##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
  For the Fiscal Year Ended December 31,
    2009
  Commission file
    No. 333-144337
 UNITED SURGICAL PARTNERS
    INTERNATIONAL, INC.
 (Exact name of Registrant as
    specified in its charter)
  Delaware(State of
    Incorporation)

75-2749762(I.R.S. Employer
    Identification No.)15305 Dallas Parkway, Suite 1600
    Addison, Texas(Address of principal
    executive offices)

75001(Zip
    Code)   (972) 713-3500
 (Registrants telephone number, including area code)
  Securities Registered Pursuant to Section 12(b) of the
    Act:
 None
  Securities Registered Pursuant to Section 12(g) of the
    Act:
 None
  o þ
  þ o
  o þ
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated filer o

Accelerated filer o

Non-accelerated filerþ

Smaller reporting company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      Documents Incorporated by Reference




---



##### 





UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    2009 ANNUAL REPORT ON
    FORM 10-K
  TABLE OF CONTENTS
  PART IItem 1.

Business


4Item 1A.

Risk Factors


27Item 1B.

Unresolved Staff Comments


39Item 2.

Properties


39Item 3.

Legal Proceedings


39Item 4.

Submission of Matters to a Vote of Security
    Holders


39PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


40Item 6.

Selected Financial Data


40Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


42Item 7A.

Quantitative and Qualitative Disclosures about
    Market Risk


74Item 8.

Financial Statements and Supplementary Data


74Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


75Item 9A.

Controls and Procedures


75Item 9B.

Other Information


76PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


77Item 11.

Executive Compensation


79Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


88Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


90Item 14.

Principal Accounting Fees and Services


92PART IVItem 15

Exhibits, Financial Statement Schedules


93EX-10.1EX-10.3EX-21.1EX-24.1EX-24.2EX-24.3EX-24.4EX-24.5EX-24.6EX-24.7EX-24.8EX-24.9EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



FORWARD
    LOOKING STATEMENTS
  Form 10-K, Form 10-K.
 3




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##### Table of Contents



PART I  Item 1.
    Business  General
  not-for-profit
    not-for-profit not-for-profit
    The
    Merger Transaction
   4




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##### Table of Contents



Form 10-K, period-to-period
  Available
    Information
  1-800-SEC-0330 http://www.sec.gov. http://www.unitedsurgical.com Form 10-K, Form 10-Q, Form 8-K Form 10-K.
  Industry
    Background
    United
    States
     5




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##### Table of Contents



not-for-profit not-for-profit not-for-profit
  United
    Kingdom
    Our
    Business Strategy
    
    attract and retain top quality surgeons and other physicians;
    expand our presence in existing markets;
    pursue strategic relationships with
    not-for-profit
    healthcare systems;
    expand selectively in new markets; and
    enhance operating efficiencies.  Attract
    and retain top quality surgeons and other
    physicians
    Pursue
    strategic relationships with
    not-for-profit
    healthcare systems
  not-for-profit not-for-profit
 6




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##### Table of Contents



not-for-profit
  Expand
    our presence in existing markets
  not-for-profit
  Expand
    selectively in new markets
  not-for-profit
    
    the potential to achieve strong increases in revenues and cash
    flows;
    whether the physicians, healthcare systems and payors in the
    market are receptive to surgery centers
    and/or
    surgical hospitals;
    the demographics of the market;
    the number of surgical facilities in the market;
    the number and nature of outpatient surgical procedures
    performed in the market;
    the case mix of the facilities to be acquired or developed;
    whether the facility is or will be well-positioned to negotiate
    agreements with insurers and other payors; and
    licensing and other regulatory considerations.    Enhance
    operating efficiencies
   7




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##### Table of Contents



Operations
  Operations
    in the United States
  not-for-profit
  day-to-day
     8




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##### Table of Contents



day-to-day
    Strategic
    Relationships
  not-for-profit not-for-profit
    not-for-profit not-for-profit
  Operations
    in the United Kingdom
  on-site on-site
 9




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##### Table of Contents



on-site
    Case
    Mix
    Specialty

U.S.

U.K.Orthopedic


21
%


25
%Pain management


19



2Gynecology


3



6
(1)General surgery


5



14Ear, nose and throat


8



3Gastrointestinal


18



2Cosmetic surgery


3



16Ophthalmology


11



2Other


12



30Total


100
%


100
%     (1)
    
    Also includes in vitro fertilization.  Payor
    Mix
    Payor

U.S.

U.K.Private insurance


67
%


64
%Self-pay


2



26Government


28
(1)


5Other


3



5Total


100
%


100
%     (1)
    
    Based solely on case volume. Because government payors typically
    pay less than private insurance, the percentage of our U.S.
    revenue attributable to government payors is approximately 14%
    for Medicare and 2% for Medicaid. 10




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##### Table of Contents



Number ofFacilitiesHealthcare Systems

OperatedHealthcare System

Geographical Focus

with USPISingle Market Systems:Baylor Health Care System

Dallas/Fort Worth, Texas


25Centura Health

Colorado


3Covenant Health

Eastern Tennessee


2INTEGRIS Health

Oklahoma


2Kennedy Health System

New Jersey


1Legacy Health System

Portland, Oregon


2McLaren Health Care Corporation

Michigan


5Memorial Hermann Healthcare System

Houston, Texas


17Meridian Health System

New Jersey


5Mountain States Health Alliance

Northeast Tennessee


1North Kansas City Hospital

Kansas City, Missouri


3NorthShore University Health System

Chicago, Illinois


4Scripps Health

San Diego, California


1St. John Health System

Oklahoma


1Multi-Market Systems:Adventist Health System:

11 states(a)


2Adventist Hinsdale Hospital

Hinsdale, IllinoisHuguley Memorial Medical Center

Fort Worth, TexasAscension Health:

18 states and D.C.(b)


11Carondelet Health System (1 facility)

Blue Springs, MissouriSt. Thomas Health Services System (7 facilities)

Middle TennesseeSt. Vincent Health (1 facility)

IndianaSeton Healthcare Network (2 facilities)

Austin, TexasBon Secours Health System:

Seven states(c)


5Bon Secours Health Center at Virginia Beach

Virginia Beach, VirginiaMary Immaculate Hospital

Newport News, VirginiaMaryview Medical Center

Suffolk, VirginiaMemorial Regional Medical Center

Richmond, VirginiaSt. Marys Hospital

Richmond, VirginiaCalifornia, Arizona,Catholic Healthcare West:

Nevada


12Mercy Hospital of Folsom (1 facility)

Sacramento, CaliforniaMercy Medical Center (3 facilities)

Redding, CaliforniaMercy San Juan Medical Center (1 facility)

Roseville, CaliforniaSt. Josephs Hospital and Medical Center (2 facilities) and
    Arizona Orthopedic Surgical Hospital (2 facilities)

Phoenix, ArizonaSt. Josephs Medical Center (1 facility)

Stockton, CaliforniaSt. Rose Dominican Hospital (2 facilities)

Las Vegas, NevadaCHRISTUS Health:

Eight states(d)


4CHRISTUS Health Central Louisiana (1 facility)

Alexandria, LouisianaCHRISTUS Santa Rosa Health Corporation (1 facility)

San Antonio, TexasCHRISTUS Spohn Health System (2 facilities)

Corpus Christi, TexasProvidence Health System:

Five states(e)


2Providence Holy Cross Health Center

Santa Clarita, CaliforniaProvidence Holy Cross Medical Center

Mission Hills, CaliforniaSSM Healthcare:

Four states(f)SSM St. Clare Health System

St. Louis, Missouri


1Totals




109  11




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##### Table of Contents



(a)
    
    Colorado, Florida, Georgia, Illinois, Kansas, Kentucky, North
    Carolina, Tennessee, Texas, West Virginia, and Wisconsin.(b)
    
    Alabama, Arkansas, Arizona, Connecticut, District of Columbia,
    Florida, Idaho, Illinois, Indiana, Kansas, Louisiana, Maryland,
    Michigan, Missouri, New York, Tennessee, Texas, Washington, and
    Wisconsin.(c)
    
    Florida, Kentucky, Maryland, New York, Pennsylvania, South
    Carolina, and Virginia(d)
    
    Arkansas, Georgia, Louisiana, Oklahoma, Missouri, New Mexico,
    Texas, and Utah.(e)
    
    Alaska, California, Montana, Oregon, and Washington.(f)
    
    Illinois, Missouri, Oklahoma and Wisconsin.  Facilities
    Date of

NumberAcquisition

of

Percentageor

Operating

Owned byFacility

Affiliation

Rooms

USPIUnited StatesAtlantaEast West Surgery Center, Austell, Georgia


9/1/00
(2)


3



70
%Lawrenceville Surgery Center, Lawrenceville, Georgia


8/1/01



2



15Northwest Georgia Surgery Center, Marietta, Georgia


11/1/00
(2)


3



15Orthopaedic South Surgical Center, Morrow, Georgia


11/28/03



2



15Resurgens Surgical Center, Atlanta, Georgia


10/1/98
(2)


4



48Roswell Surgery Center, Roswell, Georgia


10/1/00
(2)


3



15Austin*

Cedar Park Surgery Center, Cedar Park, Texas


11/22/05



2



26*

Northwest Surgery Center, Austin, Texas(1)


5/30/07



6



29Texan Surgery Center, Austin, Texas


6/1/03



3



55Chicago*

Hinsdale Surgical Center, Hinsdale, Illinois


5/1/06



4



22*

Same Day Surgery 25 East, Chicago, Illinois


10/15/04



4



45*

Same Day Surgery Elmwood Park, Elmwood Park, Illinois


10/15/04



3



33*

Same Day Surgery North Shore, Evanston, Illinois


10/15/04



2



35*

Same Day Surgery River North, Chicago, Illinois


10/15/04



4



35Corpus Christi*

Corpus Christi Outpatient Surgery Center, Corpus Christi,
    Texas(1)


5/1/02



5



30*

Shoreline Surgery Center, Corpus Christi, Texas


7/1/06



4



26Dallas/Fort Worth*

Baylor Medical Center at Frisco, Frisco, Texas(3)


9/30/02



11



25*

Baylor Surgicare at Bedford, Bedford, Texas(1)


12/18/98



5



32*

Baylor Surgicare, Dallas, Texas(1)


6/1/99



6



34*

Baylor Surgicare at Denton, Denton, Texas(1)


2/1/99



4



25*

Baylor Surgicare at Garland, Garland, Texas


2/1/99



4



30*

Baylor Surgicare at Granbury, Granbury, Texas


2/1/09



4



26*

Baylor Surgicare at Grapevine, Grapevine, Texas


2/16/02



4



28*

Baylor Surgicare at Lewisville, Lewisville, Texas(1)


9/16/02



6



37*

Baylor Surgicare at Plano, Plano, Texas


10/1/07



1



27 12




---



##### Table of Contents



Date of

NumberAcquisition

of

Percentageor

Operating

Owned byFacility

Affiliation

Rooms

USPI*

Baylor Surgicare at North Garland, Garland, Texas


5/1/05



6



26*

Baylor Surgicare at Trophy Club, Trophy Club, Texas(3)


5/3/04



6



34*

Bellaire Surgery Center, Fort Worth, Texas


10/15/02



4



25*

Doctors Surgery Center at Huguley, Burleson, Texas


2/14/06



3



26*

Heath Surgicare, Rockwall, Texas(1)


11/1/04



3



25*

Irving-Coppell Surgical Hospital, Irving, Texas(3)


10/20/03



5



9*

Mary Shiels Hospital, Dallas, Texas(3)


4/1/03



5



17*

Medical Centre Surgical Hospital, Fort Worth, Texas(3)


12/18/98



8



33*

North Central Surgical Center, Dallas, Texas(3)


12/12/05



10



18*

North Texas Surgery Center, Dallas, Texas(1)


12/18/98



4



35Park Cities Surgery Center, Dallas, Texas(1)


6/9/03



4



55*

Physicians Day Surgery Center, Dallas, Texas


10/12/00



4



34*

Physicians Surgical Center of Fort Worth, Fort Worth,
    Texas


7/13/04



4



25*

Physicians Surgical Center of Fort Worth  Campus
    II, Fort Worth, Texas


5/1/07



2



25*

Rockwall Surgery Center, Rockwall, Texas


09/1/06



3



37*

Surgery Center of Arlington, Arlington, Texas(1)


2/1/99



6



26*

Texas Surgery Center, Dallas, Texas(1)


6/1/99



4



34*

Valley View Surgery Center, Dallas, Texas


12/18/98



4



32Denver*

Crown Point Surgical Center, Parker, Colorado


10/1/08



4



40*

Harvard Park Surgery Center, Denver Colorado


1/1/09



3



25*

Summit View Surgery Center, Littleton, Colorado


1/1/09



3



25Houston*

Doctors Outpatient Surgicenter, Pasadena, Texas(1)


9/1/99



5



43*

Kingsland Surgery Center, Katy, Texas


12/31/08



4



28*

KSF Orthopaedic Surgery Center, Houston, Texas(1)


5/1/07



3



44*

Memorial Hermann Specialty Hospital Kingwood, Kingwood, 
    Texas(3)


9/1/07



6



25*

Memorial Hermann Surgery Center  Katy, Katy, Texas(1)


1/19/07



4



10*

Memorial Hermann Surgery Center  Northwest, Houston,
    Texas(1)


9/1/04



5



10*

Memorial Hermann Surgery Center  Red Oak, Houston,
    Texas(1)


4/19/06
(5)


5



28*

Memorial Hermann Surgery Center  Richmond, Richmond,
    Texas


12/31/09



2



25*

Memorial Hermann Surgery Center  Southwest, Houston,
    Texas(1)


9/21/06



6



9*

Memorial Hermann Surgery Center  Sugar Land, Sugar
    Land, Texas(1)


9/21/06



4



9*

Memorial Hermann Surgery Center  Texas Medical
    Center, Houston, Texas(1)


1/17/07



5



10*

Memorial Hermann Surgery Center  The Woodlands, The
    Woodlands, Texas


8/9/05



4



11*

North Houston Endoscopy and Surgery, Houston, Texas


10/1/08



2



26*

Sugar Land Surgical Hospital, Sugar Land, Texas(3)


12/28/02



4



13 13




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##### Table of Contents



Date of

NumberAcquisition

of

Percentageor

Operating

Owned byFacility

Affiliation

Rooms

USPI*

TOPS Surgical Specialty Hospital, Houston, Texas(3)


7/1/99



7



44*

United Surgery Center  Southeast, Houston, Texas(1)


9/1/99



3



34West Houston Ambulatory Surgical Associates, Houston, Texas


4/19/06
(5)


5



51Kansas City*

Briarcliff Surgery Center, Kansas City, Missouri


6/1/05



2



27*

Creekwood Surgery Center, Kansas City, Missouri(1)


7/29/98



4



36*

Liberty Surgery Center, Liberty, Missouri


6/1/05



2



28*

Saint Marys Surgical Center, Blue Springs, Missouri


5/1/05



4



19Knoxville*

Parkwest Surgery Center, Knoxville, Tennessee


7/26/01



5



22*

Physicians Surgery Center of Knoxville, Knoxville,
    Tennessee


1/1/08



6



26Las Vegas*

Durango Outpatient Surgery Center, Las Vegas, Nevada


12/9/08



4



37*

Parkway Surgery Center, Henderson, Nevada


8/3/98



5



30Los AngelesCoast Surgery Center of South Bay, Torrance, California(1)


12/18/01



3



24Pacific Endo-Surgical Center, Torrance, California


8/1/03



1



57*

San Fernando Valley Surgery Center, Mission Hills,
    California


11/1/04



4



26San Gabriel Valley Surgical Center, West Covina, California


11/16/01



3



48*

Santa Clarita Ambulatory Surgery Center, Santa Clarita,
    California(1)


3/7/06



3



26The Center for Ambulatory Surgical Treatment, Los Angeles,
    California(1)


11/14/02



4



39Michigan*

Clarkston Surgery Center, Clarkston, Michigan


6/1/09



4



36*

Genesis Surgery Center, Lansing, Michigan


11/1/06



4



23*

Lansing Surgery Center, Lansing, Michigan


11/1/06



4



23*

McLaren ASC of Flint, Flint, Michigan


8/2/07



4



43*

Utica Surgery and Endoscopy Center, Utica, Michigan


4/1/07



3



33Nashville*

Baptist Ambulatory Surgery Center, Nashville, Tennessee


3/1/98
(2)


6



25*

Baptist Plaza Surgicare, Nashville, Tennessee


12/3/03



9



21*

Center for Spinal Surgery, Nashville, Tennessee(3)


12/31/08



6



20*

Middle Tennessee Ambulatory Surgery Center, Murfreesboro,
    Tennessee


7/29/98



4



35*

Northridge Surgery Center, Nashville, Tennessee


4/19/06
(5)


5



31*

Physicians Pavilion Surgery Center, Smyrna, Tennessee


7/29/98



4



47*

Saint Thomas Surgicare, Nashville, Tennessee


7/15/02



5



21New Jersey*

Central Jersey Surgery Center, Eatontown, New Jersey


11/1/04



3



35*

Northern Monmouth Regional Surgery Center, Manalapan, New Jersey


7/10/06



4



35*

Select Surgical Center at Kennedy, Sewell, New Jersey


10/29/09



3



30 14




---



##### Table of Contents



Date of

NumberAcquisition

of

Percentageor

Operating

Owned byFacility

Affiliation

Rooms

USPI*

Shore Outpatient Surgicenter, Lakewood, New Jersey


11/1/04



3



42*

Shrewsbury Surgery Center, Shrewsbury, New Jersey


4/1/99



4



14Suburban Endoscopy Services, Verona, New Jersey


4/19/06
(5)


2



51*

Toms River Surgery Center, Toms River, New Jersey


3/15/02



4



20Oklahoma City*

Oklahoma Center for Orthopedic MultiSpecialty Surgery, Oklahoma
    City, Oklahoma(3)


8/2/04



4



20*

Southwest Orthopaedic Ambulatory Surgery Center, Oklahoma City,
    Oklahoma


8/2/04



2



20OrlandoSand Lake Surgery Center, Orlando, Florida


2/18/08



3



35University Surgical Center, Winter Park, Florida


10/15/98



3



38Phoenix*

Arizona Orthopedic Surgical Hospital, Chandler, Arizona(3)


5/19/04



6



36*

Desert Ridge Outpatient Surgery Center, Phoenix, Arizona


3/30/07



4



34Metro Surgery Center, Phoenix, Arizona


4/19/06
(5)


4



83Physicians Surgery Center of Tempe, Tempe, Arizona


4/19/06
(5)


2



10*

St. Josephs Outpatient Surgery Center, Phoenix, Arizona(1)


9/2/03



8



30Surgery Center of Peoria, Peoria, Arizona


4/19/06
(5)


3



55Surgery Center of Scottsdale, Scottsdale, Arizona


4/19/06
(5)


4



54Surgery Center of Gilbert, Gilbert, Arizona


4/19/06
(5)


3



22*

Warner Outpatient Surgery Center, Chandler, Arizona


7/1/99



4



35Portland*

East Portland Surgical Center, Portland, Oregon


12/31/09



4



29*

Northwest Surgery Center, Portland, Oregon


12/1/08



3



27Redding*

Court Street Surgery Center, Redding, California


4/19/06
(5)


2



31*

Mercy Surgery Center, Redding, California


3/1/08



4



31*

Redding Surgery Center, Redding, California


4/19/06
(5)


2



31Sacramento*

Folsom Outpatient Surgery Center, Folsom, California


6/1/05



2



32*

Roseville Surgery Center, Roseville, California


7/1/06



2



30San Antonio*

Alamo Heights Surgery Center, San Antonio, Texas(1)


12/1/04



3



59San Antonio Endoscopy Center, San Antonio, Texas


5/1/05



1



54St. LouisAdvanced Surgical Care, Creve Coeur, Missouri(1)


1/1/06



2



60Chesterfield Surgery Center, Chesterfield, Missouri(1)


1/1/06



2



65Frontenac Surgery and Spine Care Center, Frontenac, Missouri(1)


5/1/07



2



40Manchester Surgery Center, St. Louis, Missouri


2/1/07



3



60Mason Ridge Surgery Center, St. Louis, Missouri(1)


2/1/07



2



57Mid Rivers Surgery Center, Saint Peters, Missouri


1/1/06



2



66Old Tesson Surgery Center, St. Louis, Missouri


8/1/08



3



61 15




---



##### Table of Contents



Date of

NumberAcquisition

of

Percentageor

Operating

Owned byFacility

Affiliation

Rooms

USPIOlive Surgery Center, St. Louis, Missouri


1/1/06



2



62Riverside Ambulatory Surgery Center, Florissant, Missouri


8/1/06



2



74South County Outpatient Endoscopy Services, St. Louis,
    Missouri


10/1/08



2



25*

SSM St. Clare Surgical Center, Fenton, Missouri


10/23/09



3



21Sunset Hills Surgery Center, St. Louis, Missouri


1/1/06



2



66The Ambulatory Surgical Center of St. Louis, Bridgeton,
    Missouri


8/1/06



2



66Twin Cities Ambulatory Surgery Center, St. Louis, Missouri


9/1/08



2



62Webster Surgery Center, Webster Groves, Missouri(1)


3/1/07



2



29Virginia*

Bon Secours Surgery Center at Harbour View, Suffolk, Virginia


11/12/07



6



21*

Bon Secours Surgery Center at Virginia Beach, Virginia Beach,
    Virginia


5/30/07



2



29*

Mary Immaculate Ambulatory Surgical Center, Newport News,
    Virginia


7/19/04



3



17*

Memorial Ambulatory Surgery Center, Mechanicsville, Virginia


12/30/05



5



17*

St. Marys Ambulatory Surgery Center, Richmond, Virginia


11/29/06



4



20Surgi-Center of Central Virginia, Fredericksburg, Virginia


11/29/01



4



80Additional MarketsAustintown Ambulatory Surgery Center, Austintown, Ohio


4/12/02



5



65*

Beaumont Surgical Affiliates, Beaumont, Texas(1)


4/19/06
(5)


6



25Chico Surgery Center, Chico, California


4/19/06
(5)


3



80*

CHRISTUS Cabrini Surgery Center, Alexandria, Louisiana


6/22/07



4



25Day-Op Center of Long Island, Mineola, New York(4)


12/4/98



4



99Destin Surgery Center, Destin, Florida


9/25/02



2



30Great Plains Surgery Center, Lawton, Oklahoma


4/19/06
(5)


2



49Idaho Surgery Center, Caldwell, Idaho


4/19/06
(5)


3



20Mayfield Clinic Spine Surgery Center, Cincinnati, Ohio


12/31/09



3



51*

Mountain Empire Surgery Center, Johnson City, Tennessee


2/20/00
(2)


4



18New Horizons Surgery Center, Marion, Ohio


4/19/06
(5)


2



11New Mexico Orthopaedic Surgery Center, Albuquerque, New Mexico


2/29/00
(2)


6



51Northeast Ohio Surgery Center, Cleveland, Ohio


4/19/06
(5)


3



49Reading Surgery Center, Spring Township, Pennsylvania


7/1/04



3



57Redmond Surgery Center, Redmond, Oregon


4/19/06
(5)


2



68*

Scripps Encinitas Surgery Center, Encinitas, California


2/6/08



3



19*

St. Josephs Surgery Center, Stockton, California


2/1/09



6



5Surgery Center of Canfield, Canfield, Ohio(1)


4/19/06
(5)


3



28Surgery Center of Columbia, Columbia, Missouri(1)


8/1/06



2



61Surgery Center of Fort Lauderdale, Fort Lauderdale,
    Florida


11/1/04



4



67Templeton Surgery Center, Templeton, California


1/20/07



2



65*

Terre Haute Surgical Center, Terre Haute, Indiana


12/19/07



2



24Teton Outpatient Services, Jackson, Wyoming(1)


8/1/98
(2)


2



49Tri-City Orthopaedic Center, Richland, Washington(4)


4/19/06
(5)


2



17 16




---



##### Table of Contents



Date of

NumberAcquisition

of

Percentageor

Operating

Owned byFacility

Affiliation

Rooms

USPI*

Memorial Surgery Center, Tulsa, Oklahoma


10/1/09



4



25Victoria Ambulatory Surgery Center, Victoria, Texas


4/19/06
(5)


2



59United KingdomParkside Hospital, Wimbledon


4/6/00



4



100Parkside Oncology Clinic, Wimbledon


8/1/03







100Holly House Hospital, Essex


4/6/00



3



100Highgate Private Clinic, Highgate


4/29/03



3



100     *
    
    Facilities jointly owned with not-for-profit hospital systems.(1)
    
    Certain of our surgery centers are licensed and equipped to
    accommodate
    23-hour
    stays.(2)
    
    Indicates date of acquisition by OrthoLink Physician
    Corporation. We acquired OrthoLink in February 2001.(3)
    
    Surgical hospitals, all of which are licensed and equipped for
    overnight stays.(4)
    
    Operated through a consulting and administrative agreement.(5)
    
    Indicates the date of our acquisition of Surgis.          Acquisitions
    and Development
    Expected

Number ofHospital



Opening

OperatingFacility Location

Partner

Type

Date

RoomsArlington, Texas(1)

Baylor

Hospital


Q110



6Austin, Texas

Seton

Surgery Center


Q310



5Dallas, Texas

Baylor

Hospital


Q111



6Phoenix, Arizona

CHW

Hospital


Q211



6     (1)
    
    This facility opened in February 2010.   17




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Marketing
    Competition
          Employees
    Professional
    and General Liability Insurance
   18




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Government
    Regulation
  United
    States
  General
          Licensure
    and certificate-of-need regulations
     19




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Medicare
    and Medicaid Participation in Short Stay Surgical
    Facilities
       20




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Federal
    Anti-Kickback Law
    
    referring patients for services or items payable under a federal
    healthcare program, including Medicare or Medicaid, or
    purchasing, leasing or ordering, or arranging for or
    recommending purchasing, leasing or ordering, any good,
    facility, service or item for which payment may be made in whole
    or in part by a federal healthcare program.     21




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non-physician
 22




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##### Table of Contents



Federal
    Physician Self-Referral Law
     23




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##### Table of Contents



False and
    Other Improper Claims
        State
    Anti-Kickback and Physician Self-Referral Laws
   24




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##### Table of Contents



Health
    Information Security and Privacy Practices
    
    electronic transactions and code sets;
    unique identifiers for providers, employers, health plans and
    individuals;
    security and electronic signatures;
    privacy; and
    enforcement.       25




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##### Table of Contents



European
    Union and United Kingdom
         26




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Item 1A.
    Risk
    Factors  You should carefully read the risks and uncertainties
    described below and the other information included in this
    report. Any of the following risks could materially and
    adversely affect our business, financial condition or results of
    operations. Additional risks and uncertainties not currently
    known to us or those we currently view to be immaterial may also
    materially and adversely affect our business, financial
    condition or results of operations.
  We
    depend on payments from third party payors, including government
    healthcare programs. If these payments are reduced, our revenue
    will decrease.
    If we
    are unable to acquire and develop additional surgical facilities
    on favorable terms, are not successful in integrating operations
    of acquired surgical facilities, or are unable to manage growth,
    we may be unable to execute our acquisition and development
    strategy, which could limit our future growth.
       27




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Our
    substantial leverage could adversely affect our ability to raise
    additional capital to fund our operations, limit our ability to
    react to changes in the economy or our industry, expose us to
    interest rate risk to the extent of our variable rate debt and
    prevent us from meeting our debt obligations.
      
    requires us and certain of our subsidiaries to dedicate a
    substantial portion of cash flow from operations to payments on
    indebtedness, reducing the availability of cash flow to fund
    working capital, capital expenditures, development activity,
    acquisitions and other general corporate purposes;
    increases vulnerability to adverse general economic or industry
    conditions;
    limits flexibility in planning for, or reacting to, changes in
    our business or the industry in which we operate;
    makes us and our subsidiaries more vulnerable to increases in
    interest rates, as borrowings under our senior secured credit
    facilities are at variable rates;
    limits our and our subsidiaries ability to obtain
    additional financing in the future for working capital or other
    purposes, such as raising the funds necessary to repurchase our
    senior subordinated notes upon the occurrence of specified
    changes of control, or
    places us at a competitive disadvantage compared to our
    competitors that have less indebtedness.  Our
    significant indebtedness could limit our
    flexibility.
    Our
    debt agreements contain restrictions that limit our flexibility
    in operating our business.
    
    incur, assume or permit to exist additional indebtedness or
    guarantees;
    incur liens and engage in sale leaseback transactions;
    make loans, investments and other advances; 28




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##### Table of Contents




    declare dividends, make payments or redeem or repurchase capital
    stock;
    engage in mergers, acquisitions and other business combinations;
    prepay, redeem or repurchase certain indebtedness including the
    notes;
    amend or otherwise alter terms of certain subordinated
    indebtedness including the notes;
    enter into agreements limiting subsidiary distributions;
    sell assets;
    engage in certain transactions with affiliates;
    alter the business that we conduct; and
    issue and sell capital stock of subsidiaries.    
    incur or permit to exist additional indebtedness;
    incur liens;
    make loans, investments or acquisitions;
    declare dividends or other distributions;
    enter into operating leases;
    engage in mergers, joint ventures or partnerships;
    sell assets;
    alter the business that the U.K. borrowers and their
    subsidiaries conduct; and
    incur financial lease expenditures.    If we
    incur material liabilities as a result of acquiring surgical
    facilities, our operating results could be adversely
    affected.
   29




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We
    depend on our relationships with not-for-profit healthcare
    systems. If we are not able to maintain our relationships with
    these not-for-profit healthcare systems, or enter into new
    relationships, we may be unable to implement our business
    strategies successfully.
  not-for-profit
  If we
    and our not-for-profit healthcare system partners are unable to
    successfully negotiate contracts and maintain satisfactory
    relationships with managed care organizations or other third
    party payors, our revenues may decrease.
      We
    depend on our relationships with the physicians who use our
    facilities. Our ability to provide medical services at our
    facilities would be impaired and our revenues reduced if we are
    not able to maintain these relationships.
   30




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Our
    surgical facilities face competition for patients from other
    health care providers.
  and/or
  Current
    economic conditions may adversely affect our financial condition
    and results of operations.
    Our
    United Kingdom operations are subject to unique risks, any of
    which, if they actually occur, could adversely affect our
    results.
    
    fluctuations in exchange rates;
    competition with government sponsored healthcare systems;
    unforeseen changes in foreign regulatory requirements or
    domestic regulatory requirements affecting our foreign
    operations;
    identifying, attracting, retaining and working successfully with
    qualified local management;
    difficulties in staffing and managing geographically and
    culturally diverse, multinational operations;
    the economic conditions in the United Kingdom, which could
    adversely affect the ability or willingness of employers and
    individuals in these countries to purchase private health
    insurance; and
    a higher concentration of self-pay business than our
    U.S. facilities.    Our
    revenues may be reduced by changes in payment methods or rates
    under the Medicare or Medicaid programs.
   31




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##### Table of Contents



Efforts
    to regulate the construction, acquisition or expansion of
    healthcare facilities could prevent us from acquiring additional
    surgical facilities, renovating our existing facilities or
    expanding the breadth of services we offer.
    Failure
    to comply with federal and state statutes and regulations
    relating to patient privacy and electronic data security could
    negatively impact our financial results.
      If we
    fail to comply with applicable laws and regulations, we could
    suffer penalties or be required to make significant changes to
    our operations.
    
    physician ownership of our domestic facilities;
    the adequacy of medical care, equipment, personnel, operating
    policies and procedures;
    building codes;
    licensure, certification and accreditation; 32




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##### Table of Contents




    billing for services;
    handling of medication;
    maintenance and protection of records; and
    environmental protection.      If a
    federal or state agency asserts a different position or enacts
    new laws or regulations regarding illegal remuneration under the
    Medicare or Medicaid programs, we may be subject to civil and
    criminal penalties, experience a significant reduction in our
    revenues or be excluded from participation in the Medicare and
    Medicaid programs.
       33




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##### Table of Contents



If
    physician self-referral laws are interpreted differently or if
    other legislative restrictions are issued, we could incur
    significant sanctions and loss of reimbursement
    revenues.
       34




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##### Table of Contents



Companies
    within the healthcare industry continue to be the subject of
    federal and state audits and investigations, which increases the
    risk that we may become subject to investigations in the
    future.
    
    cost reporting and billing practices;
    quality of care;
    financial reporting;
    financial relationships with referral sources; and
    medical necessity of services provided.    If
    laws governing the corporate practice of medicine change, we may
    be required to restructure some of our domestic relationships
    which may result in significant costs to us and divert other
    resources.
     35




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##### Table of Contents



If
    domestic regulations change, we may be obligated to purchase
    some or all of the ownership interests of the physicians
    affiliated with us.
    
    make illegal the referral of Medicare or other patients to our
    surgical facilities by physicians affiliated with us;
    create the substantial likelihood that cash distributions from
    the limited partnerships or limited liability companies through
    which we operate our surgical facilities to physicians
    affiliated with us would be illegal; or
    make illegal the ownership by the physicians affiliated with us
    of interests in the partnerships or limited liability companies
    through which we own and operate our surgical facilities.    Future
    legislation could restrict our ability to operate our domestic
    surgical hospitals.
       36




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##### Table of Contents



physician-owned
    If we
    become subject to significant legal actions, we could be subject
    to substantial uninsured liabilities.
   37




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##### Table of Contents



If we
    are unable to effectively compete for physicians, strategic
    relationships, acquisitions and managed care contracts, our
    business could be adversely affected.
    Because
    our senior management has been key to our growth and success, we
    may be adversely affected if we lose any member of our senior
    management.
    The
    growth of patient receivables and a deterioration in the
    collectability of these accounts could adversely affect our
    results of operations.
      We may
    have a special legal responsibility to the holders of ownership
    interests in the entities through which we own surgical
    facilities, and that responsibility may prevent us from acting
    solely in our own best interests or the interests of our
    stockholders.
   38




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##### Table of Contents



We do
    not have exclusive control over the distribution of revenues
    from some of our domestic operating entities and may be unable
    to cause all or a portion of the revenues of these entities to
    be distributed.
    Welsh
    Carson controls us and may have conflicts of interest with us or
    you in the future.
      Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   39




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    Item 6.
    Selected
    Financial Data      40




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##### Table of Contents



Successor



PredecessorPeriod from



Period fromApril 19



January 1Year Ended


Year Ended


through



through


Years EndedDecember 31,


December 31,


December 31,



April 18,


December 31,2009


2008


2007



2007


2006


2005Consolidated Statement of Operations Data:Total revenues

$
622,365


$
642,223


$
452,488



$
191,355


$
567,374


$
458,569Equity in earnings of unconsolidated affiliates


61,771



47,042



23,867




9,906



31,568



23,998Operating expenses excluding depreciation and amortization


(419,181
)


(452,752
)


(313,921
)



(162,497
)


(405,467
)


(318,482
)Depreciation and amortization


(35,297
)


(36,757
)


(26,688
)



(12,426
)


(34,516
)


(30,203
)Operating income


229,658



199,756



135,746




26,338



158,959



133,882Other income (expense):Interest income


2,630



3,228



3,208




933



4,067



4,455Interest expense


(70,915
)


(85,649
)


(67,862
)



(9,521
)


(32,604
)


(27,391
)Loss on early retirement of debt















(2,435
)


(14,880
)


Other, net


(28,082
)


(1,790
)


(442
)



798



1,773



532Income from continuing operations before income taxes


133,291



115,545



70,650




16,113



117,315



111,478Income tax benefit (expense)


97



(22,333
)


(14,592
)



(4,256
)


(22,785
)


(25,939
)Income from continuing operations


133,388



93,212



56,058




11,857



94,530



85,539Earnings (loss) from discontinued operations, net of tax






(560
)


(2,154
)



(458
)


(5,763
)


590Net income


133,388



92,652



53,904




11,399



88,767



86,129Less: Net income attributable to noncontrolling interests


(63,722
)


(55,138
)


(45,175
)



(18,548
)


(54,521
)


(38,835
)Net income attributable to USPIs common stockholder

$
69,666


$
37,514


$
8,729



$
(7,149
)

$
34,246


$
47,294Other Data:Number of facilities operated as of the end of period(a):Consolidated


60



62



61




64



60



42Equity method


109



102



94




85



81



57Total


169



164



155




149



141



99Cash flows from operating activities

$
185,213


$
145,586


$
109,936



$
47,305


$
155,655


$
144,300   Successor

PredecessorAs of December 31,

As of December 31,2009

2008

2007

2006

2005Consolidated Balance Sheet Data:Working capital (deficit)

$
(113,016
)

$
(38,838
)

$
(12,569
)

$
(41,834
)

$
90,946Cash and cash equivalents


34,890



49,435



76,758



31,740



130,440Total assets


2,325,392



2,268,163



2,277,393



1,231,856



1,028,841Total debt


1,071,528



1,097,947



1,098,062



347,330



286,486Noncontrolling interests  redeemable


63,865



51,961



52,769



49,261



34,011Total equity


798,003



806,217



837,100



622,844



560,753     (a)
    
    Not derived from audited financial statements. 41




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation    Overview
            Critical
    Accounting Policies and Estimates
   42




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##### Table of Contents



Consolidation
    Accounting
    Standards Codification Consolidation
    Revenue
    Recognition and Accounts Receivable
  Revenue Recognition in Financial
    Statements
  
    Existence of persuasive evidence that an arrangement exists;
    Delivery has occurred or services have been rendered;
    The sellers price to the buyer is fixed or determinable;
    and
    Collectibility is reasonably assured.   43




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Income
    Taxes
       44




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Goodwill
    and Intangible Assets
    and/or
    Merger
    Transaction
        
    an investment of cash and rollover equity in the equity of
    Parent by Welsh Carson, management and other equity investors of
    approximately $785.0 million;
    borrowings by the Company of $430.0 million in new senior
    secured credit facilities; 45




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
    the issuance by the Company of $240.0 million in aggregate
    principal amount of
    87/8% senior
    subordinated notes, due 2017, and $200.0 million in
    aggregate principal amount of
    91/4%/10% senior
    subordinated toggle notes, due 2017;
    additional borrowings of £10.0 million (approximately
    $19.7 million) by Global Healthcare Partners Limited, which
    was repatriated to the U.S.; and
    approximately $21.9 million of cash on hand.  Acquisitions,
    Equity Investments and Development Projects
      Effective Date

Facility Location

AmountInvestmentsDecember 2009

Cincinnati, Ohio(1)

$
17.7 millionDecember 2009

Portland, Oregon(2)


11.1 millionDecember 2009

Nashville, Tennessee(3)


6.1 millionSeptember 2009

Fort Worth, Texas(3)


1.2 millionJuly 2009

Fort Worth, Texas(3)


1.0 millionMay 2009

St. Louis, Missouri(4)


0.9 millionFebruary 2009

Fort Worth, Texas(2)


2.0 millionFebruary 2009

Stockton, California(2)


2.5 millionVarious

Various(5)


7.3 millionTotal




49.8 millionSales(6)December 2009

Dallas, Texas(7)


2.4 millionTotal



$
47.4 million     (1)
    
    Acquisition of a noncontrolling interest in and right to manage
    a surgical facility in which we previously had no involvement.
    This facility is jointly owned with local physicians.(2)
    
    Acquisition of a noncontrolling interest in and right to manage
    a surgical facility in which we previously had no involvement.
    This facility is jointly owned with one of our hospital partners
    and local physicians.(3)
    
    Acquisition of additional ownership in one of our existing
    facilities.(4)
    
    Acquisition of the right to manage a surgical facility in which
    we previously had no involvement. We have a purchase option to
    acquire a 20% equity interest in the facility within one year,
    and after approximately three years, an option to purchase an
    additional 20% equity interest.(5)
    
    Represents the net purchase of additional ownership and equity
    contributions in various unconsolidated affiliates, including
    $3.4 million of investment in four de novos. 46




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##### Table of Contents



(6)
    
    Sale transactions not involving our surrendering control of the
    facility are described in this section. Transactions involving
    the sale of our entire interest in a facility or our
    surrendering control of a facility are described in
    Discontinued Operations and Other Dispositions.(7)
    
    Sale of a portion of our noncontrolling interest in two
    facilities to a hospital partner. This hospital partner is a
    related party (Note 13). We retained a noncontrolling interest
    in these facilities and continue to operate them.          Effective Date

Facility Location

AmountDecember 2008

St. Louis, Missouri(1)

$
0.4 millionOctober 2008

St. Louis, Missouri(2)


1.9 millionSeptember 2008

St. Louis, Missouri(2)


15.8 millionSeptember 2008

St. Louis, Missouri(3)


18.0 millionAugust 2008

St. Louis, Missouri(2)


3.0 millionJune 2008

Dallas, Texas(4)


3.9 millionApril 2008

St. Louis, Missouri(5)


14.1 millionVarious

Various(6)


6.6 millionTotal



$
63.7 million     (1)
    
    We acquired additional ownership in one of our existing
    facilities.(2)
    
    We had no previous investment in this facility.(3)
    
    We acquired additional ownership in two of our existing
    facilities.(4)
    
    We purchased all of a healthcare systems ownership
    interest in an entity it co-owned with us. This entity has
    ownership in and manages five facilities in the
    Dallas/Fort Worth area. This holding company was already a
    subsidiary of our company and is now wholly owned by us.(5)
    
    We acquired additional ownership in three of our existing
    facilities.(6)
    
    Represents the purchase of additional ownership in various
    consolidated entities.    47




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##### Table of Contents



Effective Date

Facility Location

AmountInvestmentsDecember 2008

Nashville, Tennessee(1)

$
18.3 millionDecember 2008

Houston, Texas(1)


5.4 millionDecember 2008

Portland, Oregon(1)


5.7 millionDecember 2008

Denver, Colorado(2)


2.2 millionOctober 2008

Houston, Texas(1)


5.2 millionOctober 2008

Denver, Colorado(1)


2.1 millionJanuary 2008

Knoxville, Tennessee(1)


1.4 millionJanuary 2008

Las Vegas, Nevada(1)


1.1 million41.4 millionSalesApril 2008

Kansas City, Missouri(3)


3.6 millionVarious

Various(4)


2.2 million5.8 millionTotal



$
35.6 million     (1)
    
    Acquisition of a noncontrolling equity interest in and right to
    manage a surgical facility in which we previously had no
    involvement. This facility is jointly owned with one of our
    hospital partners and local physicians.(2)
    
    Acquisition of a noncontrolling equity interest in and right to
    manage two surgical facilities in which we previously had no
    involvement. These facilities are jointly owned with one of our
    hospital partners and local physicians. The purchase price was
    paid in December 2008 and our ownership became effective
    January 1, 2009.(3)
    
    A not-for-profit hospital partner obtained ownership in a
    facility.(4)
    
    Represents the net receipt related to various other purchases
    and sales of equity interests and contributions of cash to
    equity method investees.      Effective Date

Facility Location

AmountSeptember 2007

St. Louis, Missouri(1)

$
34.3 millionMay 2007

Houston, Texas(2)


9.0 millionMay 2007

St. Louis, Missouri(2)


28.7 millionMarch 2007

St. Louis, Missouri(2)


7.3 millionFebruary 2007

St. Louis, Missouri(3)


15.9 millionTotal



$
95.2 million     (1)
    
    We acquired additional ownership in five of our existing
    facilities.(2)
    
    We had no previous investment in this facility.(3)
    
    We had no previous investment in these two facilities. 48




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Effective Date

Facility Location

AmountInvestmentsSeptember 2007

Houston, Texas(1)

$
5.7 millionApril 2007

Detroit, Michigan(1)


1.5 millionVarious

Various(2)


3.3 million10.5 millionSalesJanuary 2007

Chicago, Illinois


9.8 millionAugust 2007

Oklahoma City, Oklahoma


0.5 million10.3 millionTotal



$
0.2 million     (1)
    
    Acquisition of a noncontrolling equity interest in and right to
    manage a surgical facility in which we previously had no
    involvement. This facility is jointly owned with one of our
    hospital partners and local physicians.(2)
    
    Represents the net payment of approximately $3.3 million
    related to other purchases and sales of equity interests and
    contributions of cash to equity method investees.    Discontinued
    Operations and Other Dispositions
    Date

Facility Location

Proceeds (Costs)


Gain (Loss)December 2009

Oxnard, California(1)


0.3 million



(0.3 million
)December 2009

Baton Rouge, Louisiana(2)


(5.1 million
)


(8.2 million
)September 2009

San Antonio, Texas(1)






(2.6 million
)July 2009

Cleveland, Ohio(3)


1.0 million



February 2009

Las Cruces, New Mexico(1)






February 2009

East Brunswick, New Jersey(1)


0.7 million



(2.6 million
)Total



$
(3.1 million
)

$
(13.7 million
)July 2008

Manitowoc, Wisconsin(1)

$
0.8 million


$
July 2008

Orlando, Florida(1)


0.5 million



(0.4 million
)June 2008

Cleveland, Ohio(4)


1.6 million



(1.0 million
)April 2008

Los Angeles, California(1)






February 2008

Sarasota, Florida(1)


0.5 million



Total



$
3.4 million


$
(1.4 million
)December 2007

Houston, Texas(4)

$



$
(0.6 million
)December 2007

Decatur, Alabama(4)


0.3 million



(2.2 million
)November 2007

Canton, Mississippi(4)






(0.9 million
)September 2007

Atlanta, Georgia(1)


1.8 million



0.5 millionSeptember 2007

Baltimore, Maryland(1)






(1.2 million
)Total



$
2.1 million


$
(4.4 million
)  49




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##### Table of Contents



(1)
    
    Because these investments were accounted for under the equity
    method, the results of operations of these facilities are not
    reported as discontinued operations. The gain (loss) on the
    disposal of these facilities is recorded in (Loss) gain on
    sale of equity interests in the accompanying consolidated
    statements of operations.(2)
    
    We paid $5.1 million to settle contingent liabilities in
    conjunction with the sale of this center. Such amount was
    expensed and included in (Loss) gain on sale of equity
    interests in the accompanying consolidated statements of
    operations. Because this investment was accounted for under the
    equity method, the results of operations of this facility are
    not reported as discontinued operations.(3)
    
    We financed the entire purchase price with the buyer and have a
    security interest in the facilitys assets until the note
    is collected, which is due in March 2010. As a result, we
    deferred the recognition of the gain, which is estimated at
    $0.6 million. Because this investment was accounted for
    under the equity method, the results of operations of this
    facility are not reported as discontinued operations.(4)
    
    In accordance with GAAP, we have reclassified our historical
    results of operations to remove the operations of these
    facilities from our revenues and expenses on the accompanying
    consolidated statements of operations, collapsing the income
    (loss) related to these facilities operations and our
    disposal of them into a single line, Loss from
    discontinued operations, net of tax.    Date

Facility Location

Proceeds


Gain (Loss)December 2009

Dallas, Texas(1)

$
1.2 million


$
0.3 millionJuly 2009

Oklahoma City, Oklahoma(2)


0.2 million



0.1 millionMarch 2009

Phoenix, Arizona(3)


0.1 million



(8.2 million
)Total



$
1.5 million


$
(7.8 million
)July 2008

Beaumont, Texas

$
1.2 million


$
(0.5 million
)June 2008

Dallas, Texas(1)


2.3 million



(0.9 million
)June 2008

Houston, Texas(4)


0.6 million



March 2008

Redding, California(5)


1.7 million



Total



$
5.8 million


$
(1.4 million
)July 2007

Dallas, Texas(6)

$
3.7 million


$
April 2007

Corpus Christi, Texas(7)


6.1 million



0.9 millionTotal



$
9.8 million


$
0.9 million     (1)
    
    The hospital partner acquired a controlling interest from us in
    this transaction. Additionally, this hospital partner is a
    related party (Note 13).(2)
    
    We and the other owners of a facility consolidated by us agreed
    to merge the facility into another entity in which we hold an
    investment accounted for under the equity method.(3)
    
    A controlling interest in an entity was sold to a hospital
    partner. The hospital partner already had a 49% ownership
    interest in this entity, which owns and manages two surgical
    facilities, and through the transaction acquired an additional
    1.1% interest. The $8.2 million loss was primarily related
    to the revaluation of our remaining investment in the entity to
    fair value.(4)
    
    Because we are considered the primary beneficiary of this
    entity, we consolidate the entity, and continue to consolidate
    the facilitys operating results. The sales price of
    $0.6 million was paid in the form of a note receivable from
    the buyer.(5)
    
    We sold a controlling interest in two facilities and gained a
    noncontrolling interest in a third facility in Redding. 50




---



##### Table of Contents



(6)
    
    The hospital partner already had an ownership interest in these
    two facilities and acquired a controlling interest from us in
    this transaction. Additionally, this hospital partner is a
    related party (Note 13).(7)
    
    We sold a controlling interest in two facilities.  Combination
    of Operating Results
    Predecessor


Successor


CombinedPeriod from


Period from


Year EndedJanuary 1 through


April 19 through


December 31,April 18, 2007


December 31, 2007


2007Revenues:Net patient service revenues

$
170,598


$
402,433


$
573,031Management and contract service revenues


19,142



46,503



65,645Other revenues


1,615



3,552



5,167Total revenues


191,355



452,488



643,843Equity in earnings of unconsolidated affiliates


9,906



23,867



33,773Operating expenses:Salaries, benefits, and other employee costs


53,871



125,648



179,519Medical services and supplies


34,308



77,006



111,314Other operating expenses


31,744



74,335



106,079General and administrative expenses


39,277



29,340



68,617Provision for doubtful accounts


3,297



7,592



10,889Depreciation and amortization


12,426



26,688



39,114Total operating expenses


174,923



340,609



515,532Operating income


26,338



135,746



162,084Interest income


933



3,208



4,141Interest expense


(9,521
)


(67,862
)


(77,383
)Loss on early retirement of debt


(2,435
)






(2,435
)Other, net


798



(442
)


356Total other expense, net


(10,225
)


(65,096
)


(75,321
)Income from continuing operations before income taxes


16,113



70,650



86,763Income tax expense


(4,256
)


(14,592
)


(18,848
)Income from continuing operations


11,857



56,058



67,915Loss from discontinued operations, net of tax


(458
)


(2,154
)


(2,612
)Net income


11,399



53,904



65,303Less: Net income attributable to noncontrolling interests


(18,548
)


(45,175
)


(63,723
)Net income (loss) attributable to USPIs common stockholder

$
(7,149
)

$
8,729


$
1,580  51




---



##### Table of Contents



Sources
    of Revenue
    
    net patient service revenues of the facilities that we
    consolidate for financial reporting purposes, which are those in
    which we have ownership interests of greater than 50% or
    otherwise maintain effective control;
    management and contract service revenues, consisting of the fees
    that we earn from managing the facilities that we do not
    consolidate for financial reporting purposes and the fees we
    earn from providing certain consulting and other contracted
    services to physicians and hospitals. Our consolidated revenues
    and expenses do not include the management fees we earn from
    operating the facilities that we consolidate for financial
    reporting purposes as those fees are charged to subsidiaries and
    thus eliminate in consolidation.    Years Ended December 31,Combined2009

2008

2007Net patient service revenues


86
%


88
%


89
%Management and contract service revenues


12



11



10Other revenues


2



1



1Total revenues


100
%


100
%


100
%       Years Ended December 31,Combined2009


2008


2007Management of surgical facilities

$
46,438


$
40,100


$
34,161Contract services provided to hospitals, physicians and related
    entities


30,966



32,870



31,484Total management and contract service revenues

$
77,404


$
72,970


$
65,645    52




---



##### Table of Contents



Years Ended December 31,Combined2009

2008

2007United States


83
%


81
%


82
%United Kingdom


17



19



18Total


100
%


100
%


100
%       Results
    of Operations
    Years Ended December 31,CombinedUSPI

2009

2008

2007Total revenues


100.0
%


100.0
%


100.0
%Equity in earnings of unconsolidated affiliates


9.9



7.3



5.2Operating expenses, excluding depreciation and amortization


(67.4
)


(70.5
)


(74.0
)Depreciation and amortization


(5.6
)


(5.7
)


(6.0
)Operating income


36.9



31.1



25.2Interest and other expense, net


(15.5
)


(13.1
)


(11.7
)Income from continuing operations before income taxes


21.4



18.0



13.5Income tax benefit (expense)






(3.5
)


(2.9
)Income from continuing operations


21.4



14.5



10.6Loss from discontinued operations, net of tax






(0.1
)


(0.4
)Net income


21.4



14.4



10.2Less: Net income attributable to noncontrolling interests


(10.2
)


(8.6
)


(9.9
)Net income attributable to USPIs common stockholder


11.2
%


5.8
%


0.3
%    53




---



##### Table of Contents



Years Ended December 31,USPIs Unconsolidated Affiliates

2009

2008

2007Revenues


100.0
%


100.0
%


100.0
%Operating expenses:Salaries, benefits, and other employee costs


(23.6
)


(24.7
)


(26.2
)Medical services and supplies


(23.1
)


(21.2
)


(21.0
)Other operating expenses


(23.1
)


(24.9
)


(25.8
)Depreciation and amortization


(4.3
)


(4.8
)


(5.2
)Total operating expenses


(74.1
)


(75.6
)


(78.2
)Operating income


25.9



24.4



21.8Interest expense, net


(2.1
)


(2.4
)


(2.5
)Other, net


0.7



0.3



0.2Income before income taxes


24.5



22.3



19.5Income tax expense


(0.6
)


(0.6
)


(0.7
)Net income


23.9
%


21.7
%


18.8
%   Executive
    Summary
       54




---



##### Table of Contents



Our
    Business and Key Measures
    
    management services revenues, computed as a percentage of each
    facilitys net revenues (often net of bad debt
    expense); and
    our share of each facilitys net income, which is computed
    by multiplying the facilitys net income times the
    percentage of each facilitys equity interests owned by us.        
    equity in earnings of unconsolidated affiliates: our share of
    the net income of each facility, which is based on the
    facilities net income and the percentage of the
    facilitys outstanding equity interests owned by
    us; and
    management and administrative services revenues: income we earn
    in exchange for managing the day-to-day operations of each
    facility, usually quantified as a percentage of each
    facilitys net revenues less bad debt expense.   55




---



##### Table of Contents




    The results of operations of USPIs unconsolidated
    affiliates
    USPIs average ownership share in the facilities we
    operate; and
    Facility operating indicators, such as systemwide revenue
    growth, same store revenue growth, and same store operating
    margins  Our
    Consolidated and Unconsolidated Results
    Year Ended December 31,2009


2008


Variance to Prior YearUSPI As





USPI As





USPI AsReported





Reported





ReportedUnder


Unconsolidated


Under


Unconsolidated


Under


UnconsolidatedGAAP


Affiliates


GAAP


Affiliates


GAAP


AffiliatesRevenues:Net patient service revenues

$
533,609


$
1,171,242


$
561,532


$
996,315


$
(27,923
)

$
174,927Management and contract service revenues


77,404







72,970







4,434



Other income


11,352



3,176



7,721



2,168



3,631



1,008Total revenues


622,365



1,174,418



642,223



998,483



(19,858
)


175,935Equity in earnings of unconsolidated affiliates


61,771







47,042



13



14,729



(13
)Operating expenses:Salaries, benefits, and other employee costs


174,148



277,053



184,871



246,739



(10,723
)


30,314Medical services and supplies


102,673



271,663



112,499



211,781



(9,826
)


59,882Other operating expenses


94,633



243,241



107,659



218,337



(13,026
)


24,904General and administrative expenses


38,769







40,155







(1,386
)


Provision for doubtful accounts


8,958



28,528



7,568



29,497



1,390



(969
)Depreciation and amortization


35,297



50,251



36,757



48,722



(1,460
)


1,529Total operating expenses


454,478



870,736



489,509



755,076



(35,031
)


115,660Operating income


229,658



303,682



199,756



243,420



29,902



60,262Interest income


2,630



456



3,228



1,687



(598
)


(1,231
)Interest expense


(70,915
)


(24,850
)


(85,649
)


(25,788
)


14,734



938Other


(28,082
)


8,275



(1,790
)


2,962



(26,292
)


5,313Total other expense, net


(96,367
)


(16,119
)


(84,211
)


(21,139
)


(12,156
)


5,020Income from continuing operations before income taxes


133,291



287,563



115,545



222,281



17,746



65,282Income tax (expense) benefit


97



(6,860
)


(22,333
)


(5,566
)


22,430



(1,294
)Net income from continuing operations


133,388



280,703



93,212



216,715



40,176



63,988Loss from discontinued operations










(560
)






560



Net income


133,388


$
280,703



92,652


$
216,715



40,736


$
63,988Less: Net income attributable to noncontrolling interests


(63,722
)






(55,138
)






(8,584
)Net income attributable to USPI

$
69,666






$
37,514






$
32,152USPIs equity in earnings of unconsolidated affiliates





$
61,771






$
47,042






$
14,729   56




---



##### Table of Contents



Year Ended December 31,2008


Combined 2007


Variance to Prior YearUSPI As





USPI As





USPI AsReported





Reported





ReportedUnder


Unconsolidated


Under


Unconsolidated


Under


UnconsolidatedGAAP


Affiliates


GAAP


Affiliates


GAAP


AffiliatesRevenues:Net patient service revenues

$
561,532


$
996,315


$
573,031


$
793,123


$
(11,499
)

$
203,192Management and contract service revenues


72,970







65,645







7,325



Other income


7,721



2,168



5,167



2,036



2,554



132Total revenues


642,223



998,483



643,843



795,159



(1,620
)


203,324Equity in earnings of unconsolidated affiliates


47,042



13



33,773



118



13,269



(105
)Operating expenses:Salaries, benefits, and other employee costs


184,871



246,739



179,519



208,390



5,352



38,349Medical services and supplies


112,499



211,781



111,314



167,032



1,185



44,749Other operating expenses


107,659



218,337



106,079



183,123



1,580



35,214General and administrative expenses


40,155







68,617







(28,462
)


Provision for doubtful accounts


7,568



29,497



10,889



22,192



(3,321
)


7,305Depreciation and amortization


36,757



48,722



39,114



41,057



(2,357
)


7,665Total operating expenses


489,509



755,076



515,532



621,794



(26,023
)


133,282Operating income


199,756



243,420



162,084



173,483



37,672



69,937Interest income


3,228



1,687



4,141



2,826



(913
)


(1,139
)Interest expense


(85,649
)


(25,788
)


(77,383
)


(23,317
)


(8,266
)


(2,471
)Other


(1,790
)


2,962



(2,079
)


1,843



289



1,119Total other expense, net


(84,211
)


(21,139
)


(75,321
)


(18,648
)


(8,890
)


(2,491
)Income from continuing operations before income taxes


115,545



222,281



86,763



154,835



28,782



67,446Income tax expense


(22,333
)


(5,566
)


(18,848
)


(5,575
)


(3,485
)


9Net income from continuing operations


93,212



216,715



67,915



149,260



25,297



67,455Loss from discontinued operations


(560
)






(2,612
)






2,052



Net income


92,652


$
216,715



65,303


$
149,260



27,349


$
67,455Less: Net income attributable to noncontrolling interests


(55,138
)






(63,723
)






8,585Net income attributable to USPI

$
37,514






$
1,580






$
35,934USPIs equity in earnings of unconsolidated affiliates





$
47,042






$
33,773


$



$
13,269     Years Ended December 31,2009

2008

2007Long-term debt

$
271,781


$
273,438


$
278,417USPIs equity in earnings of unconsolidated affiliates


61,771



47,042



33,773USPIs imputed weighted average ownership percentage based
    on affiliates pretax income(1)


21.5
%


21.2
%


21.8
%USPIs imputed weighted average ownership percentage
    based
    on affiliates debt(2)


25.4
%


25.0
%


26.9
%Unconsolidated facilities operated at period end


109



101



93  57




---



##### Table of Contents



(1)
    
    Our weighted average percentage ownership in our unconsolidated
    affiliates is calculated as USPIs equity in earnings of
    unconsolidated affiliates divided by the total net income of
    unconsolidated affiliates for each respective period. This is no
    comparable GAAP measure but management believes it provides
    further useful information about its involvement in
    unconsolidated affiliates.(2)
    
    Our weighted average percentage ownership in our unconsolidated
    affiliates is calculated as the total debt of each
    unconsolidated affiliate, multiplied by the percentage ownership
    USPI held in the affiliate as of the end of each respective
    period, divided by the total debt of all of the unconsolidated
    affiliates as of the end of each respective period. This is no
    comparable GAAP measure but management believes it provides
    further useful information about its involvement in
    unconsolidated affiliates.  Form 10-K
      Our
    Ownership Interests in the Facilities We Operate
    Year Ended

Year Ended

Year EndedDecember 31,

December 31,

December 31,2009

2008

2007Unconsolidated facilities(1)


21.5
%


21.2
%


21.8
%Consolidated facilities(2)


48.1
%


48.8
%


46.5
%Total(3)


29.4
%


30.2
%


32.6
%     (1)
    
    Computed for unconsolidated facilities by dividing (a) our
    total equity in earnings of unconsolidated affiliates by
    (b) the aggregate net income of U.S. surgical facilities we
    account for under the equity method.(2)
    
    Computed for consolidated facilities by dividing (a) the
    aggregate net income of U.S. surgical facilities we operate less
    our total minority interests in income of consolidated
    subsidiaries by (b) the aggregate net income of our
    consolidated U.S. surgical facilities.(3)
    
    Computed in total by dividing our share of the facilities
    net income, defined as the sum of (a) in footnotes
    (1) and (2), by the aggregate net income of our U.S.
    surgical facilities, defined as the sum of (b) in footnotes
    (1) and (2).   58




---



##### Table of Contents



Revenues
    Year EndedDecember 31, 2009USPI AsReported Under


UnconsolidatedGAAP


AffiliatesTotal revenues, period ended December 31, 2008

$
642,223


$
998,483Add: revenue from acquired facilities


23,467



68,098Less: revenue of disposed facilities






(29,799
)Less: revenue of deconsolidated facilities


(42,420
)


42,420Impact of exchange rate


(18,884
)


Adjusted base year


604,386



1,079,202Operating growth


17,848



93,761Non-facility based revenue


131



1,455Total revenues, period ended December 31, 2009

$
622,365


$
1,174,418     Facility
    Growth
   59




---



##### Table of Contents



ramp-up
    Years Ended December 31,Combined2009

2008

2007United States facilities:Net revenue


8
%


11
%


10
%Surgical cases


2
%


2
%


6
%Net revenue per case(1)


5
%


9
%


3
%United Kingdom facilities:Adjusted admissions


(5
)%


9
%


8
%Net revenue using actual exchange rates


(14
)%


3
%


23
%Net revenue using constant exchange rates(2)


2
%


11
%


13
%All same store facilities:Net revenue using actual exchange rates


6
%


10
%


11
%     (1)
    
    Our overall domestic same store growth in net revenue per case
    for 2009 was favorably impacted by the 12% growth at our twelve
    same store surgical hospitals, which on average perform more
    complex cases and thus earn a higher average net revenue per
    case than ambulatory surgery centers. The net revenue per case
    growth at our ambulatory surgery centers was 6% during 2009. The
    favorable impact, in the first quarter of 2008, of our
    collecting amounts related to past patient services in
    conjunction with our finalizing a new contract with a major
    payor has been excluded from these growth rates as it relates to
    dates of service prior to January 1, 2008. The revenue
    reductions related to two similar, but adverse, adjustments in
    the second quarter of 2008 were excluded for similar reasons, as
    was the unfavorable impact of such an amount which arose during
    the second quarter of 2009.(2)
    
    Calculated using constant exchange rates for all periods.
    Although this computation represents a non-GAAP measure, we
    believe that using a constant currency translation rate more
    accurately reflects the trend of the business.  Joint
    Ventures with Not-for-Profit Hospitals
     60




---



##### Table of Contents



2009


2008


2007United States facilities(1):With a hospital partner


109



99



91Without a hospital partner


56



62



61Total U.S. facilities


165



161



152United Kingdom facilities


4



3



3Total facilities operated


169



164



155Change from prior year-end:De novo (newly constructed)(2)


4



4



11Acquisition


7



10



9Disposals(3)


(6
)


(5
)


(6
)Total increase in number of facilities


5



9



14     (1)
    
    At December 31, 2009, physicians own a portion of all of
    these facilities.(2)
    
    We now consider our operations at the Parkside facility in
    London, consisting of a hospital and an oncology clinic, to be
    two separate entities in our facility count.(3)
    
    During 2009, we sold our ownership interests in facilities in
    East Brunswick, New Jersey; Cleveland, Ohio; San Antonio,
    Texas; Baton Rouge, Louisiana; and Oxnard, California. We also
    merged one of our surgery centers into one of our surgical
    hospitals in Oklahoma. During 2008, we sold ownership interests
    in facilities in Sarasota, Florida; Los Angeles, California;
    Cleveland, Ohio; Manitowoc, Wisconsin; and Las Cruces,
    New Mexico. During 2007, we sold our ownership interests in
    facilities in Canton, Mississippi; Atlanta, Georgia; Baltimore,
    Maryland; Houston, Texas and Decatur, Alabama. Additionally, we
    ceased operating a facility effective October 1, 2007
    although we continued to hold an ownership interest until we
    sold it in July 2008.  Facility
    Operating Margins
    ramp-up
 61




---



##### Table of Contents



Year Ended December 31,Combined2009

2008

2007United States facilities:With a hospital partner


340
bps


170
bps


(210
) bpsWithout a hospital partner


20



(260
)


40Total U.S. facilities(2)


250



10



(140
)United Kingdom facilities(3)


(160
)bps


80
bps


300
bps     (1)
    
    Operating margin is calculated as operating income divided by
    total revenues. This table aggregates all of the same store
    facilities we operate using 100% of their results. This does not
    represent the overall margin for USPIs operations in
    either the U.S. or U.K. because we have a variety of ownership
    levels in the facilities we operate, and facilities open for
    less than a year are excluded from same store calculations.(2)
    
    The favorable impact, in the first quarter of 2008, of our
    collecting amounts related to past patient services in
    conjunction with our finalizing a new contract with a major
    payor has been excluded from these growth rates as it relates to
    dates of service prior to January 1, 2008. The revenue
    reductions related to two similar, but adverse, adjustments in
    the second quarter of 2008 were excluded for similar reasons, as
    was the unfavorable impact of such an amount which arose during
    the second quarter of 2009.(3)
    
    Calculated using constant exchange rates for all periods.
    Although this computation represents a non-GAAP measure, we
    believe that using a constant translation rate more accurately
    reflects the trend of the business. In addition, the
    $1.0 million favorable impact of a one-time recovery of
    value-added tax during the second quarter of 2009 has been
    excluded from U.K. same facility operating margins.  Year
    Ended December 31, 2009 Compared to Year Ended
    December 31, 2008
         62




---



##### Table of Contents



Year
    Ended December 31, 2008 Compared to Combined Year Ended
    December 31, 2007
   63




---



##### Table of Contents



64




---



##### Table of Contents



Liquidity
    and Capital Resources
  Years Ended December 31,Combined2009


2008


2007Net cash provided by operating activities

$
185,213


$
145,586


$
157,241Net cash used in investing activities


(87,928
)


(101,337
)


(78,579
)Net cash used in financing activities


(112,026
)


(71,573
)


(34,099
)   Overview
   65




---



##### Table of Contents



Operating
    Activities
    follow-up and/or
    Investing
    Activities
   66




---



##### Table of Contents



Acquisitions
    and Sales
    Effective Date

Facility Location

AmountInvestmentsFebruary 2009

Fort Worth, Texas

$
2.0 millionFebruary 2009

Stockton, California


2.5 millionMay 2009

St. Louis, Missouri


0.9 millionJuly 2009

Fort Worth, Texas


1.0 millionSeptember 2009

Fort Worth, Texas


1.2 millionDecember 2009

Nashville, Tennessee


6.1 millionDecember 2009

Cincinnati, Ohio


17.7 millionDecember 2009

Portland, Oregon


11.1 millionDecember 2009

Houston, Texas


9.9 millionVarious

Various


7.1 million59.5 millionSalesFebruary 2009

East Brunswick, New Jersey

$
0.7 millionMarch 2009

Phoenix, Arizona


0.1 millionJuly 2009

Oklahoma City, Oklahoma


0.2 millionDecember 2009

Fort Worth, Texas


2.4 millionDecember 2009

Baton Rouge, Louisiana


(5.1 million
)December 2009

Oxnard, California


0.3 millionDecember 2009

Dallas, Texas


1.2 millionVarious

Various


0.2 million   millionTotal



$
59.5 million       Property
    and Equipment/Facilities under Development
     67




---



##### Table of Contents



Financing
    Activities
          Dividend
    Payment
   68




---



##### Table of Contents



Debt
  Senior
    secured credit facility
  buy-up buy-up
      Senior
    subordinated notes
  7 8 1 4 payment-in-kind 1 4
 69




---



##### Table of Contents



United
    Kingdom borrowings
        Equity
    Contribution from USPI Group Holdings, Inc. and Payments to
    Repurchase Stock
    Purchases
    and Sales of Noncontrolling Interests
    Stock
    Option and Stock Purchase Plans
   70




---



##### Table of Contents



Contractual
    Cash Obligations
    Payments Due by PeriodWithin


Years


Years


BeyondContractual Cash Obligations

Total


1 Year


2 and 3


4 and 5


5 Years(In thousands)Long term debt obligations:Senior secured credit facility(1)

$
518,710


$
5,265


$
10,530


$
502,915


$
Senior subordinated notes, due 2017(1)


240,000















240,000Senior subordinated toggle notes, due 2017(1)


197,515















197,515U.K. credit facility(1)


59,966



7,038



16,784



36,144



Other debt at operating subsidiaries(1)


25,045



6,546



9,479



4,298



4,722Interest on long-term debt obligations(2)


382,401



61,694



120,936



103,485



96,286Capitalized lease obligations(3)


51,442



7,651



11,730



7,141



24,920Operating lease obligations


70,909



14,479



23,125



14,500



18,805Total contractual cash obligations

$
1,545,988


$
102,673


$
192,584


$
668,483


$
582,248     (1)
    
    Scheduled principal payments.(2)
    
    Represents interest due on long-term debt obligations. For
    variable rate debt, the interest is calculated using the
    December 31, 2009 rates applicable to each debt instrument
    and also gives effect to the interest rate swaps designated in a
    cash flow hedging relationship against portions of the U.K.
    credit facility and the senior secured credit facility in the
    U.S.(3)
    
    Includes principal and interest.  Debt at
    Operating Subsidiaries
       71




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##### Table of Contents



Off-Balance
    Sheet Arrangements
      Related
    Party Transactions
     72




---



##### Table of Contents



Date

Facility Location


Proceeds


Gain (Loss)December 2009


Dallas, Texas(1
)

$
1.2 million


$
0.3 millionDecember 2009


Fort Worth, Texas(2
)


2.4 million



0.1 millionTotal





$
3.6 million


$
0.4 millionJune 2008


Dallas, Texas(3
)

$
2.3 million


$
(0.9 million
)July 2007


Dallas, Texas(4
)

$
3.7 million


$
     (1)
    
    Baylor acquired a controlling interest in a facility from us,
    which transferred control of the facility from us to Baylor.(2)
    
    Baylor acquired a controlling interest in two facilities. We
    continue to account for these facilities under the equity method
    of accounting.(3)
    
    Baylor acquired an additional ownership interest in a facility
    it already co-owned with us and local physicians, which
    transferred control of the facility from us to Baylor.(4)
    
    Baylor acquired an additional ownership interest in two
    facilities it already co-owned with us and local physicians,
    which transferred control of the facilities from us to Baylor.
    No gain or loss was recorded upon the sale as the sale price
    approximated our carrying value.          New
    Accounting Pronouncements
  No. 2009-17, Improvements to Financial Reporting by Enterprises Involved
    with Variable Interest Entities 2009-17). 2009-17 2009-17 2009-17
 73




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##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk              Item 8.
    Financial
    Statements and Supplementary Data  Form 10-K.
 74




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Form 10-K, Form 10-K.
  Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f).
    
    Pertain to the maintenance of records that in reasonable detail,
    accurately and fairly reflect the transactions and dispositions
    of our assets.
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with U.S. generally accepted accounting
    principles, and that our receipts and expenditures are being
    made only in accordance with authorizations of our management
    and board of directors; and
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on the financial
    statements.  Internal Control  Integrated
    Framework
  
    USP Portland, Inc. (Investment in East Portland Surgery Center,
    L.L.C.)
    USP Cincinnati, Inc.
    USP Houston, Inc. (Investment in Memorial Hermann Surgery Center
    Richmond, L.L.C.)
    USP North Texas, Inc. (Investment in BremnerDuke Mary Shiels
    Development, L.P.) 75




---



##### Table of Contents



Limitations
    on the Effectiveness of Controls
    Changes
    in Internal Control Over Financial Reporting
    Item 9B.
    Other
    Information   76




---



##### Table of Contents



PART III  ITEM 10.
    Directors,
    Executive Officers and Corporate Governance  Directors
    and Executive Officers
    Name

Age

Position(s)Donald E. Steen


63


Chairman of the BoardWilliam H. Wilcox


58


President, Chief Executive Officer and DirectorBrett P. Brodnax


45


Executive Vice President and Chief Development OfficerMark A. Kopser


45


Executive Vice President and Chief Financial OfficerNiels P. Vernegaard


53


Executive Vice President and Chief Operating OfficerJohn J. Wellik


48


Senior Vice President, Chief Administrative Officer and SecretaryJoel T. Allison


62


DirectorMichael E. Donovan


33


DirectorJohn C. Garrett, M.D.


67


DirectorD. Scott Mackesy


41


DirectorJames Ken Newman


66


DirectorBoone Powell, Jr.


73


DirectorPaul B. Queally


45


DirectorRaymond A. Ranelli


62


Director   Donald E. Steen
  William H. Wilcox
  Brett P. Brodnax
  Mark A. Kopser
 77




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##### Table of Contents



Niels P. Vernegaard
  John J. Wellik
  Joel T. Allison
  Michael E. Donovan
  John C. Garrett, M.D.
  D. Scott Mackesy
  James Ken Newman
  Boone Powell, Jr.
  Paul B. Queally
  Raymond A. Ranelli
  Audit
    Committee Financial Expert
   78




---



##### Table of Contents



Nominations
    for the Board of Directors
    Section 16(a)
    Beneficial Ownership Reporting Compliance
    Code of
    Ethics
    Item 11.
    Executive
    Compensation  Overview
      Our
    Compensation Philosophy and Objectives
    
    attract and retain superior executive talent in the healthcare
    industry;
    motivate and reward executives to achieve optimum short-term and
    long-term corporate operating results;
    align the interests of our executive officers and stockholders
    by motivating executive officers to increase stockholder
    value; and
    provide a compensation package that recognizes individual
    contributions as well as overall business results.   79




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##### Table of Contents



Compensation
    Components
    Base
    Salary
    Annual
    Bonus
    Long-Term
    Equity Incentives
    Termination
    Based Compensation
    Perquisites
   80




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##### Table of Contents



Other
    Benefits
    Compensation
    Committee Report
  Regulation S-K Form 10-K.
    
  Summary
    Compensation Table for 2009
   Change inNonqualifiedNon-Equity

DeferredStock

Option

Incentive Plan

Compensation

All OtherName and Principal Position

Year

Salary

Bonus

Awards(1)

Awards(1)

Compensation

Earnings

Compensation

TotalWilliam H. Wilcox


2009


$
600,000


$
750,000
(2)

$
400,507


$







$
243,982


$
264,350
(4)

$
2,258,839President, Chief


2008



600,000



540,000
(3)


401,605











(129,167
)


251,275
(4)


1,663,713Executive Officer and


2007



575,000



287,500
(5)


280,903











195,436



250,739
(4)


1,589,578DirectorBrett P. Brodnax


2009



384,000



288,000
(6)


160,203











129,867



38,050
(4)


1,000,120Executive Vice President


2008



379,167



230,000
(6)


160,642











(100,590
)


32,702
(4)


701,921and Chief Development


2007



365,000



136,875
(2)


112,361











49,850



30,823
(4)


694,909OfficerMark A. Kopser


2009



358,000



268,500
(2)


143,339











81,803



35,546
(4)


887,188Executive Vice President


2008



353,000



205,917
(2)


143,732











(92,177
)


30,924
(4)


641,396and Chief Financial


2007



340,000



127,500
(2)


100,534











37,264



29,238
(4)


634,536OfficerJohn J. Wellik


2009



261,000



156,600
(2)


16,863











55,484



26,825
(4)


516,772Senior Vice President,


2008



257,333



128,500
(2)


16,910











(78,692
)


23,472
(4)


347,523Chief Administrative


2007



247,000



74,100
(2)


11,828











25,243



22,138
(4)


380,309Officer and SecretaryNiels P. Vernegaard


2009



428,000



321,000
(2)


143,339











91,422



116,039
(4)


1,099,800Executive Vice President


2008



421,333



245,778
(2)


143,732











22,187



110,592
(4)


943,622and Chief Operating


2007



406,667



152,500
(2)


100,534











25,634



106,250
(4)


791,585Officer     (1)
    
    We account for the cost of stock-based compensation awarded
    under our 2001 Equity-Based Compensation Plan and the 2007
    Equity Incentive Plan adopted by our Parent under which the cost
    of equity awards to employees is measured by the fair value of
    the awards on their grant date and is recognized over the
    vesting periods of the awards, whether or not the awards had any
    intrinsic value during the period. The 2001 Equity-Based
    Compensation Plan was cancelled in connection with the merger.
    Amounts shown in the table above reflect the dollar amount
    recognized for financial statement reporting purposes for 2007,
    2008 and 2009 of awards granted under the 2001 Equity-Based
    Compensation Plan and the 2007 Equity Incentive Plan and thus
    may include amounts from awards granted in prior years. No
    forfeitures occurred during 2007, 2008 or 2009. All 2001
    Equity-Based Compensation Plan awards are based on the closing
    market price of our common stock on the date of grant. The 2007
    Equity Incentive Plan awards are valued at $0.32 per share which
    we determined with the assistance of a third party valuation
    firm as the value of our Parents common stock on the date
    of grant. Assumptions used in calculation of these amounts are
    included in Note 11 to our consolidated audited financial
    statements for the fiscal year ended December 31, 2007,
    included in our Annual Report on
    Form 10-K
    filed with the Securities and Exchange Commission
    (SEC) on February 29, 2008, and in Note 15
    to our consolidated 81




---



##### Table of Contents



audited financial statements for the fiscal year ended
    December 31, 2009, included in this Annual Report on Form
    10-K.(2)
    
    Ninety percent of the amount shown was paid in cash and ten
    percent was deferred at our named executive officers
    election pursuant to USPIs Deferred Compensation Plan (the
    DCP).(3)
    
    Seventy-five percent of the amount shown was paid in cash and
    twenty-five percent was deferred at Mr. Wilcoxs
    election pursuant to the DCP.(4)
    
    Includes discretionary contributions to the named executive
    officers DCP and matching contributions to the named
    executive officers 401(k) and DCP accounts as follows:  Discretionary

Matching

MatchingContribution

Contribution

Contributionto DCP

401(k)

DCPMr. Wilcox2009

$
200,000


$
7,350


$
57,0002008


200,000



6,900



44,3752007


200,000



6,548



44,191Mr. Brodnax2009






7,350



30,7002008






6,900



25,8022007






6,390



24,433Mr. Kopser2009






7,350



28,1962008






6,900



24,0242007






6,390



22,848Mr. Wellik2009






7,350



19,4752008






6,900



16,5722007






6,402



15,736Mr. Vernegaard2009


75,000



7,350



33,6892008


75,000



6,900



28,6922007


75,000



6,750



24,500     (5)
    
    Sixty-five percent of the amount shown was paid in cash and
    thirty-five percent was deferred at Mr. Wilcoxs
    election pursuant to the DCP.(6)
    
    Fifty percent of the amount shown was paid in cash and fifty
    percent was deferred at Mr. Brodnaxs election
    pursuant to the DCP.  Grant of
    Plan-Based Awards
   82




---



##### Table of Contents



Outstanding
    Equity Awards at Fiscal Year-End
    Stock Awards(1)Number of Shares

Fair Value ofor Units of Stock

Shares or Units ofThat Have Not

Stock That HaveName

Vested

Not Vested(2)William H. Wilcox


3,562,500
(3)

$
4,310,625495,536
(4)


599,599Brett P. Brodnax


1,425,000
(3)


1,724,250275,853
(4)


333,782Mark A. Kopser


1,275,000
(3)


1,542,750220,683
(4)


267,026John J. Wellik


50,000
(3)


60,50073,561
(4)


89,009Niels P. Vernegaard


1,275,000
(3)


1,542,750245,203
(4)


296,696     (1)
    
    Upon consummation of the merger, our named executive officers
    received new stock awards under the 2007 Equity Incentive Plan.(2)
    
    Because there is no active trading market for our common stock,
    we rely on members of the compensation committee and Welsh
    Carson to determine in good faith the fair value of our common
    stock. As of December 31, 2009, this value was determined
    to be $1.21 per share of common stock. Neither USPI, USPI
    Holdings, Inc. nor USPI Group Holdings, Inc. has any class of
    equity securities registered under Section 12 of the
    Exchange Act.(3)
    
    The restrictions with respect to 16.7% of such shares will lapse
    on April 19 of each of 2010 and 2011. The restrictions with
    respect to the remaining shares will lapse on April 19,
    2015; provided however, that such restrictions may lapse sooner
    if certain internal rate of return targets are met.(4)
    
    The restrictions with respect to such shares will lapse upon a
    change of control or other exit event provided that Welsh Carson
    shall have disposed of all of its shares of our Parent acquired
    in connection with the merger and received its cost basis in
    such shares plus a return of at least 100%.  Option
    Exercises and Stock Values
    Option Awards

Stock AwardsNumber of



Number ofShares

Value

Shares

ValueAcquired

Realized

Acquired on

RealizedName

on Exercise

on Exercise

Vesting

on Vesting(1)William H. Wilcox


N/A


$




593,750


$
558,125Brett P. Brodnax


N/A







237,500



223,250Mark A. Kopser


N/A







212,500



199,750John J. Wellik


N/A







25,000



23,500Niels P. Vernegaard


N/A







212,500



199,750     (1)
    
    Because there is no active trading market for our common stock,
    we rely on members of the compensation committee and Welsh
    Carson to determine in good faith the fair value of our common
    stock. As of April 19, 2009, this value was determined to
    be $0.94 per share of common stock. Neither USPI, USPI Holdings,
    Inc. nor USPI Group Holdings, Inc. has any class of equity
    securities registered under Section 12 of the Exchange Act. 83




---



##### Table of Contents



Restricted
    Stock and Option Plan
               84




---



##### Table of Contents



Nonqualified
    Deferred Compensation
    AggregateAggregate

Balance atExecutive

USPI

Aggregate

Withdrawals/

December 31,Name

Contribution

Contribution

Earnings

Distributions

2009William H. Wilcox

$
195,000


$
257,000


$
243,982


$
(92,066
)

$
2,607,258Brett P. Brodnax


153,400



30,700



129,867



(36,672
)


661,880Mark A. Kopser


56,392



28,196



81,803



(21,850
)


373,926John J. Wellik


38,950



19,475



55,484



(20,236
)


286,159Niels P. Vernegaard


67,378



108,689



91,422







753,712   Deferred
    Compensation Plan
             85




---



##### Table of Contents



Employment
    Arrangements and Agreements
               86




---



##### Table of Contents



Potential
    Payments Upon Termination or Change of Control
    Cash





AcceleratedSeverance

Accrued



Vesting uponName

Payment

Bonus(1)(2)

Benefits(3)

Change of Control(4)William H. Wilcox

$
1,200,000
(5)

$
750,000


$
14,352
(5)

$
4,910,224Brett P. Brodnax


384,000
(6)


288,000



6,876
(6)


2,058,032Mark A. Kopser


358,000
(6)


268,500



8,004
(6)


1,809,776John J. Wellik


261,000
(6)


156,600



8,004
(6)


149,509Niels P. Vernegaard


428,000
(6)


321,000



8,004
(6)


1,839,446     (1)
    
    Amounts are based on the bonus amount paid with respect to 2009.(2)
    
    Amounts will be paid at such time as annual bonuses are payable
    to other executive and officers of USPI in accordance with
    USPIs normal payroll practices.(3)
    
    Amounts consist of the cost to continue to pay such named
    executive officers health insurance benefits for the
    designated term or the economic equivalent thereof if such
    continuation is not permissible under the terms of the
    USPIs health insurance plan.(4)
    
    Pursuant to the restricted stock award agreements with our named
    executive officers, all unvested restricted shares of our
    Parents common stock will vest in full upon a change of
    control if, as a result of such change of control, Welsh Carson
    shall have disposed of all of its shares of our Parent acquired
    in connection with the merger and received its cost basis in
    such shares plus a return of at least 100%. A change of control
    is not defined to include an initial public offering of our
    stock. In the event such restricted shares do not vest on such
    change of control, then such restricted shares shall be
    forfeited upon the closing of such change of control
    transaction. The results in this column are the result of
    multiplying the total possible number of restricted shares of
    our Parents common stock that vest upon a change of
    control by $1.21 per share. Because there is no active trading
    market for our common stock, we rely on members of the
    compensation committee and Welsh Carson to determine in good
    faith the fair value of our common stock. As of
    December 31, 2009, this value was determined to be $1.21
    per share of common stock. Neither USPI, USPI Holdings, Inc. nor
    USPI Group Holdings, Inc. has any class of equity securities
    registered under Section 12 of the Exchange Act.(5)
    
    Amounts to be paid over twenty-four months.(6)
    
    Amounts to be paid over twelve months.  Director
    Compensation
   87




---



##### Table of Contents



2009
    Non-Employee Director Compensation Table
  Fees Earned or

Stock

All OtherName

Paid in Cash

Awards(1)

Compensation

TotalJoel T. Allison

$



$







$
John C. Garrett, M.D.


42,250



10,238







52,488James Ken Newman


41,000



10,238







51,238Boone Powell, Jr.


32,500



10,934







43,434Raymond A. Ranelli


61,000



10,238







71,238     (1)
    
    We account for the cost of stock-based compensation awarded
    under the 2007 Equity Incentive Plan adopted by our Parent under
    which the cost of equity awards to employees is measured by the
    fair value of the awards on their grant date and is recognized
    over the vesting periods of the awards, whether or not the
    awards had any intrinsic value during the period. Amounts shown
    in the table above reflect the dollar amount recognized for
    financial statement reporting purposes for 2009 of awards
    granted under the 2007 Equity Incentive Plan and thus may
    include amounts from awards granted in prior years. No
    forfeitures occurred during 2009. The 2007 Equity Incentive Plan
    awards are valued at $0.32 per share which we determined with
    the assistance of a third party valuation firm as the value of
    our Parents common stock on the date of grant. Assumptions
    used in calculation of these amounts are included in
    Note 15 to our consolidated audited financial statements
    for the fiscal year ended December 31, 2009, included in
    this Annual Report on
    Form 10-K.  Compensation
    Committee Interlocks and Insider Participation
    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters     88




---



##### Table of Contents



Participating

Percent ofCommon

Percent of

Preferred

OutstandingShares

Outstanding

Shares

ParticipatingBeneficially

Common

Beneficially

PreferredName of Beneficial Owner(1)

Owned

Shares

Owned

SharesWelsh, Carson, Anderson & Stowe(2)


136,448,356



86.4
%


17,326,775



96.3
%California State Teachers Retirement System(3)


22,183,099



14.0
%


2,816,901



15.7
%CPP Investment Board (USRE II) Inc.(4)


26,619,718



16.8
%


3,380,282



18.8
%Silvertech Investment PTE Ltd(5)


8,873,239



5.6
%


1,126,761



6.3
%Donald E. Steen(6)


1,421,127




*


78,873




*William H. Wilcox(7)


6,488,790



4.1
%


157,746




*Brett P. Brodnax(8)


2,388,811



1.5
%


27,042




*Mark A. Kopser(9)


2,364,345



1.5
%


56,338




*Niels P. Vernegaard(10)


2,007,194



1.3
%


7,872




*John J. Wellik(11)


317,927




*


5,634




*Joel T. Allison














Michael E. Donovan(12)(13)


40,000




*






John C. Garrett, M.D.(13)


173,095




*


16,901




*D. Scott Mackesy(12)(13)


40,000




*






James K. Newman(13)


217,463




*


22,535




*Boone Powell, Jr.(13)


111,001




*


9,016




*Paul B. Queally (12)(14)


215,457




*


22,281




*Raymond A. Ranelli(13)


93,261




*


6,985




*All directors and executive officers as a group(15)


15,878,471



10.1
%


411,223



2.3
%     *
    
    Less than one percent(1)
    
    Unless otherwise indicated, the principal executive offices of
    each of the beneficial owners identified are located at 15305
    Dallas Parkway, Suite 1600, Addison, Texas 77001.(2)
    
    Represents (A) 54,671,610 common shares and 6,942,423
    participating preferred shares held by Welsh Carson over which
    Welsh Carson has sole voting and investment power,
    (B) 25,200 common shares and 3,200 participating preferred
    shares held by WCAS Management Corporation, an affiliate of
    Welsh Carson, over which WCAS Management Corporation has sole
    voting and investment power, (C) an aggregate 1,462,785
    common shares and 185,752 participating preferred over which
    individuals who are general partners of WCAS X Associates LLC,
    the sole general partner of Welsh Carson, and/or otherwise
    employed by an affiliate of Welsh, Carson, Anderson &
    Stowe have voting and investment power, and (D) an
    aggregate 80,288,761 common shares and 10,195,400 participating
    preferred shares held by other co-investors, over which Welsh
    Carson has sole voting power. WCAS X Associates LLC, the sole
    general partner of Welsh Carson and the individuals who serve as
    general partners of WCAS X Associates LLC, including D. Scott
    Mackesy, Paul B. Queally and Michael E. Donovan, may be deemed
    to beneficially own the shares beneficially owned by Welsh
    Carson. Such persons disclaim beneficial ownership of such
    shares. The principal executive offices of Welsh, Carson,
    Anderson & Stowe are located at 320 Park Avenue,
    Suite 2500, New York, New York 10022.(3)
    
    Such beneficial owner has granted to Welsh Carson sole voting
    power over its shares. The principal executive offices of such
    beneficial owner is 7667 Folsom Blvd., Suite 250,
    Sacramento, California 95826.(4)
    
    Such beneficial owner has granted to Welsh Carson sole voting
    power over its shares. The principal executive offices of such
    beneficial owner is One Queen Street East, Suite 2600,
    Toronto, Ontario, M5C 2W5, Canada. 89




---



##### Table of Contents



(5)
    
    Such beneficial owner has granted to Welsh Carson sole voting
    power over its shares. The principal executive offices of such
    beneficial owner is 255 Shoreline Drive, Suite 600, Redwood
    City, California 94065.(6)
    
    Includes 100,000 common shares owned by the Michelle Ann Steen
    Trust and 100,000 common shares owned by the Marcus Anthony
    Steen Trust for which, in each case, Mr. Steen acts as a
    trustee and has voting and investment power over such shares.
    Such shares are subject to restrictions on transfer set forth in
    a restricted stock award agreement entered into at the time of
    the consummation of the merger. Also included are another
    600,000 common shares which are subject to restrictions on
    transfer set forth in a restricted stock award agreement entered
    into at the time of the consummation of the merger.(7)
    
    Includes 5,246,536 common shares which are subject to
    restrictions on transfer set forth in a restricted stock award
    agreement entered into at the time of the consummation of the
    merger.(8)
    
    Includes 2,175,853 common shares which are subject to
    restrictions on transfer set forth in a restricted stock award
    agreement entered into at the time of the consummation of the
    merger.(9)
    
    Includes 1,920,683 common shares which are subject to
    restrictions on transfer set forth in a restricted stock award
    agreement entered into at the time of the consummation of the
    merger.(10)
    
    Includes 1,945,203 common shares which are subject to
    restrictions on transfer set forth in a restricted stock award
    agreement entered into at the time of the consummation of the
    merger.(11)
    
    Includes 273,561 common shares which are subject to restrictions
    on transfer set forth in a restricted stock award agreement
    entered into at the time of the consummation of the merger.(12)
    
    Does not include (A) 54,671,610 common shares or 6,942,423
    participating preferred shares owned by Welsh Carson, or
    (B) 25,200 common shares or 3,200 participating preferred
    shares owned by WCAS Management Corporation. Messrs Queally,
    Mackesy and Donovan, as general partners of WCAS X Associates
    LLC, the sole general partner of Welsh Carson, and officers of
    WCAS Management Corporation, may be deemed to beneficially own
    the shares beneficially owned by Welsh Carson and WCAS
    Management Corporation. Each of Messrs Queally, Mackesy and
    Donovan disclaims beneficial ownership of such shares. The
    principal executive offices of Messrs Queally, Mackesy and
    Donovan are located at 320 Park Avenue, Suite 2500, New
    York, New York 10022.(13)
    
    Includes 40,000 common shares which are subject to restrictions
    on transfer set forth in a restricted stock award agreement.(14)
    
    Includes (A) an aggregate 3,090 common shares and 393
    preferred shares owned by certain trusts established for the
    benefit of Mr. Queallys children for which, in each
    case, Mr. Queally acts as a trustee and has voting and
    investment power over such shares and (B) 40,000 common
    shares which are subject to restrictions on transfer set forth
    in a restricted stock awards agreement.(15)
    
    Does not include (A) 54,671,610 common shares or 6,942,423
    participating preferred shares owned by Welsh Carson, or
    (B) 25,200 common shares or 3,200 participating preferred
    shares owned by WCAS Management Corporation. Includes an
    aggregate 12,361,836 common shares which are subject to
    restrictions on transfer set forth in restricted stock award
    agreements entered into at the time of the consummation of the
    merger.  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Arrangements
    with Our Investors
   90




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##### Table of Contents



Stockholders
    Agreement
    Management
    Agreement
  out-of-pocket
  Other
    Arrangements with Directors and Executive Officers
  Restricted
    Stock and Option Plan
    Employment
    Agreements
    Other
    Arrangements
      Date

Facility Location


Proceeds


GainDecember 2009


Dallas, Texas(1
)

$
1.2 million


$
0.3 millionDecember 2009


Fort Worth, Texas(2
)


2.4 million



0.1 millionTotal





$
3.6 million


$
0.4 million     (1)
    
    Baylor acquired a controlling interest in a facility from us,
    which transferred control of the facility to Baylor.(2)
    
    Baylor acquired a controlling interest in two facilities. We
    continue to account for these facilities under the equity method
    of accounting.   91




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##### Table of Contents



Regulation S-X.
        ITEM 14.
    Principal
    Accounting Fees and Services    Description of Fees

2009


2008Audit Fees(1)

$
1,331,900


$
1,340,500Audit Related Fees(2)


41,995



Tax Fees(3)






All Other Fees(4)


198,000



155,000$
1,571,895


$
1,495,500     (1)
    
    Audit Fees. Includes fees billed for professional services
    rendered for the audit of our annual financial statements
    included in our
    Form 10-K,
    reviews of our quarterly financial statements included in
    Forms 10-Q,
    reviews of our other filings with the SEC, and other research
    work necessary to comply with generally accepted accounting
    standards for the years ended December 31, 2009 and 2008.(2)
    
    Audit Related Fees. Includes fees billed for assurance and
    related services that are reasonably related to the performance
    of the audit or review of our financial statements and are not
    reported under Audit Fees. These services include
    other accounting and reporting consultations.(3)
    
    Tax Fees. Includes fees billed for tax compliance, tax advice,
    and tax planning.(4)
    
    All Other Fees. Includes fees billed for assistance with
    preparation of Medicare cost reports.   92




---



##### 



PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules  (a)
    (1) Financial
    Statements  Form 10-K:
  Reports of Independent Registered Public
    Accounting Firm


F-1Consolidated Balance Sheets


F-4Consolidated Statements of Operations


F-5Consolidated Statements of Comprehensive Income
    (Loss)


F-6Consolidated Statements of Changes in Equity


F-7Consolidated Statements of Cash Flows


F-8Notes to Consolidated Financial Statements


F-9(2) Financial Statement Schedule 
    Schedule II


S-1(3) The following consolidated financial statements of Texas
    Health Ventures Group, L.L.C. and Subsidiaries are presented
    pursuant to
    Rule 3-09
    of
    Regulation S-X:Reports of Independent Auditors


2Consolidated Balance Sheets as of June 30,
    2009 and 2008


3Consolidated Statements of Income for the years
    ended June 30, 2009 and 2008


4Consolidated Statements of Members Equity
    for the years ended June 30, 2009 and 2008


5Consolidated Statements of Cash Flows for the
    years ended June 30, 2009 and 2008


6Notes to the Consolidated Financial Statements


8Report of Independent Auditors


24Consolidated Balance Sheets as of June 30,
    2008 and 2007


25Consolidated Statements of Income for the years
    ended June 30, 2008 and 2007


26Consolidated Statements of Members Equity
    for the years ended June 30, 2008 and 2007


27Consolidated Statements of Cash Flows for the
    years ended June 30, 2008 and 2007


28Notes to the Consolidated Financial Statements


29(4) Exhibits


IV-1   93




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           Internal Control 
    Integrated Framework
    KPMG
    LLP
    F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
     Internal Control  Integrated
    Framework Managements Report on Internal Control
    over Financial Reporting.
        Internal Control 
    Integrated Framework
    
    USP Portland, Inc. (Investment in East Portland Surgery Center,
    L.L.C.)
    USP Cincinnati, Inc.
    USP Houston, Inc. (Investment in Memorial Hermann Surgery Center
    Richmond, L.L.C.)
    USP North Texas, Inc. (Investment in BremnerDuke Mary Shiels
    Development, L.P.) F-2




---



##### Table of Contents



KPMG
    LLP
    F-3




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Consolidated Balance Sheets
    December 31, 2009 and 2008  2009


2008(In thousands, except share amounts)ASSETSCash and cash equivalents

$
34,890


$
49,435Accounts receivable, net of allowance for doubtful accounts of
    $8,160 and $11,544, respectively


54,237



57,213Other receivables (Note 7)


15,246



17,070Inventories of supplies


8,789



9,079Deferred tax asset, net (Note 14)


16,400



Prepaids and other current assets


14,382



11,735Total current assets


143,944



144,532Property and equipment, net (Note 8)


198,506



201,824Investments in unconsolidated affiliates (Note 4)


355,499



307,771Goodwill (Note 9)


1,279,291



1,270,287Intangible assets, net (Note 9)


322,896



318,852Other assets


25,256



24,897Total assets

$
2,325,392


$
2,268,163LIABILITIES AND EQUITYAccounts payable

$
23,475


$
22,194Accrued salaries and benefits


33,015



27,241Due to affiliates


129,296



57,237Accrued interest


8,784



9,336Current portion of long-term debt (Note 10)


23,337



24,488Other current liabilities


39,053



42,874Total current liabilities


256,960



183,370Long-term debt, less current portion (Note 10)


1,048,191



1,073,459Other long-term liabilities


32,466



27,517Deferred tax liability, net (Note 14)


125,907



125,639Total liabilities


1,463,524



1,409,985Noncontrolling interests  redeemable (Notes 2
    and 5)


63,865



51,961Commitments and contingencies (Notes 2 and 17)Equity (Note 15):United Surgical Partners International, Inc. (USPI)
    stockholders equity:Common stock, $0.01 par value; 100 shares authorized,
    issued and outstanding






Additional paid-in capital


789,505



801,902Accumulated other comprehensive loss, net of tax


(58,845
)


(84,008
)Retained earnings


27,292



46,243Total USPI stockholders equity


757,952



764,137Noncontrolling interests  nonredeemable (Notes 2
    and 5)


40,051



42,080Total equity


798,003



806,217Total liabilities and equity

$
2,325,392


$
2,268,163    F-4




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIESConsolidated Statements of Operations  Successor



PredecessorPeriod from



Period fromApril 19



January 1Year Ended


Year Ended


through



throughDecember 31,


December 31,


December 31,



April 18,2009


2008


2007



2007(In thousands)Revenues:Net patient service revenues

$
533,609


$
561,532


$
402,433



$
170,598Management and contract service revenues


77,404



72,970



46,503




19,142Other revenues


11,352



7,721



3,552




1,615Total revenues


622,365



642,223



452,488




191,355Equity in earnings of unconsolidated affiliates


61,771



47,042



23,867




9,906Operating expenses:Salaries, benefits, and other employee costs


174,148



184,871



125,648




53,871Medical services and supplies


102,673



112,499



77,006




34,308Other operating expenses


94,633



107,659



74,335




31,744General and administrative expenses


38,769



40,155



29,340




39,277Provision for doubtful accounts


8,958



7,568



7,592




3,297Depreciation and amortization


35,297



36,757



26,688




12,426Total operating expenses


454,478



489,509



340,609




174,923Operating income


229,658



199,756



135,746




26,338Interest income


2,630



3,228



3,208




933Interest expense


(70,915
)


(85,649
)


(67,862
)



(9,521
)Loss on early retirement of debt















(2,435
)(Loss) gain on sale of equity interests (Notes 3 and 5)


(21,371
)


(1,863
)


(636
)



798Other, net (Note 9)


(6,711
)


73



194




Total other expense, net


(96,367
)


(84,211
)


(65,096
)



(10,225
)Income from continuing operations before income taxes


133,291



115,545



70,650




16,113Income tax benefit (expense) (Note 14)


97



(22,333
)


(14,592
)



(4,256
)Income from continuing operations


133,388



93,212



56,058




11,857Discontinued operations, net of tax (Note 3):Earnings (loss) from discontinued operations






65



272




(458
)Net gain (loss) on disposal of discontinued operations






(625
)


(2,426
)



Total loss from discontinued operations






(560
)


(2,154
)



(458
)Net income


133,388



92,652



53,904




11,399Less: Net income attributable to noncontrolling interests


(63,722
)


(55,138
)


(45,175
)



(18,548
)Net income (loss) attributable to USPIs common stockholder

$
69,666


$
37,514


$
8,729




(7,149
)Amounts attributable to USPIs common stockholder:Income (loss) from continuing operations, net of tax

$
69,666


$
38,077


$
10,919



$
(6,898
)Loss from discontinued operations, net of tax






(563
)


(2,190
)



(251
)Net income attributable to USPIs common stockholder

$
69,666


$
37,514


$
8,729



$
(7,149
)    F-5




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIESConsolidated Statements of Comprehensive Income
    (Loss)  SuccessorPeriod from



Period fromApril 19



January 1Year Ended


Year Ended


through



throughDecember 31,


December 31,


December 31,



April 18,2009


2008


2007



2007(In thousands)Net income

$
133,388


$
92,652


$
53,904



$
11,399Other comprehensive income (loss):Foreign currency translation adjustments


21,967



(71,790
)


(1,646
)



2,169Unrealized gain (loss) on interest rate swaps, net of tax


3,894



(10,051
)







Pension adjustments, net of tax


(698
)


(682
)


161




Total other comprehensive income (loss)


25,163



(82,523
)


(1,485
)



2,169Comprehensive income


158,551



10,129



52,419




13,568Less: Comprehensive income attributable to noncontrolling
    interests


(63,722
)


(55,138
)


(45,175
)



(18,548
)Comprehensive income (loss) attributable to USPIs common
    stockholder

$
94,829


$
(45,009
)

$
7,244



$
(4,980
)    F-6




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIESConsolidated Statements of Changes in
    Equity  USPI Common StockholderAccumulatedAdditional





Other





NoncontrollingComprehensive


Outstanding





Paid-in


Treasury


Comprehensive


Retained


Interests Total


Income (Loss)


Shares


Par Value


Capital


Stock


Income (Loss)


Earnings


Nonredeemable(In thousands, except successor share amounts)PredecessorBalance, December 31, 2006

$
622,844


$




44,710


$
447


$
382,327


$
(109
)

$
16,349


$
200,260


$
23,570Distributions to noncontrolling interests


(1,447
)






























(1,447
)Purchases and sales of noncontrolling interests, net


9,812































9,812Issuance of common stock and exercise of stock options


6,216







474



5



6,211















Repurchases of common stock


(2,197
)






(71
)










(2,197
)










Equity-based compensation expense


17,100















17,100















Tax benefit related to increase in value of equity awards


15,822















15,822















Comprehensive income:Net income (loss)


(5,391
)


(7,149
)






















(7,149
)


1,758Foreign currency translation adjustments


2,169



2,169



















2,169







Comprehensive loss


(3,222
)

$
(4,980
)


























1,758Balance, April 18, 2007

$
664,928







45,113


$
452


$
421,460


$
(2,306
)

$
18,518


$
193,111


$
33,693SuccessorCapitalization of Successor company at April 19, 2007

$
825,549


$




100


$



$
791,856


$



$



$



$
33,693Expenses paid on behalf of USPI Group Holdings, Inc.


(7,862
)














(7,862
)














Additional investment by USPI Group Holdings, Inc.


13,477















13,477















Distributions to noncontrolling interests


(3,251
)






























(3,251
)Purchases and sales of noncontrolling interests, net


(3,106
)






























(3,106
)Contribution related to equity award grants by USPI Group
    Holdings, Inc.


2,091















2,091















Comprehensive income:Net income


11,687



8,729























8,729



2,958Other comprehensive income:Foreign currency translation adjustments


(1,646
)


(1,646
)


















(1,646
)






Pension liability adjustment, net of tax


161



161



















161







Other comprehensive income


(1,485
)


(1,485
)


























Comprehensive income


10,202


$
7,244



























2,958Balance, December 31, 2007


837,100







100







799,562







(1,485
)


8,729



30,294Distributions to noncontrolling interests


(5,112
)






























(5,112
)Purchases and sales of noncontrolling interests, net and other


14,359































14,359Contribution related to equity award grants by USPI Group
    Holdings, Inc.


2,340















2,340















Comprehensive income (loss):Net income


40,053



37,514























37,514



2,539Other comprehensive loss:Foreign currency translation adjustments


(71,790
)


(71,790
)


















(71,790
)






Unrealized loss on interest rate swaps, net of tax


(10,051
)


(10,051
)


















(10,051
)






Pension liability adjustment, net of tax


(682
)


(682
)


















(682
)






Other comprehensive loss


(82,523
)


(82,523
)


























Comprehensive loss


(42,470
)

$
(45,009
)


























2,539Balance, December 31, 2008


806,217







100







801,902







(84,008
)


46,243



42,080Distributions to noncontrolling interests


(5,749
)






























(5,749
)Purchases of noncontrolling interests


(3,814
)














(8,411
)














4,597Sales of noncontrolling interests


(6,062
)














(5,922
)














(140
)Deconsolidation of subsidiaries


(6,682
)






























(6,682
)Payment of common stock dividend


(88,617
)


























(88,617
)


Contribution related to equity award grants by USPI Group
    Holdings, Inc. and other


1,936















1,936















Comprehensive income (loss):Net income


75,611



69,666























69,666



5,945Other comprehensive income:Foreign currency translation adjustments


21,967



21,967



















21,967







Unrealized gain on interest rate swaps, net of tax


3,894



3,894



















3,894







Pension liability adjustment, net of tax


(698
)


(698
)


















(698
)






Other comprehensive income


25,163



25,163



























Comprehensive income


100,774


$
94,829



























5,945Balance, December 31, 2009

$
798,003







100


$



$
789,505


$



$
(58,845
)

$
27,292


$
40,051     F-7




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIESConsolidated Statements of Cash Flows  Successor



PredecessorPeriod from



Period fromApril 19



January 1Year Ended


Year Ended


through



throughDecember 31,


December 31,


December 31,



April 18,2009


2008


2007



2007(In thousands)Cash flows from operating activities:Net income

$
133,388


$
92,652


$
53,904



$
11,399Adjustments to reconcile net income to net cash provided by
    operating activities:Loss from discontinued operations






560



2,154




458Provision for doubtful accounts


8,958



7,568



7,592




3,297Depreciation and amortization


35,297



36,757



26,688




12,426Amortization of debt issue costs and discount


3,337



2,860



1,904




202Deferred income taxes


(10,401
)


13,860



10,143




1,426Loss (gain) on sale of equity interests and other


20,826



1,863



737




(897
)Loss on impairment of intangible asset


5,702



831








Loss on early retirement of debt















2,435Equity in earnings of unconsolidated affiliates, net of
    distributions received


(6,951
)


(8,591
)


6,667




4,335Equity-based compensation


1,951



2,297



1,810




17,100Increases (decreases) in cash from changes in operating assets
    and liabilities, net of effects from purchases of new businesses:Accounts receivable


(8,272
)


(9,579
)


(6,551
)



(973
)Other receivables


458



(9,976
)


177




509Inventories of supplies, prepaids and other assets


(4,347
)


7,859



1,906




919Accounts payable and other current liabilities


2,996



7,248



3,002




12,060Other long-term liabilities


2,271



(623
)


(197
)



(1,569
)Tax benefit related to increase in value of equity awards















(15,822
)Net cash provided by operating activities


185,213



145,586



109,936




47,305Cash flows from investing activities:Purchases of new businesses and equity interests, net of cash
    received


(59,549
)


(76,450
)


(46,576
)



(27,883
)Proceeds from sales of businesses and equity interests, net


22



12,151



5,365




6,111Purchases of property and equipment


(31,803
)


(31,163
)


(11,723
)



(6,172
)Returns of capital from unconsolidated affiliates


2,894



3,039



1,581




556Decrease (increase) in deposits and notes receivable


508



(8,914
)


9,246




(9,084
)Net cash used in investing activities


(87,928
)


(101,337
)


(42,107
)



(36,472
)Cash flows from financing activities:Proceeds from long-term debt, net of debt issuance costs


5,600



45,090



912,019




20,684Payments on long-term debt


(26,449
)


(28,318
)


(226,827
)



(7,424
)Proceeds from issuance of common stock















6,135Net equity contribution from USPI Group Holdings, Inc.


(39
)


40



779,279




Tax benefit related to increase in value of equity awards















15,822Payments to repurchase common stock










(1,430,879
)



(Purchases) sales of noncontrolling interests, net


(2,067
)


(26,430
)


(31,837
)



10,983Payment of common stock dividend


(88,617
)











(Decrease) increase in cash held on behalf of unconsolidated
    affiliates


63,101



(5,440
)


(23,342
)



13,895Expenses paid on behalf of USPI Group Holdings, Inc.










(7,862
)



Distributions to noncontrolling interests


(63,555
)


(56,514
)


(45,491
)



(19,254
)Net cash (used in) provided by financing activities


(112,026
)


(71,572
)


(74,940
)



40,841Cash flows of discontinued operations:Operating cash flows






159



969




(656
)Investing cash flows






(76
)


2,579




(827
)Financing cash flows






(34
)


(2,806
)



1,379Net cash provided by (used in) discontinued operations






49



742




(104
)Effect of exchange rate changes on cash


196



(49
)


(70
)



(113
)Net (decrease) increase in cash and cash equivalents


(14,545
)


(27,323
)


(6,439
)



51,457Cash and cash equivalents at beginning of period


49,435



76,758



83,197




31,740Cash and cash equivalents at end of period

$
34,890


$
49,435


$
76,758



$
83,197Supplemental information:Interest paid, net of amounts capitalized

$
71,467


$
86,758


$
55,302



$
9,861Income taxes (refund received) paid, net


8,060



(1,906
)


4,690




1,909Non-cash transactions:Predecessor rollover equity

$



$



$
18,192



$
Assets acquired under capital lease obligations


2,985



1,966



7,279




1,677Receipt of note receivable for sale of noncontrolling interest






601








    F-8




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIESNotes to Consolidated Financial Statements
    December 31, 2009, 2008 and 2007  (1)
    Summary
    of Significant Accounting Policies and Practices  (a)
    Description
    of Business  not-for-profit not-for-profit
              (b)
    Merger
    Transaction   F-9




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
      
    an investment of cash and rollover equity of USPI in the equity
    of Parent by Welsh Carson, management and other equity investors
    of approximately $785.0 million;
    borrowings by the Company of $430.0 million in new senior
    secured credit facilities;
    the issuance by the Company of $240.0 million in aggregate
    principal amount of
    87/8% senior
    subordinated notes, due 2017, and $200.0 million in
    aggregate principal amount of
    91/4%/10% senior
    subordinated toggle notes, due 2017;
    additional borrowings of £10.0 million (approximately
    $19.7 million) by Global, which was repatriated to the
    U.S.; and
    approximately $21.9 million of cash on hand.      Net cash and equity contribution from Holdings

$
791,856Proceeds from borrowings


889,700Cash on hand


21,922Expenses paid on behalf of Parent


(7,862
)Purchase price allocated

$
1,695,616Estimated fair value of net tangible assets acquired:Cash

$
63,497Accounts receivable


58,435Other current assets


41,204Investments in affiliates


263,666Property and equipment


227,878Other assets


20,668Current liabilities


(108,596
)Due to affiliates


(90,260
)Long-term debt, excluding current portion


(131,158
)Deferred tax liability


(97,016
)Other long-term liabilities


(14,579
)Noncontrolling interests


(84,635
) F-10




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Net tangible assets acquired


149,104Capitalized debt issuance costs


29,012Intangible assets acquired


291,631Goodwill


1,225,869$
1,695,616     (c)
    Translation
    of Foreign Currencies    (d)
    Principles
    of Consolidation      (e)
    Use of
    Estimates    (f)
    Cash
    and Cash Equivalents     F-11




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  (g)
    Inventories
    of Supplies    (h)
    Property
    and Equipment    (i)
    Goodwill
    and Intangible Assets    (j)
    Impairment
    of Long-lived Assets    (k)
    Fair
    Value Measurements     F-12




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  (l)
    Derivative
    Instruments and Hedging Activities    (m)
    Revenue
    Recognition      (n)
    Concentration
    of Credit Risk    (o)
    Investments
    and Equity in Earnings of Unconsolidated
    Affiliates    other-than-temporary
   F-13




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    (p)
    Income
    Taxes    (q)
    Equity-Based
    Compensation    (r)
    Commitments
    and Contingencies    (2)
    Adoption
    of New Accounting Standards  Business Combinations Noncontrolling Interests in
    Consolidated Financial Statements an Amendment of ARB
    No. 51 Accounting Standards
    Codification Business Combinations Consolidations
     F-14




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    BeforeASC 810


ASC 810Changes in Cash Flow Classification:Distributions of earnings paid to noncontrolling interests


Operating



FinancingAcquisitions or sales of equity interests in consolidated
    subsidiaries, no change of control


Investing



FinancingNo Change in Cash Flow Classification:Distributions of earnings received from unconsolidated affiliates


Operating



OperatingReturns of capital paid to noncontrolling interests


Financing



FinancingReturns of capital received from unconsolidated affiliates


Investing



InvestingSales of equity interests in consolidated subsidiaries resulting
    in a change of control


Investing



InvestingAcquisitions or sales of equity interests in unconsolidated
    affiliates, no change of control


Investing



InvestingAcquisitions of equity interests in unconsolidated affiliates,
    resulting in change of control


Investing



InvestingBusiness combinations with no previous ownership by the Company


Investing



Investing     December 31,Consolidated Balance Sheet

2008Total equity as previously reported

$
764,137Reclassification of nonredeemable noncontrolling interests to
    equity as required by ASC 810


41,827Total equity as adjusted for ASC 810

$
805,964   F-15




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Successor



PredecessorPeriod from



Period fromYear


April 19



January 1Ended


through



throughDecember 31,


December 31,



April 18,Consolidated Statement of Cash Flows

2008


2007



2007Net cash provided by operating activities as previously reported

$
91,210


$
67,358



$
29,099Reclassification of distributions to noncontrolling interests to
    financing activities


54,376



42,565




18,311Reclassification of noncontrolling interests to discontinued
    operations






13




(105
)Net cash provided by operating activities as adjusted for ASC 810

$
145,586


$
109,936



$
47,305Net cash used in investing activities as previously reported

$
(127,767
)

$
(73,944
)


$
(25,489
)Reclassification of purchases and sales of noncontrolling
    interests to financing activities


26,430



31,837




(10,983
)Net cash used in investing activities as adjusted for ASC 810

$
(101,337
)

$
(42,107
)


$
(36,472
)Net cash provided by (used in) financing activities as
    previously reported

$
9,234


$
(538
)


$
48,169Reclassification of distributions to noncontrolling interests
    from operating activities


(54,376
)


(42,565
)



(18,311
)Reclassification of purchases and sales of noncontrolling
    interests from investing activities


(26,430
)


(31,837
)



10,983Net cash (used in) provided by financing activities as adjusted
    for ASC 810

$
(71,572
)

$
(74,940
)


$
40,841Net cash provided by (used in) discontinued operations as
    previously reported

$
49


$
755



$
(209
)Reclassification of noncontrolling interests portion from
    operating activities






(13
)



105Net cash provided by (used in) discontinued operations as
    adjusted for ASC 810

$
49


$
742



$
(104
)      F-16




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
   (3)
    Discontinued
    Operations and Other Dispositions    Date

Facility Location

Proceeds (Costs)


Gain (Loss)December 2009

Oxnard, California(1)

$
0.3 million


$
(0.3 million
)December 2009

Baton Rouge, Louisiana(2)


(5.1 million
)


(8.2 million
)September 2009

San Antonio, Texas(1)






(2.6 million
)July 2009

Cleveland, Ohio(3)


1.0 million



February 2009

Las Cruces, New Mexico(1)






February 2009

East Brunswick, New Jersey(1)


0.7 million



(2.6 million
)Total



$
(3.1 million
)

$
(13.7 million
)July 2008

Manitowoc, Wisconsin(1)

$
0.8 million


$
July 2008

Orlando, Florida(1)


0.5 million



(0.4 million
)June 2008

Cleveland, Ohio(4)


1.6 million



(1.0 million
)April 2008

Los Angeles, California(1)






February 2008

Sarasota, Florida(1)


0.5 million



Total



$
3.4 million


$
(1.4 million
)December 2007

Houston, Texas(4)

$



$
(0.6 million
)December 2007

Decatur, Alabama(4)


0.3 million



(2.2 million
)November 2007

Canton, Mississippi(4)






(0.9 million
)September 2007

Atlanta, Georgia(1)


1.8 million



0.5 millionSeptember 2007

Baltimore, Maryland(1)






(1.2 million
)Total



$
2.1 million


$
(4.4 million
)     (1)
    
    Because these investments were accounted for under the equity
    method, the results of operations of these facilities are not
    reported as discontinued operations. The gain (loss) on the
    disposal of these facilities is recorded in (Loss) gain on
    sale of equity interests in the accompanying consolidated
    statements of operations.(2)
    
    In conjunction with the sale, the Company paid approximately
    $5.1 million in cash to settle its lease guaranty related
    to this facility. The amount was included in the loss on the
    sale of the facility and is recorded in (Loss) gain on
    sale of equity interests in the accompanying consolidated
    statements of operations. Because this investment was accounted
    for under the equity method, the results of operations of this
    facility is not reported as discontinued operations.(3)
    
    The Company financed the entire purchase price with the buyer
    and has a security interest in the facilitys assets until
    the note, which matures in March 2010, is collected. As a
    result, the Company deferred the gain, which is estimated at
    $0.6 million. Because this investment was accounted for
    under the equity method, the results of operations of this
    facility are not reported as discontinued operations.(4)
    
    In accordance with GAAP, the Company has reclassified its
    historical results of operations to remove the operations of
    these facilities from the its revenues and expenses on the
    accompanying consolidated statements of operations, collapsing
    the income (loss) related to these facilities operations
    and the Companys disposal of them into a single line,
    Earnings (loss) from discontinued operations The
    table below summarizes certain amounts related to the
    Companys discontinued operations for the periods presented
    (in thousands).  F-17




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Successor



PredecessorPeriod from



Period fromApril 19



January 1Year Ended


through



throughDecember 31,


December 31,



April 18,2008


2007



2007Revenues

$
3,108


$
8,984



$
3,693Earnings (loss) from discontinued operations before income taxes

$
95


$
363



$
(386
)Income tax (expense) benefit


(33
)


(127
)



135Earnings (loss) from discontinued operations

$
62


$
236



$
(251
)Loss on sale of discontinued operations before income taxes

$
(963
)

$
(3,732
)


$
Income tax benefit


338



1,306




Loss on sale of discontinued operations

$
(625
)

$
(2,426
)


$
   (4)
    Investments
    in Unconsolidated Affiliates and Business Combinations  not-for-profit
    2009


2008


2007Unconsolidated facilities operated at year-end


109



101



93Income statement information:Revenues

$
1,174,418


$
998,496


$
795,276Operating expenses:Salaries, benefits, and other employee costs


277,053



246,739



208,390Medical services and supplies


271,663



211,781



167,032Other operating expenses


271,769



247,834



205,314Depreciation and amortization


50,251



48,722



41,057Total operating expenses


870,736



755,076



621,793 F-18




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  2009


2008


2007Operating income


303,682



243,420



173,483Interest expense, net


(24,394
)


(24,101
)


(20,491
)Other, net


8,275



2,962



1,843Income before income taxes

$
287,563


$
222,281


$
154,835Balance sheet information:Current assets

$
264,944


$
236,108


$
187,758Noncurrent assets


412,977



403,956



399,486Current liabilities


152,081



138,199



117,436Noncurrent liabilities


283,951



288,429



291,454   Form 10-K
    
    Payment of $17.7 million for an investment in and the
    rights to manage a surgical facility in the Cincinnati, Ohio
    area;
    Payment of $11.1 million for the rights to manage a
    surgical facility in Portland, Oregon and to fund a transaction
    whereby an unconsolidated investee of the Company acquired an
    equity interest in the facility;
    Payment of $6.1 million to obtain additional ownership in
    one facility in Nashville, Tennessee;
    Payment of $3.4 million to fund initial capital investments
    in four de novo facilities;
    Payment of $2.5 million for an investment in and the rights
    to manage a surgical facility in Stockton, California, jointly
    owned with one of the Companys
    not-for-profit
    hospital partners;
    Payment of $2.2 million to obtain additional ownership in
    three facilities in the Dallas/Fort Worth, Texas area;
    Payment of $2.0 million for the rights to manage a surgical
    facility in the Dallas/Fort Worth, Texas area and to fund a
    transaction whereby an unconsolidated investee of the Company
    acquired an equity interest in the facility;
    Receipt of $2.4 million for the sale of equity ownership in
    two facilities in the Dallas/Fort Worth, Texas area to a
    not-for-profit
    hospital partner, who is also a related party (Note 13);
    Net payment of approximately $3.9 million related to
    various other purchases and sales of equity interests and
    contributions of cash to equity method investees.   F-19




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
      (5)
    Noncontrolling
    Interests      YearEndedDecember 31,2009Net income attributable to USPIs common stockholder

$
69,666Transfers to the noncontrolling interests:Decrease in USPIs additional paid-in capital for sales of
    subsidiaries equity interests


(5,922
)Decrease in USPIs additional paid-in capital for purchases
    of subsidiaries equity interests


(8,411
)Net transfers to noncontrolling interests


(14,333
)Change in equity from net income attributable to USPI and
    transfers to noncontrolling interests

$
55,333    F-20




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    Effective Date

Facility Location

Proceeds


Gain (Loss)December 2009

Dallas, Texas(1)

$
1.2 million


$
0.3 millionJuly 2009

Oklahoma City, Oklahoma(2)


0.2 million



0.1 millionMarch 2009

Phoenix, Arizona(3)


0.1 million



(8.2) millionTotal



$
1.5 million


$
(7.8 million)     (1)
    
    A controlling interest in a facility was sold to a hospital
    partner as part of the Companys strategy for partnering
    with this hospital system. The Company recorded a net gain,
    included in (Loss) gain on sale of equity interests
    in the accompanying consolidated statements of operations, of
    $0.3 million on the sale and deconsolidation of the
    facility. The gain is comprised of a $1.4 million gain
    related to the remeasurement of the Companys retained
    interest to fair value, offset by a loss of $1.1 million,
    the amount by which the carrying value of the investment
    exceeded the proceeds received. This hospital system is a
    related party (Note 13).(2)
    
    The Company and other owners of a facility consolidated by the
    Company agreed to merge the facility into another entity in
    which the Company holds an investment accounted for under the
    equity method. The Company recorded a gain, included in
    (Loss) gain on sale of equity interests in the
    accompanying consolidated statements of operations, of
    $0.1 million on the sale and deconsolidation of the
    facility.(3)
    
    A controlling interest in an entity was sold to a hospital
    partner as part of the Companys strategy for partnering
    with this hospital system. The hospital partner already had a
    49% ownership interest in this entity, which owns and manages
    two surgical facilities, and through the transaction acquired an
    additional 1.1% interest. The $8.2 million loss was
    primarily related to the revaluation of the Companys
    remaining investment in the entity to fair value.    Date

Facility Location

Proceeds


Gain (Loss)July 2008

Beaumont, Texas

$
1.2 million


$
(0.5 million
)June 2008

Dallas, Texas(1)


2.3 million



(0.9 million
)June 2008

Houston, Texas(2)


0.6 million



March 2008

Redding, California(3)


1.7 million



Total



$
5.8 million


$
(1.4 million
)July 2007

Dallas, Texas(4)

$
3.7 million


$
April 2007

Corpus Christi, Texas(5)


6.1 million



0.9 millionTotal



$
9.8 million


$
0.9 million     (1)
    
    The hospital partner already had an ownership interest in the
    facility and acquired a controlling interest from the Company in
    this transaction. Additionally, this hospital partner is a
    related party (Note 13). F-21




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
   (2)
    
    Because the Company is considered the primary beneficiary of
    this entity, the Company consolidates the entity to which it
    transferred its interest in the facility, and accordingly
    continues to consolidate the facilitys operating results.
    The sales price of $0.6 million was paid in the form of a
    note receivable from the buyer.(3)
    
    The Company sold a controlling interest in two facilities and
    gained a noncontrolling interest in a third facility in Redding.(4)
    
    The hospital partner already had an ownership interest in these
    two facilities and acquired a controlling interest from the
    Company in this transaction. Additionally, this hospital partner
    is a related party (Note 13).(5)
    
    The Company sold a controlling interest in two facilities to a
    hospital partner.    NoncontrollingInterests RedeemablePredecessorBalance, December 31, 2006

$
49,261Net income attributable to noncontrolling interests


16,790Distributions to noncontrolling interests


(17,807
)Purchases of noncontrolling interests


11,369Sales of noncontrolling interests


(8,671
)Balance, April 18, 2007

$
50,942   NoncontrollingInterests RedeemableSuccessorBalance, April 19, 2007

$
50,942Net income attributable to noncontrolling interests


42,217Distributions to noncontrolling interests


(42,285
)Purchases of noncontrolling interests


2,996Sales of noncontrolling interests


(1,101
)Balance, December, 2007


52,769Net income attributable to noncontrolling interests


52,599Distributions to noncontrolling interests


(51,401
)Purchases of noncontrolling interests


(7,446
)Sales of noncontrolling interests


8,928Deconsolidation of noncontrolling interests and other


(3,488
)Balance, December 31, 2008


51,961Net income attributable to noncontrolling interests


57,777 F-22




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  NoncontrollingInterests RedeemableSuccessorDistributions to noncontrolling interests


(57,807
)Purchases of noncontrolling interests


(2,519
)Sales of noncontrolling interests


12,403Deconsolidation of noncontrolling interests and other


2,050Balance, December 31, 2009

$
63,865   (6)
    Other
    Investments         F-23




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
   (7)
    Other
    Receivables    (8)
    Property
    and Equipment    EstimatedUseful Lives


2009


2008Land





$
34,259


$
29,089Buildings and leasehold improvements


7-50 years



118,669



119,814Equipment


3-12 years



106,091



94,743Furniture and fixtures


4-20 years



9,526



8,977Construction in progress






7,676



1,028276,221



253,651Less accumulated depreciation






(77,715
)


(51,827
)Net property and equipment





$
198,506


$
201,824     2009


2008Land and buildings

$
21,037


$
32,728Equipment and furniture


10,769



10,25131,806



42,979Less accumulated amortization


(8,258
)


(7,322
)Net property and equipment under capital leases

$
23,548


$
35,657   (9)
    Goodwill
    and Intangible Assets     F-24




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
      United


UnitedStates


Kingdom


TotalBalance at December 31, 2007

$
1,011,193


$
263,786


$
1,274,979Additions


82,784



216



83,000Disposals


(18,368
)






(18,368
)Other






(69,324
)


(69,324
)Balance at December 31, 2008


1,075,609



194,678



1,270,287Additions


4,047







4,047Disposals


(15,517
)






(15,517
)Other






20,474



20,474Balance at December 31, 2009

$
1,064,139


$
215,152


$
1,279,291         December 31, 2009GrossCarrying


AccumulatedAmount


Amortization


TotalDefinite Useful LivesManagement and other service contracts

$
26,605


$
(8,500
)

$
18,105Other


30,401



(8,262
)


22,139Total

$
57,006


$
(16,762
)

$
40,244Indefinite Useful LivesManagement contracts










282,652Total intangible assets









$
322,896  F-25




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  December 31, 2008GrossCarrying


AccumulatedAmount


Amortization


TotalDefinite Useful LivesManagement and other service contracts

$
24,618


$
(5,210
)

$
19,408Other


29,947



(4,857
)


25,090Total

$
54,565


$
(10,067
)

$
44,498Indefinite Useful LivesManagement contracts










274,354Total intangible assets









$
318,852       2010

$
6,2522011


6,4402012


6,4732013


6,3302014


5,024   (10)
    Long-term
    Debt    2009


2008Senior secured credit facility

$
518,710


$
518,975U.K. senior credit agreement


59,966



59,252Senior subordinated notes


437,515



440,000Notes payable to financial institutions


25,045



35,366Capital lease obligations (Note 12)


30,292



44,354Total long-term debt


1,071,528



1,097,947Less current portion


(23,337
)


(24,488
)Long-term debt, less current portion

$
1,048,191


$
1,073,459   (a)
    Senior
    secured credit facility   F-26




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  sub-facility, sub-facility; buy-up buy-up
        (b)
    Senior
    subordinated notes  7 8 1 4 payment-in-kind 1 4
 F-27




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    (c)
    United
    Kingdom borrowings        (d)
    Other
    Long-term Debt       F-28




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    (11)
    Interest
    Rate Swaps             F-29




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
      (12)
    Leases      Capital


OperatingLeases


LeasesYear ending December 31,2010

$
7,651


$
14,4792011


6,574



12,7632012


5,156



10,3622013


3,810



8,2312014


3,331



6,269Thereafter


24,920



18,805Total minimum lease payments


51,442


$
70,909Amount representing interest


(21,150
)Present value of minimum lease payments

$
30,292     (13)
    Related
    Party Transactions   F-30




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
      Date

Facility Location

Proceeds


Gain (Loss)December 2009

Dallas, Texas(1)

$
1.2 million


$
0.3 millionDecember 2009

Fort Worth, Texas(2)


2.4 million



0.1 millionTotal



$
3.6 million


$
0.4 millionJune 2008

Dallas, Texas(3)

$
2.3 million


$
(0.9 million
)July 2007

Dallas, Texas(4)

$
3.7 million


$
     (1)
    
    Baylor acquired a controlling interest in a facility from the
    Company, which transferred control of the facility to Baylor.(2)
    
    Baylor acquired a controlling interest in two facilities. The
    Company continues to account for these facilities under the
    equity method of accounting.(3)
    
    Baylor acquired an additional ownership interest in a facility
    it already co-owned with the Company and local physicians, which
    transferred control of the facility from the Company to Baylor.(4)
    
    Baylor acquired an additional ownership interest in two
    facilities it already co-owned with the Company and local
    physicians, which transferred control of the facilities to
    Baylor. No gain or loss was recorded upon the sale as the sale
    price approximated carrying value.       F-31




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    (14)
    Income
    Taxes    Successor



PredecessorPeriod from



Period fromApril 19



January 1through



throughDecember 31,



April 18,2009


2008


2007



2007Domestic

$
114,743


$
95,306


$
60,226



$
12,151Foreign


18,548



20,239



10,424




3,962$
133,291


$
115,545


$
70,650



$
16,113     Successor

Current


Deferred


TotalYear ended December 31, 2009:U.S. federal

$
2,042


$
(9,859
)

$
(7,817
)State and local


3,144







3,144Foreign


5,118



(542
)


4,576Net income tax expense (benefit)

$
10,304


$
(10,401
)

$
(97
)   Successor

Current


Deferred


TotalYear ended December 31, 2008:U.S. federal

$
43


$
13,819


$
13,862State and local


3,020







3,020Foreign


5,410



41



5,451Net income tax expense

$
8,473


$
13,860


$
22,333   Successor

Current


Deferred


TotalPeriod from April 19 through December 31, 2007:U.S. federal

$
(345
)

$
10,202


$
9,857State and local


1,334







1,334Foreign


3,460



(59
)


3,401Net income tax expense

$
4,449


$
10,143


$
14,592   F-32




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Predecessor

Current


Deferred


TotalPeriod from January 1 through April 18, 2007:U.S. federal

$



$
1,627


$
1,627State and local


1,302



(23
)


1,279Foreign


1,528



(178
)


1,350Net income tax expense

$
2,830


$
1,426


$
4,256     Successor



PredecessorPeriod from



Period fromApril 19



January 1Year Ended


Year Ended


through



throughDecember 31,


December 31,


December 31,



April 18,2009


2008


2007



2007Computed expected tax expense

$
46,652


$
40,441


$
24,728



$
5,640Increase (reduction) in income taxes resulting from:Book income of consolidated entities attributable to
    noncontrolling interests


(22,303
)


(19,298
)


(15,811
)



(6,492
)Differences between U.S. financial reporting and foreign
    statutory reporting


(152
)


23



381




200State tax expense, net of federal benefit


1,824



1,963



874




824Removal of foreign tax rate differential


(1,211
)


(1,224
)


(628
)



(237
)Nondeductible goodwill


6,338












Transaction costs










(453
)



2,250Valuation allowance


(31,193
)


(223
)


5,121




1,323Other


(52
)


651



380




748Total

$
(97
)

$
22,333


$
14,592



$
4,256     F-33




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  December 31,2009


2008Deferred tax assets:Net operating loss and other tax carryforwards

$
4,413


$
17,009Accrued expenses


10,730



11,433Bad debts/reserves


3,741



8,064Interest rate swaps


3,091



Capitalized costs and other


2,983



2,052Total deferred tax assets


24,958



38,558Valuation allowance


(3,283
)


(38,558
)Total deferred tax assets, net

$
21,675


$
Deferred tax liabilities:Basis difference of acquisitions

$
128,474


$
122,582Accelerated depreciation


1,826



2,850Capitalized interest and other


882



207Total deferred tax liabilities

$
131,182


$
125,639        F-34




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
      (15)
    Equity
    and Equity-Based Compensation         F-35




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    Successor



PredecessorPeriod from



Period fromApril 19



January 1Year Ended


Year Ended


through



throughDecember 31,


December 31,


December 31,



April 18,2009


2008


2007



2007Salaries, benefits and other employee costs

$
804


$
983


$
308



$
959General and administrative expenses


1,016



978



643




16,144Other operating expenses


131



336



859




Equity in earnings of unconsolidated affiliates















20Net income attributable to noncontrolling interests















(23
)Expense before income tax benefit


1,951



2,297



1,810




17,100Income tax benefit


(389
)


(463
)


(192
)



(5,366
)Total equity-based compensation expense, net of tax

$
1,562


$
1,834


$
1,618



$
11,734     Successor



PredecessorPeriod from



Period fromApril 19



January 1Year Ended


Year Ended


through



throughDecember 31,


December 31,


December 31,



April 18,2009


2008


2007



2007Share awards

$
1,215


$
1,150


$
773



$
13,202Stock options


605



811



178




3,797Warrants


131



336



859




ESPP(1)















101Expense before income tax benefit


1,951



2,297



1,810




17,100Income tax benefit


(389
)


(463
)


(192
)



(5,366
)Total equity-based compensation expense, net of tax

$
1,562


$
1,834


$
1,618



$
11,734     (1)
    
    Employee stock purchase plan (ESPP) amounts are net of
    reimbursements by other owners of the Companys investees.
    The ESPP was terminated subsequent to the merger.   F-36




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    Stock
    Options  Successor
    Period fromApril 19Year Ended

Year Ended

throughDecember 31,

December 31,

December 31,2009

2008

2007Assumptions:Expected life in years


4.82



4.82



4.82Risk-free interest rates


2.09
%


2.37-2.75
%


4.47
%Dividend yield


0.0
%


0.0
%


0.0
%Volatility


45.16
%


45.16
%


45.16
%Weighted average grant-date fair value

$
0.37


$
0.55


$
0.25     WeightedWeighted


AverageAverage


Remaining


AggregateSuccessor

Number of


Exercise


Contractual


IntrinsicStock Options

Shares (000)


Price


Life (Years)


Value ($000)Outstanding at January 1, 2009


4,352


$
0.57



6.50


$
6,141Additional grants


323



1.00







Exercised














Forfeited or expired


(113
)


0.77







Outstanding at December 31, 2009


4,562


$
0.59



5.7


$
3,051Exercisable at December 31, 2009


1,863


$
0.46



5.5


$
1,460   Share
    Awards  Successor
   F-37




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
      WeightedAverageSuccessor

Number of


Grant-DateNonvested Shares

Shares (000)


Fair ValueNonvested at January 1, 2009


11,834


$
0.46Additional grants


500



0.76Vested


(1,736
)


0.48Forfeited






Nonvested at December 31, 2009


10,598


$
0.47     Warrants 
    Successor
  not-for-profit 1 2
   F-38




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    (16)
    Segment
    Disclosures    United


UnitedSuccessor

States


Kingdom


TotalYear Ended December 31, 2009Net patient service revenues

$
428,512


$
105,097


$
533,609Other revenues


88,756







88,756Total revenues

$
517,268


$
105,097


$
622,365Depreciation and amortization

$
28,564


$
6,733


$
35,297Operating income


209,539



20,119



229,658Net interest expense


(66,714
)


(1,571
)


(68,285
)Income tax benefit (expense)


4,673



(4,576
)


97Total assets


2,000,087



325,305



2,325,392Capital expenditures


22,395



12,393



34,788   United


UnitedSuccessor

States


Kingdom


TotalYear Ended December 31, 2008Net patient service revenues

$
439,501


$
122,031


$
561,532Other revenues


80,691







80,691Total revenues

$
520,192


$
122,031


$
642,223Depreciation and amortization

$
29,932


$
6,825


$
36,757Operating income


174,294



25,462



199,756Net interest expense


(77,248
)


(5,173
)


(82,421
)Income tax expense


(16,881
)


(5,452
)


(22,333
)Total assets


1,983,676



284,487



2,268,163Capital expenditures


16,246



16,883



33,129   F-39




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  United


UnitedSuccessor

States


Kingdom


TotalPeriod from April 19 through December 31, 2007Net patient service revenues

$
318,060


$
84,373


$
402,433Other revenues


50,055







50,055Total revenues

$
368,115


$
84,373


$
452,488Depreciation and amortization

$
21,591


$
5,097


$
26,688Operating income


120,821



14,925



135,746Net interest expense


(60,182
)


(4,472
)


(64,654
)Income tax expense


(11,191
)


(3,401
)


(14,592
)Total assets


1,906,471



370,922



2,277,393Capital expenditures


13,663



5,339



19,002   United


UnitedPredecessor

States


Kingdom


TotalPeriod from January 1 through April 18, 2007Net patient service revenues

$
136,865


$
33,733


$
170,598Other revenues


20,757







20,757Total revenues

$
157,622


$
33,733


$
191,355Depreciation and amortization

$
9,487


$
2,939


$
12,426Operating income


20,929



5,409



26,338Net interest expense


(7,150
)


(1,438
)


(8,588
)Income tax expense


(2,906
)


(1,350
)


(4,256
)Total assets


1,114,429



209,279



1,323,708Capital expenditures


5,224



2,625



7,849   (17)
    Commitments
    and Contingencies  (a)
    Financial
    Guarantees     F-40




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  (b)
    Litigation    (c)
    Self
    Insurance and Professional Liability Claims    (d)
    Employee
    Benefit Plans           F-41




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    (e)
    Employment
    Agreements        (18)
    Subsequent
    Events    (19)
    Condensed
    Consolidating Financial Statements    7 8 1 4 Form S-4
 F-42




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
    Condensed
    Consolidating Balance Sheets:
  Non-Participating


Consolidation


ConsolidatedAs of December 31, 2009

Guarantors


Investees


Adjustments


TotalASSETSCurrent assets:Cash and cash equivalents

$
27,430


$
7,460


$



$
34,890Accounts receivable, net






54,202



35



54,237Other receivables


46,975



45,776



(77,505
)


15,246Inventories of supplies


428



8,361







8,789Prepaids and other current assets


26,264



4,518







30,782Total current assets


101,097



120,317



(77,470
)


143,944Property and equipment, net


16,197



181,857



452



198,506Investments in affiliates


1,027,814







(672,315
)


355,499Goodwill and intangible assets, net


857,802



353,212



391,173



1,602,187Other assets


96,205



2,213



(73,162
)


25,256Total assets

$
2,099,115


$
657,599


$
(431,322
)

$
2,325,392LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
1,396


$
22,079


$



$
23,475Accrued expenses and other


235,904



50,200



(75,956
)


210,148Current portion of long-term debt


5,480



20,116



(2,259
)


23,337Total current liabilities


242,780



92,395



(78,215
)


256,960Long-term debt, less current portion


952,311



118,892



(23,012
)


1,048,191Other long-term liabilities


146,072



13,122



(821
)


158,373Parents equity


757,952



412,362



(412,362
)


757,952Noncontrolling interests






20,828



83,088



103,916Total liabilities and equity

$
2,099,115


$
657,599


$
(431,322
)

$
2,325,392   F-43




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Non-Participating


Consolidation


ConsolidatedAs of December 31, 2008

Guarantors


Investees


Adjustments


TotalASSETSCurrent assets:Cash and cash equivalents

$
42,025


$
7,410


$



$
49,435Accounts receivable, net






57,172



41



57,213Other receivables


43,033



39,454



(65,417
)


17,070Inventories of supplies


109



8,970







9,079Prepaids and other current assets


9,625



2,110







11,735Total current assets


94,792



115,116



(65,376
)


144,532Property and equipment, net


16,036



184,959



829



201,824Investments in affiliates


1,022,144



63



(714,436
)


307,771Goodwill and intangible assets, net


790,491



322,866



475,782



1,589,139Other assets


97,400



152



(72,655
)


24,897Total assets

$
2,020,863


$
623,156


$
(375,856
)

$
2,268,163LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
910


$
21,284


$



$
22,194Accrued expenses and other


153,249



46,371



(62,932
)


136,688Current portion of long-term debt


5,556



20,368



(1,436
)


24,488Total current liabilities


159,715



88,023



(64,368
)


183,370Long-term debt, less current portion


954,968



139,445



(20,954
)


1,073,459Other long-term liabilities


142,043



12,169



(1,056
)


153,156Parents equity


764,137



371,335



(371,335
)


764,137Noncontrolling interests






12,184



81,857



94,041Total liabilities and equity

$
2,020,863


$
623,156


$
(375,856
)

$
2,268,163  F-44




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Condensed
    Consolidating Statements of Operations:
  Non-Participating


Consolidation


ConsolidatedYear Ended December 31, 2009  
    Successor

Guarantors


Investees


Adjustments


TotalRevenues

$
97,318


$
547,726


$
(22,679
)

$
622,365Equity in earnings of unconsolidated affiliates


134,226



2,413



(74,868
)


61,771Operating expenses, excluding depreciation and amortization


72,845



369,060



(22,724
)


419,181Depreciation and amortization


7,380



27,541



376



35,297Operating income


151,319



153,538



(75,199
)


229,658Interest expense, net


(60,386
)


(7,894
)


(5
)


(68,285
)Other income (expense), net


(28,482
)


710



(310
)


(28,082
)Income from continuing operations before income taxes


62,451



146,354



(75,514
)


133,291Income tax benefit (expense)


7,215



(7,118
)






97Net income


69,666



139,236



(75,514
)


133,388Less: Net income attributable to noncontrolling interests






(11,128
)


(52,594
)


(63,722
)Net income attributable to Parent

$
69,666


$
128,108


$
(128,108
)

$
69,666   Non-Participating


Consolidation


ConsolidatedYear Ended December 31, 2008  
    Successor

Guarantors


Investees


Adjustments


TotalRevenues

$
94,119


$
572,029


$
(23,925
)

$
642,223Equity in earnings of unconsolidated affiliates


113,516



2,465



(68,939
)


47,042Operating expenses, excluding depreciation and amortization


76,204



400,474



(23,926
)


452,752Depreciation and amortization


6,993



29,224



540



36,757Operating income


124,438



144,796



(69,478
)


199,756Interest expense, net


(70,024
)


(12,493
)


96



(82,421
)Other income (expense), net


(1,383
)


(97
)


(310
)


(1,790
)Income from continuing operations before income taxes


53,031



132,206



(69,692
)


115,545Income tax expense


(14,954
)


(7,383
)


4



(22,333
)Income from continuing operations


38,077



124,823



(69,688
)


93,212Loss from discontinued operations, net of tax


(563
)


3







(560
)Net income


37,514



124,826



(69,688
)


92,652Less: Net income attributable to noncontrolling interests






(6,960
)


(48,178
)


(55,138
)Net income attributable to Parent

$
37,514


$
117,866


$
(117,866
)

$
37,514   F-45




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Period from April 19 through




Non-Participating


Consolidation


ConsolidatedDecember 31, 2007   Successor

Guarantors


Investees


Adjustments


TotalRevenues

$
63,009


$
410,684


$
(21,205
)

$
452,488Equity in earnings of unconsolidated affiliates


71,090



833



(48,056
)


23,867Operating expenses, excluding depreciation and amortization


52,233



282,881



(21,193
)


313,921Depreciation and amortization


5,287



20,778



623



26,688Operating income


76,579



107,858



(48,691
)


135,746Interest expense, net


(55,180
)


(9,474
)






(64,654
)Other income (expense), net


(574
)


177



(45
)


(442
)Income from continuing operations before income taxes


20,825



98,561



(48,736
)


70,650Income tax expense


(9,906
)


(4,862
)


176



(14,592
)Income from continuing operations


10,919



93,699



(48,560
)


56,058Loss from discontinued operations, net of tax


(2,190
)


36







(2,154
)Net income


8,729



93,735



(48,560
)


53,904Less: Net income attributable to noncontrolling interests






(7,673
)


(37,502
)


(45,175
)Net income attributable to Parent

$
8,729


$
86,062


$
(86,062
)

$
8,729   F-46




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Period from January 1 through




Non-Participating


Consolidation


ConsolidatedApril 18, 2007    Predecessor

Guarantors


Investees


Adjustments


TotalRevenues

$
26,714


$
173,575


$
(8,934
)

$
191,355Equity in earnings of unconsolidated affiliates


28,137



158



(18,389
)


9,906Operating expenses, excluding depreciation and amortization


51,244



120,371



(9,118
)


162,497Depreciation and amortization


2,219



9,408



799



12,426Operating income


1,388



43,954



(19,004
)


26,338Interest expense, net


(4,996
)


(3,592
)






(8,588
)Loss on early retirement of debt


(2,435
)










(2,435
)Other income (expense), net


917



(718
)


599



798Income from continuing operations before income taxes


(5,126
)


39,644



(18,405
)


16,113Income tax expense


(1,772
)


(2,486
)


2



(4,256
)Income (loss) from continuing operations


(6,898
)


37,158



(18,403
)


11,857Loss from discontinued operations, net of tax


(251
)


(207
)






(458
)Net income (loss)


(7,149
)


36,951



(18,403
)


11,399Less: Net income attributable to noncontrolling interests






(4,537
)


(14,011
)


(18,548
)Net income (loss) attributable to Parent

$
(7,149
)

$
32,414


$
(32,414
)

$
(7,149
)   Condensed
    Consolidating Statements of Comprehensive Income
    (Loss):
  Non-Participating


Consolidation


ConsolidatedYear Ended December 31, 2009

Guarantors


Investees


Adjustments


TotalNet income

$
69,666


$
139,236


$
(75,514
)

$
133,388Other comprehensive income:Foreign currency translation adjustments


21,967



21,967



(21,967
)


21,967Unrealized gain on interest rate swaps, net of tax


3,894



108



(108
)


3,894Pension adjustments, net of tax


(698
)


(698
)


698



(698
)Total other comprehensive income


25,163



21,377



(21,377
)


25,163Comprehensive income


94,829



160,613



(96,891
)


158,551Less: Comprehensive income attributable to noncontrolling
    interests






(11,128
)


(52,594
)


(63,722
)Comprehensive income attributable to Parent

$
94,829


$
149,485


$
(149,485
)

$
94,829  F-47




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Non-Participating


Consolidation


ConsolidatedYear Ended December 31, 2008

Guarantor


Investees


Adjustments


TotalNet income

$
37,514


$
124,826


$
(69,688
)

$
92,652Other comprehensive income:Foreign currency translation adjustments


(71,790
)


(71,790
)


71,790



(71,790
)Unrealized loss on interest rate swaps, net of tax


(10,051
)


(1,280
)


1,280



(10,051
)Pension adjustments, net of tax


(682
)


(682
)


682



(682
)Total other comprehensive loss


(82,523
)


(73,752
)


73,752



(82,523
)Comprehensive income (loss)


(45,009
)


51,074



4,064



10,129Less: Comprehensive income (loss) attributable to noncontrolling
    interests






(6,960
)


(48,178
)


(55,138
)Comprehensive income (loss) attributable to Parent

$
(45,009
)

$
44,114


$
(44,114
)

$
(45,009
)   Condensed
    Consolidating Statements of USPI Stockholders
    Equity:
  Non-Participating


Consolidation


ConsolidatedSuccessor

Guarantors


Investees


Adjustments


TotalBalance December 31, 2007

$
806,806


$
442,925


$
(442,925
)

$
806,806Net income


37,514



124,826



(69,688
)


92,652Net income attributable to noncontrolling interests






(6,960
)


(48,178
)


(55,138
)Contribution related to equity award grants by USPI Group
    Holdings, Inc.


2,340



513



(513
)


2,340Acquisitions and contributions






12,918



(12,918
)


Disposals and deconsolidations






(15,675
)


15,675



Distributions






(113,463
)


113,463



Foreign currency translation and other


(82,523
)


(73,749
)


73,749



(82,523
)Balance, December 31, 2008


764,137



371,335



(371,335
)


764,137 F-48




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Non-Participating


Consolidation


ConsolidatedSuccessor

Guarantors


Investees


Adjustments


TotalNet income


69,666



139,236



(75,514
)


133,388Net income attributable to noncontrolling interests






(11,128
)


(52,594
)


(63,722
)Contribution related to equity award grants by USPI Group
    Holdings, Inc.


1,937



282



(282
)


1,937Acquisitions and contributions


(9,536
)


26,410



(26,410
)


(9,536
)Disposals and deconsolidations


(4,798
)


(17,259
)


17,259



(4,798
)Distributions






(117,890
)


117,890



Dividend on common stock


(88,617
)










(88,617
)Foreign currency translation and other


25,163



21,376



(21,376
)


25,163Balance, December 31, 2009

$
757,952


$
412,362


$
(412,362
)

$
757,952   Condensed
    Consolidating Statements of Cash Flows:
  Non-Participating


Consolidation


ConsolidatedYear Ended December 31, 2009  Successor

Guarantor


Investees


Adjustments


TotalCash flows from operating activities:Net income

$
69,666


$
139,236


$
(75,514
)

$
133,388Changes in operating and intercompany assets and liabilities and
    noncash items included in net income


(3,035
)


33,681



21,179



51,825Net cash provided by (used in) operating activities


66,631



172,917



(54,335
)


185,213Cash flows from investing activities:Purchases of property and equipment, net


(5,139
)


(26,664
)






(31,803
)Purchases of new businesses and equity interests, net


(57,625
)


(11,816
)


9,914



(59,527
)Other items, net


3,837



(10,668
)


10,233



3,402Net cash used in investing activities


(58,927
)


(49,148
)


20,147



(87,928
)Cash flows from financing activities:Long-term borrowings, net


(2,750
)


(19,684
)


1,585



(20,849
)Purchases and sales of noncontrolling interests, net


(4,662
)


2,595







(2,067
)Distributions to noncontrolling interests






(117,890
)


54,335



(63,555
)Dividend payment on common stock


(88,617
)










(88,617
)Increase in cash held on behalf of noncontrolling interest
    holders and other


73,730



11,064



(21,732
)


63,062Net cash used in financing activities


(22,299
)


(123,915
)


34,188



(112,026
)Effect of exchange rate changes on cash






196







196Net increase (decrease) in cash


(14,595
)


50







(14,545
)Cash at the beginning of the period


42,025



7,410







49,435Cash at the end of the period

$
27,430


$
7,460


$



$
34,890  F-49




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Non-Participating


Consolidation


ConsolidatedYear Ended December 31, 2008  Successor

Guarantor


Investees


Adjustments


TotalCash flows from operating activities:Net income

$
37,514


$
124,826


$
(69,688
)

$
92,652Loss on discontinued operations


563



(3
)






560Changes in operating and intercompany assets and liabilities and
    noncash items included in net income


12,306



28,855



11,213



52,374Net cash provided by operating activities


50,383



153,678



(58,475
)


145,586Cash flows from investing activities:Purchases of property and equipment, net


(4,189
)


(26,974
)






(31,163
)Purchases of new businesses and equity interests, net


(64,192
)


(107
)






(64,299
)Other items, net


(5,202
)


(3,084
)


2,411



(5,875
)Net cash used in investing activities


(73,583
)


(30,165
)


2,411



(101,337
)Cash flows from financing activities:Long-term borrowings, net


28,700



(13,455
)


1,527



16,772Purchases and sales of noncontrolling interests, net


(26,430
)










(26,430
)Distributions to noncontrolling interests






(113,462
)


56,948



(56,514
)Other items, net


(3,759
)


770



(2,411
)


(5,400
)Net cash provided by (used in) financing activities


(1,489
)


(126,147
)


56,064



(71,572
)Net cash provided by discontinued operations


49











49Effect of exchange rate changes on cash






(49
)






(49
)Net decrease in cash


(24,640
)


(2,683
)






(27,323
)Cash at the beginning of the period


66,665



10,093







76,758Cash at the end of the period

$
42,025


$
7,410


$



$
49,435   Non-Participating


Consolidation


ConsolidatedPeriod from April 19 through December 31, 2007
     Successor

Guarantors


Investees


Adjustments


TotalCash flows from operating activities:Net income

$
8,729


$
93,735


$
(48,560
)

$
53,904Loss from discontinued operations


2,190



(36
)






2,154Changes in operating and intercompany assets and liabilities and
    noncash items included in net income (loss)


24,239



27,120



2,519



53,878Net cash provided by (used in) operating activities


35,158



120,819



(46,041
)


109,936 F-50




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Non-Participating


Consolidation


ConsolidatedPeriod from April 19 through December 31, 2007
     Successor

Guarantors


Investees


Adjustments


TotalCash flows from investing activities:Purchases of property and equipment, net


(3,733
)


(7,990
)






(11,723
)Purchases and sales of new businesses and equity interests, net


(41,211
)










(41,211
)Other items, net


18,967



12,104



(20,244
)


10,827Net cash (used in) provided by investing activities


(25,977
)


4,114



(20,244
)


(42,107
)Cash flows from financing activities:Long-term borrowings, net


703,031



(20,104
)


2,265



685,192Net equity contributions from USPI Group Holdings, Inc.


779,279











779,279Payments to repurchase common stock


(1,430,879
)










(1,430,879
)Purchases and sales of noncontrolling interests, net


(31,837
)










(31,837
)Distributions to noncontrolling interests






(91,532
)


46,041



(45,491
)Other items, net


(43,308
)


(5,875
)


17,979



(31,204
)Net cash provided by (used in) financing activities


(23,714
)


(117,511
)


66,285



(74,940
)Net cash provided by discontinued operations


742











742Effect of exchange rate changes on cash






(70
)






(70
)Net increase (decrease) in cash


(13,791
)


7,352







(6,439
)Cash at the beginning of the period


80,456



2,741







83,197Cash at the end of the period

$
66,665


$
10,093


$



$
76,758   F-51




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  Non-Participating


Consolidation


ConsolidatedPeriod from January 1 through April 18, 2007 
    Predecessor

Guarantors


Investees


Adjustments


TotalCash flows from operating activities:Net income (loss)

$
(7,149
)

$
36,951


$
(18,403
)

$
11,399Loss from discontinued operations


251



207







458Changes in operating and intercompany assets and liabilities and
    noncash items included in net income (loss)


35,420



17,480



(17,452
)


35,448Net cash provided by operating activities


28,522



54,638



(35,855
)


47,305Cash flows from investing activities:Purchases of property and equipment, net


(575
)


(5,597
)






(6,172
)Purchases and sales of new businesses and equity interests, net


(21,772
)










(21,772
)Other items, net


(4,491
)


(8,410
)


4,373



(8,528
)Net cash used in investing activities


(26,838
)


(14,007
)


4,373



(36,472
)Cash flows from financing activities:Long-term borrowings, net


(511
)


9,688



4,083



13,260Purchases and sales of noncontrolling interests, net


10,983











10,983Distributions to noncontrolling interests






(55,096
)


35,842



(19,254
)Proceeds from issuance of common stock


6,135











6,135Change in cash held on behalf of unconsolidated affiliates


22,513



(175
)


(8,443
)


13,895Other items, net


15,822











15,822Net cash provided by (used in) financing activities


54,942



(45,583
)


31,482



40,841Net cash used in discontinued operations


(104
)










(104
)Effect of exchange rate changes on cash






(113
)






(113
)Net increase (decrease) in cash


56,522



(5,065
)






51,457Cash at the beginning of the period


23,934



7,806







31,740Cash at the end of the period

$
80,456


$
2,741


$



$
83,197   (20)
    New
    Accounting Pronouncements  No. 2009-17, Improvements to Financial Reporting by Enterprises Involved
    with Variable Interest Entities 2009-17). 2009-17 2009-17 2009-17
 F-52




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Notes to Consolidated Financial
    Statements  (Continued)
  (21)
    Selected
    Quarterly Financial Data (Unaudited)  2009 QuartersFirst

Second

Third

FourthNet revenues

$
157,139


$
156,367


$
152,381


$
156,478Income from continuing operations


21,982



32,857



53,511



25,038Net income attributable to noncontrolling interests


(16,295
)


(16,105
)


(14,807
)


(16,515
)Net income attributable to USPIs common stockholder


5,687



16,752



38,704



8,523   2008 QuartersFirst

Second

Third

FourthNet revenues

$
165,400


$
162,902


$
153,663


$
160,258Income from continuing operations


23,072



21,360



19,361



29,419Net income attributable to noncontrolling interests


(15,406
)


(13,952
)


(11,911
)


(13,869
)Net income attributable to USPIs common stockholder


7,721



6,463



7,441



15,889    F-53




---



##### Table of Contents



(2) Financial Statement Schedule  Form 10-K:
    SCHEDULE II:  VALUATION AND QUALIFYING
    ACCOUNTS
  Allowance
    for Doubtful Accounts
  Balance at

Additions Charged to:





Balance atBeginning of

Costs and

Other



Other

End ofPeriod

Expenses

Accounts

Deductions(2)

Items(3)

Period(In thousands)Period from January 1 through April 18, 2007
    (Predecessor)(1)

$
9,955



3,324







(2,269
)


383


$
11,393Period from April 19 through December 31, 2007
    (Successor)(1)


11,393



7,769







(7,946
)


1,505



12,721Year ended December 31, 2008 (Successor)(1)


12,721



7,568







(9,063
)


318



11,544Year ended December 31, 2009 (Successor)(1)


11,544



8,958







(10,149
)


(2,193
)


8,160   Valuation
    allowance for deferred tax assets
  Balance at

Additions Charged to:





Balance atBeginning of

Costs and

Other



Other

End ofPeriod

Expenses

Accounts(4)

Deductions(5)

Items

Period(In thousands)Period from January 1 through April 18, 2007 (Predecessor)





$
2,460



1,323














$
3,783Period from April 19 through December 31, 2007 (Successor)






3,783



5,121



28,918











37,822Year ended December 31, 2008 (Successor)






37,822



1,332



(596
)










38,558Year ended December 31, 2009 (Successor)






38,558











(31,193
)


(4,082
)


3,283     (1)
    
    Includes amounts related to companies disposed of in 2007
    through 2009.(2)
    
    Accounts written off.(3)
    
    Primarily beginning balances for purchased businesses and
    entities that were deconsolidated.(4)
    
    Recorded to goodwill(5)
    
    Reversal of deferred tax asset allowance (Note 14),
    recorded as a reduction of income tax expense.   S-1




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES Consolidated
    Financial Statements
    Years Ended June 30, 2009 and 2008
    (With Independent Auditors Report Thereon)
  1




---



##### Table of Contents



REPORT OF
    INDEPENDENT AUDITORS         
    2




---



##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES



CONSOLIDATED
    BALANCE SHEETS



JUNE 30,
    2009 AND 2008  2009


2008(In thousands)ASSETSCURRENT ASSETS:Cash

$
8,315


$
3,527Patient receivables, net of allowance for doubtful accounts of
    $9,097 and $10,448 at June 30, 2009 and 2008, respectively


41,489



45,417Due from affiliate (Note 8)


70,370



30,676Supplies


7,570



7,337Prepaid and other current assets


2,120



1,728Total current assets


129,864



88,685PROPERTY AND EQUIPMENT, net (Note 2)


141,603



148,411OTHER LONG-TERM ASSETS:Investments in unconsolidated affiliates (Note 4)


1,687



1,618Goodwill and intangible assets, net (Note 5)


137,303



131,319Other


633



652Total assets

$
411,090


$
370,685LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIES:Accounts payable

$
13,063


$
18,013Accrued expenses and other


14,316



13,687Due to affiliates (Note 8)


3,119



3,216Current portion of long-term obligations (Note 6)


12,856



12,057Total current liabilities


43,354



46,973LONG-TERM OBLIGATIONS, NET OF CURRENT PORTION (Note 6)


120,357



123,646OTHER LIABILITIES


13,376



10,238Total liabilities


177,087



180,857MINORITY INTERESTS


39,412



29,910COMMINTMENTS AND CONTINGENCIES(Notes 7, 8, and 9)MEMBERS EQUITY (Note 3)


194,591



159,918Total liabilities and members equity

$
411,090


$
370,685  3




---



##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF INCOME



FOR THE
    YEARS ENDED JUNE 30, 2009 AND 2008  2009


2008(In thousands)REVENUES:Net patient service revenue

$
424,071


$
348,203Management and royalty fee income (note 8)


588



600Other income


532



469Total revenues


425,191



349,272EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (note 4)


977



1,059OPERATING EXPENSES:Salaries, benefits, and other employee costs


92,664



82,316Medical services and supplies


98,270



78,203Management and royalty fees (note 8)


17,021



14,546Professional fees


3,880



5,714Other operating expenses


59,491



52,434Provision for doubtful accounts


12,420



13,646Depreciation and amortization


18,898



17,706Total operating expenses


302,644



264,565Operating income


123,524



85,766NONOPERATING EXPENSES:Interest expense


(13,251
)


(13,570
)Interest income (note 8)


640



1,445Other expense, net


(252
)


(61
)Income before minority interests and income taxes


110,661



73,580MINORITY INTERESTS IN INCOME OF CONSOLIDATED SUBSIDIARIES


(56,760
)


(34,341
)Income before income taxes


53,901



39,239INCOME TAXES


(2,888
)


(3,673
)Net income

$
51,013


$
35,566  4




---



##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES  CONSOLIDATED
    STATEMENTS OF MEMBERS EQUITY
  FOR THE
    YEARS ENDED JUNE 30, 2009 AND 2008
  Contributed Capital


Retained EarningsUSP


BHS


BUMC


USP


BHS


BUMC


Total(In thousands)Balance at June 30, 2007

$
45,748


$
45,932


$



$
21,335


$
21,420


$



$
134,435Net income














17,747



17,819







35,566Contributions


14,381



7,457



4,092















25,930Distributions to members














(17,971
)


(18,042
)






(36,013
)Assign BUMC 49% of BHS 50.1% interest in THVG, effective
    June 30, 2008






(52,983
)


52,983







(20,731
)


20,731



Transfer of equity in accordance with L.L.C. agreement


(1,442
)


888



554















Balance at June 30, 2008


58,687



1,294



57,629



21,111



466



20,731



159,918Net income














25,434



604



24,975



51,013Distributions to members






(43
)






(8,132
)


(179
)


(7,986
)


(16,340
)Assign remaining BHS 1.1% interest in THVG to BUMC, effective
    June 30, 2009






(1,251
)


1,251







(891
)


891



Balance at June 30, 2009

$
58,687


$



$
58,880


$
38,413


$



$
38,611


$
194,591  5




---



##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF CASH FLOWS



FOR THE
    YEARS ENDED JUNE 30, 2009 AND 2008  2009


2008(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
51,013


$
35,566Adjustments to reconcile net income to net cash provided by
    operating activities:Provision for doubtful accounts


12,420



13,646Depreciation and amortization


18,898



17,706Amortization of debt issue costs


3



3Equity in earnings of unconsolidated affiliates, net of
    distributions received


(94
)


(230
)Minority interests in income of consolidated subsidiaries, net
    of distributions paid


3,875



2,280Changes in operating assets and liabilities, net of acquisitionsPatient receivables


(7,988
)


(26,173
)Due from (to) affiliates, net


(97
)


743Supplies, prepaids, and other assets


(437
)


(1,704
)Accounts payable and accrued expenses


(3,828
)


4,295Net cash provided by operating activities


73,765



46,132CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of new businesses and equity interests, net of cash
    received of $1,762 and $291 for 2009 and 2008, respectively


(5,554
)


(9,476
)Sale of equity interests


9,048



952Purchases of property and equipment


(6,612
)


(18,301
)Sales of property and equipment


45



26Cash collections on notes receivable from affiliates






1,338Change in cash management balances with affiliate


(39,660
)


7,692Net cash used in investing activities


(42,733
)


(17,769
)  6




---



##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS  continued
  FOR THE
    YEARS ENDED JUNE 30, 2009 AND 2008
  2009


2008(In thousands)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from long-term debt

$
3,534


$
19,798Payments on long-term obligations


(13,164
)


(14,089
)Returns of capital to minority interest holders


(274
)


(817
)Distributions to Company members


(16,340
)


(36,013
)Net cash used in financing activities


(26,244
)


(31,121
)INCREASE (DECREASE) IN CASH


4,788



(2,758
)CASH, beginning of period


3,527



6,285CASH, end of period

$
8,315


$
3,527SUPPLEMENTAL INFORMATION:Cash paid for interest

$
13,441


$
12,814Cash paid for income taxes


2,365



2,375Noncash transactions:Noncash assets contributed by Members (note 3)






25,930Asset acquired under capital leases


2,675



1,840  7




---



##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES



Notes to
    Consolidated Financial Statements  FOR THE
    YEARS ENDED JUNE 30, 2009 AND 2008
  1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Description
    of Business
          Basis of
    Accounting
    Principles
    of Consolidation
   8




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Use of
    Estimates
    Recently
    Adopted Accounting Pronouncements
  Fair Value Measurements,
  The Fair Value Option
    for Financial Assets and Financial Liabilities
  Subsequent Events,
  Recently
    Issued Accounting Pronouncements
  Business
    Combinations
 9




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Non-controlling
    Interests in Consolidated Financial Statements  an
    amendment of ARB No. 51,
  Accounting
    for Transfers of Financial Assets, an amendment of FASB
    Statement No. 140, Amendments to FASB
    Interpretation No. 46(R),
  The FASB Accounting Standards
    Codificationtm tm
  Cash
    Equivalents
    Patient
    Receivables
    2009


2008Commercial and managed care providers


65
%


69
%Government-related programs


16
%


18
%Self-pay patients


19
%


13
%100
%


100
%    10




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Supplies
    Property
    and Equipment
    Investments
    in Unconsolidated Affiliates
    Intangible
    Assets and Goodwill
    Impairment
    of Long-Lived Assets
   11




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Fair
    Value of Financial Instruments
      Revenue
    Recognition
              Equity in
    Earnings of Unconsolidated Affiliates
   12




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Income
    Taxes
      Accounting for
    Uncertainty in Income Taxes- an interpretation of FASB Statement
    No. 109, Accounting for Income Taxes Accounting
    for Contingencies
    Commitments
    and Contingencies
    2.
    PROPERTY
    AND EQUIPMENT    EstimatedUseful Lives


2009


2008Buildings and leasehold improvements


5-25 years


$
114,414


$
110,629Equipment


3-15 years



70,405



68,405Furniture and fixtures


5-15 years



10,190



8,880Construction in progress






1,536



124196,545



188,038Less accumulated depreciation and amortization






(54,942
)


(39,627
)Net property and equipment





$
141,603


$
148,411  13




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   2009


2008Buildings

$
81,271


$
81,112Equipment and furniture


16,591



16,16397,862



97,275Less accumulated amortization


(20,584
)


(15,823
)Net property and equipment under capital leases

$
77,278


$
81,452   3.
    CAPITAL
    CONTRIBUTIONS BY MEMBERS      Ownership

Net AssetsInvestee

Percentage

Contributed

Effective DateArlington Surgicare Partners, Ltd. (Arlington)


50.1
%

$
12,683



July 1, 2007Rockwall Ambulatory Surgery Center, L.L.P.


50.1
%


3,766



July 1, 2007(Rockwall)Metroplex Surgicare Partners, Ltd. (Metroplex)


50.1
%


9,438



June 30, 2008     REMAINDER OF
    PAGE INTENTIONALY LEFT BLANK
 14




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Arlington


Rockwall


MetroplexCurrent assets

$
2,955


$
1,250


$
2,002Property and equipment


4,196



805



1,436Goodwill


11,912



8,254



8,424Other noncurrent assets


164



20



25Total assets acquired


19,227



10,329



11,887Current liabilities


2,360



905



1,172Long-term debt


3,412



5,606



267Other noncurrent liabilities






8



Total liabilities assumed


5,772



6,519



1,439Minority interests


772



44



1,010Net assets acquired

$
12,683


$
3,766


$
9,438   REMAINDER OF
    PAGE INTENTIONALY LEFT BLANK
 15




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   4.
    INVESTMENTS
    IN SUBSIDIARIES AND UNCONSOLIDATED AFFILIATES    Percentage OwnedJune 30,


June 30,Legal Name

Facility

City

2009


2008Consolidated subsidiaries(1):Bellaire Outpatient Surgery Center, L.L.P.

Bellaire Surgery Center

Fort Worth


50.1
%


50.1
%Dallas Surgical Partners, L.L.P.

Baylor Surgicare

Dallas


62.6



56.9Dallas Surgical Partners, L.L.P.

Texas Surgery Center

Dallas


62.6



56.9Dallas Surgical Partners, L.L.P.

Physicians Day Surgery Center

Dallas


62.6



56.9Denton Surgicare Partners, Ltd.

Baylor Surgicare at Denton

Denton


50.1



50.1Frisco Medical Center, L.L.P.

Baylor Medical Center at Frisco

Frisco


50.1



50.1Garland Surgicare Partners, Ltd.

Baylor Surgicare at Garland

Garland


50.1



50.1Grapevine Surgicare Partners, Ltd.

Baylor Surgicare at Grapevine

Grapevine


50.3



50.1Lewisville Surgicare Partners, Ltd.

Baylor Surgicare at Lewisville

Lewisville


53.1



52.8MSH Partners, L.P.

Mary Shiels Hospital

Dallas


42.4



56.9North Central Surgical Center, L.L.P.

North Central Surgery Center

Dallas


32.2



28.9North Garland Surgery Center, L.L.P.

North Garland Surgery Center

Garland


52.4



52.4Rockwall/Heath Surgery Center, L.L.P.

Baylor Surgicare at Heath

Heath


50.1



50.1Trophy Club Medical Center, L.P.

Trophy Club Medical Center

Fort Worth


52.5



50.5Valley View Surgicare Partners, Ltd.

Baylor Surgicare at Valley View

Dallas


50.1



50.1Baylor Surgical Hospital of Fort Worth Surgicare Partners,
    Ltd.

Fort Worth

Fort Worth


50.2



50.1Arlington Surgicare Partners, Ltd.

Surgery Center of Arlington

Arlington


50.1



50.1Rockwall Ambulatory Surgery Center, L.L.P.

Rockwall Surgery Center

Rockwall


50.1



50.1Baylor Surgicare at Plano, L.L.C.

Baylor Surgicare at Plano

Plano


50.1



50.1Metroplex Surgicare Partners, Ltd.

Metroplex Surgicare

Bedford


50.1



50.1Arlington Orthopedic and Spine Hospitals, LLC

Arlington Hospital

Arlington


50.1



50.1Baylor Surgicare at Granbury, LLC

Granbury Surgical Plaza

Granbury


50.6



Unconsolidated affiliates:Denton Surgicare Real Estate, Ltd.

(2)

n/a


49.0



49.0Irving-Coppell Surgical Hospital, L.L.P.

Irving-Coppell Surgical Hospital

Irving


18.3



18.4MCSH Real Estate Investors, Ltd.

(2)

n/a


2.0



2.0     (1)
    
    List excludes holding companies, which are wholly owned by the
    Company and hold the Companys investments in the
    Facilities. 16




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   (2)
    
    These entities are not surgical facilities and do not have
    ownership in any surgical facilities.    
    Net payments made for the year ended June 30, 2008 for the
    purchase of additional interests in University Surgical Partners
    of Dallas, L. L. P. (USPD) totaling approximately $3,774,000.
    USPD consists of the following facilities: Baylor Surgicare,
    Texas Surgery Center, and Physicians Day Surgery Center.
    Net proceeds received for the year ended June 20, 3009 from
    sales of additional interests in MSH Partners, L.P. (Mary Shiels
    Hospital) totaling approximately $1,983,000.
    Payments made of $3,579,000 and proceeds received of $5,306,000
    for the year ended June 30, 2009, and payments made of
    $1,538,000 and proceeds received of $952,000 for the year ended
    June 30, 2008, related to other transactions, primarily
    purchases and sales of individual partnership units with
    physicians who invest in the facilities.    REMAINDER OF
    PAGE INTENTIONALY LEFT BLANK
 17




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Granbury Surgical PlazaCurrent assets

$
2,454Property and equipment


2,847Goodwill


3,916Long-term assets


14Total assets acquired


9,231Current liabilities


882Long-term liabilities


1,776Long-term debt


5,768Total liabilities assumed


8,426Net assets acquired

$
805     5.
    GOODWILL
    AND INTANGIBLE ASSETS    2009


2008Goodwill

$
136,119


$
130,137Other intangible assets


1,184



1,182Total

$
137,303


$
131,319  18




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Balance, July 1, 2007

$
92,332Additions:Contribution of Arlington (note 3)


11,912Contribution of Rockwall (note 3)


8,254Contribution of Metroplex (note 3)


8,317Acquisition of Plano


4,299Purchase of additional interests in USPD


3,360Other


1,663Balance, June 30, 2008


130,137Additions:Acquisition of Granbury


3,916Purchase of additional interests in USPD


1,121Additional contribution from BHS for the Metroplex acquisition


107Other


838Balance, June 30, 2009

$
136,119       June 30, 2009Gross Carrying


AccumulatedAmount


Amortization


TotalDefinite useful lives:Debt issue costs

$
84


$
(50
)

$
34Indefinite useful lives:Management contracts


1,150







1,150Total intangible assets

$
1,234


$
(50
)

$
1,184   June 30, 2008Gross Carrying


AccumulatedAmount


Amortization


TotalDefinite useful lives:Debt issue costs

$
79


$
(47
)

$
32Indefinite useful lives:Management contracts


1,150







1,150Total intangible assets

$
1,229


$
(47
)

$
1,182  19




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    6.
    LONG TERM
    OBLIGATIONS    2009


2008Capital lease obligations (Note 7)

$
91,679


$
92,044Notes payable to financial institutions


41,534



43,659Total long-term obligations


133,213



135,703Less current portion


(12,856
)


(12,057
)Long-term obligations, less current portion

$
120,357


$
123,646     2010

$
10,0152011


9,6672012


8,7512013


4,3682014


3,103Thereafter


5,630Total long-term obligations

$
41,534       7.
    LEASES   20




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Capital


OperatingLeases


LeasesYear ending June 30:2010

$
13,069


$
10,2722011


12,517



8,9962012


12,124



8,9252013


11,922



8,2592014


11,671



8,007Thereafter


151,961



74,057Total minimum lease payments


213,264


$
118,516Amount representing interest


(121,585
)Total principal payments

$
91,679     8.
    RELATED-PARTY
    TRANSACTIONS         21




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
  Notes to
    Consolidated Financial
    Statements  (Continued)
   9.
    COMMITMENTS
    AND CONTINGENCIES  Financial
    Guarantees
    Litigation
    and Professional Liability Claims
    10.
    SUBSEQUENT
    EVENTS     22




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES Consolidated
    Financial Statements
    Years Ended June 30, 2008 and 2007
    (With Independent Auditors Report Thereon)
  23




---



##### Table of Contents



REPORT OF
    ERNST & YOUNG LLP, INDEPENDENT AUDITORS           
    24




---



##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C.
    AND SUBSIDIARIES
    Consolidated Balance Sheets
    June 30, 2008 and 2007  2008


2007(In thousands, except per share amounts)ASSETSCURRENT ASSETS:Cash

$
3,527


$
6,285Patient receivables, net of allowance for doubtful accounts of
    $10,448,000 and $6,384,000 at June 30, 2008 and 2007,
    respectively


45,417



29,293Due from affiliate (note 9)


30,676



35,606Inventories of supplies


7,337



5,376Current portion of notes receivable (note 6)






389Prepaid and other current assets


1,728



1,204Total current assets


88,685



78,153PROPERTY AND EQUIPMENT, net (note 2)


148,411



135,571OTHER LONG-TERM ASSETS:Investments in unconsolidated affiliates (note 4)


1,618



1,316Goodwill and intangible assets, net (notes 4 and 5)


131,319



93,516Notes receivable, net of current portion (note 6)






949Other


652



1,164Total assets

$
370,685


$
310,669LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable

$
18,013



13,595Accrued expenses and other


13,687



9,737Due to affiliates (notes 6 and 9)


3,216



2,199Current portion of long-term obligations (note 7)


12,057



7,767Total current liabilities


46,973



33,298LONG-TERM OBLIGATIONS, NET OF CURRENT PORTION (note 7)


123,646



109,908OTHER LIABILITIES


10,238



7,326Total liabilities


180,857



150,532MINORITY INTERESTS (note 4)


29,910



25,702COMMINTMENTS AND CONTINGENCIES(Notes 3, 7, 8 and 10)MEMBERS EQUITY (note 3)


159,918



134,435Total liabilities and members equity

$
370,685


$
310,669  25




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED JUNE 30, 2008 AND
    2007  2008


2007(In thousands)REVENUES:Net patient service revenue

$
348,203


$
259,716Management and royalty fee income (note 9)


600



600Other income


469



120Total revenues


349,272



260,436EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES


1,059



686OPERATING EXPENSES:Salaries, benefits, and other employee costs


82,316



57,051Medical services and supplies


78,203



58,972Management and royalty fees (note 9)


14,546



11,657Professional fees


5,714



1,314Other operating expenses


52,434



38,918Provision for doubtful accounts


13,646



8,197Depreciation and amortization


17,706



13,418Total operating expenses


264,565



189,527Operating income


85,766



71,595NONOPERATING EXPENSES:Interest expense


(13,570
)


(7,585
)Interest income (note 9)


1,445



2,199Other expense, net


(61
)


(85
)Income before minority interests and income tax


73,580



66,124MINORITY INTERESTS IN INCOME OF CONSOLIDATED SUBSIDIARIES


(34,341
)


(31,711
)Income before income taxes


39,239



34,413INCOME TAX


(3,673
)


(903
)Net income

$
35,566


$
33,510    26




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF MEMBERS EQUITY

FOR THE
    YEARS ENDED JUNE 30, 2008 AND 2007  Contributed Capital


Retained EarningsUSP


BHS


BUMC


USP


BHS


BUMC


Total(In thousands)Balance at July 1, 2007

$
35,889


$
36,033


$



$
18,160


$
18,233


$



$
108,315Net income














16,721



16,789







33,510Contribution of capital


11,168



8,590



















19,758Distributions of earnings














(13,546
)


(13,602
)






(27,148
)Transfer of equity in accordance with L.L.C. agreement


(1,309
)


1,309



















Balance at June 30, 2007


45,748



45,932







21,335



21,420


$




134,435Net income














17,747



17,819







35,566Contributions of capital


14,381



7,457



4,092















25,930Distributions of earnings














(17,971
)


(18,042
)






(36,013
)Assign BUMC 49% of BHS 50.1% interest in THVG, effective
    6/29/08






(52,983
)


52,983







(20,731
)


20,731



Transfer of equity in accordance with L.L.C. agreement


(1,442
)


888



554















Balance at June 30, 2008

$
58,687


$
1,294


$
57,629


$
21,111


$
466


$
20,731


$
159,918    27




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED JUNE 30, 2008 AND
    2007  2008


2007(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
35,566


$
33,510Adjustments to reconcile net income to net cash provided by
    operating activities:Provision for doubtful accounts


13,646



8,197Depreciation and amortization


17,706



13,418Amortization of debt issue costs


3



71Equity in earnings of unconsolidated affiliates, net of
    distributions received


(230
)


201Minority interests in income of consolidated subsidiaries, net
    of distributions paid


2,280



2,199Changes in operating assets and liabilities, net of acquisitionsPatient receivables


(26,173
)


(13,008
)Due from (to) affiliates, net


743



(229
)Inventories of supplies, prepaids, and other assets


(1,704
)


(1,249
)Accounts payable and accrued expenses


4,295



6,111Net cash provided by operating activities


46,132



49,221CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of equity interests, net of cash received of 291,000
    and 11,000 for 2008 and 2007, respectively


(9,476
)


(4,427
)Sale of equity interests


952



1,417Purchases of property and equipment


(18,301
)


(18,010
)Sales of property and equipment


26



27Cash collections on notes receivable from affiliates


1,338



361Change in cash management balances with affiliate


7,692



(7,890
)Net cash used in investing activities


(17,769
)


(28,522
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from long-term debt

$
19,798


$
11,215Payments on long-term obligations


(14,089
)


(6,417
)Returns of capital to minority interest holders


(817
)


(502
)Distributions to Company members


(36,013
)


(27,148
)Net cash used in financing activities


(31,121
)


(22,852
)DECREASE IN CASH


(2,758
)


(2,153
)CASH, beginning of period


6,285



8,438CASH, end of period

$
3,527


$
6,285SUPPLEMENTAL INFORMATION:Cash paid for interest

$
12,814


$
7,463Cash paid for taxes


2,375



Noncash transactions:Noncash settlement of note receivable (note 4)






4,135Noncash assets contributed by Members (note 3)


25,930



19,758Asset acquired under capital leases


1,840



49,817  28




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##### Table of Contents



TEXAS
    HEALTH VENTURES GROUP, L.L.C. AND SUBSIDIARIES



Notes to
    Consolidated Financial Statements  FOR THE
    YEARS ENDED JUNE 30, 2008 AND 2007
  1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Description
    of Business
          Basis
    of Accounting
    Principles
    of Consolidation
   29




---



##### Table of Contents



Use of
    Estimates
    New
    Accounting Pronouncements
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial Liabilities
    Including an Amendment of FASB Statement No. 115
  Cash
    Equivalents
   30




---



##### Table of Contents



Inventories
    of Supplies
    Property
    and Equipment
    Investments
    in Unconsolidated Affiliates
    Intangible
    Assets and Goodwill
    Impairment
    of Long-Lived Assets and Long-Lived Assets to Be Disposed
    Of
    Fair
    Value of Financial Instruments
    Revenue
    Recognition
   31




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##### Table of Contents



Equity
    in Earnings of Unconsolidated Affiliates
    Income
    Taxes
      Accounting for Uncertainty
    in Income Taxes- an interpretation of FASB Statement
    No. 109, Accounting for Income Taxes, Accounting for
    Contingencies.
  Commitments
    and Contingencies
   32




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##### Table of Contents



2.
    PROPERTY
    AND EQUIPMENT    EstimatedUseful Lives


2008


2007Buildings and leasehold improvements


5-25 years


$
110,629


$
96,034Equipment


3-15 years



68,405



56,563Furniture and fixtures


5-15 years



8,880



3,859Construction in progress






124



3,251188,038



159,707Less accumulated depreciation and amortization






(39,627
)


(24,136
)Net property and equipment





$
148,411


$
135,571     2008


2007Buildings

$
81,112


$
82,434Equipment and furniture


16,163



13,00197,275



95,435Less accumulated amortization


(15,823
)


(8,483
)Net property and equipment under capital leases

$
81,452


$
86,952   3.
    CAPITAL
    CONTRIBUTIONS BY MEMBERS      Ownership

Net AssetsInvestee

Percentage

Contributed

Effective DateFort Worth Surgicare Partners, Ltd. (Fort Worth)


50.1
%

$
19,670



July 1, 2006MCSH Real Estate Investment, Ltd. (MCSH)


2.0
%


88



July 1, 2006Arlington Surgicare Partners, Ltd. (Arlington)


50.1
%


12,683



July 1, 2007Rockwall Ambulatory Surgery Center, L.L.P. (Rockwall)


50.1
%


3,766



July 1, 2007Metroplex Surgicare Partners, Ltd. (Metroplex)


50.1
%


9,481



June 30, 2008    33




---



##### Table of Contents



Fort Worthand MCSH


Arlington


Rockwall


MetroplexCurrent assets

$
7,015


$
2,955


$
1,250


$
2,302Investments in unconsolidated affiliates


88











Property and equipment


12,642



4,196



805



1,436Goodwill


18,320



11,912



8,254



8,317Other noncurrent assets


212



164



20



25Total assets acquired


38,277



19,227



10,329



12,080Current liabilities


5,293



2,360



905



1,172Long-term debt


11,838



3,412



5,606



267Other noncurrent liabilities


42







8



Total liabilities assumed


17,173



5,772



6,519



1,439Minority interests payable


1,346



772



44



1,160Net assets acquired

$
19,758


$
12,683


$
3,766


$
9,481   4.
    INVESTMENTS
    IN SUBSIDIARIES AND UNCONSOLIDATED AFFILIATES    Percentage OwnedJune 30,

June 30,Legal Name

Facility

City

2008

2007Consolidated subsidiaries(1):Bellaire Outpatient Surgery Center, L.L.P.

Bellaire Surgery Center

Fort Worth


50.1
%


50.1
%Dallas Surgical Partners, L.L.P.

Baylor Surgicare

Dallas


56.9



50.1Dallas Surgical Partners, L.L.P.

Texas Surgery Center

Dallas


56.9



50.1Dallas Surgical Partners, L.L.P.

Physicians Day Surgery Center

Dallas


56.9



50.1Denton Surgicare Partners, Ltd.

Baylor Surgicare at Denton

Denton


50.1



50.1Frisco Medical Center, L.L.P.

Baylor Medical Center at Frisco

Frisco


50.1



50.1Garland Surgicare Partners, Ltd.

Baylor Surgicare at Garland

Garland


50.1



50.1Grapevine Surgicare Partners, Ltd.

Baylor Surgicare at Grapevine

Grapevine


50.1



50.1Lewisville Surgicare Partners, Ltd.

Baylor Surgicare at Lewisville

Lewisville


52.8



51.1MSH Partners, L.P.

Mary Shiels Hospital

Dallas


56.9



50.1North Central Surgical Center, L.L.P.

North Central Surgery Center

Dallas


28.9



25.5North Garland Surgery Center, L.L.P.

North Garland Surgery Center

Garland


52.4



51.1Rockwall/Heath Surgery Center, L.L.P.

Baylor Surgicare at Heath

Heath


50.1



50.1Trophy Club Medical Center, L.P.

Trophy Club Medical Center

Fort Worth


50.5



50.1Valley View Surgicare Partners, Ltd.

Baylor Surgicare at Valley View

Dallas


50.1



50.1Baylor Surgical Hospital of 34




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##### Table of Contents



Percentage OwnedJune 30,

June 30,Legal Name

Facility

City

2008

2007Fort Worth Surgicare Partners, Ltd.

Fort Worth

Fort Worth


50.1



50.1Arlington Surgicare Partners, Ltd.

Surgery Center of Arlington

Arlington


50.1



Rockwall Ambulatory Surgery Center, L.L.P.

Rockwall Surgery Center

Rockwall


50.1



Baylor Surgicare at Plano, L.L.C.

Baylor Surgicare at Plano

Plano


50.1



Metroplex Surgicare Partners, Ltd.

Metroplex Surgicare

Bedford


50.1



Arlington Orthopedic and Spine Hospitals, LLC

Arlington Hospital

Arlington


50.1



Unconsolidated affiliates:Denton Surgicare Real Estate, Ltd.

(2)

n/a


49.0
%


49.0
%Irving-Coppell Surgical Hospital, L.L.P.

Irving-Coppell Surgical Hospital

Irving


18.4



17.8MCSH Real Estate Investors, Ltd.

(2)

n/a


2.0



2.0     (1)
    
    List excludes holding companies, which are wholly owned by the
    Company and hold the Companys investments in the
    Facilities.(2)
    
    These entities are not surgical facilities and do not have
    ownership in any surgical facilities.      
    Net payments made for the year ended June 30, 2008 for the
    purchase of noncontrolling interests in University Surgical
    Partners of Dallas, L. L. P. (USPD) totaling $3,774,215.
    Payments made of $1,538,222 and proceeds received of $952,201
    for the year ended June 30, 2008, and payments made of
    $845,150 and proceeds received of $1,417,136 for the year ended
    June 30, 2007, related to other transactions, primarily
    purchases and sales of individual partnership units with
    physicians who invest in the facilities.   35




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##### Table of Contents



BaylorSurgicare atPlano, L.L.CCurrent assets

$
372Property and equipment


923Goodwill


4,299Total assets acquired


5,594Current liabilities


857Long-term debt


461Total liabilities assumed


1,318Minority interests payable


112Net assets acquired


4,164     5.
    GOODWILL
    AND INTANGIBLE ASSETS    2008


2007Goodwill

$
130,137


$
92,332Other intangible assets


1,182



1,184Total

$
131,319


$
93,516     Balance, June 30, 2006





$
69,803Additions:Contribution of Fort Worth and MCSH






18,320Trophy Club purchase price finalization






4,160Other






49Balance, June 30, 2007





$
92,332Additions:Contribution of Arlington (note 3)






11,912Contribution of Rockwall (note 3)






8,254Contribution of Metroplex (note 3)






8,317Acquisition of Plano






4,299Purchase of noncontrolling interests in USPD






3,360Other






1,663Balance, June 30, 2008





$
130,137  36




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##### Table of Contents



June 30, 2008Gross Carrying


AccumulatedAmount


Amortization


TotalDefinite useful lives:Debt issue costs

$
79


$
(47
)

$
32Indefinite useful lives:Management contracts


1,150







1,150Total intangible assets

$
1,229


$
(47
)

$
1,182   June 30, 2007Gross Carrying


AccumulatedAmount


Amortization


TotalDefinite useful lives:Debt issue costs

$
79


$
(45
)

$
34Indefinite useful lives:Management contracts


1,150







1,150Total intangible assets

$
1,229


$
(45
)

$
1,184     6.
    NOTES RECEIVABLE    7.
    LONG TERM
    OBLIGATIONS    2008


2007Capital lease obligations (note 8)

$
92,044


$
90,669Notes payable to financial institutions


43,659



27,006Total long-term obligations


135,703



117,675Less current portion


(12,057
)


(7,767
)Long-term obligations, less current portion

$
123,646


$
109,908    37




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##### Table of Contents



2009





$
12,0572010






11,1532011






10,0642012






8,6792013






4,808Thereafter






88,942Total long-term obligations





$
135,703       8.
    LEASES      Capital


OperatingLeases


LeasesYear ending June 30:2009

$
12,784


$
9,9592010


12,253



8,3692011


11,820



8,0882012


11,555



8,0562013


11,573



7,573Thereafter


163,545



75,559Total minimum lease payments

$
223,530


$
117,604Amount representing interest


(131,486
)Present value of minimum lease payments

$
92,044     9.
    RELATED-PARTY
    TRANSACTIONS   38




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##### Table of Contents



10.
    COMMITMENTS
    AND CONTINGENCIES  Financial
    Guarantees
    Litigation
    and Professional Liability Claims
   39




---



##### Table of Contents



11.
    SUBSEQUENT
    EVENTS   40




---



##### Table of Contents



Exhibits:
  ExhibitNumber

Description2
.1

Agreement and Plan of Merger dated as of January 27, 2006,
    by and among United Surgical Partners International, Inc., Peak
    ASC Acquisition Corp. and Surgis, Inc. (previously filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed with the Commission on January 31, 2006 and
    incorporated herein by reference).(1)2
.2

Agreement and Plan of Merger, dated as of January 7, 2007,
    by and among the Company, UNCN Holdings, Inc. and UNCN
    Acquisition Corp. (previously filed as Exhibit 2.1 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on January 8, 2007 and
    incorporated herein by reference).(1)3
.1

Amended and Restated Certificate of Incorporation (previously
    filed as Exhibit 3.1(A) to the Companys Registration
    Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)3
.2

Amended and Restated Bylaws (previously filed as
    Exhibit 3.1(B) to the Companys Registration Statement
    on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)4
.1

Indenture governing
    87/8% Senior
    Subordinated Note due 2017 and
    91/4%/10% Senior
    Subordinated Toggle Note due 2017, among the Company, the
    Guarantors named therein and U.S. Bank National Association, as
    trustee. (previously filed as an exhibit to the Companys
    Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)4
.2

Form of
    87/8% Senior
    Subordinated Note due 2017 and
    91/4%/10% Senior
    Subordinate Toggle Note due 2017 (previously filed as an exhibit
    to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)10
.1

Credit Agreement, dated as of April 19, 2007, among USPI
    Holdings, Inc., the Company, as Borrower, the Lenders party
    thereto, Citibank, N.A., as Administrative Agent and Collateral
    Agent, Lehman Brothers, Inc., as Syndication Agent, and Bear
    Stearns Corporate Lending., Inc. and UBS Securities LLC, as
    Co-Documentation Agents.(2)10
.2

Amendment No. 1 to that certain Credit Agreement dated as
    of April 19, 2007, among United Surgical Partners
    International, Inc., USPI Holdings, Inc., as Borrower, the
    Lenders party thereto, Citibank, N.A., as Administrative Agent
    and Collateral Agent, Lehman Brothers, Inc., as Syndication
    Agent, and Bear Stearns Corporate Lending, Inc. and UBS
    Securities LLC, as Co-Documentation Agents (previously filed as
    an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Commission on August 4, 2009 and
    incorporated herein by reference).(1)10
.3

Guarantee and Collateral Agreement, dated as of April 19,
    2007, among USPI Holdings, Inc., the Company, the subsidiaries
    of the Company identified therein and Citibank, N.A., as
    Collateral Agent.(2)10
.4

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and Donald E. Steen (previously filed as an
    exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.5

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and William H. Wilcox (previously filed as
    an exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.6

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and Brett P. Brodnax (previously filed as an
    exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.7

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and Niels P. Vernegaard (previously filed as
    an exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.8

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and Mark A. Kopser (previously filed as an
    exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.9

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and John J. Wellik (previously filed as an
    exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3) IV-1




---



##### Table of Contents



ExhibitNumber

Description10
.10

USPI Group Holdings, Inc. 2007 Equity Incentive Plan (previously
    filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.11

First Amendment to the USPI Group Holdings, Inc. 2007 Equity
    Incentive Plan (previously filed as an exhibit to the
    Companys Current Report on
    Form 10-K
    filed with the Commission on February 26, 2009 and
    incorporated herein by reference).(1)(3)10
.12

Amended and Restated Deferred Compensation Plan (previously
    filed as an exhibit to the Companys Current Report on
    Form 10-K
    filed with the Commission on February 26, 2009 and
    incorporated herein by reference).(1)(3)10
.13

Form of Indemnification Agreement between United Surgical
    Partners International, Inc. and its directors and officers
    (previously filed as an exhibit to Amendment No. 1 to the
    Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference).(1)(3)21
.1

List of the Companys subsidiaries.(2)24
.1

Power of Attorney  Donald E. Steen(2)24
.2

Power of Attorney  Joel T. Allison(2)24
.3

Power of Attorney  Michael E. Donovan(2)24
.4

Power of Attorney  John C. Garrett, M.D.(2)24
.5

Power of Attorney  D. Scott Mackesy(2)24
.6

Power of Attorney  James Ken Newman(2)24
.7

Power of Attorney  Boone Powell, Jr.(2)24
.8

Power of Attorney  Paul B. Queally(2)24
.9

Power of Attorney  Raymond A. Ranelli(2)31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(2)31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(2)32
.1

Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002(2)32
.2

Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002(2)     (1)
    
    Previously filed.(2)
    
    Filed herewith.(3)
    
    Management contract or compensatory plan or arrangement in which
    a director or executive officer participates. IV-2




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##### Table of Contents



SIGNATURES
    United Surgical Partners
    International, Inc.
  By:
    /s/  William
    H. Wilcox   President, Chief Executive Officer and Director
      Signature

Title

Date*Donald
    E. Steen

Chairman of the Board

February 23, 2010/s/  William
    H. WilcoxWilliam
    H. Wilcox

President, Chief Executive Officer and Director (Principal
    Executive Officer)

February 23, 2010/s/  Mark
    A. KopserMark
    A. Kopser

Executive Vice President and Chief Financial Officer (Principal
    Financial Officer)

February 23, 2010/s/  J.
    Anthony MartinJ.
    Anthony Martin

Vice President, Corporate Controller And Chief Accounting
    Officer (Principal Accounting Officer)

February 23, 2010*Joel
    T. Allison

Director

February 23, 2010*Michael
    E. Donovan

Director

February 23, 2010*John
    C. Garrett, M.D.

Director

February 23, 2010*D.
    Scott Mackesy

Director

February 23, 2010*James
    Ken Newman

Director

February 23, 2010*Boone
    Powell, Jr.

Director

February 23, 2010 IV-3




---



##### Table of Contents



Signature

Title

Date*Paul
    B. Queally

Director

February 23, 2010*Raymond
    A. Ranelli

Director

February 23, 2010     *
    
    John J. Wellik, by signing his name hereto, does hereby sign
    this Annual Report on
    Form 10-K
    on behalf of each of the above-named directors and officers of
    the Company on the date indicated below, pursuant to powers of
    attorney executed by each of such directors and officers and
    contemporaneously filed herewith with the Commission.  By:
    /s/  John
    J. Wellik   Attorney-in-fact
   IV-4




---



##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNumber

Description2
.1

Agreement and Plan of Merger dated as of January 27, 2006,
    by and among United Surgical Partners International, Inc., Peak
    ASC Acquisition Corp. and Surgis, Inc. (previously filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed with the Commission on January 31, 2006 and
    incorporated herein by reference).(1)2
.2

Agreement and Plan of Merger, dated as of January 7, 2007,
    by and among the Company, UNCN Holdings, Inc. and UNCN
    Acquisition Corp. (previously filed as Exhibit 2.1 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on January 8, 2007 and
    incorporated herein by reference).(1)3
.1

Amended and Restated Certificate of Incorporation (previously
    filed as Exhibit 3.1(A) to the Companys Registration
    Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)3
.2

Amended and Restated Bylaws (previously filed as
    Exhibit 3.1(B) to the Companys Registration Statement
    on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)4
.1

Indenture governing
    87/8% Senior
    Subordinated Note due 2017 and
    91/4%/10% Senior
    Subordinated Toggle Note due 2017, among the Company, the
    Guarantors named therein and U.S. Bank National Association, as
    trustee. (previously filed as an exhibit to the Companys
    Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)4
.2

Form of
    87/8% Senior
    Subordinated Note due 2017 and
    91/4%/10% Senior
    Subordinate Toggle Note due 2017 (previously filed as an exhibit
    to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)10
.1

Credit Agreement, dated as of April 19, 2007, among USPI
    Holdings, Inc., the Company, as Borrower, the Lenders party
    thereto, Citibank, N.A., as Administrative Agent and Collateral
    Agent, Lehman Brothers, Inc., as Syndication Agent, and Bear
    Stearns Corporate Lending., Inc. and UBS Securities LLC, as
    Co-Documentation Agents.(2)10
.2

Amendment No. 1 to that certain Credit Agreement dated as
    of April 19, 2007, among United Surgical Partners
    International, Inc., USPI Holdings, Inc., as Borrower, the
    Lenders party thereto, Citibank, N.A., as Administrative Agent
    and Collateral Agent, Lehman Brothers, Inc., as Syndication
    Agent, and Bear Stearns Corporate Lending, Inc. and UBS
    Securities LLC, as Co-Documentation Agents (previously filed as
    an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Commission on August 4, 2009 and
    incorporated herein by reference).(1)10
.3

Guarantee and Collateral Agreement, dated as of April 19,
    2007, among USPI Holdings, Inc., the Company, the subsidiaries
    of the Company identified therein and Citibank, N.A., as
    Collateral Agent.(2)10
.4

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and Donald E. Steen (previously filed as an
    exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.5

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and William H. Wilcox (previously filed as
    an exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.6

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and Brett P. Brodnax (previously filed as an
    exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.7

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and Niels P. Vernegaard (previously filed as
    an exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.8

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and Mark A. Kopser (previously filed as an
    exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.9

Employment Agreement, dated as of April 19, 2007, by and
    between the Company and John J. Wellik (previously filed as an
    exhibit to the Companys Registration Statement on
    Form S-4
    (No. 333-144337)
    and incorporated herein by reference).(1)(3) IV-5




---



##### Table of Contents



ExhibitNumber

Description10
.10

USPI Group Holdings, Inc. 2007 Equity Incentive Plan (previously
    filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    (No. 333-144337)
    and incorporated herein by reference).(1)(3)10
.11

First Amendment to the USPI Group Holdings, Inc. 2007 Equity
    Incentive Plan (previously filed as an exhibit to the
    Companys Current Report on
    Form 10-K
    filed with the Commission on February 26, 2009 and
    incorporated herein by reference ).(1)(3)10
.12

Amended and Restated Deferred Compensation Plan (previously
    filed as an exhibit to the Companys Current Report on
    Form 10-K
    filed with the Commission on February 26, 2009 and
    incorporated herein by reference).(1)(3)10
.13

Form of Indemnification Agreement between United Surgical
    Partners International, Inc. and its directors and officers
    (previously filed as an exhibit to Amendment No. 1 to the
    Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference).(1)(3)21
.1

List of the Companys subsidiaries.(2)24
.1

Power of Attorney  Donald E. Steen(2)24
.2

Power of Attorney  Joel T. Allison(2)24
.3

Power of Attorney  Michael E. Donovan(2)24
.4

Power of Attorney  John C. Garrett, M.D.(2)24
.5

Power of Attorney  D. Scott Mackesy(2)24
.6

Power of Attorney  James Ken Newman(2)24
.7

Power of Attorney  Boone Powell, Jr.(2)24
.8

Power of Attorney  Paul B. Queally(2)24
.9

Power of Attorney  Raymond A. Ranelli(2)31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(2)31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(2)32
.1

Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002(2)32
.2

Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002(2)     (1)
    
    Previously filed.(2)
    
    Filed herewith.(3)
    
    Management contract or compensatory plan or arrangement in which
    a director or executive officer participates. IV-6