##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended September 30, 2010
 or
 o
    
    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: 333-117362
 IASIS HEALTHCARE LLC
  DELAWARE
    
    20-1150104(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)DOVER CENTRE117 SEABOARD LANE, BUILDING EFRANKLIN, TENNESSEE
    
    37067(Address of principal executive offices)
    
    (Zip Code)
 (615) 844-2747
   YES o NO þ
 þ o
 þ o
 o o
 þ
  Large Accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    34Item 2. Properties
    
    
    47Item 3. Legal Proceedings
    
    
    48Item 4. (Removed and Reserved)
    
    
    48PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    49Item 6. Selected Financial Data
    
    
    49Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    51Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    72Item 8. Financial Statements and Supplementary Data
    
    
    73Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    110Item 9A. Controls and Procedures
    
    
    110Item 9B. Other Information
    
    
    110PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    111Item 11. Executive Compensation
    
    
    116Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    137Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    139Item 14. Principal Accountant Fees and Services
    
    
    140PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    141Exhibit 4.8Exhibit 10.19Exhibit 10.20Exhibit 10.21Exhibit 10.49Exhibit 10.50Exhibit 21Exhibit 31.1Exhibit 31.2
   i




---



##### Table of Contents



IASIS HEALTHCARE LLC
 
 PART I
 
 Item 1. Business
 Company Overview
  
    
    Salt Lake City, Utah;
 
    
    Phoenix, Arizona;
 
    
    Tampa-St. Petersburg, Florida;
 
    
    three cities in Texas, including San Antonio;
 
    
    Las Vegas, Nevada; and
 
    
    West Monroe, Louisiana;
        1




---



##### Table of Contents



Industry Overview
 Growth of Healthcare Spending
   Changes in the Delivery of Healthcare Services
  The Impact of Health Reform
  Business Strategy
  Focus on Operational Excellence
 
    
    growing our presence in our existing markets;
 
    
    providing high-quality services to the communities we serve;
 
    
    achieving operational efficiencies and effective cost management in all aspects of
patient care delivery;
  2




---



##### Table of Contents




    
    improving all aspects of the revenue cycle, including our processes for patient
registration, such as patient qualification for financial assistance and point-of-service
collections, billing, collections, and managed care contract compliance; and
 
    
    effectively deploying capital resources in a disciplined manner, including initiatives
related to business development, growth, quality of care, information technology and plant
maintenance.
 Provide High-Quality Services
 
    
    attracting and retaining high-quality healthcare professionals;
 
    
    monitoring and tracking clinical performance and patient safety for numerous purposes,
including the establishment of best practices;
 
    
    utilizing our advanced clinical information system, which provides more timely key
clinical care data, to enable our hospitals to enhance patient safety, reduce medical
errors through bar coding, increase staff time available for direct patient care and
continue to achieve high quality patient care outcomes;
 
    
    utilizing our hospital medical management quality program to drive improvements in core management and allocation of
resources, as well as quality and safety of care; and
 
    
    dedicating well-trained corporate and hospital resources to the improvement of patient
care.
 Recruit and Employ Physicians to Meet Community Needs in Our Markets.
 
    
    expanding the reach of our outpatient and other specialty services;
 
    
    equipping our hospitals with technologically advanced equipment;
 
    
    enhancing physician convenience and access, including the development of medical office
space on or near our hospital campuses;
 
    
    enabling physicians to remotely access clinical data through our advanced information
systems, facilitating more convenient and timely patient care; and
 
    
    sponsoring training programs to educate physicians on advanced medical procedures.
 Pursue a Comprehensive Development Strategy
  3




---



##### Table of Contents



Focus on Managed Care Relationships
 Implement Operational Initiatives in Response to Healthcare Reform
   4




---



##### Table of Contents



Our Markets
  Salt Lake City, Utah
    5




---



##### Table of Contents



Phoenix, Arizona
    Texas
    6




---



##### Table of Contents



Tampa-St. Petersburg, Florida
  West Monroe, Louisiana
      7




---



##### Table of Contents



Our Properties
  LicensedHospitals
    
    City
    
    BedsUtahDavis Hospital & Medical Center (1)
    
    Layton
    
    
    225Jordan Valley Medical Center (2)
    
    West Jordan
    
    
    183Pioneer Valley Hospital (3)
    
    West Valley City
    
    
    139Salt Lake Regional Medical Center (4)
    
    Salt Lake City
    
    
    158ArizonaMountain Vista Medical Center (5)
    
    Mesa
    
    
    178St. Lukes Medical Center (6)
    
    Phoenix
    
    
    232St. Lukes Behavioral Health Hospital
    
    Phoenix
    
    
    124Tempe St. Lukes Hospital (7)
    
    Tempe
    
    
    87TexasOdessa Regional Medical Center (8)
    
    Odessa
    
    
    222Southwest General Hospital (9)
    
    San Antonio
    
    
    327The Medical Center of Southeast Texas (10)
    
    Port Arthur
    
    
    224Wadley Regional Medical Center (11)
    
    Texarkana
    
    
    370FloridaMemorial Hospital of Tampa
    
    Tampa
    
    
    180Palms of Pasadena Hospital
    
    St. Petersburg
    
    
    307Town & Country Hospital
    
    Tampa
    
    
    201LouisianaGlenwood Regional Medical Center (12)
    
    West Monroe
    
    
    223ColoradoPikes Peak Regional Hospital (13)
    
    Woodland Park
    
    
    15NevadaNorth Vista Hospital
    
    Las Vegas
    
    
    175Total
    
    
    
    
    3,570
 
 (1)
    
    Owned by a limited partnership in which we own a 96.2% interest.(2)
    
    On July 1, 2007, Jordan Valley Medical Center acquired Pioneer Valley Hospital, a
wholly-owned subsidiary of IASIS. The combined entity is owned by a limited partnership in
which we own a 95.6% interest. (3)
    
    A separate campus of Jordan Valley Medical Center, which is leased under an agreement that
expires on January 31, 2019. We have options to extend the term of the lease through January
31, 2039.(4)
    
    Owned by a limited partnership in which we own a 98.1% interest.(5)
    
    Owned by a limited partnership in which we own a 90.8% interest.(6)
    
    On September 28, 2007, St. Lukes Medical Center acquired Tempe St. Lukes Hospital, a
wholly-owned subsidiary of IASIS.(7)
    
    A separate campus of St. Lukes Medical Center.(8)
    
    Owned by a limited partnership in which we own an 88.4% interest.(9)
    
    Owned by a limited partnership in which we own a 93.9% interest.(10)
    
    Owned by a limited partnership in which we own an 88.0% interest.(11)
    
    Wadley  is leased under an agreement that contains unlimited
successive renewal options, at our discretion. The operations are owned by a limited
liability company in which we own a 72.7% interest.(12)
    
    Includes Ouachita, a surgical hospital with 10 licensed beds.(13)
    
    Pikes Peak Regional Hospital is leased under an agreement that expires on September 11, 2017,
and is subject to three five year renewal periods at our option.   8




---



##### Table of Contents



Hospital Operations
   
    
    local economic conditions;
 
    
    the geographic location of our hospital facilities and their convenience for patients
and physicians;
 
    
    our participation in managed care programs;
 
    
    utilization management practices of managed care plans;
 
    
    consolidation of managed care payors;
 
    
    strategic investment and improvements in healthcare access points;
 
    
    capital investment at our facilities;
 
    
    the quality of our medical staff;
 
    
    competition from other healthcare providers;
 
    
    the size of and growth in local population; and
 
    
    improved treatment protocols as a result of advances in medical technology and
pharmacology.
  
    
    level of physician support;
 
    
    availability of nurses and other healthcare professionals;
 
    
    quality, skills and compassion of our employees;
 
    
    breadth of our services;
 
    
    physical capacity and level of technological advancement at our facilities; and
 
    
    emphasis on quality of care.
  Competition
  
    
    the local economies in which we operate;
 
    
    decline in tourism in our service areas;
 
    
    our managed care contracting relationships;
 
    
    the number, availability, quality and specialties of physicians, nurses and other
healthcare professionals;
 
    
    the scope, breadth and quality of services;
 
    
    the reputation of our facilities and physicians;
 
    
    growth in hospital capacity and healthcare access points in the markets we serve;
 
    
    the physical condition of our facilities and medical equipment;
 
    
    the location of our facilities and availability of physician office space;
 
    
    certificate of need restrictions, where applicable;
 
    
    the availability of parking or proximity to public transportation;
 
    
    accumulation, access and interpretation of publicly reported quality indicators;
 
    
    growth in outpatient service providers;
 
    
    charges for services; and
 
    
    the geographic coverage of our hospitals in the regions in which we operate.
     Health Choice
      9




---



##### Table of Contents




    
    waivers by health maintenance organizations of Medicare and Medicaid beneficiaries
obligation to pay cost-sharing amounts or to provide other incentives in order to attract
Medicare and Medicaid enrollees;
 
    
    certain discounts offered to prepaid health plans by contracting providers;
 
    
    certain price reductions offered to eligible managed care organizations; and
 
    
    certain price reductions offered by contractors with substantial financial risk to
managed care organizations.
  Sources of Acute Care Revenue
   
    
    the federal government, primarily under the Medicare program;
  10




---



##### Table of Contents




    
    state Medicaid programs, including managed Medicaid plans;
 
    
    managed care payors, including health maintenance organizations, preferred provider
organizations and managed Medicare plans; and
 
    
    individual patients and private insurers.
  Year Ended September 30,Payor Source
    
    2010
    
    
    2009
    
    
    2008Medicare
    
    
    23.4
    %
    
    
    22.7
    %
    
    
    23.4
    %Managed Medicare
    
    
    8.5
    
    
    
    8.0
    
    
    
    7.7Medicaid
    
    
    6.6
    
    
    
    6.5
    
    
    
    5.4Managed Medicaid
    
    
    9.1
    
    
    
    8.7
    
    
    
    8.4Managed care
    
    
    40.2
    
    
    
    43.0
    
    
    
    46.0Self-pay
    
    
    12.2
    
    
    
    11.1
    
    
    
    9.1Total(1)
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 
 (1)
    
    For the years ended September 30, 2010, 2009 and 2008, net patient revenue comprised 68.6%,
70.4% and 73.8%, respectively, of our consolidated net revenue.   Medicare
 Inpatient Acute Care
   11




---



##### Table of Contents



Government Regulation and Other FactorsHealthcare
 Reform.
   Government Regulation
 and Other FactorsHealthcare Reform.
 Outpatient
   12




---



##### Table of Contents



Government Regulation and Other Factors Healthcare Reform
  Rehabilitation
 Government Regulation and Other
Factors Healthcare Reform
  Psychiatric
 Government Regulation and Other
Factors Healthcare Reform
  13




---



##### Table of Contents



Physician Services Reimbursement
   Ambulatory Surgery Centers
  Recovery Audit Contractors
  Managed Medicare
   14




---



##### Table of Contents



Medicaid
      Private
Supplemental Medicaid Reimbursement Programs
   15




---



##### Table of Contents



Managed Medicaid
   Disproportionate Share Hospital Payments
   Annual Cost Reports
    16




---



##### Table of Contents



Managed Care
  Commercial Insurance
   Charity Care
  Government Regulation and Other Factors
  Healthcare Reform
  Expanded Coverage
   17




---



##### Table of Contents



Medicaid Expansion.
     Private Sector Expansion.
   18




---



##### Table of Contents



Public Program Spending
  Payments for Hospitals and ASCs
 Inpatient Market Basket and Productivity Adjustment
   19




---



##### Table of Contents



Quality-Based Payment Adjustments and Reductions for Inpatient Services
   Outpatient Market Basket and Productivity Adjustment
 Inpatient
Rehabilitation Hospitals and Units
 Inpatient
Psychiatric Facilities
  20




---



##### Table of Contents



Medicare and Medicaid Disproportionate Share Hospital Payments
    Accountable Care Organizations
  21




---



##### Table of Contents



Bundled Payment Pilot Programs .
 Ambulatory Surgery Centers
 Medicare Managed Care (Medicare Advantage or MA).
 Physician-owned Hospitals.
 Program Integrity and Fraud and Abuse
  Impact of Health Reform Law on Our Company
   22




---



##### Table of Contents




    
    how many previously uninsured individuals will obtain coverage as a
result of the Health Reform Law (while the CBO estimates 32 million,
CMS estimates almost 34 million; both agencies made a number of
assumptions to derive that figure, including how many individuals will
ignore substantial subsidies and decide to pay the penalty rather than
obtain health insurance and what percentage of people in the future
will meet the new Medicaid income eligibility requirements);
    
    what percentage of the newly insured patients will be covered under
the Medicaid program and what percentage will be covered by private
health insurers;
    
    the extent to which states will enroll new Medicaid participants in managed care programs;
    
    the pace at which insurance coverage expands, including the pace of different types of
coverage expansion;
    
    the change, if any, in the volume of inpatient and outpatient hospital
services that are sought by and provided to previously uninsured
individuals;
    
    the rate paid to hospitals by private payors for newly covered
individuals, including those covered through the newly created
Exchanges and those who might be covered under the Medicaid program
under contracts with the state;
    
    the rate paid by state governments under the Medicaid program for newly covered individuals;
    
    how the value-based purchasing and other quality programs will be implemented;
    
    the percentage of individuals in the Exchanges who select the high
deductible plans, since health insurers offering those kinds of
products have traditionally sought to pay lower rates to hospitals;
    
    the extent to which the net effect of the Health Reform Law, including
the prohibition on excluding individuals based on pre-existing
conditions, the requirement to keep medical costs lower than a
specified percentage of premium revenue, other health insurance
reforms and the annual fee applied to all health insurers, will put
pressure on the profitability of health insurers, which in turn might
cause them to seek to reduce payments to hospitals with respect to
both newly insured individuals and their existing business; and
    
    the possibility that implementation of provisions expanding health
insurance coverage will be delayed or even blocked due to court
challenges or revised or eliminated as a result of court challenges and efforts to repeal
or amend the new law.
  23




---



##### Table of Contents




    
    the amount of overall revenues we will generate from Medicare and
Medicaid business when the reductions are implemented;
    
    whether reductions required by the Health Reform Law will be changed
by statute prior to becoming effective;
    
    the size of the Health Reform Laws annual productivity adjustment to the market basket beginning
in 2012 payment years;
    
    the amount of the Medicare DSH reductions that will be made, commencing in federal fiscal year 2014;
    
    the allocation to our hospitals of the Medicaid DSH reductions, commencing in federal fiscal year 2014;
    
    what the losses in revenues will be, if any, from the Health Reform Laws quality initiatives;
    
    how successful ACOs will be at coordinating care and reducing costs;
    
    the scope and nature of potential changes to Medicare reimbursement
methods, such as an emphasis on bundling payments or coordination of
care programs;
    
    whether our revenues from private supplemental Medicaid reimbursement programs
will be adversely affected, because there may be fewer indigent,
non-Medicaid patients for whom we provide services pursuant to these
programs; and
    
    reductions to Medicare payments CMS may impose for excessive readmissions.
  Licensure, Certification and Accreditation
    24




---



##### Table of Contents



Utilization Review
  Federal and State Fraud and Abuse Provisions
      
    
    payment of any incentive by the hospital when a physician refers a patient to the
hospital;
 
    
    use of free or significantly discounted office space or equipment for physicians in
facilities usually located close to the hospital;
 
    
    provision of free or significantly discounted billing, nursing, or other staff
services;
  25




---



##### Table of Contents




    
    free training for a physicians office staff, including management and laboratory
techniques;
 
    
    guarantees that provide that, if the physicians income fails to reach a predetermined
level, the hospital will pay any portion of the remainder;
 
    
    low-interest or interest-free loans, or loans that may be forgiven if a physician
refers patients to the hospital;
 
    
    payment of the costs of a physicians travel and expenses for conferences or a
physicians continuing education courses;
 
    
    coverage on the hospitals group health insurance plans at an inappropriately low cost
to the physician;
 
    
    rental of space in physician offices, at other than fair market value terms, by persons
or entities to which physicians refer;
 
    
    payment for services that require few, if any, substantive duties by the physician, or
payment for services in excess of the fair market value of the services rendered; or
 
    
    gainsharing, the practice of giving physicians a share of any reduction in a
hospitals costs for patient care attributable in part to the physicians efforts.
     26




---



##### Table of Contents



27




---



##### Table of Contents



The Federal False Claims Act and Similar State Laws
 qui tam qui
tam
  28




---



##### Table of Contents



Corporate Practice of Medicine/Fee Splitting
  HIPAA Administrative Simplification and Privacy and Security Requirements
   29




---



##### Table of Contents



The Emergency Medical Treatment and Active Labor Act
   30




---



##### Table of Contents



Conversion Legislation
  Healthcare Industry Investigations
    31




---



##### Table of Contents



Certificates of Need
  Environmental Matters
  
    
    the proper handling and disposal of medical waste, hazardous waste and low-level
radioactive medical waste;
 
    
    the proper use, storage and handling of mercury and other hazardous materials;
 
    
    underground and above-ground storage tanks;
 
    
    management of hydraulic fluid or oil associated with elevators, chiller units or other
equipment;
 
    
    management of asbestos-containing materials or lead-based paint present or likely to be
present at some locations; and
 
    
    air emission permits and standards for boilers or other equipment.
  Professional and General Liability Insurance
   32




---



##### Table of Contents



Our Information Systems
   
    
    patient accounting, including billing and collection of net revenue;
 
    
    financial, accounting, reporting and payroll;
 
    
    coding and compliance;
 
    
    laboratory, radiology and pharmacy systems;
 
    
    materials and asset management;
 
    
    negotiating, pricing and administering our managed care contracts; and
 
    
    monitoring of quality of care and collecting data on quality measures necessary for
full Medicare payment updates.
  
    
    enhance patient safety, automate medication administration and increase staff time
available for direct patient care;
 
    
    optimize staffing levels according to patient volumes, acuity and seasonal needs at
each facility;
 
    
    perform product line analyses;
 
    
    continue to meet or exceed quality of care indicators on a current basis;
 
    
    effectively monitor registration, billing, collections, managed care contract
compliance and all other aspects of our revenue cycle;
 
    
    control supply costs by complying with our group purchasing organization contract; and
 
    
    effectively monitor financial results.
   33




---



##### Table of Contents



Employees and Medical Staff
   Compliance Program
  
 Item 1A. Risk Factors
 Risks Related to Our Business
 If We Are Unable To Retain And Negotiate Reasonable Contracts With Managed Care Plans, Our Net
Revenue May Be Reduced.
   34




---



##### Table of Contents



We Are Unable to Predict The Impact Of The Health Reform Law, Which Represents Significant
Change To The Healthcare Industry.
      35




---



##### Table of Contents



Changes In Governmental Healthcare Programs May Reduce Our Revenues.
     Our Hospitals Face Competition For Patients From Other Hospitals And Healthcare Providers That
Could Impact Patient Volume.
   36




---



##### Table of Contents



If We Continue To Experience A Shift in Payor Mix From Commercial And Managed Care Payors To
Medicaid  and Managed Medicaid, Our Revenue and  Results Of Operations Could Be
Adversely Affected.
  If We Experience Further Growth In Volume And Revenue Related To Uncompensated Care, Our
Financial Condition Or Results Of Operations Could Be Adversely Affected.
  If We Are Unable To Attract And Retain Quality Medical Staffs, Our Financial Condition Or
Results Of Operations Could Be Adversely Affected.
  
    
    the number and quality of the physicians on the medical staffs of our hospitals;
 
    
    the admitting practices of those physicians; and
 
    
    our maintenance of good relations with those physicians.
  37




---



##### Table of Contents



Our Hospitals Face Competition For Staffing, Which May Increase Our Labor Costs And Reduce
Profitability.
  If We Fail To Continually Enhance Our Hospitals With The Most Recent Technological Advances In
Diagnostic And Surgical Equipment, Our Ability To Maintain And Expand Our Markets May Be Adversely
Affected.
  If We Fail To Comply With Extensive Laws And Government Regulations, We Could Suffer
Penalties, Be Required To Alter Arrangements With Investors In Our Hospitals Or Be Required To Make
Significant Changes To Our Operations.
  
    
    billing and coding for services and proper handling of  overpayments;
 
    
    relationships with physicians and other referral sources;
 
    
    adequacy of medical care;
 
    
    quality of medical equipment and services;
 
    
    qualifications of medical and support personnel;
  38




---



##### Table of Contents




    
    confidentiality, maintenance, data breach, identity theft and security issues
associated with individually identifiable information and medical records;
 
    
    the screening, stabilization and transfer of patients who have emergency medical
conditions;
 
    
    licensure and certification;
 
    
    hospital rate or budget review;
 
    
    preparing and filing of cost reports;
 
    
    activities regarding competitors;
 
    
    operating policies and procedures;
 
    
    addition of facilities and services;
 
    
    provider-based reimbursement, including complying with requirements allowing multiple
locations of a hospital to be billed under the hospitals Medicare provider number; and
 
    
    disclosures to patients, including disclosure of any physician ownership in a hospital.
   
    
    criminal penalties;
 
    
    civil penalties, including the loss of our licenses to operate one or more of our
facilities; and
 
    
    exclusion of one or more of our facilities from participation in the Medicare, Medicaid
and other federal and state healthcare programs.
 The Health Reform Law Imposes Significant New Restrictions On Hospitals That Have Physician
Owners, Including Our Hospitals That Have Physician Owners.
   39




---



##### Table of Contents



Providers In The Healthcare Industry Have Been The Subject Of Federal And State
Investigations, And We May Become Subject To Additional Investigations In The Future That Could
Result In Significant Liabilities Or Penalties To Us.
 qui tam
  
    
    cost reporting and billing practices;
 
    
    financial arrangements with referral sources;
 
    
    physician recruitment activities;
 
    
    physician joint ventures; and
 
    
    hospital charges and collection practices for self-pay patients.
    40




---



##### Table of Contents



We May Incur Material Fees, Costs And Expenses In Connection With An Appeal Of The Court Order
Dismissing With Prejudice the Qui Tam Action And Investigation of IAS.
 qui tam qui tam qui
tam qui tam qui tam qui tam qui tam qui tam
 Compliance With Section 404 Of The Sarbanes-Oxley Act May Negatively Impact Our Results Of
Operations And Failure To Comply May Subject The Company To Regulatory Scrutiny And A Loss Of
Investors Confidence In Our Internal Control Over Financial Reporting.
    41




---



##### Table of Contents



A Failure Of Our Information Systems Would Adversely Affect Our Ability To Properly Manage Our
Operations.
  
    
    patient accounting, including billing and collection of net revenue;
 
    
    financial, accounting, reporting and payroll;
 
    
    coding and compliance;
 
    
    laboratory, radiology and pharmacy systems;
 
    
    materials and asset management;
 
    
    negotiating, pricing and administering managed care contracts; and
 
    
    monitoring quality of care and collecting data on quality measures necessary for full
Medicare payment updates.
  If We Fail to Effectively and Timely Implement Electronic Health Record Systems, Our
Operations Could Be Adversely Affected.
  Regional Economic Downturns Or Other Material Changes In The Economic Condition Could Cause
Our Overall Business Results To Suffer.
   42




---



##### Table of Contents



Health Choice
    
    
    31.4
    %Salt Lake City, Utah
    
    
    18.4
    %Phoenix, Arizona (excluding Health Choice)
    
    
    14.3
    %Three cities in Texas, including San Antonio
    
    
    18.4
    %Tampa-St. Petersburg, Florida
    
    
    8.3
    %Other
    
    
    9.2
    %
  We May Be Subject To Liabilities Because Of Claims Brought Against Our Facilities.
     If Health Choices Contract With AHCCCS Was Discontinued, Our Net Revenue And Profitability
Would Be Adversely Affected.
   43




---



##### Table of Contents



If We Are Unable To Control Healthcare Costs At Health Choice, Our Profitability May Be
Adversely Affected.
  
    
    our ability to contract with cost-effective healthcare providers;
 
    
    the increased cost of individual healthcare services;
 
    
    the type and number of individual healthcare services delivered; and
 
    
    the occurrence of catastrophes, epidemics or other unforeseen occurrences.
  If AHCCCS Significantly Alters The Payment Structure Of Its Contracts Or The Amount Of
Premiums Paid To Us, Our Net Revenue And Profitability May Be Adversely Affected.
  Significant Competition From Other Healthcare Companies And State Efforts To Regulate The Sale
Of Not-For-Profit Hospitals May Affect Our Ability To Acquire Hospitals.
  Difficulties With The Integration Of Acquisitions May Disrupt Our Ongoing Operations.
   44




---



##### Table of Contents



We Are Dependent On Key Personnel And The Loss Of One Or More Of Our Senior Management Team Or
Local Management Personnel Could Have A Material Adverse Effect On Our Business.
  Our Hospitals Are Subject To Potential Responsibilities And Costs Under Environmental Laws
That Could Lead To Material Expenditures Or Liability.
   If The Fair Value Of Our Reporting Units Declines, A Material Non-Cash Charge To Earnings From
Impairment Of Our Goodwill May Result.
    Risks Related to Our Capital Structure
 Servicing Our Indebtedness Requires A Significant Amount of Cash. Our Ability To Generate
Sufficient Cash Depends On Numerous Factors Beyond Our Control, And We May Be Unable To Generate
Sufficient Cash Flow To Service Our Debt Obligations, Including Making Payments On Our 8 3 / 4 % Notes And Term Loans.
 3 4 3 4 3 4 3 4 3 4
  45




---



##### Table of Contents



3 4
 
    
    our debt holders could declare all outstanding principal and interest to be due and
payable;
 
    
    our secured debt lenders could terminate their commitments and commence foreclosure
proceedings against our assets; and
 
    
    we could be forced into bankruptcy or liquidation.
 Our Substantial Level Of Indebtedness Could Adversely Affect Our Financial Condition And
Prevent Us From Fulfilling Our Obligations Under The 8 3 / 4 % Notes And Senior
Secured Credit Facilities.
 3 4 3 4 3 4
  
    
    it may be more difficult for us to satisfy our obligations, including debt service
requirements under our outstanding debt;
 
    
    our ability to obtain additional financing for working capital, acquisitions, capital
expenditures, debt service requirements, or other general corporate purposes may be
impaired;
 
    
    we must use a substantial portion of our cash flow to pay principal and interest on our
8 3/4% notes, senior secured credit facilities, and other
indebtedness which will reduce the funds available to us for other purposes;
 
    
    we are more vulnerable to economic downturns and adverse industry conditions;
 
    
    our ability to capitalize on business opportunities and to react to competitive
pressures as compared to our competitors may be compromised due to our high level of
indebtedness; and
 
    
    our ability to borrow additional funds or to refinance indebtedness may be limited.
  46




---



##### Table of Contents



An Increase In Interest Rates Would Increase The Cost Of Servicing Our Debt And Could Reduce
Our Profitability.
  We Are Controlled By Our Principal Equity Sponsors.
  
 Item 2. Properties
    47




---



##### Table of Contents



Item 3. Legal Proceedings
 qui tam qui tam qui
tam qui tam qui tam qui tam
 
 Item 4. (Removed and Reserved)
  48




---



##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
   
 Item 6. Selected Financial Data
   Year Ended
    
    
    Year Ended
    
    
    Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Statement of Operations Data (1):Net revenue
    
    $
    2,521,406
    
    
    $
    2,361,972
    
    
    $
    2,065,536
    
    
    $
    1,766,079
    
    
    $
    1,539,577Costs and expenses:Salaries and benefits (2)
    
    
    686,303
    
    
    
    660,921
    
    
    
    632,109
    
    
    
    533,792
    
    
    
    439,349Supplies
    
    
    266,545
    
    
    
    250,573
    
    
    
    231,259
    
    
    
    194,915
    
    
    
    167,616Medical claims
    
    
    678,651
    
    
    
    592,760
    
    
    
    452,055
    
    
    
    376,505
    
    
    
    347,217Other operating expenses
    
    
    363,916
    
    
    
    325,735
    
    
    
    283,123
    
    
    
    266,263
    
    
    
    223,946Provision for bad debts
    
    
    197,680
    
    
    
    192,563
    
    
    
    161,936
    
    
    
    136,233
    
    
    
    134,614Rentals and leases
    
    
    39,955
    
    
    
    39,127
    
    
    
    36,633
    
    
    
    31,546
    
    
    
    30,277Interest expense, net
    
    
    66,810
    
    
    
    67,890
    
    
    
    75,665
    
    
    
    71,206
    
    
    
    67,124Depreciation and amortization
    
    
    96,106
    
    
    
    97,462
    
    
    
    96,741
    
    
    
    75,388
    
    
    
    69,137Management fees
    
    
    5,000
    
    
    
    5,000
    
    
    
    5,000
    
    
    
    4,746
    
    
    
    4,189Impairment of goodwill (3)
    
    
    
    
    
    
    64,639
    
    
    
    
    
    
    
    
    
    
    
    Hurricane-related property damage (4)
    
    
    
    
    
    
    938
    
    
    
    3,589
    
    
    
    
    
    
    
    Business interruption insurance
recoveries (5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,443
    )
    
    
    (8,974
    )Loss on extinguishment of debt (6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,229
    
    
    
    Total costs and expenses
    
    
    2,400,966
    
    
    
    2,297,608
    
    
    
    1,978,110
    
    
    
    1,693,380
    
    
    
    1,474,495Earnings from continuing operations
before gain (loss) on disposal of
assets and income taxes
    
    
    120,440
    
    
    
    64,364
    
    
    
    87,426
    
    
    
    72,699
    
    
    
    65,082Gain (loss) on disposal of assets, net
    
    
    108
    
    
    
    1,465
    
    
    
    (75
    )
    
    
    (1,359
    )
    
    
    913Earnings from continuing operations
before income taxes
    
    
    120,548
    
    
    
    65,829
    
    
    
    87,351
    
    
    
    71,340
    
    
    
    65,995Income tax expense
    
    
    44,715
    
    
    
    27,576
    
    
    
    35,325
    
    
    
    25,909
    
    
    
    22,515Net earnings from continuing operations
    
    
    75,833
    
    
    
    38,253
    
    
    
    52,026
    
    
    
    45,431
    
    
    
    43,480Earnings (loss) from discontinued
operations, net of income taxes
    
    
    (1,087
    )
    
    
    (176
    )
    
    
    (11,275
    )
    
    
    669
    
    
    
    (385
    )Net earnings
    
    
    74,746
    
    
    
    38,077
    
    
    
    40,751
    
    
    
    46,100
    
    
    
    43,095Net earnings attributable to
non-controlling interests
    
    
    (8,279
    )
    
    
    (9,987
    )
    
    
    (4,437
    )
    
    
    (4,496
    )
    
    
    (3,546
    )Net earnings attributable to IASIS
Healthcare LLC
    
    $
    66,467
    
    
    $
    28,090
    
    
    $
    36,314
    
    
    $
    41,604
    
    
    $
    39,549Balance Sheet Data (at end of period):Cash and cash equivalents
    
    $
    144,511
    
    
    $
    206,528
    
    
    $
    80,738
    
    
    $
    
    
    
    $
    95,415Total assets
    
    $
    2,353,194
    
    
    $
    2,357,204
    
    
    $
    2,308,147
    
    
    $
    2,186,422
    
    
    $
    1,967,835Long-term debt and capital lease
obligations (including current
portion)
    
    $
    1,051,578
    
    
    $
    1,059,837
    
    
    $
    1,114,622
    
    
    $
    1,031,657
    
    
    $
    896,945Members equity
    
    $
    702,135
    
    
    $
    750,932
    
    
    $
    714,507
    
    
    $
    674,732
    
    
    $
    639,714
  49




---



##### Table of Contents



(1)
    
    The results of Glenwood and Alliance are included from January 31, 2007 and May 31, 2007,
respectively, their dates of acquisition. Excludes Mesa General Hospital and Biltmore Surgery
Center, where operations were discontinued effective May 31, 2008 and April 30, 2008,
respectively.(2)
    
    Results for the year ended September 30, 2010, include $2.0 million in stock compensation
expense related to the repurchase of certain equity by our parent company.(3)
    
    Results for the year ended September 30, 2009, include a $64.6 million non-cash charge ($43.2
million after taxes) related to the impairment of goodwill in our Florida market.(4)
    
    Results for the years ended September 30, 2009 and 2008, include an adverse financial impact
totaling $938,000 and $3.6 million, respectively, before income taxes related to property
damage sustained at The Medical Center of Southeast Texas, as a result of Hurricane Ike.(5)
    
    Results for the years ended September 30, 2007 and 2006, include $3.4 million and $9.0
million, respectively, of business interruption insurance recoveries received in connection
with the temporary closure and disruption of operations at The Medical Center of Southeast
Texas, as a result of Hurricane Rita. Cumulative business interruption insurance recoveries of
$12.4 million received through fiscal 2007 includes the impact of related insurance
deductibles of $4.6 million.(6)
    
    Results for the year ended September 30, 2007, include a $6.2 million loss on extinguishment
of debt related to the refinancing of our senior secured credit facilities. Selected Operating Data
  Year Ended September 30,2010
    
    
    2009
    
    
    2008Acute Care (1)Number of acute care hospital facilities
at end of period (2)
    
    
    15
    
    
    
    15
    
    
    
    15Licensed beds at end of period
    
    
    3,185
    
    
    
    3,162
    
    
    
    3,027Average length of stay (days) (3)
    
    
    4.8
    
    
    
    4.7
    
    
    
    4.7Occupancy rates (average beds in service)
    
    
    46.6
    %
    
    
    46.5
    %
    
    
    48.9
    %Admissions (4)
    
    
    101,798
    
    
    
    101,083
    
    
    
    101,302Adjusted admissions (5)
    
    
    170,812
    
    
    
    169,721
    
    
    
    165,819Patient days (6)
    
    
    489,274
    
    
    
    473,601
    
    
    
    471,853Adjusted patient days (5)
    
    
    790,958
    
    
    
    762,234
    
    
    
    741,466Net patient revenue per adjusted admission
    
    $
    10,066
    
    
    $
    9,703
    
    
    $
    9,101Outpatient revenue as a % of gross patient revenue
    
    
    39.6
    %
    
    
    39.0
    %
    
    
    36.9
    %Health Choice:Medicaid covered lives
    
    
    194,095
    
    
    
    187,104
    
    
    
    142,193Dual-eligible lives (7)
    
    
    4,298
    
    
    
    3,659
    
    
    
    3,300Medical loss ratio (8)
    
    
    87.2
    %
    
    
    86.1
    %
    
    
    85.2
    %
 
 (1)
    
    Excludes Mesa General Hospital and Biltmore Surgery Center, where operations were
discontinued effective May 31, 2008 and April 30, 2008, respectively.(2)
    
    Excludes St. Lukes Behavioral Hospital.(3)
    
    Represents the average number of days that a patient stayed in our hospitals.(4)
    
    Represents the total number of patients admitted to our hospitals for stays in excess of 23
hours. Management and investors use this number as a general measure of inpatient volume.(5)
    
    Adjusted admissions and adjusted patient days are general measures of combined inpatient and
outpatient volume. We compute adjusted admissions/patient days by multiplying
admissions/patient days by gross patient revenue and then dividing that number by gross
inpatient revenue.(6)
    
    Represents the number of days our beds were occupied by inpatients over the period.(7)
    
    Represents members eligible for Medicare and Medicaid benefits under Health Choices contract
with CMS to provide coverage as a MAPD SNP.(8)
    
    Represents medical claims expense as a percentage of premium revenue, including claims paid
to our hospitals.  50




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  
    
    Forward Looking Statements;
    
    Executive Overview;
    
    Critical Accounting Policies and Estimates;
    
    Results of Operations Summary;
    
    Liquidity and Capital Resources; and
    
    Recent Accounting Pronouncements.
  FORWARD LOOKING STATEMENTS
    51




---



##### Table of Contents



EXECUTIVE OVERVIEW
  
    
    Salt Lake City, Utah;
    
    Phoenix, Arizona;
    
    Tampa-St. Petersburg, Florida;
    
    three cities in Texas, including San Antonio;
    
    Las Vegas, Nevada; and
    
    West Monroe, Louisiana.
  Acquisition
  Revenue and Volume Trends
  Acute Care Revenue
     52




---



##### Table of Contents



Year Ended September 30,2010
    
    
    2009
    
    
    2008Medicare
    
    
    31.0
    %
    
    
    31.1
    %
    
    
    31.9
    %Managed Medicare
    
    
    12.3
    
    
    
    11.5
    
    
    
    10.9Medicaid
    
    
    8.5
    
    
    
    8.4
    
    
    
    7.2Managed Medicaid
    
    
    12.5
    
    
    
    11.2
    
    
    
    10.6Managed care
    
    
    30.7
    
    
    
    32.8
    
    
    
    34.7Self-pay
    
    
    5.0
    
    
    
    5.0
    
    
    
    4.7Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    Premium Revenue
     53




---



##### Table of Contents



Significant Industry Trends
  Payor Mix Shift
  Value-Based Reimbursement
    54




---



##### Table of Contents



Physician Alignment and Integration
    55




---



##### Table of Contents



Uncompensated Care
      September 30,
    
    
    September 30,2010
    
    
    2009Insured receivables
    
    
    61.8
    %
    
    
    62.0
    %Uninsured receivables
    
    
    38.2
    %
    
    
    38.0
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
   September 30,
    
    
    September 30,2010
    
    
    20090 to 90 days
    
    
    71.9
    %
    
    
    69.4
    %91 to 180 days
    
    
    17.8
    %
    
    
    18.1
    %Over 180 days
    
    
    10.3
    %
    
    
    12.5
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
  56




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   Allowance for Doubtful Accounts.
 
    
    Historical write-off and collection experience using a hindsight or look-back approach;
    
    Revenue and volume trends by payor, particularly the self-pay components;
    
    Changes in the aging and payor mix of accounts receivable, including increased focus on
accounts due from the uninsured and accounts that represent co-payments and deductibles due
from patients;
    
    Cash collections as a percentage of net patient revenue less bad debt expense;
    
    Trending of days revenue in accounts receivable; and
    
    Various allowance coverage statistics.
   Allowance for Contractual Discounts and Settlement Estimates.
   57




---



##### Table of Contents



Insurance Reserves.
  58




---



##### Table of Contents



Year ended September 30, 2010
    
    $
    (2.6
    )Year ended September 30, 2009
    
    $
    (1.2
    )Year ended September 30, 2008
    
    $
    (6.8
    )
   As reported at September 30, 2010
    
    $
    41.675% Confidence Level
    
    $
    48.290% Confidence Level
    
    $
    60.1
  Year ended September 30, 2010
    
    $
    1.1Year ended September 30, 2009
    
    $
    (0.5
    )Year ended September 30, 2008
    
    $
    0.8
 Medical Claims Payable.
  59




---



##### Table of Contents



Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009Medical claims payable as of October 1
    
    $
    113,519
    
    
    $
    97,343Medical claims expense incurred during the year:Related to current year
    
    
    697,052
    
    
    
    620,153Related to prior years
    
    
    (6,596
    )
    
    
    (18,077
    )Total expenses
    
    
    690,456
    
    
    
    602,076Medical claims payments during the year:Related to current year
    
    
    (587,292
    )
    
    
    (508,299
    )Related to prior years
    
    
    (105,310
    )
    
    
    (77,601
    )Total payments
    
    
    (692,602
    )
    
    
    (585,900
    )Medical claims payable as of September 30
    
    $
    111,373
    
    
    $
    113,519
   Claims Trend Factor
    
    
    Completion FactorIncrease (Decrease) in
    
    
    
    
    
    
    Increase (Decrease) inIncrease (Decrease) in
    
    
    Medical Claims
    
    
    Increase (Decrease) in
    
    
    Medical ClaimsFactor
    
    
    Payable
    
    
    Factor
    
    
    Payable(3.0
    )%
    
    $
    (4,363
    )
    
    
    1.0
    %
    
    $
    (5,042
    )(2.0
    )
    
    
    (2,908
    )
    
    
    0.5
    
    
    
    (2,524
    )(1.0
    )
    
    
    (1,454
    )
    
    
    (0.5
    )
    
    
    2,5921.0
    
    
    
    1,454
    
    
    
    (1.0
    )
    
    
    5,190
 Goodwill and Other Intangibles.
  60




---



##### Table of Contents



Income Taxes.
     61




---



##### Table of Contents



RESULTS OF OPERATIONS SUMMARY
 Consolidated
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2008($ in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    1,729,344
    
    
    
    68.6
    %
    
    $
    1,662,469
    
    
    
    70.4
    %
    
    $
    1,523,790
    
    
    
    73.8
    %Premium revenue
    
    
    792,062
    
    
    
    31.4
    %
    
    
    699,503
    
    
    
    29.6
    %
    
    
    541,746
    
    
    
    26.2
    %Total net revenue
    
    
    2,521,406
    
    
    
    100.0
    %
    
    
    2,361,972
    
    
    
    100.0
    %
    
    
    2,065,536
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    686,303
    
    
    
    27.2
    %
    
    
    660,921
    
    
    
    28.0
    %
    
    
    632,109
    
    
    
    30.6
    %Supplies
    
    
    266,545
    
    
    
    10.6
    %
    
    
    250,573
    
    
    
    10.6
    %
    
    
    231,259
    
    
    
    11.2
    %Medical claims
    
    
    678,651
    
    
    
    26.9
    %
    
    
    592,760
    
    
    
    25.1
    %
    
    
    452,055
    
    
    
    21.9
    %Other operating expenses
    
    
    363,916
    
    
    
    14.4
    %
    
    
    325,735
    
    
    
    13.8
    %
    
    
    283,123
    
    
    
    13.7
    %Provision for bad debts
    
    
    197,680
    
    
    
    7.9
    %
    
    
    192,563
    
    
    
    8.2
    %
    
    
    161,936
    
    
    
    7.8
    %Rentals and leases
    
    
    39,955
    
    
    
    1.6
    %
    
    
    39,127
    
    
    
    1.7
    %
    
    
    36,633
    
    
    
    1.8
    %Interest expense, net
    
    
    66,810
    
    
    
    2.6
    %
    
    
    67,890
    
    
    
    2.9
    %
    
    
    75,665
    
    
    
    3.7
    %Depreciation and
amortization
    
    
    96,106
    
    
    
    3.8
    %
    
    
    97,462
    
    
    
    4.1
    %
    
    
    96,741
    
    
    
    4.7
    %Management fees
    
    
    5,000
    
    
    
    0.2
    %
    
    
    5,000
    
    
    
    0.2
    %
    
    
    5,000
    
    
    
    0.2
    %Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    64,639
    
    
    
    2.7
    %
    
    
    
    
    
    
    Hurricane-related
property damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    0.0
    %
    
    
    3,589
    
    
    
    0.2
    %Total costs and
expenses
    
    
    2,400,966
    
    
    
    95.2
    %
    
    
    2,297,608
    
    
    
    97.3
    %
    
    
    1,978,110
    
    
    
    95.8
    %Earnings from continuing
operations before gain
(loss) on disposal of
assets and income taxes
    
    
    120,440
    
    
    
    4.8
    %
    
    
    64,364
    
    
    
    2.7
    %
    
    
    87,426
    
    
    
    4.2
    %Gain (loss) on disposal
of assets, net
    
    
    108
    
    
    
    0.0
    %
    
    
    1,465
    
    
    
    0.1
    %
    
    
    (75
    )
    
    
    (0.0
    )%Earnings from continuing
operations before income
taxes
    
    
    120,548
    
    
    
    4.8
    %
    
    
    65,829
    
    
    
    2.8
    %
    
    
    87,351
    
    
    
    4.2
    %Income tax expense
    
    
    44,715
    
    
    
    1.8
    %
    
    
    27,576
    
    
    
    1.2
    %
    
    
    35,325
    
    
    
    1.7
    %Net earnings from
continuing operations
    
    
    75,833
    
    
    
    3.0
    %
    
    
    38,253
    
    
    
    1.6
    %
    
    
    52,026
    
    
    
    2.5
    %Loss from discontinued
operations, net of income
taxes
    
    
    (1,087
    )
    
    
    (0.1
    )%
    
    
    (176
    )
    
    
    (0.0
    )%
    
    
    (11,275
    )
    
    
    (0.5
    )%Net earnings
    
    
    74,746
    
    
    
    2.9
    %
    
    
    38,077
    
    
    
    1.6
    %
    
    
    40,751
    
    
    
    2.0
    %Net earnings attributable
to non-controlling
interests
    
    
    (8,279
    )
    
    
    (0.3
    )%
    
    
    (9,987
    )
    
    
    (0.4
    )%
    
    
    (4,437
    )
    
    
    (0.2
    )%Net earnings attributable
to IASIS Healthcare LLC
    
    $
    66,467
    
    
    
    2.6
    %
    
    $
    28,090
    
    
    
    1.2
    %
    
    $
    36,314
    
    
    
    1.8
    %
  62




---



##### Table of Contents



Acute Care
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2008($ in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    1,729,344
    
    
    
    99.3
    %
    
    $
    1,662,469
    
    
    
    99.4
    %
    
    $
    1,523,790
    
    
    
    99.4
    %Revenue between segments
    
    
    11,805
    
    
    
    0.7
    %
    
    
    9,316
    
    
    
    0.6
    %
    
    
    9,594
    
    
    
    0.6
    %Total acute care revenue (1)
    
    
    1,741,149
    
    
    
    100.0
    %
    
    
    1,671,785
    
    
    
    100.0
    %
    
    
    1,533,384
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    667,154
    
    
    
    38.3
    %
    
    
    641,893
    
    
    
    38.4
    %
    
    
    614,442
    
    
    
    40.1
    %Supplies
    
    
    266,347
    
    
    
    15.3
    %
    
    
    250,310
    
    
    
    15.0
    %
    
    
    231,001
    
    
    
    15.1
    %Other operating expenses
    
    
    339,304
    
    
    
    19.5
    %
    
    
    302,804
    
    
    
    18.1
    %
    
    
    264,814
    
    
    
    17.3
    %Provision for bad debts
    
    
    197,680
    
    
    
    11.4
    %
    
    
    192,563
    
    
    
    11.5
    %
    
    
    161,936
    
    
    
    10.6
    %Rentals and leases
    
    
    38,409
    
    
    
    2.2
    %
    
    
    37,563
    
    
    
    2.2
    %
    
    
    35,466
    
    
    
    2.3
    %Interest expense, net
    
    
    66,810
    
    
    
    3.8
    %
    
    
    67,890
    
    
    
    4.1
    %
    
    
    75,665
    
    
    
    4.9
    %Depreciation and amortization
    
    
    92,544
    
    
    
    5.3
    %
    
    
    94,014
    
    
    
    5.6
    %
    
    
    93,003
    
    
    
    6.0
    %Management fees
    
    
    5,000
    
    
    
    0.3
    %
    
    
    5,000
    
    
    
    0.3
    %
    
    
    5,000
    
    
    
    0.3
    %Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    64,639
    
    
    
    3.9
    %
    
    
    
    
    
    
    Hurricane-related property damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    0.1
    %
    
    
    3,589
    
    
    
    0.2
    %Total costs and expenses
    
    
    1,673,248
    
    
    
    96.1
    %
    
    
    1,657,614
    
    
    
    99.2
    %
    
    
    1,484,916
    
    
    
    96.8
    %Earnings from continuing
operations before gain (loss)
on disposal of assets and
income taxes
    
    
    67,901
    
    
    
    3.9
    %
    
    
    14,171
    
    
    
    0.8
    %
    
    
    48,468
    
    
    
    3.2
    %Gain (loss) on disposal of
assets, net
    
    
    108
    
    
    
    0.0
    %
    
    
    1,616
    
    
    
    0.1
    %
    
    
    (75
    )
    
    
    (0.0
    )%Earnings from continuing
operations before income taxes
    
    $
    68,009
    
    
    
    3.9
    %
    
    $
    15,787
    
    
    
    0.9
    %
    
    $
    48,393
    
    
    
    3.2
    %
 
 (1)
    
    Revenue between segments is eliminated in our consolidated results. Years Ended September 30, 2010 and 2009
 Acute care revenue
 Salaries and benefits
 Supplies
 Other operating expenses
  63




---



##### Table of Contents



Provision for bad debts
 Earnings
from continuing operations before income taxes
 Years Ended September 30, 2009 and 2008
 Acute care revenue
 Salaries and benefits
 Other operating expenses
 Provision for bad debts
 Interest expense, net
 Impairment of goodwill
 Earnings from continuing operations before income taxes
  64




---



##### Table of Contents



Health Choice
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    September 30, 2008($ in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentagePremium revenue:Premium revenue
    
    $
    792,062
    
    
    
    100.0
    %
    
    $
    699,503
    
    
    
    100.0
    %
    
    $
    541,746
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    19,149
    
    
    
    2.4
    %
    
    
    19,028
    
    
    
    2.7
    %
    
    
    17,667
    
    
    
    3.3
    %Supplies
    
    
    198
    
    
    
    0.0
    %
    
    
    263
    
    
    
    0.0
    %
    
    
    258
    
    
    
    0.0
    %Medical claims (1)
    
    
    690,456
    
    
    
    87.2
    %
    
    
    602,076
    
    
    
    86.1
    %
    
    
    461,649
    
    
    
    85.2
    %Other operating expenses
    
    
    24,612
    
    
    
    3.1
    %
    
    
    22,931
    
    
    
    3.3
    %
    
    
    18,309
    
    
    
    3.4
    %Rentals and leases
    
    
    1,546
    
    
    
    0.2
    %
    
    
    1,564
    
    
    
    0.2
    %
    
    
    1,167
    
    
    
    0.2
    %Depreciation and amortization
    
    
    3,562
    
    
    
    0.5
    %
    
    
    3,448
    
    
    
    0.5
    %
    
    
    3,738
    
    
    
    0.7
    %Total costs and expenses
    
    
    739,523
    
    
    
    93.4
    %
    
    
    649,310
    
    
    
    92.8
    %
    
    
    502,788
    
    
    
    92.8
    %Earnings before loss on
disposal of assets
    
    
    52,539
    
    
    
    6.6
    %
    
    
    50,193
    
    
    
    7.2
    %
    
    
    38,958
    
    
    
    7.2
    %Loss on disposal of assets, net
    
    
    
    
    
    
    
    
    
    
    (151
    )
    
    
    (0.0
    )%
    
    
    
    
    
    
    Earnings before income taxes
    
    $
    52,539
    
    
    
    6.6
    %
    
    $
    50,042
    
    
    
    7.2
    %
    
    $
    38,958
    
    
    
    7.2
    %
 
 (1)
    
    Medical claims paid to our hospitals of $11.8 million, $9.3 million and $9.6 million for the
years ended September 30, 2010, 2009 and 2008, respectively, are eliminated in our
consolidated results. Years Ended September 30, 2010 and 2009
 Premium revenue 
 Medical claims
 Years Ended September 30, 2009 and 2008
 Premium revenue 
 Medical claims
  65




---



##### Table of Contents



Income Taxes
  Years Ended September 30, 2010 and 2009
 Income tax expense
 Years Ended September 30, 2009 and 2008
 Income tax expense
 Summary of Operations by Quarter
  Quarter EndedSept. 30,
    
    
    June 30,
    
    
    March 31,
    
    
    Dec. 31,2010(1)
    
    
    2010
    
    
    2010(2)
    
    
    2009(in thousands)Net revenue
    
    $
    629,939
    
    
    $
    637,988
    
    
    $
    624,522
    
    
    $
    628,957Earnings from continuing operations before income taxes
    
    
    20,800
    
    
    
    34,410
    
    
    
    35,410
    
    
    
    29,928Net earnings from continuing operations
    
    
    12,629
    
    
    
    21,727
    
    
    
    22,140
    
    
    
    19,337
 Quarter EndedSept. 30,
    
    
    June 30,
    
    
    March 31,
    
    
    Dec. 31,2009(3)
    
    
    2009
    
    
    2009(4)
    
    
    2008(in thousands)Net revenue
    
    $
    620,056
    
    
    $
    601,618
    
    
    $
    578,674
    
    
    $
    561,624Earnings (loss) from continuing operations
before income taxes
    
    
    (38,699
    )
    
    
    36,943
    
    
    
    44,816
    
    
    
    22,769Net earnings (loss) from continuing operations
    
    
    (27,300
    )
    
    
    23,228
    
    
    
    28,367
    
    
    
    13,958
 
 (1)
    
    Results for the quarter ended September 30, 2010, include a $1.7 million property tax
assessment related to prior periods, and a $723,000 reduction and a $273,000 increase in prior
year estimates for professional and general liability losses and workers compensation claims,
respectively, as a result of our semi-annual actuarial studies.(2)
    
    Results for the quarter ended March 31, 2010, include $2.0 million of stock compensation
expense related to the repurchase of certain equity by our parent company, and a $1.9 million
reduction and an $801,000 increase in prior year estimates for professional and general
liability losses and workers compensation claims, respectively, as a result of our
semi-annual actuarial studies.(3)
    
    Results for the quarter ended September 30, 2009, include a $64.6 million non-cash charge
($43.2 million after taxes) related to the impairment of goodwill in our Florida market, and a
$2.0 million and a $326,000 increase in prior year estimates for professional and general
liability losses and workers compensation claims, respectively, as a result of our
semi-annual actuarial studies.(4)
    
    Results for the quarter ended March 31, 2009, include a $3.2 million and an $852,000
reduction in prior year estimates for professional and general liability losses and workers
compensation claims, respectively, as a result of our semi-annual actuarial studies. Results
for the quarter ended March 31, 2009, also include $938,000 in costs associated with property
damage sustained at The Medical Center of Southeast Texas, as a result of Hurricane Ike.  66




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Overview of Cash Flow Activities for the Years Ended September 30, 2010 and 2009
  2010
    
    
    2009Cash flows from operating activities
    
    $
    257,239
    
    
    $
    271,971Cash flows from investing activities
    
    
    (176,473
    )
    
    
    (82,576
    )Cash flows from financing activities
    
    
    (142,783
    )
    
    
    (63,605
    )
 Operating Activities
   Investing Activities
   Financing Activities
    67




---



##### Table of Contents



Capital Resources
  
    
    $854.0 million in senior secured credit facilities; and
    
    $475.0 million in 8 3/4% senior subordinated notes due 2014.
 $854.0 Million Senior Secured Credit Facilities
      $475.0 Million 83/4% Senior Subordinated Notes Due 2014
 3 4 3 4 3 4 3 4 3 4 3 4 3 4
  68




---



##### Table of Contents



Holdings Senior PIK Loans
  Other
   Capital Expenditures
  
    
    $50.0 million to $55.0 million for growth and new business projects;
    
    $40.0 million to $45.0 million in replacement or maintenance related projects at our
hospitals;
    
    $12.0 million related to
our newly acquired facilities; and
    
    $18.0 million in hardware and software costs related to information systems
projects, including healthcare IT stimulus initiatives.
 Liquidity
   69




---



##### Table of Contents



Available cash and cash equivalents
    
    $
    144.5Available capacity under our senior secured revolving credit facility
    
    
    183.6Net available liquidity at September 30, 2010
    
    $
    328.1
   3 4
 3 4
  70




---



##### Table of Contents



Tabular Disclosure of Contractual Obligations
  Payments Due By PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More than1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years
    
    
    Total(in millions)Contractual Cash Obligations:Long-term debt, with interest (1)
    
    $
    67.8
    
    
    $
    408.5
    
    
    $
    787.7
    
    
    $
    
    
    
    $
    1,264.0Capital lease obligations, with interest
    
    
    0.9
    
    
    
    1.2
    
    
    
    1.1
    
    
    
    4.7
    
    
    
    7.9Medical claims
    
    
    111.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111.4Operating leases
    
    
    28.5
    
    
    
    50.0
    
    
    
    38.5
    
    
    
    57.4
    
    
    
    174.4Estimated self-insurance liabilities
    
    
    7.7
    
    
    
    15.9
    
    
    
    21.4
    
    
    
    
    
    
    
    45.0Purchase obligations
    
    
    30.8
    
    
    
    17.1
    
    
    
    0.2
    
    
    
    
    
    
    
    48.1Subtotal
    
    $
    247.1
    
    
    $
    492.7
    
    
    $
    848.9
    
    
    $
    62.1
    
    
    $
    1,650.8
 Amount of Commitment Expiration Per PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More than1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years
    
    
    Total(in millions)Other Commitments (2):Guarantees of surety bonds
    
    $
    12.1
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    12.1Letters of credit
    
    
    
    
    
    
    39.9
    
    
    
    41.4
    
    
    
    
    
    
    
    81.3Other commitments
    
    
    4.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.8Subtotal
    
    
    16.9
    
    
    
    39.9
    
    
    
    41.4
    
    
    
    
    
    
    
    98.2Total obligations and commitments
    
    $
    264.0
    
    
    $
    532.6
    
    
    $
    890.3
    
    
    $
    62.1
    
    
    $
    1,749.0
 
 (1)
    
    We used 3.4%, the weighted average interest rate incurred on our senior secured credit
facilities in fiscal 2010, which accrues actual interest at a variable rate. Actual interest
will vary based on changes in interest rates. Included in the weighted average interest rate
is the effect of our interest rate swap arrangements, which effectively converts $425.0
million of variable rate debt to fixed rate debt.(2)
    
    Excludes $11.7 million of unrecognized tax benefits and related interest that could result in
a cash settlement, of which $9.2 million relates to timing differences between book and
taxable income that may be offset by a reduction of cash tax obligations in future periods. We
have not included these amounts in the above table as we cannot reliably estimate the amount
and timing of payments related to these liabilities. Seasonality
  RECENT ACCOUNTING PRONOUNCEMENTS
   71




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    3 4 3 4
   72




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 IASIS Healthcare LLC
Index to Consolidated Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    74Consolidated Balance Sheets at September 30, 2010 and 2009
    
    
    75Consolidated Statements of Operations for the Years Ended September 30, 2010, 2009 and 2008
    
    
    76Consolidated Statements of Equity for the Years Ended September 30, 2010, 2009 and 2008
    
    
    77Consolidated Statements of Cash Flows for the Years Ended September 30, 2010, 2009 and 2008
    
    
    78Notes to Consolidated Financial Statements
    
    
    79
  73




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Noncontrolling Interests in Consolidated Financial Statements Consolidation
  
  74




---



##### Table of Contents



IASIS HEALTHCARE LLC


CONSOLIDATED BALANCE SHEETS  (In thousands)
 September 30,
    
    
    September 30,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    144,511
    
    
    $
    206,528Accounts receivable, less allowance for doubtful accounts of
$125,406 and $126,132 at September 30, 2010 and 2009,
respectively
    
    
    209,173
    
    
    
    230,198Inventories
    
    
    53,842
    
    
    
    50,492Deferred income taxes
    
    
    15,881
    
    
    
    39,038Prepaid expenses and other current assets
    
    
    65,340
    
    
    
    49,453Total current assets
    
    
    488,747
    
    
    
    575,709Property and equipment, net
    
    
    985,291
    
    
    
    997,353Goodwill
    
    
    718,243
    
    
    
    717,920Other intangible assets, net
    
    
    27,000
    
    
    
    30,000Deposit for acquisition
    
    
    97,891
    
    
    
    Other assets, net
    
    
    36,022
    
    
    
    36,222Total assets
    
    $
    2,353,194
    
    
    $
    2,357,204LIABILITIES AND EQUITYCurrent liabilities:Accounts payable
    
    $
    78,931
    
    
    $
    68,552Salaries and benefits payable
    
    
    38,110
    
    
    
    42,548Accrued interest payable
    
    
    12,536
    
    
    
    12,511Medical claims payable
    
    
    111,373
    
    
    
    113,519Other accrued expenses and other current liabilities
    
    
    106,614
    
    
    
    65,701Current portion of long-term debt and capital lease obligations
    
    
    6,691
    
    
    
    8,366Total current liabilities
    
    
    354,255
    
    
    
    311,197Long-term debt and capital lease obligations
    
    
    1,044,887
    
    
    
    1,051,471Deferred income taxes
    
    
    109,272
    
    
    
    106,425Other long-term liabilities
    
    
    60,162
    
    
    
    54,222Non-controlling interests with redemption rights
    
    
    72,112
    
    
    
    72,527Equity:Members equity
    
    
    702,135
    
    
    
    750,932Non-controlling interests
    
    
    10,371
    
    
    
    10,430Total equity
    
    
    712,506
    
    
    
    761,362Total liabilities and equity
    
    $
    2,353,194
    
    
    $
    2,357,204
   75




---



##### Table of Contents



IASIS HEALTHCARE LLC


CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands)
 Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2008Net revenue:Acute care revenue
    
    $
    1,729,344
    
    
    $
    1,662,469
    
    
    $
    1,523,790Premium revenue
    
    
    792,062
    
    
    
    699,503
    
    
    
    541,746Total net revenue
    
    
    2,521,406
    
    
    
    2,361,972
    
    
    
    2,065,536Costs and expenses:Salaries and benefits
    
    
    686,303
    
    
    
    660,921
    
    
    
    632,109Supplies
    
    
    266,545
    
    
    
    250,573
    
    
    
    231,259Medical claims
    
    
    678,651
    
    
    
    592,760
    
    
    
    452,055Other operating expenses
    
    
    363,916
    
    
    
    325,735
    
    
    
    283,123Provision for bad debts
    
    
    197,680
    
    
    
    192,563
    
    
    
    161,936Rentals and leases
    
    
    39,955
    
    
    
    39,127
    
    
    
    36,633Interest expense, net
    
    
    66,810
    
    
    
    67,890
    
    
    
    75,665Depreciation and amortization
    
    
    96,106
    
    
    
    97,462
    
    
    
    96,741Management fees
    
    
    5,000
    
    
    
    5,000
    
    
    
    5,000Impairment of goodwill
    
    
    
    
    
    
    64,639
    
    
    
    Hurricane-related property damage
    
    
    
    
    
    
    938
    
    
    
    3,589Total costs and expenses
    
    
    2,400,966
    
    
    
    2,297,608
    
    
    
    1,978,110Earnings from continuing operations before gain (loss)
on disposal of assets and income taxes
    
    
    120,440
    
    
    
    64,364
    
    
    
    87,426Gain (loss) on disposal of assets, net
    
    
    108
    
    
    
    1,465
    
    
    
    (75
    )Earnings from continuing operations before income taxes
    
    
    120,548
    
    
    
    65,829
    
    
    
    87,351Income tax expense
    
    
    44,715
    
    
    
    27,576
    
    
    
    35,325Net earnings from continuing operations
    
    
    75,833
    
    
    
    38,253
    
    
    
    52,026Loss from discontinued operations, net of income taxes
    
    
    (1,087
    )
    
    
    (176
    )
    
    
    (11,275
    )Net earnings
    
    
    74,746
    
    
    
    38,077
    
    
    
    40,751Net earnings attributable to non-controlling interests
    
    
    (8,279
    )
    
    
    (9,987
    )
    
    
    (4,437
    )Net earnings attributable to IASIS Healthcare LLC
    
    $
    66,467
    
    
    $
    28,090
    
    
    $
    36,314
   76




---



##### Table of Contents



IASIS HEALTHCARE LLC

CONSOLIDATED STATEMENTS OF EQUITY  (In thousands)
 Non-controllingInterests with
    
    
    
    
    
    
    Non-Redemption
    
    
    Members
    
    
    controllingRights
    
    
    Equity
    
    
    Interests
    
    
    Total EquityBalance at September 30, 2007 (as previously
reported)
    
    $
    
    
    
    $
    691,514
    
    
    $
    
    
    
    $
    691,514Adjustment to non-controlling interests
from adoption of FASB authoritative
guidance
    
    
    44,134
    
    
    
    (16,782
    )
    
    
    8,604
    
    
    
    (8,178
    )Balance at September 30, 2007 (as adjusted)
    
    
    44,134
    
    
    
    674,732
    
    
    
    8,604
    
    
    
    683,336Net earnings
    
    
    4,285
    
    
    
    36,314
    
    
    
    152
    
    
    
    36,466Distributions to non-controlling interests
    
    
    (5,313
    )
    
    
    
    
    
    
    (172
    )
    
    
    (172
    )Proceeds from the sale of non-controlling
interests
    
    
    15,872
    
    
    
    
    
    
    
    
    
    
    
    Repurchases of non-controlling intersts
    
    
    (802
    )
    
    
    
    
    
    
    
    
    
    
    Non-controlling interests in acquisition of Ouachita
    
    
    
    
    
    
    
    
    
    
    1,897
    
    
    
    1,897Tax effect of adoption of FASB income tax
guidance
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Adjustment to redemption value of
non-controlling interests with redemption
rights
    
    
    (3,520
    )
    
    
    3,520
    
    
    
    
    
    
    
    3,520Balance at September 30, 2008
    
    
    54,656
    
    
    
    714,507
    
    
    
    10,481
    
    
    
    724,988Net earnings
    
    
    9,769
    
    
    
    28,090
    
    
    
    218
    
    
    
    28,308Distributions to non-controlling interests
    
    
    (6,481
    )
    
    
    
    
    
    
    (269
    )
    
    
    (269
    )Repurchases of non-controlling interests
    
    
    (1,379
    )
    
    
    
    
    
    
    
    
    
    
    Conversion of non-controlling interests
to note payable
    
    
    (691
    )
    
    
    
    
    
    
    
    
    
    
    Stock compensation
    
    
    
    
    
    
    561
    
    
    
    
    
    
    
    561Other comprehensive loss
    
    
    
    
    
    
    (2,926
    )
    
    
    
    
    
    
    (2,926
    )Income tax benefit resulting from
exercise of employee stock options
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    9Contribution from parent company related
to tax benefit from Holdings Senior PIK
Loans interest
    
    
    
    
    
    
    27,344
    
    
    
    
    
    
    
    27,344Adjustment to redemption value of
non-controlling interests with redemption
rights
    
    
    16,653
    
    
    
    (16,653
    )
    
    
    
    
    
    
    (16,653
    )Balance at September 30, 2009
    
    
    72,527
    
    
    
    750,932
    
    
    
    10,430
    
    
    
    761,362Net earnings
    
    
    8,144
    
    
    
    66,467
    
    
    
    135
    
    
    
    66,602Distributions to non-controlling interests
    
    
    (8,790
    )
    
    
    
    
    
    
    (194
    )
    
    
    (194
    )Repurchases of non-controlling interests
    
    
    (459
    )
    
    
    
    
    
    
    
    
    
    
    Stock compensation
    
    
    
    
    
    
    2,487
    
    
    
    
    
    
    
    2,487Other comprehensive loss
    
    
    
    
    
    
    (653
    )
    
    
    
    
    
    
    (653
    )Distribution to parent company in
connection with the repurchase of equity,
net
    
    
    
    
    
    
    (124,962
    )
    
    
    
    
    
    
    (124,962
    )Contribution from parent company related
to tax benefit from Holdings Senior PIK
Loans interest
    
    
    
    
    
    
    8,554
    
    
    
    
    
    
    
    8,554Adjustment
to redemption value of non-controlling interests with redemption rights
    
    
    690
    
    
    
    (690
    )
    
    
    
    
    
    
    (690
    )Balance at September 30, 2010
    
    $
    72,112
    
    
    $
    702,135
    
    
    $
    10,371
    
    
    $
    712,506
   77




---



##### Table of Contents



IASIS HEALTHCARE LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands)
 Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net earnings
    
    $
    74,746
    
    
    $
    38,077
    
    
    $
    40,751Adjustments to reconcile net earnings to net cash provided by
operating activities:Depreciation and amortization
    
    
    96,106
    
    
    
    97,462
    
    
    
    96,741Amortization of loan costs
    
    
    3,163
    
    
    
    3,029
    
    
    
    2,913Stock compensation costs
    
    
    2,487
    
    
    
    561
    
    
    
    Deferred income taxes
    
    
    30,473
    
    
    
    (5,572
    )
    
    
    19,368Income tax benefit from stock compensation
    
    
    (1,770
    )
    
    
    
    
    
    
    Income tax benefit from parent company interest
    
    
    8,554
    
    
    
    27,344
    
    
    
    Loss (gain) on disposal of assets, net
    
    
    (108
    )
    
    
    (1,465
    )
    
    
    75Loss from discontinued operations
    
    
    1,087
    
    
    
    176
    
    
    
    11,275Impairment of goodwill
    
    
    
    
    
    
    64,639
    
    
    
    Hurricane-related property damage
    
    
    
    
    
    
    938
    
    
    
    3,589Changes in operating assets and liabilities, net of the
effect of acquisitions and dispositions:Accounts receivable, net
    
    
    21,279
    
    
    
    (7,302
    )
    
    
    17,131Inventories, prepaid expenses and other current assets
    
    
    (19,227
    )
    
    
    6,728
    
    
    
    (21,361
    )Accounts payable, other accrued expenses and other
accrued liabilities
    
    
    41,957
    
    
    
    45,884
    
    
    
    (29,419
    )Net cash provided by operating activities  continuing operations
    
    
    258,747
    
    
    
    270,499
    
    
    
    141,063Net cash provided by (used in) operating activities 
discontinued operations
    
    
    (1,508
    )
    
    
    1,472
    
    
    
    2,313Net cash provided by operating activities
    
    
    257,239
    
    
    
    271,971
    
    
    
    143,376Cash flows from investing activities:Purchases of property and equipment
    
    
    (81,268
    )
    
    
    (87,720
    )
    
    
    (137,415
    )Cash paid for acquisitions
    
    
    (98,305
    )
    
    
    (1,941
    )
    
    
    (16,821
    )Proceeds from sale of assets
    
    
    57
    
    
    
    5,252
    
    
    
    360Change in other assets
    
    
    3,043
    
    
    
    1,823
    
    
    
    4,613Net cash used in investing activities  continuing operations
    
    
    (176,473
    )
    
    
    (82,586
    )
    
    
    (149,263
    )Net cash provided by (used in) investing activities 
discontinued operations
    
    
    
    
    
    
    10
    
    
    
    (1,017
    )Net cash used in investing activities
    
    
    (176,473
    )
    
    
    (82,576
    )
    
    
    (150,280
    )Cash flows from financing activities:Payment of debt and capital lease obligations
    
    
    (8,378
    )
    
    
    (55,476
    )
    
    
    (306,611
    )Proceeds from debt borrowings
    
    
    
    
    
    
    
    
    
    
    384,978Distribution to parent company in connection with the repurchase
of equity, net
    
    
    (124,962
    )
    
    
    
    
    
    
    Distributions to non-controlling interests
    
    
    (8,984
    )
    
    
    (6,750
    )
    
    
    (5,485
    )Proceeds received from sale (costs paid for repurchase) of
non-controlling interests, net
    
    
    (459
    )
    
    
    (1,379
    )
    
    
    15,070Other
    
    
    
    
    
    
    
    
    
    
    192Net cash provided by (used in) financing activities  continuing
operations
    
    
    (142,783
    )
    
    
    (63,605
    )
    
    
    88,144Net cash used in financing activities  discontinued operations
    
    
    
    
    
    
    
    
    
    
    (502
    )Net cash provided by (used in) financing activities
    
    
    (142,783
    )
    
    
    (63,605
    )
    
    
    87,642Change in cash and cash equivalents
    
    
    (62,017
    )
    
    
    125,790
    
    
    
    80,738Cash and cash equivalents at beginning of period
    
    
    206,528
    
    
    
    80,738
    
    
    
    Cash and cash equivalents at end of period
    
    $
    144,511
    
    
    $
    206,528
    
    
    $
    80,738Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    63,762
    
    
    $
    66,136
    
    
    $
    83,126Cash paid (received) for income taxes, net
    
    $
    13,528
    
    
    $
    4,104
    
    
    $
    (925
    )Supplemental schedule of noncash investing and financing activities:Capital lease obligations resulting from acquisitions
    
    $
    
    
    
    $
    
    
    
    $
    4,849
   78




---



##### Table of Contents



IASIS HEALTHCARE LLC
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. ORGANIZATION AND BASIS OF PRESENTATION
 Organization
  
    
    Salt Lake City, Utah;
 
    
    Phoenix, Arizona;
 
    
    Tampa-St. Petersburg, Florida;
 
    
    three cities in Texas, including San Antonio;
 
    
    Las Vegas, Nevada; and
 
    
    West Monroe, Louisiana.
  Principles of Consolidation
  Use of Estimates
  Reclassifications
  General and Administrative
  Subsequent Events Consideration
   79




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 2. SIGNIFICANT ACCOUNTING POLICIES
 Net Revenue
 Acute Care Revenue
    Premium Revenue
     80




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
   Cash and Cash Equivalents
  Accounts Receivable
   Allowance for Doubtful Accounts
  
    
    Historical write-off and collection experience using a hindsight or look-back
approach;
 
    
    Revenue and volume trends by payor, particularly the self-pay components;
 
    
    Changes in the aging and payor mix of accounts receivable, including increased
focus on accounts due from the uninsured and accounts that represent co-payments and
deductibles due from patients;
 
    
    Cash collections as a percentage of net patient revenue less bad debt expense;
 
    
    Trending of days revenue in accounts receivable; and
 
    
    Various allowance coverage statistics.
   81




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 
 Inventories
  Long-lived Assets
  Property and Equipment
  Goodwill and Other Intangible Assets
   Other Assets
   82




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Insurance Reserves
  Income Taxes
  Non-controlling Interests in Consolidated Entities
   Medical Claims Payable
    83




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009Medical claims payable as of October 1
    
    $
    113,519
    
    
    $
    97,343Medical claims expense incurred during the year:Related to current year
    
    
    697,052
    
    
    
    620,153Related to prior years
    
    
    (6,596
    )
    
    
    (18,077
    )Total expenses
    
    
    690,456
    
    
    
    602,076Medical claims payments during the year:Related to current year
    
    
    (587,292
    )
    
    
    (508,299
    )Related to prior years
    
    
    (105,310
    )
    
    
    (77,601
    )Total payments
    
    
    (692,602
    )
    
    
    (585,900
    )Medical claims payable as of September 30
    
    $
    111,373
    
    
    $
    113,519
   Stock Based Compensation
   Fair Value of Financial Instruments
 3 4 3 4
  84




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 Management Services Agreement
  Recently Issued Accounting Pronouncements
  3. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
  September 30,
    
    
    September 30,2010
    
    
    2009Senior secured credit facilities
    
    $
    570,260
    
    
    $
    576,150Senior subordinated notes
    
    
    475,000
    
    
    
    475,000Capital leases and other obligations
    
    
    6,318
    
    
    
    8,6871,051,578
    
    
    
    1,059,837Less current maturities
    
    
    6,691
    
    
    
    8,366$
    1,044,887
    
    
    $
    1,051,471
 Senior Secured Credit Facilities
    85




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
    8 3 / 4 % Senior Subordinated Notes
 3 4 3 4 3 4 3 4 3 4
 Holdings Senior Paid-in-Kind Loans
  4. INTEREST RATE SWAPS
  Total NotionalDate Range
    
    Amounts(in thousands)Expiring on February 28, 2011
    
    $
    225,000Expiring on February 29, 2012
    
    $
    200,000
  86




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
      87




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 5. COMPREHENSIVE INCOME
  Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009Net earnings
    
    $
    74,746
    
    
    $
    38,077Change in fair value of interest rate swaps
    
    
    (1,045
    )
    
    
    (4,660
    )Change in income tax benefit
    
    
    392
    
    
    
    1,734Comprehensive income
    
    $
    74,093
    
    
    $
    35,151
  September 30,
    
    
    September 30,2010
    
    
    2009Fair value of interest rate swaps
    
    $
    (5,707
    )
    
    $
    (4,662
    )Income tax benefit
    
    
    2,128
    
    
    
    1,736Accumulated other comprehensive loss
    
    $
    (3,579
    )
    
    $
    (2,926
    )
 6. DISTRIBUTION TO PARENT
  7. ACQUISITIONS
    88




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 8. DISCONTINUED OPERATIONS
  Year ended
    
    
    Year ended
    
    
    Year endedSeptember 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2008Total net revenue
    
    $
    77
    
    
    $
    974
    
    
    $
    49,974Operating expenses
    
    
    1,814
    
    
    
    1,256
    
    
    
    64,648Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    3,928Income tax benefit
    
    
    (650
    )
    
    
    (106
    )
    
    
    (7,327
    )Loss from discontinued operations, net of income taxes
    
    $
    (1,087
    )
    
    $
    (176
    )
    
    $
    (11,275
    )
    89




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 9. PROPERTY AND EQUIPMENT
  September 30,
    
    
    September 30,2010
    
    
    2009Land
    
    $
    102,969
    
    
    $
    102,499Buildings and improvements
    
    
    811,569
    
    
    
    792,467Equipment
    
    
    556,353
    
    
    
    500,4501,470,891
    
    
    
    1,395,416Less accumulated depreciation and amortization
    
    
    (501,952
    )
    
    
    (414,572
    )968,939
    
    
    
    980,844Construction-in-progress
    
    
    16,352
    
    
    
    16,509$
    985,291
    
    
    $
    997,353
  10. GOODWILL AND OTHER INTANGIBLE ASSETS
  Acute
    
    
    HealthCare
    
    
    Choice
    
    
    TotalBalance at September 30, 2008
    
    $
    774,842
    
    
    $
    5,757
    
    
    $
    780,599Impairment of Florida market goodwill
    
    
    (64,639
    )
    
    
    
    
    
    
    (64,639
    )Other acquisitions
    
    
    1,960
    
    
    
    
    
    
    
    1,960Balance at September 30, 2009
    
    
    712,163
    
    
    
    5,757
    
    
    
    717,920Other acquisitions
    
    
    323
    
    
    
    
    
    
    
    323Balance at September 30, 2010
    
    $
    712,486
    
    
    $
    5,757
    
    
    $
    718,243
    90




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 11. MEMBERS EQUITY
 Common Interests of IASIS
  12. STOCK OPTIONS
 Management Rollover Options
    2004 Stock Option Plan
   91




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  2004 Stock Option Plan
    
    
    Rollover OptionsWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageOption Price
    
    
    Exercise
    
    
    
    
    
    
    Option Price
    
    
    ExerciseOptions
    
    
    Per Share
    
    
    Price
    
    
    Options
    
    
    Per Share
    
    
    PriceOptions outstanding at
September 30, 2007
    
    
    1,491,125
    
    
    $
    20.00-$35.68
    
    
    $
    22.09
    
    
    
    163,150
    
    
    $
    8.75
    
    
    $
    8.75Granted
    
    
    1,080
    
    
    $
    34.75
    
    
    $
    34.75
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (9,600
    )
    
    $
    20.00
    
    
    $
    20.00
    
    
    
    
    
    
    
    
    
    
    
    Cancelled/forfeited
    
    
    (80,720
    )
    
    $
    20.00-$35.68
    
    
    $
    26.04
    
    
    
    
    
    
    
    
    
    
    
    Options outstanding at
September 30, 2008
    
    
    1,401,885
    
    
    $
    20.00-$35.68
    
    
    $
    21.82
    
    
    
    163,150
    
    
    $
    8.75
    
    
    $
    8.75Granted
    
    
    477,700
    
    
    $
    34.75
    
    
    $
    34.75
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled/forfeited
    
    
    (119,410
    )
    
    $
    20.00-$35.68
    
    
    $
    31.17
    
    
    
    
    
    
    
    
    
    
    
    Options outstanding at
September 30, 2009
    
    
    1,760,175
    
    
    $
    20.00-$35.68
    
    
    $
    24.70
    
    
    
    163,150
    
    
    $
    8.75
    
    
    $
    8.75Granted
    
    
    45,000
    
    
    $
    34.75-$45.66
    
    
    $
    43.24
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled/forfeited
    
    
    (118,846
    )
    
    $
    20.00-$35.68
    
    
    $
    33.38
    
    
    
    (163,150
    )
    
    
    8.75
    
    
    
    8.75Options outstanding at
September 30, 2010
    
    
    1,686,329
    
    
    $
    20.00-$45.66
    
    
    $
    24.58
    
    
    
    
    
    
    
    
    
    
    
    Options exercisable at
September 30, 2010
    
    
    1,374,620
    
    
    $
    20.00-$35.68
    
    
    $
    21.98
    
    
    
    
    
    
    $
    
    
    
    $
    
  Options GrantedOn or AfterOctober 1, 2006Risk-free interest
    
    
    3.1
    %Dividend yield
    
    
    0.0
    %Volatility
    
    
    35.0
    %Expected option life
    
    
    7.3 years
  13. INCOME TAXES
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2008Current:Federal
    
    $
    11,439
    
    
    $
    28,220
    
    
    $
    12,631State
    
    
    2,803
    
    
    
    4,933
    
    
    
    3,326Deferred:Federal
    
    
    26,750
    
    
    
    (5,092
    )
    
    
    15,522State
    
    
    3,723
    
    
    
    (485
    )
    
    
    3,846$
    44,715
    
    
    $
    27,576
    
    
    $
    35,325
  92




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2008Federal statutory rate
    
    $
    35.0
    %
    
    $
    35.0
    %
    
    $
    35.0
    %State income taxes, net of federal income tax benefit
    
    
    3.5
    
    
    
    4.4
    
    
    
    5.3Non-deductible goodwill impairment charges
    
    
    
    
    
    
    3.8
    
    
    
    Other non-deductible expenses
    
    
    0.2
    
    
    
    0.8
    
    
    
    0.5Income attributable to non-controlling interests
    
    
    (2.4
    )
    
    
    (5.3
    )
    
    
    (1.8
    )Change in valuation allowance charged to federal
income tax expense
    
    
    0.4
    
    
    
    2.4
    
    
    
    1.1Other items, net
    
    
    0.4
    
    
    
    0.8
    
    
    
    0.3Income tax expense
    
    $
    37.1
    %

    
    $
    41.9
    %
    
    $
    40.4
    %
  93




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  September 30,
    
    
    September 30,2010
    
    
    2009Assets
    
    
    Liabilities
    
    
    Assets
    
    
    LiabilitiesDepreciation and fixed asset basis differences
    
    $
    
    
    
    $
    76,706
    
    
    $
    
    
    
    $
    77,743Amortization and intangible asset basis differences
    
    
    
    
    
    
    66,092
    
    
    
    
    
    
    
    55,721Allowance for doubtful accounts
    
    
    8,424
    
    
    
    
    
    
    
    30,769
    
    
    
    Professional liability
    
    
    15,350
    
    
    
    
    
    
    
    15,561
    
    
    
    Accrued expenses and other liabilities
    
    
    18,617
    
    
    
    
    
    
    
    14,625
    
    
    
    Deductible carryforwards and credits
    
    
    10,221
    
    
    
    
    
    
    
    9,861
    
    
    
    Other, net
    
    
    6,325
    
    
    
    
    
    
    
    3,841
    
    
    
    Valuation allowance
    
    
    (9,530
    )
    
    
    
    
    
    
    (8,580
    )
    
    
    Total
    
    $
    49,407
    
    
    $
    142,798
    
    
    $
    66,077
    
    
    $
    133,464
       94




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
   Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2008Unrecognized tax benefits at October 1
    
    $
    13,638
    
    
    $
    15,550
    
    
    
    17,942Additions resulting from tax positions taken in a prior period
    
    
    
    
    
    
    14
    
    
    
    937Reductions resulting from tax positions taken in a prior period
    
    
    (1,700
    )
    
    
    (3,171
    )
    
    
    (6,258
    )Additions resulting from tax positions taken in the current period
    
    
    5,596
    
    
    
    1,965
    
    
    
    2,929Reductions resulting from lapse of statute of limitations
    
    
    
    
    
    
    (720
    )
    
    
    Unrecognized tax benefits at September 30
    
    $
    17,534
    
    
    $
    13,638
    
    
    $
    15,550
   14. COMMITMENTS AND CONTINGENCIES
 Net Revenue
  Professional, General and Workers Compensation Liability Risks
   95




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
  Health Choice
  Acquisitions
  Other
 qui tam qui tam qui tam qui tam qui tam qui tam qui tam qui tam
  96




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 15. LEASES
   Capital
    
    
    OperatingLeases
    
    
    Leases2011
    
    $
    933
    
    
    $
    28,5252012
    
    
    652
    
    
    
    25,7662013
    
    
    562
    
    
    
    24,2542014
    
    
    562
    
    
    
    20,7692015
    
    
    562
    
    
    
    17,713Thereafter
    
    
    4,679
    
    
    
    57,380Total minimum lease payments
    
    $
    7,950
    
    
    $
    174,407Amount representing interest (at rates ranging from 4.4% to 11.0%)
    
    
    3,374Present
value of net minimum lease payments (including $649 classified as current)
    
    $
    4,576
  16. RETIREMENT PLANS
   97




---



##### Table of Contents



IASIS HEALTHCARE LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 17. SEGMENT AND GEOGRAPHIC INFORMATION
  For the Year Ended September 30, 2010Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    1,729,344
    
    
    $
    
    
    
    $
    
    
    
    $
    1,729,344Premium revenue
    
    
    
    
    
    
    792,062
    
    
    
    
    
    
    
    792,062Revenue between segments
    
    
    11,805
    
    
    
    
    
    
    
    (11,805
    )
    
    
    Total net revenue
    
    
    1,741,149
    
    
    
    792,062
    
    
    
    (11,805
    )
    
    
    2,521,406Salaries and benefits (excludes
stock compensation)
    
    
    664,667
    
    
    
    19,149
    
    
    
    
    
    
    
    683,816Supplies
    
    
    266,347
    
    
    
    198
    
    
    
    
    
    
    
    266,545Medical claims
    
    
    
    
    
    
    690,456
    
    
    
    (11,805
    )
    
    
    678,651Other operating expenses
    
    
    339,304
    
    
    
    24,612
    
    
    
    
    
    
    
    363,916Provision for bad debts
    
    
    197,680
    
    
    
    
    
    
    
    
    
    
    
    197,680Rentals and leases
    
    
    38,409
    
    
    
    1,546
    
    
    
    
    
    
    
    39,955Adjusted EBITDA(1)
    
    
    234,742
    
    
    
    56,101
    
    
    
    
    
    
    
    290,843Interest expense, net
    
    
    66,810
    
    
    
    
    
    
    
    
    
    
    
    66,810Depreciation and amortization
    
    
    92,544
    
    
    
    3,562
    
    
    
    
    
    
    
    96,106Stock compensation
    
    
    2,487
    
    
    
    
    
    
    
    
    
    
    
    2,487Management fees
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Earnings from continuing
operations before gain on
disposal of assets and income
taxes
    
    
    67,901
    
    
    
    52,539
    
    
    
    
    
    
    
    120,440Gain on disposal of assets, net
    
    
    108
    
    
    
    
    
    
    
    
    
    
    
    108Earnings from continuing
operations before income
taxes
    
    $
    68,009
    
    
    $
    52,539
    
    
    $
    
    
    
    $
    120,548Segment assets
    
    $
    2,032,246
    
    
    $
    320,948
    
    
    
    
    
    
    $
    2,353,194Capital expenditures
    
    $
    80,966
    
    
    $
    302
    
    
    
    
    
    
    $
    81,268Goodwill
    
    $
    712,486
    
    
    $
    5,757
    
    
    
    
    
    
    $
    718,243
  98




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 For the Year Ended September 30, 2009Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    1,662,469
    
    
    $
    
    
    
    $
    
    
    
    $
    1,662,469Premium revenue
    
    
    
    
    
    
    699,503
    
    
    
    
    
    
    
    699,503Revenue between segments
    
    
    9,316
    
    
    
    
    
    
    
    (9,316
    )
    
    
    Total net revenue
    
    
    1,671,785
    
    
    
    699,503
    
    
    
    (9,316
    )
    
    
    2,361,972Salaries and benefits (excludes stock compensation)
    
    
    641,332
    
    
    
    19,028
    
    
    
    
    
    
    
    660,360Supplies
    
    
    250,310
    
    
    
    263
    
    
    
    
    
    
    
    250,573Medical claims
    
    
    
    
    
    
    602,076
    
    
    
    (9,316
    )
    
    
    592,760Other operating expenses
    
    
    302,804
    
    
    
    22,931
    
    
    
    
    
    
    
    325,735Provision for bad debts
    
    
    192,563
    
    
    
    
    
    
    
    
    
    
    
    192,563Rentals and leases
    
    
    37,563
    
    
    
    1,564
    
    
    
    
    
    
    
    39,127Hurricane-related property damage
    
    
    938
    
    
    
    
    
    
    
    
    
    
    
    938Adjusted EBITDA(1)
    
    
    246,275
    
    
    
    53,641
    
    
    
    
    
    
    
    299,916Interest expense, net
    
    
    67,890
    
    
    
    
    
    
    
    
    
    
    
    67,890Depreciation and amortization
    
    
    94,014
    
    
    
    3,448
    
    
    
    
    
    
    
    97,462Stock compensation
    
    
    561
    
    
    
    
    
    
    
    
    
    
    
    561Impairment of goodwill
    
    
    64,639
    
    
    
    
    
    
    
    
    
    
    
    64,639Management fees
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Earnings from continuing operations before gain (loss) on
disposal of assets and income taxes
    
    
    14,171
    
    
    
    50,193
    
    
    
    
    
    
    
    64,364Gain (loss) on disposal of assets, net
    
    
    1,616
    
    
    
    (151
    )
    
    
    
    
    
    
    1,465Earnings from continuing operations before income taxes
    
    $
    15,787
    
    
    $
    50,042
    
    
    $
    
    
    
    $
    65,829Segment assets
    
    $
    2,109,422
    
    
    $
    247,782
    
    
    
    
    
    
    $
    2,357,204Capital expenditures
    
    $
    86,875
    
    
    $
    845
    
    
    
    
    
    
    $
    87,720Goodwill
    
    $
    712,163
    
    
    $
    5,757
    
    
    
    
    
    
    $
    717,920
  99




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 For the Year Ended September 30, 2008Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    1,523,790
    
    
    $
    
    
    
    $
    
    
    
    $
    1,523,790Premium revenue
    
    
    
    
    
    
    541,746
    
    
    
    
    
    
    
    541,746Revenue between segments
    
    
    9,594
    
    
    
    
    
    
    
    (9,594
    )
    
    
    Total net revenue
    
    
    1,533,384
    
    
    
    541,746
    
    
    
    (9,594
    )
    
    
    2,065,536Salaries and benefits
    
    
    614,442
    
    
    
    17,667
    
    
    
    
    
    
    
    632,109Supplies
    
    
    231,001
    
    
    
    258
    
    
    
    
    
    
    
    231,259Medical claims
    
    
    
    
    
    
    461,649
    
    
    
    (9,594
    )
    
    
    452,055Other operating expenses
    
    
    264,814
    
    
    
    18,309
    
    
    
    
    
    
    
    283,123Provision for bad debts
    
    
    161,936
    
    
    
    
    
    
    
    
    
    
    
    161,936Rentals and leases
    
    
    35,466
    
    
    
    1,167
    
    
    
    
    
    
    
    36,633Hurricane-related property damage
    
    
    3,589
    
    
    
    
    
    
    
    
    
    
    
    3,589Adjusted EBITDA(1)
    
    
    222,136
    
    
    
    42,696
    
    
    
    
    
    
    
    264,832Interest expense, net
    
    
    75,665
    
    
    
    
    
    
    
    
    
    
    
    75,665Depreciation and amortization
    
    
    93,003
    
    
    
    3,738
    
    
    
    
    
    
    
    96,741Management fees
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Earnings from continuing operations before loss on
disposal of assets and income taxes
    
    
    48,468
    
    
    
    38,958
    
    
    
    
    
    
    
    87,426Loss on disposal of assets, net
    
    
    (75
    )
    
    
    
    
    
    
    
    
    
    
    (75
    )Earnings from continuing operations before income taxes
    
    $
    48,393
    
    
    $
    38,958
    
    
    $
    
    
    
    $
    87,351Segment assets
    
    $
    2,123,069
    
    
    $
    185,078
    
    
    
    
    
    
    $
    2,308,147Capital expenditures
    
    $
    136,425
    
    
    $
    990
    
    
    
    
    
    
    $
    137,415Goodwill
    
    $
    774,842
    
    
    $
    5,757
    
    
    
    
    
    
    $
    780,599
 (1)
    
    Adjusted EBITDA represents net earnings from continuing operations before interest
expense, income tax expense, depreciation and amortization, stock compensation, impairment of
goodwill, gain (loss) on disposal of assets and management fees. Management fees represent
monitoring and advisory fees paid to TPG, the Companys majority financial sponsor, and
certain other members of IASIS Investment LLC. Management routinely calculates and
communicates adjusted EBITDA and believes that it is useful to investors because it is
commonly used as an analytical indicator within the healthcare industry to evaluate hospital
performance, allocate resources and measure leverage capacity and debt service ability. In
addition, the Company uses adjusted EBITDA as a measure of performance for its business
segments and for incentive compensation purposes. Adjusted EBITDA should not be considered as
a measure of financial performance under GAAP, and the items excluded from adjusted EBITDA are
significant components in understanding and assessing financial performance. Adjusted EBITDA
should not be considered in isolation or as an alternative to net earnings, cash flows
generated by operating, investing, or financing activities or other financial statement data
presented in the consolidated financial statements as an indicator of financial performance or
liquidity. Adjusted EBITDA, as presented, differs from what is defined under the Companys
senior secured credit facilities and may not be comparable to similarly titled measures of
other companies. 18. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  September 30,
    
    
    September 30,2010
    
    
    2009Employee health insurance payable
    
    $
    8,265
    
    
    $
    9,183Accrued property taxes
    
    
    11,645
    
    
    
    10,496Health Choice program settlements payable
    
    
    56,487
    
    
    
    13,720Other
    
    
    30,217
    
    
    
    32,302$
    106,614
    
    
    $
    65,701
  100




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 19. ALLOWANCE FOR DOUBTFUL ACCOUNTS
  AccountsWritten Off,Beginning
    
    
    Provision for
    
    
    
    
    
    
    Net of
    
    
    EndingBalance
    
    
    Bad Debts
    
    
    Other (1)
    
    
    Recoveries
    
    
    BalanceYear Ended September
30, 2008
    
    $
    97,829
    
    
    
    161,936
    
    
    
    6,782
    
    
    
    (158,092
    )
    
    $
    108,455Year Ended September
30, 2009
    
    $
    108,455
    
    
    
    192,563
    
    
    
    641
    
    
    
    (175,527
    )
    
    $
    126,132Year Ended September
30, 2010
    
    $
    126,132
    
    
    
    197,680
    
    
    
    
    
    
    
    (198,406
    )
    
    $
    125,406
 
 (1)
    
    Represents provision for bad debts recorded at facilities which are now included in
discontinued operations.  20. IMPACT OF HURRICANE ACTIVITY
  21. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
 3 4
    101




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)      (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    143,599
    
    
    $
    912
    
    
    $
    
    
    
    $
    144,511Accounts receivable, net
    
    
    
    
    
    
    81,649
    
    
    
    127,524
    
    
    
    
    
    
    
    209,173Inventories
    
    
    
    
    
    
    22,793
    
    
    
    31,049
    
    
    
    
    
    
    
    53,842Deferred income taxes
    
    
    15,881
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,881Prepaid expenses and other current assets
    
    
    
    
    
    
    23,577
    
    
    
    41,763
    
    
    
    
    
    
    
    65,340Total current assets
    
    
    15,881
    
    
    
    271,618
    
    
    
    201,248
    
    
    
    
    
    
    
    488,747Property and equipment, net
    
    
    
    
    
    
    351,265
    
    
    
    634,026
    
    
    
    
    
    
    
    985,291Intercompany
    
    
    
    
    
    
    (297,257
    )
    
    
    297,257
    
    
    
    
    
    
    
    Net investment in and advances to subsidiaries
    
    
    1,823,973
    
    
    
    
    
    
    
    
    
    
    
    (1,823,973
    )
    
    
    Goodwill
    
    
    17,331
    
    
    
    65,504
    
    
    
    635,408
    
    
    
    
    
    
    
    718,243Other intangible assets, net
    
    
    
    
    
    
    
    
    
    
    27,000
    
    
    
    
    
    
    
    27,000Deposit for acquisition
    
    
    
    
    
    
    97,891
    
    
    
    
    
    
    
    
    
    
    
    97,891Other assets, net
    
    
    12,018
    
    
    
    17,967
    
    
    
    6,037
    
    
    
    
    
    
    
    36,022Total assets
    
    $
    1,869,203
    
    
    $
    506,988
    
    
    $
    1,800,976
    
    
    $
    (1,823,973
    )
    
    $
    2,353,194Liabilities and EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    32,400
    
    
    $
    46,531
    
    
    $
    
    
    
    $
    78,931Salaries and benefits payable
    
    
    
    
    
    
    19,916
    
    
    
    18,194
    
    
    
    
    
    
    
    38,110Accrued interest payable
    
    
    12,536
    
    
    
    (3,237
    )
    
    
    3,237
    
    
    
    
    
    
    
    12,536Medical claims payable
    
    
    
    
    
    
    
    
    
    
    111,373
    
    
    
    
    
    
    
    111,373Other accrued expenses and other current liabilities
    
    
    
    
    
    
    32,326
    
    
    
    74,288
    
    
    
    
    
    
    
    106,614Current portion of long-term debt and capital lease obligations
    
    
    5,890
    
    
    
    801
    
    
    
    20,570
    
    
    
    (20,570
    )
    
    
    6,691Total current liabilities
    
    
    18,426
    
    
    
    82,206
    
    
    
    274,193
    
    
    
    (20,570
    )
    
    
    354,255Long-term debt and capital lease obligations
    
    
    1,039,370
    
    
    
    5,517
    
    
    
    547,170
    
    
    
    (547,170
    )
    
    
    1,044,887Deferred income taxes
    
    
    109,272
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,272Other long-term liabilities
    
    
    
    
    
    
    59,527
    
    
    
    635
    
    
    
    
    
    
    
    60,162Total liabilities
    
    
    1,167,068
    
    
    
    147,250
    
    
    
    821,998
    
    
    
    (567,740
    )
    
    
    1,568,576Non-controlling interests with redemption rights
    
    
    
    
    
    
    72,112
    
    
    
    
    
    
    
    
    
    
    
    72,112Equity:Members equity
    
    
    702,135
    
    
    
    277,255
    
    
    
    978,978
    
    
    
    (1,256,233
    )
    
    
    702,135Non-controlling interests
    
    
    
    
    
    
    10,371
    
    
    
    
    
    
    
    
    
    
    
    10,371Total equity
    
    
    702,135
    
    
    
    287,626
    
    
    
    978,978
    
    
    
    (1,256,233
    )
    
    
    712,506Total liabilities and equity
    
    $
    1,869,203
    
    
    $
    506,988
    
    
    $
    1,800,976
    
    
    $
    (1,823,973
    )
    
    $
    2,353,194
  102




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash
equivalents
    
    $
    
    
    
    $
    206,331
    
    
    $
    197
    
    
    $
    
    
    
    $
    206,528Accounts receivable, net
    
    
    
    
    
    
    90,883
    
    
    
    139,315
    
    
    
    
    
    
    
    230,198Inventories
    
    
    
    
    
    
    22,405
    
    
    
    28,087
    
    
    
    
    
    
    
    50,492Deferred income taxes
    
    
    39,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,038Prepaid expenses and other current assets
    
    
    
    
    
    
    15,521
    
    
    
    33,932
    
    
    
    
    
    
    
    49,453Total current assets
    
    
    39,038
    
    
    
    335,140
    
    
    
    201,531
    
    
    
    
    
    
    
    575,709Property and equipment,
net
    
    
    
    
    
    
    347,657
    
    
    
    649,696
    
    
    
    
    
    
    
    997,353Intercompany
    
    
    
    
    
    
    (243,956
    )
    
    
    243,956
    
    
    
    
    
    
    
    Net investment in and advances to subsidiaries
    
    
    1,851,008
    
    
    
    
    
    
    
    
    
    
    
    (1,851,008
    )
    
    
    Goodwill
    
    
    17,331
    
    
    
    67,445
    
    
    
    633,144
    
    
    
    
    
    
    
    717,920Other intangible assets, net
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    30,000Other assets, net
    
    
    15,182
    
    
    
    16,780
    
    
    
    4,260
    
    
    
    
    
    
    
    36,222Total assets
    
    $
    1,922,559
    
    
    $
    523,066
    
    
    $
    1,762,587
    
    
    $
    (1,851,008
    )
    
    $
    2,357,204Liabilities and EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    25,269
    
    
    $
    43,283
    
    
    $
    
    
    
    $
    68,552Salaries and benefits payable
    
    
    
    
    
    
    25,008
    
    
    
    17,540
    
    
    
    
    
    
    
    42,548Accrued interest payable
    
    
    12,511
    
    
    
    (3,239
    )
    
    
    3,239
    
    
    
    
    
    
    
    12,511Medical claims payable
    
    
    
    
    
    
    
    
    
    
    113,519
    
    
    
    
    
    
    
    113,519Other accrued expenses and other current
liabilities
    
    
    
    
    
    
    39,559
    
    
    
    26,142
    
    
    
    
    
    
    
    65,701Current portion of long-term debt and
capital lease obligations
    
    
    7,431
    
    
    
    935
    
    
    
    20,614
    
    
    
    (20,614
    )
    
    
    8,366Total current
liabilities
    
    
    19,942
    
    
    
    87,532
    
    
    
    224,337
    
    
    
    (20,614
    )
    
    
    311,197Long-term debt and capital lease obligations
    
    
    1,045,260
    
    
    
    6,211
    
    
    
    566,980
    
    
    
    (566,980
    )
    
    
    1,051,471Deferred income taxes
    
    
    106,425
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,425Other long-term liabilities
    
    
    
    
    
    
    53,577
    
    
    
    645
    
    
    
    
    
    
    
    54,222Total liabilities
    
    
    1,171,627
    
    
    
    147,320
    
    
    
    791,962
    
    
    
    (587,594
    )
    
    
    1,523,315Non-controlling interests with redemption rights
    
    
    
    
    
    
    72,527
    
    
    
    
    
    
    
    
    
    
    
    72,527Equity:Members equity
    
    
    750,932
    
    
    
    292,789
    
    
    
    970,625
    
    
    
    (1,263,414
    )
    
    
    750,932Non-controlling interests
    
    
    
    
    
    
    10,430
    
    
    
    
    
    
    
    
    
    
    
    10,430Total equity
    
    
    750,932
    
    
    
    303,219
    
    
    
    970,625
    
    
    
    (1,263,414
    )
    
    
    761,362Total liabilities and
equity
    
    $
    1,922,559
    
    
    $
    523,066
    
    
    $
    1,762,587
    
    
    $
    (1,851,008
    )
    
    $
    2,357,204
  103




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (in thousands)
 For the Year Ended September 30, 2010Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet revenue:Acute care revenue
    
    $
    
    
    
    $
    685,244
    
    
    $
    1,055,905
    
    
    $
    (11,805
    )
    
    $
    1,729,344Premium revenue
    
    
    
    
    
    
    
    
    
    
    792,062
    
    
    
    
    
    
    
    792,062Total net revenue
    
    
    
    
    
    
    685,244
    
    
    
    1,847,967
    
    
    
    (11,805
    )
    
    
    2,521,406Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    351,792
    
    
    
    334,511
    
    
    
    
    
    
    
    686,303Supplies
    
    
    
    
    
    
    111,777
    
    
    
    154,768
    
    
    
    
    
    
    
    266,545Medical claims
    
    
    
    
    
    
    
    
    
    
    690,456
    
    
    
    (11,805
    )
    
    
    678,651Other operating expenses
    
    
    
    
    
    
    121,522
    
    
    
    242,394
    
    
    
    
    
    
    
    363,916Provision for bad debts
    
    
    
    
    
    
    90,564
    
    
    
    107,116
    
    
    
    
    
    
    
    197,680Rentals and leases
    
    
    
    
    
    
    16,736
    
    
    
    23,219
    
    
    
    
    
    
    
    39,955Interest expense, net
    
    
    66,810
    
    
    
    
    
    
    
    41,270
    
    
    
    (41,270
    )
    
    
    66,810Depreciation and amortization
    
    
    
    
    
    
    40,762
    
    
    
    55,344
    
    
    
    
    
    
    
    96,106Management fees
    
    
    5,000
    
    
    
    (22,831
    )
    
    
    22,831
    
    
    
    
    
    
    
    5,000Equity in earnings of affiliates
    
    
    (139,647
    )
    
    
    
    
    
    
    
    
    
    
    139,647
    
    
    
    Total costs and expenses
    
    
    (67,837
    )
    
    
    710,322
    
    
    
    1,671,909
    
    
    
    86,572
    
    
    
    2,400,966Earnings (loss) from continuing operations before gain (loss)
on disposal of assets and income taxes
    
    
    67,837
    
    
    
    (25,078
    )
    
    
    176,058
    
    
    
    (98,377
    )
    
    
    120,440Gain (loss) on disposal of assets, net
    
    
    
    
    
    
    273
    
    
    
    (165
    )
    
    
    
    
    
    
    108Earnings (loss) from continuing operations before income taxes
    
    
    67,837
    
    
    
    (24,805
    )
    
    
    175,893
    
    
    
    (98,377
    )
    
    
    120,548Income tax expense
    
    
    43,290
    
    
    
    
    
    
    
    1,425
    
    
    
    
    
    
    
    44,715Net earnings (loss) from continuing operations
    
    
    24,547
    
    
    
    (24,805
    )
    
    
    174,468
    
    
    
    (98,377
    )
    
    
    75,833Earnings (loss) from discontinued operations, net of income
taxes
    
    
    650
    
    
    
    (1,731
    )
    
    
    (6
    )
    
    
    
    
    
    
    (1,087
    )Net earnings (loss)
    
    
    25,197
    
    
    
    (26,536
    )
    
    
    174,462
    
    
    
    (98,377
    )
    
    
    74,746Net earnings attributable to non-controlling interests
    
    
    
    
    
    
    (8,279
    )
    
    
    
    
    
    
    
    
    
    
    (8,279
    )Net earnings (loss) attributable to IASIS Healthcare LLC
    
    $
    25,197
    
    
    $
    (34,815
    )
    
    $
    174,462
    
    
    $
    (98,377
    )
    
    $
    66,467
  104




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (in thousands)
 For the Year Ended September 30, 2009Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet revenue:Acute care revenue
    
    $
    
    
    
    $
    656,913
    
    
    $
    1,014,872
    
    
    $
    (9,316
    )
    
    $
    1,662,469Premium revenue
    
    
    
    
    
    
    
    
    
    
    699,503
    
    
    
    
    
    
    
    699,503Total net revenue
    
    
    
    
    
    
    656,913
    
    
    
    1,714,375
    
    
    
    (9,316
    )
    
    
    2,361,972Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    336,687
    
    
    
    324,234
    
    
    
    
    
    
    
    660,921Supplies
    
    
    
    
    
    
    103,587
    
    
    
    146,986
    
    
    
    
    
    
    
    250,573Medical claims
    
    
    
    
    
    
    
    
    
    
    602,076
    
    
    
    (9,316
    )
    
    
    592,760Other operating expenses
    
    
    
    
    
    
    121,597
    
    
    
    204,138
    
    
    
    
    
    
    
    325,735Provision for bad debts
    
    
    
    
    
    
    94,662
    
    
    
    97,901
    
    
    
    
    
    
    
    192,563Rentals and leases
    
    
    
    
    
    
    16,138
    
    
    
    22,989
    
    
    
    
    
    
    
    39,127Interest expense, net
    
    
    67,890
    
    
    
    
    
    
    
    43,063
    
    
    
    (43,063
    )
    
    
    67,890Depreciation and amortization
    
    
    
    
    
    
    42,492
    
    
    
    54,970
    
    
    
    
    
    
    
    97,462Management fees
    
    
    5,000
    
    
    
    (21,862
    )
    
    
    21,862
    
    
    
    
    
    
    
    5,000Impairment of goodwill
    
    
    
    
    
    
    64,639
    
    
    
    
    
    
    
    
    
    
    
    64,639Hurricane-related property damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    938Equity in earnings of affiliates
    
    
    (84,640
    )
    
    
    
    
    
    
    
    
    
    
    84,640
    
    
    
    Total costs and expenses
    
    
    (11,750
    )
    
    
    757,940
    
    
    
    1,519,157
    
    
    
    32,261
    
    
    
    2,297,608Earnings (loss) from continuing operations before gain (loss)
on disposal of assets and income taxes
    
    
    11,750
    
    
    
    (101,027
    )
    
    
    195,218
    
    
    
    (41,577
    )
    
    
    64,364Gain (loss) on disposal of assets, net
    
    
    
    
    
    
    1,598
    
    
    
    (133
    )
    
    
    
    
    
    
    1,465Earnings (loss) from continuing operations before income taxes
    
    
    11,750
    
    
    
    (99,429
    )
    
    
    195,085
    
    
    
    (41,577
    )
    
    
    65,829Income tax expense
    
    
    26,829
    
    
    
    
    
    
    
    747
    
    
    
    
    
    
    
    27,576Net earnings (loss) from continuing operations
    
    
    (15,079
    )
    
    
    (99,429
    )
    
    
    194,338
    
    
    
    (41,577
    )
    
    
    38,253Earnings (loss) from discontinued operations, net of income
taxes
    
    
    106
    
    
    
    (310
    )
    
    
    28
    
    
    
    
    
    
    
    (176
    )Net earnings (loss)
    
    
    (14,973
    )
    
    
    (99,739
    )
    
    
    194,366
    
    
    
    (41,577
    )
    
    
    38,077Net earnings attributable to non-controlling interests
    
    
    
    
    
    
    (9,987
    )
    
    
    
    
    
    
    
    
    
    
    (9,987
    )Net earnings (loss) attributable to IASIS Healthcare LLC
    
    $
    (14,973
    )
    
    $
    (109,726
    )
    
    $
    194,366
    
    
    $
    (41,577
    )
    
    $
    28,090
  105




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (in thousands)
 For the Year Ended September 30, 2008Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet revenue:Acute care revenue
    
    $
    
    
    
    $
    637,773
    
    
    $
    895,611
    
    
    $
    (9,594
    )
    
    $
    1,523,790Premium revenue
    
    
    
    
    
    
    
    
    
    
    541,746
    
    
    
    
    
    
    
    541,746Total net revenue
    
    
    
    
    
    
    637,773
    
    
    
    1,437,357
    
    
    
    (9,594
    )
    
    
    2,065,536Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    319,243
    
    
    
    312,866
    
    
    
    
    
    
    
    632,109Supplies
    
    
    
    
    
    
    104,698
    
    
    
    126,561
    
    
    
    
    
    
    
    231,259Medical claims
    
    
    
    
    
    
    
    
    
    
    461,649
    
    
    
    (9,594
    )
    
    
    452,055Other operating expenses
    
    
    
    
    
    
    111,781
    
    
    
    171,342
    
    
    
    
    
    
    
    283,123Provision for bad debts
    
    
    
    
    
    
    80,139
    
    
    
    81,797
    
    
    
    
    
    
    
    161,936Rentals and leases
    
    
    
    
    
    
    14,891
    
    
    
    21,742
    
    
    
    
    
    
    
    36,633Interest expense, net
    
    
    75,665
    
    
    
    
    
    
    
    54,716
    
    
    
    (54,716
    )
    
    
    75,665Depreciation and amortization
    
    
    
    
    
    
    42,721
    
    
    
    54,020
    
    
    
    
    
    
    
    96,741Management fees
    
    
    5,000
    
    
    
    (19,337
    )
    
    
    19,337
    
    
    
    
    
    
    
    5,000Hurricane-related property damage
    
    
    
    
    
    
    
    
    
    
    3,589
    
    
    
    
    
    
    
    3,589Equity in earnings of affiliates
    
    
    (91,476
    )
    
    
    
    
    
    
    
    
    
    
    91,476
    
    
    
    Total costs and expenses
    
    
    (10,811
    )
    
    
    654,136
    
    
    
    1,307,619
    
    
    
    27,166
    
    
    
    1,978,110Earnings (loss) from continuing operations before gain (loss)
on disposal of assets and income taxes
    
    
    10,811
    
    
    
    (16,363
    )
    
    
    129,738
    
    
    
    (36,760
    )
    
    
    87,426Gain (loss) on disposal of assets, net
    
    
    
    
    
    
    (81
    )
    
    
    6
    
    
    
    
    
    
    
    (75
    )Earnings (loss) from continuing operations before income taxes
    
    
    10,811
    
    
    
    (16,444
    )
    
    
    129,744
    
    
    
    (36,760
    )
    
    
    87,351Income tax expense
    
    
    34,996
    
    
    
    
    
    
    
    329
    
    
    
    
    
    
    
    35,325Net earnings (loss) from continuing
operations
    
    
    (24,185
    )
    
    
    (16,444
    )
    
    
    129,415
    
    
    
    (36,760
    )
    
    
    52,026Earnings (loss) from discontinued operations, net of income
taxes
    
    
    5,783
    
    
    
    (12,257
    )
    
    
    (4,801
    )
    
    
    
    
    
    
    (11,275
    )Net earnings (loss)
    
    
    (18,402
    )
    
    
    (28,701
    )
    
    
    124,614
    
    
    
    (36,760
    )
    
    
    40,751Net earnings attributable to non-controlling interests
    
    
    
    
    
    
    (4,437
    )
    
    
    
    
    
    
    
    
    
    
    (4,437
    )Net earnings (loss) attributable to IASIS Healthcare LLC
    
    $
    (18,402
    )
    
    $
    (33,138
    )
    
    $
    124,614
    
    
    $
    (36,760
    )
    
    $
    36,314
  106




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 (in thousands)
 For the Year Ended September 30, 2010Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activitiesNet earnings (loss)
    
    $
    25,197
    
    
    $
    (26,536
    )
    
    $
    174,462
    
    
    $
    (98,377
    )
    
    $
    74,746Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    
    
    
    
    40,762
    
    
    
    55,344
    
    
    
    
    
    
    
    96,106Amortization of loan costs
    
    
    3,163
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,163Stock compensation costs
    
    
    2,487
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,487Deferred income taxes
    
    
    30,473
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,473Income tax benefit from stock compensation
    
    
    (1,770
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,770
    )Income tax benefit from parent company interest
    
    
    8,554
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,554Loss (gain) on disposal of assets
    
    
    
    
    
    
    (273
    )
    
    
    165
    
    
    
    
    
    
    
    (108
    )Loss (earnings) from discontinued operations
    
    
    (650
    )
    
    
    1,731
    
    
    
    6
    
    
    
    
    
    
    
    1,087Equity in earnings of affiliates
    
    
    (139,647
    )
    
    
    
    
    
    
    
    
    
    
    139,647
    
    
    
    Changes in operating assets and liabilities, net of the
effect of acquisitions and dispositions:Accounts receivable, net
    
    
    
    
    
    
    9,488
    
    
    
    11,791
    
    
    
    
    
    
    
    21,279Inventories, prepaid expenses and other current assets
    
    
    
    
    
    
    (8,423
    )
    
    
    (10,804
    )
    
    
    
    
    
    
    (19,227
    )Accounts payable, other accrued expenses and other
accrued liabilities
    
    
    1,795
    
    
    
    11,108
    
    
    
    29,054
    
    
    
    
    
    
    
    41,957Net cash provided by (used in) operating activities 
continuing operations
    
    
    (70,398
    )
    
    
    27,857
    
    
    
    260,018
    
    
    
    41,270
    
    
    
    258,747Net cash used in operating activities  discontinued
operations
    
    
    (216
    )
    
    
    (1,292
    )
    
    
    
    
    
    
    
    
    
    
    (1,508
    )Net cash provided by (used in) operating activities
    
    
    (70,614
    )
    
    
    26,565
    
    
    
    260,018
    
    
    
    41,270
    
    
    
    257,239Cash flows from investing activitiesPurchases of property and equipment
    
    
    
    
    
    
    (44,246
    )
    
    
    (37,022
    )
    
    
    
    
    
    
    (81,268
    )Cash paid for acquisitions
    
    
    
    
    
    
    (97,891
    )
    
    
    (414
    )
    
    
    
    
    
    
    (98,305
    )Proceeds from sale of assets
    
    
    
    
    
    
    20
    
    
    
    37
    
    
    
    
    
    
    
    57Change in other assets
    
    
    
    
    
    
    4,247
    
    
    
    (1,204
    )
    
    
    
    
    
    
    3,043Net cash used in investing activities
    
    
    
    
    
    
    (137,870
    )
    
    
    (38,603
    )
    
    
    
    
    
    
    (176,473
    )Cash flows from financing activitiesPayment of debt and capital lease obligations
    
    
    (7,521
    )
    
    
    (43
    )
    
    
    (814
    )
    
    
    
    
    
    
    (8,378
    )Distribution to parent company in connection with the
repurchase of equity, net
    
    
    (124,962
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (124,962
    )Distributions to non-controlling interests
    
    
    
    
    
    
    (194
    )
    
    
    (8,790
    )
    
    
    
    
    
    
    (8,984
    )Costs paid for repurchase of non-controlling interests
    
    
    
    
    
    
    (459
    )
    
    
    
    
    
    
    
    
    
    
    (459
    )Change in intercompany balances with affiliates, net
    
    
    49,269
    
    
    
    49,269
    
    
    
    (211,096
    )
    
    
    (41,270
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    70,614
    
    
    
    48,573
    
    
    
    (220,700
    )
    
    
    (41,270
    )
    
    
    (142,783
    )Change in cash and cash equivalents
    
    
    
    
    
    
    (62,732
    )
    
    
    715
    
    
    
    
    
    
    
    (62,017
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    206,331
    
    
    
    197
    
    
    
    
    
    
    
    206,528Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    143,599
    
    
    $
    912
    
    
    $
    
    
    
    $
    144,511
  107




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)     (in thousands)
 For the Year Ended September 30, 2009Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activitiesNet earnings (loss)
    
    $
    (14,973
    )
    
    $
    (99,739
    )
    
    $
    194,366
    
    
    $
    (41,577
    )
    
    $
    38,077Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:Loss (earnings) from discontinued operations
    
    
    (106
    )
    
    
    310
    
    
    
    (28
    )
    
    
    
    
    
    
    176Depreciation and amortization
    
    
    
    
    
    
    42,492
    
    
    
    54,970
    
    
    
    
    
    
    
    97,462Amortization of loan costs
    
    
    3,029
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,029Income tax benefit from parent company interest
    
    
    27,344
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,344Deferred income taxes
    
    
    (5,572
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,572
    )Loss (gain) on disposal of assets
    
    
    
    
    
    
    (1,598
    )
    
    
    133
    
    
    
    
    
    
    
    (1,465
    )Impairment of goodwill
    
    
    
    
    
    
    64,639
    
    
    
    
    
    
    
    
    
    
    
    64,639Hurricane-related property damage
    
    
    
    
    
    
    
    
    
    
    938
    
    
    
    
    
    
    
    938Stock compensation costs
    
    
    561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    561Equity in earnings of affiliates
    
    
    (84,640
    )
    
    
    
    
    
    
    
    
    
    
    84,640
    
    
    
    Changes in operating assets and liabilities, net of the
effect of acquisitions and dispositions:Accounts receivable, net
    
    
    
    
    
    
    9,319
    
    
    
    (16,621
    )
    
    
    
    
    
    
    (7,302
    )Inventories, prepaid expenses and other current assets
    
    
    
    
    
    
    1,179
    
    
    
    5,549
    
    
    
    
    
    
    
    6,728Accounts payable, other accrued expenses and other
accrued liabilities
    
    
    51
    
    
    
    30,220
    
    
    
    15,613
    
    
    
    
    
    
    
    45,884Net cash provided by (used in) operating activities 
continuing operations
    
    
    (74,306
    )
    
    
    46,822
    
    
    
    254,920
    
    
    
    43,063
    
    
    
    270,499Net cash provided by (used in) operating activities 
discontinued operations
    
    
    (106
    )
    
    
    1,739
    
    
    
    (161
    )
    
    
    
    
    
    
    1,472Net cash provided by (used in) operating activities
    
    
    (74,412
    )
    
    
    48,561
    
    
    
    254,759
    
    
    
    43,063
    
    
    
    271,971Cash flows from investing activitiesPurchases of property and equipment
    
    
    
    
    
    
    (24,965
    )
    
    
    (62,755
    )
    
    
    
    
    
    
    (87,720
    )Cash paid for acquisitions
    
    
    
    
    
    
    (1,941
    )
    
    
    
    
    
    
    
    
    
    
    (1,941
    )Proceeds from sale of assets
    
    
    
    
    
    
    3,018
    
    
    
    2,234
    
    
    
    
    
    
    
    5,252Change in other assets
    
    
    
    
    
    
    (654
    )
    
    
    2,477
    
    
    
    
    
    
    
    1,823Net cash used in investing activities  continuing
operations
    
    
    
    
    
    
    (24,542
    )
    
    
    (58,044
    )
    
    
    
    
    
    
    (82,586
    )Net cash provided by investing activities 
discontinued operations
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Net cash used in investing activities
    
    
    
    
    
    
    (24,532
    )
    
    
    (58,044
    )
    
    
    
    
    
    
    (82,576
    )Cash flows from financing activitiesPayment of debt and capital lease obligations
    
    
    (55,015
    )
    
    
    
    
    
    
    (461
    )
    
    
    
    
    
    
    (55,476
    )Distributions to non-controlling interests
    
    
    
    
    
    
    (269
    )
    
    
    (6,481
    )
    
    
    
    
    
    
    (6,750
    )Costs paid for repurchase of non-controlling interests
    
    
    
    
    
    
    (1,379
    )
    
    
    
    
    
    
    
    
    
    
    (1,379
    )Change in intercompany balances with affiliates, net
    
    
    129,427
    
    
    
    103,614
    
    
    
    (189,978
    )
    
    
    (43,063
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    74,412
    
    
    
    101,966
    
    
    
    (196,920
    )
    
    
    (43,063
    )
    
    
    (63,605
    )Change in cash and cash equivalents
    
    
    
    
    
    
    125,995
    
    
    
    (205
    )
    
    
    
    
    
    
    125,790Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    80,336
    
    
    
    402
    
    
    
    
    
    
    
    80,738Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    206,331
    
    
    $
    197
    
    
    $
    
    
    
    $
    206,528
  108




---



##### Table of Contents



IASIS HEALTHCARE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)     (in thousands)
 For the Year Ended September 30, 2008Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activitiesNet earnings (loss)
    
    $
    (18,402
    )
    
    $
    (28,701
    )
    
    $
    124,614
    
    
    $
    (36,760
    )
    
    $
    40,751Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:Loss (earnings) from discontinued
operations
    
    
    (5,783
    )
    
    
    12,257
    
    
    
    4,801
    
    
    
    
    
    
    
    11,275Depreciation and amortization
    
    
    
    
    
    
    42,721
    
    
    
    54,020
    
    
    
    
    
    
    
    96,741Amortization of loan costs
    
    
    2,913
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,913Deferred income taxes
    
    
    19,368
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,368Loss (gain) on disposal of assets
    
    
    
    
    
    
    81
    
    
    
    (6
    )
    
    
    
    
    
    
    75Hurricane-related property damage
    
    
    
    
    
    
    
    
    
    
    3,589
    
    
    
    
    
    
    
    3,589Equity in earnings of affiliates
    
    
    (91,476
    )
    
    
    
    
    
    
    
    
    
    
    91,476
    
    
    
    Changes in operating assets and liabilities, net of the
effect of acquisitions and dispositions:Accounts receivable, net
    
    
    
    
    
    
    23,114
    
    
    
    (5,983
    )
    
    
    
    
    
    
    17,131Inventories, prepaid expenses and other current assets
    
    
    
    
    
    
    2,328
    
    
    
    (23,689
    )
    
    
    
    
    
    
    (21,361
    )Accounts payable, other accrued expenses and other accrued
liabilities
    
    
    (10,947
    )
    
    
    (13,040
    )
    
    
    (5,432
    )
    
    
    
    
    
    
    (29,419
    )Net cash provided by (used in) operating activities 
continuing operations
    
    
    (104,327
    )
    
    
    38,760
    
    
    
    151,914
    
    
    
    54,716
    
    
    
    141,063Net cash provided by (used in) operating activities 
discontinued operations
    
    
    5,783
    
    
    
    (884
    )
    
    
    (2,586
    )
    
    
    
    
    
    
    2,313Net cash provided by (used in) operating activities
    
    
    (98,544
    )
    
    
    37,876
    
    
    
    149,328
    
    
    
    54,716
    
    
    
    143,376Cash flows from investing activitiesPurchases of property and equipment
    
    
    
    
    
    
    (45,109
    )
    
    
    (92,306
    )
    
    
    
    
    
    
    (137,415
    )Cash paid for acquisitions
    
    
    
    
    
    
    (16,799
    )
    
    
    (22
    )
    
    
    
    
    
    
    (16,821
    )Proceeds from sale of assets
    
    
    
    
    
    
    94
    
    
    
    266
    
    
    
    
    
    
    
    360Change in other assets
    
    
    
    
    
    
    5,226
    
    
    
    (613
    )
    
    
    
    
    
    
    4,613Net cash used in investing activities  continuing operations
    
    
    
    
    
    
    (56,588
    )
    
    
    (92,675
    )
    
    
    
    
    
    
    (149,263
    )Net cash provided by (used in) investing activities 
discontinued operations
    
    
    
    
    
    
    (1,040
    )
    
    
    23
    
    
    
    
    
    
    
    (1,017
    )Net cash used in investing activities
    
    
    
    
    
    
    (57,628
    )
    
    
    (92,652
    )
    
    
    
    
    
    
    (150,280
    )Cash flows from financing activitiesPayment of debt and capital lease obligations
    
    
    (303,190
    )
    
    
    (849
    )
    
    
    (2,572
    )
    
    
    
    
    
    
    (306,611
    )Proceeds from debt borrowings
    
    
    384,978
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384,978Distributions to non-controlling interests
    
    
    
    
    
    
    (172
    )
    
    
    (5,313
    )
    
    
    
    
    
    
    (5,485
    )Proceeds received from sale of non-controlling interests, net
    
    
    
    
    
    
    15,070
    
    
    
    
    
    
    
    
    
    
    
    15,070Other
    
    
    192
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    192Change in intercompany balances with affiliates, net
    
    
    16,564
    
    
    
    90,593
    
    
    
    (52,441
    )
    
    
    (54,716
    )
    
    
    Net cash provided by (used in) financing activities 
continuing operations
    
    
    98,544
    
    
    
    104,642
    
    
    
    (60,326
    )
    
    
    (54,716
    )
    
    
    88,144Net cash used in financing activities
 discontinued operations
    
    
    
    
    
    
    (502
    )
    
    
    
    
    
    
    
    
    
    
    (502
    )Net cash provided by (used in) financing activities
    
    
    98,544
    
    
    
    104,140
    
    
    
    (60,326
    )
    
    
    (54,716
    )
    
    
    87,642Change in cash and cash equivalents
    
    
    
    
    
    
    84,388
    
    
    
    (3,650
    )
    
    
    
    
    
    
    80,738Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    (4,052
    )
    
    
    4,052
    
    
    
    
    
    
    
    Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    80,336
    
    
    $
    402
    
    
    $
    
    
    
    $
    80,738
  109




---



##### Table of Contents



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
  
 Item 9A. Controls and Procedures
 Evaluations of Disclosure Controls and Procedures
  Report of Management on Internal Control over Financial Reporting
    Internal Control  Integrated Framework
  Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information
   110




---



##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  Name
    
    Age
    
    
    PositionW. Carl Whitmer
    
    
    46
    
    
    Director, Chief Executive Officer and PresidentPhillip J. Mazzuca
    
    
    51
    
    
    Chief Operating OfficerJohn M. Doyle
    
    
    50
    
    
    Chief Financial OfficerFrank A. Coyle
    
    
    46
    
    
    Secretary and General CounselJames Moake
    
    
    41
    
    
    Operations Chief Financial OfficerPaul Jenson
    
    
    62
    
    
    Executive Vice PresidentRichard Gonzalez
    
    
    59
    
    
    President, Texas and Louisiana MarketsMatt Tulin
    
    
    44
    
    
    Chief Financial Officer, Utah MarketBashar Abunaser
    
    
    42
    
    
    Corporate Operations Controller and Chief Financial
Officer, Florida, Texas and Louisiana MarketsPeter Stanos
    
    
    47
    
    
    Vice President, Ethics and Business PracticesCarolyn Rose
    
    
    61
    
    
    Chief Executive Officer, Health Choice Arizona, Inc.David R. White
    
    
    63
    
    
    Chairman of the BoardSandra K. McRee
    
    
    54
    
    
    Vice Chair of the BoardJonathan J. Coslet
    
    
    46
    
    
    DirectorDavid Dupree
    
    
    57
    
    
    DirectorKirk E. Gorman
    
    
    60
    
    
    DirectorGreg Kranias
    
    
    33
    
    
    DirectorTodd B. Sisitsky
    
    
    39
    
    
    DirectorPaul S. Levy
    
    
    63
    
    
    DirectorJeffrey C. Lightcap
    
    
    51
    
    
    DirectorSharad Mansukani
    
    
    41
    
    
    Director
 W. Carl
 Whitmer
 Phillip J. Mazzuca
 John M. Doyle
  111




---



##### Table of Contents



Frank A. Coyle
 James Moake
 Paul Jenson
 Richard Gonzalez
 Matt Tulin
 Bashar Abunaser
 Peter Stanos
 Carolyn Rose
  112




---



##### Table of Contents



David R. White
 Sandra K. McRee
 Jonathan J. Coslet
 David Dupree
  113




---



##### Table of Contents



Kirk E. Gorman
 Greg
Kranias
 Todd
B. Sisitsky
 Paul S. Levy
 Jeffrey C. Lightcap
 Sharad Mansukani
 Director Qualifications
     114




---



##### Table of Contents



Audit Committee Financial Expert
  Code of Ethics
   115




---



##### Table of Contents



Item 11. Executive Compensation
 COMPENSATION DISCUSSION AND ANALYSIS
 Executive Summary
        116




---



##### Table of Contents



The Executive Compensation Process
 The Compensation Committee
  
    
    Reviewing and approving our compensation philosophy;
 
    
    Determining executive compensation levels;
 
    
    Annually reviewing and assessing performance goals and objectives for all
executive officers, with particular emphasis with respect to the Chief Executive
Officer, the Chief Operating Officer and the Chief Financial Officer; and
 
    
    Determining short-term and long-term incentive compensation for all executive
officers with particular emphasis with respect to the Chief Executive Officer, the Chief
Operating Officer and the Chief Financial Officer.
    Benchmarking Process
   117




---



##### Table of Contents



Pay for Performance
  
    
    Adjusted EBITDA year over year growth;
 
    
    Free cash flow;
 
    
    Return on equity;
 
    
    Peer group comparisons including comparisons of net revenue growth, expense
margins and return on capital;
 
    
    Individual, company or division performance including certain core performance
measures;
 
    
    Promotion of an effective, company-wide program that fosters a culture of legal
compliance; and
 
    
    Response to unusual or extreme events.
  Internal Pay Equity
  Components of the Executive Compensation Program
 Employment Agreements
  Base Salary
   118




---



##### Table of Contents



Short-Term Incentive Compensation
    Annual Incentive Target Award Ranges (as a Percentage of Base Salary) for Fiscal 2010
 Threshold
    
    
    Target
    
    
    MaximumDavid R. White
    
    
    20
    %
    
    
    100
    %
    
    
    200
    %W. Carl Whitmer(1)
    
    
    10
    %
    
    
    75
    %
    
    
    150
    %Sandra K. McRee
    
    
    10
    %
    
    
    50
    %
    
    
    100
    %John M. Doyle(2)
    
    
    10
    %
    
    
    50
    %
    
    
    100
    %Frank A. Coyle
    
    
    
    
    
    
    35
    %
    
    
    35
    %Carolyn Rose
    
    
    
    
    
    
    35
    %
    
    
    75
    %
 (1)
    
    For the time period prior to his promotion to President on April 23, 2010, Mr.
Whitmers Target award was 50% and his Maximum award was 100%.(2)
    
    For the time period prior to his promotion to Chief Financial Officer on April 23,
2010, Mr. Doyles Target award was 35% and his Maximum award was 50%.  
    
    Adjusted EBITDA year over year growth;
 
    
    Free cash flow;
 
    
    Return on equity;
  119




---



##### Table of Contents




    
    Peer group comparisons including comparisons of net revenue growth, expense
margins and return on capital;
 
    
    Individual, company or division performance including certain core performance
measures;
 
    
    Promotion of an effective, company-wide program that fosters a culture of legal
compliance; and
 
    
    Response to unusual or extreme events.
   Long-Term Incentive Compensation
      120




---



##### Table of Contents



Non-qualified Executive Savings Plan
     Severance and Change in Control Agreements
  Perquisites
  Group term life insurance premiums.
  121




---



##### Table of Contents



Impact of Tax and Accounting Rules
  Recovery of Certain Awards
  Compensation Committee Conclusion
  Compensation Committee Report
   
  122




---



##### Table of Contents



Summary Compensation Table  Fiscal 2010
  Change inPension ValueandNon-Equity
    
    
    NonqualifiedOption
    
    
    Incentive Plan
    
    
    Deferred
    
    
    All OtherName and Principal
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Compensation
    
    
    Compensation
    
    
    CompensationPosition
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)(2)
    
    
    Earnings ($)
    
    
    ($)
    
    
    Total ($)David R.
White (3)
Chairman of the Board &
Chief Executive Officer
    
    
    2010
    
    
    
    808,500
    
    
    
    
    
    
    
    2,466,992
    
    
    
    
    
    
    
    
    
    
    
    9,628
    
    
    
    3,285,1202009
    
    
    
    808,500
    
    
    
    
    
    
    
    16,374
    
    
    
    1,617,000
    
    
    
    
    
    
    
    9,628
    
    
    
    2,451,5022008
    
    
    
    808,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,474
    
    
    
    817,974W. Carl
Whitmer (3)
President
    
    
    2010
    
    
    
    585,458
    
    
    
    
    
    
    
    1,438,157
    
    
    
    
    
    
    
    
    
    
    
    7,945
    
    
    
    2,031,5602009
    
    
    
    534,871
    
    
    
    
    
    
    
    6,264
    
    
    
    534,871
    
    
    
    
    
    
    
    7,879
    
    
    
    1,083,8852008
    
    
    
    521,620
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,638
    
    
    
    530,258Sandra K.
McRee (3)
Chief Operating Officer
    
    
    2010
    
    
    
    600,000
    
    
    
    
    
    
    
    1,809,865
    
    
    
    
    
    
    
    
    
    
    
    7,242
    
    
    
    2,417,1072009
    
    
    
    600,000
    
    
    
    
    
    
    
    6,264
    
    
    
    600,000
    
    
    
    
    
    
    
    7,242
    
    
    
    1,213,5062008
    
    
    
    585,135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,142
    
    
    
    593,277John M. Doyle
Chief Financial Officer
    
    
    2010
    
    
    
    321,515
    
    
    
    
    
    
    
    150,453
    
    
    
    
    
    
    
    
    
    
    
    9,179
    
    
    
    481,147Frank A. Coyle
Secretary and General Counsel
    
    
    2010
    
    
    
    339,570
    
    
    
    
    
    
    
    221,255
    
    
    
    
    
    
    
    
    
    
    
    7,640
    
    
    
    568,4652009
    
    
    
    339,570
    
    
    
    
    
    
    
    5,693
    
    
    
    118,850
    
    
    
    
    
    
    
    7,596
    
    
    
    471,7092008
    
    
    
    337,097
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,098
    
    
    
    344,195Carolyn Rose
Chief Executive Officer  Health Choice
    
    
    2010
    
    
    
    245,000
    
    
    
    
    
    
    
    
    
    
    
    180,000
    
    
    
    
    
    
    
    7,057
    
    
    
    432,0572009
    
    
    
    245,000
    
    
    
    
    
    
    
    13,208
    
    
    
    158,400
    
    
    
    
    
    
    
    8,498
    
    
    
    425,1062008
    
    
    
    240,000
    
    
    
    
    
    
    
    
    
    
    
    236,250
    
    
    
    
    
    
    
    9,551
    
    
    
    485,801
 
 1.
    
    For 2010, amount represents the
incremental fair value paid for canceled vested rollover
options to purchase common stock. For 2009, represents the proportionate amount of the total
value of option awards recognized as an expense during fiscal 2009 for financial accounting
purposes under the provision of FASB authoritative guidance regarding accounting for
share-based payments, disregarding for this purpose estimated forfeitures related to
service-based vesting conditions. Compensation expense is equal to the grant date fair value
of the options estimated using the Black-Scholes-Merton model as amortized over the requisite
service periods. See Note 2 to our consolidated financial statements, Significant Accounting
Policies for additional information.2.
    
    Represents compensation to the named executive officers made pursuant to the Companys
short-term incentive bonus plan.3.
    
    Mr. White acted as Chief
Executive Officer through October 31, 2010 and currently serves as
Chairman of the Board. Mr. Whitmer currently acts as President and
became Chief Executive Officer effective November 1, 2010. Ms. McRee
acted as Chief Operating Officer through October 31, 2010 and
currently serves as Vice Chair of the Board.  123




---



##### Table of Contents



Grants of Plan-Based Awards in Fiscal Year 2010
 Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)Threshold
    
    
    Target
    
    
    MaximumName of Executive
    
    ($)
    
    
    ($)
    
    
    ($)David R White
    
    
    161,700
    
    
    
    808,500
    
    
    
    1,617,000W. Carl Whitmer
    
    
    58,546
    
    
    
    292,729
    
    
    
    585,458Sandra K. McRee
    
    
    60,000
    
    
    
    300,000
    
    
    
    600,000John M. Doyle
    
    
    32,152
    
    
    
    160,758
    
    
    
    321,515Frank A. Coyle
    
    
    
    
    
    
    118,850
    
    
    
    118,850Carolyn Rose
    
    
    
    
    
    
    85,750
    
    
    
    183,750
 Future Payouts Under Equity Incentive Plan Awards(2)All Other OptionAwards: Number of
    
    
    
    
    
    
    Grant date fairSecurities Underlying
    
    
    Exercise or Base Price
    
    
    value of stock andOptions
    
    
    of Option Awards
    
    
    option awardsName of Executive
    
    (#)
    
    
    ($/Sh)
    
    
    ($)David R White
    
    
    60,658
    
    
    
    8.75
    
    
    
    2,466,992Sandra K. McRee
    
    
    44,501
    
    
    
    8.75
    
    
    
    1,809,865W. Carl Whitmer
    
    
    35,361
    
    
    
    8.75
    
    
    
    1,438,157Frank A. Coyle
    
    
    5,440
    
    
    
    8.75
    
    
    
    221,255John M. Doyle
    
    
    3,699
    
    
    
    8.75
    
    
    
    150,453
 1.
    
    Awards made under the 2010 Short Term Incentive Plan.2.
    
    Amounts are for cancelled option awards that were paid at $49.42 per share during
fiscal 2010. Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
 Employment Agreements
     124




---



##### Table of Contents



The 2004 Stock Option Plan
       125




---



##### Table of Contents



Outstanding Equity Awards at Fiscal 2010 Year-End
  Option AwardsNumber of
    
    
    Number ofSecurities
    
    
    SecuritiesUnderlying
    
    
    UnderlyingUnexercised Options
    
    
    Unexercised Options
    
    
    Option(#)
    
    
    (#)
    
    
    Exercise Price
    
    
    OptionName
    
    Exercisable
    
    
    Unexercisable
    
    
    ($)
    
    
    Expiration Date(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)David R. White
    
    
    292,000
    
    
    
    
    
    
    
    20.00
    
    
    
    6/23/14194,000
    
    
    
    
    
    
    
    20.00
    
    
    
    3/22/155,000
    
    
    
    
    
    
    
    35.68
    
    
    
    4/1/162,875
    
    
    
    8,625
    
    
    
    34.75
    
    
    
    10/2/18Sandra K. McRee
    
    
    116,800
    
    
    
    
    
    
    
    20.00
    
    
    
    6/23/1485,200
    
    
    
    
    
    
    
    20.00
    
    
    
    3/22/152,600
    
    
    
    650
    
    
    
    35.68
    
    
    
    4/1/161,100
    
    
    
    4,400
    
    
    
    34.75
    
    
    
    10/2/18W. Carl Whitmer
    
    
    116,800
    
    
    
    
    
    
    
    20.00
    
    
    
    6/23/1485,200
    
    
    
    
    
    
    
    20.00
    
    
    
    3/22/152,600
    
    
    
    650
    
    
    
    35.68
    
    
    
    4/1/161,100
    
    
    
    4,400
    
    
    
    34.75
    
    
    
    10/2/18John M. Doyle
    
    
    18,300
    
    
    
    
    
    
    
    20.00
    
    
    
    9/9/146,700
    
    
    
    
    
    
    
    20.00
    
    
    
    3/22/1510,400
    
    
    
    2,600
    
    
    
    35.68
    
    
    
    4/1/164,800
    
    
    
    7,200
    
    
    
    34.75
    
    
    
    10/2/18Frank A. Coyle
    
    
    30,000
    
    
    
    
    
    
    
    20.00
    
    
    
    9/9/1430,000
    
    
    
    
    
    
    
    20.00
    
    
    
    3/22/158,000
    
    
    
    2,000
    
    
    
    35.68
    
    
    
    4/1/161,000
    
    
    
    4,000
    
    
    
    34.75
    
    
    
    10/2/18Carolyn Rose
    
    
    7,000
    
    
    
    
    
    
    
    20.00
    
    
    
    9/9/141,120
    
    
    
    280
    
    
    
    35.68
    
    
    
    4/1/162,320
    
    
    
    9,280
    
    
    
    34.75
    
    
    
    10/2/18
 Option Award Vesting Schedule for David R. White
 Grant Date
    
    Vesting Schedule6/23/2004
    
    25% vests each year for four years from date of grant3/22/2005
    
    25% vests each year for four years from date of grant4/1/2006
    
    25% vests each year for four years from date of grant10/2/2008
    
    25% vests each year for four years from date of grant
 Option Award Vesting Schedule
Named Executive Officers except David R. White
 Grant Date
    
    Vesting Schedule6/23/2004
    
    20% vests each year for five years from date of grant9/9/2004
    
    20% vests each year for five years from date of grant3/22/2005
    
    20% vests each year for five years from date of grant4/1/2006
    
    20% vests each year for five years from date of grant10/2/2008
    
    20% vests each year for five years from date of grant
 Pension Benefits
   126




---



##### Table of Contents



Nonqualified Deferred Compensation for Fiscal 2010
     Employment Agreements
  Potential Payments Upon Termination or Change in Control
 The Employment Agreements
   127




---



##### Table of Contents



Death
         Disability
       128




---



##### Table of Contents



Termination by the Company for Cause
  By the Company without Cause
          129




---



##### Table of Contents



By the Executive for Good Reason
          130




---



##### Table of Contents



By the Executive without Good Reason or the Executives Failure to Extend the Employment Term
  Definition of Good Reason
             The Companys Failure to Extend the Employment Term
     131




---



##### Table of Contents



Definition of Change of Control
         132




---



##### Table of Contents



IAS 2004 Stock Option Plan
 Vesting Date of Options
     Definition of Change of Control
  Definition of Good Reason
     Definition of Cause
        133




---



##### Table of Contents



Summary of Payments Made Upon Termination or a Change of Control
  Involuntary
    
    
    Involuntary
    
    
    
    
    
    
    Resignation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ChangeTermination
    
    
    Termination
    
    
    
    
    
    
    For Good
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InWithout
    
    
    For Cause
    
    
    Resignation
    
    
    Reason
    
    
    Retirement
    
    
    Death
    
    
    Disability
    
    
    ControlDavid R. White
    
    Cause ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)Cash severance
    
    
    1,617,000
    
    
    
    
    
    
    
    
    
    
    
    1,617,000
    
    
    
    
    
    
    
    808,500
    
    
    
    1,212,750
    
    
    
    1,617,000Health and welfare continuation
    
    
    27,248
    
    
    
    
    
    
    
    
    
    
    
    27,248
    
    
    
    
    
    
    
    27,248
    
    
    
    27,248
    
    
    
    27,248Total
    
    
    1,644,248
    
    
    
    
    
    
    
    
    
    
    
    1,644,248
    
    
    
    
    
    
    
    835,748
    
    
    
    1,239,998
    
    
    
    1,644,248
 InvoluntaryTermination
    
    
    Involuntary
    
    
    
    
    
    
    Resignation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ChangeWithout
    
    
    Termination
    
    
    
    
    
    
    For Good
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InSandra K. McRee
    
    Cause
    
    
    For Cause
    
    
    Resignation
    
    
    Reason
    
    
    Retirement
    
    
    Death
    
    
    Disability
    
    
    ControlCash severance
    
    
    1,200,000
    
    
    
    
    
    
    
    
    
    
    
    1,200,000
    
    
    
    
    
    
    
    600,000
    
    
    
    900,000
    
    
    
    1,200,000Health and welfare continuation
    
    
    25,656
    
    
    
    
    
    
    
    
    
    
    
    25,656
    
    
    
    
    
    
    
    25,656
    
    
    
    25,656
    
    
    
    25,656Total
    
    
    1,225,656
    
    
    
    
    
    
    
    
    
    
    
    1,225,656
    
    
    
    
    
    
    
    625,656
    
    
    
    925,656
    
    
    
    1,225,656
 InvoluntaryTermination
    
    
    Involuntary
    
    
    
    
    
    
    Resignation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ChangeWithout
    
    
    Termination
    
    
    
    
    
    
    For Good
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InW. Carl Whitmer
    
    Cause
    
    
    For Cause
    
    
    Resignation
    
    
    Reason
    
    
    Retirement
    
    
    Death
    
    
    Disability
    
    
    ControlCash severance
    
    
    1,170,916
    
    
    
    
    
    
    
    
    
    
    
    1,170,916
    
    
    
    
    
    
    
    585,458
    
    
    
    878,187
    
    
    
    1,170,916Health and welfare continuation
    
    
    37,878
    
    
    
    
    
    
    
    
    
    
    
    37,878
    
    
    
    
    
    
    
    37,878
    
    
    
    37,878
    
    
    
    37,878Total
    
    
    1,208,794
    
    
    
    
    
    
    
    
    
    
    
    1,208,794
    
    
    
    
    
    
    
    623,336
    
    
    
    916,065
    
    
    
    1,208,794
 InvoluntaryTermination
    
    
    Involuntary
    
    
    
    
    
    
    Resignation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ChangeWithout
    
    
    Termination
    
    
    
    
    
    
    For Good
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InJohn M. Doyle
    
    Cause
    
    
    For Cause
    
    
    Resignation
    
    
    Reason
    
    
    Retirement
    
    
    Death
    
    
    Disability
    
    
    ControlCash severance
    
    
    482,273
    
    
    
    
    
    
    
    
    
    
    
    482,273
    
    
    
    
    
    
    
    321,515
    
    
    
    482,273
    
    
    
    Health and welfare continuation
    
    
    37,605
    
    
    
    
    
    
    
    
    
    
    
    37,605
    
    
    
    
    
    
    
    37,605
    
    
    
    37,605
    
    
    
    Total
    
    
    519,878
    
    
    
    
    
    
    
    
    
    
    
    519,878
    
    
    
    
    
    
    
    359,120
    
    
    
    519,878
    
    
    
    
 InvoluntaryTermination
    
    
    Involuntary
    
    
    
    
    
    
    Resignation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ChangeWithout
    
    
    Termination
    
    
    
    
    
    
    For Good
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InCarolyn Rose
    
    Cause
    
    
    For Cause
    
    
    Resignation
    
    
    Reason
    
    
    Retirement
    
    
    Death
    
    
    Disability
    
    
    ControlCash severance
    
    
    183,750
    
    
    
    
    
    
    
    
    
    
    
    183,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183,750Health and welfare continuation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    183,750
    
    
    
    
    
    
    
    
    
    
    
    183,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183,750
  134




---



##### Table of Contents



Director Compensation for Fiscal 2010
  Fees Earnedor Paid in
    
    
    StockCash
    
    
    Awards
    
    
    Option Awards
    
    
    All Other
    
    
    TotalName
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    Compensation ($)
    
    
    ($)Jonathan J. Coslet
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    David Dupree
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Kirk E. Gorman
    
    
    37,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,500Greg Kranias
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Todd B. Sisitsky
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Paul S. Levy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jeffrey C. Lightcap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sharad Mansukani
    
    
    37,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,500
 Aggregate Options Held
    
    
    Aggregate Stock Awards HeldName
    
    at Fiscal Year End
    
    
    at Fiscal Year EndJonathan J. Coslet
    
    
    
    
    
    
    David Dupree
    
    
    
    
    
    
    Kirk E. Gorman
    
    
    3,319
    
    
    
    3,319Greg Kranias
    
    
    
    
    
    
    Todd B. Sisitsky
    
    
    
    
    
    
    Paul S. Levy
    
    
    
    
    
    
    Jeffrey C. Lightcap
    
    
    
    
    
    
    Sharad Mansukani
    
    
    3,082
    
    
    
    3,082
    135




---



##### Table of Contents



Committee Interlocks and Insider Participation
   136




---



##### Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
 Equity Compensation Plans
  
    
    the number of securities to be issued upon the exercise of outstanding options;
 
    
    the weighted-average exercise price of the outstanding options; and
 
    
    the number of securities remaining available for future issuance under the plans.
  Remaining Availablefor Future IssuanceNumber of
    
    
    
    
    
    
    Under EquitySecurities to be
    
    
    
    
    
    
    Compensation PlansIssued Upon
    
    
    Weighted-average
    
    
    (excluding securitiesExercise of
    
    
    Exercise Price of
    
    
    reflected in thePlan Category
    
    Outstanding Options
    
    
    Outstanding Options
    
    
    first column)Equity compensation
plans approved by
security holders  (1)
    
    
    1,686,329
    
    
    $
    24.58
    
    
    
    939,646Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,686,329
    
    
    $
    24.58
    
    
    
    939,646
 (1)
    
    Consists of 1,686,329 shares of common stock to be issued upon exercise of options issued
under IAS 2004 Stock Option Plan, with exercise prices ranging from $20.00 to $35.68 per
share. Of the 2,625,975 shares of common stock currently authorized for issuance under the
2004 Stock Option Plan, 939,646 shares remain available for future issuance.
 Beneficial Ownership of Common Stock
    137




---



##### Table of Contents



Percentage of
    
    
    Percentage ofPreferred Shares
    
    
    Common Shares
    
    
    Preferred Shares
    
    
    Common SharesBeneficial Owners
    
    Beneficially Owned
    
    
    Beneficially Owned (a)
    
    
    Beneficially Owned
    
    
    Beneficially OwnedIASIS Investment (b)(c)
    
    
    17,989
    
    
    
    14,600,000
    
    
    
    100.0
    %
    
    
    99.9
    %David R. White
    
    
    
    
    
    
    497,250
    
    
    
    *
    
    
    
    *Sandra K. McRee
    
    
    
    
    
    
    206,800
    
    
    
    *
    
    
    
    *W. Carl Whitmer
    
    
    
    
    
    
    206,800
    
    
    
    *
    
    
    
    *John M. Doyle
    
    
    
    
    
    
    40,200
    
    
    
    *
    
    
    
    *Frank A. Coyle
    
    
    
    
    
    
    70,000
    
    
    
    *
    
    
    
    *Carolyn Rose
    
    
    
    
    
    
    12,760
    
    
    
    *
    
    
    
    *Percentage of
    
    
    Percentage ofPreferred Shares
    
    
    Common Shares
    
    
    Preferred Shares
    
    
    Common SharesBeneficial Owners
    
    Beneficially Owned
    
    
    Beneficially Owned (a)
    
    
    Beneficially Owned
    
    
    Beneficially OwnedJonathan J. Coslet (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    David Dupree
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Kirk E. Gorman (c)
    
    
    
    
    
    
    5,562
    (d)
    
    
    *
    
    
    
    *Greg Kranias
(c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Todd B. Sisitsky (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Paul S. Levy (e)
    
    
    3,382
    
    
    
    2,744,800
    
    
    
    18.8
    %
    
    
    18.8
    %Jeffrey C. Lightcap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sharad Mansukani (c)
    
    
    
    
    
    
    5,088
    (d)
    
    
    *
    
    
    
    *Current directors and
executive officers as
a group (21 persons)
    
    
    17,989
    
    
    
    1,126,815
    
    
    
    100.0
    %
    
    
    100.0
    %
 *
    
    Less than 1%.(a)
    
    The following shares of common stock subject to options currently exercisable or exercisable
within 60 days of December 21, 2010, include: Mr. White, 497,250; Ms. McRee, 206,800; Mr. Whitmer, 206,800; Mr. Doyle, 140,200; Mr. Coyle, 70,000; Ms. Rose, 12,760;
and all current directors and executive officers as a group (21
persons), 1,126,815.(b)
    
    The membership interests of IASIS Investment are owned as follows: TPG, 74.4%, JLL, 18.8%,
and Trimaran, 6.8%. TPG Advisors III, Inc. and TPG Advisors IV, Inc. through their ownership
of TPG, which owns a controlling interest in IASIS Investment, may be deemed to beneficially
own all of the shares of preferred stock and common stock owned by IASIS Investment.(c)
    
    David Bonderman and James G. Coulter are directors, executive officers and the sole
shareholders of TPG Advisors III, Inc. and TPG Advisors IV, Inc. TPG Advisors III, Inc. and
TPG Advisors IV, Inc., through their control of investment funds, parallel investment vehicles
and co-investment vehicles that own a controlling interest in IASIS Investment, may be deemed
to beneficially own all of the shares of preferred stock and common stock owned by IASIS
Investment. Messrs. Bonderman and Coulter, by virtue of their positions with TPG Advisors III,
Inc. and TPG Advisors IV, Inc., may be deemed to have investment power and beneficial
ownership with respect to all of the shares of preferred stock and common stock owned by IASIS
Investment. None of Messrs. Coslet, Kranias,  Sisitsky or Mansukani has investment power over any of the
shares of preferred stock and common stock owned by IASIS Investment.(d)
    
    Represents shares of restricted stock and options currently or exercisable within 60 days of
December 21, 2010, granted to Messrs. Gorman and Mansukani pursuant to Director Compensation
and Restricted Stock Award Agreements.(e)
    
    Mr. Levy is a senior managing director of JLL Partners, Inc. which, through its controlling
interest in JLL, which owns 18.8% of IASIS Investment, may be deemed to beneficially own 18.8%
of the shares of preferred
stock and common stock owned by IASIS Investment. Accordingly, Mr. Levy may be deemed to
beneficially own 18.8% of the shares of preferred stock and common stock owned by IASIS
Investment.
  138




---



##### Table of Contents



Item 13. Certain Relationships and Related Transactions, and Director Independence
 IASIS Investment Limited Liability Company Operating Agreement
    Investor Rights Agreement
  Management Services Agreement
  Income Tax Allocations
   139




---



##### Table of Contents



Policy on Transactions with Related Persons
   
 Item 14. Principal Accountant Fees and Services
  Fiscal
    
    
    Fiscal2010
    
    
    2009Audit Fees (a)
    
    $
    1,002,700
    
    
    $
    1,022,500Audit-Related Fees (b)
    
    
    2,000
    
    
    
    17,500Tax Fees
    
    
    7,300
    
    
    
    2,100All Other Fees (c)
    
    
    
    
    
    
    
 (a)
    
    Audit Fees represent fees billed for professional services rendered for the audit of our
annual financial statements and review of our quarterly financial statements, and audit
services provided in connection with other statutory or regulatory filings.(b)
    
    Audit-Related Fees represent fees billed for assurance services related to the audit of our
financial statements, as well as certain due diligence projects.(c)
    
    All Other Fees represent fees for services provided to us not otherwise included in the
categories above.
   140




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare Corporation and David R. White (1)
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare Corporation and Sandra K. McRee (1)
    
    Employment Agreement, dated as of September 30, 2010, by and between IASIS Healthcare Corporation and W. Carl Whitmer (18)
    
    Employment Agreement, dated as of September 30, 2010, by and between IASIS Healthcare Corporation and John M. Doyle (18)
    
    Employment Agreement, dated as of September 30, 2010, by and between IASIS Healthcare Corporation and Phillip J. Mazzuca (19)
    
    First Amendment to Employment Agreement, dated January 31, 2008, by and between IASIS Healthcare Corporation and Sandra K. McRee (11)
    
    Agreement for Severance Benefits and Restrictive Covenants, dated as of March 1, 2001, by and between IASIS Management Company and Carolyn Rose (16)
    
    Form of Roll-over Option Letter Agreement (1)
    
    Amended and Restated IASIS Healthcare Corporation 2004 Stock Option Plan (19)
    
    Form of Management Stockholders Agreement between IAS and each of David R. White, Sandra K. McRee and W. Carl Whitmer (1)
    
    Form of Management Stockholders Agreement under IASIS Healthcare Corporation 2004 Stock Option Plan (1)
    
    Form of Stock Option Grant Agreement under IASIS Healthcare Corporation 2004 Stock Option Plan (1)
    
    Stock Option Agreement, dated October 11, 2010, by and between IASIS Healthcare Corporation and W. Carl Whitmer (19)
    
    Stock Option Agreement, dated October 11, 2010, by and
between IASIS Healthcare Corporation and John M. Doyle (19)
    
    Stock Option Agreement, dated October 11, 2010, by and between IASIS Healthcare Corporation and Phillip J. Mazzuca (19)
  141




---



##### Table of Contents




    
    Form of Management Stockholders Agreement for Rollover Options (1)
    
    IASIS Corporate Incentive Plan (1)
    
    IASIS Market Executive Incentive Program (1)
    
    Director Compensation and Restricted Share Award Agreement, dated as of February 14, 2005, between IASIS Healthcare Corporation and Kirk Gorman (12)
    
    Director Compensation and Restricted Share Award Agreement, dated as of April 14, 2005, between IASIS Healthcare Corporation and Sharad Mansukani (13)
    
    IASIS Healthcare Non-Qualified Deferred Compensation Program (4)
  142




---



##### Table of Contents



Exhibit No.
    
    Description2.1
    
    
    Agreement and Plan of Merger, dated as of May 4, 2004, by and among IASIS Investment
LLC, Titan Merger Corporation and IASIS Healthcare Corporation (1)2.2
    
    
    Indemnification Agreement dated as of May 4, 2004, by and among IASIS Investment LLC,
IASIS Healthcare Corporation, and the stockholders and option holders of IASIS
Healthcare Corporation listed on the signature pages thereof (2)3.1
    
    
    Certificate of Formation of IASIS Healthcare LLC, as filed with the Secretary of State
of the State of Delaware on May 11, 2004 (1)3.2
    
    
    Limited Liability Company Agreement of IASIS Healthcare LLC dated as of May 11, 2004 (1)4.1
    
    
    Indenture, dated as of June 22, 2004, among IASIS Healthcare LLC, IASIS Capital
Corporation, the Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as
Trustee (1)4.2
    
    
    Form of Notation of Subsidiary Guarantee (1)4.3
    
    
    Form of 8 3/4% Senior Subordinated Exchange Note due 2014 (1)4.4
    
    
    Supplemental Indenture, dated as of June 30, 2004, by and between IASIS Finance Texas
Holdings, LLC, IASIS Healthcare LLC, IASIS Capital Corporation, the existing Subsidiary
Guarantors and The Bank of New York Trust Company, N.A., as Trustee (1)4.5
    
    
    Supplemental Indenture, effective as of August 1, 2005, by and among Cardiovascular
Specialty Centers of Utah, LP, IASIS Healthcare LLC, IASIS Capital Corporation, the
existing Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as Trustee
(3)4.6
    
    
    Supplemental Indenture, dated as of July 20, 2006, by and among IASIS Glenwood Regional
Medical Center, L.P., IASIS Healthcare LLC, IASIS Capital Corporation, the existing
Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as Trustee (4)4.7
    
    
    Supplemental Indenture, dated as of July 27, 2006, by and among The Heart Center of
Central Phoenix, L.P., IASIS Healthcare LLC, IASIS Capital Corporation, the existing
Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as Trustee (4)4.8
    
    
    Supplemental Indenture, dated as of October 1, 2010, by and among Brim Holding Company,
Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee10.1
    
    
    Lease, dated as of July 29, 1977, by and between Sierra Equities, Inc., as Landlord,
and Mesa General Hospital, Inc., as Tenant (5)10.2
    
    
    Addendum to Lease entered into by and between Sierra Equities, Inc., as Landlord, and
Mesa General Hospital, Inc., as Tenant (5)10.3
    
    
    Conforming Amendment to Lease, dated as of June 10, 1991, by and between Sierra
Equities, Inc., as Landlord, and Mesa General Hospital, Inc., as Tenant (5)10.4
    
    
    Amendment to Hospital Lease, dated as of October 31, 2000, by and between Sierra
Equities, Inc., as Landlord, and Mesa General Hospital, L.P., as Tenant (5)10.5
    
    
    Amendment to Lease, dated April 30, 2003, by and between Sierra Equities, Inc. and Mesa
General Hospital, L.P. (6)10.6
    
    
    Letter Agreement effective May 6, 2005, amending Lease by and between Sierra Equities
Inc. and Mesa General Hospital, L.P. (7)10.7
    
    
    Amended and Restated Pioneer Hospital Lease, dated as of June 28, 2002, by and between
Health Care Property Investors, Inc. and Pioneer Valley Hospital, Inc. (8)10.8
    
    
    Lease Agreement, dated as of October 6, 2003, between The Dover Centre, LLC and IASIS
Healthcare Corporation (9)10.9
    
    
    Form of Indemnification Agreement (1)10.10
    
    
    Contract between Arizona Health Care Cost Containment System and Health Choice Arizona
(including Amendment No. 1 thereto), effective as of October 1, 2008 (16)10.11
    
    
    Amendment No. 2 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of January 15, 2009 (17)
  143




---



##### Table of Contents



Exhibit No.
    
    Description10.12
    
    
    Amendment No. 3 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of May 1, 2009 (17)10.13
    
    
    Amendment No. 4 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of August 1, 2009 (17)10.14
    
    
    Amendment No. 5 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of August 1, 2009 (17)10.15
    
    
    Amendment No. 6 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 2009 (17)10.16
    
    
    Amendment No. 7 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 2009 (17)10.17
    
    
    Amendment No. 8 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 2009 (17)10.18
    
    
    Amendment No. 9 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 2009 (17)10.19
    
    
    Amendment No. 10 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 201010.20
    
    
    Amendment No. 11 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.21
    
    
    Amendment No. 12 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.22
    
    
    Information System Agreement, dated February 23, 2000, between McKesson Information
Solutions LLC and IASIS Healthcare Corporation, as amended (1)**10.23
    
    
    Amended and Restated Credit Agreement, dated as of April 27, 2007, by and among IASIS
Healthcare LLC, as Borrower, IASIS Healthcare Corporation, as Holdings, Bank of
America, N.A., as administrative agent, swingline lender revolving L/C issuer and
synthetic L/C issuer and each lender from time to time party thereto (18)10.24
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and David R. White (1)10.25
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and Sandra K. McRee (1)10.26
    
    
    Employment Agreement, dated as of September 30, 2010, by and between IASIS Healthcare
Corporation and W. Carl Whitmer (18)10.27
    
    
    Employment Agreement, dated September 30, 2010, by and between IASIS Healthcare
Corporation and John M. Doyle (18)10.28
    
    
    Employment Agreement, dated October 11, 2010, by and between IASIS Healthcare
Corporation and Phillip J. Mazzuca (19)10.29
    
    
    First Amendment to Employment Agreement, dated January 31, 2008, by and between IASIS
Healthcare Corporation and Sandra K. McRee (11)10.30
    
    
    Agreement for Severance Benefits and Restrictive Covenants, dated as of March 1, 2001,
by and between IASIS Management Company and Carolyn Rose (16)10.31
    
    
    Form of Roll-over Option Letter Agreement (1)10.32
    
    
    Amended and Restated IASIS Healthcare Corporation 2004 Stock Option Plan (19)10.33
    
    
    Management Services Agreement dated as of June 22, 2004 by and among IASIS Healthcare
LLC, Trimaran Fund II, L.L.C., Trimaran Parallel Fund II, L.P., Trimaran Capital
L.L.C., CIBC Employee Private Equity Partners (Trimaran), CIBC MB Inc., JLL Partners
Inc., TPG IASIS IV LLC, TPG IASIS III LLC, TPG IASIS Co-Invest I LLC and TPG IASIS
Co-Invest II LLC (1)
  144




---



##### Table of Contents



Exhibit No.
    
    Description10.34
    
    
    Investor Rights Agreement dated as of June 22, 2004, by and between IASIS Investment
LLC and IASIS Healthcare Corporation (1)10.35
    
    
    Form of Management Stockholders Agreement between IAS and each of David R. White,
Sandra K. McRee and W. Carl Whitmer (1)10.36
    
    
    Form of Management Stockholders Agreement under IASIS Healthcare Corporation 2004 Stock
Option Plan (1)10.37
    
    
    Form of Stock Option Grant Agreement under IASIS Healthcare Corporation 2004 Stock
Option Plan (1)10.38
    
    
    Stock Option Award Agreement, dated October 11, 2010, by and between IASIS Healthcare
Corporation and W. Carl Whitmer (19)10.39
    
    
    Stock Option Award Agreement, dated October 11, 2010, by and between IASIS Healthcare
Corporation and John M. Doyle (19)10.40
    
    
    Stock Option Agreement, dated October 11, 2010, by and between IASIS Healthcare
Corporation and Phillip J. Mazzuca (19)10.41
    
    
    Form of Management Stockholders Agreement for Rollover Options (1)10.42
    
    
    IASIS Corporate Incentive Plan (1)10.43
    
    
    IASIS Market Executive Incentive Program (1)10.44
    
    
    Director Compensation and Restricted Share Award Agreement, dated as of February 14,
2005, between IASIS Healthcare Corporation and Kirk Gorman (12)10.45
    
    
    Director Compensation and Restricted Share Award Agreement, dated as of April 14, 2005,
between IASIS Healthcare Corporation and Sharad Mansukani (13)10.46
    
    
    Asset Purchase Agreement, dated July 20, 2006, by and among Glenwood Regional Medical
Center, Glenwood Health Services, Inc., Hospital Service District No. 1 of the Parish
of Ouachita, State of Louisiana, IASIS Glenwood Regional Medical Center, L.P. and IASIS
Healthcare, LLC (14)10.47
    
    
    IASIS Healthcare Non-Qualified Deferred Compensation Program (4)10.48
    
    
    Contribution Agreement, dated as of May 9, 2007, by and among Odessa Regional Hospital,
LP, Alliance Hospital, Ltd. and Sri-Sai Enterprises, Inc. (15)10.49
    
    
    Supplement No. 1, dated as of October 1, 2010, to the Guaranty dated as of April 27,
2007 among IASIS Healthcare Corporation, certain subsidiaries of IASIS Healthcare LLC
from time to time party thereto and Bank of America, N.A., as Administrative Agent10.50
    
    
    Supplement No. 1, dated as of October 1, 2010, to the Amended and Restated Security
Agreement dated as of April 27, 2007 among IASIS Healthcare Corporation, IASIS
Healthcare LLC, certain subsidiaries of IASIS Healthcare LLC from time to time party
thereto and Bank of America, N.A., as Administrative Agent14
    
    
    Code of Ethics (9)21
    
    
    Subsidiaries of IASIS Healthcare Corporation31.1
    
    
    Certification of Principal Executive Officer Pursuant to Rule 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Principal Financial Officer Pursuant to Rule 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
 
 **
    
    Portions of this exhibit have been omitted and filed separately with the Commission
pursuant to a grant of confidential treatment pursuant to Rule 24(b)-2 promulgated under the
Securities Exchange Act of 1934, as amended.(1)
    
    Incorporated by reference to the Companys Registration Statement on Form S-4 (Registration
No. 333-117362).
  145




---



##### Table of Contents



(2)
    
    Incorporated by reference to IASIS Healthcare Corporations Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 2004.(3)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2006.(4)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year
ended September 30, 2006.(5)
    
    Incorporated by reference to IASIS Healthcare Corporations Annual Report on Form 10-K for
the fiscal year ended September 30, 2000.(6)
    
    Incorporated by reference to IASIS Healthcare Corporations Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2003.(7)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on May 12, 2005.(8)
    
    Incorporated by reference to IASIS Healthcare Corporations Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2002.(9)
    
    Incorporated by reference to IASIS Healthcare Corporations Annual Report on Form 10-K for
the fiscal year ended September 30, 2003.(10)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on May 2, 2007.(11)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on February 5,
2008.(12)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on February 18,
2005.(13)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on April 20, 2005.(14)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on July 24, 2006.(15)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on May 10, 2007.(16)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2008.(17)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year ended
September 30, 2009.(18)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on October 6,
2010.(19)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on October 15,
2010.
  146




---



##### Table of Contents



SIGNATURES
  IASIS HEALTHCARE LLCDate: December 21, 2010
    By:
    /s/ W. Carl WhitmerW. Carl WhitmerChief Executive Officer and President  Signature
    
    Title
    
    Date/s/ David R. White
    
    Chairman of the BoardDavid R. White
    
    
    
    December 21, 2010Vice Chair of the BoardSandra K. McRee/s/ W. Carl Whitmer

W. Carl Whitmer
    
    Chief Executive Officer and President
and Director of IASIS Healthcare Corporation
(sole member of IASIS Healthcare LLC)
(Principal Executive Officer)
    
    December 21, 2010/s/ John M. Doyle

John M. Doyle
    
    Chief Financial Officer
(Principal Financial and Accounting Officer)
    
    December 21, 2010/s/ Jonathan J. Coslet

Jonathan J. Coslet
    
    Director of IASIS Healthcare Corporation
(sole member of IASIS Healthcare LLC)
    
    December 21, 2010/s/ David Dupree

David Dupree
    
    Director of IASIS Healthcare Corporation
(sole member of IASIS Healthcare LLC)
    
    December 21, 2010/s/ Kirk E. Gorman

Kirk E. Gorman
    
    Director of IASIS Healthcare Corporation
(sole member of IASIS Healthcare LLC)
    
    December 21, 2010/s/ Greg Kranias

Greg Kranias
    
    Director of IASIS Healthcare Corporation
(sole member of IASIS Healthcare LLC)
    
    December 21, 2010/s/ Todd B. Sisitsky

Todd B. Sisitsky
    
    Director of IASIS Healthcare Corporation
(sole member of IASIS Healthcare LLC)
    
    December 21, 2010Paul S. Levy
    
    Director of IASIS Healthcare Corporation
(sole member of IASIS Healthcare LLC)Jeffrey C. Lightcap
    
    Director of IASIS Healthcare Corporation
(sole member of IASIS Healthcare LLC)/s/ Sharad Mansukani

Sharad Mansukani
    
    Director of IASIS Healthcare Corporation
(sole member of IASIS Healthcare LLC)
    
    December 21, 2010
  147




---



##### Table of Contents



SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY
REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
   148




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description2.1
    
    
    Agreement and Plan of Merger, dated as of May 4, 2004, by and among IASIS Investment
LLC, Titan Merger Corporation and IASIS Healthcare Corporation (1)2.2
    
    
    Indemnification Agreement dated as of May 4, 2004, by and among IASIS Investment LLC,
IASIS Healthcare Corporation, and the stockholders and option holders of IASIS
Healthcare Corporation listed on the signature pages thereof (2)3.1
    
    
    Certificate of Formation of IASIS Healthcare LLC, as filed with the Secretary of State
of the State of Delaware on May 11, 2004 (1)3.2
    
    
    Limited Liability Company Agreement of IASIS Healthcare LLC dated as of May 11, 2004 (1)4.1
    
    
    Indenture, dated as of June 22, 2004, among IASIS Healthcare LLC, IASIS Capital
Corporation, the Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as
Trustee (1)4.2
    
    
    Form of Notation of Subsidiary Guarantee (1)4.3
    
    
    Form of 8 3/4% Senior Subordinated Exchange Note due 2014 (1)4.4
    
    
    Supplemental Indenture, dated as of June 30, 2004, by and between IASIS Finance Texas
Holdings, LLC, IASIS Healthcare LLC, IASIS Capital Corporation, the existing Subsidiary
Guarantors and The Bank of New York Trust Company, N.A., as Trustee (1)4.5
    
    
    Supplemental Indenture, effective as of August 1, 2005, by and among Cardiovascular
Specialty Centers of Utah, LP, IASIS Healthcare LLC, IASIS Capital Corporation, the
existing Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as Trustee
(3)4.6
    
    
    Supplemental Indenture, dated as of July 20, 2006, by and among IASIS Glenwood Regional
Medical Center, L.P., IASIS Healthcare LLC, IASIS Capital Corporation, the existing
Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as Trustee (4)4.7
    
    
    Supplemental Indenture, dated as of July 27, 2006, by and among The Heart Center of
Central Phoenix, L.P., IASIS Healthcare LLC, IASIS Capital Corporation, the existing
Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as Trustee (4)4.8
    
    
    Supplemental Indenture, dated as of October 1, 2010, by and among Brim Holding Company,
Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee10.1
    
    
    Lease, dated as of July 29, 1977, by and between Sierra Equities, Inc., as Landlord,
and Mesa General Hospital, Inc., as Tenant (5)10.2
    
    
    Addendum to Lease entered into by and between Sierra Equities, Inc., as Landlord, and
Mesa General Hospital, Inc., as Tenant (5)10.3
    
    
    Conforming Amendment to Lease, dated as of June 10, 1991, by and between Sierra
Equities, Inc., as Landlord, and Mesa General Hospital, Inc., as Tenant (5)10.4
    
    
    Amendment to Hospital Lease, dated as of October 31, 2000, by and between Sierra
Equities, Inc., as Landlord, and Mesa General Hospital, L.P., as Tenant (5)10.5
    
    
    Amendment to Lease, dated April 30, 2003, by and between Sierra Equities, Inc. and Mesa
General Hospital, L.P. (6)10.6
    
    
    Letter Agreement effective May 6, 2005, amending Lease by and between Sierra Equities
Inc. and Mesa General Hospital, L.P. (7)10.7
    
    
    Amended and Restated Pioneer Hospital Lease, dated as of June 28, 2002, by and between
Health Care Property Investors, Inc. and Pioneer Valley Hospital, Inc. (8)10.8
    
    
    Lease Agreement, dated as of October 6, 2003, between The Dover Centre, LLC and IASIS
Healthcare Corporation (9)10.9
    
    
    Form of Indemnification Agreement (1)10.10
    
    
    Contract between Arizona Health Care Cost Containment System and Health Choice Arizona
(including Amendment No. 1 thereto), effective as of October 1, 2008 (16)10.11
    
    
    Amendment No. 2 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of January 15, 2009 (17)
  149




---



##### Table of Contents



Exhibit No.
    
    Description10.12
    
    
    Amendment No. 3 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of May 1, 2009 (17)10.13
    
    
    Amendment No. 4 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of August 1, 2009 (17)10.14
    
    
    Amendment No. 5 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of August 1, 2009 (17)10.15
    
    
    Amendment No. 6 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 2009 (17)10.16
    
    
    Amendment No. 7 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 2009 (17)10.17
    
    
    Amendment No. 8 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 2009 (17)10.18
    
    
    Amendment No. 9 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 2009 (17)10.19
    
    
    Amendment No. 10 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 201010.20
    
    
    Amendment No. 11 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.21
    
    
    Amendment No. 12 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.22
    
    
    Information System Agreement, dated February 23, 2000, between McKesson Information
Solutions LLC and IASIS Healthcare Corporation, as amended (1)**10.23
    
    
    Amended and Restated Credit Agreement, dated as of April 27, 2007, by and among IASIS
Healthcare LLC, as Borrower, IASIS Healthcare Corporation, as Holdings, Bank of
America, N.A., as administrative agent, swingline lender revolving L/C issuer and
synthetic L/C issuer and each lender from time to time party thereto (18)10.24
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and David R. White (1)10.25
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and Sandra K. McRee (1)10.26
    
    
    Employment Agreement, dated as of September 30, 2010, by and between IASIS Healthcare
Corporation and W. Carl Whitmer (18)10.27
    
    
    Employment Agreement, dated September 30, 2010, by and between IASIS Healthcare
Corporation and John M. Doyle (18)10.28
    
    
    Employment Agreement, dated October 11, 2010, by and between IASIS Healthcare
Corporation and Phillip J. Mazzuca (19)10.29
    
    
    First Amendment to Employment Agreement, dated January 31, 2008, by and between IASIS
Healthcare Corporation and Sandra K. McRee (11)10.30
    
    
    Agreement for Severance Benefits and Restrictive Covenants, dated as of March 1, 2001,
by and between IASIS Management Company and Carolyn Rose (16)10.31
    
    
    Form of Roll-over Option Letter Agreement (1)10.32
    
    
    Amended and Restated IASIS Healthcare Corporation 2004 Stock Option Plan (19)10.33
    
    
    Management Services Agreement dated as of June 22, 2004 by and among IASIS Healthcare
LLC, Trimaran Fund II, L.L.C., Trimaran Parallel Fund II, L.P., Trimaran Capital
L.L.C., CIBC Employee Private Equity Partners (Trimaran), CIBC MB Inc., JLL Partners
Inc., TPG IASIS IV LLC, TPG IASIS III LLC, TPG IASIS Co-Invest I LLC and TPG IASIS
Co-Invest II LLC (1)
  150




---



##### Table of Contents



Exhibit No.
    
    Description10.34
    
    
    Investor Rights Agreement dated as of June 22, 2004, by and between IASIS Investment
LLC and IASIS Healthcare Corporation (1)10.35
    
    
    Form of Management Stockholders Agreement between IAS and each of David R. White,
Sandra K. McRee and W. Carl Whitmer (1)10.36
    
    
    Form of Management Stockholders Agreement under IASIS Healthcare Corporation 2004 Stock
Option Plan (1)10.37
    
    
    Form of Stock Option Grant Agreement under IASIS Healthcare Corporation 2004 Stock
Option Plan (1)10.38
    
    
    Stock Option Award Agreement, dated October 11, 2010, by and between IASIS Healthcare
Corporation and W. Carl Whitmer (19)10.39
    
    
    Stock Option Award Agreement, dated October 11, 2010, by and between IASIS Healthcare
Corporation and John M. Doyle (19)10.40
    
    
    Stock Option Agreement, dated October 11, 2010, by and between IASIS Healthcare
Corporation and Phillip J. Mazzuca (19)10.41
    
    
    Form of Management Stockholders Agreement for Rollover Options (1)10.42
    
    
    IASIS Corporate Incentive Plan (1)10.43
    
    
    IASIS Market Executive Incentive Program (1)10.44
    
    
    Director Compensation and Restricted Share Award Agreement, dated as of February 14,
2005, between IASIS Healthcare Corporation and Kirk Gorman (12)10.45
    
    
    Director Compensation and Restricted Share Award Agreement, dated as of April 14, 2005,
between IASIS Healthcare Corporation and Sharad Mansukani (13)10.46
    
    
    Asset Purchase Agreement, dated July 20, 2006, by and among Glenwood Regional Medical
Center, Glenwood Health Services, Inc., Hospital Service District No. 1 of the Parish
of Ouachita, State of Louisiana, IASIS Glenwood Regional Medical Center, L.P. and IASIS
Healthcare, LLC (14)10.47
    
    
    IASIS Healthcare Non-Qualified Deferred Compensation Program (4)10.48
    
    
    Contribution Agreement, dated as of May 9, 2007, by and among Odessa Regional Hospital,
LP, Alliance Hospital, Ltd. and Sri-Sai Enterprises, Inc. (15)10.49
    
    
    Supplement No. 1, dated as of October 1, 2010, to the Guaranty dated as of April 27,
2007 among IASIS Healthcare Corporation, certain subsidiaries of IASIS Healthcare LLC
from time to time party thereto and Bank of America, N.A., as Administrative Agent10.50
    
    
    Supplement No. 1, dated as of October 1, 2010, to the Amended and Restated Security
Agreement dated as of April 27, 2007 among IASIS Healthcare Corporation, IASIS
Healthcare LLC, certain subsidiaries of IASIS Healthcare LLC from time to time party
thereto and Bank of America, N.A., as Administrative Agent14
    
    
    Code of Ethics (9)21
    
    
    Subsidiaries of IASIS Healthcare Corporation31.1
    
    
    Certification of Principal Executive Officer Pursuant to Rule 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Principal Financial Officer Pursuant to Rule 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
 
 **
    
    Portions of this exhibit have been omitted and filed separately with the Commission
pursuant to a grant of confidential treatment pursuant to Rule 24(b)-2 promulgated under the
Securities Exchange Act of 1934, as amended.(1)
    
    Incorporated by reference to the Companys Registration Statement on Form S-4 (Registration
No. 333-117362).
  151




---



##### Table of Contents



(2)
    
    Incorporated by reference to IASIS Healthcare Corporations Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 2004.(3)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2006.(4)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year
ended September 30, 2006.(5)
    
    Incorporated by reference to IASIS Healthcare Corporations Annual Report on Form 10-K for
the fiscal year ended September 30, 2000.(6)
    
    Incorporated by reference to IASIS Healthcare Corporations Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2003.(7)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on May 12, 2005.(8)
    
    Incorporated by reference to IASIS Healthcare Corporations Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2002.(9)
    
    Incorporated by reference to IASIS Healthcare Corporations Annual Report on Form 10-K for
the fiscal year ended September 30, 2003.(10)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on May 2, 2007.(11)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on February 5,
2008.(12)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on February 18,
2005.(13)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on April 20, 2005.(14)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on July 24, 2006.(15)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on May 10, 2007.(16)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2008.(17)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2009.(18)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on October 6, 2010.(19)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on October 15, 2010.
  152