Company: THC
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000070318-25-000009
Chunk: 99

Company: TENET HEALTHCARE CORP
Filing Date: 2025-02-18
Form: 10-K
Item: Item 8
Chunk 99
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 for payer classes, to evaluate whether the inputs to management’s estimate were reasonable.

◦Performing a retrospective analysis on management’s reserve estimates for prior years by (1) calculating the reserves based on actual collection results and comparing to management’s recorded balances and (2) comparing actual write-offs in the current year to the prior year estimated losses.

•We independently recalculated reserve rates using historical collection data for each payer class. We then compared the result to the implicit price concession estimate developed by management to evaluate the reasonableness of accounts receivable and net patient service revenues.

Professional and General Liability Reserves – Refer to Notes 1 and 16 to the consolidated financial statements

Critical Audit Matter Description

Management records accruals for the portion of their professional and general liability risks, including incurred but not reported claims, for which they are self-insured and that are probable and can be reasonably estimated. These accruals are estimated based on modeled estimates of projected payments using case-specific facts and circumstances and the Company’s historical claim loss reporting, claim development and settlement patterns, reported and closed claim counts, and a variety of hospital census information. 

We identified the professional and general liability reserves for hospitals in the Hospital Operations and Services segment as a critical audit matter because auditing management’s estimate for these reserves involved especially subjective auditor judgment and required the involvement of our actuarial specialists given the subjectivity of estimating the projected liability of reported and unreported claims.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the professional and general liability reserves for hospitals in the Hospital Operations and Services segment included the following, among others:

•We tested the effectiveness of controls related to the professional and general liability reserves, including those over the estimation of the projected liability of reported and unreported claims. 

•We evaluated the data used by management to estimate the professional and general liability reserves by:

◦Testing the underlying data that served as the basis for the actuarial analyses, including historical claims, to evaluate whether the inputs to the actuarial estimates were reasonable.

◦Comparing management’s prior year expected emergence of losses to actual losses incurred during the current year.

•With the assistance of our actuarial specialists, we developed an independent range of estimates of the professional and general liability reserves, using loss data, historical and industry claim development factors, among other factors, and compared our estimates to the recorded balance.

/s/ DELOITTE & TOUCHE LLP

Dallas, Texas

February 18, 2025