<PAGE>

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               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q

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

                 For the quarterly period ended March 31, 1999

                                      OR

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

                 For the transition period from _____ to _____

                        Commission file number 0-29816

                             Triad Hospitals, Inc.
            (Exact name of registrant as specified in its charter)

                    Delaware                             75-2816101
          (State or other jurisdiction                (I.R.S. Employer
        of incorporation or organization)            Identification No.)


            13455 Noel Road, Suite 2000
                  Dallas, Texas                             75240
      (Address of principal executive offices)            (Zip Code)

                                (972) 701-2200
             (Registrant's telephone number, including area code)

                                Not Applicable
             (Former name, former address and former fiscal year,
                         if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.

                             YES             NO  X
                                 ___            ___

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock of the latest practical date.


                                  29,898,688
                                  ----------
                             (As of May 11, 1999)


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<PAGE>

                        Part I:  Financial Information
                         Item 1: Financial Statements

                             TRIAD HOSPITALS, INC
                    CONDENSED COMBINED STATEMENTS OF INCOME
                For the quarters ended March 31, 1999 and 1998
                                   Unaudited
                (Dollars in millions, except per share amounts)

<TABLE>
<CAPTION>
                                                                                        1999          1998
                                                                                    ------------  ------------
<S>                                                                                 <C>           <C>
Revenues........................................................................... $     367.6   $     414.0

Salaries and benefits..............................................................       156.9         178.1
Supplies...........................................................................        54.1          64.0
Other operating expenses...........................................................        81.3          87.0
Provision for doubtful accounts....................................................        34.5          36.9
Depreciation and amortization......................................................        28.0          26.2
Interest expense allocated from Columbia/HCA.......................................        18.2          16.1
Management fees allocated from Columbia/HCA........................................         6.8           7.6
Impairment of long-lived assets....................................................        33.9            --
                                                                                    -----------   -----------

Total operating expenses...........................................................       413.7         415.9
                                                                                    -----------   -----------

Loss from continuing operations before minority
   interest and income tax benefit.................................................       (46.1)         (1.9)

Minority interests in earnings of consolidated entities............................        (2.2)         (4.0)
Income tax benefit.................................................................        12.4           1.8
                                                                                    -----------   -----------

Loss from continuing operations....................................................       (35.9)         (4.1)

Loss from operations of discontinued businesses,
 net of income tax benefit of $0.6 in 1998.........................................          --          (0.4)
                                                                                    -----------   -----------

Net loss........................................................................... $     (35.9)  $      (4.5)
                                                                                    ===========   ===========

Loss per common share:
 Loss from continuing operations................................................... $     (1.20)  $     (0.14)
 Loss from operations of discontinued business.....................................          --         (0.01)
                                                                                    -----------   -----------

Net loss........................................................................... $     (1.20)  $     (0.15)
                                                                                    ===========   ===========

Pro forma shares used in loss per share calculations...............................  29,898,688    29,898,688
</TABLE>


           See notes to the condensed combined financial statements.

                                      -2-
<PAGE>

                             TRIAD HOSPITALS, INC.
                       CONDENSED COMBINED BALANCE SHEETS
                                   Unaudited
                             (Dollars in millions)

<TABLE>
<CAPTION>
                                                                      Pro Forma
                                                                      Liabilities
                                                                      and Equity
                                                                      March 31,        March 31,      December 31,
                                                                        1999             1999            1998
                                                                    --------------   ------------    --------------
<S>                                                                 <C>              <C>             <C>
                              ASSETS

Current assets
   Accounts receivable, less allowance for doubtful accounts
     of $159.1 at March 31, 1999 and $155.9 at December 31, 1998.................... $     190.4     $      199.3
   Inventories......................................................................        39.3             44.8
   Income taxes.....................................................................        41.4             37.9
   Other............................................................................        16.7             23.9
                                                                                     -----------     ------------

Total current assets................................................................       287.8            305.9

Property and equipment, at cost:
   Land.............................................................................        83.4             82.0
   Buildings........................................................................       571.3            604.9
   Equipment........................................................................       725.8            712.0
   Construction in progress.........................................................        63.6             63.7
                                                                                     -----------     ------------
                                                                                         1,444.1          1,462.6
   Accumulated depreciation.........................................................      (724.1)          (703.1)
                                                                                     -----------     ------------
                                                                                           720.0            759.5

Intangible assets, net of accumulated amortization of $52.2 at
   March 31, 1999 and $50.2 at December 31, 1998....................................       273.7            272.9
Investment in equity of affiliates..................................................        25.4             24.3
Other...............................................................................         5.7              8.7
                                                                                     -----------     ------------

Total assets........................................................................ $   1,312.6     $    1,371.3
                                                                                     ===========     ============

                    LIABILITIES AND EQUITY

Current liabilities
   Accounts payable................................................ $       48.1     $      48.1     $       47.5
   Accrued salaries................................................         31.0            31.0             34.8
   Other current liabilities.......................................        140.2            43.2             38.7
                                                                    ------------     -----------     ------------

Total current liabilities..........................................        219.3           122.3            121.0

Intercompany balances payable to Columbia/HCA......................           --           613.1            613.7
Long-term debt.....................................................        578.0             7.3             13.4
Deferred taxes and other liabilities...............................         53.6            53.6             62.5
Minority interests in equity of consolidated entities..............         51.5            51.5             60.0

Equity, investments by Columbia/HCA................................        410.2           464.8            500.7
                                                                    ------------     -----------     ------------

Total liabilities and equity....................................... $    1,312.6     $   1,312.6     $    1,371.3
                                                                    ============     ===========     ============
</TABLE>

            See notes to the condensed combined financial statements

                                      -3-
<PAGE>

                             TRIAD HOSPITALS, INC.
                  CONDENSED COMBINED STATEMENTS OF CASH FLOWS
                For the quarters ended March 31, 1999 and 1998
                                   Unaudited
                             (Dollars in millions)

<TABLE>
<CAPTION>
                                                                                  1999        1998
                                                                               ----------  ----------
<S>                                                                            <C>         <C>

Cash flows from operating activities
    Net loss.................................................................. $   (35.9)  $    (4.5)
    Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
         Provision for doubtful accounts......................................      34.5        36.9
         Depreciation and amortization........................................      28.0        26.2
         Deferred income tax benefit..........................................     (12.4)       (1.8)
         Impairment of long-lived assets......................................      33.9          --
         Loss from discontinued operations....................................        --         0.4
         Increase (decrease) in cash from operating assets and liabilities
             Accounts receivable..............................................     (25.6)      (42.2)
             Inventories and other assets.....................................       9.3        (4.2)
             Accounts payable and other current liabilities...................       1.2       (11.6)
         Other................................................................      (8.5)      (11.7)
                                                                               ---------   ---------
         Net cash provided by (used in) operating activities..................      24.5       (12.5)

Cash flows from investing activities
    Purchases of property and equipment.......................................     (19.8)      (28.0)
    Investment in and advances to affiliates..................................      (1.1)       (2.2)
    Other.....................................................................       3.1         8.8
                                                                               ---------   ---------
         Net cash used in investing activities................................     (17.8)      (21.4)

Cash flows from financing activities
    Payments of long-term debt................................................      (6.1)       (0.5)
    Increase (decrease) in intercompany balances with Columbia/HCA, net.......      (0.6)       34.4
                                                                               ---------   ---------
        Net cash provided by (used in) financing activities...................      (6.7)       33.9
                                                                               ---------   ---------

Change in cash and cash equivalents........................................... $      --   $      --
                                                                               =========   =========

Interest payments............................................................. $    18.3   $    16.1
Income tax payments........................................................... $      --   $      --
</TABLE>

           See notes to the condensed combined financial statements

                                      -4-
<PAGE>

                             TRIAD HOSPITALS, INC.
             NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
                                   Unaudited


NOTE 1--BASIS OF PRESENTATION

          The accompanying unaudited condensed combined financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements of Triad Hospitals, Inc. (the "Company"). In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. Interim results are not necessarily indicative
of the results that may be expected for the year. The condensed combined
financial statements should be read in conjunction with the combined financial
statements and notes thereto for the year ended December 31, 1998 included in
the Company's Registration Statement on Form 10.

          The balance sheet at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements.

          Certain prior year amounts have been reclassified to conform to the
current year presentation.

NOTE 2--SPIN-OFF OF TRIAD HOSPITALS, INC.

          On May 11, 1999, Columbia/HCA Healthcare Corporation ("Columbia/HCA")
completed the spin-off of the Company to its shareholders (the "Spin-off") by a
pro rata distribution of 29,898,688 shares of common stock. The accompanying
financial statements were prepared on the push down basis of the historical cost
to Columbia/HCA and represent the combined financial position, results of
operations and cash flows of the Company.

          Loss per common share information has been presented as if the
29,898,688 shares referenced above had been outstanding for all periods
presented.

          In connection with the Spin-off, all intercompany amounts payable by
the Company to Columbia/HCA were eliminated, and the Company has assumed certain
indebtedness from Columbia/HCA. The pro forma combined balance sheet as of March
31, 1999 includes adjustments to reflect the elimination of intercompany
balances payable to Columbia/HCA and the assumption of $675.0 million in debt
financing in connection with the Spin-off (see NOTE 6). In addition, the Company
has entered into various agreements with Columbia/HCA which are intended to
facilitate orderly changes for both companies in a way which will be minimally
disruptive to each entity (see NOTE 9).

          The combined financial statements included herein precede the date of
the Spin-off and may not necessarily be indicative of the results of operations,
financial position and cash flows of the Company in the future or had it
operated as a separate, independent company during the periods presented. The
combined financial statements included herein do not reflect any changes that
have occurred or may occur in the financing and operations of the Company as a
result of the Spin-off.

          On May 11, 1999, Columbia/HCA also completed the spin-off of a
separate, independent company, LifePoint Hospitals, Inc. ("LifePoint").

          Information regarding Columbia/HCA included in this Report on
Form 10-Q is derived from reports and other information filed by
Columbia/HCA with the Securities and Exchange Commission.

NOTE 3--CONTINGENCIES

  Columbia/HCA Investigations

          Columbia/HCA is currently the subject of several Federal
investigations into certain of its business practices, as well as governmental
investigations by various states. Columbia/HCA is cooperating in these
investigations and understands that it is a target in these investigations.
Given the breadth of the ongoing investigations, Columbia/HCA expects additional
subpoenas and other investigative and prosecutorial activity to occur in these
and other jurisdictions in the future. Columbia/HCA is a defendant in several
qui tam actions brought by private parties on behalf of the United States of
America, which have been unsealed and

                                      -5-
<PAGE>

                             TRIAD HOSPITALS, INC.
             NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
                                   Unaudited
                                  (Continued)


NOTE 3--CONTINGENCIES (Continued)

served on Columbia/HCA.  The actions allege, in general, that Columbia/HCA and
certain subsidiaries and/or affiliated partnerships violated the False Claims
Act for improper claims submitted to the government for reimbursement.  The
lawsuits seek damages of three times the amount of all Medicare or Medicaid
claims (involving false claims) presented by the defendants to the Federal
government, civil penalties of not less than $5,000 nor more than $10,000 for
each such Medicare or Medicaid claim, attorneys' fees and costs. To the
Company's knowledge, the government has intervened in three qui tam actions
against Columbia/HCA.  Columbia/HCA is aware of additional qui tam actions that
remain under seal and believes that there are other sealed qui tam cases of
which it is unaware.

          Columbia/HCA is a defendant in a number of other suits, which allege,
in general, improper and fraudulent billing, overcharging, coding and physician
referrals, as well as other violations of law. Certain of the suits have been
conditionally certified as class actions.

          It is too early to predict the effect of outcome of any of the ongoing
investigations or qui tam and other actions, or whether any additional
investigations or litigations will be commenced. If Columbia/HCA is found to
have violated Federal or state laws relating to Medicare, Medicaid or similar
programs, Columbia/HCA could be subject to substantial monetary fines, civil and
criminal penalties, and exclusion from participation in the Medicare and
Medicaid programs. Similarly, the amounts claimed in the qui tam and other
actions may be substantial, and Columbia/HCA could be subject to substantial
costs resulting from an adverse outcome of one or more of such actions.

          In connection with the Spin-off, Columbia/HCA has agreed to indemnify
the Company in respect of any losses which it may incur as a result of the
proceedings described above (see the description of the distribution agreement
in NOTE 9 for a description of such indemnification arrangement). If any of such
indemnified matters were successfully asserted against the Company, or any of
its facilities, and Columbia/HCA failed to meet its indemnification obligations,
then such losses could have a material adverse effect on the business, financial
position, results of operations or prospects of the Company. Columbia/HCA will
not indemnify the Company for losses relating to any acts, practices and
omissions engaged in by the Company after the date of the Spin-off, whether or
not the Company is indemnified for similar acts, practices and omissions
occurring prior to the date of the Spin-off.

   General Liability Claims

          The Company is subject to claims and suits arising in the ordinary
course of business, including claims for personal injuries or wrongful
restriction of, or interference with, physicians' staff privileges. In certain
of these actions the claimants may seek punitive damages against the Company,
which are usually not covered by insurance. It is management's opinion that the
ultimate resolution of these pending claims and legal proceedings will not have
a material adverse effect on the Company's results of operations or financial
position.

NOTE 4--COMPANY OPERATIONS

          As of January 1, 1999, the Company owned or operated 39 hospitals
(including two facilities the Company is leasing from others and an investment
in one hospital that is accounted for using the equity method), 19 free-standing
ambulatory surgery centers (including two investments in ambulatory surgery
centers that are accounted for using the equity method) and related health care
entities located in eleven western, southwestern and southeastern states. During
the quarter ended March 31, 1999, the Company sold one hospital, the proceeds of
which were retained by Columbia/HCA, and ceased operations of one hospital.
Also, on January 1, 1999, the Company transferred two acute care hospitals and
three ambulatory surgery centers located in Kansas City, Missouri to an
unaffiliated third party pursuant to a long-term lease which provides for
payment to the Company of rental amounts approximating $16.0 million per year.
Subsequent to the quarter ended March 31, 1999 but prior to the date of the
Spin-off, the Company opened one hospital that is accounted for using the equity
method.

NOTE 5--IMPAIRMENT OF LONG-LIVED ASSETS

          The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 121, Accounting of the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed of ("SFAS 121"). SFAS 121 addresses
accounting for the impairment of long-lived assets and long-lived assets to be
disposed of, certain identifiable intangibles and goodwill related to those
assets, and provides guidance for recognizing and measuring impairment losses.
The statement requires that the carrying amount of impaired assets be reduced to
fair value.

     As discussed above, during the quarter ended March 31, 1999, the Company
sold one hospital and ceased to operate another hospital. At March 31, 1999, the
Company intended to sell five additional facilities (4 general, acute care
hospitals and one psychiatric hospital) that were identified as not compatible
with the Company's operating plans, based upon management's review of all
facilities, and giving consideration to current and expected competition in each
market, expected population trends in each

                                      -6-
<PAGE>

                             TRIAD HOSPITALS, INC.
             NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
                                   Unaudited
                                  (Continued)

NOTE 5--IMPAIRMENT OF LONG-LIVED ASSETS (Continued)

market and the current and expected capital needs in each market. Subsequent to
the date of the Spin-off, management completed its review of all facilities and
the Company decided to sell four additional general, acute care hospitals that
met the criteria described above. In the quarter ended March 31, 1999, the
carrying value of the long-lived assets relating to the eleven facilities was
approximately $133.6 million. For the quarters ended March 31, 1999 and 1998,
these facilities contributed net revenues of $77.0 million and $93.6 million and
losses before impairment charges and income tax benefit of $7.4 million and $9.4
million, respectively. The Company expects to complete the sales of the
remaining nine facilities which are held for sale over the next twelve months.
The Company is required to use sales proceeds on the nine remaining facilities
to retire outstanding indebtedness (see NOTE 6).

          In the quarter ended March 31, 1999, the carrying value of the long-
lived assets related to certain of these facilities (3 hospital facilities), of
approximately $50.6 million, was reduced to fair value, based on estimates of
selling values, for a total non-cash charge of $30.8 million. For the quarter
ended March 31, 1999 and 1998, respectively, these three facilities had net
revenues of approximately $25.0 million and $24.9 million and incurred losses
from continuing operations before income tax benefit and the asset impairment
charge of approximately $3.8 million and $4.3 million.

          During the quarter ended March 31, 1999, the Company recorded further
impairment losses of $3.1 million related to one hospital facility where the
recorded asset values were not deemed to be fully recoverable based upon the
operating results, trends and projected future cash flows. These assets will
continue to be used and are now recorded at estimated fair value, based upon
discounted, estimated future cash flows.

          The impairment charges, totaling $33.9 million, did not have a
significant impact on the Company's cash flows and are not expected to
significantly impact cash flows for future periods. As a result of the write-
downs, depreciation and amortization expense related to these assets will
decrease in future periods. In the aggregate, the net effect of the change in
depreciation and amortization expense is not expected to have material effect on
operating results for future periods.

NOTE 6--LONG-TERM DEBT

          In connection with the Spin-off, the Company assumed approximately
$675.0 million of debt financing from Columbia/HCA. The debt consists of a $75.0
million asset sale bridge loan bearing interest at LIBOR plus 3.25% (8.15% per
annum at May 31,1999) due December 31, 1999, a $65.0 million Tranche A term loan
bearing interest at LIBOR plus 3.25% (8.15% per annum at May 31, 1999) with
principal amounts due beginning in 1999 through 2004, a $200.0 million Tranche B
term loan bearing interest at LIBOR plus 4% (8.9% per annum at May 31, 1999)
with principal amounts due beginning in 1999 through 2005, and $325.0 million
senior subordinated notes bearing interest at 11% due in 2009 with interest
payments due quarterly. The Company also assumed various indebtedness of
Columbia/HCA related to specific hospitals in the aggregate amount of
approximately $10.0 million with interest rates averaging 5.7% maturing over
five years.

          The Company's bank debt is secured by a pledge of substantially all of
its assets. The debt agreements require that the Company comply with various
financial ratios and tests and have restrictions on new indebtedness, asset
sales, capital expenditures and dividends.

          The Company also assumed a $125.0 million revolving line of credit
bearing interest at LIBOR plus 3.25% due in 2004. No amounts were outstanding as
of May 31, 1999.

          A five-year maturity schedule is as follows (in millions):

                    1999                          $ 97.9
                    2000                            14.0
                    2001                            13.4
                    2002                            20.9
                    2003                            57.9
                    Thereafter                     470.9
                                                  ------

                                                  $675.0
                                                  ======

          As part of the assumption of the above reference debt financing, the
Company also assumed approximately $15.0 million in debt issue costs, which will
be amortized over the lives of the loans.


                                      -7-
<PAGE>
                             TRIAD HOSPITALS, INC.
             NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
                                   Unaudited
                                  (Continued)

NOTE 7--STOCK BENEFIT PLANS

          In connection with the Spin-off, the Company adopted the 1999 Long-
Term Incentive Plan, for which 5,350,000 shares of the Company's common stock
have been reserved for issuance. The 1999 Long-Term Incentive Plan authorizes
the grant of stock options, stock appreciation rights and other stock based
awards to officers and employees of the Company. As of May 31, 1999, 581,040
stock options have been granted under this plan, at varying prices, in respect
of pre-existing Columbia/HCA options and 3,020,126 stock options have been
granted under this plan, to be effective on June 10, 1999, with the exercise
price of such options to be determined based on the closing price of the
Company's stock on the next preceding day. In addition, options have been
granted under this plan by the Committee to participants in the Executive Stock
Purchase Plan, as described below.

          The Company has also adopted the Executive Stock Purchase Plan,
for which 1,000,000 shares of the Company's common stock have been reserved for
issuance. The Executive Stock Purchase Plan grants to specified
executives of the Company a right to purchase shares of common stock from the
Company. The Company will loan each participant in the plan 100% of the purchase
price of the Company's common stock, on a full recourse basis, to the extent the
participant does not elect to pay the purchase price in cash. The principal and
interest of the loans will mature on the fifth anniversary following the
purchase of the shares, termination of the participants' employment or
bankruptcy of the participant. In addition, the Committee has granted to such
executives stock options equal to three-quarters of a share for each share
purchased. The exercise price of these stock options is to equal the purchase
price of the shares. As of May 31, 1999, 950,000 shares have been purchased by
participants in the plan and options to purchase an additional 712,500 shares at
exercise prices ranging from $9.375 to $9.4375 have been issued in connection
with such purchased shares. As of May 31, 1999, the total amount which has been
loaned to participants to purchase shares under the plan is $8.9 million.

          Also, the Company adopted various other plans for which 500,000 shares
of the Company's common stock have been reserved for issuance. As of May 31,
1999, 120,000 options have been granted under such plans to non-employee
directors, to be effective on June 10, 1999, with the exercise price of such
options to be determined based on the closing price of the Company's stock on
the next preceding day.

          In connection with the Spin-off, the Company will establish an
Employee Stock Ownership Plan ("ESOP") which will purchase from the Company at
fair market value approximately 9% of the Company's common stock (3.0 million
shares). The purchase will be financed by the ESOP by issuing a promissory note
to the Company. The loan will be amortized over a 10-year period. As of May 31,
1999, the purchase price and the final terms of the note had not been
determined.

NOTE 8--DISCONTINUED OPERATIONS

          During the first quarter of 1998, the Company recorded a loss from
discontinued operations related to the divestiture of home health business of
$0.4 million (net of income tax benefit).  Revenues for the home health
businesses disposed of were approximately $14.8 million in the first quarter of
1998.  Columbia/HCA and the Company completed the divestiture and received
proceeds of approximately $3.9 million, which approximated the carrying value of
the net assets of discontinued operations during the fourth quarter of 1998. The
combined financial statements reflect the results of operations and net assets
of the home health businesses as discontinued operations.

NOTE 9--AGREEMENTS WITH COLUMBIA/HCA

          As described below, the Company has entered into several agreements
with Columbia/HCA to facilitate an orderly change after the Spin-off.

          Columbia/HCA, the Company and LifePoint have entered into a
distribution agreement providing for certain arrangements among Columbia/HCA,
the Company and LifePoint subsequent to the date of the Spin-off. The
distribution agreement generally provides that the Company will be financially
responsible for liabilities arising out of or in connection with the assets and
entities that constitute the Company. The distribution agreement provides,
however, that Columbia/HCA will indemnify the Company for any losses which it
incurs arising from the pending governmental investigations of certain of
Columbia/HCA's business practices. The distribution agreement further provides
that Columbia/HCA will indemnify the Company for any losses which it may incur
arising from stockholder actions and other legal proceedings related to the
governmental investigations which are currently pending against Columbia/HCA,
and from proceedings which may be commenced by governmental authorities or by
private parties in the future that arise from acts, practices or omissions
engaged in prior to the date of the Spin-off and related to such proceedings.
Columbia/HCA has also agreed that, in the event that any hospital owned by the
Company as of the date of the Spin-off is permanently excluded from
participation in the Medicare and Medicaid programs as a result of the
proceedings described above, then Columbia/HCA will make a cash payment to the
Company in an amount (if positive) equal to five times the excluded hospital's
1998 income from continuing operations before depreciation and amortization,
interest expense, management fees, impairment of long-lived assets, minority
interests and income taxes less the net proceeds of the sale or other
disposition of the excluded hospital. The Company agreed that, in connection
with the pending governmental investigations, it will participate with

                                      -8-
<PAGE>

                             TRIAD HOSPITALS, INC.
             NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
                                   Unaudited
                                  (Continued)

NOTE 9--AGREEMENTS WITH COLUMBIA/HCA (CONTINUED)

Columbia/HCA in negotiating one or more compliance agreements setting forth each
of their agreements to comply with applicable laws and regulations.
Columbia/HCA will not indemnify the Company for losses relating to any acts,
practices and omissions engaged in by the Company after the date of the Spin-
off, whether or not the Company is indemnified for similar acts, practices and
omissions occurring prior to the date of the Spin-off.

          In connection with the Spin-off, Columbia/HCA also agreed to indemnify
the Company for any payments which it is required to make in respect of
Medicare, Medicaid and Blue Cross cost reports relating to periods ending on or
prior to the date of the Spin-off, and the Company agreed to indemnify
Columbia/HCA for and pay to Columbia/HCA any payments received by it relating to
such cost reports relating to periods ending on or prior to the date of the
Spin-off. The Company will be responsible for the filing of these cost reports
and any terminating cost reports. These cost report payables are approximately
$40 million at March 31, 1999.

          Columbia/HCA, the Company and LifePoint entered into a tax sharing and
indemnification agreement, which allocates tax liabilities among Columbia/HCA,
the Company and LifePoint, and addresses certain other tax matters such as
responsibility for filing tax returns, control of and cooperation in tax
litigation and qualification of the Spin-off as a tax-free transaction.
Generally, Columbia/HCA will be responsible for taxes that are allocable to
periods prior to the Spin-off, and Columbia/HCA, the Company and LifePoint will
each be responsible for its own tax liabilities (including its allocable share
of taxes shown on any consolidated, combined or other tax return filed by
Columbia/HCA) for periods after the Spin-off.  The tax sharing and
indemnification agreement prohibits the Company from taking actions that could
jeopardize the tax treatment of either the Spin-off or the internal
restructuring of Columbia/HCA that preceded the Spin-off, and requires the
Company to indemnify Columbia/HCA for any taxes or other losses that result from
any such actions.

          Prior to the date of the Spin-off, Columbia/HCA maintained various
insurance policies for the benefit of the Company and LifePoint.  In connection
with the Spin-off, Columbia/HCA, the Company and LifePoint entered into an
agreement relating to insurance matters which provides that any claims against
insurers outstanding at the Spin-off will be for the benefit of the party who
will own the asset which is the basis for the claim, or, in the case of
liability claim, which is the owner of the facility at which the activity which
is the subject of the claim occurred. Columbia/HCA will pay the Company any
portion of such a claim that is unpaid by an insurer to satisfy deductible, co-
insurance or self-insurance amounts (unless such amounts were paid to or
accounted for by the affected entity prior to the Spin-off). Columbia/HCA and
the Company have ensured that all of the insurance policies in effect after the
Spin-off provide the same coverage to the Company that were available prior to
the Spin-off. The Company has purchased continuous coverage under extensions or
renewals of existing, or new, policies issued by Health Care Indemnity, Inc., a
subsidiary of Columbia/HCA. Any retroactive rate adjustments for periods ending
on or before the Spin-off, in respect of such insurance policies, will be paid
or received by Columbia/HCA.

          Columbia/HCA's wholly owned subsidiary Columbia Information Services,
Inc. ("CIS"), entered into a computer and data processing services agreement
with the Company. Pursuant to this agreement, CIS will provide computer
installation, support, training, maintenance, data processing and other related
services to the Company. The initial term of the agreement is seven years, which
will be followed by a wind-down period of up to one year. CIS will charge the
Company approximately $19.0 million per year for services provided under this
agreement. In the event the agreement is terminated by the Company, it will be
required to pay a termination fee equal to the first month's billed fees,
multiplied by the remaining number of months in the agreement. CIS does not
warrant that the software and hardware used by CIS in providing services to the
Company will be Year 2000 ready, although CIS is currently making efforts in a
professional, timely and workmanlike manner that it deems reasonable to address
Year 2000 issues with respect to the software licensed to the Company under the
computer and data processing services agreements.

          Columbia/HCA, the Company and LifePoint entered into an agreement
relating to benefit and employment matters which allocates responsibilities for
employment compensation, benefits, labor, benefit plan administration and
certain other employment matters on and after the date of the Spin-off. The
agreement generally provides that the Company will assume responsibility for its
employees from and after the date of the Spin-off, and that Columbia/HCA will
retain the liabilities with respect to former employees associated with the
facilities and operations of the Company who terminated employment on or prior
to the date of the Spin-off. Benefit plans established by the Company generally
recognize past service with Columbia/HCA.

          Columbia/HCA also entered into an agreement with the Company, pursuant
to which the Company will sub-lease from Columbia/HCA its principal executive
offices (at the same price per square foot as is payable under the existing
Columbia/HCA lease). The Company's sub-lease will terminate on January 31, 2003.

          Columbia/HCA also entered into a transitional service agreement with
the Company pursuant to which Columbia/HCA will continue to furnish various
administrative services to the Company. These services will include support in
various aspects of payroll processing and tax reporting for employees of the
Company, real estate design and construction management, legal, human resources,
insurance and accounting matters. Columbia/HCA and the Company also will
continue an ongoing program of inspecting medical

                                      -9-
<PAGE>

                             TRIAD HOSPITALS, INC.
             NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
                                   Unaudited
                                  (Continued)

NOTE 9--AGREEMENTS WITH COLUMBIA/HCA (Continued)

equipment at each of the Company's hospitals to assure Year 2000 compliance.
Each agreement will terminate on December 31, 2000, but may be terminated by the
Company as to specific services before December 31, 2000. The Company will pay
fees to Columbia/HCA For services provided in amounts equal to Columbia/HCA's
costs incurred in providing such services.


          Columbia/HCA entered into an agreement with the Company whereby
Columbia/HCA will share telecommunications services with the Company under
Columbia/HCA's agreements with its telecommunications services provider and
whereby Columbia/HCA will make certain account collection services available to
the Company. The Company also participates, along with Columbia/HCA and
LifePoint, in a group purchasing organization which makes certain national
supply and equipment contracts available to their respective facilities.

NOTE 10--DERIVATIVES

          In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), which was required to be
adopted in years beginning after June 15, 1999. In May 1999, the effective date
of SFAS 133 was deferred until year beginning after June 15, 2000. Because of
the Company's minimal use of derivatives, management does not anticipate that
the adoption of the new statement will have a significant effect on the results
of operations or the financial position of the Company.

                                      -10-
<PAGE>

                         Part I: Financial Information
                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

          The Company owns and operates the health care service business which
comprised the Pacific Group of Columbia/HCA until the distribution by
Columbia/HCA to its shareholders of all of the shares of outstanding common
stock of the Company (the "Spin-off"). The Spin-off, which occurred on May 11,
1999, marks the beginning of the Company's operations as an independent,
publicly traded company. As such, the historical financial statements of the
Company may not necessarily be indicative of the Company's future performance,
nor do they necessarily reflect what the financial position and results of
operations of the Company would have been if it had operated as a separate,
stand-alone entity during the periods covered.

          As of January 1, 1999 the Company owned or operated 39 hospitals
(including two facilities the Company is leasing from others and an investment
in one hospital that is accounted for using the equity method), 19 free-standing
ambulatory surgery centers (including two investments in ambulatory surgery
centers that are accounted for using the equity method) and related health care
entities located in eleven western, southwestern and southeastern states. During
the quarter ended March 31, 1999, the Company sold one hospital, the proceeds of
which were retained by Columbia/HCA, and ceased operations of one hospital.
Also, on January 1, 1999, the Company transferred two acute care hospitals and
three ambulatory surgery centers located in Kansas City, Missouri to an
unaffiliated third party pursuant to a long-term lease which provides for
payment to the Company of rental amounts approximating $16.0 million per year.
Subsequent to the quarter ended March 31, 1999, the Company opened one hospital,
which is accounted for using the equity method.

          Information regarding Columbia/HCA included in this Report on
Form 10-Q is derived from reports and other information filed by
Columbia/HCA with the Securities and Commission.

FORWARD LOOKING STATEMENTS

          This "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains disclosures which are "forward-looking
statements." Forward-looking statements include all statements that do not
relate solely to historical or current facts, and can be identified by the use
of words such as "may", "believe", "will", "expect", "project", "estimate",
"anticipate", "plan" or "continue". These forward-looking statements are based
on the current plans and expectations of the Company and are subject to a number
of uncertainties and risks that could significantly affect current plans and
expectations and the future financial condition and results of the Company.
These factors include, but are not limited to, (i) the highly competitive nature
of the health care business, (ii) the efforts of insurers, health care providers
and others to contain health care costs, (iii) possible changes in the Medicare
and Medicaid programs that may further limit reimbursements to health care
providers and insurers, (iv) changes in Federal, state or local regulation
affecting the health care industry, (v) the possible enactment of Federal or
state health care reform, (vi) the ability to attract and retain qualified
management and personnel, including physicians, (vii) claims and legal actions
relating to professional liabilities and other matters, (viii) fluctuations in
the market value of the Company's common stock, (ix) the departure of key
executive officers from the Company, (x) changes in accounting practices, (xi)
changes in general economic conditions, (xii) future divestitures which may
result in additional charges, (xiii) the complexity of integrated computer
systems and the success and expense of the remediation efforts of the Company
and relevant third parties in achieving Year 2000 readiness, (xiv) the ability
to enter into managed care provider arrangements on acceptable terms, (xv) the
availability and terms of capital to fund the expansion of the Company's
business, (xvi) changes in business strategy or development plans, (xvii)
timeliness of reimbursement payments received under government programs and
(xviii) other risk factors. As a consequence, current plans, anticipated actions
and future financial condition and results may differ from those expressed in
any forward-looking statements made by or on behalf of the Company. You are
cautioned not to unduly rely on such forward-looking statements when evaluating
the information presented in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

RESULTS OF OPERATIONS

   Revenue/Volume Trends

  During the quarter ended March 31, 1999, the Company experienced declines in
revenue and volumes.  Management believes six factors have contributed to the
declines in revenue: the impact of reductions in Medicare payments mandated by
the Federal Balanced Budget Act of 1997 (the "Balanced Budget Act"), the
announced divestitures of hospitals in certain markets, the disposition of one
acute care hospital and cessation of operations of one acute care hospital, the
transfer pursuant to a long-

                                      -11-
<PAGE>

                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)

term lease to an unaffiliated third party of two acute care hospitals and three
ambulatory surgery centers, the continuing trend toward the conversion of more
services to an outpatient basis and the impact of the governmental
investigations of Columbia/HCA. Typically, in the healthcare industry, revenues
and volumes tend to be higher in the first quarter of each year compared to the
other quarters. Management expects these trends to be similar for the Company,
therefore first quarter results are not necessarily indicative of results that
may be expected for the year.

          The Company's revenues continue to be affected by an increasing
proportion of revenue being derived from fixed payment, higher discount sources,
including Medicare, Medicaid and managed care plans. In addition, insurance
companies, government programs (other than Medicare) and employers purchasing
health care services for their employees are also negotiating discounted amounts
that they will pay health care providers rather than paying standard prices. The
Company expects patient volumes from Medicare and Medicaid to continue to
increase due to the general aging of the population and expansion of state
Medicaid programs. However, under the Balanced Budget Act, the Company's
reimbursement from Medicare and Medicaid programs was reduced in 1999 and 1998
and will be further reduced as reductions in reimbursement levels are phased in
over the next two years. The Balanced Budget Act has accelerated a shift, by
certain Medicare beneficiaries, from traditional Medicare coverage to medical
coverage that is provided under managed care plans. The Company generally
receives lower payments per patient under managed care plans than under
traditional indemnity insurance plans. With an increasing proportion of services
being reimbursed based upon fixed payment amounts (where the payment is based
upon the diagnosis, regardless of the cost incurred or level of service
provided), revenues, earnings and cash flows are being significantly reduced.
Net patient revenues related to Medicare and Medicaid patients were 46.2% of
total net patient revenues each quarter ended March 31, 1999 and 1998 and net
patient revenues related to managed care plan patients were 29.1% and 25.6% of
total net patient revenues for the quarters ended March 31, 1999 and 1998,
respectively. Net patient revenues from capitation arrangement (prepaid health
service agreements) are less than 1% of net patient revenues.

          Management of the Company has focused on streamlining the Company's
portfolio of facilities to eliminate those with poor financial performance, weak
competitive market positions or locations in certain urban markets. As a result,
management determined that eleven of the facilities (10 general, acute care
hospitals and one psychiatric hospital) which were part of the Columbia/HCA
Pacific Group as of January 1, 1999, did not meet the Company's strategic plan
and decided to divest these facilities. During the first quarter of 1999,
Columbia/HCA sold one hospital and ceased operations of one hospital, which had
net revenues of $4.9 million and $8.2 million and losses before impairment
charges and income tax benefit of $4.5 million and $2.6 million for the quarters
ended March 31, 1999 and 1998, respectively. The sale of the remaining nine
facilities is expected to be completed over the next twelve months. For the
quarters ending March 31, 1999 and 1998, the eleven facilities divested or to be
divested contributed net revenues of $77.0 million and $93.6 million and losses
before impairment charges and income tax benefit of $7.4 million and $9.4
million, respectively. On January 1, 1999, the Company transferred two acute
care hospitals and three ambulatory surgery centers located in Kansas City,
Missouri to an unaffiliated third party pursuant to a long-term lease which
provides for payment to the Company of rental amounts approximating $16.0
million per year. For the quarters ending March 31, 1999 and 1998, these leased
facilities contributed net revenues, exclusive of the $4.0 million lease
payments, of $(1.5) million and $50.0 million and losses before impairment
charges and income tax benefit of $8.5 million and $0.1 million, respectively.
These leased hospitals, along with the facilities divested and to be divested,
accounted for a majority of the decrease in revenue and volume for the Company.

          The Company's revenues also continue to be affected by the trend
toward certain services being performed more frequently on an outpatient basis.
Growth in outpatient services is expected to continue in the health care
industry as procedures performed on an inpatient basis are converted to
outpatient procedures through continuing advances in pharmaceutical and medical
technologies. The redirection of certain procedures to an outpatient basis is
also influenced by pressures from payers to perform certain procedures as
outpatient care rather than inpatient care. Outpatient revenues grew to 45.5% of
net patient revenues for the quarter ended March 31, 1999 compared to 44.9% for
the quarter ended March 31, 1998.

          Management believes that the impact of the ongoing governmental
investigations of certain Columbia/HCA business practices and the related media
coverage may have created uncertainties with physicians, patients and payers in
certain of the Company's markets.

          Reductions in the rate of increase in Medicare and Medicaid
reimbursement, increasing percentages of patient volume being related to
patients participating in managed care plans and continuing trends toward more
services being performed on an outpatient basis are expected to present ongoing
challenges. The challenges presented by these trends are magnified by the
Company's inability to control these trends and the associated risks. To
maintain and improve its operating margins in future periods, the Company must
increase patient volumes while controlling the costs of providing services. If
the Company is not able to achieve reductions in the cost of providing services
through increased operational efficiencies, and the trend toward declining
reimbursements and payments continues, results of operations and cash flows will
deteriorate.

          Management believes that the proper response to these challenges
includes the delivery of a broad range of quality health care services to
physicians and patients with operating decisions being primarily made by the
local management teams and local physicians.

                                      -12-
<PAGE>

                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


     In connection with the Spin-off, Columbia/HCA agreed to indemnify the
Company for any payments which it is required to make in respect of Medicare,
Medicaid and Blue Cross cost reports relating to periods ending on or prior to
the date of the Spin-off, and the Company agreed to indemnify Columbia/HCA for
and pay to Columbia/HCA any payments received by it relating to such cost
reports relating to periods ending on or prior to the date of the Spin-off.  The
Company will be responsible for the filing of these cost reports and any
terminating cost reports. These cost report payables are approximately $40
million at March 31, 1999.

Operating Results Summary

     The following is a summary of results from continuing operations for the
quarters ended March 31, 1999 and 1998 (dollars in millions, except per share
amounts and ratios):

<TABLE>
<CAPTION>
                                                                      1999                          1998
                                                             ---------------------         -----------------------
                                                              Amount    Percentage          Amount      Percentage
                                                             ---------  ----------         ----------   ----------
<S>                                                          <C>        <C>                <C>          <C>
Revenues...................................................  $  367.6        100.0          $   414.0        100.0

Salaries and benefits......................................     156.9         42.7              178.1         43.0
Supplies...................................................      54.1         14.7               64.0         15.5
Other operating expenses...................................      81.3         22.1               87.0         21.0
Provision for doubtful accounts............................      34.5          9.4               36.9          8.9
Depreciation and amortization..............................      28.0          7.6               26.2          6.3
Interest expense allocated from Columbia/HCA...............      18.2          5.0               16.1          3.9
Management fees allocated from Columbia/HCA................       6.8          1.8                7.6          1.8
Impairment of long-lived assets............................      33.9          9.2                 --           --
                                                             --------        -----           --------     --------
                                                                413.7        112.5              415.9        100.4
                                                             --------        -----           --------     --------

Loss from continuing operations before minority interests
 and income tax benefit....................................     (46.1)       (12.5)              (1.9)        (0.4)
Minority interests in earnings of consolidated entities....      (2.2)        (0.6)              (4.0)        (1.0)
                                                             --------        -----           --------     --------
Loss from continuing operations before income tax benefit..     (48.3)       (13.1)              (5.9)        (1.4)
Income tax benefit.........................................      12.4          3.4                1.8          0.4
                                                             --------        -----           --------     --------
Loss from continuing operations............................  $  (35.9)        (9.7)          $   (4.1)        (1.0)
                                                             ========        =====           ========     ========

Loss per common share from continuing operations...........  $  (1.20)                       $  (0.14)

EBITDA (a).................................................  $   40.8                        $   48.0
Number of hospitals at end of period.......................        37                              39
Licensed beds at end of period (b).........................     5,015                           5,928
Available beds at end of period (c)........................     4,608                           5,242
Admissions (d).............................................    42,573                          45,479
Adjusted admissions (e)....................................    67,819                          72,498
Patient days (f)...........................................   198,557                         229,410
Adjusted patient days (g)..................................   316,301                         365,702
Average length of stay (h).................................       4.7                             5.0
Average daily census (i)...................................     2,206                           2,549
Occupancy rate (j).........................................      47.9%                           48.6%
Net revenue per adjusted patient day.......................  $  1,162                        $  1,132
Gross inpatient revenue....................................  $  508.2                        $  564.9
Gross outpatient revenue...................................  $  301.4                        $  314.8
Gross outpatient revenue percentage........................      37.2%                           35.8%
Net inpatient revenue......................................  $  194.0                        $  224.5
Net outpatient revenue.....................................  $  162.2                        $  183.3
Net outpatient revenue percentage..........................      45.5%                           44.9%
</TABLE>

(a)  EBITDA is defined as income from continuing operations before depreciation
     and amortization, interest expense, management fees, impairment of long-
     lived assets, minority interests in earnings of consolidated entities and
     income tax benefit.  EBITDA is commonly used as an analytical indicator
     within the health care industry, and also serves as a measure of leverage
     capacity and debt service ability.  EBITDA should not be considered as a
     measure of financial performance under generally accepted accounting
     principles, and the items excluded from EBITDA are significant components
     in understanding and assessing financial performance.  EBITDA should not be
     considered in isolation or as an alternative to net income, cash flows
     generated by operating, investing or financing activities or other
     financial statement data presented in

                                      -13-
<PAGE>

                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


     the combined financial statements as an indicator of financial performance
     or liquidity. Because EBITDA is not a measurement determined in accordance
     with generally accepted accounting principles and is thus susceptible to
     varying calculations, EBITDA as presented may not be comparable to other
     similarly titled measures of other companies.
(b)  Licensed beds are those beds for which a facility has been granted approval
     to operate from the applicable state licensing agency.
(c)  Available beds are those beds a facility actually has in use.
(d)  Represents the total number of patients admitted (in the facility for a
     period in excess of 23 hours) to the Company's facilities and is used by
     management and certain investors as a general measure of inpatient volume.
(e)  Adjusted admissions is used by management and certain investors as a
     general measure of combined inpatient and outpatient volume. Adjusted
     admissions are computed by multiplying admissions (inpatient volume) by the
     sum of gross inpatient revenue and gross outpatient revenue and then
     dividing the resulting amount by gross inpatient revenue. The adjusted
     admissions computation "equates" outpatient revenue to the volume measure
     (admissions) used to measure inpatient volume resulting in a general
     measure of combined inpatient and outpatient volume.
(f)  Represents the total number of days each patient stays in the Company's
     hospitals.
(g)  Adjusted patient days is used by management and certain investors as a
     general measure of combined inpatient and outpatient volume.  Adjusted
     patient days are computed by multiplying patient days (inpatient volume) by
     the sum of gross inpatient revenue and gross outpatient revenue and then
     dividing the resulting amount by gross inpatient revenue.  The adjusted
     patient days computation "equates" outpatient revenue to the volume measure
     (patient days) used to measure inpatient volume resulting in a general
     measure of combined inpatient and outpatient volume.
(h)  Represents the average number of days an admitted patient stays in the
     Company's hospitals.  Average length of stay has declined due to the
     continuing pressures from managed care and other payers to restrict
     admissions and reduce the number of days that are covered by the payers for
     certain procedures, and by technological and pharmaceutical improvements.
(i)  Represents the average number of patients in the Company's hospital beds
     each day.
(j)  Represents the percentage of hospital available beds occupied by patients.
     Both average daily census and occupancy rate provide measures of the
     utilization of inpatient rooms.  The declining occupancy rate is primarily
     attributed to the trend toward more services, that were previously
     performed in an inpatient setting, being performed on an outpatient basis
     and the decline in average length of stay per admission.

 Quarters Ended March 31, 1999 and 1998

          Losses from continuing operations before income tax benefit increased
to $48.3 million in the first quarter of 1999 from $5.9 million in the first
quarter of 1998. The increase in pretax loss was primarily attributable to
impairment charges of $33.9 million recorded in the first quarter of 1999 due to
the management reassessment of the facilities that would not be part of the
Company's core markets. Other increases in pretax loss were attributable to $1.9
million of additional losses on the facilities that were either sold or
operations ceased during the first quarter of 1999, a $4.0 million adjustment at
one facility to reflect deterioration in accounts receivable, and certain write-
offs and adjustments relating to the leased facilities in Kansas City, Missouri
of $8.9 million. Management continues to evaluate the ultimate collectibility of
outstanding, aging, accounts receivable associated with the leased facilities.
While additional gross amounts of up to $5.0 million may be required to be
written off, management believes adequate reserves and subsequent collections
exist to substantially offset this amount. These were partially offset by $4.0
million of lease income from the leased facilities in the first quarter of 1999
and improvement in the operations of facilities that will remain after the
planned divestitures.

          Revenues decreased 11.2% to $367.6 million in the first quarter of
1999 compared to $414.0 million in the first quarter of 1998. Inpatient
admissions decreased 6.4% and adjusted admissions (adjusted to reflect combined
inpatient and outpatient volume) decreased 6.5% in the first quarter of 1999
compared to the first quarter of 1998. Revenues, admissions and adjusted
admissions declined primarily as a result of the facilities that were leased in
January 1999. In the first quarter of 1998, these facilities had revenues of
$50.0 million, admissions of 4,743 and adjusted admissions of 7,315. Other
factors contributing to the reduction of revenues include a $3.3 million
reduction relating to the sale of one hospital and cessation of operations of
one hospital in the first quarter of 1999 compared to the first quarter of 1998
and a $2.0 million adjustment at one facility during the first quarter of 1999
to reflect additional discounts relating to deterioration in accounts
receivable. These were partially offset by $4.0 million of lease income from the
leased facilities in the first quarter of 1999 and improvement in the operations
of facilities that will remain after the planned divestitures.

          Revenues have been decreasing over the past several years due to
several factors. These factors include decreases in Medicare rates of
reimbursement mandated by the Balanced Budget Act which became effective October
1, 1997 (lowering first quarter 1999 revenues by approximately $3.0 million
compared to $1.4 million during the first quarter of 1998) and continued
increases in discounts from the growing number of managed care payers (managed
care as a percent of net revenues increased to 29.1% in the first quarter of
1999 compared to 25.6% during the first quarter of 1998).

          Salaries and benefits, as a percentage of revenues, decreased to 42.7%
in the first quarter of 1999 from 43.0% in the first quarter of 1998. The
decrease was primarily attributable to the leased facilities, which had a higher
percentage of salaries and benefits to net revenue.

                                      -14-
<PAGE>

                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)

     Supply costs decreased as a percentage of revenues to 14.7% in the first
quarter of 1999 from 15.5% in the first quarter of 1998 due to the leased
facilities having a higher percentage of supply costs to net revenue.

     Other operating expenses (primarily consisting of contract services,
professional fees, repairs and maintenance, rents and leases, utilities,
insurance and non-income taxes), as a percentage of revenues, increased to 22.1%
in the first quarter of 1999 from 21.0% in the first quarter of 1998 due
primarily to the collection fees relating to collection efforts on the remaining
accounts receivables of the leased facilities in 1999.

     Provision for doubtful accounts, as a percentage of revenues, increased to
9.4% in the first quarter of 1999 from 8.9% in the first quarter of 1998 due to
$3.6 million of certain write offs and adjustments relating to the leased
facilities in the first quarter of 1999 and a $2.0 million adjustment that was
made at one facility in the first quarter of 1999 to reflect deterioration in
accounts receivable. Additionally, the uncertain status of the held for sale
facilities contributed to the increase.

     Depreciation and amortization increased as a percentage of revenues to 7.6%
in the first quarter of 1999 from 6.3% in the first quarter of 1998, primarily
due to the increased capital expenditures and to the decrease in net revenues
from the leased facilities.

     Interest expense, which is primarily represented by interest incurred on
the net intercompany balance with Columbia/HCA, increased to $18.2 million in
the first quarter of 1999 compared to $16.1 million in the first quarter of 1998
primarily as a result of an increase in average balance of the advances from
Columbia/HCA during the first quarter of 1999 compared to the first quarter of
1998.

     Management fees allocated from Columbia/HCA remained unchanged as a
percentage of net revenues during the first quarter of 1999 compared to the
first quarter of 1998.

     Impairments on long-lived assets were $33.9 million during the first
quarter of 1999 due to the management reassessment of certain facilities that
would not be part of the core markets that the Company would go forward with
after the Spin-off.  Management determined that the potential sales prices of
these facilities would not cover the book value of the facilities and a write
down would be necessary.

     Minority interests, which are primarily related to one ambulatory surgery
center joint venture in Arizona, decreased slightly as a percentage of revenues
to 0.6% in the first quarter of 1999 from 1.0% in the first quarter of 1998.

PRO FORMA OPERATING RESULTS SUMMARY

     The following is a summary of pro forma results from continuing operations
for the quarters ended March 31, 1999 and 1998 (dollars in millions, except per
share amounts and ratios).  The pro forma operating results from continuing
operations reflect the following adjustments at the beginning of each quarter:

(1)  To reflect the following completed divestiture and cessation of operations
     and planned divestitures in 1999:
     (a)  elimination of the first quarter of 1999 and first quarter of 1998
          results of operations of one acute care hospital which was sold during
          the first quarter of 1999 (the proceeds of such sale were retained by
          Columbia/HCA);
     (b)  elimination of the first quarter of 1999 and the first quarter of 1998
          results of operation of eight acute care hospitals and one psychiatric
          hospital for which the Company's management believes dispositions over
          the next twelve months are probable; and
     (c)  elimination of the first quarter 1999 and 1998 results of operations
          of one acute care hospital which the Company ceased to operate on
          April 1, 1999.
(2)  To reflect the long term lease payment of $16.0 million per year and
     elimination of operations in the first quarters of 1999 and 1998 of two
     acute care hospitals and three ambulatory surgery centers in Kansas City,
     Missouri in January 1999 as though such lease had commenced at the
     beginning of each period.
(3)  To adjust to the estimated, incremental general and administrative costs of
     $5.6 million in the first quarters of 1999 and 1998 (in addition to $2.3
     million in the first quarter of 1999 and $1.8 million in first quarter of
     1998 in costs already included in the historical combined statement of
     operations) that would have been incurred if the Company had managed
     comparable general and administrative functions and to eliminate the
     management fee allocated from Columbia/HCA.
(4)  To adjust historical retirement plan expenses recorded as a component of
     salaries and wages and record the estimated annual Triad Hospitals, Inc.
     Retirement Savings Plan (the "ESOP") expense.  The Company's ESOP will be
     established in connection with the Spin-off and the ESOP will purchase
     newly issued shares of the Company's common stock equal to 9.0% of the
     outstanding shares of the Company.  The ESOP shares will be released from a
     suspense account and allocated to the Company's participating employees
     over a 10-year period.  The non-cash ESOP expense will be recognized as the
     shares are released and allocated to the participants and will be based
     upon the fair value of the shares released.
(5)  To adjust interest expense to $17.4 million for the quarters ended March
     31, 1999 and 1998.  The interest expense adjustment is based on the
     elimination of all intercompany amounts payable to Columbia/HCA and the
     assumption of

                                      -15-
<PAGE>

               ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)

PRO FORMA OPERATING RESULTS SUMMARY (Continued)

     certain indebtedness from Columbia/HCA in the aggregate amount of
     approximately $675.0 million at an assumed average interest rate of 9.83%
     and approximately $1.5 million in amortization of the estimated loan
     issuance costs.
(6)  To adjust provision for income taxes for the estimated impact of the pro
     forma adjustments.
(7)  Pro forma income (loss) per share was computed using the 29.9 million
     shares issued to the stockholders of Columbia/HCA on the date of the Spin-
     off.


<TABLE>
<CAPTION>
                                                                       1999                    1998
                                                                ----------------------  ---------------------
                                                                 Amount    Percentage    Amount    Percentage
                                                                --------   ----------   --------   ----------
<S>                                                             <C>        <C>          <C>        <C>
Revenues......................................................  $  292.1        100.0   $  274.4        100.0

Salaries and benefits.........................................     116.0         39.7      109.7         40.0
Supplies......................................................      42.8         14.6       39.6         14.4
Other operating expenses......................................      61.4         21.0       58.6         21.4
Provision for doubtful accounts...............................      23.3          8.0       25.0          9.1
Depreciation and amortization.................................      21.1          7.2       19.7          7.2
Interest expense..............................................      17.4          6.0       17.4          6.3
ESOP expense..................................................       1.1          0.4        1.1          0.4
                                                                --------        -----   --------        -----
                                                                   283.1         96.9      271.1         98.8
                                                                --------        -----   --------        -----

Income from continuing operations before minority interests
 and income taxes.............................................       9.0          3.1        3.3          1.2
Minority interests in earnings of consolidated entities.......      (2.2)        (0.8)      (3.6)        (1.3)
                                                                --------        -----   --------        -----
Income (loss) from continuing operations before income taxes..       6.8          2.3       (0.3)        (0.1)
Provision for income taxes....................................      (3.4)        (1.2)      (0.6)        (0.2)
                                                                --------        -----   --------        -----
Income (loss) from continuing operations......................  $    3.4          1.1   $   (0.9)        (0.3)
                                                                ========        =====   ========        =====

Income (loss) per common share from continuing operations.....  $   0.11                $  (0.03)

Pro forma EBITDA (a)..........................................  $   48.6                $   41.5
Number of hospitals...........................................        29                      29
Licensed beds at end of period (b)............................     3,128                   3,527
Available beds at end of period (c)...........................     2,716                   2,906
Admissions (d)................................................    32,666                  30,026
Adjusted admissions (e).......................................    54,572                  49,157
Patient days (f)..............................................   149,049                 144,464
Adjusted patient days (g).....................................   249,001                 236,510
Average length of stay (h)....................................       4.6                     4.8
Average daily census (i)......................................     1,656                   1,605
Occupancy rate (j)............................................      61.0%                   55.2%
Net revenue per adjusted patient day..........................  $  1,173                $  1,160
Gross inpatient revenue.......................................  $  367.6                $  333.2
Gross outpatient revenue......................................  $  243.2                $  212.3
Gross outpatient revenue percentage...........................      39.8%                   38.9%
Net inpatient revenue.........................................  $  138.3                $  131.2
Net outpatient revenue........................................  $  144.7                $  134.2
Net outpatient revenue percentage.............................      51.1%                   50.6%
</TABLE>

(a)  Pro forma EBITDA is EBITDA, as defined previously, adjusted (i) as if the
     Spin-off and the divestitures of certain facilities that the Company
     intends to divest or cease to operate during 1999 had occurred at the
     beginning of 1998, (ii) as if the long term lease of the Kansas City
     facilities in January 1999 had occurred at the beginning of each period,
     (iii) to exclude non-cash ESOP expense and (iv) to include the Company's
     management's estimated corporate overhead costs of $22.4 million on an
     annual basis that are recorded in the Pro Forma Operating Results Summary
     to replace the management fees allocated by Columbia/HCA. Pro forma EBITDA
     is commonly used as an analytical indicator of leverage capacity and debt
     service ability. Pro forma EBITDA should not be considered as a measure of
     financial performance under generally accepted accounting principles, and
     the items excluded from pro forma EBITDA are significant components in
     understanding and assessing financial performance. Pro forma EBITDA should
     not be considered in isolation or as an alternative to net income, cash
     flows generated by operating, investing or financing activities or other
     financial statement data presented in the combined financial statements as
     an indicator of financial performance or liquidity. Because pro forma
     EBITDA is not a measurement determined in accordance with generally
     accepted accounting principles and is thus susceptible to varying
     calculations, pro forma EBITDA as presented may not be comparable to other
     similarly titled measures of the companies.

                                     -16-
<PAGE>

                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)

PRO FORMA OPERATING RESULTS SUMMARY (CONTINUED)

(b)  Licensed beds are those beds for which a facility has been granted approval
     to operate from the applicable state licensing agency.
(c)  Available beds are those beds a facility actually has in use.
(d)  Represents the total number of patients admitted (in the facility for a
     period in excess of 23 hours) to the Company's facilities and is used by
     management and certain investors as a general measure of inpatient volume.


(e)  Adjusted admissions is used by management and certain investors as a
     general measure of combined inpatient and outpatient volume. Adjusted
     admissions are computed by multiplying admissions (inpatient volume) by the
     sum of gross inpatient revenue and gross outpatient revenue and then
     dividing the resulting amount by gross inpatient revenue. The adjusted
     admissions computation "equates" outpatient revenue to the volume measure
     (admissions) used to measure inpatient volume resulting in a general
     measure of combined inpatient and outpatient volume.
(f)  Represents the total number of days each patient stays in the Company's
     hospitals.
(g)  Adjusted patient days is used by management and certain investors as a
     general measure of combined inpatient and outpatient volume.  Adjusted
     patient days are computed by multiplying patient days (inpatient volume) by
     the sum of gross inpatient revenue and gross outpatient revenue and then
     dividing the resulting amount by gross inpatient revenue.  The adjusted
     patient days computation "equates" outpatient revenue to the volume measure
     (patient days) used to measure inpatient volume resulting in a general
     measure of combined inpatient and outpatient volume.
(h)  Represents the average number of days an admitted patient stays in the
     Company's hospitals.  Average length of stay has declined due to the
     continuing pressures from managed care and other payers to restrict
     admissions and reduce the number of days that are covered by the payers for
     certain procedures, and by technological and pharmaceutical improvements.
(i)  Represents the average number of patients in the Company's hospital beds
     each day.
(j)  Represents the percentage of hospital available beds occupied by patients.
     Both average daily census and occupancy rate provide measures of the
     utilization of inpatient rooms. The declining occupancy rate is primarily
     attributed to the trend toward more services, that were previously
     performed in an inpatient setting, being performed on an outpatient basis
     and the decline in average length of stay per admission.

  Pro Forma Comparisons of Quarters Ended March 31, 1999 and 1998

         The following discussion compares the results of the first quarter of
1999 on a pro forma basis to the results of the first quarter of 1998 on a pro
forma basis, in each case giving effect to the assumptions set forth above the
summary table of pro forma results from continuing operations for the quarters
ended March 31, 1999 and March 31, 1998.

         On a pro forma basis, income from continuing operations before income
taxes increased to $6.8 million in the first quarter of 1999 from a loss from
continuing operations before income taxes of $0.3 million in the first quarter
of 1998. The pro forma increase was primarily due to the improved operations of
the facilities that will remain after the planned divestitures.

         On a pro forma basis, revenues increased 6.5% to $292.1 million in the
first quarter of 1999 compared to $274.4 million in the first quarter of 1998.
Inpatient admissions increased 8.8% and adjusted admissions increased 11.0% in
the first quarter of 1999 compared to the first quarter of 1998 on a pro forma
basis.  The increase in revenues, on a pro forma basis, was due primarily to
increased focus by management on the markets that met the Company's strategic
plan as the Company progressed toward the Spin-off.  That increased management
attention decreased the uncertainty in the affected markets as to the eventual
disposition of the facilities.

         On a pro forma basis, salaries and benefits, as a percentage of net
revenue, decreased to 39.7% in the first quarter of 1999 from 40.0% in the first
quarter of 1998 due to an improved ability to adjust staffing levels to patient
volumes.

         On a pro forma basis, provision for doubtful accounts, as a percentage
of net revenue, decreased to 8.0% in the first quarter of 1999 from 9.1% in the
first quarter of 1998 due to increased focus by management on the core
facilities that will remain with the Company after the planned divestitures.

         On a pro forma basis, supplies, other operating expenses, depreciation
and amortization, interest expense and minority interests in earnings of
consolidated entities remained relatively unchanged for the quarters ended March
31, 1999 compared to March 31, 1998.

LIQUIDITY AND CAPITAL RESOURCES

         Prior to the Spin-off, the Company previously relied upon Columbia/HCA
for liquidity and sources of capital to supplement any needs not met by
operations. Subsequent to the Spin-off, as an independent, publicly traded
company, the

                                      -17-
<PAGE>

                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


Company has direct access to the capital markets and the ability to enter into
its own borrowing arrangements.  At March 31, 1999, the Company had working
capital of $165.5 million.

       Cash provided by continuing operating activities was $24.5 million in the
first quarter of 1999 compared to cash used in operating activities of $12.5
million in the first quarter of 1998.  The increase was due to an increase in
accounts payable and other current liabilities, decrease in inventories and
other assets and a smaller increase in accounts receivable in 1999 than 1998.

       Cash used in investing activities decreased to $17.8 million in the first
quarter of 1999 from $21.4 million in the first quarter of 1998.  This was due
primarily due to a reduction of construction projects in the first quarter of
1999 compared to the first quarter of 1998.  The Company expects to expend
approximately $120 million ($90 million for expansion) in capital expenditures
from the date of the Spin-off through the end of 1999 and approximately $90
million ($50 million for expansion) in 2000.

       Cash used in financing activities was $6.7 million in the first quarter
of 1999 compared to cash provided by financing activities of $33.9 million in
the first quarter of 1998. This was due primarily to changes in the intercompany
balances with Columbia/HCA.

       In connection with the Spin-off, all intercompany accounts payable by the
Company to Columbia/HCA were eliminated and the Company assumed approximately
$675.0 million of debt obligations from Columbia/HCA.  The debt consists of a
$75.0 million asset sale bridge loan bearing interest at LIBOR plus 3.25% per
annum due December 31, 1999, a $65.0 million Tranche A loan bearing interest at
LIBOR plus 3.25% with principal amounts due beginning in 1999 through 2004, a
$200.0 million Tranche B loan bearing interest at LIBOR plus 4.00% with
principal amounts due beginning in 1999 through 2005, and a $325.0 million
senior subordinated note bearing interest at 11% due in 2009.  The Company also
assumed various indebtedness of Columbia/HCA related to specific hospitals in
the aggregate amount of approximately $10.0 million with interest rates
averaging 5.7% maturing over five years.  The Company also assumed a $125.0
million revolving line of credit bearing interest at LIBOR plus 3.25% due in
2004.  No amounts were outstanding under the revolving credit facility as of May
31, 1999.  The Company's bank debt is secured by a pledge of substantially all
of its assets.  The bank debt agreements require that the Company comply with
various financial ratios and tests, including a minimum net worth test, a total
funded debt to EBITDA ratio, a senior funded debt to EBITDA ratio, and a minimum
fixed charge coverage ratio, all as defined in the bank debt agreements.  The
bank debt agreements and the indenture relating to the 11% Senior Subordinated
Notes also contain covenants that, among other things, limit the ability of the
Company to incur additional indebtedness, pay dividends on, redeem or purchase
its capital stock, make investments and capital expenditures, engage in
transactions with affiliates, create certain liens, sell assets, and
consolidate, merge or transfer assets.

       As previously discussed, based upon a review of all facilities and trends
in each market, management of the Company has determined that 10 acute care
hospitals and one psychiatric hospital are not compatible with the Company's
strategic  plans.  Of the facilities to be divested, one acute care hospital was
sold during the first quarter of 1999, the proceeds of which were retained by
Columbia/HCA, and the operations of one acute care hospital were ceased.  The
Company is required to use sales proceeds on the remaining nine facilities to
retire outstanding indebtedness.

       In January 1999, the Company entered into a fifteen year lease with an
unaffiliated party for the operations of two acute care hospitals and three
ambulatory surgery centers located in Kansas City, Missouri.  The lease payments
will be approximately $16.0 million per year.  In January 2001, the lessee has
an option to purchase the facilities for approximately $130.0 million.  As of
March 31, 1999, these facilities assets had a book value of  $79.1 million.

       On June 1, 1999 the Company completed a swap of its facility in Laredo,
Texas for a facility in Victoria, Texas and $4.5 million in cash which
management expects to have no material impact on operations.

       In connection with the Spin-off, the Company will establish an ESOP,
which will purchase from the Company at fair market value approximately 9% of
the Company's common stock, 3.0 million shares. The ESOP will finance the
purchase by issuing a promissory note to the Company, which will be amortized
over 10 years. As of May 31, 1999, the purchase price and the final terms of the
note had not been determined. ESOP expense will be recognized based on the
number of shares to be released based on loan repayments during each year
multiplied by the average share price during that year. Shares outstanding for
the earnings per share calculation will be the average number of shares to be
released.

       Although the Company's indebtedness will be more substantial than was
historically the case for its predecessor entities, management expects that
operations and working capital facilities will provide sufficient liquidity for
fiscal 1999.

CONTINGENCIES

       Columbia/HCA is currently the subject of several Federal investigations
into certain of its business practices, as well as governmental investigations
by various states. Columbia/HCA is cooperating in these investigations and
understands, through written notice and other means, that it is a target in
these investigations. Given the breadth of the ongoing investigations,

                                      -18-
<PAGE>

                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


Columbia/HCA expects additional subpoenas and other investigative and
prosecutorial activity to occur in these and other jurisdictions in the future.

       Management believes that the ongoing governmental investigations and
related media coverage may have had a negative effect on Columbia/HCA's results
of operations (which includes the Company for the periods prior to the Spin-off
which are presented herein). The extent to which the Company may or may not
continue to be affected by the ongoing investigations of Columbia/HCA, the
initiation of additional investigations, if any, and the related media coverage
cannot be predicted.

       In connection with the Spin-off, Columbia/HCA has agreed to indemnify the
Company in respect of any losses which it may incur arising from the
governmental investigations described above and from stockholder actions and
other legal proceedings related to the governmental investigations which are
currently pending against Columbia/HCA.  Columbia/HCA has also agreed to
indemnify the Company in respect of any losses which it may incur as a result of
proceedings which may be commenced by government authorities or by private
parties in the future that arise from acts, practices or omissions engaged in
prior to the distribution date and related to the proceedings described above.
Columbia/HCA has also agreed that, in the event that any hospital owned by the
Company as of the date of the Spin-off is permanently excluded from
participation in the Medicare and Medicaid programs as a result of the
proceedings described above, then Columbia/HCA will make a cash payment to the
Company in an amount (if positive) equal to five times the excluded hospital's
1998 income from continuing operations before depreciation and amortization,
interest expense, management fees, impairment of long-lived assets, minority
interests and income taxes less the net proceeds of the sale or other
disposition of the excluded hospital.  The Company has agreed that, in
connection with the pending governmental investigations of Columbia/HCA, it will
participate with Columbia/HCA in negotiating one or more compliance agreements
setting forth each of their agreements to comply with applicable laws and
regulations.  If any such indemnified matters were successfully asserted against
the Company, or any of its facilities, and Columbia/HCA failed to meet its
indemnification obligations, then such losses could have a material adverse
effect on the business, financial position, results of operations or prospects
of the Company.  Columbia/HCA will not indemnify the Company for losses relating
to any acts, practices and omissions engaged in by the Company after the Spin-
off date, whether or not the Company is indemnified for similar acts, practices
and omissions occurring prior to the Spin-off date.

       The Company is subject to claims and suits arising in the ordinary course
of business, including claims for personal injuries or wrongful restriction of,
or interference with, physicians' staff privileges. In certain of these actions
the claimants may seek punitive damages against the Company, which are usually
not covered by insurance. It is management's opinion that the ultimate
resolution of these pending claims and legal proceedings will not have a
material adverse effect on the Company's results of operations or financial
position.

IMPACT OF YEAR 2000 COMPUTER ISSUES

       The Year 2000 problem is the result of two potential malfunctions that
could have an impact on Columbia/HCA's systems, including systems and equipment
on which the Company relies.  The first problem arises due to computers being
programmed to use two rather than four digits to define the applicable year.
The second problem arises in embedded chips, where microchips and
microcontrollers have been designed using two rather than four digits to define
the applicable year.  Certain of the Company's computer programs, building
infrastructure components (e.g., alarm systems and HVAC systems) and medical
devices that are date sensitive, may recognize a date using "00" as the year
1900 rather than the year 2000.  If uncorrected, the problem could result in
computer system and program failures that could result in a disruption of the
Company's business operations or equipment and medical device malfunctions that
could affect patient diagnosis and treatment.

       Columbia/HCA and the Company entered into a computer and data processing
services agreement (see NOTE 9 to the Condensed Combined Financial Statements)
with the Company.  Pursuant to this agreement, Columbia/HCA will provide
computer installation, support, training, maintenance, data processing and other
related services to the Company.  Columbia/HCA does not warrant that the
software and hardware used by Columbia/HCA in providing services to the Company
will be Year 2000 ready, although Columbia/HCA is currently making efforts in a
professional, timely, and workmanlike manner that it deems reasonable to address
Year 2000 issues with respect to the software licensed to the Company under the
computer and data processing services agreements.  In connection with its
participation in Columbia/HCA's Year 2000 project, the Company has made and will
continue to make certain expenditures related to software systems and
applications not obtained from Columbia/HCA and non-information technology
systems (e.g., vendor products, medical equipment and other related equipment
with embedded chips) to ensure that they are Year 2000 ready.

       Pursuant to the computer and data processing services agreement, the
Company relies upon Columbia/HCA to support virtually all of its computer and
information technology services. Columbia/HCA and the Company also are
continuing an ongoing program to inspect medical equipment at the Company
facilities for Year 2000 readiness. The Company is dependent upon Columbia/HCA
in substantially all respects for the Year 2000 readiness of its information
technology and non-information technology systems and for contingency planning
in respect of Year 2000-related risks. Any failure by Columbia/HCA to adequately
address such matters could have a material adverse effect on the business,
financial condition, results of operations or prospects of the
                                      -19-
<PAGE>

                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


Company.

       Columbia/HCA is utilizing both internal and external resources to manage
and implement its Year 2000 program.  With the assistance of external resources,
Columbia/HCA has undertaken development of contingency plans in the event that
its Year 2000 efforts, or the Year 2000 efforts of third-parties upon which
Columbia/HCA and the Company rely, are not accurately or timely completed.  The
Company management consults regularly with Columbia/HCA personnel for
development of such contingency plans.  Columbia/HCA has developed a contingency
planning methodology and will implement contingency plans throughout 1999.

       With respect to the information technology ("IT") systems portions of the
Columbia/HCA Year 2000 project, which address the inventory, assessment,
remediation, testing and implementation of internally developed software,
Columbia/HCA has identified various software applications that are being
addressed on separate time lines.  Columbia/HCA has begun remediating these
software applications and is testing the software applications where remediation
has been completed.  Columbia/HCA has also completed the assessment of mission
critical third party software (i.e., that software which is essential for day-
to-day operations) and has developed testing and implementation plans with
separate time lines.  Columbia/HCA has completed and placed into production 95%
of software applications and anticipates completing, in all material respects,
remediation, testing and implementation for internally developed and mission
critical third party software by June 30, 1999.  Remediation, testing and
implementation of various software applications will be complete in the fourth
quarter of 1999.  These exceptions to the June 1999 IT systems goals should not
have a material effect on Columbia/HCA's readiness and accordingly the
Company's.  The IT systems portion of the Columbia/HCA Year 2000 project is
currently on schedule in all material respects.

       With respect to the IT infrastructure portion of the Columbia/HCA Year
2000 project, Columbia/HCA has undertaken a program to inventory, assess and
correct, replace or otherwise address impacted, vendor-supplied products
(hardware, systems software, business software, and telecommunication
equipment). Columbia/HCA has implemented a program to contact vendors, analyze
information provided, and to remediate, replace or otherwise address IT products
that pose a material Year 2000 impact. Columbia/HCA anticipates completion, in
all material respects, of the IT infrastructure portion of its program by
September 30, 1999 (revised from an expected completion date of June 30, 1999).
With respect to such revised date, the IT infrastructure portion of the
Columbia/HCA Year 2000 project is currently on schedule in all material
respects.

       Columbia/HCA presently believes that with modifications to existing
software or the installation of upgraded software under the IT infrastructure
portion, the Year 2000 will not pose material operational problems for the its
computer systems. However, if such modifications or upgrades are not
accomplished in a timely manner, Year 2000 related failures may present a
material adverse impact on the operations of the Company.

       With respect to the non-IT infrastructure portion of Columbia/HCA's Year
2000 project, the Columbia/HCA has undertaken a program to inventory, assess and
correct, replace or otherwise address impacted vendor products, medical
equipment and other related equipment with embedded chips. Columbia/HCA has
implemented a program to contact vendors, analyze information provided, and to
remediate, replace or otherwise address devices or equipment that pose a
material Year 2000 impact. Columbia/HCA anticipates completion, in all material
respects, of the non-IT infrastructure portion of its program by September 30,
1999 (revised from an expected completion date of June 30, 1999). With respect
to such revised date, the non-IT infrastructure portion of Columbia/HCA Year
2000 project is currently on schedule in all material respects.

       Columbia/HCA is prioritizing its non-IT infrastructure efforts by
focusing on equipment and medical devices that will have a direct impact on
patient care. Columbia/HCA is directing substantial efforts to repair, replace,
upgrade or otherwise address this equipment and these medical devices in order
to minimize risk to patient safety and health. Columbia/HCA is relying on
information that is being provided to it by equipment and medical device
manufacturers regarding the Year 2000 status of their products. While
Columbia/HCA is attempting to evaluate information provided by its previous and
current vendors, there can be no assurance that in all instances accurate
information is being provided. Columbia/HCA also cannot in all instances
guarantee that the repair, replacement or upgrade of all non-IT infrastructure
systems will occur on a timely basis or that such repairs, replacements or
upgrades will avoid all Year 2000 problems.

       Columbia/HCA has initiated communications with the Company's major third
party payers and intermediaries, including government payers and intermediaries.
The Company relies on these entities for accurate and timely reimbursement of
claims, often through the use of electronic data interfaces. Columbia/HCA has
not received assurances that these interfaces will be timely converted. Testing
with payers and intermediaries will not be completed by June 30, 1999 because
the payers and intermediaries are not ready to test with Columbia/HCA systems.
Failure of these third party systems could have a material adverse affect on the
Company's cash flow and results of operations.

       Columbia/HCA also has initiated communications with the Company's mission
critical suppliers and vendors (i.e., those suppliers and vendors whose products
and services are essential for day-to-day operations) to verify their ability to
continue to deliver goods and services through the Year 2000. Columbia/HCA has
not received assurances from all mission critical suppliers and vendors that
they will be able to continue to deliver goods and services through the Year
2000, but Columbia/HCA is continuing its efforts to obtain such assurances.
Failure of these third parties could have a material impact on

                                      -20-
<PAGE>

                ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


operations and/or the ability to provide health care services.

       With the assistance of external resources, Columbia/HCA has undertaken
the development of contingency plans in the event that its Year 2000 efforts, or
the efforts of third parties upon which the Company relies, are not accurately
or timely completed. Columbia/HCA has developed a contingency planning
methodology and will implement contingency plans throughout 1999.

       While Columbia/HCA is developing contingency plans to address possible
failure scenarios, the Company recognizes that there are "worst case" scenarios
which may develop and are largely outside Columbia/HCA's control. The Company
recognizes the risks associated with extended infrastructure (power, water,
telecommunications) failure, the interruption of insurance payments to the
Company and the failure of equipment or software that could impact patient
safety or health despite the assurances of third parties. Columbia/HCA is
addressing these and other failure scenarios in its contingency planning effort
and is engaging third parties in discussions regarding how to manage common
failure scenarios, but the Company cannot currently estimate the likelihood or
the potential cost of such failures. Currently, the Company does not believe
that any reasonably likely worst case scenario will have a material impact on
the Company's revenues or operations. Those reasonably likely worst case
scenarios include continued expenditures for remediation, continued expenditures
for replacement or upgrade of equipment, continued efforts regarding contingency
planning, increased staffing for the periods immediately preceding and after
January 1, 2000, and possible payment delays from the Company's payers.

       The Year 2000 project costs incurred by Columbia/HCA will have an impact
on the computer and data processing services agreement with the Company. The
Company is not currently able to reasonably estimate the ultimate cost to be
incurred by it for the assessment, remediation, upgrade, replacement and testing
of its impact non-information technology systems. The majority of the costs
(except the cost of new equipment) related to the Year 2000 project will be
expensed as incurred and are expected to be funded through operating cash flows.

       The estimated completion dates for the Year 2000 modifications are based
on Columbia/HCA's management's best estimates, which were derived utilizing
numerous assumptions of future events, including the continued availability of
certain resources, third party modification plans and other factors. However,
there can be no guarantees that these estimates will be achieved and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area and the ability to
locate and correct all relevant computer codes and all medical equipment.

HEALTH CARE REFORM

       In recent years, an increasing number of legislative proposals have been
introduced or proposed to Congress and in some state legislatures that would
significantly affect health care systems in the Company's markets.  The cost of
certain proposals would be funded, in significant part, by reduction in payments
by government programs, including Medicare and Medicaid, to health care
providers (similar to the reductions incurred as part of the Balanced Budget Act
as previously discussed).  While the Company is unable to predict which, if any,
proposals for health care reform will be adopted, there can be no assurance that
proposals adverse to the business of the Company will not be adopted.

                                      -21-
<PAGE>

                          Part II:  Other Information


Item 5:  Other Information.

(a) Operating Results Summary for 1998

       The following is a summary of historical results from operations for
each period presented (dollars in millions, except per share amounts and
ratios):

<TABLE>
<CAPTION>
                                                                                                              For the year
                                                                For the quarters ending                          ended
                                             -------------------------------------------------------------   --------------
                                              March 31,      June 30,      September 30,     December 31,     December 31,
                                                 1998          1998             1998             1998             1998
                                             -----------   ------------   ---------------   --------------   --------------
<S>                                          <C>            <C>           <C>               <C>              <C>
Revenues..................................    $    414.0     $    399.8        $    389.6       $    385.3       $  1,588.7

Salaries and benefits.....................         178.1          174.3             170.2            177.9            700.5
Supplies..................................          64.0           59.0              60.0             58.6            241.6
Other operating expenses..................          87.0           91.9              86.2             94.1            359.2
Provision for doubtful accounts...........          36.9           35.7              31.2             34.6            138.4
Depreciation and amortization.............          26.2           26.6              27.5             29.3            109.6
Interest expense allocated from
  Columbia/HCA............................          16.1           17.3              17.0             18.5             68.9
Management fees allocated from
  Columbia/HCA............................           7.6            7.4               7.2              7.1             29.3
Impairment of long-lived assets...........            --             --              19.3             35.8             55.1
                                              ----------     ----------        ----------       ----------       ----------
                                                   415.9          412.2             418.6            455.9          1,702.6
                                              ----------     ----------        ----------       ----------       ----------

Loss from continuing operations
  before minority interests and
  income tax benefit......................          (1.9)         (12.4)            (29.0)           (70.6)          (113.9)
Minority interests in earnings of
  consolidated entities...................          (4.0)          (2.5)             (1.9)            (2.6)           (11.0)
                                              ----------     ----------        ----------       ----------       ----------
Loss from continuing operations
  before income tax benefit...............          (5.9)         (14.9)            (30.9)           (73.2)          (124.9)
Income tax benefit........................           1.8            4.4              10.1             23.1             39.4
                                              ----------     ----------        ----------       ----------       ----------
Loss from continuing operations...........    $     (4.1)    $    (10.5)       $    (20.8)      $    (50.1)      $    (85.5)
                                              ==========     ==========        ==========       ==========       ==========

Loss per common share from
  continuing operations...................    $    (0.14)    $    (0.35)       $    (0.70)      $    (1.68)      $    (2.86)

EBITDA (a)................................    $     48.0     $     38.9        $     42.0       $     20.1       $    149.0
Number of hospitals at end of period......            39             39                39               39               39
Licensed beds at end of period............         5,928          5,907             5,902            5,902            5,902
Available beds at end of period...........         5,242          5,192             5,202            5,199            5,199
Admissions................................        45,479         41,822            40,954           41,904          170,159
Adjusted admissions.......................        72.498         69,307            68,456           69,526          277,712
Patient days..............................       229,410        202,705           195,869          198,209          826,193
Adjusted patient days.....................       365,702        334,611           327,400          328,861        1,348,409
Average length of stay....................           5.0            4.9               4.8              4.7              4.9
Average daily census......................         2,549          2,252             2,176            2,202            2,295
Occupancy rate............................          48.6%          43.4%             41.8%            42.4%            44.1%
Net revenue per adjusted patient day......    $    1,132     $    1,195        $    1,190       $    1,172       $    1,178
Gross inpatient revenue...................    $    564.9     $    506.2        $    487.1       $    502.0       $  2,060.2
Gross outpatient revenue..................    $    314.8     $    329.4        $    327.1       $    330.9       $  1,302.2
Gross outpatient revenue percentage.......          35.8%          39.4%             40.2%            39.7%            38.7%
Net inpatient revenue.....................    $    224.5     $    195.0        $    182.8       $    185.8       $    788.1
Net outpatient revenue....................    $    183.3     $    191.7        $    191.3       $    189.7       $    756.0
Net outpatient revenue percentage.........          44.9%          49.6%             51.1%            50.5%            49.0%
</TABLE>

(a)  EBITDA is defined as income from continuing operations before depreciation
     and amortization, interest expense, management fees, impairment of long-
     lived assets, minority interests in earnings of consolidated entities and
     income tax benefit.  EBITDA is commonly used as an analytical indicator
     within the health care industry, and also serves as a measure of leverage
     capacity and debt service ability.  EBITDA should not be considered as a
     measure of financial performance under generally accepted accounting
     principles, and the items excluded from EBITDA are significant components
     in understanding and assessing financial performance.  EBITDA should not be
     considered in isolation or as an alternative to net income, cash flows
     generated by operating, investing or financing activities or other
     financial statement data presented in the combined financial statements as
     an indicator of financial performance or liquidity. Because EBITDA is not a
     measurement determined in accordance with generally accepted accounting
     principles and is thus susceptible to varying calculations, EBITDA as
     presented may not be comparable to other similarly titled measures of other
     companies.


                                      -22-
<PAGE>

                          Part II:  Other Information
                                  (Continued)


Item 5:  Other Information (Continued)

(b) Pro Forma Operating Results Summary for 1998

          The following is a summary of pro forma results from continuing
operations for each period presented. The pro forma operating results from
continuing operations reflect the following adjustments at the beginning of
1998:

(1)  To reflect the following completed divestiture and cessation of operations
     and planned divestitures in 1999:
     (a)  elimination of the results of operations of one acute care hospital
          which was sold during the first quarter of 1999 (the proceeds of such
          sale were retained by Columbia/HCA)
     (b)  elimination of the results of operations of eight acute care hospitals
          and one psychiatric hospital for which the Company's management
          believes dispositions over the next twelve months are probable; and
     (c)  elimination of the results of operations of one acute care hospital
          which the Company ceased to operate on April 1, 1999.
(2)  To reflect the long term lease payment of $16.0 million per year and
     elimination of operations of two acute care hospitals and three ambulatory
     surgery centers in Kansas City, Missouri in January 1999.
(3)  To adjust the estimated, incremental general and administrative costs that
     would have been incurred if the Company had managed comparable general and
     administrative functions and to eliminate the management fee allocated from
     Columbia/HCA.
(4)  To adjust historical retirement plan expenses recorded as a component of
     salaries and wages and record the estimated annual Triad Hospitals, Inc.
     Retirement Savings Plan (the "ESOP") expense.  The Company's ESOP will be
     established in connection with the Spin-off and the ESOP will purchase
     newly issued shares of the Company's common stock equal to 9.0% of the
     outstanding shares of the Company.  The ESOP shares will be released from a
     suspense account and allocated to the Company's participating employees
     over a 10-year period.  The non-cash ESOP expense will be recognized as the
     shares are released and allocated to the participants and will be based
     upon the fair value of the shares released.
(5)  To adjust interest expense to eliminate of all intercompany amounts payable
     to Columbia/HCA and the assumption of certain indebtedness from
     Columbia/HCA in the aggregate amount of approximately $675.0 million at an
     assumed average interest rate of 9.83% amortization estimated loan issuance
     costs.
(6)  To adjust provision for income taxes for the estimated impact of the pro
     forma adjustments.
(7)  Pro forma income (loss) per share was computed using the 29.9 million
     shares issued to the stockholders of Columbia/HCA on the date of the Spin-
     off.

                                      -23-
<PAGE>

                          Part II:  Other Information
                                  (Continued)

Pro Forma Operating Results Summary (continued)

<TABLE>
<CAPTION>
                                                                                                       For the year
                                                           For the quarters ending                        ending
                                          ---------------------------------------------------------   ---------------
                                           March 31,     June 30,    September 30,    December 31,     December 31,
                                             1998          1998          1998             1998             1998
                                          -----------   ----------  ---------------  --------------   --------------
<S>                                       <C>           <C>         <C>              <C>              <C>
Revenues................................. $     274.4   $    269.3    $      267.8    $     266.7      $   1,078.2

Salaries and benefits....................       109.7        109.9           107.5          115.6            442.7
Supplies.................................        39.6         37.3            40.2           39.9            157.0
Other operating expenses.................        58.6         62.9            58.6           65.6            245.7
Provision for doubtful accounts..........        25.0         23.9            23.4           24.1             96.4
Depreciation and amortization............        19.7         19.8            20.0           22.6             82.1
Interest expense.........................        17.4         17.4            17.4           17.4             69.6
ESOP expense.............................         1.1          1.1             1.1            1.1              4.4
                                          -----------   ----------    ------------    -----------      -----------
                                                271.1        272.3           268.2          286.3          1,097.9
                                          -----------   ----------    ------------    -----------      -----------

Income from continuing operations
  before minority interests and
  income tax benefit.....................         3.3         (3.0)           (0.4)         (19.6)           (19.7)
Minority interests in earnings of
  consolidated entities..................        (3.6)        (2.2)           (1.8)          (2.5)           (10.1)
                                          -----------   ----------    ------------    -----------      -----------
Income (loss) from continuing
  operations before income tax
  benefit................................        (0.3)        (5.2)           (2.2)         (22.1)           (29.8)
(Provision) benefit income taxes.........        (0.6)         1.3             0.1            8.0              8.8
                                          -----------   ----------    ------------    -----------      -----------
Income (loss) from continuing
  operations............................. $      (0.9)  $     (3.9)   $       (2.1)   $     (14.1)     $     (21.0)
                                          ===========   ==========    ============    ===========      ===========


Loss per common share from
  continuing operations.................. $     (0.03)  $    (0.13)   $      (0.07)   $     (0.47)     $     (0.70)

Pro forma EBITDA (a)..................... $      41.5   $     35.3    $       38.1    $      21.5      $     136.4
Number of hospitals......................          29           29              29             29               29
Licensed beds at end of period...........       3,527        3,511           3,506          3,506            3,506
Available beds at end of period..........       2,906        2,856           2,866          2,863            2,863
Admissions...............................      30,026       27,807          27,666         28,595          114,094
Adjusted admissions......................      49,157       48,462          48,509         49,410          195,538
Patient days.............................     144,464      127,807         123,436        127,587          523,294
Adjusted patient days....................     236,510      222,740         216,429        220,463          896,142
Average length of stay...................         4.8          4.6             4.5            4.5              4.6
Average daily census.....................       1,605        1,420           1,372          1,418            1,454
Occupancy rate...........................        55.2%        49.7%           47.9%          49.5%            50.8%
Net revenue per adjusted patient day..... $     1,160   $    1,209    $      1,237    $     1,210      $     1,203
Gross inpatient revenue.................. $     333.2   $    301.3    $      296.8    $     313.9      $   1,245.2
Gross outpatient revenue................. $     212.3   $    223.8    $      223.6    $     228.5      $     888.2
Gross outpatient revenue percentage......        38.9%        42.6%           43.0%          42.1%            41.6%
Net inpatient revenue.................... $     131.2   $    112.7    $      111.9    $     119.3      $     475.1
Net outpatient revenue................... $     134.2   $    141.0    $      139.4    $     137.8      $     552.4
Net outpatient revenue percentage........        50.6%        55.6%           55.5%          53.6%            53.8%
</TABLE>

(a)  Pro forma EBITDA is EBITDA, as defined previously, adjusted (i) as if the
     Spin-off and the divestitures of certain facilities that the Company
     intends to divest or cease to operate during 1999 had occurred at the
     beginning of 1998, (ii) as if the long term lease of the Kansas City
     facilities in January 1999 had occurred at the beginning of each period,
     (iii) to exclude non-cash ESOP expense and (iv) to include the Company's
     management's estimated corporate overhead costs of $22.4 million on an
     annual basis that are recorded in the Pro Forma Operating Results Summary
     to replace the management fees allocated by Columbia/HCA. Pro forma EBITDA
     is commonly used as an analytical indicator of leverage capacity and debt
     service ability. Pro forma EBITDA should not be considered as a measure of
     financial performance under generally accepted accounting principles, and
     the items excluded from pro forma EBITDA are significant components in
     understanding and assessing financial performance. Pro forma EBITDA should
     not be considered in isolation or as an alternative to net income, cash
     flows generated by operating, investing or financing activities or other
     financial statement data presented in the combined financial statements as
     an indicator of financial performance or liquidity. Because pro forma
     EBITDA is not a measurement determined in accordance with generally
     accepted accounting principles and is thus susceptible to varying
     calculations, pro forma EBITDA as presented may not be comparable to other
     similarly titled measures of the companies.


                                      -24-
<PAGE>

                          Part II:  Other Information
                                  (Continued)


Item 6:  Exhibits and Reports on Form 8-K.

     (a)  List of Exhibits:

             Exhibit Number                  Description
             --------------                  -----------

                 2.1          Distribution Agreement dated May 11, 1999 by and
                              among Columbia/HCA Healthcare Corporation,
                              LifePoint Hospitals, Inc. and the Company.

                 3.1          Certificate of Incorporation of the Company.

                 3.2          By-Laws of the Company.

                 4.1          Rights Agreement dated as of May 11, 1999 between
                              the Company and National City Bank as Rights
                              Agent.

                 4.2(a)       11% Senior Subordinated Notes due 2009 Indenture
                              dated as of May 11, 1999 by and between
                              Healthtrust, Inc. - The Hospital Company and
                              Citibank N.A. as Trustee.

                 4.2(b)       Form of Senior Subordinated Note due 2009.

                 4.3(a)       Senior Subordinated Notes due 2009 Purchase
                              Agreement dated April 30, 1999 by and among
                              Healthtrust, Inc. - The Hospital Company, Goldman,
                              Sachs & Co., NationsBanc Montgomery Securities
                              LLC, Chase Securities Inc., Salomon Smith Barney
                              Inc., SG Cowen Securities Corporation and the
                              Purchasers.

                 4.3(b)       Assumption Agreement dated May 11, 1999 by and
                              between Healthtrust, Inc. - The Hospital Company
                              and the Company.

                 4.3(c)       Assumption Agreement dated May 11, 1999 by and
                              between the Company and Triad Hospitals Holdings,
                              Inc.

                 4.3(d)       Guarantor Assumption Agreement dated May 11, 1999.

                 4.4(a)       Exchange and Registration Rights Agreement dated
                              May 11, 1999 by and among Healthtrust, Inc. - The
                              Hospital Company, Goldman, Sachs & Co.,
                              NationsBanc Montgomery Securities LLC, Chase
                              Securities Inc., Salomon Smith Barney Inc. and SG
                              Cowen Securities Corporation.

                 4.4(b)       Assumption Agreement dated May 11, 1999 by and
                              between Healthtrust, Inc. - The Hospital Company
                              and the Company.

                 4.4(c)       Assumption Agreement dated May 11, 1999 by and
                              between the Company and Triad Hospitals Holdings,
                              Inc.

                 4.4(d)       Guarantor Assumption Agreement dated May 11, 1999.

                 10.1         Tax Sharing and Indemnification Agreement dated
                              May 11, 1999 by and among Columbia/HCA Healthcare
                              Corporation, LifePoint Hospitals, Inc. and the
                              Company.

                 10.2         Benefits and Employment Matters Agreement dated
                              May 11, 1999 by and among Columbia/HCA Healthcare
                              Corporation, LifePoint Hospitals, Inc. and the
                              Company.

                 10.3         Insurance Allocation and Administration Agreement
                              dated May 11, 1999 by and among

                                      -25-
<PAGE>

                              Columbia/HCA Healthcare Corporation, LifePoint
                              Hospitals, Inc. and the Company.

                 10.4         Transitional Services Agreement dated May 11, 1999
                              by and between Columbia/HCA Healthcare Corporation
                              and the Company.

                 10.5         Computer and Data Processing Services Agreement
                              dated May 11, 1999 by and between Columbia
                              Information Systems, Inc. and the Company.

                 10.6         Agreement to Share Telecommunications Services
                              dated May 11, 1999 by and between Columbia
                              Information Systems, Inc. and the Company.

                 10.7         Year 2000 Professional Services Agreement dated
                              May 11, 1999 by and between CHCA Management
                              Services, L.P. and the Company.

                 10.8         Sub-Lease Agreement dated May 11, 1999 by and
                              between Med-Point LLC and the Company.

                 10.9         Sub-Lease Agreement dated May 11, 1999 by and
                              between Healthtrust, Inc. - The Hospital Company
                              and the Company.

                 10.10*       Triad Hospitals, Inc. 1999 Long-Term Incentive
                              Plan.

                 10.11*       Triad Hospitals, Inc. Executive Stock Purchase
                              Plan.

                 10.12*       Triad Hospitals, Inc. Management Stock Purchase
                              Plan.

                 10.13*       Triad Hospitals, Inc. Outside Directors Stock and
                              Incentive Compensation Plan.

                 10.14        Credit Agreement, dated as of May 11, 1999 among
                              Healthtrust, Inc. - The Hospital Company and
                              Certain Subsidiaries from time to time party
                              thereto, as Borrower, the Several Lenders from
                              time to time parties thereto, Citicorp USA, Inc.
                              and The Chase Manhattan Bank as Syndication
                              Agents, Credit Lyonnais New York Branch and
                              Societe Generale as Co-Agents, Bank of America
                              National Trust and Savings Association as
                              Administrative Agent and NationsBanc Montgomery
                              Securities, LLC as Lead Arranger and Sole Book
                              Manager.

                 10.15        Assumption Agreement dated as of May 11, 1999 by
                              and between Bank of America National Trust and
                              Savings Association and the Company.

                 10.16        Assumption Agreement dated as of May 11, 1999 by
                              and between Bank of America National Trust and
                              Savings Association and Triad Hospitals Holdings,
                              Inc.

                 27           Financial Data Schedule. (Included in electronic
                              format only.)

                 * Compensatory plan or arrangement.

     (b)  Reports on Form 8-K filed during the quarter ended March 31, 1999:

          None

                                      -26-
<PAGE>

                                  SIGNATURES

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

                                        Triad Hospitals, Inc.

Date:  June 11, 1999                  By:  /s/ Burke W. Whitman
                                           ------------------------
                                           Burke W. Whitman
                                           Executive Vice President,
                                           Chief Financial Officer and Treasurer
                                           (Principal Financial Officer)

                                      -27-
<PAGE>


                               INDEX TO EXHIBITS


             Exhibit Number                  Description
             --------------                  -----------

                 2.1          Distribution Agreement dated May 11, 1999 by and
                              among Columbia/HCA Healthcare Corporation,
                              LifePoint Hospitals, Inc. and the Company.

                 3.1          Certificate of Incorporation of the Company.

                 3.2          By-Laws of the Company.

                 4.1          Rights Agreement dated as of May 11, 1999 between
                              the Company and National City Bank as Rights
                              Agent.

                 4.2(a)       11% Senior Subordinated Notes due 2009 Indenture
                              dated as of May 11, 1999 by and between
                              Healthtrust, Inc. - The Hospital Company and
                              Citibank N.A. as Trustee.

                 4.2(b)       Form of Senior Subordinated Note due 2009.

                 4.3(a)       Senior Subordinated Notes due 2009 Purchase
                              Agreement dated April 30, 1999 by and among
                              Healthtrust, Inc. - The Hospital Company, Goldman,
                              Sachs & Co., NationsBanc Montgomery Securities
                              LLC, Chase Securities Inc., Salomon Smith Barney
                              Inc., SG Cowen Securities Corporation and the
                              Purchasers.

                 4.3(b)       Assumption Agreement dated May 11, 1999 by and
                              between Healthtrust, Inc. - The Hospital Company
                              and the Company.

                 4.3(c)       Assumption Agreement dated May 11, 1999 by and
                              between the Company and Triad Hospitals Holdings,
                              Inc.

                 4.3(d)       Guarantor Assumption Agreement dated May 11, 1999.

                 4.4(a)       Exchange and Registration Rights Agreement dated
                              May 11, 1999 by and among Healthtrust, Inc. - The
                              Hospital Company, Goldman, Sachs & Co.,
                              NationsBanc Montgomery Securities LLC, Chase
                              Securities Inc., Salomon Smith Barney Inc. and SG
                              Cowen Securities Corporation.

                 4.4(b)       Assumption Agreement dated May 11, 1999 by and
                              between Healthtrust, Inc. - The Hospital Company
                              and the Company.

                 4.4(c)       Assumption Agreement dated May 11, 1999 by and
                              between the Company and Triad Hospitals Holdings,
                              Inc.

                 4.4(d)       Guarantor Assumption Agreement dated May 11, 1999.

                 10.1         Tax Sharing and Indemnification Agreement dated
                              May 11, 1999 by and among Columbia/HCA Healthcare
                              Corporation, LifePoint Hospitals, Inc. and the
                              Company.

                 10.2         Benefits and Employment Matters Agreement dated
                              May 11, 1999 by and among Columbia/HCA Healthcare
                              Corporation, LifePoint Hospitals, Inc. and the
                              Company.

                 10.3         Insurance Allocation and Administration Agreement
                              dated May 11, 1999 by and among

                                      -28-

<PAGE>


                              Columbia/HCA Healthcare Corporation, LifePoint
                              Hospitals, Inc. and the Company.

                 10.4         Transitional Services Agreement dated May 11, 1999
                              by and between Columbia/HCA Healthcare Corporation
                              and the Company.

                 10.5         Computer and Data Processing Services Agreement
                              dated May 11, 1999 by and between Columbia
                              Information Systems, Inc. and the Company.

                 10.6         Agreement to Share Telecommunications Services
                              dated May 11, 1999 by and between Columbia
                              Information Systems, Inc. and the Company.

                 10.7         Year 2000 Professional Services Agreement dated
                              May 11, 1999 by and between CHCA Management
                              Services, L.P. and the Company.

                 10.8         Sub-Lease Agreement dated May 11, 1999 by and
                              between Med-Point LLC and the Company.

                 10.9         Sub-Lease Agreement dated May 11, 1999 by and
                              between Healthtrust, Inc. - The Hospital Company
                              and the Company.

                 10.10*       Triad Hospitals, Inc. 1999 Long-Term Incentive
                              Plan.

                 10.11*       Triad Hospitals, Inc. Executive Stock Purchase
                              Plan.

                 10.12*       Triad Hospitals, Inc. Management Stock Purchase
                              Plan.

                 10.13*       Triad Hospitals, Inc. Outside Directors Stock and
                              Incentive Compensation Plan.

                 10.14        Credit Agreement, dated as of May 11, 1999 among
                              Healthtrust, Inc. - The Hospital Company and
                              Certain Subsidiaries from time to time party
                              thereto, as Borrower, the Several Lenders from
                              time to time parties thereto, Citicorp USA, Inc.
                              and The Chase Manhattan Bank as Syndication
                              Agents, Credit Lyonnais New York Branch and
                              Societe Generale as Co-Agents, Bank of America
                              National Trust and Savings Association as
                              Administrative Agent and NationsBanc Montgomery
                              Securities, LLC as Lead Arranger and Sole Book
                              Manager.

                 10.15        Assumption Agreement dated as of May 11, 1999 by
                              and between Bank of America National Trust and
                              Savings Association and the Company.

                 10.16        Assumption Agreement dated as of May 11, 1999 by
                              and between Bank of America National Trust and
                              Savings Association and Triad Hospitals Holdings,
                              Inc.

                 27           Financial Data Schedule. (Included in electronic
                              format only.)

                 * Compensatory plan or arrangement.


                                      -29-