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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, 2009
 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
(State or other jurisdiction 
of incorporation or organization)
    
    20-1150104
(I.R.S. Employer
Identification No.)DOVER CENTRE 
117 SEABOARD LANE, BUILDING E 
FRANKLIN, TENNESSEE
(Address of principal executive offices)
    
    37067
(Zip Code)
 (615) 844-2747
   YES o NO þ
 YES þ NO o
 YES þ NO o
 YES
o NO 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)
 YES o NO þ




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TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    29Item 2. Properties
    
    
    42Item 3. Legal Proceedings
    
    
    43Item 4. Submission of Matters to a Vote of Security Holders
    
    
    43PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    44Item 6. Selected Financial Data
    
    
    44Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    46Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    67Item 8. Financial Statements and Supplementary Data
    
    
    69Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    103Item 9A(T). Controls and Procedures
    
    
    103Item 9B. Other Information
    
    
    103PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    104Item 11. Executive Compensation
    
    
    108Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    127Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    129Item 14. Principal Accountant Fees and Services
    
    
    130PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    131Exhibit 10.11Exhibit 10.12Exhibit 10.13Exhibit 10.14Exhibit 10.15Exhibit 10.16Exhibit 10.17Exhibit 10.18Exhibit 21Exhibit 31.1Exhibit 31.2
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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.
      Business Strategy
   1




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Focus on Operational Excellence
 
    
    using our advanced information systems platform across all of our hospitals to provide
us with accurate, real-time and cost-effective financial and clinical information;
 
    
    expanding our profitable product lines and improving our business mix;
 
    
    focusing on efficient staffing, outsourcing programs and supply utilization;
 
    
    capitalizing on purchasing efficiencies and reducing operating costs through monitoring
compliance with our national group purchasing contract; and
 
    
    improving our processes for patient registration, including patient qualification for
financial assistance and point-of-service collections, billing, collections, managed care
contract compliance and all other aspects of our revenue cycle.
 Provide High-Quality Services
 
    
    dedicated corporate and hospital resources;
 
    
    on-going training and education of both medical and non-medical personnel;
 
    
    utilizing our hospital medical management quality program to drive
improvements in case management and allocation of resources, as well as quality and safety
of care;
 
    
    leveraging our information systems to enhance clinical operations;
 
    
    either Det Norske Veritas (DNV) or The Joint Commission accreditation at all
hospitals;
 
    
    regulatory achievement and continuous compliance from numerous organizations such as
the College of American Pathologists and the Society of Chest Pain Centers;
 
    
    centers of excellence within our hospitals, across many different service lines;
 
    
    HealthGrades 5-Star, Top 5% and Top 10% ratings at numerous hospitals; and
 
    
    various other independent ratings.
 Strategically Invest in Our Markets to Expand Services and Increase Revenue
  2




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
    
    upgrading and expanding specialty services and surgical capacity, including cardiology,
orthopedics, womens services and sub-acute care;
 
    
    expanding emergency room capacity;
 
    
    updating our technology in surgery, such as robotic surgery, diagnostic imaging and
other medical equipment;
 
    
    improving clinical and operating efficiencies through installation of automated
laboratory systems at certain of our hospitals;
 
    
    increasing capacity and utilization of inpatient services at
certain of our hospitals;
and
 
    
    enhancing the convenience and quality of our outpatient services, including expansion
of outpatient surgery, imaging and other specialty services.
 Employing Physicians to Meet Community Needs in Certain Markets.
 Recruit and Retain Quality Physicians
 
    
    dedicating corporate personnel and resources to physician recruitment;
 
    
    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;
 
    
    sponsoring training programs to educate physicians on advanced medical procedures; and
 
    
    allowing physicians to remotely access clinical data through our advanced information
systems, facilitating more convenient and timely patient care.
 Continue to Develop Reasonable Managed Care Relationships
  3




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Selectively Pursue Acquisitions and Strategic Alliances
 Implement Operational Initiatives in Response to Healthcare Reform
  Our Markets
  Salt Lake City, Utah
   
    
    An expansion project at Davis Hospital and Medical Center, which included opening the
majority of a new patient tower in June 2009. This expansion project includes: 67
additional beds; a conversion to all private rooms; a new 20 bed psychiatric unit; a new 14
bed intensive care unit; a womens surgical services unit; and expanded pediatric,
medical/surgical and inpatient services;
 
    
    An expansion project at Jordan Valley Medical Center, including the patient tower which
opened in January 2009. The expansion project consists of three new hospital patient floors,
including: 10 additional critical care beds; 88 new inpatient beds; 15 new beds in the
emergency room; a new, fully automated laboratory system; a redesigned outpatient cardiology
center; and a Level III neonatal intensive care unit; and
 
    
    Emergency room and intensive care unit expansions at Salt Lake Regional Medical Center.
   4




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Phoenix, Arizona
    Tampa-St. Petersburg, Florida
   Texas
    5




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Las Vegas, Nevada
   West Monroe, Louisiana
      6




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Our Properties
  LicensedHospitals
    
    City
    
    BedsUtahDavis Hospital & Medical Center (1)
    
    Layton
    
    
    191Jordan Valley Medical Center (2)
    
    West Jordan
    
    
    183Pioneer Valley Hospital (3)
    
    West Valley City
    
    
    139Salt Lake Regional Medical Center (4)
    
    Salt Lake City
    
    
    168ArizonaMountain 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
    
    
    87FloridaMemorial Hospital of Tampa
    
    Tampa
    
    
    180Palms of Pasadena Hospital
    
    St. Petersburg
    
    
    307Town & Country Hospital
    
    Tampa
    
    
    201NevadaNorth Vista Hospital
    
    Las Vegas
    
    
    178TexasOdessa Regional Medical Center (8)
    
    Odessa
    
    
    222Southwest General Hospital (9)
    
    San Antonio
    
    
    327The Medical Center of Southeast Texas (10)
    
    Port Arthur
    
    
    224LouisianaGlenwood Regional Medical Center (11)
    
    West Monroe
    
    
    221Total
    
    
    
    
    3,162
 
 (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 an 98.0% interest.(5)
    
    Owned by a limited partnership in which we own an 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 93.7% interest.(10)
    
    Owned by a limited partnership in which we own an 87.9% interest.(11)
    
    Includes Ouachita, a surgical hospital with 10 licensed beds.   7




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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;
 
    
    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.
   8




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Sources of Acute Care Revenue
  
    
    the federal government, primarily under the Medicare program;
 
    
    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
    
    2009
    
    
    2008
    
    
    2007Medicare
    
    
    22.7
    %
    
    
    23.4
    %
    
    
    22.2
    %Managed Medicare
    
    
    8.0
    
    
    
    7.7
    
    
    
    6.8Medicaid
    
    
    6.5
    
    
    
    5.4
    
    
    
    5.4Managed Medicaid
    
    
    8.7
    
    
    
    8.4
    
    
    
    8.6Managed care
    
    
    43.0
    
    
    
    46.0
    
    
    
    47.5Self-pay
    
    
    11.1
    
    
    
    9.1
    
    
    
    9.5Total(1)
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 
 (1)
    
    For the years ended September 30, 2009, 2008 and 2007, net patient revenue comprised 70.4%,
73.8% and 74.5%, respectively, of our consolidated net revenue.  Medicare
   9




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10




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Managed Medicare
  Medicaid
    12




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Managed Medicaid
   Annual Cost Reports
   13




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Managed Care
  Commercial Insurance
   Charity Care
   14




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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 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.
     15




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Employees And Medical Staff
   Compliance Program
  Government Regulation and Other Factors
  Licensure, Certification and Accreditation
   16




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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;
  17




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
    
    provision of free or significantly discounted billing, nursing, or other staff
services;
 
    
    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 which 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 of services which 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.
     18




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The Federal False Claims Act and Similar State Laws
 qui tam qui tam
  20




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Corporate Practice of Medicine/Fee Splitting
  HIPAA Administrative Simplification and Privacy and Security Requirements
     21




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The Emergency Medical Treatment and Active Labor Act
  Healthcare Reform
   22




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Conversion Legislation
   23




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Healthcare Industry Investigations
   qui tam qui tam qui tam
  24




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Certificates of Need
  Health Choice
       25




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
    
    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.
  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;
  26




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
    
    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
   Our Information Systems
   
    
    patient accounting, including billing and collection of net revenue;
 
    
    financial, accounting, reporting and payroll;
 
    
    coding and compliance;
  27




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
    
    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.
    28




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Item 1A. Risk Factors
 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
  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
  29




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
    
    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.
  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.
   30




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If We Are Unable To Retain And Negotiate Reasonable Contracts With Managed Care Plans, Our Net
Revenue May Be Reduced.
   Healthcare Reform and Other Changes In Governmental Programs May Significantly Reduce
Government Healthcare Spending And Our Revenue.
      31




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32




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Our Hospitals Face Competition For Patients From Other Hospitals And Healthcare Providers That
Could Impact Patient Volume.
   If We Continue To Experience 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.
    33




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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 for services;
 
    
    relationships with physicians and other referral sources;
 
    
    adequacy of medical care;
 
    
    quality of medical equipment and services;
 
    
    qualifications of medical and support personnel;
 
    
    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;
 
    
    operating policies and procedures;
  34




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
    
    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.
 Congress Is Considering And May Enact Legislation That Would Impose Significant Restrictions
On Hospitals That Have Physician Owners, Including Our Hospitals That Have Physician Owners.
   Some Of Our Hospitals May Be Required To Submit To The Department Information On Their
Relationships With Physicians, Including Information Regarding Physician Investors, And This
Submission Could Subject Such Hospitals And Us To Liability.
   35




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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
 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.
   36




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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.
   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;
  37




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
    
    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 Any One Of The Regions In Which We Operate Experiences Or Continues To Experience An
Economic Downturn Or Other Material Change, Our Overall Business Results May Suffer.
   Health Choice
    
    
    29.6
    %Salt Lake City, Utah
    
    
    19.1
    %Phoenix, Arizona (excluding Health Choice)
    
    
    13.9
    %Three cities in Texas, including San Antonio
    
    
    19.0
    %Tampa-St. Petersburg, Florida
    
    
    8.9
    %Other
    
    
    9.5
    %
  We May Be Subject To Liabilities Because Of Claims Brought Against Our Facilities.
    38




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Our Hospitals May Face Increasing Insurance Costs That May Reduce Our Cash Flows And Net
Earnings .
  Operations At Our Hospitals Have Been And May Be Negatively Impacted By Certain Factors,
Including Severe Weather Conditions And The Impact Of Natural Disasters.
  If Health Choices Contract With AHCCCS Was Discontinued, Our Net Revenue And Profitability
Would Be Adversely Affected.
   39




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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 Would 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.
   40




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Difficulties With Current Construction Projects Or New Construction Projects Would Involve
Significant Capital Expenditures Which Could Have An Adverse Impact On Our Liquidity.
  
    
    our ability to control construction costs;
 
    
    the ability of general contractors or subcontractors to perform under their contracts;
 
    
    adverse weather conditions;
 
    
    shortages of labor or materials;
 
    
    our ability to obtain necessary licensing and other required governmental
authorizations; and
 
    
    other unforeseen problems and delays.
  State Efforts To Regulate The Construction Or Expansion Of Hospitals Could Impair Our Ability
To Operate And Expand Our Operations.
  
    
    the purchase, construction or expansion of healthcare facilities;
 
    
    capital expenditures exceeding a prescribed amount; or
 
    
    changes in services or bed capacity.
  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.
   41




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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 Could Result.
  
 Item 2. Properties
    42




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Item 3. Legal Proceedings
 qui tam qui tam qui tam
 
 Item 4. Submission of Matters to a Vote of Security Holders
   43




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##### 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 30,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Statement of Operations Data (1)(6):Net revenue
    
    $
    2,361,972
    
    
    $
    2,065,536
    
    
    $
    1,766,079
    
    
    $
    1,539,577
    
    
    $
    1,429,429Costs and expenses:Salaries and benefits
    
    
    660,921
    
    
    
    632,109
    
    
    
    533,792
    
    
    
    439,349
    
    
    
    410,119Supplies
    
    
    250,573
    
    
    
    231,259
    
    
    
    194,915
    
    
    
    167,616
    
    
    
    166,159Medical claims
    
    
    592,760
    
    
    
    452,055
    
    
    
    376,505
    
    
    
    347,217
    
    
    
    302,204Other operating expenses
    
    
    325,735
    
    
    
    283,123
    
    
    
    266,263
    
    
    
    223,946
    
    
    
    191,538Provision for bad debts
    
    
    192,563
    
    
    
    161,936
    
    
    
    136,233
    
    
    
    134,614
    
    
    
    123,728Rentals and leases
    
    
    39,127
    
    
    
    36,633
    
    
    
    31,546
    
    
    
    30,277
    
    
    
    28,502Interest expense, net
    
    
    67,890
    
    
    
    75,665
    
    
    
    71,206
    
    
    
    67,124
    
    
    
    63,398Depreciation and amortization
    
    
    97,462
    
    
    
    96,741
    
    
    
    75,388
    
    
    
    69,137
    
    
    
    68,358Management fees
    
    
    5,000
    
    
    
    5,000
    
    
    
    4,746
    
    
    
    4,189
    
    
    
    3,791Impairment of goodwill (3)
    
    
    64,639
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Hurricane-related property damage (2)
    
    
    938
    
    
    
    3,589
    
    
    
    
    
    
    
    
    
    
    
    4,762Business interruption insurance
recoveries (4)
    
    
    
    
    
    
    
    
    
    
    (3,443
    )
    
    
    (8,974
    )
    
    
    Loss on extinguishment of debt (5)
    
    
    
    
    
    
    
    
    
    
    6,229
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    2,297,608
    
    
    
    1,978,110
    
    
    
    1,693,380
    
    
    
    1,474,495
    
    
    
    1,362,559Earnings from continuing operations
before gain (loss) on disposal of
assets, minority interests and income
taxes
    
    
    64,364
    
    
    
    87,426
    
    
    
    72,699
    
    
    
    65,082
    
    
    
    66,870Gain (loss) on disposal of assets, net
    
    
    1,465
    
    
    
    (75
    )
    
    
    (1,359
    )
    
    
    913
    
    
    
    (231
    )Minority interests
    
    
    (9,987
    )
    
    
    (4,437
    )
    
    
    (4,496
    )
    
    
    (3,546
    )
    
    
    (2,891
    )Earnings from continuing operations
before income taxes
    
    
    55,842
    
    
    
    82,914
    
    
    
    66,844
    
    
    
    62,449
    
    
    
    63,748Income tax expense
    
    
    27,576
    
    
    
    35,325
    
    
    
    25,909
    
    
    
    22,515
    
    
    
    25,402Net earnings from continuing operations
    
    
    28,266
    
    
    
    47,589
    
    
    
    40,935
    
    
    
    39,934
    
    
    
    38,346Earnings (loss) from discontinued
operations, net of income taxes
    
    
    (176
    )
    
    
    (11,275
    )
    
    
    669
    
    
    
    (385
    )
    
    
    2,246Net earnings
    
    $
    28,090
    
    
    $
    36,314
    
    
    $
    41,604
    
    
    $
    39,549
    
    
    $
    40,592Balance Sheet Data (at end of period):Cash and cash equivalents
    
    $
    206,528
    
    
    $
    80,738
    
    
    $
    
    
    
    $
    95,415
    
    
    $
    89,097Total assets
    
    $
    2,357,204
    
    
    $
    2,308,147
    
    
    $
    2,186,422
    
    
    $
    1,967,835
    
    
    $
    1,852,724Long-term debt and capital lease
obligations (including current
portion)
    
    $
    1,059,837
    
    
    $
    1,114,622
    
    
    $
    1,031,657
    
    
    $
    896,945
    
    
    $
    904,808Members equity
    
    $
    780,847
    
    
    $
    727,769
    
    
    $
    691,514
    
    
    $
    656,496
    
    
    $
    616,947
 
 (1)
    
    The results of Glenwood  and Alliance are included from
January 31, 2007 and May 31, 2007, respectively, their dates of acquisition.  44




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##### Table of Contents



(2)
    
    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. Results for
the year ended September 30, 2005, include an adverse financial impact totaling $4.8 million
before income taxes related to property damage sustained at The Medical Center of Southeast
Texas, as a result of Hurricane Rita.(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, 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 were reduced by related insurance deductibles of
$4.6 million.(5)
    
    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.(6)
    
    Excludes Mesa General Hospital and Biltmore Surgery Center, where operations were
discontinued effective May 31, 2008 and April 30, 2008, respectively. Selected Operating Data
  Year Ended September 30,2009
    
    
    2008
    
    
    2007Acute Care (1)Number of acute care hospital facilities at end of period (2)
    
    
    15
    
    
    
    15
    
    
    
    15Beds in service at end of period
    
    
    2,853
    
    
    
    2,644
    
    
    
    2,565Average length of stay (days) (3)
    
    
    4.7
    
    
    
    4.7
    
    
    
    4.6Occupancy rates (average beds in service)
    
    
    47.0
    %
    
    
    48.9
    %
    
    
    49.5
    %Admissions (4)
    
    
    101,083
    
    
    
    101,302
    
    
    
    92,198Adjusted admissions (5)
    
    
    169,721
    
    
    
    165,819
    
    
    
    150,774Patient days (6)
    
    
    473,601
    
    
    
    471,853
    
    
    
    427,244Adjusted patient days (5)
    
    
    762,234
    
    
    
    741,466
    
    
    
    669,999Net patient revenue per adjusted admission
    
    $
    9,703
    
    
    $
    9,101
    
    
    $
    8,639Health Choice:Medicaid covered lives
    
    
    187,104
    
    
    
    142,193
    
    
    
    122,437Dual-eligible lives (7)
    
    
    3,659
    
    
    
    3,300
    
    
    
    3,482Medical loss ratio (8)
    
    
    86.1
    %
    
    
    85.2
    %
    
    
    85.2
    %
 
 (1)
    
    Excludes Mesa General Hospital, which discontinued services effective May 31, 2008.(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.  45




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##### 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;
 
    
    Off-Balance Sheet Arrangements; and
 
    
    Recent Accounting Pronouncements.
  FORWARD LOOKING STATEMENTS
    46




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##### 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.
  Revenue and Volume Trends
  Acute Care Revenue
    47




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##### Table of Contents



Year Ended September 30,2009
    
    
    2008
    
    
    2007Medicare
    
    
    31.1
    %
    
    
    31.9
    %
    
    
    30.7
    %Managed Medicare
    
    
    11.5
    
    
    
    10.9
    
    
    
    9.4Medicaid
    
    
    8.4
    
    
    
    7.2
    
    
    
    7.2Managed Medicaid
    
    
    11.2
    
    
    
    10.6
    
    
    
    10.4Managed care
    
    
    32.8
    
    
    
    34.7
    
    
    
    37.1Self-pay
    
    
    5.0
    
    
    
    4.7
    
    
    
    5.2Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
     Premium Revenue
   48




---



##### Table of Contents



Significant Industry Trends
  General Economic Environment
  Value-Based Reimbursement
   49




---



##### Table of Contents



Physician Integration
    50




---



##### Table of Contents



Growth in Uncompensated Care
   September 30,
    
    
    September 30,2009
    
    
    2008Insured receivables
    
    
    62.0
    %
    
    
    64.8
    %Uninsured receivables
    
    
    38.0
    %
    
    
    35.2
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
   September 30,
    
    
    September 30,2009
    
    
    20080 to 90 days
    
    
    69.4
    %
    
    
    67.5
    %91 to 180 days
    
    
    18.1
    %
    
    
    17.9
    %Over 180 days
    
    
    12.5
    %
    
    
    14.6
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
 Sub-Acute Care Services
   51




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##### Table of Contents



Changes in Patient Service Mix
  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.
    52




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##### Table of Contents



Allowance for Contractual Discounts and Settlement Estimates.
       53




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##### Table of Contents



Insurance Reserves.
   Year ended September 30, 2009
    
    $
    (1.2
    )Year ended September 30, 2008
    
    $
    (6.8
    )Year ended September 30, 2007
    
    $
    (6.6
    )
   As reported at September 30, 2009
    
    $
    41.775% Confidence Level
    
    $
    48.990% Confidence Level
    
    $
    60.8
  54




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##### Table of Contents



Year ended September 30, 2009
    
    $
    (0.5
    )Year ended September 30, 2008
    
    $
    0.8Year ended September 30, 2007
    
    $
    (1.0
    )
 Medical Claims Payable.
  Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008Medical claims payable as of October 1
    
    $
    97,343
    
    
    $
    81,309Medical claims expense incurred during the year:Related to current year
    
    
    620,153
    
    
    
    464,055Related to prior years
    
    
    (18,077
    )
    
    
    (2,406
    )Total expenses
    
    
    602,076
    
    
    
    461,649Medical claims payments during the year:Related to current year
    
    
    (508,299
    )
    
    
    (368,392
    )Related to prior years
    
    
    (77,601
    )
    
    
    (77,223
    )Total payments
    
    
    (585,900
    )
    
    
    (445,615
    )Medical claims payable as of September 30
    
    $
    113,519
    
    
    $
    97,343
   Claims Trend Factor
    
    
    Completion FactorIncrease (Decrease) in
    
    
    
    
    
    
    Increase (Decrease) inIncrease (Decrease) in
    
    
    
    
    Medical Claims
    
    
    Increase (Decrease) in
    
    
    Medical ClaimsFactor
    
    
    
    
    Payable
    
    
    Factor
    
    
    Payable(3.0
    )%
    
    
    
    $
    (4,661
    )
    
    
    1.0
    %
    
    $
    (5,560
    )(2.0
    )
    
    
    
    
    (3,103
    )
    
    
    0.5
    
    
    
    (2,787
    )(1.0
    )
    
    
    
    
    (1,552
    )
    
    
    (0.5
    )
    
    
    2,8451.0
    
    
    
    
    
    1,564
    
    
    
    (1.0
    )
    
    
    5,705
  55




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##### Table of Contents



Goodwill and Other Intangibles.
 Income Taxes.
     56




---



##### Table of Contents



RESULTS OF OPERATIONS SUMMARY
 Consolidated
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30, 2009
    
    
    September 30, 2008
    
    
    September 30, 2007($ in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    1,662,469
    
    
    
    70.4
    %
    
    $
    1,523,790
    
    
    
    73.8
    %
    
    $
    1,315,438
    
    
    
    74.5
    %Premium revenue
    
    
    699,503
    
    
    
    29.6
    %
    
    
    541,746
    
    
    
    26.2
    %
    
    
    450,641
    
    
    
    25.5
    %Total net revenue
    
    
    2,361,972
    
    
    
    100.0
    %
    
    
    2,065,536
    
    
    
    100.0
    %
    
    
    1,766,079
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    660,921
    
    
    
    28.0
    %
    
    
    632,109
    
    
    
    30.6
    %
    
    
    533,792
    
    
    
    30.2
    %Supplies
    
    
    250,573
    
    
    
    10.6
    %
    
    
    231,259
    
    
    
    11.2
    %
    
    
    194,915
    
    
    
    11.0
    %Medical claims
    
    
    592,760
    
    
    
    25.1
    %
    
    
    452,055
    
    
    
    21.9
    %
    
    
    376,505
    
    
    
    21.3
    %Other operating expenses
    
    
    325,735
    
    
    
    13.8
    %
    
    
    283,123
    
    
    
    13.7
    %
    
    
    266,263
    
    
    
    15.1
    %Provision for bad debts
    
    
    192,563
    
    
    
    8.2
    %
    
    
    161,936
    
    
    
    7.8
    %
    
    
    136,233
    
    
    
    7.7
    %Rentals and leases
    
    
    39,127
    
    
    
    1.7
    %
    
    
    36,633
    
    
    
    1.8
    %
    
    
    31,546
    
    
    
    1.8
    %Interest expense, net
    
    
    67,890
    
    
    
    2.9
    %
    
    
    75,665
    
    
    
    3.7
    %
    
    
    71,206
    
    
    
    4.0
    %Depreciation and
amortization
    
    
    97,462
    
    
    
    4.1
    %
    
    
    96,741
    
    
    
    4.7
    %
    
    
    75,388
    
    
    
    4.3
    %Management fees
    
    
    5,000
    
    
    
    0.2
    %
    
    
    5,000
    
    
    
    0.2
    %
    
    
    4,746
    
    
    
    0.3
    %Impairment of goodwill
    
    
    64,639
    
    
    
    2.7
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Hurricane-related property
damage
    
    
    938
    
    
    
    0.0
    %
    
    
    3,589
    
    
    
    0.2
    %
    
    
    
    
    
    
    Loss on extinguishment of
debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,229
    
    
    
    0.4
    %Business interruption
insurance recoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,443
    )
    
    
    (0.2
    )%Total costs and expenses
    
    
    2,297,608
    
    
    
    97.3
    %
    
    
    1,978,110
    
    
    
    95.8
    %
    
    
    1,693,380
    
    
    
    95.9
    %Earnings from continuing
operations before gain
(loss) on disposal of
assets, minority interests
and income taxes
    
    
    64,364
    
    
    
    2.7
    %
    
    
    87,426
    
    
    
    4.2
    %
    
    
    72,699
    
    
    
    4.1
    %Gain (loss) on disposal of
assets, net
    
    
    1,465
    
    
    
    0.1
    %
    
    
    (75
    )
    
    
    (0.0
    )%
    
    
    (1,359
    )
    
    
    (0.1
    )%Minority interests
    
    
    (9,987
    )
    
    
    (0.4
    )%
    
    
    (4,437
    )
    
    
    (0.2
    )%
    
    
    (4,496
    )
    
    
    (0.2
    )%Earnings from continuing
operations before income
taxes
    
    
    55,842
    
    
    
    2.4
    %
    
    
    82,914
    
    
    
    4.0
    %
    
    
    66,844
    
    
    
    3.8
    %Income tax expense
    
    
    27,576
    
    
    
    1.2
    %
    
    
    35,325
    
    
    
    1.7
    %
    
    
    25,909
    
    
    
    1.5
    %Net earnings from continuing
operations
    
    
    28,266
    
    
    
    1.2
    %
    
    
    47,589
    
    
    
    2.3
    %
    
    
    40,935
    
    
    
    2.3
    %Earnings (loss) from
discontinued operations, net
of income taxes
    
    
    (176
    )
    
    
    (0.0
    )%
    
    
    (11,275
    )
    
    
    (0.5
    )%
    
    
    669
    
    
    
    0.0
    %Net earnings
    
    $
    28,090
    
    
    
    1.2
    %
    
    $
    36,314
    
    
    
    1.8
    %
    
    $
    41,604
    
    
    
    2.3
    %
  57




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##### Table of Contents



Acute Care
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30, 2009
    
    
    September 30, 2008
    
    
    September 30, 2007($ in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageNet revenue:Acute care revenue
    
    $
    1,662,469
    
    
    
    99.4
    %
    
    $
    1,523,790
    
    
    
    99.4
    %
    
    $
    1,315,438
    
    
    
    99.4
    %Revenue between segments
    
    
    9,316
    
    
    
    0.6
    %
    
    
    9,594
    
    
    
    0.6
    %
    
    
    7,540
    
    
    
    0.6
    %Total net revenue (1)
    
    
    1,671,785
    
    
    
    100.0
    %
    
    
    1,533,384
    
    
    
    100.0
    %
    
    
    1,322,978
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    641,893
    
    
    
    38.4
    %
    
    
    614,442
    
    
    
    40.1
    %
    
    
    518,989
    
    
    
    39.2
    %Supplies
    
    
    250,310
    
    
    
    15.0
    %
    
    
    231,001
    
    
    
    15.1
    %
    
    
    194,630
    
    
    
    14.7
    %Other operating expenses
    
    
    302,804
    
    
    
    18.1
    %
    
    
    264,814
    
    
    
    17.3
    %
    
    
    251,167
    
    
    
    19.0
    %Provision for bad debts
    
    
    192,563
    
    
    
    11.5
    %
    
    
    161,936
    
    
    
    10.6
    %
    
    
    136,233
    
    
    
    10.3
    %Rentals and leases
    
    
    37,563
    
    
    
    2.2
    %
    
    
    35,466
    
    
    
    2.3
    %
    
    
    30,384
    
    
    
    2.3
    %Interest expense, net
    
    
    67,890
    
    
    
    4.1
    %
    
    
    75,665
    
    
    
    4.9
    %
    
    
    71,206
    
    
    
    5.4
    %Depreciation and amortization
    
    
    94,014
    
    
    
    5.6
    %
    
    
    93,003
    
    
    
    6.0
    %
    
    
    71,828
    
    
    
    5.4
    %Management fees
    
    
    5,000
    
    
    
    0.3
    %
    
    
    5,000
    
    
    
    0.3
    %
    
    
    4,746
    
    
    
    0.4
    %Impairment of goodwill
    
    
    64,639
    
    
    
    3.9
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Hurricane-related property damage
    
    
    938
    
    
    
    0.1
    %
    
    
    3,589
    
    
    
    0.2
    %
    
    
    
    
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,229
    
    
    
    0.5
    %Business interruption insurance
recoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,443
    )
    
    
    (0.3
    )%Total costs and expenses
    
    
    1,657,614
    
    
    
    99.2
    %
    
    
    1,484,916
    
    
    
    96.8
    %
    
    
    1,281,969
    
    
    
    96.9
    %Earnings from continuing operations
before gain (loss) on disposal of
assets, minority interests and income
taxes
    
    
    14,171
    
    
    
    0.8
    %
    
    
    48,468
    
    
    
    3.2
    %
    
    
    41,009
    
    
    
    3.1
    %Gain (loss) on disposal of assets, net
    
    
    1,616
    
    
    
    0.1
    %
    
    
    (75
    )
    
    
    (0.0
    )%
    
    
    (1,359
    )
    
    
    (0.1
    )%Minority interests
    
    
    (9,987
    )
    
    
    (0.6
    )%
    
    
    (4,437
    )
    
    
    (0.3
    )%
    
    
    (4,496
    )
    
    
    (0.3
    )%Earnings from continuing operations
before income taxes
    
    $
    5,800
    
    
    
    0.3
    %
    
    $
    43,956
    
    
    
    2.9
    %
    
    $
    35,154
    
    
    
    2.7
    %
 
 (1)
    
    Revenue between segments is eliminated in our consolidated results. Years Ended September 30, 2009 and 2008
 Acute care revenue
 Salaries and benefits
 Other operating expenses
  58




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Provision for bad debts
 Interest expense, net
 Impairment
of goodwill
 Earnings from continuing operations before income taxes
 Years Ended September 30, 2008 and 2007
 Acute care revenue
  Salaries and benefits
 Supplies
 Other operating expenses qui tam
 Provision for bad debts
  59




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##### Table of Contents



Interest expense, net
 Depreciation and amortization
 Earnings from continuing operations before income taxes
 Health Choice
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30, 2009
    
    
    September 30, 2008
    
    
    September 30, 2007Health Choice ($ in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentagePremium revenue
    
    $
    699,503
    
    
    
    100.0
    %
    
    $
    541,746
    
    
    
    100.0
    %
    
    $
    450,641
    
    
    
    100.0
    %Costs and expenses:Salaries and benefits
    
    
    19,028
    
    
    
    2.7
    %
    
    
    17,667
    
    
    
    3.3
    %
    
    
    14,803
    
    
    
    3.3
    %Supplies
    
    
    263
    
    
    
    0.0
    %
    
    
    258
    
    
    
    0.0
    %
    
    
    285
    
    
    
    0.1
    %Medical claims (1)
    
    
    602,076
    
    
    
    86.1
    %
    
    
    461,649
    
    
    
    85.2
    %
    
    
    384,045
    
    
    
    85.2
    %Other operating expenses
    
    
    22,931
    
    
    
    3.3
    %
    
    
    18,309
    
    
    
    3.4
    %
    
    
    15,096
    
    
    
    3.3
    %Rentals and leases
    
    
    1,564
    
    
    
    0.2
    %
    
    
    1,167
    
    
    
    0.2
    %
    
    
    1,162
    
    
    
    0.3
    %Depreciation and amortization
    
    
    3,448
    
    
    
    0.5
    %
    
    
    3,738
    
    
    
    0.7
    %
    
    
    3,560
    
    
    
    0.8
    %Total costs and expenses
    
    
    649,310
    
    
    
    92.8
    %
    
    
    502,788
    
    
    
    92.8
    %
    
    
    418,951
    
    
    
    93.0
    %Earnings before loss on disposal of assets
    
    
    50,193
    
    
    
    7.2
    %
    
    
    38,958
    
    
    
    7.2
    %
    
    
    31,690
    
    
    
    7.0
    %Loss on disposal of assets, net
    
    
    (151
    )
    
    
    (0.0
    )%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Earnings before income taxes
    
    $
    50,042
    
    
    
    7.2
    %
    
    $
    38,958
    
    
    
    7.2
    %
    
    $
    31,690
    
    
    
    7.0
    %
 
 (1)
    
    Medical claims paid to our hospitals of $9.3 million, $9.6 million and $7.5 million for the
years ended September 30, 2009, 2008 and 2007, respectively, are eliminated in our
consolidated results. Years Ended September 30, 2009 and 2008
 Premium revenue
  60




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Medical claims
 Years Ended September 30, 2008 and 2007
 Premium revenue
 Medical claims
 Income Taxes
  Years Ended September 30, 2009 and 2008
 Income tax expense
 Years Ended September 30, 2008 and 2007
 Income tax expense
  61




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Summary of Operations by Quarter
  Quarter EndedSept. 30,
    
    
    June 30,
    
    
    March 31,
    
    
    Dec. 31,2009(1)
    
    
    2009
    
    
    2009(2)
    
    
    2008(in thousands)Net revenue
    
    $
    620,056
    
    
    $
    601,618
    
    
    $
    578,674
    
    
    $
    561,624Earnings (loss) from continuing operations
before income taxes
    
    
    (41,446
    )
    
    
    34,277
    
    
    
    41,839
    
    
    
    21,172Net earnings (loss) from continuing operations
    
    
    (30,047
    )
    
    
    20,562
    
    
    
    25,390
    
    
    
    12,361
 Quarter EndedSept. 30,
    
    
    June 30,
    
    
    March 31,
    
    
    Dec. 31,2008(3)
    
    
    2008
    
    
    2008(4)
    
    
    2007(in thousands)Net revenue
    
    $
    515,419
    
    
    $
    532,560
    
    
    $
    524,820
    
    
    $
    492,737Earnings from continuing operations before income taxes
    
    
    12,491
    
    
    
    24,492
    
    
    
    26,681
    
    
    
    19,250Net earnings from continuing operations
    
    
    5,446
    
    
    
    14,964
    
    
    
    15,885
    
    
    
    11,294
 
 (1)
    
    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.(2)
    
    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.(3)
    
    Results for the quarter ended September 30, 2008,
include a $2.9 million and a $44,000
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, and $3.6
million in costs associated with property damage sustained at The Medical Center of Southeast
Texas, as a result of Hurricane Ike in September 2008.(4)
    
    Results for the quarter ended March 31, 2008, include a $3.9 million reduction and an
$803,000 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. LIQUIDITY AND CAPITAL RESOURCES
 Overview of Cash Flow Activities for the Years Ended September 30, 2009 and 2008
  2009
    
    
    2008Cash flows from operating activities  continuing operations
    
    $
    270,499
    
    
    $
    141,063Cash flows from investing activities  continuing operations
    
    
    (82,586
    )
    
    
    (149,263
    )Cash flows from financing activities  continuing operations
    
    
    (63,605
    )
    
    
    88,144
 Operating Activities
   62




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Investing Activities
   Financing Activities
   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
    63




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$475.0 Million 8 3/4 Senior Subordinated Notes Due 2014
 3 4 3 4 3 4 3 4 3 4 3 4 3 4
 $300.0 Million Holdings Senior PIK Loans
  Other
    64




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##### Table of Contents



Capital Expenditures
  
    
    $60.0 million to $65.0 million for other growth and new business projects;
 
    
    $45.0 million to $50.0 million in replacement or maintenance related projects at our
hospitals;
 
    
    $12.0 million related to healthcare IT stimulus funds; and
 
    
    $8.0 million in hardware and software costs related to other information systems
projects.
 Liquidity
   Available cash
    
    $
    206.5Available capacity under our senior secured revolving credit facility
    
    
    200.3Net available liquidity at September 30, 2009
    
    $
    406.8
    65




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##### Table of Contents



3 4
 3 4
 OFF-BALANCE SHEET ARRANGEMENTS
   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)
    
    $
    69.5
    
    
    $
    135.4
    
    
    $
    1,129.6
    
    
    $
    
    
    
    $
    1,334.5Capital lease obligations, with interest
    
    
    1.1
    
    
    
    1.6
    
    
    
    1.1
    
    
    
    5.2
    
    
    
    9.0Medical claims
    
    
    113.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113.5Operating leases
    
    
    21.8
    
    
    
    33.0
    
    
    
    28.1
    
    
    
    42.3
    
    
    
    125.2Estimated self-insurance liabilities
    
    
    12.6
    
    
    
    16.0
    
    
    
    14.1
    
    
    
    15.1
    
    
    
    57.8Purchase obligations
    
    
    23.0
    
    
    
    9.0
    
    
    
    1.6
    
    
    
    0.1
    
    
    
    33.7Subtotal
    
    $
    241.5
    
    
    $
    195.0
    
    
    $
    1,174.5
    
    
    $
    62.7
    
    
    $
    1,673.7
 Amount of Commitment Expiration Per PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More than1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years
    
    
    Total(in millions)Other Commitments(2):Construction and improvement commitments
    
    $
    13.7
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    13.7Guarantees of surety bonds
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9Letters of credit
    
    
    
    
    
    
    39.9
    
    
    
    24.7
    
    
    
    
    
    
    
    64.6Minimum revenue guarantees
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.7Other commitments
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3Subtotal
    
    
    19.6
    
    
    
    39.9
    
    
    
    24.7
    
    
    
    
    
    
    
    84.2Total obligations and commitments
    
    $
    261.1
    
    
    $
    234.9
    
    
    $
    1,199.2
    
    
    $
    62.7
    
    
    $
    1,757.9
 
 (1)
    
    We used 3.6%, the weighted average interest rate incurred on our senior secured credit
facilities in fiscal
2009, 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 $7.8 million of unrecognized tax benefits and related interest that could
result in a cash settlement, of which $6.2 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.  66




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Seasonality
  RECENT
ACCOUNTING PRONOUNCEMENTS
   Item 7A. Quantitative and Qualitative Disclosures About Market Risk
   67




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3 4 3 4
   68




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Item 8. Financial Statements and Supplementary Data
 IASIS Healthcare LLC
Index to Consolidated Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    70Consolidated Balance Sheets at September 30, 2009 and 2008
    
    
    71Consolidated Statements of Operations for the Years Ended September 30, 2009, 2008 and 2007
    
    
    72Consolidated Statements of Members Equity for the Years Ended September 30, 2009, 2008 and 2007
    
    
    73Consolidated Statements of Cash Flows for the Years Ended September 30, 2009, 2008 and 2007
    
    
    74Notes to Consolidated Financial Statements
    
    
    75
  69




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Report of Independent Registered Public Accounting Firm
 
     
  70




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IASIS HEALTHCARE LLC
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands)
 September 30,
    
    
    September 30,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    206,528
    
    
    $
    80,738Accounts receivable, less allowance for doubtful accounts of
$126,132 and $108,500 at September 30, 2009 and 2008,
respectively
    
    
    230,198
    
    
    
    224,138Inventories
    
    
    50,492
    
    
    
    49,454Deferred income taxes
    
    
    39,038
    
    
    
    38,860Prepaid expenses and other current assets
    
    
    49,453
    
    
    
    60,053Total current assets
    
    
    575,709
    
    
    
    453,243Property and equipment, net
    
    
    997,353
    
    
    
    1,004,248Goodwill
    
    
    717,920
    
    
    
    780,599Other intangible assets, net
    
    
    30,000
    
    
    
    33,000Other assets, net
    
    
    36,222
    
    
    
    37,057Total assets
    
    $
    2,357,204
    
    
    $
    2,308,147LIABILITIES AND MEMBERS EQUITYCurrent liabilities:Accounts payable
    
    $
    68,552
    
    
    $
    64,851Salaries and benefits payable
    
    
    42,548
    
    
    
    31,807Accrued interest payable
    
    
    12,511
    
    
    
    12,460Medical claims payable
    
    
    113,519
    
    
    
    97,343Other accrued expenses and other current liabilities
    
    
    65,701
    
    
    
    51,802Current portion of long-term debt and capital lease obligations
    
    
    8,366
    
    
    
    7,623Total current liabilities
    
    
    311,197
    
    
    
    265,886Long-term debt and capital lease obligations
    
    
    1,051,471
    
    
    
    1,106,999Deferred income taxes
    
    
    106,425
    
    
    
    111,092Other long-term liabilities
    
    
    54,222
    
    
    
    44,526Minority interests
    
    
    53,042
    
    
    
    51,875Members equity:Members equity
    
    
    780,847
    
    
    
    727,769Total liabilities and members equity
    
    $
    2,357,204
    
    
    $
    2,308,147
  71




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IASIS HEALTHCARE LLC
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands)
 Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2007Net revenue:Acute care revenue
    
    $
    1,662,469
    
    
    $
    1,523,790
    
    
    $
    1,315,438Premium revenue
    
    
    699,503
    
    
    
    541,746
    
    
    
    450,641Total net revenue
    
    
    2,361,972
    
    
    
    2,065,536
    
    
    
    1,766,079Costs and expenses:Salaries and benefits
    
    
    660,921
    
    
    
    632,109
    
    
    
    533,792Supplies
    
    
    250,573
    
    
    
    231,259
    
    
    
    194,915Medical claims
    
    
    592,760
    
    
    
    452,055
    
    
    
    376,505Other operating expenses
    
    
    325,735
    
    
    
    283,123
    
    
    
    266,263Provision for bad debts
    
    
    192,563
    
    
    
    161,936
    
    
    
    136,233Rentals and leases
    
    
    39,127
    
    
    
    36,633
    
    
    
    31,546Interest expense, net
    
    
    67,890
    
    
    
    75,665
    
    
    
    71,206Depreciation and amortization
    
    
    97,462
    
    
    
    96,741
    
    
    
    75,388Management fees
    
    
    5,000
    
    
    
    5,000
    
    
    
    4,746Impairment of goodwill
    
    
    64,639
    
    
    
    
    
    
    
    Hurricane-related property damage
    
    
    938
    
    
    
    3,589
    
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    6,229Business interruption insurance recoveries
    
    
    
    
    
    
    
    
    
    
    (3,443
    )Total costs and expenses
    
    
    2,297,608
    
    
    
    1,978,110
    
    
    
    1,693,380Earnings from continuing operations before
gain (loss) on disposal of assets, minority
interests and income taxes
    
    
    64,364
    
    
    
    87,426
    
    
    
    72,699Gain (loss) on disposal of assets, net
    
    
    1,465
    
    
    
    (75
    )
    
    
    (1,359
    )Minority interests
    
    
    (9,987
    )
    
    
    (4,437
    )
    
    
    (4,496
    )Earnings from continuing operations before
income taxes
    
    
    55,842
    
    
    
    82,914
    
    
    
    66,844Income tax expense
    
    
    27,576
    
    
    
    35,325
    
    
    
    25,909Net earnings from continuing operations
    
    
    28,266
    
    
    
    47,589
    
    
    
    40,935Earnings (loss) from discontinued
operations, net of income taxes
    
    
    (176
    )
    
    
    (11,275
    )
    
    
    669Net earnings
    
    $
    28,090
    
    
    $
    36,314
    
    
    $
    41,604
  72




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IASIS HEALTHCARE LLC
 
 CONSOLIDATED STATEMENTS OF MEMBERS EQUITY
 (In thousands)
 MembersEquityBalance at September 30, 2006
    
    $
    656,496Distribution to parent for debt financing costs
    
    
    (6,586
    )Net earnings
    
    
    41,604Balance at September 30, 2007
    
    $
    691,514Cumulative effect of the adoption of FASB income tax guidance
    
    
    (59
    )Net earnings
    
    
    36,314Balance at September 30, 2008
    
    $
    727,769Income tax benefit resulting from exercise of employee stock options
    
    
    9Stock compensation costs
    
    
    561Other comprehensive loss
    
    
    (2,926
    )Contribution from parent related to tax benefit
from Holdings Senior PIK Loans interest
    
    
    27,344Net earnings
    
    
    28,090Balance at September 30, 2009
    
    $
    780,847
  73




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IASIS HEALTHCARE LLC
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net earnings
    
    $
    28,090
    
    
    $
    36,314
    
    
    $
    41,604Adjustments to reconcile net earnings to net cash provided by
operating activities:Loss (earnings) from discontinued operations
    
    
    176
    
    
    
    11,275
    
    
    
    (669
    )Depreciation and amortization
    
    
    97,462
    
    
    
    96,741
    
    
    
    75,388Amortization of loan costs
    
    
    3,029
    
    
    
    2,913
    
    
    
    2,942Minority interests
    
    
    9,987
    
    
    
    4,437
    
    
    
    4,496Deferred income taxes
    
    
    (5,572
    )
    
    
    19,368
    
    
    
    24,103Income tax benefit from parent company interest
    
    
    27,344
    
    
    
    
    
    
    
    Loss (gain) on disposal of assets, net
    
    
    (1,465
    )
    
    
    75
    
    
    
    1,359Impairment of goodwill
    
    
    64,639
    
    
    
    
    
    
    
    Hurricane-related property damage
    
    
    938
    
    
    
    3,589
    
    
    
    Stock compensation costs
    
    
    561
    
    
    
    
    
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    5,091Changes in operating assets and liabilities, net of the
effect of acquisitions and dispositions:Accounts receivable, net
    
    
    (7,302
    )
    
    
    17,131
    
    
    
    (52,749
    )Inventories, prepaid expenses and other current assets
    
    
    6,728
    
    
    
    (21,361
    )
    
    
    (5,894
    )Accounts payable, other accrued expenses and other
accrued liabilities
    
    
    45,884
    
    
    
    (29,419
    )
    
    
    26,002Net cash provided by operating activities  continuing operations
    
    
    270,499
    
    
    
    141,063
    
    
    
    121,673Net cash provided by operating activities  discontinued
operations
    
    
    1,472
    
    
    
    2,313
    
    
    
    4,661Net cash provided by operating activities
    
    
    271,971
    
    
    
    143,376
    
    
    
    126,334Cash flows from investing activities:Purchases of property and equipment
    
    
    (87,720
    )
    
    
    (137,415
    )
    
    
    (194,043
    )Cash paid for acquisitions
    
    
    (1,941
    )
    
    
    (16,821
    )
    
    
    (141,585
    )Proceeds from sale of assets
    
    
    5,252
    
    
    
    360
    
    
    
    1,026Change in other assets
    
    
    1,823
    
    
    
    4,613
    
    
    
    5,893Net cash used in investing activities  continuing operations
    
    
    (82,586
    )
    
    
    (149,263
    )
    
    
    (328,709
    )Net cash provided by (used in) investing activities 
discontinued operations
    
    
    10
    
    
    
    (1,017
    )
    
    
    (929
    )Net cash used in investing activities
    
    
    (82,576
    )
    
    
    (150,280
    )
    
    
    (329,638
    )Cash flows from financing activities:Payment of debt and capital lease obligations
    
    
    (55,476
    )
    
    
    (306,611
    )
    
    
    (650,305
    )Proceeds from debt borrowings
    
    
    
    
    
    
    384,978
    
    
    
    778,800Debt financing costs incurred
    
    
    
    
    
    
    
    
    
    
    (8,200
    )Distribution to parent for debt financing costs
    
    
    
    
    
    
    
    
    
    
    (6,586
    )Distribution of minority interests
    
    
    (6,750
    )
    
    
    (5,485
    )
    
    
    (4,850
    )Proceeds received from sale (costs paid for repurchase) of
partnership interests, net
    
    
    (1,379
    )
    
    
    15,070
    
    
    
    (495
    )Other
    
    
    
    
    
    
    192
    
    
    
    Net cash provided by (used in) financing activities  continuing
operations
    
    
    (63,605
    )
    
    
    88,144
    
    
    
    108,364Net cash used in financing activities  discontinued operations
    
    
    
    
    
    
    (502
    )
    
    
    (475
    )Net cash provided by (used in) financing activities
    
    
    (63,605
    )
    
    
    87,642
    
    
    
    107,889Increase (decrease) in cash and cash equivalents
    
    
    125,790
    
    
    
    80,738
    
    
    
    (95,415
    )Cash and cash equivalents at beginning of period
    
    
    80,738
    
    
    
    
    
    
    
    95,415Cash and cash equivalents at end of period
    
    $
    206,528
    
    
    $
    80,738
    
    
    $
    Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    66,136
    
    
    $
    83,126
    
    
    $
    80,647Cash paid (received) for income taxes, net
    
    $
    4,104
    
    
    $
    (925
    )
    
    $
    7,710Cash paid in loss on extinguishment of debt
    
    $
    
    
    
    $
    
    
    
    $
    1,138Supplemental schedule of noncash investing and financing activities:Capital lease obligations resulting from acquisitions
    
    $
    
    
    
    $
    4,849
    
    
    $
    5,037Property and equipment in accounts payable
    
    $
    1,184
    
    
    $
    4,788
    
    
    $
    6,401Partnership interests issued for acquisition
    
    $
    
    
    
    $
    
    
    
    $
    3,517
  74




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##### 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
   75




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2. SIGNIFICANT ACCOUNTING POLICIES
 Net Revenue
 Acute Care Revenue
    Premium Revenue
      76




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##### Table of Contents



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.
   77




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##### Table of Contents



Inventories
  Long-lived Assets
  Property and Equipment
  Goodwill and Other Intangible Assets
   Other Assets
  Insurance Reserves
   78




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##### Table of Contents



Income Taxes
  Minority Interest in Consolidated Entities
  Medical Claims Payable
    Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2007Medical claims payable as of October 1
    
    $
    97,343
    
    
    $
    81,309
    
    
    $
    81,822Medical claims expense incurred during the year:Related to current year
    
    
    620,153
    
    
    
    464,055
    
    
    
    396,152Related to prior years
    
    
    (18,077
    )
    
    
    (2,406
    )
    
    
    (12,107
    )Total expenses
    
    
    602,076
    
    
    
    461,649
    
    
    
    384,045Medical claims payments during the year:Related to current year
    
    
    (508,299
    )
    
    
    (368,392
    )
    
    
    (317,798
    )Related to prior years
    
    
    (77,601
    )
    
    
    (77,223
    )
    
    
    (66,760
    )Total payments
    
    
    (585,900
    )
    
    
    (445,615
    )
    
    
    (384,558
    )Medical claims payable as of September 30
    
    $
    113,519
    
    
    $
    97,343
    
    
    $
    81,309
   Stock Based Compensation
   79




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##### Table of Contents



Fair Value of Financial Instruments
 3 4 3 4
 Management Services Agreement
  Recently Issued Accounting Pronouncements
   80




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##### Table of Contents



3. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
  September 30,
    
    
    September 30,2009
    
    
    2008Senior secured credit facilities
    
    $
    576,150
    
    
    $
    629,818Senior subordinated notes
    
    
    475,000
    
    
    
    475,000Capital leases and other obligations
    
    
    8,687
    
    
    
    9,8041,059,837
    
    
    
    1,114,622Less current maturities
    
    
    8,366
    
    
    
    7,623$
    1,051,471
    
    
    $
    1,106,999
 Senior Secured Credit Facilities
       81




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##### Table of Contents



8 3/4% Senior Subordinated Notes
 3 4 3 4 3 4 3 4 3 4
 $300.0 Million Holdings Senior Paid-in-Kind Loans
  4. INTEREST RATE SWAPS
  Total NotionalDate Range
    
    Amounts(in thousands)March 2, 2009 to February 28, 2011
    
    $
    225,000March 2, 2009 to February 29, 2012
    
    $
    200,000
   82




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5. OTHER COMPREHENSIVE LOSS
  Balance at September 30, 2008
    
    $
    Change in fair value of interest rate swaps, net of income tax effect of $1,734
    
    
    (2,926
    )Balance at September 30, 2009
    
    $
    (2,926
    )
 6. DISCONTINUED OPERATIONS
  Year ended
    
    
    Year ended
    
    
    Year endedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2007Total net revenue
    
    $
    974
    
    
    $
    49,974
    
    
    $
    88,335Operating expenses
    
    
    1,256
    
    
    
    64,648
    
    
    
    87,254Loss on disposal of assets
    
    
    
    
    
    
    3,928
    
    
    
    Income tax expense (benefit)
    
    
    (106
    )
    
    
    (7,327
    )
    
    
    412Earning (loss) from
discontinued operations,
net of income taxes
    
    $
    (176
    )
    
    $
    (11,275
    )
    
    $
    669
  83




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##### Table of Contents



7. ACQUISITIONS
 Acquisition of Glenwood Regional Medical Center
   Fair value of assets acquired and liabilities assumed:Assets acquiredAccounts receivable, net
    
    $
    13,727Inventory, prepaid expenses and other current assets
    
    
    4,354Property and equipment
    
    
    66,640Other long-term assets
    
    
    1,529Total assets acquired
    
    $
    86,250Liabilities assumed
    
    $
    8,004
 Acquisition of Alliance Hospital
   Fair value of assets acquired and liabilities assumed:Assets acquiredAccounts receivable, net
    
    $
    4,230Inventory, prepaid expenses and other current assets
    
    
    1,873Property and equipment
    
    
    60,965Goodwill
    
    
    10,593Total assets acquired
    
    $
    77,661Liabilities assumed
    
    $
    10,932
 Other
   84




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##### Table of Contents



8. PROPERTY AND EQUIPMENT
  September 30,
    
    
    September 30,2009
    
    
    2008Land
    
    $
    102,499
    
    
    $
    103,763Buildings and improvements
    
    
    792,467
    
    
    
    693,113Equipment
    
    
    500,450
    
    
    
    471,2071,395,416
    
    
    
    1,268,083Less accumulated depreciation and amortization
    
    
    (414,572
    )
    
    
    (325,560
    )980,844
    
    
    
    942,523Construction-in-progress (estimated cost to
complete at September 30, 2009  $13.7 million)
    
    
    16,509
    
    
    
    61,725$
    997,353
    
    
    $
    1,004,248
  9. GOODWILL AND OTHER INTANGIBLE ASSETS
  Acute
    
    
    HealthCare
    
    
    Choice
    
    
    TotalBalance at September 30, 2007
    
    $
    750,836
    
    
    $
    5,757
    
    
    $
    756,593Adjustments in deferred tax assets and liabilities
    
    
    (3,769
    )
    
    
    
    
    
    
    (3,769
    )Adjustment resulting from Ouachita Community Hospital
    
    
    17,134
    
    
    
    
    
    
    
    17,134Adjustments resulting from purchase price allocation
of Alliance Hospital
    
    
    10,593
    
    
    
    
    
    
    
    10,593Other purchase price adjustments
    
    
    48
    
    
    
    
    
    
    
    48Balance 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
    
    
    $
    717,920
    85




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##### Table of Contents



10. MEMBERS EQUITY
 Common Interests of IASIS
  11. STOCK OPTIONS
 Management Rollover Options
   2004 Stock Option Plan
   2004 Stock Option Plan
    
    
    Rollover OptionsWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageOption Price
    
    
    Exercise
    
    
    
    
    
    
    Option Price
    
    
    ExerciseOptions
    
    
    Per Share
    
    
    Price
    
    
    Options
    
    
    Per Share
    
    
    PriceOptions outstanding at
September 30, 2006
    
    
    1,595,485
    
    
    $
    20.00-$35.68
    
    
    $
    22.28
    
    
    
    166,413
    
    
    $
    8.75-$437.48
    
    
    $
    17.16Granted
    
    
    7,080
    
    
    $
    34.75-$35.68
    
    
    $
    35.54
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled/forfeited
    
    
    (111,440
    )
    
    $
    20.00-$35.68
    
    
    $
    25.61
    
    
    
    (3,263
    )
    
    $
    437.48
    
    
    $
    437.48Options 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
    
    
    $
    8.75Options exercisable at
September 30, 2009
    
    
    1,252,436
    
    
    $
    20.00-$35.68
    
    
    $
    21.11
    
    
    
    163,150
    
    
    $
    8.75
    
    
    $
    8.75
  86




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##### Table of Contents



Options Granted
    
    
    Options GrantedOn or After
    
    
    Prior toOctober 1, 2006
    
    
    October 1, 2006Risk-free interest
    
    
    3.1
    %
    
    
    4.6
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Volatility
    
    
    35.0
    %
    
    
    N/AExpected option life
    
    7.3 years
    
    
    9.8 years
  12. INCOME TAXES
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2007Current:Federal
    
    $
    28,220
    
    
    $
    12,631
    
    
    $
    132State
    
    
    4,933
    
    
    
    3,326
    
    
    
    1,674Deferred:Federal
    
    
    (5,092
    )
    
    
    15,522
    
    
    
    23,172State
    
    
    (485
    )
    
    
    3,846
    
    
    
    931$
    27,576
    
    
    $
    35,325
    
    
    $
    25,909
  Year Ended
    
    
    Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2007Federal statutory rate
    
    $
    19,544
    
    
    $
    29,020
    
    
    $
    23,396State income taxes, net of federal income tax benefit
    
    
    2,892
    
    
    
    4,663
    
    
    
    1,693Nondeductible goodwill impairment charges
    
    
    2,470
    
    
    
    
    
    
    
    Other non-deductible expenses
    
    
    550
    
    
    
    418
    
    
    
    328Change in valuation allowance charged to federal tax
provision
    
    
    1,576
    
    
    
    970
    
    
    
    541Other items, net
    
    
    544
    
    
    
    254
    
    
    
    (49
    )Income tax expense
    
    $
    27,576
    
    
    $
    35,325
    
    
    $
    25,909
  87




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##### Table of Contents



September 30,
    
    
    September 30,2009
    
    
    2008Assets
    
    
    Liabilities
    
    
    Assets
    
    
    LiabilitiesDepreciation and fixed asset basis differences
    
    $
    
    
    
    $
    77,743
    
    
    $
    
    
    
    $
    67,317Amortization and intangible asset basis differences
    
    
    
    
    
    
    55,721
    
    
    
    
    
    
    
    64,742Allowance for doubtful accounts
    
    
    30,769
    
    
    
    
    
    
    
    29,958
    
    
    
    Professional liability
    
    
    15,561
    
    
    
    
    
    
    
    12,801
    
    
    
    Accrued expenses and other liabilities
    
    
    14,625
    
    
    
    
    
    
    
    13,436
    
    
    
    Deductible carryforwards and credits
    
    
    9,861
    
    
    
    
    
    
    
    8,709
    
    
    
    Other, net
    
    
    3,841
    
    
    
    
    
    
    
    570
    
    
    
    Valuation allowance
    
    
    (8,580
    )
    
    
    
    
    
    
    (5,647
    )
    
    
    Total
    
    $
    66,077
    
    
    $
    133,464
    
    
    $
    59,827
    
    
    $
    132,059
        88




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##### Table of Contents



Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008Unrecognized tax benefits at October 1
    
    $
    15,550
    
    
    $
    17,942Additions resulting from tax positions taken in a prior period
    
    
    14
    
    
    
    937Reductions resulting from tax positions taken in a prior period
    
    
    (3,171
    )
    
    
    (6,258
    )Additions resulting from tax positions taken in the current period
    
    
    1,965
    
    
    
    2,929Reductions resulting from lapse of statute of limitations
    
    
    (720
    )
    
    
    Unrecognized tax benefits at September 30
    
    $
    13,638
    
    
    $
    15,550
  13. COMMITMENTS AND CONTINGENCIES
 Net Revenue
  Professional, General and Workers Compensation Liability Risks
   89




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##### Table of Contents



Health Choice
  Acquisitions
  Other
 qui tam qui tam qui tam qui tam
  90




---



##### Table of Contents



14. LEASES
   Capital
    
    
    OperatingLeases
    
    
    Leases2010
    
    $
    1,118
    
    
    $
    21,8392011
    
    
    923
    
    
    
    17,5602012
    
    
    647
    
    
    
    15,4012013
    
    
    562
    
    
    
    14,7342014
    
    
    562
    
    
    
    13,353Thereafter
    
    
    5,194
    
    
    
    42,277Total minimum lease payments
    
    $
    9,006
    
    
    $
    125,164Amount representing interest (at rates ranging from 4.4% to 14.2%)
    
    
    3,781Present
value of net minimum lease payments (including $654 classified as current)
    
    $
    5,225
  15. RETIREMENT PLANS
   91




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16. SEGMENT AND GEOGRAPHIC INFORMATION
  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
    
    
    641,893
    
    
    
    19,028
    
    
    
    
    
    
    
    660,921Supplies
    
    
    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)
    
    
    245,714
    
    
    
    53,641
    
    
    
    
    
    
    
    299,355Interest expense, net
    
    
    67,890
    
    
    
    
    
    
    
    
    
    
    
    67,890Depreciation and amortization
    
    
    94,014
    
    
    
    3,448
    
    
    
    
    
    
    
    97,462Impairment of goodwill
    
    
    64,639
    
    
    
    
    
    
    
    
    
    
    
    64,639Management fees
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Earnings from continuing operations before
gain (loss) on disposal of assets, minority
interests and income taxes
    
    
    14,171
    
    
    
    50,193
    
    
    
    
    
    
    
    64,364Gain (loss) on disposal of assets, net
    
    
    1,616
    
    
    
    (151
    )
    
    
    
    
    
    
    1,465Minority interests
    
    
    (9,987
    )
    
    
    
    
    
    
    
    
    
    
    (9,987
    )Earnings from continuing operations
before income taxes
    
    $
    5,800
    
    
    $
    50,042
    
    
    $
    
    
    
    $
    55,842Segment assets
    
    $
    2,109,422
    
    
    $
    247,782
    
    
    
    
    
    
    $
    2,357,204Capital expenditures  continuing operations
    
    $
    86,875
    
    
    $
    845
    
    
    
    
    
    
    $
    87,720Goodwill
    
    $
    712,163
    
    
    $
    5,757
    
    
    
    
    
    
    $
    717,920
 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, minority
interests and income taxes
    
    
    48,468
    
    
    
    38,958
    
    
    
    
    
    
    
    87,426Loss on disposal of assets, net
    
    
    (75
    )
    
    
    
    
    
    
    
    
    
    
    (75
    )Minority interests
    
    
    (4,437
    )
    
    
    
    
    
    
    
    
    
    
    (4,437
    )Earnings from continuing operations
before income taxes
    
    $
    43,956
    
    
    $
    38,958
    
    
    $
    
    
    
    $
    82,914Segment assets
    
    $
    2,123,069
    
    
    $
    185,078
    
    
    
    
    
    
    $
    2,308,147Capital expenditures  continuing operations
    
    $
    136,425
    
    
    $
    990
    
    
    
    
    
    
    $
    137,415Goodwill
    
    $
    774,842
    
    
    $
    5,757
    
    
    
    
    
    
    $
    780,599
  92




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For the Year Ended September 30, 2007Acute Care
    
    
    Health Choice
    
    
    Eliminations
    
    
    ConsolidatedAcute care revenue
    
    $
    1,315,438
    
    
    $
    
    
    
    $
    
    
    
    $
    1,315,438Premium revenue
    
    
    
    
    
    
    450,641
    
    
    
    
    
    
    
    450,641Revenue between segments
    
    
    7,540
    
    
    
    
    
    
    
    (7,540
    )
    
    
    Total net revenue
    
    
    1,322,978
    
    
    
    450,641
    
    
    
    (7,540
    )
    
    
    1,766,079Salaries and benefits
    
    
    518,989
    
    
    
    14,803
    
    
    
    
    
    
    
    533,792Supplies
    
    
    194,630
    
    
    
    285
    
    
    
    
    
    
    
    194,915Medical claims
    
    
    
    
    
    
    384,045
    
    
    
    (7,540
    )
    
    
    376,505Other operating expenses
    
    
    251,167
    
    
    
    15,096
    
    
    
    
    
    
    
    266,263Provision for bad debts
    
    
    136,233
    
    
    
    
    
    
    
    
    
    
    
    136,233Rentals and leases
    
    
    30,384
    
    
    
    1,162
    
    
    
    
    
    
    
    31,546Business interruption insurance recoveries
    
    
    (3,443
    )
    
    
    
    
    
    
    
    
    
    
    (3,443
    )Adjusted EBITDA(1)
    
    
    195,018
    
    
    
    35,250
    
    
    
    
    
    
    
    230,268Interest expense, net
    
    
    71,206
    
    
    
    
    
    
    
    
    
    
    
    71,206Depreciation and amortization
    
    
    71,828
    
    
    
    3,560
    
    
    
    
    
    
    
    75,388Loss on extinguishment of debt
    
    
    6,229
    
    
    
    
    
    
    
    
    
    
    
    6,229Management fees
    
    
    4,746
    
    
    
    
    
    
    
    
    
    
    
    4,746Earnings from continuing operations before
loss on disposal of assets, minority
interests and income taxes
    
    
    41,009
    
    
    
    31,690
    
    
    
    
    
    
    
    72,699Loss on disposal of assets, net
    
    
    (1,359
    )
    
    
    
    
    
    
    
    
    
    
    (1,359
    )Minority interests
    
    
    (4,496
    )
    
    
    
    
    
    
    
    
    
    
    (4,496
    )Earnings from continuing operations
before income taxes
    
    $
    35,154
    
    
    $
    31,690
    
    
    $
    
    
    
    $
    66,844Segment assets
    
    $
    2,035,386
    
    
    $
    151,036
    
    
    
    
    
    
    $
    2,186,422Capital expenditures  continuing operations
    
    $
    193,570
    
    
    $
    473
    
    
    
    
    
    
    $
    194,043Goodwill
    
    $
    750,836
    
    
    $
    5,757
    
    
    
    
    
    
    $
    756,593
 (1)
    
    Adjusted EBITDA represents net earnings before interest expense, income tax expense (benefit),
depreciation and amortization, impairment of goodwill, loss on extinguishment of debt, gain
(loss) on disposal of assets, minority interests 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. 17. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  September 30,
    
    
    September 30,2009
    
    
    2008Employee health insurance payable
    
    $
    9,183
    
    
    $
    10,834Accrued property taxes
    
    
    10,496
    
    
    
    10,041Health Choice program settlements payable
    
    
    13,720
    
    
    
    Other
    
    
    32,302
    
    
    
    30,927$
    65,701
    
    
    $
    51,802
  93




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18. ALLOWANCE FOR DOUBTFUL ACCOUNTS
  AccountsWritten Off,Beginning
    
    
    Provision for
    
    
    
    
    
    
    Net of
    
    
    
    
    
    
    EndingBalance
    
    
    Bad Debts
    
    
    Other (1)
    
    
    Recoveries
    
    
    Acquisitions
    
    
    BalanceYear Ended
September 30, 2007
    
    $
    109,877
    
    
    
    136,233
    
    
    
    6,475
    
    
    
    (167,900
    )
    
    
    13,144
    
    
    $
    97,829Year 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
    )
    
    
    
    
    
    $
    126,132
 
 (1)
    
    Represents provision for bad debts recorded at facilities which are now included in
discontinued operations.  19. IMPACT OF HURRICANE ACTIVITY
   20. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
 3 4
 3 4
    94




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##### Table of Contents



(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
    
    
    1,690,127
    
    
    
    
    
    
    
    
    
    
    
    (1,690,127
    )
    
    
    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
    
    $
    1,761,678
    
    
    $
    523,066
    
    
    $
    1,762,587
    
    
    $
    (1,690,127
    )
    
    $
    2,357,204Liabilities and Members 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
    
    
    
    
    
    
    
    54,222Minority interests
    
    
    
    
    
    
    53,042
    
    
    
    
    
    
    
    
    
    
    
    53,042Total liabilities
    
    
    1,171,627
    
    
    
    200,362
    
    
    
    791,962
    
    
    
    (587,594
    )
    
    
    1,576,357Members equity
    
    
    590,051
    
    
    
    322,704
    
    
    
    970,625
    
    
    
    (1,102,533
    )
    
    
    780,847Total liabilities and members equity
    
    $
    1,761,678
    
    
    $
    523,066
    
    
    $
    1,762,587
    
    
    $
    (1,690,127
    )
    
    $
    2,357,204
  95




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##### Table of Contents



(in thousands)
 Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    80,336
    
    
    $
    402
    
    
    $
    
    
    
    $
    80,738Accounts receivable, net
    
    
    
    
    
    
    101,291
    
    
    
    122,847
    
    
    
    
    
    
    
    224,138Inventories
    
    
    
    
    
    
    21,236
    
    
    
    28,218
    
    
    
    
    
    
    
    49,454Deferred income taxes
    
    
    38,860
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,860Prepaid expenses and other current assets
    
    
    
    
    
    
    19,688
    
    
    
    40,365
    
    
    
    
    
    
    
    60,053Total current assets
    
    
    38,860
    
    
    
    222,551
    
    
    
    191,832
    
    
    
    
    
    
    
    453,243Property and equipment, net
    
    
    
    
    
    
    363,106
    
    
    
    641,142
    
    
    
    
    
    
    
    1,004,248Intercompany
    
    
    
    
    
    
    (190,870
    )
    
    
    190,870
    
    
    
    
    
    
    
    Net investment in and advances to subsidiaries
    
    
    1,717,907
    
    
    
    
    
    
    
    
    
    
    
    (1,717,907
    )
    
    
    Goodwill
    
    
    18,609
    
    
    
    128,764
    
    
    
    633,226
    
    
    
    
    
    
    
    780,599Other intangible assets, net
    
    
    
    
    
    
    
    
    
    
    33,000
    
    
    
    
    
    
    
    33,000Other assets, net
    
    
    18,210
    
    
    
    12,944
    
    
    
    5,903
    
    
    
    
    
    
    
    37,057Total assets
    
    $
    1,793,586
    
    
    $
    536,495
    
    
    $
    1,695,973
    
    
    $
    (1,717,907
    )
    
    $
    2,308,147Liabilities and Members EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    24,708
    
    
    $
    40,143
    
    
    $
    
    
    
    $
    64,851Salaries and benefits payable
    
    
    
    
    
    
    16,819
    
    
    
    14,988
    
    
    
    
    
    
    
    31,807Accrued interest payable
    
    
    12,460
    
    
    
    (3,242
    )
    
    
    3,242
    
    
    
    
    
    
    
    12,460Medical claims payable
    
    
    
    
    
    
    
    
    
    
    97,343
    
    
    
    
    
    
    
    97,343Other accrued expenses and other current
liabilities
    
    
    
    
    
    
    38,552
    
    
    
    13,250
    
    
    
    
    
    
    
    51,802Current portion of long-term debt and
capital lease obligations
    
    
    6,042
    
    
    
    1,581
    
    
    
    15,255
    
    
    
    (15,255
    )
    
    
    7,623Total current liabilities
    
    
    18,502
    
    
    
    78,418
    
    
    
    184,221
    
    
    
    (15,255
    )
    
    
    265,886Long-term debt and capital lease obligations
    
    
    1,098,928
    
    
    
    8,071
    
    
    
    588,172
    
    
    
    (588,172
    )
    
    
    1,106,999Deferred income taxes
    
    
    111,092
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,092Other long-term liabilities
    
    
    
    
    
    
    43,871
    
    
    
    655
    
    
    
    
    
    
    
    44,526Minority interests
    
    
    
    
    
    
    51,875
    
    
    
    
    
    
    
    
    
    
    
    51,875Total liabilities
    
    
    1,228,522
    
    
    
    182,235
    
    
    
    773,048
    
    
    
    (603,427
    )
    
    
    1,580,378Members equity
    
    
    565,064
    
    
    
    354,260
    
    
    
    922,925
    
    
    
    (1,114,480
    )
    
    
    727,769Total liabilities and members equity
    
    $
    1,793,586
    
    
    $
    536,495
    
    
    $
    1,695,973
    
    
    $
    (1,717,907
    )
    
    $
    2,308,147
  96




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##### Table of Contents



(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, minority
interests and income taxes
    
    
    11,750
    
    
    
    (101,027
    )
    
    
    195,218
    
    
    
    (41,577
    )
    
    
    64,364Gain (loss) on disposal of assets, net
    
    
    
    
    
    
    1,598
    
    
    
    (133
    )
    
    
    
    
    
    
    1,465Minority interests
    
    
    
    
    
    
    (9,987
    )
    
    
    
    
    
    
    
    
    
    
    (9,987
    )Earnings (loss) from continuing
operations before income taxes
    
    
    11,750
    
    
    
    (109,416
    )
    
    
    195,085
    
    
    
    (41,577
    )
    
    
    55,842Income tax expense
    
    
    26,829
    
    
    
    
    
    
    
    747
    
    
    
    
    
    
    
    27,576Net earnings (loss) from continuing
operations
    
    
    (15,079
    )
    
    
    (109,416
    )
    
    
    194,338
    
    
    
    (41,577
    )
    
    
    28,266Earnings (loss) from discontinued
operations, net of income taxes
    
    
    106
    
    
    
    (310
    )
    
    
    28
    
    
    
    
    
    
    
    (176
    )Net earnings (loss)
    
    $
    (14,973
    )
    
    $
    (109,726
    )
    
    $
    194,366
    
    
    $
    (41,577
    )
    
    $
    28,090
  97




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##### Table of Contents



(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, minority
interests and income taxes
    
    
    10,811
    
    
    
    (16,363
    )
    
    
    129,738
    
    
    
    (36,760
    )
    
    
    87,426Gain (loss) on disposal of assets, net
    
    
    
    
    
    
    (81
    )
    
    
    6
    
    
    
    
    
    
    
    (75
    )Minority interests
    
    
    
    
    
    
    (4,437
    )
    
    
    
    
    
    
    
    
    
    
    (4,437
    )Earnings (loss) from continuing
operations before income taxes
    
    
    10,811
    
    
    
    (20,881
    )
    
    
    129,744
    
    
    
    (36,760
    )
    
    
    82,914Income tax expense
    
    
    34,996
    
    
    
    
    
    
    
    329
    
    
    
    
    
    
    
    35,325Net earnings (loss) from continuing
operations
    
    
    (24,185
    )
    
    
    (20,881
    )
    
    
    129,415
    
    
    
    (36,760
    )
    
    
    47,589Earnings (loss) from discontinued
operations, net of income taxes
    
    
    5,783
    
    
    
    (12,257
    )
    
    
    (4,801
    )
    
    
    
    
    
    
    (11,275
    )Net earnings (loss)
    
    $
    (18,402
    )
    
    $
    (33,138
    )
    
    $
    124,614
    
    
    $
    (36,760
    )
    
    $
    36,314
  98




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##### Table of Contents



(in thousands)
 For the Year Ended September 30, 2007Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet revenue:Acute care revenue
    
    $
    
    
    
    $
    577,891
    
    
    $
    745,087
    
    
    $
    (7,540
    )
    
    $
    1,315,438Premium revenue
    
    
    
    
    
    
    
    
    
    
    450,641
    
    
    
    
    
    
    
    450,641Total net revenue
    
    
    
    
    
    
    577,891
    
    
    
    1,195,728
    
    
    
    (7,540
    )
    
    
    1,766,079Costs and expenses:Salaries and benefits
    
    
    
    
    
    
    284,520
    
    
    
    249,272
    
    
    
    
    
    
    
    533,792Supplies
    
    
    
    
    
    
    97,043
    
    
    
    97,872
    
    
    
    
    
    
    
    194,915Medical claims
    
    
    
    
    
    
    
    
    
    
    384,045
    
    
    
    (7,540
    )
    
    
    376,505Other operating expenses
    
    
    
    
    
    
    115,542
    
    
    
    150,721
    
    
    
    
    
    
    
    266,263Provision for bad debts
    
    
    
    
    
    
    68,824
    
    
    
    67,409
    
    
    
    
    
    
    
    136,233Rentals and leases
    
    
    
    
    
    
    11,985
    
    
    
    19,561
    
    
    
    
    
    
    
    31,546Interest expense, net
    
    
    71,206
    
    
    
    
    
    
    
    34,684
    
    
    
    (34,684
    )
    
    
    71,206Depreciation and amortization
    
    
    
    
    
    
    37,161
    
    
    
    38,227
    
    
    
    
    
    
    
    75,388Management fees
    
    
    4,746
    
    
    
    (16,030
    )
    
    
    16,030
    
    
    
    
    
    
    
    4,746Loss on extinguishment of debt
    
    
    6,229
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,229Business interruption insurance recoveries
    
    
    
    
    
    
    
    
    
    
    (3,443
    )
    
    
    
    
    
    
    (3,443
    )Equity in earnings of affiliates
    
    
    (117,212
    )
    
    
    
    
    
    
    
    
    
    
    117,212
    
    
    
    Total costs and expenses
    
    
    (35,031
    )
    
    
    599,045
    
    
    
    1,054,378
    
    
    
    74,988
    
    
    
    1,693,380Earnings (loss) from continuing operations
before loss on disposal of assets, minority
interests and income taxes
    
    
    35,031
    
    
    
    (21,154
    )
    
    
    141,350
    
    
    
    (82,528
    )
    
    
    72,699Loss on disposal of assets, net
    
    
    
    
    
    
    (774
    )
    
    
    (585
    )
    
    
    
    
    
    
    (1,359
    )Minority interests
    
    
    
    
    
    
    (4,496
    )
    
    
    
    
    
    
    
    
    
    
    (4,496
    )Earnings (loss) from continuing operations
before income taxes
    
    
    35,031
    
    
    
    (26,424
    )
    
    
    140,765
    
    
    
    (82,528
    )
    
    
    66,844Income tax expense
    
    
    25,909
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,909Net earnings (loss) from continuing operations
    
    
    9,122
    
    
    
    (26,424
    )
    
    
    140,765
    
    
    
    (82,528
    )
    
    
    40,935Earnings (loss) from discontinued operations,
net of income taxes
    
    
    (2,202
    )
    
    
    6,314
    
    
    
    (3,443
    )
    
    
    
    
    
    
    669Net earnings (loss)
    
    $
    6,920
    
    
    $
    (20,110
    )
    
    $
    137,322
    
    
    $
    (82,528
    )
    
    $
    41,604
  99




---



##### Table of Contents



(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
    )
    
    $
    (109,726
    )
    
    $
    194,366
    
    
    $
    (41,577
    )
    
    $
    28,090Adjustments 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,029Minority interests
    
    
    
    
    
    
    9,987
    
    
    
    
    
    
    
    
    
    
    
    9,987Income 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
    )Distribution of minority interests
    
    
    
    
    
    
    (269
    )
    
    
    (6,481
    )
    
    
    
    
    
    
    (6,750
    )Costs paid for repurchase of partnership 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
    )Increase (decrease) 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
  100




---



##### Table of Contents



(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
    )
    
    $
    (33,138
    )
    
    $
    124,614
    
    
    $
    (36,760
    )
    
    $
    36,314Adjustments 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,913Minority interests
    
    
    
    
    
    
    4,437
    
    
    
    
    
    
    
    
    
    
    
    4,437Deferred 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384,978Distribution of minority interests
    
    
    
    
    
    
    (171
    )
    
    
    (5,314
    )
    
    
    
    
    
    
    (5,485
    )Proceeds received from sale of partnership interests, net
    
    
    
    
    
    
    15,070
    
    
    
    
    
    
    
    
    
    
    
    15,070Other
    
    
    192
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    192Change in intercompany balances with affiliates, net
    
    
    16,564
    
    
    
    90,592
    
    
    
    (52,440
    )
    
    
    (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
    )
    
    
    87,642Increase (decrease) 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
  101




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##### Table of Contents



(in thousands)
 For the Year Ended September 30, 2007Subsidiary
    
    
    Subsidiary
    
    
    
    
    
    
    CondensedParent Issuer
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activitiesNet earnings (loss)
    
    $
    6,920
    
    
    $
    (20,110
    )
    
    $
    137,322
    
    
    $
    (82,528
    )
    
    $
    41,604Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:Loss (earnings) from discontinued operations
    
    
    2,202
    
    
    
    (6,314
    )
    
    
    3,443
    
    
    
    
    
    
    
    (669
    )Depreciation and amortization
    
    
    
    
    
    
    37,161
    
    
    
    38,227
    
    
    
    
    
    
    
    75,388Amortization of loan costs
    
    
    2,942
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,942Minority interests
    
    
    
    
    
    
    4,496
    
    
    
    
    
    
    
    
    
    
    
    4,496Deferred income taxes
    
    
    24,103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,103Loss on disposal of assets
    
    
    
    
    
    
    774
    
    
    
    585
    
    
    
    
    
    
    
    1,359Loss on extinguishment of debt
    
    
    5,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,091Equity in earnings of affiliates
    
    
    (117,212
    )
    
    
    
    
    
    
    
    
    
    
    117,212
    
    
    
    Changes in operating assets and
liabilities, net of the effect of
acquisitions and dispositions:Accounts receivable, net
    
    
    
    
    
    
    (37,182
    )
    
    
    (15,567
    )
    
    
    
    
    
    
    (52,749
    )Inventories, prepaid expenses and other
current assets
    
    
    
    
    
    
    (3,204
    )
    
    
    (2,690
    )
    
    
    
    
    
    
    (5,894
    )Accounts payable, other accrued expenses
and other accrued liabilities
    
    
    (1,100
    )
    
    
    25,090
    
    
    
    2,012
    
    
    
    
    
    
    
    26,002Net cash provided by (used in) operating
activities  continuing operations
    
    
    (77,054
    )
    
    
    711
    
    
    
    163,332
    
    
    
    34,684
    
    
    
    121,673Net cash provided by (used in) operating
activities  discontinued operations
    
    
    (2,202
    )
    
    
    9,306
    
    
    
    (2,443
    )
    
    
    
    
    
    
    4,661Net cash provided by (used in) operating
activities
    
    
    (79,256
    )
    
    
    10,017
    
    
    
    160,889
    
    
    
    34,684
    
    
    
    126,334Cash flows from investing activitiesPurchases of property and equipment
    
    
    
    
    
    
    (41,987
    )
    
    
    (152,056
    )
    
    
    
    
    
    
    (194,043
    )Cash paid for acquisitions
    
    
    
    
    
    
    (78,083
    )
    
    
    (63,502
    )
    
    
    
    
    
    
    (141,585
    )Proceeds from sale of assets
    
    
    
    
    
    
    1,026
    
    
    
    
    
    
    
    
    
    
    
    1,026Change in other assets
    
    
    
    
    
    
    4,272
    
    
    
    1,621
    
    
    
    
    
    
    
    5,893Net cash used in investing activities 
continuing operations
    
    
    
    
    
    
    (114,772
    )
    
    
    (213,937
    )
    
    
    
    
    
    
    (328,709
    )Net cash used in investing activities 
discontinued operations
    
    
    
    
    
    
    (874
    )
    
    
    (55
    )
    
    
    
    
    
    
    (929
    )Net cash used in investing activities
    
    
    
    
    
    
    (115,646
    )
    
    
    (213,992
    )
    
    
    
    
    
    
    (329,638
    )Cash flows from financing activitiesPayment of debt and capital lease obligations
    
    
    (646,663
    )
    
    
    (1,447
    )
    
    
    (2,195
    )
    
    
    
    
    
    
    (650,305
    )Proceeds from debt borrowings
    
    
    778,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    778,800Debt financing costs incurred
    
    
    (8,200
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,200
    )Distribution to parent for debt financing costs
    
    
    (6,586
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,586
    )Distribution of minority interests
    
    
    
    
    
    
    
    
    
    
    (4,850
    )
    
    
    
    
    
    
    (4,850
    )Costs paid for partnership interests
    
    
    
    
    
    
    (495
    )
    
    
    
    
    
    
    
    
    
    
    (495
    )Change in intercompany balances with
affiliates, net
    
    
    (38,095
    )
    
    
    9,736
    
    
    
    63,043
    
    
    
    (34,684
    )
    
    
    Net cash provided by (used in) financing
activities  continuing operations
    
    
    79,256
    
    
    
    7,794
    
    
    
    55,998
    
    
    
    (34,684
    )
    
    
    108,364Net cash used in financing activities 
discontinued operations
    
    
    
    
    
    
    (475
    )
    
    
    
    
    
    
    
    
    
    
    (475
    )Net cash provided by (used in) financing
activities
    
    
    79,256
    
    
    
    7,319
    
    
    
    55,998
    
    
    
    (34,684
    )
    
    
    107,889Increase (decrease) in cash and cash
equivalents
    
    
    
    
    
    
    (98,310
    )
    
    
    2,895
    
    
    
    
    
    
    
    (95,415
    )Cash and cash equivalents at beginning of
period
    
    
    
    
    
    
    94,258
    
    
    
    1,157
    
    
    
    
    
    
    
    95,415Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    (4,052
    )
    
    $
    4,052
    
    
    $
    
    
    
    $
    
  102




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##### Table of Contents



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
  
 Item 9A(T). 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
   103




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  Name
    
    Age
    
    PositionDavid R. White
    
    
    62
    
    
    Chairman of the Board and Chief Executive OfficerSandra K. McRee
    
    
    53
    
    
    President and Chief Operating OfficerW. Carl Whitmer
    
    
    45
    
    
    Chief Financial OfficerFrank A. Coyle
    
    
    45
    
    
    Secretary and General CounselJames Moake
    
    
    40
    
    
    Operations Chief Financial OfficerJohn M. Doyle
    
    
    49
    
    
    Vice President and Chief Accounting OfficerPaul Jenson
    
    
    61
    
    
    Executive Vice PresidentKirk Olsen
    
    
    59
    
    
    Executive Vice President  Mountain RegionDorothy Sawyer
    
    
    59
    
    
    President, Arizona MarketRichard Gonzalez
    
    
    58
    
    
    President, Texas and Louisiana MarketsMatt Tulin
    
    
    43
    
    
    Chief Financial Officer, Utah MarketRuby Majhail
    
    
    42
    
    
    Chief Financial Officer, Arizona and NevadaJoe Minissale
    
    
    45
    
    
    Chief Financial Officer, Texas and Louisiana MarketsBashar Abunaser
    
    
    41
    
    
    Chief Financial Officer, Florida MarketPeter Stanos
    
    
    46
    
    
    Vice President, Ethics and Business PracticesCarolyn Rose
    
    
    60
    
    
    Chief Executive Officer, Health Choice Arizona, Inc.Jonathan J. Coslet
    
    
    45
    
    
    DirectorDavid Dupree
    
    
    56
    
    
    DirectorKirk E. Gorman
    
    
    59
    
    
    DirectorCurtis S. Lane
    
    
    52
    
    
    DirectorTodd B. Sisitsky
    
    
    38
    
    
    DirectorPaul S. Levy
    
    
    62
    
    
    DirectorJeffrey C. Lightcap
    
    
    50
    
    
    DirectorSharad Mansukani
    
    
    40
    
    
    Director
 David R. White
 Sandra K. McRee
  104




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##### Table of Contents



W. Carl Whitmer
 Frank A. Coyle
 James Moake
 John M. Doyle
 Paul Jenson
 Kirk Olsen
 Dorothy Sawyer
 Richard Gonzalez
  105




---



##### Table of Contents



Matt Tulin
 Ruby Majhail
 Joe Minissale
 Bashar Abunaser
 Peter Stanos
 Carolyn Rose
 Jonathan J. Coslet
 David Dupree
  106




---



##### Table of Contents



Kirk E. Gorman
 Curtis S. Lane
 Todd B. Sisitsky
 Paul S. Levy
 Jeffrey C. Lightcap
 Sharad Mansukani
   Audit Committee Financial Expert
   107




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##### Table of Contents



Code of Ethics
  
 Item 11. Executive Compensation
 COMPENSATION DISCUSSION AND ANALYSIS
 Executive Summary
     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.
  108




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##### Table of Contents



Benchmarking Process
  Pay for Performance
  
    
    Adjusted EBITDA year over year growth;
    
    Free cash flow;
    
    Return on invested capital;
    
    Peer group comparisons including comparisons of net revenue growth, expense
margins and return on capital;
  109




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##### Table of Contents




    
    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
    110




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##### Table of Contents



Short-Term Incentive Compensation
    Annual Incentive Target Award Ranges (as a Percentage of Base Salary) for Fiscal 2009
 Threshold
    
    
    Target
    
    
    MaximumDavid R. White
    
    
    20
    %
    
    
    100
    %
    
    
    200
    %Sandra K. McRee
    
    
    10
    %
    
    
    50
    %
    
    
    100
    %W. Carl Whitmer
    
    
    10
    %
    
    
    50
    %
    
    
    100
    %Frank A. Coyle
    
    
    
    
    
    
    35
    %
    
    
    35
    %Carolyn Rose
    
    
    
    
    
    
    50
    %
    
    
    75
    %
  
    
    Adjusted EBITDA year over year growth;
    
    Free cash flow;
    
    Return on invested capital;
    
    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.
   111




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##### Table of Contents



Long-Term Incentive Compensation
     Non-qualified Executive Savings Plan
   112




---



##### Table of Contents



401(k)
  Severance and Change in Control Agreements
  Perquisites
  Group term life insurance premiums.
   113




---



##### Table of Contents



Impact of Tax and Accounting Rules
    Recovery of Certain Awards
  Compensation Committee Conclusion
  Compensation Committee Report
  Compensation Committee:Jonathan J. CosletDavid R. WhiteJeffrey C. Lightcap
  114




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##### Table of Contents



Summary Compensation Table  Fiscal 2009
  Change inPension ValueandNon-Equity
    
    
    NonqualifiedOption
    
    
    Incentive Plan
    
    
    Deferred
    
    
    All OtherName and Principal
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Compensation
    
    
    Compensation
    
    
    CompensationPosition
    
    Year
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)(3)
    
    
    Earnings ($)
    
    
    ($) (4)
    
    
    Total ($)David R. WhiteChairman of the Board &
Chief Executive
Officer
    
    
    2009
    
    
    
    808,500
    
    
    
    
    
    
    
    16,374
    
    
    
    1,617,000
    
    
    
    
    
    
    
    9,628
    
    
    
    2,451,5022008
    
    
    
    808,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,474
    
    
    
    817,9742007
    
    
    
    786,042
    
    
    
    1,000,000
    
    
    
    
    
    
    
    1,169,063
    
    
    
    
    
    
    
    1,164,462
    
    
    
    4,119,567Sandra K. McReePresident and Chief
Operating Officer
    
    
    2009
    
    
    
    600,000
    
    
    
    
    
    
    
    6,264
    
    
    
    600,000
    
    
    
    
    
    
    
    7,242
    
    
    
    1,213,5062008
    
    
    
    585,135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,142
    
    
    
    593,2772007
    
    
    
    525,525
    
    
    
    800,000
    
    
    
    
    
    
    
    525,525
    
    
    
    
    
    
    
    853,940
    
    
    
    2,704,990W. Carl WhitmerChief Financial Officer
    
    
    2009
    
    
    
    534,871
    
    
    
    
    
    
    
    6,264
    
    
    
    534,871
    
    
    
    
    
    
    
    7,879
    
    
    
    1,083,8852008
    
    
    
    521,620
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,638
    
    
    
    530,2582007
    
    
    
    468,481
    
    
    
    800,000
    
    
    
    
    
    
    
    468,481
    
    
    
    
    
    
    
    679,394
    
    
    
    2,416,356Frank A. CoyleSecretary and General
Counsel
    
    
    2009
    
    
    
    339,570
    
    
    
    
    
    
    
    5,693
    
    
    
    118,850
    
    
    
    
    
    
    
    7,596
    
    
    
    471,7092008
    
    
    
    337,097
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,098
    
    
    
    344,1952007
    
    
    
    327,276
    
    
    
    150,000
    
    
    
    
    
    
    
    114,547
    
    
    
    
    
    
    
    117,024
    
    
    
    708,847Carolyn RoseChief Executive Officer 
Health Choice
    
    
    2009
    
    
    
    245,000
    
    
    
    
    
    
    
    13,208
    
    
    
    158,400
    
    
    
    
    
    
    
    8,498
    
    
    
    425,1062008
    
    
    
    240,000
    
    
    
    
    
    
    
    
    
    
    
    236,250
    
    
    
    
    
    
    
    9,551
    
    
    
    485,801
 
 1.
    
    In connection with the refinancing and recapitalization transaction, certain executive
officers, including the named executive officers, received, in recognition of their efforts
associated with the increase in equity value of the Company since the Transactions, a special
compensation bonus. The named executive officers respective bonus is represented in this
column.2.
    
    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.3.
    
    Represents compensation for 2009 to the named executive officers made pursuant to the
Companys short-term incentive bonus plan.4.
    
    All other compensation in the Summary Compensation Table for fiscal 2009 consisted of the
following: David R.
    
    
    Sandra K.
    
    
    W. Carl
    
    
    Frank A.
    
    
    CarolynWhite
    
    
    McRee
    
    
    Whitmer
    
    
    Coyle
    
    
    RoseMatching contributions (i)
    
    $
    6,064
    
    
    $
    6,000
    
    
    $
    7,136
    
    
    $
    7,118
    
    
    $
    7,088Group term life insurance premiums (ii)
    
    
    3,564
    
    
    
    1,242
    
    
    
    743
    
    
    
    478
    
    
    
    1,410Totals
    
    $
    9,628
    
    
    $
    7,242
    
    
    $
    7,879
    
    
    $
    7,596
    
    
    $
    8,498
 
 (i)
    
    Represents total company contributions to each named executive officers accounts in the
IASIS 401(k) plan. With respect to Mr. Coyle, amount also includes $857 in company contributions to his
account in the companys non-qualified executive savings plan.(ii)
    
    Represents insurance premiums paid by our company with respect to group term life insurance
for the named executive officer.  115




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##### Table of Contents



Grants of Plan-Based Awards in Fiscal Year 2009
 Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)Threshold
    
    
    Target
    
    
    MaximumName of Executive
    
    ($)
    
    
    ($)
    
    
    ($)David R White
    
    
    161,700
    
    
    
    808,500
    
    
    
    1,617,000Sandra K. McRee
    
    
    60,000
    
    
    
    300,000
    
    
    
    600,000W. Carl Whitmer
    
    
    53,487
    
    
    
    267,436
    
    
    
    534,871Frank A. Coyle
    
    
    
    
    
    
    118,850
    
    
    
    118,850Carolyn Rose
    
    
    
    
    
    
    122,500
    
    
    
    183,750Estimated Future Payouts Under Equity Incentive Plan AwardsAll 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
    
    
    11,500
    
    
    
    34.75
    
    
    
    78,131Sandra K. McRee
    
    
    5,500
    
    
    
    34.75
    
    
    
    37,367W. Carl Whitmer
    
    
    5,500
    
    
    
    34.75
    
    
    
    37,367Frank A. Coyle
    
    
    5,000
    
    
    
    34.75
    
    
    
    33,970Carolyn Rose
    
    
    11,600
    
    
    
    34.75
    
    
    
    78,810
 1.
    
    Awards made under the 2009 Short Term Incentive Plan. Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
 Employment Agreements
   The 2004 Stock Option Plan
   116




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##### Table of Contents



117




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##### Table of Contents



Outstanding Equity Awards at Fiscal 2009 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
    
    
    
    3/22/154,125
    
    
    
    1,375
    
    
    
    35.68
    
    
    
    4/1/16
    
    
    
    11,500
    
    
    
    34.75
    
    
    
    10/2/1830,826
    (1)
    
    
    
    
    
    
    8.75
    
    
    
    4/30/1029,832
    (1)
    
    
    
    
    
    
    8.75
    
    
    
    11/30/10Sandra K. McRee
    
    
    116,800
    
    
    
    
    
    
    
    20.00
    
    
    
    6/23/1468,160
    
    
    
    17,040
    
    
    
    20.00
    
    
    
    3/22/151,950
    
    
    
    1,300
    
    
    
    35.68
    
    
    
    4/1/16
    
    
    
    5,500
    
    
    
    34.75
    
    
    
    10/2/1844,501
    (1)
    
    
    
    
    
    
    8.75
    
    
    
    5/31/11W. Carl Whitmer
    
    
    116,800
    
    
    
    
    
    
    
    20.00
    
    
    
    6/23/1468,160
    
    
    
    17,040
    
    
    
    20.00
    
    
    
    3/22/151,950
    
    
    
    1,300
    
    
    
    35.68
    
    
    
    4/1/16
    
    
    
    5,500
    
    
    
    34.75
    
    
    
    10/2/185,073
    (1)
    
    
    
    
    
    
    8.75
    
    
    
    11/30/1030,288
    (1)
    
    
    
    
    
    
    8.75
    
    
    
    10/31/11Frank A. Coyle
    
    
    30,000
    
    
    
    
    
    
    
    20.00
    
    
    
    9/9/1424,000
    
    
    
    6,000
    
    
    
    20.00
    
    
    
    3/22/156,000
    
    
    
    4,000
    
    
    
    35.68
    
    
    
    4/1/16
    
    
    
    5,000
    
    
    
    34.75
    
    
    
    10/2/185,440
    (1)
    
    
    
    
    
    
    8.75
    
    
    
    4/30/10Carolyn Rose
    
    
    7,000
    
    
    
    
    
    
    
    20.00
    
    
    
    9/9/14840
    
    
    
    560
    
    
    
    35.68
    
    
    
    4/1/16
    
    
    
    11,600
    
    
    
    34.75
    
    
    
    10/2/18
 1.
    
    Represents fully vested options issued in connection with the Transactions. 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 grant10/2/2018
    
    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 grant10/2/2018
    
    20% vests each year for five years from date of grant
  118




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##### Table of Contents



Pension Benefits
  Nonqualified Deferred Compensation for Fiscal 2009
  Executive
    
    
    Registrant
    
    
    
    
    
    
    Aggregate
    
    
    Aggregate BalanceContributions in
    
    
    Contributions in
    
    
    Aggregate Earnings
    
    
    Withdrawals/
    
    
    at LastLast FY
    
    
    Last FY
    
    
    in Last FY
    
    
    Distributions
    
    
    FYEName
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)Frank A. Coyle
    
    
    
    
    
    
    857
    (1)
    
    
    34
    
    
    
    
    
    
    
    92,919
 1.
    
    Our contribution of $857 to the nonqualified deferred compensation plan in 2009 is included in
the Summary Compensation Table for 2009 in the All Other Compensation column.   401(k)
  Employment Agreements
   119




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##### Table of Contents



Potential Payments Upon Termination or Change in Control
 The Employment Agreements
  Death
         Disability
     120




---



##### Table of Contents



Termination by the Company for Cause
  By the Company without Cause
        121




---



##### Table of Contents



By the Executive for Good Reason
             122




---



##### 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
     123




---



##### Table of Contents



Definition of Change of Control
         124




---



##### Table of Contents



IAS 2004 Stock Option Plan
 Vesting Date of Options
     Definition of Change of Control
  Definition of Good Reason
     Definition of Cause
        125




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##### 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
    
    
    4,851,000
    
    
    
    
    
    
    
    
    
    
    
    4,851,000
    
    
    
    
    
    
    
    2,425,500
    
    
    
    2,829,750
    
    
    
    4,851,000Health and welfare
continuation
    
    
    15,869
    
    
    
    
    
    
    
    
    
    
    
    15,869
    
    
    
    
    
    
    
    15,869
    
    
    
    15,869
    
    
    
    15,869Total
    
    
    4,866,869
    
    
    
    
    
    
    
    
    
    
    
    4,866,869
    
    
    
    
    
    
    
    2,441,369
    
    
    
    2,845,619
    
    
    
    4,866,869InvoluntaryTermination
    
    
    Involuntary
    
    
    
    
    
    
    Resignation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ChangeWithout
    
    
    Termination
    
    
    
    
    
    
    For Good
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InSandra K. McRee
    
    Cause
    
    
    For Cause
    
    
    Resignation
    
    
    Reason
    
    
    Retirement
    
    
    Death
    
    
    Disability
    
    
    ControlCash severance
    
    
    2,400,000
    
    
    
    
    
    
    
    
    
    
    
    2,400,000
    
    
    
    
    
    
    
    1,200,000
    
    
    
    1,500,000
    
    
    
    2,400,000Health and welfare
continuation
    
    
    14,769
    
    
    
    
    
    
    
    
    
    
    
    14,769
    
    
    
    
    
    
    
    14,769
    
    
    
    14,769
    
    
    
    14,769Total
    
    
    2,414,769
    
    
    
    
    
    
    
    
    
    
    
    2,414,769
    
    
    
    
    
    
    
    1,214,769
    
    
    
    1,514,769
    
    
    
    2,414,769InvoluntaryTermination
    
    
    Involuntary
    
    
    
    
    
    
    Resignation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ChangeWithout
    
    
    Termination
    
    
    
    
    
    
    For Good
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InW. Carl Whitmer
    
    Cause
    
    
    For Cause
    
    
    Resignation
    
    
    Reason
    
    
    Retirement
    
    
    Death
    
    
    Disability
    
    
    ControlCash severance
    
    
    2,139,484
    
    
    
    
    
    
    
    
    
    
    
    2,139,484
    
    
    
    
    
    
    
    1,069,742
    
    
    
    1,337,178
    
    
    
    2,139,484Health and welfare
continuation
    
    
    21,569
    
    
    
    
    
    
    
    
    
    
    
    21,569
    
    
    
    
    
    
    
    21,569
    
    
    
    21,569
    
    
    
    21,569Total
    
    
    2,161,053
    
    
    
    
    
    
    
    
    
    
    
    2,161,053
    
    
    
    
    
    
    
    1,091,311
    
    
    
    1,358,747
    
    
    
    2,161,053InvoluntaryTermination
    
    
    Involuntary
    
    
    
    
    
    
    Resignation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ChangeWithout
    
    
    Termination
    
    
    
    
    
    
    For Good
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InCarolyn Rose
    
    Cause
    
    
    For Cause
    
    
    Resignation
    
    
    Reason
    
    
    Retirement
    
    
    Death
    
    
    Disability
    
    
    ControlCash severance
    
    
    180,000
    
    
    
    
    
    
    
    
    
    
    
    180,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180,000Health and welfare
continuation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    180,000
    
    
    
    
    
    
    
    
    
    
    
    180,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180,000
 Director Compensation for Fiscal 2009
  Fees Earnedor Paid in
    
    
    StockCash
    
    
    Awards
    
    
    Option Awards
    
    
    All Other
    
    
    TotalName
    
    ($)
    
    
    ($)(1)(2)
    
    
    ($)(1)(2)
    
    
    Compensation ($)
    
    
    ($)Jonathan J. Coslet
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    David Dupree
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Kirk E. Gorman
    
    
    37,500
    
    
    
    18,750
    
    
    
    7,626
    
    
    
    
    
    
    
    63,876Curtis Lane
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Todd B. Sisitsky
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Paul S. Levy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jeffrey C. Lightcap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sharad Mansukani
    
    
    37,500
    
    
    
    18,750
    
    
    
    7,626
    
    
    
    
    
    
    
    63,876
 1.
    
    Using the prospective transition method upon adoption of FASB authoritative guidance
regarding accounting for share-based payments, we have implemented the
fair value recognition provisions requiring all share-based payments to employees granted on
or after October 1, 2006, including grants of employee stock options, to be recognized in the
income statement based on their fair values. In accordance with these provisions,
we have elected to use the Black-Scholes-Merton model in determining the fair value of its
share-based payments. The fair value of compensation costs will be amortized on a
straight-line basis over the requisite service periods of the awards, generally equal to the
awards vesting periods.  126




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##### Table of Contents



2.
    
    Each option grant vests one year from date of grant. Similarly, the restrictions with respect
to the stock award are lifted one year from the date of grant. The date of grant for the stock
award and options award for Messrs. Gorman and Mansukani were February 14, 2009 and April 14,
2009, respectively. The options will vest and the restrictions on the stock will be lifted for
Messrs. Gorman and Mansukani on February 14, 2010 and April 14, 2010, respectively, provided that the individuals remain members
of the board of directors. Aggregate Options Held
    
    
    Aggregate Stock Awards HeldName
    
    at Fiscal Year End
    
    
    at Fiscal Year EndJonathan J. Coslet
    
    
    
    
    
    
    David Dupree
    
    
    
    
    
    
    Kirk E. Gorman
    
    
    3,319
    
    
    
    3,319Curtis Lane
    
    
    
    
    
    
    Todd B. Sisitsky
    
    
    
    
    
    
    Paul S. Levy
    
    
    
    
    
    
    Jeffrey C. Lightcap
    
    
    
    
    
    
    Sharad Mansukani
    
    
    3,082
    
    
    
    3,082
    Committee Interlocks and Insider Participation
  
 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
common stock(1)
    
    
    1,923,325
    
    
    $
    23.34
    
    
    
    580,475Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,923,325
    
    
    $
    23.34
    
    
    
    580,475
 (1)
    
    Consists of 163,150 shares of common stock to be issued upon exercise of rollover options
issued in connection with the Transactions, with an exercise price of $8.75 per share, and
1,760,175 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
2,340,650 shares of common stock currently authorized for issuance under the 2004 Stock Option
Plan, 580,475 shares remain available for future issuance. Beneficial Ownership of Common Stock
    127




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##### 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)
    
    
    80,784
    
    
    
    14,600,000
    
    
    
    100.0
    %
    
    
    99.9
    %David R. White
    
    
    
    
    
    
    553,658
    
    
    
    *
    
    
    
    *Sandra K. McRee
    
    
    
    
    
    
    232,511
    
    
    
    *
    
    
    
    *W. Carl Whitmer
    
    
    
    
    
    
    223,371
    
    
    
    *
    
    
    
    *Frank A. Coyle
    
    
    
    
    
    
    65,440
    
    
    
    *
    
    
    
    *Carolyn Rose
    
    
    
    
    
    
    10,160
    
    
    
    *
    
    
    
    *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)
    
    
    *
    
    
    
    *Curtis Lane
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Todd B. Sisitsky (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Paul S. Levy (e)
    
    
    15,187
    
    
    
    2,744,800
    
    
    
    18.8
    %
    
    
    18.8
    %Jeffrey C. Lightcap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sharad Mansukani (c)
    
    
    
    
    
    
    5,088
    (d)
    
    
    *
    
    
    
    *Current directors and
executive officers as
a group (24 persons)
    
    
    80,784
    
    
    
    1,210,159
    
    
    
    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 November 25, 2009, include rollover options converted by management in
connection with the Transactions and are deemed outstanding for the purpose of computing the
percentage ownership of the person holding such options but are not deemed outstanding for the
purpose of computing the percentage ownership of any other person: Mr. White, 553,658; Ms.
McRee, 232,511; Mr. Whitmer, 223,371; Mr. Coyle, 65,440; Ms. Rose, 10,160; and all current directors and executive
officers as a group (24 persons), 1,210,159.(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, 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
November 25, 2009, 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.  128




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##### 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
   129




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##### Table of Contents



Income Tax Allocations
  Policy on Transactions with Related Persons
   
 Item 14. Principal Accountant Fees and Services
  Fiscal
    
    
    Fiscal2009
    
    
    2008Audit Fees (a)
    
    $
    1,022,500
    
    
    $
    1,218,000Audit-Related Fees (b)
    
    
    17,500
    
    
    
    29,500Tax Fees
    
    
    2,100
    
    
    
    87,900All Other Fees (c)
    
    
    
    
    
    
    24,500
 (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.   130




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PART IV





Item 15. Exhibits, Financial Statement Schedules


(a)
    1.
    Financial Statements: See Item 8


2.
    
    Financial Statement Schedules: Not Applicable


3.
    
    Management Contracts and Compensatory Plans and Arrangements



    
    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 May 4, 2004, by and between IASIS Healthcare
Corporation and W. Carl Whitmer (1)



    
    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 (17) 
    
    Form of Roll-over Option Letter Agreement (1)
    
    IASIS Healthcare Corporation 2004 Stock Option Plan (1)
 
    
    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)
    
    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)
 
    
    First Amendment to IASIS Healthcare Corporation 2004 Stock Option Plan (13)
 
    
    Director Compensation and Restricted Share Award Agreement, dated as of April 14,
2005, between IASIS Healthcare Corporation and Sharad Mansukani (14)
 
    
    IASIS Healthcare Non-Qualified Deferred Compensation Program (4)
  131




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##### Table of Contents



(b)
    
    Exhibits:
 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)10.1
    
    
    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)
  132




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Exhibit No.
    
    Description10.8
    
    
    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 (17)10.11
    
    
    Amendment No. 2 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of January 15, 200910.12
    
    
    Amendment No. 3 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of May 1, 200910.13
    
    
    Amendment No. 4 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of August 1, 200910.14
    
    
    Amendment No. 5 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of August 1, 200910.15
    
    
    Amendment No. 6 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.16
    
    
    Amendment No. 7 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.17
    
    
    Amendment No. 8 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.18
    
    
    Amendment No. 9 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.19
    
    
    Information System Agreement, dated February 23, 2000, between McKesson Information
Solutions LLC and IASIS Healthcare Corporation, as amended (1)**10.20
    
    
    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 (19)10.21
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and David R. White (1)10.22
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and Sandra K. McRee (1)10.23
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and W. Carl Whitmer (1)
  133




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Exhibit No.
    
    Description10.24
    
    
    First Amendment to Employment Agreement, dated January 31, 2008, by and between IASIS
Healthcare Corporation and Sandra K. McRee (11)10.25
    
    
    Agreement for Severance Benefits and Restrictive Covenants, dated as of March 1, 2001,
by and between IASIS Management Company and Carolyn Rose (17)10.26
    
    
    Form of Roll-over Option Letter Agreement (1)10.27
    
    
    IASIS Healthcare Corporation 2004 Stock Option Plan (1)10.28
    
    
    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)10.29
    
    
    Investor Rights Agreement dated as of June 22, 2004, by and between IASIS Investment
LLC and IASIS Healthcare Corporation (1)10.30
    
    
    Form of Management Stockholders Agreement between IAS and each of David R. White,
Sandra K. McRee and W. Carl Whitmer (1)10.31
    
    
    Form of Management Stockholders Agreement under IASIS Healthcare Corporation 2004 Stock
Option Plan (1)10.32
    
    
    Form of Stock Option Grant Agreement under IASIS Healthcare Corporation 2004 Stock
Option Plan (1)10.33
    
    
    Form of Management Stockholders Agreement for Rollover Options (1)10.34
    
    
    IASIS Corporate Incentive Plan (1)10.35
    
    
    IASIS Market Executive Incentive Program (1)10.36
    
    
    Director Compensation and Restricted Share Award Agreement, dated as of February 14,
2005, between IASIS Healthcare Corporation and Kirk Gorman (12)10.37
    
    
    First Amendment to IASIS Healthcare Corporation 2004 Stock Option Plan (13)10.38
    
    
    Director Compensation and Restricted Share Award Agreement, dated as of April 14, 2005,
between IASIS Healthcare Corporation and Sharad Mansukani (14)10.39
    
    
    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 (15)10.40
    
    
    IASIS Healthcare Non-Qualified Deferred Compensation Program (4)10.41
    
    
    Contribution Agreement, dated as of May 9, 2007, by and among Odessa Regional Hospital,
LP, Alliance Hospital, Ltd. and Sri-Sai Enterprises, Inc. (16)14
    
    
    Code of Ethics (9)21
    
    
    Subsidiaries of IASIS Healthcare Corporation31.2
    
    
    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).  134




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##### 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 March 22,
2005.(14)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on April 20,
2005.(15)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on July 24, 2006.(16)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on May 10, 2007.(17)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year
ended September 30, 2008.  135




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SIGNATURES
  IASIS HEALTHCARE LLCDate: November 25, 2009
    By:
    /s/ David R. WhiteDavid R. WhiteChairman of the Board and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ David R. White
    
    Chairman of the Board andDavid R. White
    
    Chief Executive Officer
(Principal Executive Officer)
    
    November 25, 2009/s/ W. Carl Whitmer
    
    Chief Financial OfficerW. Carl Whitmer
    
    (Principal Financial Officer)
    
    November 25, 2009/s/ John M. Doyle
    
    Chief Financial OfficerJohn M. Doyle
    
    (Principal Accounting Officer)
    
    November 25, 2009/s/ Jonathan J. Coslet
    
    Director of IASIS Healthcare CorporationJonathan J. Coslet
    
    (sole member of IASIS Healthcare LLC)
    
    November 25, 2009/s/ David Dupree
    
    Director of IASIS Healthcare CorporationDavid Dupree
    
    (sole member of IASIS Healthcare LLC)
    
    November 25, 2009/s/ Kirk E. Gorman
    
    Director of IASIS Healthcare CorporationKirk E. Gorman
    
    (sole member of IASIS Healthcare LLC)
    
    November 25, 2009Director of IASIS Healthcare CorporationCurtis Lane
    
    (sole member of IASIS Healthcare LLC)Director of IASIS Healthcare CorporationTodd B. Sisitsky
    
    (sole member of IASIS Healthcare LLC)Director of IASIS Healthcare CorporationPaul S. Levy
    
    (sole member of IASIS Healthcare LLC)/s/ Jeffrey C. Lightcap
    
    Director of IASIS Healthcare CorporationJeffrey C. Lightcap
    
    (sole member of IASIS Healthcare LLC)
    
    November 25, 2009/s/ Sharad Mansukani
    
    Director of IASIS Healthcare CorporationSharad Mansukani
    
    (sole member of IASIS Healthcare LLC)
    
    November 25, 2009
  136




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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
   137




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##### 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)10.1
    
    
    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)
  138




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Exhibit No.
    
    Description10.8
    
    
    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 (17)10.11
    
    
    Amendment No. 2 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of January 15, 200910.12
    
    
    Amendment No. 3 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of May 1, 200910.13
    
    
    Amendment No. 4 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of August 1, 200910.14
    
    
    Amendment No. 5 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of August 1, 200910.15
    
    
    Amendment No. 6 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.16
    
    
    Amendment No. 7 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.17
    
    
    Amendment No. 8 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.18
    
    
    Amendment No. 9 to Contract between Arizona Health Care Cost Containment System and
Health Choice Arizona, effective as of October 1, 200910.19
    
    
    Information System Agreement, dated February 23, 2000, between McKesson Information
Solutions LLC and IASIS Healthcare Corporation, as amended (1)**10.20
    
    
    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 (10)10.21
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and David R. White (1)10.22
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and Sandra K. McRee (1)10.23
    
    
    Employment Agreement, dated as of May 4, 2004, by and between IASIS Healthcare
Corporation and W. Carl Whitmer (1)10.24
    
    
    First Amendment to Employment Agreement, dated January 31, 2008, by and between IASIS
Healthcare Corporation and Sandra K. McRee (11)10.25
    
    
    Agreement for Severance Benefits and Restrictive Covenants, dated as of March 1, 2001,
by and between IASIS Management Company and Carolyn Rose (17)10.26
    
    
    Form of Roll-over Option Letter Agreement (1)10.27
    
    
    IASIS Healthcare Corporation 2004 Stock Option Plan (1)10.28
    
    
    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)10.29
    
    
    Investor Rights Agreement dated as of June 22, 2004, by and between IASIS Investment
LLC and IASIS Healthcare Corporation (1)10.30
    
    
    Form of Management Stockholders Agreement between IAS and each of David R. White,
Sandra K. McRee and W. Carl Whitmer (1)10.31
    
    
    Form of Management Stockholders Agreement under IASIS Healthcare Corporation 2004 Stock
Option Plan (1)10.32
    
    
    Form of Stock Option Grant Agreement under IASIS Healthcare Corporation 2004 Stock
Option Plan (1)10.33
    
    
    Form of Management Stockholders Agreement for Rollover Options (1)10.34
    
    
    IASIS Corporate Incentive Plan (1)
  139




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Exhibit No.
    
    Description10.35
    
    
    IASIS Market Executive Incentive Program (1)10.36
    
    
    Director Compensation and Restricted Share Award Agreement, dated as of February 14,
2005, between IASIS Healthcare Corporation and Kirk Gorman (12)10.37
    
    
    First Amendment to IASIS Healthcare Corporation 2004 Stock Option Plan (13)10.38
    
    
    Director Compensation and Restricted Share Award Agreement, dated as of April 14, 2005,
between IASIS Healthcare Corporation and Sharad Mansukani (14)10.39
    
    
    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 (15)10.40
    
    
    IASIS Healthcare Non-Qualified Deferred Compensation Program (4)10.41
    
    
    Contribution Agreement, dated as of May 9, 2007, by and among Odessa Regional Hospital,
LP, Alliance Hospital, Ltd. and Sri-Sai Enterprises, Inc. (16)14
    
    
    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).(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.  140




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(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 March 22,
2005.(14)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on April 20,
2005.(15)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on July 24, 2006.(16)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on May 10, 2007.(17)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year
ended September 30, 2008.  141