submitted to government payers in relation to services provided at those facilities. While there have been various matters raised by DOJ during the pendency of this investigation, DOJ Civil has advised that the focus of their investigation is on medical necessity issues and billing for services not eligible for payment due to non-compliance with regulatory requirements relating to, among other things, admission eligibility, discharge decisions, length of stay and patient care issues. It is our understanding that the DOJ Criminal Fraud Section was investigating similar issues prior to the closure of their investigation. UHS denies any fraudulent billings were submitted to government payers.  

In July 2019, we reached an agreement in principle with the DOJ’s Civil Division, and on behalf of various states’ attorneys general offices, to resolve the civil aspects of the government’s investigation of our behavioral health care facilities for $127 million subject to requisite approvals and preparation and execution of definitive settlement and related agreements. We are also negotiating a corporate integrity agreement with the Office of Inspector General for the United States Department of Health and Human Services (“OIG”) which we expect will be part of the overall settlement of this matter.  

In connection with this agreement in principle, during the nine-month period ended September 30, 2019, we recorded a pre-tax increase of approximately $11 million to the reserve established in connection with the civil aspects of these matters (“DOJ Reserve”), which includes related fees and costs due to or on behalf of third-parties. The aggregate pre-tax DOJ Reserve amounted to $134 million as of September 30, 2019 and $123 million as of December 31, 2018 (including $48 million and $70 million recorded during the three and nine-month periods ended September 30, 2018, respectively).

In late August, 2019, we received the initial draft of the settlement agreement from the DOJ’s Civil Division. Negotiations regarding the terms and conditions of the settlement agreement continue. Based upon the terms and provisions included in the draft settlement agreement, and related subsequent discussions, our financial statements for each of the three and nine-month periods ended September 30, 2019 include an unfavorable provision for income taxes of approximately $6 million resulting from the net estimated federal and state income taxes due on the portion of the pre-tax DOJ Reserve that is estimated to be non-deductible for income tax purposes.  

Since the agreement in principle with the DOJ’s Civil Division is subject to certain required approvals and negotiation and execution of definitive settlement agreements, as well as negotiation and execution of a corporate integrity agreement with the OIG, we can provide no assurance that definitive agreements will ultimately be finalized. We therefore can provide no assurance that final amounts paid in settlement or otherwise, or associated costs, or the income tax deductibility of such payments, will not differ materially from our established reserve and assumptions related to income tax deductibility.

DOJ investigation of Turning Point Hospital.

During the fourth quarter of 2018, we were notified that the DOJ Civil Division in conjunction with the U.S. Attorney’s Office for the Northern District of Georgia and the Georgia Attorney General’s Office opened an investigation of Turning Point Hospital in Moultrie, GA.  The DOJ Civil Division has advised us that they are primarily investigating transportation and housing financial assistance provided to patients receiving treatment at the facility. The DOJ issued a civil investigative demand to the facility requesting various documents and other information. In September, 2019, we reached a settlement in principle of this matter pending negotiation, finalization and execution of definitive settlement agreements. As of September 30, 2019, our financial statements include an estimated reserve in connection with the potential settlement of this matter, which did not have material impact on our results of operations and financial condition.

Litigation:

U.S. ex rel Escobar v. Universal Health Services, Inc. et.al.

This is a False Claims Act case filed against Universal Health Services, Inc., UHS of Delaware, Inc. and HRI Clinics, Inc. d/b/a Arbour Counseling Services in U.S. District Court for the District of Massachusetts.  This qui tam action primarily alleges that Arbour Counseling Services failed to appropriately supervise certain clinical providers in contravention of  regulatory requirements and the submission of claims to Medicaid were subsequently improper.  Relators make other claims of improper billing to Medicaid associated with alleged failures of Arbour Counseling to comply with state regulations.  The U.S. Attorney’s Office and the Massachusetts Attorney General’s Office initially declined to intervene.  UHS filed a motion to dismiss and the trial court originally granted the motion dismissing the case.  The First Circuit Court of Appeals (“First Circuit”) reversed the trial court’s dismissal of the case.  The United States Supreme Court subsequently vacated the First Circuit’s opinion and remanded the case for further consideration under the new legal standards established by the Supreme Court for False Claims Act cases.  During the 4^th quarter of 2016, the First Circuit issued a revised opinion upholding their reversal of the trial court’s dismissal.  The case was then remanded to the trial court for further proceedings.  In January 2017, the U.S. Attorney’s Office and Massachusetts Attorney General’s Office advised of the potential for intervention in the case.  The Massachusetts Attorney General’s Office subsequently filed its motion to intervene which was granted and, in April 2017, filed their Complaint in Intervention. We are defending this case vigorously. This matter is included in the above-mentioned agreement in principle reached with the DOJ’s Civil Division, and on behalf of various states’ attorneys general offices, to resolve the civil aspects of the government’s investigation of our behavioral health care facilities, subject to requisite approvals and preparation and execution of definitive settlement and related agreements.

Shareholder Class Action

In December 2016 a purported shareholder class action lawsuit was filed in U.S. District Court for the Central District of California against UHS and certain UHS officers alleging violations of the federal securities laws. The case was originally filed as Heed v. Universal Health Services, Inc. et. al. (Case No. 2:16-CV-09499-PSG-JC). The court subsequently appointed Teamsters Local 456 Pension Fund and Teamsters Local 456 Annuity Fund to serve as lead plaintiffs.  The case has been transferred to the U.S. District Court for the Eastern District of Pennsylvania and the style of the case has been changed to Teamsters Local 456 Pension Fund, et. al. v. Universal Health Services, Inc. et. al. (Case No. 2:17-CV-02817-LS). In September, 2017, Teamsters Local 456 Pension Fund filed an amended complaint. The amended class action complaint alleges violations of federal securities laws relating to disclosures made in public filings associated with alleged practices and operations at our behavioral health facilities.  Plaintiffs seek monetary damages for shareholders during the defined class period as a result of the decrease in share price following various public disclosures or reports. In December, 2017, we filed a motion to dismiss the amended complaint. In August, 2019, the court granted our motion to dismiss. Plaintiffs have filed a motion with the court seeking leave to file a second amended complaint. Should the court deny plaintiffs’ motion, we anticipate an appeal of the dismissal of the case. We deny liability and intend to defend ourselves vigorously. At this time, we are uncertain as to potential liability or financial exposure, if any, which may be associated with this matter.

Shareholder Derivative Cases  

In March 2017, a shareholder derivative suit was filed by plaintiff David Heed in the Court of Common Pleas of Philadelphia County. A notice of removal to the United States District Court for the Eastern District of Pennsylvania was filed (Case No. 2:17-cv-01476-LS). Plaintiff filed a motion to remand. In December 2017, the Court denied plaintiff’s motion to remand and has retained the case in federal court. In May, June and July 2017, additional shareholder derivative suits were filed in the United States District Court for the Eastern District of Pennsylvania. The plaintiffs in those cases are: Central Laborers’ Pension Fund (Case No. 17-cv-02187-LS); Firemen’s Retirement System of St. Louis (Case No. 17—cv-02317-LS); Waterford Township Police & Fire Retirement System (Case No. 17-cv-02595-LS); and Amalgamated Bank Longview Funds (Case No. 17-cv-03404-LS). The Fireman’s Retirement System case has since been voluntarily dismissed. The federal court has consolidated all of the cases pending in the Eastern District of Pennsylvania and has appointed co-lead plaintiffs and co-lead counsel. Lead Plaintiffs have filed a consolidated, amended complaint. We have filed a motion to dismiss the amended complaint.  In addition, a shareholder derivative case was filed in Chancery Court in Delaware by the Delaware County Employees’ Retirement Fund (Case No. 2017-0475-JTL). In December 2017, the Chancery Court stayed this case pending resolution of other contemporaneous matters. Each of these cases have named certain current and former members of the Board of Directors individually and certain officers of Universal Health Services, Inc. as defendants.  UHS has also been named as a nominal defendant in these cases. The derivative cases make substantially similar allegations and claims as the

shareholder class action relating to practices at our behavioral health facilities and board and corporate oversight of these facilities as well as claims relating to the stock trading by the individual defendants and company repurchase of shares during the relevant time period. The cases make claims of breaches of fiduciary duties by the named board members and officers; alleged violations of federal securities laws; and common law causes of action against the individual defendants including unjust enrichment, corporate waste, abuse of control, constructive fraud and gross mismanagement. The cases seek monetary damages allegedly incurred by the company; restitution and disgorgement of profits, benefits and other compensation from the individual defendants and various forms of equitable relief relating to corporate governance matters. In August, 2019, the court granted our motion to dismiss. Plaintiffs have filed a motion with the court seeking leave to file a second amended complaint. Should the court deny plaintiffs’ motion, we anticipate an appeal of the dismissal of the case.  The defendants deny liability and intend to defend these cases vigorously. At this time, we are uncertain as to potential liability or financial exposure, if any, which may be associated with these matters.

Disproportionate Share Hospital Payment Matter:

In late September, 2015, many hospitals in Pennsylvania, including certain of our behavioral health care hospitals located in the state, received letters from the Pennsylvania Department of Human Services (the “Department”) demanding repayment of allegedly excess Medicaid Disproportionate Share Hospital payments (“DSH”), primarily consisting of managed care payments characterized as DSH payments, for the federal fiscal year (“FFY”) 2011 amounting to approximately $4 million in the aggregate. Since that time, certain of our behavioral health care hospitals in Pennsylvania have received similar requests for repayment for alleged DSH overpayments for FFYs 2012 through 2015. For FFY 2012, the claimed overpayment amounts to approximately $4 million. For FFY 2013, the claimed overpayments were initially approximately $7 million but have since been reduced to approximately $2 million due to a change in the Department’s calculations of the hospital specific DSH upper payment limit. For FFY 2014, the claimed overpayments were approximately $7 million and for FFY 2015, the claimed overpayments were approximately $5 million. We filed administrative appeals for all of our facilities contesting the recoupment efforts for FFYs 2011 through 2015 as we believe the Department’s calculation methodology is inaccurate and conflicts with applicable federal and state laws and regulations. The Department has agreed to postpone the recoupment of the state’s share of the DSH payments until all hospital appeals are resolved but started recoupment of the federal share. We understand that starting in FFY 2016, the first full fiscal year after the January 1, 2015 effective date of Medicaid expansion in Pennsylvania, the Department will no longer characterize managed care payments received by the hospitals as DSH payments. We can provide no assurance that we will ultimately be successful in our legal and administrative appeals related to the Department’s repayment demands.  If our legal and administrative appeals are unsuccessful, our future consolidated results of operations and financial condition could be adversely impacted by these repayments.        

Other Matters:

Various other suits, claims and investigations, including government subpoenas, arising against, or issued to, us are pending and additional such matters may arise in the future. Management will consider additional disclosure from time to time to the extent it believes such matters may be or become material. The outcome of any current or future litigation or governmental or internal investigations, including the matters described above, cannot be accurately predicted, nor can we predict any resulting penalties, fines or other sanctions that may be imposed at the discretion of federal or state regulatory authorities. We record accruals for such contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made at this time regarding the matters described above or that are otherwise pending because the inherently unpredictable nature of legal proceedings may be exacerbated by various factors, including, but not limited to: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the matter  is in its early stages; (iv) the matters present legal uncertainties; (v) there are significant facts in dispute; (vi) there are a large number of parties, or; (vii) there is a wide range of potential outcomes. It is possible that the outcome of these matters could have a material adverse impact on our future results of operations, financial position, cash flows and, potentially, our reputation.

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Dividends

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Dividends

(10) Dividends

We declared and paid dividends of $17.6 million, or $.20 per share, during the third quarter of 2019 and $9.3 million or $.10 per share during the third quarter of 2018.  We declared and paid dividends of $35.6 million and $28.1 million during the nine-month periods ended September 30, 2019 and 2018, respectively.  

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 100,870	$ 174,881	$ 579,533	$ 634,261
Other comprehensive income (loss):
Unrealized derivative gains (losses) on cash flow hedges		(1,924)	(3,925)	(345)
Foreign currency translation adjustment	(10,089)	(12,323)	(19,192)	(15,480)
Other comprehensive income (loss) before tax	(10,089)	(14,247)	(23,117)	(15,825)
Income tax expense (benefit) related to items of other comprehensive income (loss)	174	(457)	(676)	(82)
Total other comprehensive income (loss), net of tax	(10,263)	(13,790)	(22,441)	(15,743)
Comprehensive income	90,607	161,091	557,092	618,518
Less: Comprehensive income attributable to noncontrolling interests	3,680	3,135	9,855	12,631
Comprehensive income attributable to UHS	$ 86,927	$ 157,956	$ 547,237	$ 605,887

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General

9 Months Ended

Sep. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

General

(1) General

This Quarterly Report on Form 10-Q is for the quarterly period ended September 30, 2019. In this Quarterly Report, “we,” “us,” “our” “UHS” and the “Company” refer to Universal Health Services, Inc. and its subsidiaries.

The condensed consolidated interim financial statements include the accounts of our majority-owned subsidiaries and partnerships and limited liability companies controlled by us, or our subsidiaries, as managing general partner or managing member. The condensed consolidated interim financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and reflect all adjustments (consisting only of normal recurring adjustments) which, in our opinion, are necessary to fairly state results for the interim periods. Certain information and footnote disclosures normally included in audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although we believe that the accompanying disclosures are adequate to make the information presented not misleading. These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements, significant accounting policies and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

Provision for Asset Impairment-Foundations Recovery Network:

Our financial results for the three and nine-month periods ended September 30, 2019, include an aggregate pre-tax provision for asset impairment of $97.6 million recorded in connection with Foundations Recovery Network, L.L.C. (“Foundations”), which was acquired by us in 2015. This pre-tax provision for asset impairment includes: (i) a $74.9 million impairment provision to write-off the carrying value of the Foundations’ tradename intangible asset, and; (ii) a $22.7 million impairment provision to reduce the carrying value of real property assets of certain Foundations’ facilities.

This provision for asset impairment, which is included in other operating expenses in our consolidated statements of income and the behavioral health services operating segment for the three and nine-month periods ended September 30, 2019, was recorded after evaluation of the estimated fair value of the Foundations’ tradename using the income approach as well as certain related real property assets using the market approach. The provision for asset impairment was impacted by the following: (i) recent decisions made by management to cancel the opening of future planned de novo facilities; (ii) further reductions in projected future patient volumes, revenues and cash flows based upon the operating trends and financial results experienced by existing facilities, and; (iii) competitive pressures experienced in certain markets.

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Future Maturities of Lease Liabilities (Detail) $ in Thousands	Sep. 30, 2019 USD ($)
Operating Leases
2019 (remaining 3 months)	$ 17,887
2020	66,595
2021	59,317
2022	48,633
2023	43,843
Later years	186,908
Total lease payments	423,183
less imputed interest	(93,855)
Total	329,328
Finance Leases
2019 (remaining 3 months)	826
2020	3,375
2021	3,257
2022	3,559
2023	3,654
Later years	12,130
Total lease payments	26,801
less imputed interest	(8,420)
Total	$ 18,381

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Summary of Effects of Interest Rate Swap Agreements and Foreign Currency Foreign Exchange Contracts on Result of Operations (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Derivative Instruments Gain Loss [Line Items]
Gain/(Loss) recognized in AOCI			$ (1,924)	$ (3,925)	$ (345)
Designated As Hedging Instrument | Cash Flow Hedging | Interest Rate Swap
Derivative Instruments Gain Loss [Line Items]
Gain/(Loss) recognized in AOCI	[1]	$ 0	(1,924)	(3,925)	(345)
Designated As Hedging Instrument | Net Investment Hedge | Foreign Currency Foreign Exchange Contracts
Derivative Instruments Gain Loss [Line Items]
Gain/(Loss) recognized in AOCI	[2]	$ 33,927	$ 3,790	$ 79,584	$ 26,088

[1] The amount of gain reclassified out of AOCI into Interest expense, net was $0 and $2.0 million during the three-month periods ended September 30, 2019 and 2018, respectively, and $3.4 million and $4.2 million during the nine-month periods ended September 30, 2019 and 2018, respectively.

[2] The amount reclassified out of AOCI into Other (income) expense, net includes the net effect of a $1.1 million gain offset by a $1.1 million loss recorded on repatriation of cash related to our net investment in the U.K. for the three-month period ended September 30, 2019, and a $5.7 million gain offset by a $5.7 million loss recorded on repatriation of cash related to our net investment in the U.K. during the nine-month period ended September 30, 2019.  There were no amounts reclassified out of AOCI for the three and nine-month periods ended September 30, 2018.

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Remaining Renewal Options and Terms for Hospital Facilities Leased from Trust (Detail)	9 Months Ended
	Sep. 30, 2019 USD ($)
McAllen Medical Center
Property Subject to or Available for Operating Lease [Line Items]
Annual Minimum Rent	$ 5,485,000
End of Lease Term	2026-12
Renewal Term (years)	5 years	[1]
Wellington Regional Medical Center
Property Subject to or Available for Operating Lease [Line Items]
Annual Minimum Rent	$ 3,030,000
End of Lease Term	2021-12
Renewal Term (years)	10 years	[2]
Southwest Healthcare System, Inland Valley Campus
Property Subject to or Available for Operating Lease [Line Items]
Annual Minimum Rent	$ 2,648,000
End of Lease Term	2021-12
Renewal Term (years)	10 years	[2]

[1] We have one 5-year renewal option at existing lease rates (through 2031).

[2] We have two 5-year renewal options at fair market value lease rates (2022 through 2031).

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Commitments and Contingencies - Additional Information (Detail) £ in Millions	1 Months Ended	3 Months Ended			6 Months Ended	9 Months Ended			12 Months Ended						66 Months Ended
	Jul. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2019 GBP (£)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Sep. 30, 2019 USD ($)	Jan. 31, 2017 USD ($)	Jan. 31, 2017 GBP (£)	Dec. 31, 2016 USD ($)
Commitments and Contingencies Disclosure [Line Items]
Self-insured for professional and general liability, current		$ 42,000,000				$ 42,000,000			$ 42,000,000						$ 42,000,000
Compensation liability claims		75,000,000				75,000,000			72,000,000						75,000,000
Compensation and related benefits		40,000,000				40,000,000			40,000,000						40,000,000
Accounts receivable, net		1,544,077,000				1,544,077,000			1,509,909,000						1,544,077,000
Provision for income tax related to non-deductible DOJ reserve		6,000,000				6,000,000
Department of Human Services
Commitments and Contingencies Disclosure [Line Items]
Repayment of legal settlement amount on demand										$ 4,000,000	$ 4,000,000	$ 4,000,000	$ 4,000,000	$ 4,000,000
Amount claimed from over payments of legal settlements										5,000,000	7,000,000	7,000,000	$ 4,000,000
Amount claimed from over payments of legal settlements due to change in calculations												2,000,000
DOJ
Commitments and Contingencies Disclosure [Line Items]
Definitive settlement and related civil agreements	$ 127,000,000
Increase in aggregate pre-tax reserve				$ 48,000,000		134,000,000		$ 70,000,000	123,000,000
Pre-tax increase to reserve for civil aspects						11,000,000
DOJ | Federal and State Income Taxes
Commitments and Contingencies Disclosure [Line Items]
Provision for income tax related to non-deductible DOJ reserve			$ 6,000,000		$ 6,000,000
River Point Behavioral Health
Commitments and Contingencies Disclosure [Line Items]
Amount withheld in contingent Medicare payment suspension															8,600,000
Wind Storms
Commitments and Contingencies Disclosure [Line Items]
Minimum Insurance Deductible		50,000				50,000									50,000
Maximum insurance deductible		250,000				250,000									250,000
Flood
Commitments and Contingencies Disclosure [Line Items]
Maximum insurance deductible		500,000				500,000									500,000
Illinois
Commitments and Contingencies Disclosure [Line Items]
Accounts receivable, net		29,000,000				29,000,000			32,000,000						29,000,000
Accounts receivable net greater than sixty days Past due		13,000,000				13,000,000			18,000,000						13,000,000
Cygnet Health Care Limited
Commitments and Contingencies Disclosure [Line Items]
Property insurance | £							£ 1,290
Maximum | Wind Storms
Commitments and Contingencies Disclosure [Line Items]
Commercial property insurance policies covering catastrophic losses		$ 1,000,000,000				$ 1,000,000,000									$ 1,000,000,000
Percentage of insurance deductible		5.00%				5.00%									5.00%
Maximum | Flood
Commitments and Contingencies Disclosure [Line Items]
Commercial property insurance policies covering catastrophic losses		$ 100,000,000				$ 100,000,000									$ 100,000,000
Maximum | LAS VEGAS, NEVADA | Earthquake
Commitments and Contingencies Disclosure [Line Items]
Commercial property insurance policies covering catastrophic losses		500,000,000				500,000,000									500,000,000
Maximum | CALIFORNIA | Earthquake
Commitments and Contingencies Disclosure [Line Items]
Commercial property insurance policies covering catastrophic losses		130,000,000				130,000,000									130,000,000
Maximum | Faulty Zones of UNITED STATES | Earthquake
Commitments and Contingencies Disclosure [Line Items]
Commercial property insurance policies covering catastrophic losses		100,000,000				100,000,000									100,000,000
Maximum | PUERTO RICO | Earthquake
Commitments and Contingencies Disclosure [Line Items]
Commercial property insurance policies covering catastrophic losses		40,000,000				40,000,000									40,000,000
Maximum | PUERTO RICO | Flood
Commitments and Contingencies Disclosure [Line Items]
Commercial property insurance policies covering catastrophic losses		1,000,000				1,000,000									1,000,000
Maximum | OTHER STATES | Earthquake
Commitments and Contingencies Disclosure [Line Items]
Commercial property insurance policies covering catastrophic losses		250,000,000				250,000,000									250,000,000
Maximum | Texas | Flood
Commitments and Contingencies Disclosure [Line Items]
Commercial property insurance policies covering catastrophic losses		$ 10,000,000				$ 10,000,000									$ 10,000,000
Minimum | Wind Storms
Commitments and Contingencies Disclosure [Line Items]
Percentage of insurance deductible		3.00%				3.00%									3.00%
General and Professional Liability
Commitments and Contingencies Disclosure [Line Items]
Self-insured for professional and general liability		$ 248,000,000				$ 248,000,000			$ 243,000,000						$ 248,000,000
Subsidiaries | Professional Liability | Cygnet Health Care Limited
Commitments and Contingencies Disclosure [Line Items]
Self-insured for professional and general liability | £																	£ 10
Subsidiaries | Professional Liability | Maximum
Commitments and Contingencies Disclosure [Line Items]
Self-insured for professional and general liability																$ 5,000,000		$ 10,000,000
Subsidiaries | General Liability | Cygnet Health Care Limited
Commitments and Contingencies Disclosure [Line Items]
Self-insured for professional and general liability | £																	£ 25
Subsidiaries | General Liability | Maximum
Commitments and Contingencies Disclosure [Line Items]
Self-insured for professional and general liability																$ 3,000,000		3,000,000
Subsidiaries | General And Professional Liability Insurance Policies
Commitments and Contingencies Disclosure [Line Items]
Percentage of liability for claims paid under commercially insured coverage		10.00%				10.00%									10.00%
Subsidiaries | General And Professional Liability Insurance Policies | Maximum
Commitments and Contingencies Disclosure [Line Items]
Purchased several excess policies through commercial insurance carriers per occurrence										$ 250,000,000	$ 250,000,000	$ 200,000,000						$ 250,000,000
Liability for claims paid under commercially insured coverage		$ 5,000,000				$ 5,000,000									$ 5,000,000
Subsidiaries | General And Professional Liability Insurance Policies | Maximum | Located in U.K.
Commitments and Contingencies Disclosure [Line Items]
Liability for claims paid under commercially insured coverage		$ 8,500,000				$ 8,500,000									$ 8,500,000

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Segment Reporting

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Reporting

(7) Segment Reporting

Our reportable operating segments consist of acute care hospital services and behavioral health care services. The “Other” segment column below includes centralized services including, but not limited to, information technology, purchasing, reimbursement, accounting and finance, taxation, legal, advertising and design and construction. The chief operating decision making group for our acute care services and behavioral health care services is comprised of our Chief Executive Officer, the President and the Presidents of each operating segment. The Presidents for each operating segment also manage the profitability of each respective segment’s various facilities. The operating segments are managed separately because each operating segment represents a business unit that offers different types of healthcare services or operates in different healthcare environments. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2018. The corporate overhead allocations, as reflected below, are utilized for internal reporting purposes and are comprised of each period’s projected corporate-level operating expenses (excluding interest expense). The overhead expenses are captured and allocated directly to each segment to the extent possible, and overhead expenses incurred on behalf of both segments are captured and allocated to each segment based upon each segment’s respective percentage of total operating expenses.

	Three months ended September 30, 2019
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	7,004,832		$	2,536,504		$	0		$	9,541,336
Gross outpatient revenues	$	4,477,277		$	257,690		$	0		$	4,734,967
Total net revenues	$	1,528,535		$	1,291,816		$	2,102		$	2,822,453
Income/(loss) before allocation of corporate overhead and    income taxes	$	148,085		$	138,019		$	(148,029	)	$	138,075
Allocation of corporate overhead	$	(57,578	)	$	(41,651	)	$	99,229		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	90,507		$	96,368		$	(48,800	)	$	138,075
Total assets as of September 30, 2019	$	4,395,259		$	6,919,100		$	280,042		$	11,594,401
	Nine months ended September 30, 2019
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	21,220,471		$	7,568,129		$	0		$	28,788,600
Gross outpatient revenues	$	13,137,199		$	792,929		$	0		$	13,930,128
Total net revenues	$	4,575,088		$	3,898,440		$	8,484		$	8,482,012
Income/(loss) before allocation of corporate overhead and    income taxes	$	528,455		$	648,173		$	(431,449	)	$	745,179
Allocation of corporate overhead	$	(172,606	)	$	(124,936	)	$	297,542		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	355,849		$	523,237		$	(133,907	)	$	745,179
Total assets as of September 30, 2019	$	4,395,259		$	6,919,100		$	280,042		$	11,594,401
	Three months ended September 30, 2018
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	6,009,303		$	2,459,078		$	0		$	8,468,381
Gross outpatient revenues	$	3,694,389		$	242,167		$	0		$	3,936,556
Total net revenues	$	1,383,050		$	1,262,472		$	3,391		$	2,648,913
Income/(loss) before allocation of corporate overhead and    income taxes	$	147,448		$	234,170		$	(152,551	)	$	229,067
Allocation of corporate overhead	$	(49,967	)	$	(40,244	)	$	90,211		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	97,481		$	193,926		$	(62,340	)	$	229,067
Total assets as of September 30, 2018	$	4,027,573		$	6,871,765		$	374,247		$	11,273,585
	Nine months ended September 30, 2018
	Acute Care Hospital Services			Behavioral Health Services (a)			Other			Total Consolidated
	(Amounts in thousands)
Gross inpatient revenues	$	18,535,079		$	7,310,230		$	0		$	25,845,309
Gross outpatient revenues	$	11,169,376		$	764,885		$	0		$	11,934,261
Total net revenues	$	4,232,673		$	3,774,551		$	10,558		$	8,017,782
Income/(loss) before allocation of corporate overhead and    income taxes	$	513,174		$	734,362		$	(420,461	)	$	827,075
Allocation of corporate overhead	$	(149,760	)	$	(120,822	)	$	270,582		$	0
Income/(loss) after allocation of corporate overhead and    before income taxes	$	363,414		$	613,540		$	(149,879	)	$	827,075
Total assets as of September 30, 2018	$	4,027,573		$	6,871,765		$	374,247		$	11,273,585

(a) Includes net revenues generated from our behavioral health care facilities located in the U.K. amounting to approximately $135 million and $130 million for the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $415 million and $364 million for the nine-month periods ended September 30, 2019 and 2018, respectively.  Total assets at our U.K. behavioral health care facilities were approximately $1.175 billion and $1.231 billion as of September 30, 2019 and 2018, respectively.

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

(11) Income Taxes

Our effective income tax rates were 26.9% and 23.7% during the three-month periods ended September 30, 2019 and 2018, respectively, and 22.2% and 23.3% during the nine-month periods ended September 30, 2019, and 2018, respectively.  The increase in the effective tax rate during the three-month period ended September 30, 2019, as compared to the comparable quarter of 2018, was primarily due to $6 million of tax expense related to non-deductible DOJ Reserve offset by $2 million of tax benefit attributable to employee share-based payments during the third quarter of 2019.  The net decrease in the effective tax rate during the nine-month period ended September 30, 2019, compared with the same period in 2018, was primarily due to an $11 million tax benefit attributable to employee share-based payments, a $4 million tax benefit related to the effects of a change in state tax law enacted during 2019 offset by $6 million of tax expense due to non-deductible DOJ Reserve during the third quarter of 2019 as compared to $1 million of tax benefit attributable to employee share-based payments during the first nine months of 2018.

The global intangible low-taxed income (“GILTI”) provisions from the TCJA-17 require the inclusion of the earnings of certain foreign subsidiaries in excess of an acceptable rate of return on certain assets of the respective subsidiaries in our U.S. tax return for tax years beginning after December 31, 2017.  An accounting policy election was made during 2018 to treat taxes related to GILTI as a period cost when the tax is incurred. We recorded a GILTI tax provision of less than $1 million for the nine-month periods ended September 30, 2019 and 2018, respectively.

As of January 1, 2019, our unrecognized tax benefits were approximately $2 million. The amount, if recognized, that would favorably affect the effective tax rate is approximately $1 million. During the nine months ended September 30, 2019, changes to the estimated liabilities for uncertain tax positions (including accrued interest) relating to tax positions taken during prior and current periods did not have a material impact on our financial statements.

We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of September 30, 2019, we have less than $1 million of accrued interest and penalties. The U.S. federal statute of limitations remains open for 2016 and subsequent years. Foreign and U.S. state and local jurisdictions have statutes of limitations generally ranging from 3 to 4 years. The statute of limitations on certain jurisdictions could expire within the next twelve months.  It is reasonably possible that the amount of uncertain tax benefits will change during the next 12 months, however, it is anticipated that any such change, if it were to occur, would not have a material impact on our results of operations.

We operate in multiple jurisdictions with varying tax laws. We are subject to audits by any of these taxing authorities. Our tax returns have been examined by the Internal Revenue Service (“IRS”) through the year ended December 31, 2006. We believe that adequate accruals have been provided for federal, foreign and state taxes.

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Relationship with Universal Health Realty Income Trust and Related Party Transactions - Additional Information (Detail)	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($) Facility SquareFoot Bed Lease	Sep. 30, 2018 USD ($)	Dec. 31, 2013	Sep. 30, 2019 USD ($) Hospital Facility	Sep. 30, 2018 USD ($) Hospital	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Net revenues	$ 2,822,453,000	$ 2,648,913,000		$ 8,482,012,000	$ 8,017,782,000
Chief Executive Officer
Related Party Transaction [Line Items]
Estimated payments to acquire life insurance policies				28,000,000
Payments to acquire life insurance policies, net							$ 1,100,000
Chief Executive Officer | Scenario Forecast
Related Party Transaction [Line Items]
Payments to acquire life insurance policies, net						$ 1,100,000
Chief Executive Officer | Trust Owned by CEO
Related Party Transaction [Line Items]
Estimated payments to acquire life insurance policies				$ 9,000,000
Joint Venture Agreement
Related Party Transaction [Line Items]
Lease initial terms	20 years			20 years
Lease renewal period, years	10 years
Number of beds | Bed	108
Number of triple net lease | Lease	5
Number of square foot to be constructed | SquareFoot	80,000
Expected aggregate fee	$ 750,000
Estimated project cost	37,500,000
Estimated initial annual rent	$ 2,700,000
Expected project to begin and be completed year	2020
Minimum
Related Party Transaction [Line Items]
Lease initial terms	5 years			5 years
Minimum | Chief Executive Officer
Related Party Transaction [Line Items]
Estimated death benefit proceeds				$ 37,000,000
Maximum
Related Party Transaction [Line Items]
Lease initial terms	10 years			10 years
Relationship with Universal Health Realty Income Trust
Related Party Transaction [Line Items]
Trust outstanding shares held, percentage	5.70%			5.70%
Percentage of annual incentive fee				20.00%
Percentage of advisory fee on average invested real estate assets				0.70%	0.70%		0.70%	0.70%	0.70%
Pre-tax share of income from the Trust	$ 300,000	260,000		$ 700,000	$ 1,100,000
Dividends received from the Trust	536,000	528,000		1,600,000	1,600,000
Carrying value of investment in Trust	6,600,000			6,600,000			$ 7,500,000
Market value of investment in Trust	$ 81,000,000.0			$ 81,000,000.0			48,300,000
Lease initial terms	10 years			10 years
Lease renewal period, years				5 years
Rent expense under operating leases	$ 4,000,000	4,000,000		$ 12,000,000	$ 12,000,000
Notice period on renewal of lease				90 days
Period of rights of refusal to leased facilities				180 days
Number of hospital facilities | Hospital				3	3
Number of free-standing emergency departments to be acquired | Facility	2			2
Percentage of master lease rentable square feet				50.00%
Annual Minimum Rent				$ 644,000
Relationship with Universal Health Realty Income Trust | Texoma Medical Center
Related Party Transaction [Line Items]
Number of square feet to be constructed | SquareFoot	75,000
Relationship with Universal Health Realty Income Trust | Minimum
Related Party Transaction [Line Items]
Lease initial terms	13 years			13 years
Relationship with Universal Health Realty Income Trust | Minimum | Limited Liability Companies
Related Party Transaction [Line Items]
Non-controlling ownership interests by subsidiaries	95.00%			95.00%
Relationship with Universal Health Realty Income Trust | Maximum
Related Party Transaction [Line Items]
Lease initial terms	15 years			15 years
Relationship with Universal Health Realty Income Trust | Maximum | Limited Liability Companies
Related Party Transaction [Line Items]
Non-controlling ownership interests by subsidiaries	100.00%			100.00%
Relationship with Universal Health Realty Income Trust | Advisory Fee
Related Party Transaction [Line Items]
Net revenues	$ 1,000,000.0	$ 1,000,000.0		$ 3,000,000.0	$ 2,800,000
Premier, Inc. | Other (Income) Expense, Net | ASU 2016-01
Related Party Transaction [Line Items]
Unrealized gain				13,000,000
Premier, Inc. | Group Purchasing Organization Agreement | Restricted Stock
Related Party Transaction [Line Items]
Shares vesting period			7 years
Shares vesting period start year			2014
Shares vesting period end year			2020
Market value of retained vested shares				$ 43,000,000			$ 56,000,000

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Relationship with Universal Health Realty Income Trust and Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Remaining Renewal Options and Terms for Each of Three Hospital Facilities Leased from Trust

The table below details the renewal options and terms for each of our three acute care hospital facilities leased from the Trust: 

Hospital Name	Annual Minimum Rent		End of Lease Term	Renewal Term (years)
McAllen Medical Center	$	5,485,000	December, 2026	5(a)
Wellington Regional Medical Center	$	3,030,000	December, 2021	10(b)
Southwest Healthcare System, Inland Valley Campus	$	2,648,000	December, 2021	10(b)

(a)     We have one 5-year renewal option at existing lease rates (through 2031).

(b)     We have two 5-year renewal options at fair market value lease rates (2022 through 2031).

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Earnings Per Share Data ("EPS") and Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Computation of Basic and Diluted Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data): 

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Basic and Diluted:
Net income attributable to UHS	$	97,190		$	171,746		$	569,678		$	621,630
Less: Net income attributable to unvested restricted share    grants		(243	)		(317	)		(1,414	)		(813	)
Net income attributable to UHS – basic and diluted	$	96,947		$	171,429		$	568,264		$	620,817
Weighted average number of common shares - basic		87,952			92,849			89,288			93,639
Net effect of dilutive stock options and grants based on the    treasury stock method		403			481			231			459
Weighted average number of common shares and    equivalents - diluted		88,355			93,330			89,519			94,098
Earnings per basic share attributable to UHS:	$	1.10		$	1.85		$	6.36		$	6.63
Earnings per diluted share attributable to UHS:	$	1.10		$	1.84		$	6.35		$	6.60

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Dividends - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Dividends [Abstract]
Dividends declared and paid	$ 17.6	$ 9.3	$ 35.6	$ 28.1
Quarterly cash dividend	$ 0.20	$ 0.10

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Segment Reporting (Parenthetical) (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Net revenues		$ 2,822,453	$ 2,648,913	$ 8,482,012	$ 8,017,782
Total assets		11,594,401	11,273,585	11,594,401	11,273,585	$ 11,265,480
Behavioral Health Services
Segment Reporting Information [Line Items]
Net revenues	[1]	1,291,816	1,262,472	3,898,440	3,774,551
Total assets	[1]	6,919,100	6,871,765	6,919,100	6,871,765
Behavioral Health Services | Located in U.K.
Segment Reporting Information [Line Items]
Net revenues		135,000	130,000	415,000	364,000
Total assets		$ 1,175,000	$ 1,231,000	$ 1,175,000	$ 1,231,000

[1] Includes net revenues generated from our behavioral health care facilities located in the U.K. amounting to approximately $135 million and $130 million for the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $415 million and $364 million for the nine-month periods ended September 30, 2019 and 2018, respectively.  Total assets at our U.K. behavioral health care facilities were approximately $1.175 billion and $1.231 billion as of September 30, 2019 and 2018, respectively.

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Components of Lease Expense (Detail) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
		Sep. 30, 2019	Sep. 30, 2019
Leases [Abstract]
Operating lease cost		$ 17,849	$ 54,188
Variable and short term lease cost	[1]	9,811	26,132
Total lease cost		27,660	80,320
Finance lease cost:
Amortization of right-of-use-assets		481	1,444
Interest on lease liabilities		464	1,422
Total finance lease cost		$ 945	$ 2,866

[1] Includes equipment, month-to-month and leases with a maturity of less than 12 months.