##### 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, 2006
 Commission file
    No. 000-32837
  UNITED SURGICAL PARTNERS
    INTERNATIONAL, INC.
 (Exact name of Registrant as
    specified in its charter)
  Delaware

75-2749762(State of
    Incorporation)

(I.R.S. Employer Identification
    No.)   15305 Dallas Parkway, Suite 1600
 Addison, Texas 75001
 (Address of principal executive
    offices) (Zip Code)
  (972) 713-3500
 (Registrants telephone
    number, including area code)
  Securities Registered Pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of each exchange on which registeredCommon Stock, par value $.01 per shareRights to Purchase Series A Junior ParticipatingPreferred Stock, par value $.01 per share

The NASDAQ Stock Market, LLCThe NASDAQ Stock Market, LLC   Securities Registered Pursuant to Section 12(g) of the
    Act:  None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  þ o o
  Rule 12b-2 o þ
    As of February 23, 2007, 44,772,459 shares of the
    Registrants common stock were outstanding.
  DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    2006 ANNUAL REPORT ON
    FORM 10-K
    TABLE OF CONTENTS
  PART IItem 1.


Business


2Item 1A.


Risk
    Factors


24Item 1B.


Unresolved Staff
    Comments


34Item 2.


Properties


34Item 3.


Legal
    Proceedings


34Item 4.


Submission of
    Matters to a Vote of Security Holders


35PART IIItem 5.


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


35Item 6.


Selected
    Consolidated Financial Data


36Item 7.


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


37Item 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


59Item 8.


Financial
    Statements and Supplementary Data


60Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


60Item 9A.


Controls and
    Procedures


60Item 9B.


Other
    Information


62PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


62Item 11.


Executive
    Compensation


62Item 12.


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


62Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


62Item 14.


Principal
    Accountant Fees and Services


62PART IVItem 15.


Exhibits and
    Financial Statement Schedules


63   Note:
    The responses to Items 10 through 14 will be included in
    the Companys definitive proxy statement to be filed
    pursuant to Regulation 14A for its 2007 Annual Meeting of
    Stockholders. The required information is incorporated into this
    Form 10-K
    by reference to that document and is not repeated herein.List of the Company's SubsidiariesConsent of KPMG LLPPower of Attorney - Paul B. QueallyCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906  1




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##### Table of Contents



FORWARD
    LOOKING STATEMENTS
  Form 10-K, Form 10-K.
  PART I
  Item 1.
    Business  General
  not-for-profit
     2




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##### Table of Contents



not-for-profit
  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
     3




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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;
    pursue strategic relationships with
    not-for-profit
    healthcare systems;
    expand our presence in existing markets;
    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
 4




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##### Table of Contents



not-for-profit
  Expand
    our presence in existing markets
  not-for-profit
  Expand
    selectively in new markets
      
    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;
    the size 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;
    whether the facility is well-positioned to negotiate agreements
    with insurers and other payors; and
    licensing and other regulatory considerations.    Enhance
    operating efficiencies
   5




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##### Table of Contents



Recent
    Developments
  Hart-Scott-Rodino
    Operations
  Operations
    in the United States
    day-to-day
   6




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##### Table of Contents



day-to-day
    Strategic
    Relationships
  not-for-profit not-for-profit
   7




---



##### Table of Contents



not-for-profit not-for-profit not-for-profit
  Operations
    in the United Kingdom
  on-site on-site
    on-site
    Case
    Mix
    Specialty

U.S.


U.K.Orthopedic


21
%


23
%Pain management


18



1Gynecology


3



12
(1)General surgery


5



14Ear, nose and throat


8



2Gastrointestinal


17



2Plastic surgery


4



23Ophthalmology


11



2Other


13



21Total


100
%


100
%     (1)
    
    Also includes in vitro fertilization. 8




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##### Table of Contents



Payor
    Mix
    Payor

U.S.


U.K.Private insurance


63
%


59
%Self-pay


3



40Government


28
(1)


1Other


6



Total


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 11% for Medicare and 1% for Medicaid.  not-for-profit
  Number ofHealthcare Systems

Facilities OperatedHealthcare System

Geographical Focus

with USPISingle Market
    Systems:Baylor Health Care System

Dallas/Fort Worth, Texas


23Memorial Hermann Healthcare System

Houston, Texas


8Evanston Northwestern Healthcare

Chicago, Illinois


4Meridian Health System

New Jersey


5INTEGRIS Health

Oklahoma


2Covenant Health:

Eastern Tennessee


1Fort Sanders Parkwest Medical
    Center

Knoxville, TennesseeDecatur General Hospital

Decatur, Alabama


1Mountain States Health Alliance:

Northeast Tennessee


1Johnson City Medical Center

Johnson City, TennesseeNorthside Cherokee Hospital

Canton, Georgia


1Robert Wood Johnson University
    Hospital

East Brunswick, New Jersey


1Sarasota Memorial Hospital

Sarasota, Florida


1McLaren Health Care Corporation

Michigan


2North Kansas City Hospital

Kansas City, Missouri


2Multi-Market
    Systems:Adventist Health System:

10 states(a)


2Adventist Hinsdale Hospital

Hinsdale, IllinoisHuguley Memorial Medical Center

Fort Worth, TexasAscension Health:

18 states and D.C.(b)


9Carondelet Health System (1
    facility)

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

Middle TennesseeSt. Agnes Healthcare (1 facility)

Baltimore, MarylandSeton Healthcare Network (1
    facility)

Austin, TexasBon Secours Health System:

Eight eastern states(c)


3Mary Immaculate Hospital

Newport News, VirginiaMemorial Regional Medical Center

Richmond, Virginia 9




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##### Table of Contents



Number ofHealthcare Systems

Facilities OperatedHealthcare System

Geographical Focus

with USPISt. Marys Hospital

Richmond, VirginiaCatholic Healthcare West:

California, Arizona, Nevada


8Mercy Hospital of Folsom (1
    facility)

Sacramento, CaliforniaMercy San Juan Medical Center
    (1 facility)

Roseville, CaliforniaSan Gabriel Valley Medical
    Center (1 facility)

San Gabriel, CaliforniaSt. Johns Regional Medical
    Center (1 facility)

Oxnard, CaliforniaSt. Josephs Hospital and
    Medical Center (1 facility) and Arizona Orthopedic Surgical
    Hospital (2 facilities)

Phoenix, ArizonaSt. Rose Dominican Hospital
    (1 facility)

Henderson, NevadaCHRISTUS Health:

Seven states(d)


2Christus Santa Rosa Health
    Corporation

San Antonio, TexasProvidence Health System:

Five western states(e)


2Providence Holy Cross Health Center

Santa Clarita, CaliforniaProvidence Holy Cross Medical
    Center

Mission Hills, CaliforniaTotals




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


NumberAcquisition


of


Percentageor


Operating


Owned byFacility

Affiliation


Rooms


USPIUnited StatesAtlanta*


Advanced Surgery Center of
    Georgia, Canton, Georgia(1)


3/27/02



3



26
%East West Surgery Center, Austell,
    Georgia


9/1/00
(2)


3



53Lawrenceville Surgery Center,
    Lawrenceville, Georgia


8/1/01



2



15Northwest Georgia Surgery Center,
    Marietta, Georgia


11/1/00
(2)


2



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



26Texan Surgery Center, Austin, Texas


6/1/03



3



60 10




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##### Table of Contents



Date of


NumberAcquisition


of


Percentageor


Operating


Owned byFacility

Affiliation


Rooms


USPIChicago*


Hinsdale Surgical Center,
    Hinsdale, Illinois


5/1/06



4



22*


Same Day Surgery 25 East, Chicago,
    Illinois


10/15/04



4



73*


Same Day Surgery Elmwood Park,
    Elmwood Park, Illinois


10/15/04



3



60*


Same Day Surgery North Shore,
    Evanston, Illinois


10/15/04



2



71*


Same Day Surgery River North,
    Chicago, Illinois


10/15/04



4



55ClevelandNortheast Ohio Surgery Center,
    Cleveland, Ohio


4/19/06
(5)


3



49The Surgery Center, Middleburg
    Heights, Ohio(1)


6/19/02



7



71Corpus ChristiCorpus Christi Outpatient Surgery
    Center, Corpus Christi, Texas(1)


5/1/02



5



65Shoreline Surgery Center, Corpus
    Christi, Texas


7/1/06



4



51Dallas/Fort Worth*


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


9/30/02



6



25*


Baylor Surgicare, Dallas, Texas(1)


6/1/99



6



28*


Baylor Surgicare at Denton,
    Denton, Texas(1)


2/1/99



4



27*


Baylor Surgicare at Garland,
    Garland, Texas


2/1/99



2



35*


Baylor Surgicare at Grapevine,
    Grapevine, Texas


2/16/02



4



28*


Baylor Surgicare at Lewisville,
    Lewisville, Texas(1)


9/16/02



6



35*


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



36*


Bellaire Surgery Center,
    Fort Worth, Texas


10/15/02



4



25*


Doctors Surgery Center at
    Huguley, Burleson, Texas


2/14/06



4



19*


Heath Surgicare, Rockwall, Texas


11/1/04



3



26*


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


10/20/03



5



9*


Mary Shiels Hospital, Dallas,
    Texas(3)


4/1/03



5



28*


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


12/18/98



8



30*


Metroplex Surgicare, Bedford,
    Texas(1)


12/18/98



5



43*


North Central Surgery Center,
    Dallas, Texas


12/12/05



5



14*


North Texas Surgery Center,
    Dallas, Texas(1)


12/18/98



4



44*


Park Cities Surgery Center,
    Dallas, Texas(1)


6/9/03



4



41*


Physicians Day Surgery Center,
    Dallas, Texas


10/12/00



4



28*


Physicians Surgical Center of
    Fort Worth, Fort Worth, Texas


7/13/04



4



29*


Rockwall Surgery Center, Rockwall,
    Texas


09/1/06



3



48*


Surgery Center of Arlington,
    Arlington, Texas(1)


2/1/99



6



41*


Texas Surgery Center, Dallas,
    Texas(1)


6/1/99



4



28*


Valley View Surgery Center,
    Dallas, Texas


12/18/98



4



31Houston*


Doctors Outpatient Surgicenter,
    Pasadena, Texas


9/1/99



5



46*


Memorial Hermann Surgery
    Center   Northwest, Houston, Texas


9/1/04



5



11*


Memorial Hermann Surgery
    Center   Southwest, Houston, Texas


9/21/06



6



14*


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


8/9/05



4



10 11




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##### Table of Contents



Date of


NumberAcquisition


of


Percentageor


Operating


Owned byFacility

Affiliation


Rooms


USPI*


Memorial Hermann Surgery
    Center  Sugar Land, Sugar Land, Texas


9/21/06



4



10Northwest Surgery Center, Houston,
    Texas


4/19/06
(5)


5



49*


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


12/28/02



4



13*


TOPS Surgical Specialty Hospital,
    Houston, Texas(3)


7/1/99



7



46*


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


9/1/99



3



41West Houston Ambulatory Surgical
    Associates, Houston, Texas


4/19/06
(5)


5



51Kansas City*


Briarcliff Surgery Center, Kansas
    City, Missouri


6/1/05



2



29Creekwood Surgery Center, Kansas
    City, Missouri(1)


7/29/98



4



62*


Liberty Surgery Center, Liberty,
    Missouri


6/1/05



2



30*


Saint Marys Surgical Center,
    Blue Springs, Missouri


5/1/05



4



20Lansing*


Genesis Surgery Center, Lansing,
    Michigan


11/1/06



4



50*


Lansing Surgery Center, Lansing,
    Michigan


11/1/06



4



38Los AngelesCoast Surgery Center of South Bay,
    Torrance, California(1)


12/18/01



3



61Pacific Endo-Surgical Center,
    Torrance, California


8/1/03



1



62*


San Fernando Valley Surgery
    Center, Mission Hills, California


11/1/04



4



34*


San Gabriel Ambulatory
    Surgery Center, San Gabriel, California


4/1/05



3



41San Gabriel Valley Surgical
    Center, West Covina, California


11/16/01



4



55*


Santa Clarita Ambulatory Surgery
    Center, Santa Clarita, California


3/7/06



3



35The Center for Ambulatory Surgical
    Treatment, Los Angeles, California


11/14/02



4



64Nashville*


Baptist Ambulatory Surgery Center,
    Nashville, Tennessee


3/1/98
(2)


6



22*


Baptist Plaza Surgicare,
    Nashville, Tennessee


12/3/03



9



21*


Middle Tennessee Ambulatory
    Surgery Center, Murfreesboro, Tennessee


7/29/98



4



40*


Northridge Surgery Center,
    Nashville, Tennessee


4/19/06
(5)


5



32*


Physicians Pavilion Surgery
    Center, Smyrna, Tennessee


7/29/98



4



50*


Saint Thomas Surgicare, Nashville,
    Tennessee


7/15/02



5



21New Jersey*


Central Jersey Surgery Center,
    Eatontown, New Jersey


11/1/04



3



39*


Northern Monmouth Regional Surgery
    Center, Manalapan, New Jersey


7/10/06



4



34*


Robert Wood Johnson Surgery
    Center, East Brunswick, New Jersey


6/26/02



5



47*


Shore Outpatient Surgicenter,
    Lakewood, New Jersey


11/1/04



3



56*


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



31Oklahoma City*


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


8/2/04



4



25 12




---



##### Table of Contents



Date of


NumberAcquisition


of


Percentageor


Operating


Owned byFacility

Affiliation


Rooms


USPI*


Southwest Orthopaedic Ambulatory
    Surgery Center, Oklahoma City, Oklahoma


8/2/04



2



25Specialists Surgery Center,
    Oklahoma City, Oklahoma(1)


3/27/02



4



37OrlandoOrlando Ophthalmology Surgery
    Center, Orlando, Florida


4/19/06
(5)


3



21University Surgical Center, Winter
    Park, Florida


10/15/98



3



40Phoenix*


Arizona Orthopedic Surgical
    Hospital, Chandler, Arizona(3)


5/19/04



6



36Metro Surgery Center, Phoenix,
    Arizona


4/19/06
(5)


4



74Physicians Surgery Center of
    Tempe, Tempe, Arizona


4/19/06
(5)


2



10*


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


9/2/03



9



33Surgery Center of Peoria, Peoria,
    Arizona


4/19/06
(5)


2



57Surgery 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



26Richmond*


Memorial Ambulatory Surgery
    Center, Mechanicsville, Virginia


12/30/05



5



47*


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


11/29/06



4



20Sacramento*


Folsom Outpatient Surgery Center,
    Folsom, California


6/1/05



2



29*


Roseville Surgery Center,
    Roseville, California


7/1/06



2



30San Antonio*


Alamo Heights Surgery Center,
    San Antonio, Texas


12/1/04



3



57*


Christus Santa Rosa Surgery
    Center, San Antonio, Texas


5/3/04



5



21San Antonio Endoscopy Center,
    San Antonio, Texas


5/1/05



1



54St. LouisAdvanced Surgical Care, Creve
    Coeur, Missouri


1/1/06



2



33Chesterfield Surgery Center,
    Chesterfield, Missouri


1/1/06



2



33Mid Rivers Surgery Center, Saint
    Peters, Missouri


1/1/06



2



34Olive Surgery Center,
    St. Louis, Missouri


1/1/06



2



32Riverside Ambulatory Surgery
    Center, Florissant, Missouri


8/1/06



2



33Sunset Hills Surgery Center,
    St. Louis, Missouri


1/1/06



2



33The Ambulatory Surgical Center of
    St. Louis, Bridgeton, Missouri


8/1/06



2



33Additional
    MarketsAustintown Ambulatory Surgery
    Center, Austintown, Ohio(1)


4/12/02



5



69Beaumont Surgical Affiliates,
    Beaumont, Texas


4/19/06
(5)


6



76*


Cape Surgery Center, Sarasota,
    Florida


10/18/04



6



45Chico Surgery Center, Chico,
    California


4/19/06
(5)


2



60Court Street Surgery Center,
    Redding, California


4/19/06
(5)


2



60Day-Op Center of Long Island,
    Mineola, New York(4)


12/4/98



4



0*


Decatur Ambulatory Surgery Center,
    Decatur, Alabama(1)


7/29/98



3



64Destin Surgery Center, Destin,
    Florida


9/25/02



2



32Great Plains Surgery Center,
    Lawton, Oklahoma


4/19/06
(5)


2



49Greater Baton Rouge Surgical
    Hospital, Baton Rouge, Louisiana(3)


10/11/05



4



34 13




---



##### Table of Contents



Date of


NumberAcquisition


of


Percentageor


Operating


Owned byFacility

Affiliation


Rooms


USPIIdaho Surgery Center, Caldwell,
    Idaho


4/19/06
(5)


3



21Las Cruces Surgical Center, Las
    Cruces, New Mexico


2/1/01



3



25Madison Ambulatory Surgery Center,
    Canton, Mississippi


4/19/06
(5)


2



75Manitowoc Surgery Center,
    Manitowoc, Wisconsin


12/18/06
(5)


2



30*


Mary Immaculate Ambulatory
    Surgical Center, Newport News, Virginia


7/19/04



3



18*


Mountain Empire Surgery Center,
    Johnson City, Tennessee


2/20/00
(2)


4



18New Horizons Surgery Center,
    Marion, Ohio


4/19/06
(5)


2



10New Mexico Orthopaedic Surgery
    Center, Albuquerque, New Mexico


2/29/00
(2)


5



51*


Parkway Surgery Center, Henderson
    (Las Vegas), Nevada


8/3/98



5



25*


Parkwest Surgery Center,
    Knoxville, Tennessee


7/26/01



5



22Reading Surgery Center, Spring
    Township, Pennsylvania


7/1/04



3



57Redding Surgery Center, Redding,
    California


4/19/06
(5)


2



22Redmond Surgery Center, Redmond,
    Oregon


4/19/06
(5)


2



70*


Saint Agnes Surgery Center,
    Ellicott City (Baltimore), Maryland


10/01/04



4



74*


Saint Johns Outpatient
    Surgery Center, Oxnard, California


12/5/05



4



34Surgi-Center of Central Virginia,
    Fredericksburg, Virginia


11/29/01



4



79Surgery Center of Canfield,
    Canfield, Ohio


4/19/06
(5)


3



20Surgery Center of Columbia,
    Columbia, Missouri


8/1/06



2



30Surgery Center of
    Fort Lauderdale, Fort Lauderdale, Florida


11/1/04



4



61Teton Outpatient Services,
    Jackson, Wyoming


8/1/98
(2)


2



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


4/19/06
(5)


2



0Tulsa Outpatient Surgery Center,
    Tulsa, Oklahoma


11/1/04



4



30Victoria Ambulatory Surgery
    Center, Victoria, Texas


4/19/06
(5)


2



59United KingdomParkside Hospital, Wimbledon


4/6/00



4



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.       14




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##### Table of Contents



Acquisitions
    and Development
      Expected


Number ofHospital




Opening


OperatingFacility Location

Partner

Type


Date


RoomsDesert Ridge, Arizona

CHW


Surgery Center



1Q07



4Alexandria, Louisiana

Christus


Surgery Center



2Q07



4Flint, Michigan

McLaren


Surgery Center



2Q07



4Houston, Texas

Memorial Hermann


Surgery Center



2Q07



4Suffolk, Virginia

Bon Secours


Surgery Center



2Q07



6Virginia Beach, Virginia

Bon Secours


Surgery Center



2Q07



3Terre Haute, Indiana

Ascension


Surgery Center



3Q07



2Oklahoma City, Oklahoma

Integris


Surgery Center



3Q07



3Orlando, Florida




Surgery Center



4Q07



3San Martin (Las Vegas), Nevada

CHW


Surgery Center



1Q08



4     Marketing
    Competition
     15




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##### Table of Contents



not-for-profit
      Employees
    Professional
    and General Liability Insurance
    Government
    Regulation
  United
    States
     16




---



##### Table of Contents



Licensure
    and
    certificate-of-need
    regulations
           17




---



##### Table of Contents



Medicare
    and Medicaid Participation in Surgery Centers
      on-site
     18




---



##### Table of Contents



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.             19




---



##### Table of Contents



Federal
    Physician Self-Referral Law
   20




---



##### Table of Contents



18-month
  False
    and Other Improper Claims
       21




---



##### Table of Contents



State
    Anti-Kickback and Physician Self-Referral Laws
      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.     22




---



##### Table of Contents



European
    Union and United Kingdom
         23




---



##### Table of Contents



Item 1A.
    Risk
    Factors  An investment in United Surgical Partners International, Inc.
    involves certain risks. You should carefully read the risks and
    uncertainties described below and the other information included
    or incorporated by reference in this report.
  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 surgery centers or
    private surgical hospitals on favorable terms, we may be unable
    to execute our acquisition and development strategy, which could
    limit our future growth.
    If we are
    not successful in integrating the operations of Surgis, Inc.,
    which we acquired in April 2006, with our own operations, we may
    not realize the potential benefits of this
    acquisition.
    If we
    incur material liabilities as a result of acquiring companies or
    surgical facilities, our operating results could be adversely
    affected.
   24




---



##### Table of Contents



If we are
    unable to manage growth, we may be unable to achieve our growth
    strategy.
    We depend
    on our relationships with
    not-for-profit
    healthcare systems and their ability to assist in negotiating
    managed care contracts on behalf of the surgical facilities that
    we jointly own with healthcare systems. If we are not able to
    maintain our strategic alliances with these
    not-for-profit
    healthcare systems, or enter into new alliances, we may be
    unable to implement our business strategies
    successfully.
  not-for-profit not-for-profit 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.
    not-for-profit
 25




---



##### Table of Contents



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.
    Our
    surgery centers and surgical hospitals face competition for
    patients from other hospitals and health care
    providers.
  27-question
  not-for-profit
  Our
    United Kingdom operations are subject to unique risks, any of
    which, if they actually occur, could adversely affect our
    results.
    
    competition with government sponsored healthcare systems; 26




---



##### Table of Contents




    unforeseen changes in foreign regulatory requirements or
    domestic regulatory requirements affecting our foreign
    operations;
    identifying, attracting, retaining and working successfully with
    qualified local management;
    fluctuations in exchange rates;
    difficulties in staffing and managing geographically and
    culturally diverse, multinational operations; and
    the possibility of an economic downturn in the United Kingdom,
    which could adversely affect the ability or willingness of
    employers and individuals in these countries to purchase private
    health insurance.    Our
    significant indebtedness could limit our flexibility.
      
    we must dedicate a substantial portion of our cash flows from
    operations to the payment of principal and interest on our
    indebtedness, reducing the funds available for our operations;
    a portion of our borrowings are at variable rates of interest,
    making us vulnerable to increases in interest rates;
    we may be more highly leveraged than some of our competitors,
    which could place us at a competitive disadvantage;
    our degree of leverage may make us more vulnerable to a downturn
    in our business or the economy generally; and
    the terms of our existing credit arrangements contain numerous
    financial and other restrictive covenants, including
    restrictions on paying dividends, incurring additional
    indebtedness and selling assets.  Our
    revenues may be reduced by changes in payment methods or rates
    under the Medicare or Medicaid programs.
   27




---



##### Table of Contents



Efforts
    to regulate the construction, acquisition or expansion of
    healthcare facilities could prevent us from acquiring additional
    surgery centers or private surgical hospitals, 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 other 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;
    billing for services;
    maintenance and protection of records; and
    environmental protection.   28




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##### Table of Contents



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.
         29




---



##### 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.
        Companies
    within the healthcare industry continue to be the subject of
    federal and state 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.   30




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##### Table of Contents



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.
      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.   31




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##### Table of Contents



Future
    legislation could restrict our ability to operate our domestic
    surgical hospitals.
  18-month
  If we
    become subject to significant legal actions, we could be subject
    to substantial uninsured liabilities.
    If we are
    unable to effectively compete for physicians, strategic
    relationships, acquisitions and managed care contracts, our
    business could be adversely affected.
  not-for-profit
  We may be
    adversely affected if we lose any member of our senior
    management.
   32




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##### Table of Contents



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.
    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.
   33




---



##### Table of Contents



Provisions
    of our charter documents, Delaware law and our stockholder
    rights plan could discourage a takeover you may consider
    favorable or the removal of our current management.
    
    authorize the issuance of blank check preferred
    stock;
    provide for a classified board of directors with staggered,
    three-year terms;
    prohibit cumulative voting in the election of directors;
    prohibit our stockholders from acting by written consent without
    the approval of our board of directors;
    limit the persons who may call special meetings of stockholders;
    and
    establish advance notice requirements for nominations for
    election to the board of directors or for proposing matters to
    be approved by stockholders at stockholder meetings.      Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings     34




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##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market for Common Stock.
  High(1)


Low(1)Year Ended December 31,
    2005:First Quarter

$
31.17


$
24.72Second Quarter


35.99



28.50Third Quarter


40.07



32.25Fourth Quarter


39.72



31.57Year Ended December 31,
    2006:First Quarter

$
40.29


$
32.10Second Quarter


35.90



28.24Third Quarter


31.56



23.91Fourth Quarter


29.39



22.57     (1)
    
    Restated to reflect the 3 for 2 stock split, which was effective
    July 15, 2005.    
    any applicable contractual restrictions limiting our ability to
    pay dividends;
    our earnings;
    our financial condition;
    our ability to fund our capital requirements; and
    other factors our board deems relevant.    Recent Sales of Unregistered
    Securities.
  Issuer Purchases of Equity Securities.
 35




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##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data      Years Ended December 31,2006


2005


2004


2003


2002(In thousands, except number of facilities and per share
    data)Consolidated Statement of
    Income Data:Total revenues

$
578,825


$
469,601


$
383,186


$
304,229


$
242,307Equity in earnings of
    unconsolidated affiliates


31,568



23,998



18,626



15,074



9,454Operating expenses excluding
    depreciation and amortization


(416,034
)


(327,569
)


(267,765
)


(210,349
)


(168,840
)Depreciation and amortization


(35,300
)


(30,980
)


(26,761
)


(22,184
)


(19,039
)Operating income


159,059



135,050



107,286



86,770



63,882Other income (expense):Interest income


4,069



4,455



1,591



1,025



774Interest expense


(32,716
)


(27,471
)


(26,430
)


(24,642
)


(23,298
)Loss on early retirement of debt


(14,880
)






(1,635
)






Other


1,778



533



247



733



(11
)Income before minority interests


117,310



112,567



81,059



63,886



41,347Minority interests in income of
    consolidated subsidiaries


(54,452
)


(38,521
)


(30,344
)


(24,109
)


(14,820
)Income tax expense


(22,773
)


(26,430
)


(17,986
)


(14,978
)


(9,896
)Income from continuing operations


40,085



47,616



32,729



24,799



16,631Earnings (loss) from discontinued
    operations, net of tax


(5,839
)


(322
)


53,446



5,077



2,969Net income

$
34,246


$
47,294


$
86,175


$
29,876


$
19,600 36




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##### Table of Contents



Years Ended December 31,2006


2005


2004


2003


2002(In thousands, except number of facilities and per share
    data)Share Data(a):Net income (loss) per share
    attributable to common stockholders:Basic:Continuing operations

$
0.92


$
1.11


$
0.78


$
0.61


$
0.45Discontinued operations


(0.14
)


(0.01
)


1.28



0.12



0.07Total

$
0.78


$
1.10


$
2.06


$
0.73


$
0.52Diluted:Continuing operations

$
0.88


$
1.06


$
0.74


$
0.59


$
0.43Discontinued operations


(0.13
)


(0.01
)


1.22



0.12



0.07Total

$
0.75


$
1.05


$
1.96


$
0.71


$
0.50Weighted average number of common
    sharesBasic shares


43,723



42,994



41,913



40,699



37,387Diluted shares


45,466



44,977



43,948



42,366



39,085Other Data:Number of facilities operated as
    of the end of period(b)


141



99



87



65



56Cash flows from operating
    activities

$
102,504


$
107,142


$
81,098


$
66,206


$
46,725   As of December 31,2006


2005


2004


2003


2002(Dollars in thousands)Consolidated Balance Sheet
    Data:Working capital (deficit)

$
(41,834
)

$
90,946


$
87,178


$
29,957


$
51,412Cash and cash equivalents


31,740



130,440



93,467



28,519



47,571Total assets


1,231,856



1,028,841



922,304



870,509



728,758Total debt


347,330



286,486



288,485



304,744



276,703Total stockholders equity


599,274



531,050



474,609



390,655



322,261     (a)
    
    Share and per share data are adjusted and restated to give
    effect to a
    three-for-two
    stock split effected during 2005.(b)
    
    Does not include Spanish facilities. Not derived from audited
    financial statements.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation    Overview
  not-for-profit
   37




---



##### Table of Contents



not-for-profit
      Critical
    Accounting Policies and Estimates
    Consolidation
  not-for-profit
  Consolidation of Variable Interest Entities (as amended)
 38




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##### Table of Contents



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 and determinable;
    and
    Collectibility is reasonably assured.       39




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##### Table of Contents



Income
    Taxes
    Goodwill
    and Intangible Assets
  Accounting for Goodwill
    and Intangible Assets
  and/or
  Equity-based
    Compensation
  Share-Based Payment
 40




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##### Table of Contents



Acquisitions,
    Equity Investments and Development Projects
              
    Receipt of $19.8 million as final payment from the buyers
    of our Spanish operations,
    Investment of $4.1 million in a joint venture with one of
    our
    not-for-profit
    hospital partners, which the joint venture used to acquire
    ownership in a surgery center in the Sacramento, California area,
    Investment of $3.7 million in a joint venture with one of
    our
    not-for-profit
    hospital partners, which the joint venture used to acquire
    ownership in two surgery centers in the Lansing, Michigan area,
    Receipt of $4.8 million from another of our
    not-for-profit
    hospital partners, as we sold a controlling interest in a
    surgical facility in Fort Worth, Texas,
    Payment of $3.1 million to sellers based on certain
    financial targets or objectives being met for acquired
    facilities or based upon the resolution of certain contingencies,
    Receipt of $2.0 million for the sale of a facility in Ocean
    Springs, Mississippi, which we had acquired in April as part of
    the Surgis acquisition,
    Receipt of $1.3 million for the sale of a facility in
    Phoenix, Arizona, which we had acquired in April as part of the
    Surgis acquisition,
    Receipt of $0.5 million for the sale of a facility in
    Lyndhurst, Ohio, and
    Net payment of $3.4 million related to other purchases and
    sales of equity interests and contributions of cash to equity
    method investees.   41




---



##### Table of Contents




    $34.0 million was paid to acquire additional ownership in
    nine facilities we operate in the Dallas/Fort Worth market,
    net of proceeds from the sale of a portion of three other
    facilities in this same market,
    $5.2 million was paid for equity method investments in two
    surgery centers near Kansas City, Missouri,
    $4.7 million was paid for an equity method investment in a
    surgery center in the Sacramento, California area,
    $5.5 million was paid to acquire additional ownership in a
    facility the we operate in New Jersey, and
    $12.0 million was received from three
    not-for-profit
    healthcare systems for noncontrolling interests in six
    facilities we already operated. Included in these transactions
    are call options allowing the healthcare systems to acquire
    additional noncontrolling ownership interests in each facility
    in 2006. With respect to four of the facilities, the approximate
    sales price is $10.2 million and we have a put option with
    the same terms. With respect to the other two facilities, the
    systems have call options that, for one facility, fix the price
    at $2.0 million and in the other case base the price on a
    multiple of earnings when the option is exercised. We have no
    put options with respect to these two facilities, and
    $1.3 million of other net purchases of equity interests.                     42




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##### Table of Contents



Discontinued
    Operations
      Sources
    of Revenue
    
    net patient service revenue 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 revenue, 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 31,2006


2005


2004Net patient service revenue


90
%


92
%


90
%Management and contract service
    revenue


9



8



10Other revenue


1







Total revenue


100
%


100
%


100
%   gross-up
 43




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##### Table of Contents



Years Ended December 31,2006


2005


2004Management of surgical facilities

$
26,623


$
20,069


$
18,115Contract services provided to
    physicians, hospitals and related entities


25,613



15,835



19,527Total management and contract
    service revenues

$
52,236


$
35,904


$
37,642     Years Ended December 31,2006


2005


2004United States


83
%


81
%


78
%United Kingdom


17



19



22Total


100
%


100
%


100
%    44




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##### Table of Contents



Equity in
    Earnings of Unconsolidated Affiliates
  not-for-profit
  Years Ended December 31,2006


2005


2004Revenues

$
610,160


$
443,292


$
339,109Equity in earnings of
    unconsolidated affiliates


224



27



Operating expenses:Salaries, benefits, and other
    employee costs


150,625



109,734



79,917Medical services and supplies


125,981



86,573



62,213Other operating expenses


150,108



111,140



77,820Depreciation and amortization


29,884



20,287



15,480Total operating expenses


456,598



327,734



235,430Operating income


153,786



115,585



103,679Interest expense, net


(14,400
)


(10,560
)


(9,297
)Other


282



772



826Income before income taxes

$
139,668


$
105,797


$
95,208Long-term debt


169,304



118,458



100,443USPIs equity in earnings of
    unconsolidated affiliates


31,568



23,998



18,626USPIs imputed weighted
    average ownership percentage based on affiliates pre-tax
    income(1)


22.6
%


22.7
%


19.6
%USPIs imputed weighted
    average ownership percentage based on affiliates debt(2)


29.2
%


28.1
%


24.0
%Unconsolidated facilities operated
    at period end


80



57



44     (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
    percentage is higher in 2006 and 2005 due primarily to our
    acquisition of additional ownership in facilities we account for
    under the equity method and our acquisition, in the second
    quarter of 2006, of four facilities in which we own a majority
    economic interest but account for under the equity method due to
    a lack of effective control over the facilities operations.(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
    percentage is higher in 2006 as compared to the corresponding
    prior year due primarily to our acquisition, in the second
    quarter of 2006, of four facilities in which we own a majority
    economic interest but account for under the equity method due to
    a lack of effective control over the facilities
    operations. This percentage is higher in 2005 as compared to the
    twelve months ended December 31, 2004 due primarily to our
    acquisition of additional ownership in facilities we account for
    under the equity method. 45




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##### Table of Contents



Results
    of Operations
    Years Ended December 31,2006


2005


2004Total revenues


100.0
%


100.0
%


100.0
%Equity in earnings of
    unconsolidated affiliates


5.5



5.1



4.9Operating expenses, excluding
    depreciation and amortization


(72.0
)


(69.7
)


(69.9
)Depreciation and amortization


(6.0
)


(6.6
)


(7.0
)Operating income


27.5



28.8



28.0Minority interests in income of
    consolidated subsidiaries


(9.4
)


(8.2
)


(8.0
)Interest and other expense, net


(7.2
)


(4.8
)


(6.8
)Income from continuing operations
    before income taxes


10.9



15.8



13.2Income tax expense


(4.0
)


(5.7
)


(4.7
)Income from continuing operations


6.9



10.1



8.5Earnings (loss) from discontinued
    operations


(1.0
)






14.0Net income


5.9
%


10.1
%


22.5
%   Executive
    Summary
    stronger-than-expected
  not-for-profit
 46




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Hart-Scott-Rodino
  Revenues
    not-for-profit
  out-of-network
 47




---



##### Table of Contents



Years Ended December 31,2006


2005


2004United States facilities:Net revenue


9
%


9
%


17
%Surgical cases


7
%


4
%


7
%Net revenue per case(1)


2
%


5
%


9
%United Kingdom facilities:Net revenue using actual exchange
    rates


7
%


6
%


32
%Net revenue using constant
    exchange rates(2)


6
%


7
%


18
%All same store facilities:Net revenue using actual exchange
    rates


9
%


9
%


19
%     (1)
    
    Our overall domestic same store growth in net revenue per case
    was favorably impacted by the growth at our ten 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. Net revenue per case of our same
    store ambulatory surgery remained flat for the year-ended
    December 31, 2006, as compared to the corresponding prior
    year period.(2)
    
    Calculated using 2006 exchange rates for both periods. We
    believe that using a constant currency translation rate more
    accurately reflects the trend of the business. 48




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##### Table of Contents



Joint
    Ventures with
    Not-for-Profit
    Hospitals
    2006


2005


2004United States facilities(1):With a hospital partner


78



66



48Without a hospital partner(2)


60



30



36Total U.S. facilities


138



96



84United Kingdom facilities


3



3



3Total facilities operated


141



99



87Change from prior year-end:De novo (newly constructed)


8



9



9Acquisition


38



4



13Disposals(3)


(4
)


(1
)


Total increase in number of
    facilities


42



12



22     (1)
    
    At December 31, 2006, physicians own a portion of all of
    these facilities.(2)
    
    We acquired 33 facilities without a hospital partner in 2006,
    primarily as a result of the Surgis and St. Louis
    acquisitions. We are in active discussions with potential
    hospital partners for many of these recently acquired facilities.(3)
    
    We sold our ownership interests in facilities in Lyndhurst, Ohio
    and Chicago, Illinois during the first quarter of 2006. We also
    disposed of Surgis interests in two of its facilities, one
    in Phoenix, Arizona, the other in Ocean Springs, Mississippi.  Facility
    Operating Margins
  year-over-year
   49




---



##### Table of Contents



year-over-year
  Year Ended December 31,2006

2005

2004United States facilities:With a hospital partner


(50
) bps


(270
) bps


250
bpsWithout a hospital partner


(50
)


(20
)


30Total U.S. facilities


(50
)


(200
)


230United Kingdom facilities


(205
) bps


(90
) bps


(10
) 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.  Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
         50




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##### Table of Contents



gross-ups,
              Year
    Ended December 31, 2005 Compared to Year Ended
    December 31, 2004
     51




---



##### Table of Contents



52




---



##### Table of Contents



Liquidity
    and Capital Resources
  Years Ended December 31,2006


2005


2004Net cash provided by operating
    activities

$
102,504


$
107,142


$
81,098Net cash used in investing
    activities


(282,151
)


(102,178
)


(19,175
)Net cash provided by financing
    activities


81,065



32,119



1,458   Overview
    Operating
    Activities
    follow-up and/or
   53




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##### Table of Contents



Investing
    Activities
    Acquisitions
    
    $193.1 million, net of $5.9 million of cash acquired,
    was paid for 100% of the equity interests in Surgis, Inc., a
    privately-held, Nashville-based owner and operator of surgery
    centers;
    $58.9 million was paid to acquire controlling interests in
    eight ambulatory surgery centers in the St. Louis, Missouri
    area;
    $10.9 million was paid to acquired a controlling interest
    in an ambulatory surgery center in Rockwall, Texas;
    $4.1 million was paid for an investment in a joint venture
    with one of our
    not-for-profit
    hospital partners, which the joint venture used to acquire
    ownership in a surgery center in the Sacramento, California area;
    $3.8 million was paid to acquire a surgery center and
    related real estate in Corpus Christi, Texas;
    $3.7 million was invested in a joint venture with one of
    our
    not-for-profit
    hospital partners, which the joint venture used to acquire
    ownership in two surgery centers in the Lansing, Michigan area.
    $3.1 million was paid to sellers based on certain financial
    targets or objectives being met for acquired facilities or based
    upon the resolution of certain contingencies;
    $1.3 million of additional purchase price related to the
    purchase of additional ownership in 2005 in a facility in
    Eatontown, New Jersey;
    $2.0 million net payment related to other purchases and
    sales of equity interests and contributions of cash to equity
    method investees.      Property
    and Equipment/Facilities under Development
   54




---



##### Table of Contents



Financing
    Activities
    Debt
   55




---



##### Table of Contents



Stock
    Option and Stock Purchase Plans
     56




---



##### Table of Contents



Contractual
    Cash Obligations
    Payments Due by PeriodWithin








BeyondContractual Cash Obligations

Total


1 Year


Years 2 and 3


Years 4 and 5


5 Years(In thousands)Long term debt obligations
    (principal plus interest)(1):U.S. Term loan facility
    (Term B)

$
199,000


$
2,000


$
4,000


$
4,000


$
189,000U.K. credit facility


80,128



12,278



27,608



40,242



Other debt at operating
    subsidiaries


38,254



11,565



18,259



7,626



804Capitalized lease obligations


78,479



9,137



16,414



11,757



41,171Operating lease obligations


77,514



14,458



24,454



17,095



21,507Total contractual cash obligations

$
473,375


$
49,438


$
90,735


$
80,720


$
252,482     (1)
    
    Amounts shown for long-term debt obligations and capital lease
    obligations include the associated interest. For variable rate
    debt, the interest is calculated using the December 31,
    2006 rates applicable to each debt instrument.  Debt
    at Operating Subsidiaries
      Merger
    Agreement
     57




---



##### Table of Contents



Hart-Scott-Rodino
    Off-Balance
    Sheet Arrangements
  not-for-profit
    Related
    Party Transactions
       58




---



##### Table of Contents



New
    Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes, an interpretation
    of FASB Statement No. 109. Accounting for
    Income Taxes.
  Fair Value Measurement
  Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans  an amendment of FASB
    Statement No. 87, 88, 106 and 132(R),
  Considering the Effects of Prior
    Year Misstatements when Quantifying Misstatements in Current
    Year Financial Statements
 Item 7A.  Quantitative
    and Qualitative Disclosures about Market Risk  variable-to-fixed
   59




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Form 10-K.
  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. 60




---



##### Table of Contents



Internal Control  Integrated
    Framework.
  
    Surgis, Inc.
    USP Creve Coeur, Inc.
    USP Chesterfield, Inc.
    USP St. Peters, Inc.
    USP Olive, Inc.
    USP Sunset Hills
    USP Bridgeton, Inc.
    USP Columbia, Inc.
    USP Florissant, Inc.
    Shoreline Real Estate Partnership, L.L.P.
    Shoreline Surgery Center, L.L.P.
    USP Richmond II, Inc. (Investment in St. Marys
    Ambulatory Surgery Center, L.L.C.)
    USP Sacramento, Inc. (Investment in Roseville Surgery Center,
    L.P.)
    THVG/HealthFirst, L.L.C. (Investments in Huguley Surgery Center,
    L.L.P. and Rockwall Ambulatory Surgery Center, L.L.P.)
    USP Midwest, Inc. (Investment in Hinsdale Surgical Center,
    L.L.C.)
    USP Mission Hills, Inc. (Investment in Santa Clarita Surgery
    Center, LP)
    USP New Jersey, Inc. (Investment in Northern Monmouth Regional
    Surgery Center, L.L.C.)
    USP Houston, Inc. (Investments in Memorial Herrmann Surgery
    Center Southwest, L.L.P. and Memorial Herrmann Surgery Center
    Sugarland, L.L.P.)
    USP Michigan, Inc. (Investments in Genesis ASC Partners, L.L.C.
    and Lake Lansing ASC Partners, L.L.C.)      Limitations
    on the Effectiveness of Controls
   61




---



##### Table of Contents



Changes
    in Internal Control Over Financial Reporting
   Item 9B.  Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   62




---



##### Table of Contents



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


F-1Consolidated
    Balance Sheets as of December 31, 2006 and 2005


F-4Consolidated
    Statements of Income for the years ended December 31, 2006,
    2005 and 2004


F-5Consolidated
    Statements of Comprehensive Income for the years ended
    December 31, 2006, 2005 and 2004


F-6Consolidated
    Statements of Stockholders Equity for the years ended
    December 31, 2006, 2005 and 2004


F-7Consolidated
    Statements of Cash Flows for the years ended December 31,
    2006, 2005 and 2004


F-8Notes to
    Consolidated Financial Statements


F-9  63




---



##### Table of Contents



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




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
     , Internal Control  Integrated Framework
        Internal
    Control  Integrated Framework Internal Control  Integrated Framework
    
    Surgis, Inc. F-2




---



##### Table of Contents




    USP Creve Coeur, Inc.
    USP Chesterfield, Inc.
    USP St. Peters, Inc.
    USP Olive, Inc.
    USP Sunset Hills
    USP Bridgeton, Inc.
    USP Columbia, Inc.
    USP Florissant, Inc.
    Shoreline Real Estate Partnership, L.L.P.
    Shoreline Surgery Center, L.L.P.
    USP Richmond II, Inc. (Investment in St. Marys
    Ambulatory Surgery Center, L.L.C.)
    USP Sacramento, Inc. (Investment in Roseville Surgery Center,
    L.P.)
    THVG/HealthFirst, L.L.C. (Investments in Huguley Surgery Center,
    L.L.P. and Rockwall Ambulatory Surgery Center, L.L.P.)
    USP Midwest, Inc. (Investment in Hinsdale Surgical Center,
    L.L.C.)
    USP Mission Hills, Inc. (Investment in Santa Clarita Surgery
    Center, LP)
    USP New Jersey, Inc. (Investment in Northern Monmouth Regional
    Surgery Center, L.L.C.)
    USP Houston, Inc. (Investments in Memorial Herrmann Surgery
    Center Southwest, L.L.P. and Memorial Herrmann Surgery Center
    Sugarland, L.L.P.)
    USP Michigan, Inc. (Investments in Genesis ASC Partners, L.L.C.
    and Lake Lansing ASC Partners, L.L.C.)    KPMG LLP
    F-3




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Consolidated Balance Sheets
    December 31, 2006 and 2005  2006


2005(In thousands, exceptper share amounts)ASSETSCash and cash equivalents

$
31,740


$
130,440Patient receivables, net of
    allowance for doubtful accounts of $9,955 and $6,656,
    respectively


58,525



44,501Other receivables (Note 4)


16,973



10,253Inventories of supplies


9,108



7,819Deferred tax asset, net


14,238



11,654Prepaids and other current assets


13,264



8,443Total current assets


143,848



213,110Property and equipment, net
    (Note 5)


299,829



259,016Investments in affiliates
    (Note 3)


158,499



100,500Goodwill and intangible assets,
    net (Note 6)


621,264



422,556Other assets (Note 2)


8,416



33,659Total assets

$
1,231,856


$
1,028,841LIABILITIES AND
    STOCKHOLDERS EQUITYAccounts payable

$
24,436


$
19,095Accrued salaries and benefits


26,145



19,572Due to affiliates


76,398



34,997Accrued interest


1,742



1,506Current portion of long-term debt
    (Note 7)


26,373



15,922Other accrued expenses


30,588



31,072Total current liabilities


185,682



122,164Long-term debt, less current
    portion (Note 7)


320,957



270,564Other long-term liabilities


10,857



4,474Deferred tax liability, net


42,256



36,591Total liabilities


559,752



433,793Minority interests (Note 3)


72,830



63,998Commitments and contingencies
    (Notes 8 and 15)Stockholders equity
    (Notes 9 and 12)Common stock, $0.01 par
    value; 200,000 shares authorized; 44,714 and
    44,320 shares issued at December 31, 2006 and 2005,
    respectively


447



443Additional paid-in capital


382,327



375,656Treasury stock, at cost, 4 and
    37 shares at December 31, 2006 and 2005, respectively


(109
)


(831
)Deferred compensation






(14,128
)Accumulated other comprehensive
    income, net of tax


16,349



3,896Retained earnings


200,260



166,014Total stockholders equity


599,274



531,050Total liabilities and
    stockholders equity

$
1,231,856


$
1,028,841    F-4




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Consolidated Statements of Income  Years Ended December 31,2006


2005


2004(In thousands, except per share amounts)Revenues:Net patient service revenue

$
518,788


$
432,727


$
344,727Management and contract service
    revenue


52,236



35,904



37,642Other revenue


7,801



970



817Total revenues


578,825



469,601



383,186Equity in earnings of
    unconsolidated affiliates


31,568



23,998



18,626Operating expenses:Salaries, benefits, and other
    employee costs


160,979



119,525



97,927Medical services and supplies


104,382



83,652



62,977Other operating expenses


99,623



84,762



71,435General and administrative expenses


40,950



30,275



27,493Provision for doubtful accounts


10,100



9,355



7,933Depreciation and amortization


35,300



30,980



26,761Total operating expenses


451,334



358,549



294,526Operating income


159,059



135,050



107,286Interest income


4,069



4,455



1,591Interest expense


(32,716
)


(27,471
)


(26,430
)Loss on early retirement of debt
    (Note 7)


(14,880
)






(1,635
)Other


1,778



533



247Total other expense, net


(41,749
)


(22,483
)


(26,227
)Income before minority interests


117,310



112,567



81,059Minority interests in income of
    consolidated subsidiaries


(54,452
)


(38,521
)


(30,344
)Income from continuing operations
    before income taxes


62,858



74,046



50,715Income tax expense


(22,773
)


(26,430
)


(17,986
)Income from continuing operations


40,085



47,616



32,729Discontinued operations, net of
    tax (Note 2):Income (loss) from discontinued
    operations


(96
)


(477
)


3,108Net gain (loss) on disposal of
    discontinued operations


(5,743
)


155



50,338Total earnings (loss) from
    discontinued operations


(5,839
)


(322
)


53,446Net income

$
34,246


$
47,294


$
86,175Net income (loss) per share:Basic:Continuing operations

$
0.92


$
1.11


$
0.78Discontinued operations


(0.14
)


(0.01
)


1.28Total

$
0.78


$
1.10


$
2.06Diluted:Continuing operations

$
0.88


$
1.06


$
0.74Discontinued operations


(0.13
)


(0.01
)


1.22Total

$
0.75


$
1.05


$
1.96Weighted average number of common
    sharesBasic


43,723



42,994



41,913Diluted


45,466



44,977



43,948    F-5




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Consolidated Statements of Comprehensive Income  Years Ended December 31,2006


2005


2004(In thousands)Net income

$
34,246


$
47,294


$
86,175Other comprehensive income (loss):Foreign currency translation
    adjustments


13,104



(9,975
)


2,515Minimum pension liability
    adjustment, net of tax


(434
)


(549
)


(235
)Net unrealized gains on
    securities, net of tax










70Reclassifications due to sale of
    Spanish operations:Foreign currency translation
    adjustments










(20,563
)Net unrealized losses on
    securities, net of tax










(219
)Other comprehensive income (loss)


12,670



(10,524
)


(18,432
)Comprehensive income

$
46,916


$
36,770


$
67,743    F-6




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
    Consolidated Statements of Stockholders Equity
    For the years ended December 31, 2006, 2005 and
    2004  Receivables


AccumulatedCommon Stock


Additional








from Sales


OtherOutstanding





Paid-In


Treasury


Deferred


of Common


Comprehensive


RetainedShares


Par Value


Capital


Stock


Compensation


Stock


Income (Loss)


Earnings


Total(In thousands)Balance, December 31, 2003


41,479


$
415


$
330,381


$
(986
)

$
(4,548
)

$
(1
)

$
32,852


$
32,542


$
390,655Issuance of common stock and
    exercise of stock options


1,508



15



18,674



1,077



(5,113
)


1







3



14,657Repurchases of common stock


(18
)






(7
)


(411
)


















(418
)Amortization of deferred
    compensation


















1,972















1,972Net income






























86,175



86,175Foreign currency translation
    adjustments


























2,515







2,515Unrealized gains on securities


























70







70Minimum pension liability
    adjustment, net of tax


























(235
)






(235
)Reclassifications due to sale of
    Spanish operations


























(20,782
)






(20,782
)Balance, December 31, 2004


42,969



430



349,048



(320
)


(7,689
)






14,420



118,720



474,609Issuance of common stock and
    exercise of stock options


1,346



13



26,608



363



(10,454
)














16,530Repurchases of common stock


(32
)










(874
)


















(874
)Amortization of deferred
    compensation


















4,015















4,015Net income






























47,294



47,294Foreign currency translation
    adjustments


























(9,975
)






(9,975
)Minimum pension liability
    adjustment, net of tax


























(549
)






(549
)Balance, December 31, 2005


44,283



443



375,656



(831
)


(14,128
)






3,896



166,014



531,050Reclassification of deferred
    compensation upon adoption of SFAS 123R










(14,128
)






14,128















Issuance of common stock and
    exercise of stock options


480



4



8,825



2,394



















11,223Repurchases of common stock


(53
)










(1,672
)


















(1,672
)Equity-based compensation expense










11,974























11,974Net income






























34,246



34,246Foreign currency translation
    adjustments


























13,104







13,104Minimum pension liability
    adjustment, net of tax


























(434
)






(434
)Adjustment to initially apply
    SFAS 158, net of tax (Note 15)


























(217
)






(217
)Balance, December 31, 2006


44,710


$
447


$
382,327


$
(109
)

$



$



$
16,349


$
200,260


$
599,274    F-7




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.

AND SUBSIDIARIES



Consolidated Statements of Cash Flows  Years ended December 31,2006


2005


2004(In thousands)Cash flows from operating
    activities:Net income

$
34,246


$
47,294


$
86,175Adjustments to reconcile net income
    to net cash provided by operating activities:(Earnings) loss from discontinued
    operations


5,839



322



(53,446
)Provision for doubtful accounts


10,100



9,355



7,933Depreciation and amortization


35,300



30,980



26,761Amortization of debt issue costs
    and discount


912



770



1,766Deferred income taxes


6,294



2,041



4,619Loss on early retirement of debt


14,880







1,635Equity in earnings of
    unconsolidated affiliates, net of distributions received


(4,104
)


(3,958
)


(3,248
)Minority interests in income of
    consolidated subsidiaries, net of distributions paid


272



1,222



4,916Equity-based compensation


11,974



4,514



3,299Increases (decreases) in cash from
    changes in operating assets and liabilities, net of effects from
    purchases of new businesses:Patient receivables


(14,132
)


(10,165
)


(13,508
)Other receivables


(3,744
)


8,504



(1,188
)Inventories of supplies, prepaids
    and other assets


(2,522
)


(646
)


(2,225
)Accounts payable and other current
    liabilities


5,673



10,744



15,166Other long-term liabilities


1,516



6,165



2,443Net cash provided by operating
    activities


102,504



107,142



81,098Cash flows from investing
    activities:Purchases of new businesses and
    equity interests, net of cash received


(280,913
)


(60,491
)


(131,123
)Proceeds from sales of businesses
    and equity interests


28,335







141,132Purchases of property and equipment


(31,302
)


(30,771
)


(23,676
)Returns of capital from
    unconsolidated affiliates


1,670



201



9(Increase) decrease in deposits and
    notes receivable


59



(11,117
)


(5,517
)Net cash used in investing
    activities


(282,151
)


(102,178
)


(19,175
)Cash flows from financing
    activities:Proceeds from long-term debt


306,076



17,114



18,341Payments on long-term debt


(275,426
)


(18,101
)


(25,945
)Proceeds from issuance of common
    stock and related income tax benefit


10,377



10,954



9,598Increase in cash held on behalf of
    unconsolidated affiliates


41,161



23,541



Returns of capital to minority
    interest holders


(1,123
)


(1,389
)


(536
)Net cash provided by financing
    activities


81,065



32,119



1,458Cash flows of discontinued
    operations:Operating cash flows


157



763



4,173Investing cash flows


5



(255
)


(9,664
)Financing cash flows


(173
)


(541
)


6,802Effect of exchange rate changes










(2
)Net cash provided by (used in)
    discontinued operations


(11
)


(33
)


1,309Effect of exchange rate changes on
    cash


(107
)


(77
)


258Net increase (decrease) in cash and
    cash equivalents


(98,700
)


36,973



64,948Cash and cash equivalents at
    beginning of year


130,440



93,467



28,519Cash and cash equivalents at end of
    year

$
31,740


$
130,440


$
93,467Supplemental information:Interest paid, net of amounts
    capitalized

$
25,105


$
27,822


$
25,050Income taxes paid


17,799



17,553



30,927Non-cash transactions:Issuance of common stock to
    employees

$
30,455


$
10,609


$
5,250Assets acquired under capital lease
    obligations


5,277



4,086



27,691Note receivable for remaining
    proceeds of sale of Spanish operations










18,035    F-8




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES  Notes to Consolidated Financial Statements
 December 31, 2006 and 2005
  (1)  Summary
    of Significant Accounting Policies and Practices
  (a)
    Description
    of Business  not-for-profit not-for-profit
          (b)
    Stock
    Split  three-for-two
  (c)
    Translation
    of Foreign Currencies   F-9




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
   (d)
    Principles
    of Consolidation  Consolidation of Variable Interest Entities (as amended)
  (e)
    Use of
    Estimates    (f)
    Cash
    and Cash Equivalents    (g)
    Inventories
    of Supplies    (h)
    Property
    and Equipment    (i)
    Intangible
    Assets   F-10




---



##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
    (j)
    Impairment
    of Long-lived Assets    (k)
    Fair
    Value of Financial Instruments    (l)
    Revenue
    Recognition      (m)
    Concentration
    of Credit Risk    (n)
    Investments
    and Equity in Earnings of Unconsolidated
    Affiliates   F-11




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
    The
    Equity Method of Accounting for Investments in Common Stock. other-than-temporary
    (o)
    Income
    Taxes    (p)
    Equity-Based
    Compensation  Share-Based Payment Accounting for Stock Issued to Employees
   F-12




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
    Years Ended December 31,2005


2004Net income:As reported

$
47,294


$
86,175Add: Total stock-based employee
    compensation expense included in reported net income, net of
    taxes


2,934



2,145Less: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of taxes


(6,015
)


(6,072
)Pro forma

$
44,213


$
82,248Basic earnings per shareAs reported

$
1.10


$
2.06Pro forma


1.03



1.96Diluted earnings per shareAs reported

$
1.05


$
1.96Pro forma


0.98



1.87       No. 96-18, Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services.
  (q)
    Commitments
    and Contingencies    (2)  Discontinued
    Operations and Other Dispositions
  Accounting for the Impairment or
    Disposal of Long-Lived Assets
 F-13




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
    not-for-profit
     F-14




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
     Years Ended December 31,2006


2005


2004Revenues

$
1,117


$
5,140


$
105,422Earnings (loss) from discontinued
    operations before income taxes

$
(148
)

$
(734
)

$
5,676Income tax benefit (expense)


52



257



(2,568
)Earnings (loss) from discontinued
    operations

$
(96
)

$
(477
)

$
3,108Gain (loss) on sale of
    discontinued operations before income taxes

$
(7,396
)

$
(80
)

$
72,486Income tax benefit (expense)


1,653



235



(22,148
)Net gain (loss) on sale of
    discontinued operations

$
(5,743
)

$
155


$
50,338Earnings (loss) per diluted share:Earnings (loss) from discontinued
    operations

$



$
(0.01
)

$
0.07Gain (loss) on sale of
    discontinued operations


(0.13
)






1.15Total

$
(0.13
)

$
(0.01
)

$
1.22   (3)  Acquisitions
    and Equity Method Investments
     F-15




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##### Table of Contents



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

$
5,894Patient receivables, net


4,766Property and equipment, net


14,453Investments in affiliates


32,252Management contract intangibles


26,068Other service contract intangibles


7,257Goodwill


117,562Other assets


9,689Total assets acquired


217,941Long-term debt


(9,083
)Other liabilities


(6,516
)Total liabilities assumed


(15,599
)Minority interests


(3,342
)Net assets acquired

$
199,000          F-16




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
     Years Ended December 31,2006


2005(Unaudited)Net revenues

$
616,202


$
599,164Income from continuing operations


40,944



51,732Diluted earnings per share from
    continuing operations

$
0.90


$
1.15       
    Investment of $4.1 million in a joint venture with one of
    the Companys
    not-for-profit
    hospital partners, which the joint venture used to acquire
    ownership in a surgery center in the Sacramento, California area,
    Investment of $3.7 million in a joint venture with one of
    the Companys
    not-for-profit
    hospital partners, which the joint venture used to acquire
    ownership in two surgery centers in the Lansing, Michigan area
    and,
    Net payment of $3.3 million related to other purchases and
    sales of equity interests and contributions of cash to equity
    method investees. F-17




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
     2006


2005


2004Unconsolidated facilities operated
    at year-end


80



57



44Income statement information:Revenues

$
610,160


$
443,292


$
339,109Equity in earnings of
    unconsolidated affiliates


224



27



Operating expenses:Salaries, benefits, and other
    employee costs


150,625



109,734



79,917Medical services and supplies


125,981



86,573



62,213Other operating expenses


150,108



111,140



77,820Depreciation and amortization


29,884



20,287



15,480Total operating expenses


456,598



327,734



235,430Operating income


153,786



115,585



103,679Interest expense, net


(14,400
)


(10,560
)


(9,297
)Other


282



772



826Income before income taxes

$
139,668


$
105,797


$
95,208Balance sheet information:Current assets

$
164,715


$
119,461


$
96,006Noncurrent assets


271,447



203,463



163,410Current liabilities


87,944



65,487



51,027Noncurrent liabilities


175,119



112,926



96,415   (4)  Other
    Receivables
   F-18




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
   (5)  Property
    and Equipment
    Estimateduseful lives


2006


2005Land and land improvements





$
27,289


$
19,856Buildings and leasehold
    improvements


7-50 years



230,221



209,334Equipment


3-12 years



190,226



155,595Furniture and fixtures


4-20 years



10,988



9,485Construction in progress






2,090



924460,814



395,194Less accumulated depreciation






(160,985
)


(136,178
)Net property and equipment





$
299,829


$
259,016     2006


2005Land and buildings

$
34,847


$
47,521Equipment and furniture


15,981



32,57650,828



80,097Less accumulated amortization


(11,023
)


(29,942
)Net property and equipment under
    capital leases

$
39,805


$
50,155     (6)  Goodwill
    and Intangible Assets
  Accounting for Goodwill
    and Other Intangible Assets
    December 31,2006


2005Goodwill

$
511,603


$
338,270Other intangible assets


109,661



84,286Total

$
621,264


$
422,556  F-19




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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, 2004

$
291,941


$
27,414


$
319,355Additions


29,243







29,243Disposals


(7,449
)






(7,449
)Other






(2,879
)


(2,879
)Balance at December 31, 2005


313,735



24,535



338,270Additions


189,608







189,608Disposals


(19,698
)






(19,698
)Other






3,423



3,423Balance at December 31, 2006

$
483,645


$
27,958


$
511,603         December 31, 2006GrossCarrying


AccumulatedAmount


Amortization


TotalDefinite Useful LivesManagement and other service
    contracts

$
32,856


$
(13,179
)

$
19,677Other


4,134



(1,267
)


2,867Total

$
36,990


$
(14,446
)


22,544Indefinite Useful
    LivesManagement contracts










86,425Other










692Total










87,117Total intangible assets









$
109,661   F-20




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
  December 31, 2005GrossCarrying


AccumulatedAmount


Amortization


TotalDefinite Useful LivesManagement and other service
    contracts

$
25,234


$
(10,767
)

$
14,467Other


7,892



(2,644
)


5,248Total

$
33,126


$
(13,411
)


19,715Indefinite Useful
    LivesManagement contracts










63,859Other










712Total










64,571Total intangible assets









$
84,286       2007

$
3,2292008


2,8712009


2,6982010


2,4002011


2,165  F-21




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
  (7)  Long-term
    Debt
    2006


2005Term loan facility (Term B)

$
199,000


$
U.S. credit facility






U.K. senior credit agreements


70,139



64,370Senior subordinated notes






149,174Notes payable to financial
    institutions


33,170



21,326Capital lease obligations
    (Note 8)


45,021



51,616Total long-term debt


347,330



286,486Less current portion


(26,373
)


(15,922
)Long-term debt, less current
    portion

$
320,957


$
270,564   (a)
    Lines
    of Credit       F-22




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
   (b)
    Term
    Loan Facility (Term B)      (c)
    Subordinated
    Debt      (d)
    Other
    Long-term Debt        (8)  Leases
   F-23




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##### Table of Contents



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


OperatingLeases


LeasesYear ending December 31,2007

$
9,137


$
14,4582008


9,602



13,5392009


6,812



10,9152010


6,427



9,2452011


5,330



7,850Thereafter


41,171



21,507Total minimum lease payments


78,479


$
77,514Amount representing interest


(33,458
)Present value of minimum lease
    payments

$
45,021     (9)  Preferred
    Stock
    Series A Redeemable Preferred
    Stock, $0.01 par value


31,200Series B Convertible
    Redeemable Preferred Stock, $0.01 par value


2,716Series C Convertible
    Preferred Stock, $0.01 par value


20,000Series D Redeemable Preferred
    Stock, $0.01 par value


40,000Series A Junior Participating
    Preferred Stock, $0.01 par value


500,000Not designated


9,460,000Total authorized shares of
    Preferred Stock


10,053,916     (10)  Related
    Party Transactions
     F-24




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
          (11)  Income
    Taxes
    2006


2005


2004Domestic

$
53,440


$
62,924


$
40,766Foreign


9,418



11,122



9,949$
62,858


$
74,046


$
50,715     Current


Deferred


TotalYear ended December 31, 2006:U.S. federal

$
10,846


$
7,791


$
18,637State and local


2,902



(441
)


2,461Foreign


2,731



(1,056
)


1,675Net income tax expense

$
16,479


$
6,294


$
22,773   F-25




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##### Table of Contents



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


Deferred


TotalYear ended December 31, 2005:U.S. federal

$
18,970


$
2,407


$
21,377State and local


2,213



206



2,419Foreign


3,206



(572
)


2,634Net income tax expense

$
24,389


$
2,041


$
26,430   Current


Deferred


TotalYear ended December 31, 2004:U.S. federal

$
8,805


$
4,638


$
13,443State and local


1,517



791



2,308Foreign


3,045



(810
)


2,235Net income tax expense

$
13,367


$
4,619


$
17,986     Years Ended December 31,2006


2005


2004Computed expected tax
    expense

$
22,000


$
25,916


$
17,750Increase (reduction) in income
    taxes resulting from:Differences between
    U.S. financial reporting and foreign statutory reporting


(1,007
)


(603
)


(631
)State tax expense, net of federal
    benefit


1,445



1,550



1,582Removal of foreign tax rate
    differential


(614
)


(656
)


(612
)Intangible assets










22Other


949



223



(125
)Total

$
22,773


$
26,430


$
17,986  F-26




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
    December 31,2006


2005Deferred tax assets:Net operating loss carryforwards

$
8,862


$
2,502Accrued expenses


12,527



10,335Bad debts/reserves


4,171



1,318Capitalized costs and other


738



654Total deferred tax assets


26,298



14,809Valuation allowance


(2,460
)


Total deferred tax assets, net

$
23,838


$
14,809Deferred tax liabilities:Basis difference of acquisitions

$
45,735


$
30,654Accelerated depreciation


5,560



8,324Capitalized interest and other


561



768Total deferred tax liabilities

$
51,856


$
39,746     (12)  Equity-Based
    Compensation
  Share-Based
    Payment Accounting for Stock Issued to Employees
     F-27




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
      Years Ended December 31,2006


2005


2004Equity in earnings of
    unconsolidated affiliates

$
78


$



$
Salaries, benefits and other
    employee costs


2,941







General and administrative expenses


9,034



4,514



3,299Minority interests in income of
    consolidated subsidiaries


(79
)






Expense before income tax benefit


11,974



4,514



3,299Income tax benefit


(3,684
)


(1,580
)


(1,154
)Total equity-based compensation
    expense, net of tax

$
8,290


$
2,934


$
2,145       Years Ended December 31,2006


2005


2004Share awards(1)

$
9,423


$
4,514


$
3,299Stock options(2)


2,253







ESPP(2)


298







Expense before income tax benefit


11,974



4,514



3,299Income tax benefit


(3,684
)


(1,580
)


(1,154
)Total equity-based compensation
    expense, net of tax

$
8,290


$
2,934


$
2,145     (1)
    
    Included in the Companys Consolidated Statements of Income
    for all periods.(2)
    
    Included in the Companys Consolidated Statement of Income
    beginning January 1, 2006, reflecting the Companys
    adoption of SFAS 123R. ESPP amounts are net of
    reimbursements by other owners of the Companys investees. F-28




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
   Stock
    Options
    Years Ended December 31,2006


2005


2004Assumptions:Expected life in years


3.75



3.00



3.00Risk-free interest rates


4.3%-5.0%



3.7%



2.7%Dividend yield


0.0%



0.0%



0.0%Volatility


30.0%



30.0%



40.0%Weighted average grant-date fair
    value


$9.52



$7.74



$7.47     WeightedWeighted


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


Intrinsic ValueStock Options

Shares (000)


Price


Life (Years)


($000)Outstanding at January 1, 2006


3,470


$
14.09



4.75


$
62,358Granted


286



31.72Exercised


(405
)


13.23Forfeited or expired


(55
)


23.87Outstanding at December 31,
    2006


3,296


$
15.49



3.88


$
46,519Exercisable at December 31,
    2006


2,714


$
12.98



3.99


$
44,052    F-29




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
   Share
    Awards
    WeightedAverageNumber of


Grant-DateNonvested Shares

Shares (000)


Fair ValueNonvested at January 1, 2006


853


$
23.44Granted


912



33.39Converted / vested(1)


(125
)


30.47Forfeited


(77
)


26.67Nonvested at December 31, 2006


1,563


$
28.59     (1)
    
    The Company has granted share awards both in the form of
    nonvested shares and restricted stock units, which convert to
    unrestricted shares upon vesting.        Employee
    Stock Purchase Plan
       F-30




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
    Years Ended December 31,2006


2005


2004Expected life in years


0.25



0.50



0.50Weighted average interest rate


4.2-5.1%



2.6-3.4%



1.0-1.6%Dividend yield


0.0%



0.0%



0.0%Volatility


30.0%



30.0%



40.0%Grant-date fair value per share

$
5.25-7.56


$
8.42-9.97


$
8.84-10.53   (13)  Earnings
    Per Share
    Years Ended December 31,2006


2005


2004Income (loss) from:Continuing operations

$
40,085


$
47,616


$
32,729Discontinued operations


(5,839
)


(322
)


53,446Net income

$
34,246


$
47,294


$
86,175Weighted average common shares
    outstanding


43,723



42,994



41,913Effect of dilutive securities:Stock options


1,293



1,703



1,849Warrants and restricted stock


450



280



186Shares used for diluted earnings
    (loss) per share


45,466



44,977



43,948Basic earnings (loss) per share:Continuing operations

$
0.92


$
1.11


$
0.78Discontinued operations


(0.14
)


(0.01
)


1.28Total

$
0.78


$
1.10


$
2.06Diluted earnings (loss) per share:Continuing operations

$
0.88


$
1.06


$
0.74Discontinued operations


(0.13
)


(0.01
)


1.22Total

$
0.75


$
1.05


$
1.96   (14)  Segment
    Disclosures
  Disclosures About Segments of an Enterprise and Related
    Information,
 F-31




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
  non-U.S. segment
  United


United2006 (in thousands)

States


Kingdom


TotalNet patient service revenue

$
422,794


$
95,994


$
518,788Other revenue


60,037







60,037Total revenues

$
482,831


$
95,994


$
578,825Depreciation and amortization

$
27,137


$
8,163


$
35,300Operating income


145,475



13,584



159,059Net interest expense


(25,290
)


(3,357
)


(28,647
)Income tax expense


(21,098
)


(1,675
)


(22,773
)Total assets


1,027,243



204,613



1,231,856Capital expenditures


25,463



11,116



36,579   United


United2005 (in thousands)

States


Kingdom


TotalNet patient service revenue

$
343,261


$
89,466


$
432,727Other revenue


36,874







36,874Total revenues

$
380,135


$
89,466


$
469,601Depreciation and amortization

$
23,788


$
7,192


$
30,980Operating income


120,416



14,634



135,050Net interest expense


(20,285
)


(2,731
)


(23,016
)Income tax expense


(23,796
)


(2,634
)


(26,430
)Total assets


833,476



195,365



1,028,841Capital expenditures


14,015



20,842



34,857   F-32




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##### Table of Contents



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


United2004 (in thousands)

States


Kingdom


TotalNet patient service revenue

$
260,273


$
84,454


$
344,727Other revenue


38,459







38,459Total revenues

$
298,732


$
84,454


$
383,186Depreciation and amortization

$
19,925


$
6,836


$
26,761Operating income


92,771



14,515



107,286Net interest expense


(20,977
)


(3,862
)


(24,839
)Income tax expense


(15,751
)


(2,235
)


(17,986
)Total assets


721,830



200,474



922,304Capital expenditures


40,785



10,582



51,367   (15)  Commitments
    and Contingencies
  (a)
    Financial
    Guarantees    Guarantors Accounting and
    Disclosure Requirements for Guarantees, Including Indirect
    Guarantees of Indebtedness of Others
  (b)
    Litigation
    and Professional Liability Claims    (c)
    Self
    Insurance   F-33




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
    (d)
    Employee
    Benefit Plans          (e)
    Employment
    Agreements   F-34




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
       (f)
    Spanish
    Tax Indemnification  Accounting for Contingencies
  (16)  Subsequent
    Events
  Merger
     F-35




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
    Hart-Scott-Rodino
        Other
      (17)  New
    Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes, an Interpretation
    of FASB Statement No. 109. Accounting for Income
    Taxes.
 F-36




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##### Table of Contents



UNITED
    SURGICAL PARTNERS INTERNATIONAL, INC.
    AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements  (Continued)
    Fair Value Measurement
  Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans  an amendment of FASB
    Statement No. 87, 88, 106 and 132(R), .
  Considering the Effects of Prior
    Year Misstatements when Quantifying Misstatements in Current
    Year Financial Statements
  (18)  Selected
    Quarterly Financial Data (Unaudited)
  2006 Quarters


2005 QuartersFirst


Second


Third


Fourth


First


Second


Third


Fourth(In thousands, except per share amounts)


(In thousands, except per share amounts)Net revenues

$
127,843


$
150,452


$
144,787


$
155,743


$
114,292


$
123,186


$
116,030


$
116,093Income from continuing operations


11,638



13,146



2,223



13,078



10,813



12,666



11,657



12,480Basic earnings per share from
    continuing operations

$
0.27


$
0.30


$
0.05


$
0.30


$
0.25


$
0.30


$
0.27


$
0.29Diluted earnings per share from
    continuing operations

$
0.26


$
0.29


$
0.05


$
0.29


$
0.24


$
0.28


$
0.26


$
0.27    F-37




---



##### Table of Contents



(2)  Financial
    Statement Schedules
  Form 10-K:
 F-38




---



##### Table of Contents



SCHEDULE II:
    VALUATION AND QUALIFYING ACCOUNTS
   FOR THE
    YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
   Allowance
    for Doubtful Accounts
  Balance at


Additions Charged to:Beginning of


Costs and








Other


Balance atPeriod


Expenses


Other Accounts


Deductions(2)


Items(3)


End of Period(In thousands)2004(1)

$
8,838


$
8,159






$
(7,592
)

$
(2,128
)

$
7,2772005(1)


7,277



9,518







(13,637
)


3,498



6,6562006


6,656



10,100







( 8,530
)


1,729



9,955   Valuation
    allowance for deferred tax assets
  Balance at


Additions Charged to:Beginning of


Costs and








Other


Balance atPeriod


Expenses


Other Accounts


Deductions(2)


Items(3)


End of Period(In thousands)2004






















2005






















2006

















$
2,460


$
2,460     (1)
    
    Includes Spanish and Lyndhurst, Ohio operations, which the
    Company disposed of during 2004 and 2006, respectively.(2)
    
    Accounts written off.(3)
    
    Primarily beginning balances for purchased businesses. For 2004,
    these amounts are offset by $3.8 million of deductions due
    to the sale of the Spanish operations.   S-1




---



##### Table of Contents



Exhibits :
  ExhibitNumber

Description2
.1#

Agreement and Plan of Merger,
    dated as of December 6, 2000, among the Company, OPC
    Acquisition Corporation and OrthoLink Physicians Corporation
    (previously filed as Exhibit 2.1 to the Companys
    Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)2
.2#

Agreement for the Sale and
    Purchase of Shares and Loan Notes in Aspen Healthcare Holdings
    Limited, dated April 6, 2000, between Electra Private
    Equity Partners 1995 and others and Global Healthcare Partners
    Limited (previously filed as Exhibit 2.2 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)2
.3#

Agreement and Plan of
    Reorganization, dated as of March 26, 2002, by and among
    the Company, USP Acquisition Corporation, Surgicoe Corporation
    and each of the shareholders of Surgicoe named in the agreement
    (previously filed as Exhibit 2.1 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on April 16, 2002 and
    incorporated herein by reference)2
.4#

Sale and Purchase Agreement, dated
    July 29, 2004, between USPE Holdings Limited, United
    Surgical Partners International, Inc., Jenebe International
    S.a.r.l., Delphirica Investments S.a.r.l., Alosem Sociedad
    Civil, Tesalia Sociedad Civil and Capital Stock S.C.R., S.A.
    (previously filed as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on September 15, 2004 and
    incorporated herein by reference)2
.5#

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 From
    8-K filed
    with the Commission on January 31, 2006 and incorporated
    herein by reference)2
.6#

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)3
.1#

Second Amended and Restated
    Certificate of Incorporation (previously filed as
    Exhibit 3.1 to Amendment No. 4 to the Companys
    Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)3
.2#

Amended and Restated Bylaws
    (previously filed as Exhibit 3.2 to the Companys
    Registration Statement on
    Form S-3
    (No. 333-99309)
    and incorporated herein by reference)4
.1#

Form of Common Stock Certificate
    (previously filed as Exhibit 4.1 to Amendment No. 4 to
    the Companys Registration Statement on
    Form S-1
    (No. 333-
    55442) and incorporated herein by reference)4
.2#

Rights Agreement between the
    Company and First Union National Bank as Rights Agent dated
    June 13, 2001 (previously filed as Exhibit 4.1 to the
    Companys
    Form 8-A
    filed with the Commission on June 13, 2001 and incorporated
    herein by reference)4
.3#

First Amendment to Rights
    Agreement, dated January 7, 2007, by and between the
    Company and American Stock Transfer & Trust Company, as
    successor to First Union National Bank, as Rights Agent
    (previously filed as Exhibit 4.1 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on January 8, 2007 and
    incorporated herein by reference)10
.1#

Credit Agreement, dated
    April 6, 2000, by and among Global Healthcare Partners
    Limited and the Governor and Company of the Bank of Scotland
    (previously filed as Exhibit 10.3 to the Companys
    Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference) IV-1




---



##### Table of Contents



ExhibitNumber

Description10
.2#

Contribution and Purchase
    Agreement, dated as of May 11, 1999, by and among USP North
    Texas, Inc., Baylor Health Services, Texas Health Ventures Group
    LLC and THVG/Health First L.L.C. (previously filed as
    Exhibit 10.11 to Amendment No. 2 to the Companys
    Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)10
.3#

Common Stock Purchase Warrant,
    dated June 1, 1999 (previously filed as Exhibit 10.15
    to the Companys Registration Statement on
    Form S-1
    (No. 333-
    55442) and incorporated herein by reference)10
.4#

Stock Purchase Warrant, dated
    March 27, 2000 (previously filed as Exhibit 10.16 to
    the Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)10
.5#

Employment Agreement, dated as of
    November 15, 2002, by and between the Company and Donald E.
    Steen (previously filed as Exhibit 10.6 to the
    Companys Annual Report on
    Form 10-K
    filed with the Commission on March 25, 2003 and
    incorporated herein by reference)10
.5.1#

Amendment of Employment Agreement,
    dated as of February 18, 2004, by and between the Company
    and Donald E. Steen (previously filed as Exhibit 10.6.1 to
    the Companys Annual Report on
    Form 10-K
    filed with the Commission on March 12, 2004 and
    incorporated herein by reference)10
.5.2#

Second Amendment to Employment
    Agreement, dated April 28, 2006, by and between the Company
    and Donald E. Steen (previously filed as Exhibit 10.1 to
    the Companys Current Report on
    Form 8-K
    filed with the Commission on May 4, 2006 and incorporated
    herein by reference)10
.6#

Employment Agreement, dated as of
    November 15, 2002, by and between the Company and William
    H. Wilcox (previously filed as Exhibit 10.7 to the
    Companys Annual Report on
    Form 10-K
    filed with the Commission on March 25, 2003 and
    incorporated herein by reference)10
.6.1#

Amendment to Employment Agreement,
    dated November 15, 2006, by and between the Company and
    William H. Wilcox (previously filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on November 15, 2006 and
    incorporated herein by reference)10
.7#

Stock Option and Restricted Stock
    Purchase Plan (previously filed as Exhibit 10.19 to the
    Companys Registration Statement on
    Form S-1
    (No. 333-
    55442) and incorporated herein by reference)10
.8#

2001 Equity-Based Compensation
    Plan (previously filed as Exhibit 10.20 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)10
.9#

Employee Stock Purchase Plan
    (previously filed as Exhibit 10.21 to Amendment No. 1
    to the Companys Registration Statement on
    Form S-1
    (No. 333-
    55442) and incorporated herein by reference)10
.10#

Deferred Compensation Plan,
    effective as of January 1, 2005 (previously filed as
    Exhibit 99.1 to the Companys Current Report on
    Form 8-K
    filed with the Commission on January 6, 2005 and
    incorporated herein by reference)10
.11#

Form of Indemnification Agreement
    between the Company and its directors and officers (previously
    filed as Exhibit 10.22 to Amendment No. 1 to the
    Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)10
.12#

Employment Agreement, dated as of
    July 1, 2005, by and between the Company and Brett P.
    Brodnax (previously filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on July 29, 2005 and incorporated
    herein by reference)10
.13#

Employment Agreement, dated as of
    June 1, 2006, by and between the Company and Niels P.
    Vernegaard (previously filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on May 12, 2006 and incorporated
    herein by reference) IV-2




---



##### Table of Contents



ExhibitNumber

Description10
.14#

Employment Agreement, dated as of
    July 1, 2005, by and between the Company and Mark A. Kopser
    (previously filed as Exhibit 10.3 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on July 29, 2005 and incorporated
    herein by reference)10
.15#

Employment Agreement, dated as of
    July 1, 2005, by and between the Company and John J. Wellik
    (previously filed as Exhibit 10.4 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on July 29, 2005 and incorporated
    herein by reference)10
.16#

Credit Agreement, dated as of
    February 21, 2006, among USP Domestic Holdings, Inc., the
    lenders from time to time party thereto and SunTrust Bank
    (previously filed as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on February 21, 2006 and
    incorporated herein by reference)10
.16.1#

First Amendment to Credit
    Agreement, dated August 7, 2006, among USP Domestic
    Holdings, Inc., the lenders from time to time party thereto and
    SunTrust Bank (previously filed as Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on August 8, 2006 and
    incorporated herein by reference)10
.17#

Credit Agreement, dated as of
    August 7, 2006, among USP Domestic Holdings, Inc., the
    lenders from time to time party thereto, Bear Stearns Corporate
    Lending, Inc., as administrative agent, and SunTrust Bank, as
    collateral and documentation agent (previously filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed with the Commission on August 8, 2006 and
    incorporated herein by reference)21
.1*

List of the Companys
    subsidiaries23
.1*

Consent of KPMG LLP24
.1*

Power of
    Attorney  Paul B. Queally31
.1*

Certification of Chief Executive
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200231
.2*

Certification of Chief Financial
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200232
.1*

Certification of Chief Executive
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 200232
.2*

Certification of Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002     *
    
    Filed herewith.#
    
    Previously filed. IV-3




---



##### Table of Contents



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

Title

Date/s/  Donald
    E. SteenDonald
    E. Steen

Chairman of the Board

February 28, 2007/s/  William
    H. WilcoxWilliam
    H. Wilcox

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

February 28, 2007/s/  Mark
    A. KopserMark
    A. Kopser

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

February 28, 2007/s/  John
    J. WellikJohn
    J. Wellik

Senior Vice President, Accounting
    and Administration, and Secretary
    (Principal Accounting Officer)

February 28, 2007/s/  Joel
    T. AllisonJoel
    T. Allison

Director

February 28, 2007/s/  John
    C.
    Garrett, M.D.John
    C. Garrett, M.D.

Director

February 28, 2007/s/  Thomas
    L. MillsThomas
    L. Mills

Director

February 28, 2007/s/  James
    Ken NewmanJames
    Ken Newman

Director

February 28, 2007/s/  Boone
    Powell, Jr.Boone
    Powell, Jr.

Director

February 28, 2007 IV-4




---



##### Table of Contents



Signature

Title

Date*Paul
    B. Queally

Director

February 28, 2007/s/  Nancy
    L. WeaverNancy
    L. Weaver

Director

February 28, 2007/s/  Jerry
    P. WidmanJerry
    P. Widman

Director

February 28, 2007    *
    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-5




---



##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNumber

Description2
.1#

Agreement and Plan of Merger,
    dated as of December 6, 2000, among the Company, OPC
    Acquisition Corporation and OrthoLink Physicians Corporation
    (previously filed as Exhibit 2.1 to the Companys
    Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)2
.2#

Agreement for the Sale and
    Purchase of Shares and Loan Notes in Aspen Healthcare Holdings
    Limited, dated April 6, 2000, between Electra Private
    Equity Partners 1995 and others and Global Healthcare Partners
    Limited (previously filed as Exhibit 2.2 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)2
.3#

Agreement and Plan of
    Reorganization, dated as of March 26, 2002, by and among
    the Company, USP Acquisition Corporation, Surgicoe Corporation
    and each of the shareholders of Surgicoe named in the agreement
    (previously filed as Exhibit 2.1 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on April 16, 2002 and
    incorporated herein by reference)2
.4#

Sale and Purchase Agreement, dated
    July 29, 2004, between USPE Holdings Limited, United
    Surgical Partners International, Inc., Jenebe International
    S.a.r.l., Delphirica Investments S.a.r.l., Alosem Sociedad
    Civil, Tesalia Sociedad Civil and Capital Stock S.C.R., S.A.
    (previously filed as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on September 15, 2004 and
    incorporated herein by reference)2
.5#

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 From
    8-K filed
    with the Commission on January 31, 2006 and incorporated
    herein by reference)2
.6#

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)3
.1#

Second Amended and Restated
    Certificate of Incorporation (previously filed as
    Exhibit 3.1 to Amendment No. 4 to the Companys
    Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)3
.2#

Amended and Restated Bylaws
    (previously filed as Exhibit 3.2 to the Companys
    Registration Statement on
    Form S-3
    (No. 333-99309)
    and incorporated herein by reference)4
.1#

Form of Common Stock Certificate
    (previously filed as Exhibit 4.1 to Amendment No. 4 to
    the Companys Registration Statement on
    Form S-1
    (No. 333-
    55442) and incorporated herein by reference)4
.2#

Rights Agreement between the
    Company and First Union National Bank as Rights Agent dated
    June 13, 2001 (previously filed as Exhibit 4.1 to the
    Companys
    Form 8-A
    filed with the Commission on June 13, 2001 and incorporated
    herein by reference)4
.3#

First Amendment to Rights
    Agreement, dated January 7, 2007, by and between the
    Company and American Stock Transfer & Trust Company, as
    successor to First Union National Bank, as Rights Agent
    (previously filed as Exhibit 4.1 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on January 8, 2007 and
    incorporated herein by reference)10
.1#

Credit Agreement, dated
    April 6, 2000, by and among Global Healthcare Partners
    Limited and the Governor and Company of the Bank of Scotland
    (previously filed as Exhibit 10.3 to the Companys
    Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)10
.2#

Contribution and Purchase
    Agreement, dated as of May 11, 1999, by and among USP North
    Texas, Inc., Baylor Health Services, Texas Health Ventures Group
    LLC and THVG/Health First L.L.C. (previously filed as
    Exhibit 10.11 to Amendment No. 2 to the Companys
    Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)




---



##### Table of Contents



ExhibitNumber

Description10
.3#

Common Stock Purchase Warrant,
    dated June 1, 1999 (previously filed as Exhibit 10.15
    to the Companys Registration Statement on
    Form S-1
    (No. 333-
    55442) and incorporated herein by reference)10
.4#

Stock Purchase Warrant, dated
    March 27, 2000 (previously filed as Exhibit 10.16 to
    the Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)10
.5#

Employment Agreement, dated as of
    November 15, 2002, by and between the Company and Donald E.
    Steen (previously filed as Exhibit 10.6 to the
    Companys Annual Report on
    Form 10-K
    filed with the Commission on March 25, 2003 and
    incorporated herein by reference)10
.5.1#

Amendment of Employment Agreement,
    dated as of February 18, 2004, by and between the Company
    and Donald E. Steen (previously filed as Exhibit 10.6.1 to
    the Companys Annual Report on
    Form 10-K
    filed with the Commission on March 12, 2004 and
    incorporated herein by reference)10
.5.2#

Second Amendment to Employment
    Agreement, dated April 28, 2006, by and between the Company
    and Donald E. Steen (previously filed as Exhibit 10.1 to
    the Companys Current Report on
    Form 8-K
    filed with the Commission on May 4, 2006 and incorporated
    herein by reference)10
.6#

Employment Agreement, dated as of
    November 15, 2002, by and between the Company and William
    H. Wilcox (previously filed as Exhibit 10.7 to the
    Companys Annual Report on
    Form 10-K
    filed with the Commission on March 25, 2003 and
    incorporated herein by reference)10
.6.1#

Amendment to Employment Agreement,
    dated November 15, 2006, by and between the Company and
    William H. Wilcox (previously filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on November 15, 2006 and
    incorporated herein by reference)10
.7#

Stock Option and Restricted Stock
    Purchase Plan (previously filed as Exhibit 10.19 to the
    Companys Registration Statement on
    Form S-1
    (No. 333-
    55442) and incorporated herein by reference)10
.8#

2001 Equity-Based Compensation
    Plan (previously filed as Exhibit 10.20 to Amendment
    No. 1 to the Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)10
.9#

Employee Stock Purchase Plan
    (previously filed as Exhibit 10.21 to Amendment No. 1
    to the Companys Registration Statement on
    Form S-1
    (No. 333-
    55442) and incorporated herein by reference)10
.10#

Deferred Compensation Plan,
    effective as of January 1, 2005 (previously filed as
    Exhibit 99.1 to the Companys Current Report on
    Form 8-K
    filed with the Commission on January 6, 2005 and
    incorporated herein by reference)10
.11#

Form of Indemnification Agreement
    between the Company and its directors and officers (previously
    filed as Exhibit 10.22 to Amendment No. 1 to the
    Companys Registration Statement on
    Form S-1
    (No. 333-55442)
    and incorporated herein by reference)10
.12#

Employment Agreement, dated as of
    July 1, 2005, by and between the Company and Brett P.
    Brodnax (previously filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on July 29, 2005 and incorporated
    herein by reference)10
.13#

Employment Agreement, dated as of
    June 1, 2006, by and between the Company and Niels P.
    Vernegaard (previously filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on May 12, 2006 and incorporated
    herein by reference)10
.14#

Employment Agreement, dated as of
    July 1, 2005, by and between the Company and Mark A. Kopser
    (previously filed as Exhibit 10.3 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on July 29, 2005 and incorporated
    herein by reference)10
.15#

Employment Agreement, dated as of
    July 1, 2005, by and between the Company and John J. Wellik
    (previously filed as Exhibit 10.4 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on July 29, 2005 and incorporated
    herein by reference)




---



##### Table of Contents



ExhibitNumber

Description10
.16#

Credit Agreement, dated as of
    February 21, 2006, among USP Domestic Holdings, Inc., the
    lenders from time to time party thereto and SunTrust Bank
    (previously filed as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on February 21, 2006 and
    incorporated herein by reference)10
.16.1#

First Amendment to Credit
    Agreement, dated August 7, 2006, among USP Domestic
    Holdings, Inc., the lenders from time to time party thereto and
    SunTrust Bank (previously filed as Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on August 8, 2006 and
    incorporated herein by reference)10
.17#

Credit Agreement, dated as of
    August 7, 2006, among USP Domestic Holdings, Inc., the
    lenders from time to time party thereto, Bear Stearns Corporate
    Lending, Inc., as administrative agent, and SunTrust Bank, as
    collateral and documentation agent (previously filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed with the Commission on August 8, 2006 and
    incorporated herein by reference)21
.1*

List of the Companys
    subsidiaries23
.1*

Consent of KPMG LLP24
.1*

Power of
    Attorney  Paul B. Queally31
.1*

Certification of Chief Executive
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200231
.2*

Certification of Chief Financial
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200232
.1*

Certification of Chief Executive
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 200232
.2*

Certification of Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002     *
    
    Filed herewith.#
    
    Previously filed.