##### Table of Contents



UNITED
    STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    000-51251
    
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware

20-1538254(State or Other Jurisdiction
    of

(I.R.S. EmployerIncorporation or Organization)

Identification No.)103 Powell Court,
    Suite 200

37027Brentwood, Tennessee

(Zip Code)(Address Of Principal Executive
    Offices)   (615) 372-8500
 (Registrants Telephone
    Number, Including Area Code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Exchange on Which RegisteredCommon Stock, par value
    $.01 per share


NASDAQ Global Select MarketPreferred Stock Purchase Rights


NASDAQ Global Select Market   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
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 



TABLE
    OF CONTENTS
  PART I


1Item 1.

Business


1Item 1A.

Factors That May
    Affect Future Results


37Item 1B.

Unresolved Staff
    Comments


48Item 2.

Properties


48Item 3.

Legal
    Proceedings


48Item 4.

Submission of
    Matters to a Vote of Security Holders


48PART II


49Item 5.

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


49Item 6.

Selected Financial
    Data


51Item 7.

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


52Item 7A.

Quantitative and
    Qualitative Disclosures about Market Risk


108Item 8.

Financial
    Statements and Supplementary Data


109Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


109Item 9A.

Controls and
    Procedures


109Item 9B.

Other
    Information


110PART III


111Item 10.

Directors,
    Executive Officers and Corporate Governance


111Item 11.

Executive
    Compensation


111Item 12.

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


112Item 13.

Certain
    Relationships and Related Transactions, and Director
    Independence


112Item 14.

Principal
    Accountant Fees and Services


112PART IV


113Item 15.

Exhibits and
    Financial Statement Schedules


113SIGNATURESExhibit IndexEX-12.1 COMPUTATIONS OF RATIOS OF EARNINGSEX-21.1 SUBSIDIARIES OF LIFEPOINT HOSPITALS, INC.EX-23.1 CONSENT OF ERNST & YOUNG LLPEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO




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##### Table of Contents



PART I  Item 1.
    Business.  Overview
    of Our Company
  and/or
      one-for-one
    Availability
    of Information
  www.lifepointhospitals.com. Form 10-K, Form 10-Q, Form 8-K
 1




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##### Table of Contents



Operating
    Philosophy
    
    increasing the scope and improving the quality of available
    healthcare services;
    providing physicians a positive environment in which to practice
    medicine, with access to necessary equipment, office space and
    resources needed to operate their practices;
    providing an outstanding work environment for employees;
    recognizing and expanding each hospitals role as a
    community asset; and
    continuing to improve each hospitals financial performance.  The
    Non-Urban Healthcare Market
    
    Less Competition than Urban Markets.  Because
    non-urban communities have smaller populations, they generally
    have fewer hospitals and other healthcare service providers.
    Because non-urban hospitals are generally the sole providers of
    inpatient services in their markets, there is limited
    competition. However, we are experiencing an increase in
    competition from other specialized care providers, including
    outpatient surgery, oncology, physical therapy and diagnostic
    centers, as well as competing services rendered in physician
    offices.
    Community Focus.  We believe that the local
    hospital generally is viewed as an integral part of the
    community. In addition, we believe that non-urban communities
    can have a higher level of patient and physician loyalty that
    fosters cooperative relationships among the local hospitals,
    physicians, employees, patients and local government authorities.
    Acquisition Opportunities.  Currently,
    not-for-profit
    and governmental entities own most non-urban hospitals. These
    entities often have limited access to the capital needed to keep
    pace with advances in medical technology. In addition, these
    entities sometimes lack the resources to leverage their
    professional staff in the manner necessary to control hospital
    expenses, recruit and retain physicians, expand healthcare
    services and comply with increasingly complex reimbursement and
    managed care requirements. As a result, patients may migrate, be
    referred by local physicians, or be encouraged by managed care
    plans to travel to hospitals in larger, urban markets. We
    believe that, as a result of these pressures, many
    not-for-profit
    and governmental owners of non-urban hospitals who wish to
    maximize the value of their community assets and preserve the
    local availability of quality healthcare services are interested
    in selling or leasing these hospitals to a company like ours,
    that is committed to the local delivery of healthcare and that
    has greater access to capital and management resources. Of the
    51 hospitals that we currently operate, 25 were acquired from
    either
    not-for-profit
    or governmental entities.  Business
    Strategy
    
    Expand Breadth of Services and Attract Community
    Patients.  We strive to increase revenues by
    broadening the scope and improving the quality of healthcare
    services available at our facilities and by recruiting
    physicians with a broader range of specialties. We believe that
    our expansion of available treatments, our emphasis on quality
    and our community focus will encourage residents in the
    non-urban communities we serve to seek care locally at our
    facilities rather than at facilities outside the area. To
    broaden our services, we have entered into joint ventures in a
    few of our communities. In addition, we have undertaken projects
    in a majority of our hospitals that are targeted at expanding
    specialty services. 2




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##### Table of Contents



Capital expenditures related to these projects were as follows
    for the years presented (dollars in millions):  Expansion or Renovation Projects*

2002


2003


2004


2005


2006Operating room expansions

$
10.4


$
8.7


$
0.8


$
0.6


$
19.6New/replacement hospitals














29.2



28.2MRI additions


8.5



4.9



3.1



4.1



5.5Medical office building additions


4.8



6.3



4.1



12.1



10.9Patient room additions


1.5



7.2



9.3



15.6



0.6CT scanner additions


0.7







2.1



5.4



6.4Emergency room expansions


0.5



3.8



7.6



10.3



21.7Rehabilitation additions


2.8



1.8



2.3







Cardiac catheterization lab
    additions


3.1



2.0











0.4Miscellaneous expansions


5.7



8.8



22.1



23.0



13.2$
38.0


$
43.5


$
51.4


$
100.3


$
106.5     *
    
    This table reflects approved expansion projects and is updated
    as incremental costs are incurred on projects previously
    approved.  
    Strengthen Physician Recruiting and
    Retention.  We believe that recruiting physicians
    who are interested in practicing in local communities is
    important to increasing the quality of healthcare and the
    breadth of available services at our facilities. Our physician
    recruitment program is currently focused on recruiting
    additional specialty care physicians and primary care
    physicians. Our local management teams are focused on working
    more collaboratively with individual physicians and physician
    practices. We believe that expansion of the range of available
    treatments at our hospitals should also assist in physician
    recruiting and retention, and contribute to the sense that our
    hospitals are community assets.
    Improve Expense Management.  We seek to control
    costs by, among other things, attempting to improve employee
    productivity, controlling supply expenses through the use of a
    group purchasing organization, controlling professional and
    general liability insurance expenses through the utilization of
    risk management and quality care programs, and reducing
    uncollectible revenues. We have implemented cost control
    initiatives that include efforts to adjust staffing levels
    according to patient volumes, modify supply purchases according
    to usage patterns and provide support to hospital staff in more
    efficient billing and collection processes. We believe that as
    our company continues to grow, we should benefit from our
    ability to spread certain overhead fixed costs over a larger
    base of operations.
    Retain and Develop Stable Management and Clinical
    Staff.  We seek to retain and develop the
    executive teams at our hospitals, to enhance medical staff
    relations, and maintain continuity of relationships within the
    community, and develop our existing clinical staff. We focus our
    recruitment of managers on those who wish to live and work in
    the communities in which our hospitals are located. Our hospital
    executives are participants in our stock incentive plans.
    Improve Managed Care Revenues.  We continue to
    strive to improve our revenues from managed care plans by
    negotiating facility-specific contracts with these payors on
    terms appropriate for non-urban markets.
    Acquire Other Hospitals and Healthcare Service
    Providers.  We continue to pursue a selective
    acquisition strategy and seek to identify and acquire hospitals
    in non-urban markets that are the sole or a significant market
    provider of healthcare services in the community. We may also
    pursue the acquisition of other healthcare service providers,
    such as ambulatory surgery centers and diagnostic imaging
    centers, in our existing markets. By implementing our operating
    strategies at acquired facilities, we believe that we may
    attract many of the patients in these markets that historically
    have sought care elsewhere. From time to time, we may evaluate
    our facilities and sell assets that we believe, for various
    reasons, may no longer fit within our long-term strategy. 3




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##### Table of Contents




    Align Interests with Our Communities.  We
    believe that our strategic goals align our interests with those
    of the local communities served by our hospitals. We believe
    that the following qualities enable us to compete successfully
    for acquisitions:  
    our commitment to maintaining the local availability of quality
    healthcare services;
    our practice of providing market-specific, broader-based
    healthcare;
    our focus on physician relationships, recruiting and retention;
    our managements operating experience;
    our access to capital markets; and
    our ability to provide the necessary equipment and other
    resources for physicians.  
    Develop New Hospitals and Replace Existing
    Hospitals.  We continue to focus on improving the
    operations at our hospitals as well as seeking additional
    opportunities. Consistent with our operating strategies, we
    continually evaluate the communities we serve and our existing
    facilities to determine where replacement facilities would be
    beneficial.  Acquisitions
    AcquiredAcquisition



Purchase


LicensedHospital Name

Date

Location

Price(a)


BedsClinch Valley Medical Center

July 1, 2006

Richland, VA

$
239.0
(b)


200Raleigh General Hospital

July 1, 2006

Beckley, WV


N/A
(b)


369St. Josephs Hospital(c)

July 1, 2006

Parkersburg, WV


N/A
(b)


325Saint Francis Hospital(d)

July 1, 2006

Charleston, WV


N/A
(b)


155Danville Regional Medical Center(e)

July 1, 2005

Danville, VA


210.0



350Wythe County Community Hospital(e)

June 1, 2005

Wytheville, VA


43.3



104Province business combination:






1,797.6



2,529Ashland Regional Medical
    Center(e),(f)

April 15, 2005

Ashland, PA


N/A



123Bolivar Medical Center(e)

April 15, 2005

Cleveland, MS


N/A



165Coastal Carolina Medical Center

April 15, 2005

Hardeeville, SC


N/A



41Colorado Plains Medical Center(e)

April 15, 2005

Fort Morgan, CO


N/A



50Colorado River Medical Center(e)

April 15, 2005

Needles, CA


N/A



49Doctors Hospital of Opelousas

April 15, 2005

Opelousas, LA


N/A



171Ennis Regional Medical Center(e)

April 15, 2005

Ennis, TX


N/A



45Eunice Community Medical Center(e)

April 15, 2005

Eunice, LA


N/A



72Havasu Regional Medical Center(e)

April 15, 2005

Lake Havasu City, AZ


N/A



138Los Alamos Medical Center(e)

April 15, 2005

Los Alamos, NM


N/A



47Medical Center of Southern
    Indiana(e),(f)

April 15, 2005

Charlestown, IN


N/A



96Memorial Hospital of Martinsville
    and Henry County(e)

April 15, 2005

Martinsville, VA


N/A



237Memorial Medical Center of Las
    Cruces(e)

April 15, 2005

Las Cruces, NM


N/A



286Minden Medical Center

April 15, 2005

Minden, LA


N/A



159Northeastern Nevada Regional
    Hospital(e)

April 15, 2005

Elko, NV


N/A



75Palestine Regional Medical Center(e)

April 15, 2005

Palestine, TX


N/A



249Palo Verde Hospital(e),(g)

April 15, 2005

Blythe, CA


N/A



51Parkview Regional Hospital(e)

April 15, 2005

Mexia, TX


N/A



59Starke Memorial Hospital(e)

April 15, 2005

Knox, IN


N/A



53Teche Regional Medical Center(e)

April 15, 2005

Morgan City, LA


N/A



149 4




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##### Table of Contents



AcquiredAcquisition



Purchase


LicensedHospital Name

Date

Location

Price(a)


BedsVaughan Regional Medical Center(e)

April 15, 2005

Selma, AL


N/A



214River Parishes Hospital

July 1, 2004

LaPlace, LA


24.0



106Spring View Hospital(e)

October 1, 2003

Lebanon, KY


16.1



113Logan Regional Medical
    Center(e) and Guyan Valley Hospital(e),(h)

December 1, 2002

Logan, WV


87.5



151Lakeland Community
    Hospital(e) and Northwest Medical Center(e)

December 1, 2002

Haleyville, AL


22.1



170Russellville Hospital(e)

October 3, 2002

Russellville, AL and Winfield, AL


19.8



100Ville Platte Medical Center(e)

December 1, 2001

Ville Platte, LA


11.1



116Athens Regional Medical Center

October 1, 2001

Athens, TN


17.0



118Bluegrass Community Hospital(e),(i)

January 2, 2001

Versailles, KY


3.2



25Lander Valley Medical Center

July 1, 2000

Lander, WY


29.8



102Putnam Community Medical Center

June 16, 2000

Palatka, FL


43.5



141     (a)
    
    Excluding working capital, except for the Province business
    combination.(b)
    
    We acquired four hospitals from HCA under the same purchase
    agreement.(c)
    
    Held-for-sale
    hospital.(d)
    
    Divested on January 1, 2007.(e)
    
    Immediately prior to the acquisition of this hospital by
    Province or us, it was owned by a
    not-for-profit
    or governmental entity.(f)
    
    Divested on May 1, 2006.(g)
    
    Divested on January 1, 2006.(h)
    
    We voluntarily closed and ceased the operations of Guyan Valley
    Hospital as an eight-bed critical access hospital effective
    December 29, 2006.(i)
    
    Initially an operating lease; we exercised our option to
    purchase Bluegrass Community Hospital for $3.2 million in
    January 2005.  Dispositions
    Disposition



Sale


LicensedHospital Name

Date

Location

Price


BedsSaint Francis Hospital

January 1, 2007

Charleston, WV

$
37.5



155Ashland Regional Medical Center

May 1, 2006

Ashland, PA


4.1



123Medical Center of Southern Indiana

May 1, 2006

Charleston, IN


4.6



96Smith County Memorial Hospital

March 31, 2006

Carthage, TN


20.0



63Palo Verde Hospital

January 1, 2006

Blythe, CA


1.0



51Bartow Memorial Hospital

March 31, 2005

Bartow, FL


33.0



56Springhill Medical Center

November 17, 2000

Springhill, LA


5.7



63Barrow Medical Center

September 1, 2000

Barrow, GA


2.2



56Riverview Medical Center

August 1, 2000

Gonzales, LA


20.7



104Halstead Hospital

April 1, 2000

Halstead, KS






177Trinity Hospital

February 1, 2000

Erin, TN


2.4



40    5




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##### Table of Contents



Operations
  one-day
        
    accounting, financial, tax and reimbursement management;
    clinical management and consulting;
    construction oversight and management;
    corporate ethics and compliance;
    education and training;
    employee benefits;
    HIPAA compliance;
    human resources management;
    information and clinical systems;
    internal auditing and consulting;
    legal management;
    managed care contracting;
    materials management;
    physician recruiting;
    physician services management;
    quality resource management;
    risk management; and
    revenue and cash cycle management.   6




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##### Table of Contents



Seasonality
    Properties
    Acquisition/Licensed Beds


Opening/

OperationalHospital Name

Acute


Psychiatric


Rehabilitation


SNF(a)


Total


Swing(b)


Lease Date

StatusAlabamaAndalusia Regional Hospital


88







12







100



10


May 11, 1999

OwnLakeland Community Hospital(c)


50















50



10


December 1, 2002

OwnNorthwest Medical Center


61



10











71






December 1, 2002

OwnRussellville Hospital


100















100



10


October 3, 2002

OwnVaughan Regional Medical
    Center(d),(e)


175















175






April 15, 2005

OwnArizonaHavasu Regional Medical
    Center(c),(d)


119







19







138






April 15, 2005

OwnValley View Medical Center


50







10







60






November 8, 2005

OwnCaliforniaColorado River Medical Center(d),(f)


25















25






April 15, 2005

LeaseColoradoColorado Plains Medical
    Center(c),(d),(g)


40







10







50






April 15, 2005

LeaseFloridaPutnam Community Medical Center(e)


131











10



141






June 16, 2000

OwnIndianaStarke Memorial Hospital(d)


45







8







53



6


April 15, 2005

LeaseKansasWestern Plains Medical Complex(c)


74







16



9



99






May 11, 1999

OwnKentuckyBluegrass Community Hospital(f)


25















25



15


January 2, 2001

OwnBourbon Community Hospital


33



25











58



10


May 11, 1999

OwnGeorgetown Community Hospital


75















75



10


May 11, 1999

OwnJackson Purchase Medical Center(e)


107















107



10


May 11, 1999

OwnLake Cumberland Regional
    Hospital(c),(e)


186



34



27



12



259






May 11, 1999

OwnLogan Memorial Hospital


92















92



10


May 11, 1999

OwnMeadowview Regional Medical Center


101















101



10


May 11, 1999

OwnSpring View Hospital


75















75



6


October 1, 2003

OwnLouisianaAcadian Medical Center(d),(g)


52















52






April 15, 2005

OwnDoctors Hospital of
    Opelousas(d),(g)


117



32



22







171






April 15, 2005

OwnMinden Medical Center(d),(e)


127



20



12







159






April 15, 2005

OwnRiver Parishes Hospital


106















106






July 1, 2004

OwnTeche Regional Medical Center(c),(d)


140



9











149






April 15, 2005

LeaseVille Platte Medical Center(g),(h)


95















95






December 1, 2001

OwnMississippiBolivar Medical Center(c),(d)


153











12



165






April 15, 2005

Lease 7




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##### Table of Contents



Acquisition/Licensed Beds


Opening/

OperationalHospital Name

Acute


Psychiatric


Rehabilitation


SNF(a)


Total


Swing(b)


Lease Date

StatusNevadaNortheastern Nevada Regional
    Hospital(c),(d)


75















75






April 15, 2005

OwnNew MexicoLos Alamos Medical Center(c),(d)


47















47



6


April 15, 2005

OwnMemorial Medical Center of Las
    Cruces(d)


274



12











286






April 15, 2005

LeaseSouth CarolinaCoastal Carolina Medical Center(d)


31







10







41






April 15, 2005

OwnTennesseeAthens Regional Medical Center


118















118



10


October 1, 2001

OwnCrockett Hospital(h)


97







10







107






May 11, 1999

OwnEmerald-Hodgson Hospital


21











20



41






May 11, 1999

OwnHillside Hospital(h)


81



14











95



5


May 11, 1999

OwnLivingston Regional Hospital(h)


100







14







114



14


May 11, 1999

OwnSouthern Tennessee Medical Center


107



12



12



26



157






May 11, 1999

OwnTexasEnnis Regional Medical Center(d)


45















45






April 15, 2005

LeasePalestine Regional Medical
    Center(c),(d),(e),(g)


100



28



49







177






April 15, 2005

OwnParkview Regional
    Hospital(c),(d),(g)


49







10







59






April 15, 2005

LeaseUtahAshley Valley Medical Center(c)


39















39



39


May 11, 1999

OwnCastleview Hospital(c)


84















84



12


May 11, 1999

OwnVirginiaClinch Valley Medical Center


176







10



14



200






July 1, 2006

OwnDanville Regional Medical Center


245



35



10



60



350






July 1, 2005

OwnMemorial Hospital of Martinsville
    and Henry County(d)


208



12











220






April 15, 2005

OwnWythe County Community Hospital(c)


92











8



100



9


June 1, 2005

LeaseWest VirginiaLogan Regional Medical Center(c),(g)


124







8







132






December 1, 2002

OwnRaleigh General Hospital


300















300






July 1, 2006

OwnSaint Francis Hospital(i),(j)


145











10



155






July 1, 2006

OwnSt. Josephs Hospital(i)


268



57











325






July 1, 2006

OwnWyomingLander Valley Medical Center(c),(g)


66



15



8







89






July 1, 2000

OwnRiverton Memorial Hospital(c),(g)


70















70






May 11, 1999

Own5,404



315



277



181



6,177



202     (a)
    
    Skilled nursing facility licensed beds.(b)
    
    The federal swing-bed program allows certain rural hospitals to
    provide a mix of acute and skilled nursing care without
    obtaining a change in their licenses. Reported swing-beds are
    included in the amount of acute licensed beds.(c)
    
    Designated by Medicare as a sole community hospital.(d)
    
    Hospital acquired as a result of the Province business
    combination.(e)
    
    Designated by Medicare as a rural referral center.(f)
    
    Designated by Medicare as a critical-access hospital
    (CAH).(g)
    
    Hospital is certified by the State and Medicare to use swing
    beds. However, the State licensure does not assign a specific
    number of swing beds to a hospital. 8




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##### Table of Contents



(h)
    
    Designated by Medicare as a Medicare dependent hospital.(i)
    
    Held-for-sale
    hospital.(j)
    
    Divested on January 1, 2007.      Alabama
  Andalusia Regional Hospital
  Lakeland Community Hospital
  Northwest Medical Center
  Russellville Hospital
  Vaughan Regional Medical Center 47-bed
  Arizona
  Havasu Regional Medical Center
 9




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##### Table of Contents



Valley View Medical Center
  California
  Colorado River Medical Center
  Colorado
  Colorado Plains Medical Center
  Florida
  Putnam Community Medical Center
  Indiana
  Starke Memorial Hospital
  Kansas
  Western Plains Medical Complex
 10




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##### Table of Contents



Kentucky
  Bluegrass Community Hospital
  Bourbon Community Hospital
  Georgetown Community Hospital
  Jackson Purchase Medical Center
  Lake Cumberland Regional Hospital
  Logan Memorial Hospital
  Meadowview Regional Medical Center
  Spring View Hospital
  Louisiana
  Acadian Medical Center
 11




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##### Table of Contents



52-bed
  Doctors Hospital of Opelousas
  Minden Medical Center
  River Parishes Hospital
  Teche Regional Medical Center
  Ville Platte Medical Center
  Mississippi
  Bolivar Medical Center
  Nevada
  Northeastern Nevada Regional Hospital
 12




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##### Table of Contents



New
    Mexico
  Los Alamos Medical Center
  Memorial Medical Center of Las Cruces
  South
    Carolina
  Coastal Carolina Medical Center
  Tennessee
  Athens Regional Medical Center
  Crockett Hospital
  Hillside Hospital
  Livingston Regional Hospital
  Southern Tennessee Medical Center Emerald-Hodgson
    Hospital
  Texas
  Ennis Regional Medical Center ten-year
 13




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##### Table of Contents



Palestine Regional Medical Center 388-bed
  Parkview Regional Hospital
  Utah
  Ashley Valley Medical Center
  Castleview Hospital
  Virginia
  Clinch Valley Medical Center
  Danville Regional Medical Center
  Memorial Hospital of Martinsville and Henry County
 14




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##### Table of Contents



Wythe County Community Hospital 30-year
  West
    Virginia
  Logan Regional Medical Center
  Raleigh General Hospital
  St. Josephs Hospital
  Wyoming
  Lander Valley Medical Center
  Riverton Memorial Hospital
 15




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##### Table of Contents



Demographic
    Information
    Historical(a)


Projected(b)2004


2005


2006


2011Average County/Parish Population

LifePoint Average


51,207



51,454



53,193



56,377Total Population Growth

LifePoint Average


0.9
%


0.0
%


2.5
%


0.6
%U.S. Average


0.5
%


1.0
%


1.6
%


1.3
%Females
    Ages 15-44
    Growth

LifePoint Average


0.4
%


(0.7
)%


1.6
%


(0.6
)%U.S. Average


0.3
%


(0.1
)%


0.5
%


0.5
%Females
    Ages 15-44
    as a % of Total Population

LifePoint Average


19.6
%


19.4
%


19.2
%


18.1
%U.S. Average


21.2
%


21.0
%


20.8
%


19.9
%Population Ages 65 + Growth

LifePoint Average


1.0
%


0.4
%


2.3
%


1.3
%U.S. Average


0.6
%


1.5
%


1.0
%


1.8
%Population Ages 65+ as a % of
    Total Population

LifePoint Average


14.8
%


14.9
%


15.0
%


15.6
%U.S. Average


12.5
%


12.6
%


12.5
%


12.8
%Median Household Income

LifePoint Average

$
36,575


$
37,587


$
38,420


$
44,149U.S. Average

$
49,660


$
51,261


$
53,256


$
62,955Unemployment Rate(c)

LifePoint Average


6.2
%


5.8
%


5.2
%


N/AU.S. Average


5.5
%


5.1
%


4.4
%


N/A     (a)
    
    The 2004, 2005 and 2006 historical rates are annual growth rates.(b)
    
    The 2011 projected growth rate represents the compounded annual
    growth rate from 2006 to 2011.(c)
    
    The 2006 unemployment rate represents the eleven-month average
    as of November 30, 2006.  Services
    and Utilization
    
    the size of and growth in local population;
    local economic conditions;
    loyalty of the local population to support the local hospital;
    physician availability, expertise and local reputation;
    physician utilization trends;
    the availability of reimbursement programs such as Medicare and
    Medicaid; 16




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##### Table of Contents




    the ability to negotiate contracts with managed care
    organizations that are appropriate for non-urban markets;
    necessary medical equipment to perform clinical
    procedures; and
    improved treatment protocols as a result of advances in medical
    technology and pharmacology.      Sources
    of Revenue
    2002


2003


2004


2005


2006Medicare


35.2
%


35.7
%


36.7
%


36.5
%


34.8
%Medicaid


11.5



10.8



11.1



9.3



10.0HMOs, PPOs and other private
    insurers


43.1



40.6



38.8



38.8



38.7Self-pay


8.2



8.7



9.4



12.3



12.7Other


2.0



4.2



4.0



3.1



3.8100.0
%


100.0
%


100.0
%


100.0
%


100.0
%     Medicare
     17




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##### Table of Contents



pay-for-performance,
  Inpatient Acute Care Diagnosis Related Group
    Payments.
    Medicare


MedicareDRG


CapitalPayments


Payments2002

$
137.2


$
13.12003


177.8



16.02004


194.2



17.52005


359.5



33.32006


458.8



41.3     % Increase2002


2.752003


2.952004


3.402005


3.302006


3.702007


3.40      18




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##### Table of Contents



FFY 2007
    Standard Rate for Hospitals with a Wage Index Greater than the
    National Average(69.7% Labor Share and 30.3% Nonlabor Share)
  Labor-Related


Nonlabor-RelatedFull update (3.4%)

$
3,397.52


$
1,476.97Reduced update (1.4%)

$
3,331.80


$
1,448.40   FFY 2007
    Standard Rate for Hospitals with a Wage Index Less than or Equal
    to the National Average(62.0% Labor Share and 38.0% Percent Nonlabor
    Share)
  Labor-Related


Nonlabor-RelatedFull update (3.4%)

$
3,022.18


$
1,852.31Reduced update (1.4%)

$
2,963.73


$
1,816.48   Capital
    StandardFederal Payment Rate
   Outlier Payments.
    MedicareOutlierPayments2002

$
0.72003


0.32004


0.62005


2.52006


3.2  19




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##### Table of Contents



Disproportionate Share Payments.
      MedicareDSHPayments2002

$
8.82003


9.82004


20.92005


47.62006


50.3   Wage Index and Geographic
    Reclassification.
      Number ofHospitals


Increase inReclassified


Reimbursement2002


13


$
9.72003


14



10.72004


14



11.72005


23



20.82006


23



24.3  20




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##### Table of Contents



Post-Acute Care Transfer Policy.
  Inpatient Rehabilitation and the 75%
    Rule.
    Minimum Qualifying


Co-MorbiditiesCost Reporting Period Beginning

Patient Mix


Apply (Y/N)(1)


Patient Mix AffectedJuly 1, 2004-June 30,
    2005


50
%


Y



Medicare and TotalJuly 1, 2005-June 30,
    2006


60
%


Y



Medicare and TotalJuly 1, 2006-June 30,
    2007


60
%


Y



Medicare and TotalJuly 1, 2007-June 30,
    2008


65
%


Y



Medicare and TotalJuly 1, 2008 and thereafter


75
%


N



Medicare and Total     (1)
    
    Patients with certain co-morbidities (additional health
    conditions) may count towards the minimum patient mix
    established by the revised 75% Rule during the phase-in period.      
    increases the market basket payments by 3.3%;
    incorporates downward adjustments for reimbursement (resulting
    in an overall decrease of approximately 2.6%) in response to
    coding changes;
    continues the payment rate adjustment of 21.3% for IRFs in rural
    areas; and
    increases the outlier payment threshold for cases with unusually
    high costs. 21




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##### Table of Contents



IRFReimbursement2002

$
12.52003


18.42004


20.92005


29.52006


31.0   Inpatient Psychiatric. cost-per-discharge cost-per-discharge th cost-per-discharge
  18-month
    Medicare InpatientPsychiatric Payments2002

$
4.62003


4.92004


5.82005


13.12006


16.9   Skilled Nursing Facilities and Swing Beds.
 22




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##### Table of Contents



Medicare InpatientSNF RUG Payments2002

$
6.32003


4.82004


4.02005


6.32006


8.7       Medicare InpatientSwing-Bed RUG Payments2002

$
3.42003


2.42004


3.72005


4.02006


3.9   Critical Access Hospitals.
 23




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##### Table of Contents



Medicare Critical-AccessHospital Payments2002

$
2.32003


4.02004


5.42005


5.32006


9.3   Graduate Medical Education.
  Indirect Medical Education. resident-to-bed
  Outpatient Payments.
      Medicare


Medicare Hold Harmless PaymentsOutpatient Payments


(Included in Medicare Outpatient Payments)2002

$
45.5


$
0.52003


56.7



0.62004


71.2



0.12005


142.1



2006


178.5



   Home Health Payments.
 24




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##### Table of Contents



60-day
    Medicare HomeHealth Payments2002

$
0.22003


1.92004


1.22005


8.22006


12.7   Sole Community Hospitals and Medicare Dependent
    Hospitals. 35-mile
    Rural Health Clinics. all-inclusive
  Hospice Payments.
 25




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##### Table of Contents



Medicare Bad Debt Reimbursement.
    
    the debt must be related to covered services and derived from
    deductible and coinsurance amounts;
    the provider must be able to establish that reasonable
    collection efforts were made;
    the debt was actually uncollectible when claimed as
    worthless; and
    sound business judgment established that there was no likelihood
    of recovery at any time in the future.      Medicare BadDebt Payments2002

$
4.12003


5.22004


6.92005


13.42006


16.9  26




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##### Table of Contents



Medicaid
      RevenuesState

2002


2003


2004


2005


2006


Reimbursement Methodologies

Requirements(In millions)Alabama

$
1.7


$
5.8


$
6.6


$
15.8


$
22.4


IP: Cost-related rates, not
    retrospective

Informational onlyOP: Fee scheduleArizona














5.9



13.5


IP: Per diem rates, not
    retrospective

NoneOP: Fee scheduleCalifornia














0.9



1.4


IP: Cost-based

Inpatient cost settledOP: Fee scheduleColorado














1.9



2.5


IP: DRG-based

Outpatient cost settledOP: 72% of allowable cost and fee
    scheduleFlorida


3.4



3.0



4.5



5.2



6.5


IP: Per diem

Rate setting, cost settledOP: Per visit/per line itemIndiana














1.5



1.5


IP: DRG-based

Informational onlyOP: Fee scheduleKansas


1.6



2.1



1.8



3.3



3.1


IP: DRG-based

Informational onlyOP: Fee scheduleKentucky


36.0



32.4



40.5



43.2



51.2


IP: DRG-based

Outpatient cost settledOP: Cost-based, flat rate, fee
    scheduleLouisiana


3.7



3.6



4.3



16.9



21.7


IP: Per diem

Outpatient cost settledOP: Primarily 87%  of allowable
    cost and fee scheduleMississippi














8.0



11.7


IP: Per diem

Rate settingOP: Prospective rateNevada














1.3



2.6


IP: Per diem rates, not
    retrospective

NoneOP: Fee scheduleNew Mexico














4.8



16.1


IP: DRG-based with cost-based
    capital

IP capital and OP cost settledOP: Cost-based and fee scheduleSouth Carolina














0.9



4.1


IP: Cost-based

IP capital and OP cost settledOP: Cost-basedTennessee


20.6



22.4



24.2



23.6



20.1


IP: DRG-based

NoneOP: Fee scheduleTexas














8.9



12.2


IP: DRG-based

OP cost settledOP: Cost-based and fee scheduleUtah


7.9



8.4



8.7



8.1



7.9


IP: Negotiated percentage of charges

NoneOP: Primarily 93% of charges and
    fee scheduleVirginia














7.3



25.9


IP: DRG-based with cost-based
    capital

IP capital and OP cost settledOP: Cost-basedWest Virginia


0.6



9.3



9.4



7.1



12.0


IP: DRG-based

Informational onlyOP: Fee scheduleWyoming


4.8



5.2



5.5



6.8



7.7


IP: Prospective, based on per
    discharge

NoneOP: Fee schedule$
80.3


$
92.2


$
105.5


$
171.4


$
244.1    27




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##### Table of Contents



Medicaid Disproportionate Share PaymentsState

2002


2003


2004


2005


2006Alabama

$
0.3


$
0.6


$
1.7


$
3.7


$
1.7Florida


















1.2Kansas














0.9



0.4Kentucky


5.9



3.4



4.9



4.9



6.4Louisiana


0.1



0.1







0.4



Mississippi














1.3



0.9Nevada


















0.5New Mexico














0.2



0.1South Carolina


















1.9Tennessee


0.2



0.9



1.6



1.2



2.2Texas














1.9



2.5West Virginia






0.7



0.8



0.8



0.9Wyoming






0.1











0.4$
6.5


$
5.8


$
9.0


$
15.3


$
19.1   Annual
    Cost Reports
      HMOs,
    PPOs and Other Private Insurers
    Self-Pay
   28




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##### Table of Contents



Self-Pay


Charity/Indigent Care


CombinedRevenues


Write-Offs


Total2002

$
57.6


$
3.5


$
61.12003


75.7



5.1



80.82004


92.3



7.7



100.02005


226.9



24.0



250.92006


309.6



42.4



352.0   Indigent
    Care Programs
    
    Expanded Care Program, which is funded by both the City of Las
    Cruces and Dona Ana County; and
    Sole Community Provider Program, which is funded by both Dona
    Ana County and the federal government.    Competition
  Hospitals,
    Specialized Care Providers and Physicians
  not-for-profit
   29




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##### Table of Contents



Hospital
    Acquisitions
  start-up
  Employees
    and Medical Staff
      Government
    Regulation
  Overview.
 30




---



##### Table of Contents



Utilization Review.
  Fraud and Abuse Laws. and/or and/or and/or and/or
  
    making claims to Medicare
    and/or
    Medicaid for services not provided or misrepresenting actual
    services provided in order to obtain higher payments;
    paying money to induce the referral of patients or purchase of
    items or services where such items or services are reimbursable
    under a federal or state health program; or
    failing to provide appropriate emergency medical screening
    services to any individual who comes to a hospitals campus
    or otherwise failing to properly treat and transfer emergency
    patients.       31




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##### Table of Contents




    payment of any incentive by a hospital each time a physician
    refers a patient to the hospital;
    use of free or significantly discounted office space or
    equipment;
    provision of free or significantly discounted billing, nursing
    or other staff services;
    free training (other than compliance training) for a
    physicians office staff, including management and
    laboratory technique training;
    guarantees which provide that if a physicians income fails
    to reach a predetermined level, the hospital will pay any
    portion of the remainder;
    low-interest or interest-free loans, or loans which may be
    forgiven if a physician refers patients to the hospital;
    payment of the costs for a physicians travel and expenses
    for conferences;
    payment of services which require few, if any, substantive
    duties by the physician or which are in excess of the fair
    market value of the services rendered; or
    purchasing goods or services from physicians at prices in excess
    of their fair market value.  and/or
   32




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##### Table of Contents



Corporate Practice of Medicine and
    Fee-Splitting.
  Emergency Medical Treatment and Active Labor
    Act.
      Federal False Claims Act.
   33




---



##### Table of Contents



Healthcare Reform. Medicare+Choice
    Conversion Legislation. not-for-profit not-for-profit not-for-profit
  Certificates of Need.
  HIPAA Transaction, Privacy and Security
    Requirements.
   34




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##### Table of Contents



Patient Safety and Quality Improvement Act of
    2005.
  California Seismic
    Standards.
 35




---



##### Table of Contents




    hospitals in California must conduct seismic evaluation and
    submit these evaluations to the Office of Statewide Health
    Planning and Development, Facilities Development Division for
    its review and approval;
    hospitals in California must identify the most critical
    nonstructural systems that represent the greatest risk of
    failure during an earthquake and submit timetables for upgrading
    these systems to the Office of Statewide Health Planning and
    Development, Facilities Development Division for its review and
    approval; and
    hospitals in California must prepare a plan and compliance
    schedule for each regulated building demonstrating the steps a
    hospital will take to bring the hospital buildings into
    substantial compliance with the regulations and standards.    State Hospital Rate-Setting Activity.
  Medical Malpractice Tort Law Reform.
  Environmental Regulation.
  Regulatory
    Compliance Program
     36




---



##### Table of Contents



Risk
    Management and Insurance
          Item 1A.
    Factors
    That May Affect Future Results    
    projections of our revenues, net income, earnings per share,
    capital expenditures, cash flows, debt repayments, interest
    rates, certain operating statistics and data or other financial
    items;
    descriptions of plans or objectives of our management for future
    operations or services, including pending acquisitions and
    divestitures;
    interpretations of Medicare and Medicaid law and their effects
    on our business; and
    descriptions of assumptions underlying or relating to any of the
    foregoing.    
    investment in and integration of our acquisitions;
    liabilities associated with and other effects resulting from our
    recent acquisitions; 37




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##### Table of Contents




    future financial performance and condition;
    future liquidity and capital resources;
    future cash flows;
    existing and future debt and equity structure;
    our strategic goals;
    our business strategy and operating philosophy;
    demographic trends;
    competition with other hospital companies and healthcare service
    providers;
    our compliance with federal, state and local regulations;
    our stock compensation arrangements;
    executive compensation;
    our hedging arrangements;
    supply and information technology costs;
    changes in interest rates;
    our plans as to the payment of dividends;
    future acquisitions, dispositions and joint ventures;
    development of de novo facilities;
    tax-related liabilities;
    industry trends;
    the efforts of insurers and other payors, healthcare providers
    and others to contain healthcare costs;
    reimbursement changes;
    patient volumes and related revenues;
    risk management and insurance;
    recruiting and retention of clinical personnel;
    future capital expenditures;
    expected changes in certain expenses;
    our contractual obligations;
    the completion of projects under construction;
    the impact of changes in our critical accounting estimates;
    claims and legal actions relating to professional liabilities
    and other matters;
    non-GAAP measures;
    the impact and applicability of new accounting
    standards; and
    physician recruiting and retention.   38




---



##### Table of Contents



Managements Discussion and Analysis of
    Financial Condition and Results of Operations, Quantitative and Qualitative
    Disclosures about Market Risk and/or
  Risk
    Factors
  We
    have substantial indebtedness and we may incur significant
    amounts of additional indebtedness in the future which could
    affect our ability to finance operations and capital
    expenditures, pursue desirable business opportunities or
    successfully operate our business in the future.
      
    Under our credit facility, we are required to satisfy and
    maintain specified financial ratios and tests. Failure to comply
    with these obligations may cause an event of default which, if
    not cured or waived, could require us to repay substantial
    indebtedness immediately. Moreover, if debt repayment is
    accelerated, we will be subject to higher interest rates on our
    debt obligations as a result of these covenants and our credit
    ratings may be adversely impacted.
    We may be vulnerable in the event of downturns and adverse
    changes in our hospitals businesses, in our industry, or
    in the economy generally, such as the implementation by the
    government of further limitations on reimbursement under
    Medicare and Medicaid, because of our need for increased cash
    flow.
    We may have difficulty obtaining additional financing at
    favorable interest rates to meet our requirements for working
    capital, capital expenditures, acquisitions, general corporate
    or other purposes.
    We will be required to dedicate a substantial portion of our
    cash flow to the payment of principal and interest on
    indebtedness, which will reduce the amount of funds available
    for operations, capital expenditures and future acquisitions.
    Any borrowings we incur at variable interest rates expose us to
    increases in interest rates generally.
    A breach of any of the restrictions or covenants in our debt
    agreements could cause a cross-default under other debt
    agreements. We may be required to pay our indebtedness
    immediately if we default on any of the numerous financial or
    other restrictive covenants contained in the debt agreements. It
    is not certain whether we will have, or will be able to obtain,
    sufficient funds to make these accelerated 39




---



##### Table of Contents



payments. If any senior debt is accelerated, our assets may not
    be sufficient to repay such indebtedness and our other
    indebtedness.  
    In the event of a default, we may be forced to pursue one or
    more alternative strategies, such as restructuring or
    refinancing our indebtedness, selling assets, reducing or
    delaying capital expenditures or seeking additional equity
    capital. There can be no assurances that any of these strategies
    could be effected on satisfactory terms, if at all, or that
    sufficient funds could be obtained to make these accelerated
    payments.  We
    may continue to see the growth of uninsured and patient
    due accounts; deterioration in the collectibility of these
    accounts could adversely affect our results of operations and
    cash flows.
      We are
    exposed to interest rate changes.
    If
    our access to HCA-Information Technology and Services,
    Inc.s information systems is restricted or we are not able
    to integrate changes to our existing information systems or
    information systems of acquired hospitals, our operations could
    suffer.
  HCA-IT
   40




---



##### Table of Contents



If
    our fair value declines, a material non-cash charge to earnings
    from impairment of our goodwill could result.
    We
    may have difficulty acquiring hospitals on favorable terms and,
    because of regulatory scrutiny, acquiring
    not-for-profit
    entities.
  start-up
    not-for-profit not-for-profit
  We
    may encounter numerous business risks in acquiring additional
    hospitals and may have difficulty operating and integrating
    those hospitals. As a result, we may be unable to achieve our
    growth strategy.
   41




---



##### Table of Contents



If
    we do not effectively recruit and retain qualified physicians,
    nurses, medical technicians and other healthcare professionals,
    our ability to deliver healthcare services efficiently will be
    adversely affected.
        Our
    revenues may decline if federal or state programs reduce our
    Medicare or Medicaid payments or if managed care companies
    reduce reimbursement amounts. In addition, the financial
    condition of purchasers of healthcare services and healthcare
    cost containment initiatives may limit our revenues and
    profitability.
       42




---



##### Table of Contents



Our revenues are especially concentrated in a small number
    of states which will make us particularly sensitive to
    regulatory and economic changes in those states.
    Revenue Concentration by StateAmount


% of Total Revenues2005


2006


2005


2006Kentucky

$
387.0


$
404.0



21.0
%


16.6
%Virginia


189.5



341.9



10.3



14.0Louisiana


171.1



211.3



9.3



8.7New Mexico


136.7



210.9



7.4



8.6Tennessee


191.7



199.6



10.4



8.2Alabama


162.5



186.5



8.8



7.6West Virginia


78.3



151.7



4.3



6.2Texas


95.8



136.3



5.2



5.6$
1,412.6


$
1,842.2



76.7
%


75.5
%   and/or
  Other hospitals and outpatient facilities provide services
    similar to those which we offer. In addition, physicians provide
    services in their offices that could be provided in our
    hospitals. These factors may increase the level of competition
    we face and may therefore adversely affect our revenues,
    profitability and market share.
  not-for-profit
   43




---



##### Table of Contents



If we do not continually enhance our hospitals with the
    most recent technological advances in diagnostic and surgical
    equipment, our ability to maintain and expand our markets will
    be adversely affected.
      We are subject to governmental regulation, and may be
    subjected to allegations that we have failed to comply with
    governmental regulations which could result in sanctions that
    reduce our revenues and profitability.
       44




---



##### Table of Contents



We may be subjected to actions brought by the government
    under anti-fraud and abuse provisions or by individuals on the
    governments behalf under the False Claims Acts
    qui tam or whistleblower provisions.
    
    criminal penalties;
    civil monetary penalties; and/or
    exclusion from participation in Medicare, Medicaid or other
    federal healthcare programs, any of which could impair our
    ability to operate one or more of our hospitals profitably.         45




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##### Table of Contents



We may be subject to liabilities because of malpractice
    and related legal claims brought against our hospitals. If we
    become subject to these claims, we could be required to pay
    significant damages, which may not be covered by
    insurance.
    Certificate of need laws and regulations regarding
    licenses, ownership and operation may impair our future
    expansion in some states.
    In states without certificate of need laws, competing
    providers of healthcare services are able to expand and
    construct facilities without the need for significant regulatory
    approval.
    We are subject to significant corporate regulation as a
    public company and failure to comply with all applicable
    regulations could subject us to liability or negatively affect
    our stock price.
  Form 10-K
 46




---



##### Table of Contents



Our
    revenues and volume trends may be adversely affected by certain
    factors over which we have no control relevant to the markets in
    which we have hospitals, including weather
    conditions.
    Different
    interpretations of accounting principles could have a material
    adverse effect on our results of operations or financial
    condition.
    Our
    stock price has been and may continue to be volatile; any
    significant decline may result in litigation.
      
    issues associated with integration of the hospitals that we
    acquire;
    actual or anticipated quarterly variations in operating results,
    particularly if they differ from investors expectations;
    changes in financial estimates and recommendations by securities
    analysts;
    changes in government regulations as they relate to
    reimbursement and operational policies and procedures;
    the operating and stock price performance of other companies
    that investors may deem comparable;
    changes in overall economic factors in our markets; and
    news reports relating to trends or events in our markets.     47




---



##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.  Business, 
  Item 3.
    Legal
    Proceedings.  General.
  Americans with Disabilities Act Claims.
    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   48




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    Information for Common Stock
    High


Low2005First Quarter

$
45.53


$
33.24Second Quarter


51.10



41.67Third Quarter


51.51



40.78Fourth Quarter


44.47



36.292006First Quarter

$
37.01


$
28.27Second Quarter


36.40



29.21Third Quarter


37.20



30.89Fourth Quarter


36.94



32.602007First Quarter (through
    February 2, 2007)

$
34.93


$
32.74     Stockholders
    Dividends
  Managements Discussion and Analysis of
    Financial Condition and Results of Operations,
     
  Recent
    Sales of Unregistered Securities
    Recent
    Purchases of Equity Securities by the Issuer and Affiliated
    Purchasers
    Equity
    Compensation Plan Information
   49




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##### Table of Contents



Number of SecuritiesNumber of Securities





Available for Futureto be Issued Upon


Weighted-Average


Issuance Under EquityExercise of Outstanding


Exercise Price of


Compensation PlansOptions, Warrants and


Outstanding Options,


(Excluding SecuritiesPlan Category

Rights


Warrants and Rights


Reflected in Column (a))(a)


(b)


(c)Equity Compensation Plans Approved
    by Security Holders


4,162,648
(1)

$
30.19
(2)


3,693,128
(3)Equity Compensation Plans not
    Approved by Security Holders


None



None



NoneTotal


4,162,648


$
30.19



3,693,128     (1)
    
    Includes the following:  
    4,007,163 shares of common stock to be issued upon exercise of
    outstanding stock options granted under the Incentive Plan;
    114,361 shares of common stock to be issued upon exercise of
    outstanding stock options granted under the Outside Directors
    Plan;
    16,624 shares of common stock to be issued upon the vesting of
    deferred stock units outstanding under the Outside Directors
    Plan; and
    24,500 shares of common stock to be issued upon the vesting of
    restricted stock units outstanding under the Outside Directors
    Plan.  (2)
    
    Upon vesting, deferred stock units and restricted stock units
    are settled for shares of common stock on a one-for-one basis.
    Accordingly, the deferred stock units and restricted stock units
    have been excluded for purposes of computing the
    weighted-average exercise price.(3)
    
    Includes the following:  
    3,432,376 shares of common stock available for issuance
    under the Incentive Plan;
    76,123 shares of common stock available for issuance under
    the Management Stock Purchase Plan;
    148,499 shares of common stock available for issuance under
    the Outside Directors Plan; and
    36,130 shares of common stock available for issuance under
    the Employee Stock Purchase Plan. 50




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##### Table of Contents



Item 6.
    Selected
    Financial Data.  Business, Managements Discussion and
    Analysis of Financial Condition and Results of Operations.
  Years Ended December 31,2002


2003


2004


2005


2006(In millions, except per share amounts)Statement of Operations
    Data:Revenues

$
702.3


$
861.7


$
928.8


$
1,841.5


$
2,439.7Income from continuing operations


42.2



69.4



85.9



79.0



142.2Income from continuing operations
    per share:Basic

$
1.13


$
1.86


$
2.32


$
1.57


$
2.56Diluted

$
1.09


$
1.78


$
2.18


$
1.55


$
2.53Weighted average shares
    outstanding:Basic


37.5



37.2



37.0



50.1



55.6Diluted


38.6



43.3



42.8



53.2



56.3Cash dividends declared per share


















Balance Sheet Data (as of end
    of year):Working capital, excluding assets
    held for sale

$
66.8


$
101.5


$
115.4


$
181.2


$
195.9Property and equipment, net


335.3



437.9



495.5



1,296.3



1,373.6Total assets (including assets
    held for sale)


733.5



799.0



890.4



3,224.6



3,638.4Long-term debt, including amounts
    due within one year


250.0



270.0



221.0



1,516.3



1,670.3Stockholders equity


357.6



394.3



509.5



1,287.8



1,450.0  51




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.    Overview
    2004


2005


2006Revenues

$
982.8


$
1,841.5


$
2,439.7Income from continuing operations

$
85.9


$
79.0


$
142.2Diluted earnings per share from
    continuing operations

$
2.18


$
1.55


$
2.53   Change
    in the Companys Chief Executive Officer and
    Chairman
        Stock-Based
    Compensation
   52




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##### Table of Contents



Reduction of income from
    continuing operations before income taxes (included in salaries
    and benefits)

$
5.7Income tax benefit


(2.1
)Reduction of income from
    continuing operations

$
3.6Reduction of income per share from
    continuing operations:Basic

$
0.06Diluted

$
0.06     2004


2005(a)


2006Nonvested stock

$
1.8


$
6.5


$
7.5Stock options










5.7Total stock-based compensation
    expense

$
1.8


$
6.5


$
13.2Tax benefits on stock-based
    compensation expense

$
0.6


$
2.4


$
5.2     (a)
    
    This excludes the $4.0 million ($2.5 million, net of
    income taxes) of compensation expense we recognized that was the
    result of the accelerated vesting of nonvested stock due to the
    Province business combination.     53




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##### Table of Contents



Physician
    Minimum Revenue Guarantees
  No. FIN 45-3, FIN 45-3), FIN 45-3, FIN 45-3 FIN 45-3 FIN 45-3.
  FIN 45-3 FIN 45-3 FIN 45-3,
  FIN 45-3
  Increase of income from continuing
    operations before income taxes (included in other operating
    expenses)

$
8.7Provision for income taxes


(3.4
)Increase of income from continuing
    operations

$
5.3Increase of income per share from
    continuing operations:Basic

$
0.10Diluted

$
0.09   Hospital
    Acquisitions
  Business
 54




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##### Table of Contents



Havasu
    Joint Venture
    Business
    Combination with Province Healthcare Company
    Discontinued
    Operations
   55




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##### Table of Contents



2004


2005


2006Revenues

$
46.8


$
61.7


$
108.4Income (loss) from discontinued
    operations

$
(0.2
)

$
0.4


$
(0.9
)Impairment of assets






(5.8
)


Gain (loss) on sale of hospitals






(0.7
)


4.2Income (loss) from discontinued
    operations

$
(0.2
)

$
(6.1
)

$
3.3Diluted earnings (loss) per share
    from discontinued operations

$
(0.1
)

$
(0.12
)

$
0.06   Key
    Challenges
    
    Increases in Provision for Doubtful
    Accounts.  We have experienced an increase in our
    provision for doubtful accounts during recent years. These
    increases were the result of an increased number of uninsured
    patients and an increase in co-payments and deductibles from
    healthcare plan design changes. These changes increase
    collection costs and reduce overall cash collections.  Our provision for doubtful accounts on a consolidated basis was
    as follows for the periods presented (in millions):  Provision for Doubtful Accounts2004


2005


2006First Quarter

$
22.7


$
25.2


$
68.6Second Quarter


21.2



45.3



60.2Third Quarter


26.2



63.0



73.9Fourth Quarter


24.4



63.8



71.2$
94.5


$
197.3


$
273.9   Our revenues decrease when we write-off patient accounts
    identified as charity and indigent care. Our hospitals write-off
    a portion of a patients account upon the determination
    that the patient qualifies under the hospitals
    charity/indigent care policy. In the event that a patient
    account was previously classified as self-pay when the
    determination of charity/indigent status is made, a
    corresponding reduction in the provision for doubtful accounts
    may occur.The following table reflects our consolidated charity and
    indigent care write-offs for the periods presented (in millions):  Charity and Indigent Care Write-Offs2004


2005


2006First Quarter

$
1.9


$
1.8


$
6.0Second Quarter


2.4



6.3



12.2Third Quarter


1.7



8.4



11.6Fourth Quarter


1.8



9.5



16.6$
7.8


$
26.0


$
46.4  56




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##### Table of Contents



Self-Pay Revenues2004


2005


2006First Quarter

$
23.1


$
26.9


$
73.8Second Quarter


23.3



56.9



73.3Third Quarter


28.8



74.1



88.3Fourth Quarter


25.7



71.6



75.1$
100.9


$
229.5


$
310.5     Revenue Days Outstanding inAccounts Receivable2004


2005


2006March 31


40.1



37.2



39.6June 30


38.8



41.0



40.7September 30


40.6



42.0



45.1December 31


38.7



40.5



43.1     AdjustedRevenue Days Outstanding inAccounts Receivable2004


2005


2006March 31


44.0



40.9



44.7June 30


42.4



45.2



45.5September 30


45.2



47.3



50.5December 31


42.6



45.6



48.1     December 31,


December 31,2005


2006Insured receivables


40.6
%


37.1
%Uninsured receivables (including
    co-payments and deductibles)


59.4



62.9100.0
%


100.0
%  57




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##### Table of Contents



The approximate percentages of billed hospital receivables in
    summarized aging categories are as follows:  December 31,


December 31,2005


20060 to 60 days


51.4
%


49.3
%61 to 150 days


20.9



21.3Over 150 days


27.7



29.4100.0
%


100.0
%   We continue to implement a number of operating strategies as
    they relate to cash collections. However, if the trend of
    increasing self-pay revenues continues, our results of
    operations and financial position in the future could be
    materially adversely affected.  
    Physician Recruitment and
    Retention.  Recruiting and retaining both primary
    care physicians and specialists for our non-urban communities is
    a key to increasing revenues, patient volumes and the value that
    the communities place on our hospitals. The medical staffs at
    our hospitals are typically small and our revenues are
    negatively affected by the loss of physicians. Our management
    believes that continuing to add specialists should help our
    hospitals increase volumes by offering new services. During
    2006, we recruited 182 new admitting physicians and spent
    $26.3 million in cash on physician recruitment, including
    physician minimum revenue guarantee payments. We plan to recruit
    approximately 172 new admitting physicians during 2007.    AdmittingPhysiciansDecember 31, 2005


1,832Recruited


182Departed


(82
)Additions from two HCA hospitals
    (acquired effective July 1, 2006)


132December 31, 2006


2,064   
    Substantial Indebtedness.  Our consolidated
    debt was $1,670.3 million as of December 31, 2006, and
    we incurred $103.5 million of net interest expense during
    2006. We entered into an interest rate swap agreement effective
    as of November 30, 2006 with a maturity date of
    May 30, 2011. The interest rate swap converts a portion of
    our indebtedness to a fixed interest rate with a decreasing
    notional amount starting at $900.0 million at an annual
    fixed rate of 5.585%. Our substantial indebtedness increases our
    cost of capital, decreases our net income and reduces the amount
    of funds available for operations, capital expenditures and
    future acquisitions. We are in compliance with our financial
    debt covenants as of December 31, 2006 and believe we will
    be in compliance with them throughout 2007. It is not our intent
    to maintain large cash balances, and we will focus on reducing
    our indebtedness during 2007.
    Medicare Changes.  We have experienced changes
    with respect to governmental reimbursement that are affecting
    our growth. Effective October 1, 2005, CMS expanded the
    post-acute transfer policy from 30 diagnosis related groups
    (DRGs) to 182 DRGs resulting in an approximate
    $6.0 million reduction in our Medicare inpatient PPS
    payments for FFY 2006. CMS further expanded the list to 192 DRGs
    during FFY 2007; however we do not anticipate any material
    increase in payment reductions for 2007. On February 8,
    2006, the DRA was signed into law. This law includes measures
    related to quality reporting and
    pay-for-performance,
    the inpatient rehabilitation facility 75% Rule and Medicaid
    cuts. Part I, Item 1. Business, Sources
    of Revenuein this report contains a detailed
    discussion of provisions that affect our Medicare reimbursement.
    Integration of Acquired Hospitals.  During 2005
    and 2006, we acquired numerous hospitals in several
    transactions. The process of integrating the operations of these
    hospitals could cause an interruption of, 58




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##### Table of Contents



or loss of momentum in, the activities of our business. However,
    we are dedicated to devoting significant management attention
    and resources to integrating the business practices and
    operations of our recently acquired hospitals.  
    Shortage of Clinical Personnel and Increased Contract Labor
    Usage.  In recent years, many hospitals, including
    some of the hospitals we own, have encountered difficulty in
    recruiting and retaining nursing and certain medical
    technicians. When we are unable to staff our nursing and certain
    medical technician positions, we are required to use contract
    labor to ensure adequate patient care. Contract labor generally
    costs more per hour than employed labor. We have adopted a
    number of human resources strategies in an attempt to improve
    our ability to recruit and retain nursing and certain medical
    technicians. However, we expect that staffing issues related to
    nurses and certain medical technicians will continue in the
    future.
    Challenges in Professional and General Liability
    Costs.  Professional and general liability costs
    remain a challenge to us, and we expect this pressure to
    continue in the future. In recent years, we have incurred
    favorable loss experience, as reflected in our external
    actuarial reports. We have implemented enhanced risk management
    processes for monitoring professional and general liability
    claims and managing in high-risk areas.
    Increases in Supply Costs.  During the past few
    years, we have experienced an increase in supply costs as a
    percentage of revenues, especially in the areas of
    pharmaceutical, orthopedic, oncology and cardiac supplies. We
    participate in a group purchasing organization in an attempt to
    achieve lower supply costs from our vendors. Because of the
    fixed reimbursement nature of most governmental and commercial
    payor arrangements, we may not be able to recover supply cost
    increases through increased revenues.
    Increases in Information Technology Costs and Costs of
    Integration. Our acquisition activity requires transitions
    from, and the integration of, various information systems that
    are used by hospitals we acquire. We rely heavily on HCA-IT for
    information systems integration pursuant to our contractual
    arrangement for information technology services. Recently, the
    number of hospitals we operated increased significantly. This
    resulted in significant increases in our information technology
    costs.  Summary
    Revenue
    Sources
  Business,
     
   59




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##### Table of Contents



60




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##### Table of Contents



Critical
    Accounting Estimates
    
    it requires assumptions to be made that were uncertain at the
    time the estimate was made; and
    changes in the estimate or different estimates that could have
    been made could have a material impact on our consolidated
    results of operations or financial condition.        Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisAllowance for doubtful
    accounts and provision for doubtful accountsAccounts receivable primarily consist of amounts due from third-party payors and patients. Our ability to collect outstanding receivables is critical to our results of operations and cash flows. To provide for accounts receivable that could become uncollectible in the future, we establish an allowance for doubtful accounts to reduce the carrying value of such receivables
to their estimated net realizable value. The primary uncertainty lies with uninsured patient receivables and deductibles, co-payments or other amounts due from individual patients.


The largest component of bad
    debts in our patient accounts receivable relates to accounts for
    which patients are responsible, which we refer to as patient
    responsibility accounts or self- pay accounts. These accounts
    include both amounts payable by uninsured patients and
    co-payments and deductibles payable by insured patients. In
    general, we attempt to collect  deductibles,  co-payments and
    self-pay accounts  prior to the time of service for
    non-emergency care. If we do not collect  these patient
    responsibility accounts prior to the delivery of care, the
    accounts are handled through our billing and collections
    processes.  
      We verify each patients insurance coverage as early as
    possible


If self-pay revenues during 2006
    were changed by 1%, our 2006 after-tax income from continuing
    operations would change by approximately $1.9 million or
    diluted earnings per share of $0.03.  
      This is only one example of reasonably possible sensitivity
    scenarios. The process of determining the allowance requires us
    to estimate uncollectible patient accounts that are highly
    uncertain and requires a high degree of judgment. Our estimates
    may be impacted by changes in regional economic conditions,
    business office operations, payor mix and trends in federal or
    state governmental healthcare coverage.   61




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##### Table of Contents



Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisAllowance for doubtful
    accounts and provision for doubtful accounts (continued)Our allowance for doubtful
    accounts, included in our balance sheets as of December  
    31 was as follows (in millions):  
         2006  $328.1; and


before a scheduled admission or
    procedure, including with respect to eligibility, benefits and
    authorization/pre-certification requirements, in order to notify
    patients of the amounts for which they will be responsible. We
    attempt to verify insurance coverage within a reasonable amount
    of time for all emergency room visits and urgent admissions in
    compliance with the Emergency Medical Treatment and Active Labor
    Act. 
      In general, we perform the following steps in collecting
    accounts receivable:


A significant increase in our provision for doubtful accounts
    (as a percentage of revenues) would lower our earnings. This
    would adversely affect our results of operations, financial
    condition, liquidity and future access to capital   2005 
    $252.9  
      Our provision for doubtful accounts, included in our results
    of operations, was as follows (in millions):  
       2006  $266.7


   if possible, cash collection of deductibles,
    co-payments and self-pay accounts prior to or at the time
    service is provided;  
       billing and
    follow-up
    with third party payors;   2005    $189.4; and   2004    $85.4   collection calls;   utilization of collection agencies; and   if collection efforts are unsuccessful, write
    off of the accounts.Our policy is to write off accounts after all collection efforts have failed, which is typically no longer than one year after the date of discharge of the patient. Patient responsibility accounts represent the majority of our write-offs. All of our hospitals retain third-party collection agencies for billing and collection of delinquent accounts. At most of our
hospitals, more than one collection agency is used   62




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##### Table of Contents



Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisAllowance for doubtful
    accounts and provision for doubtful accounts (continued)to promote competition and
    improve performance results. The selection of collection
    agencies and the timing of referral of an account to a
    collection agency vary among hospitals. Generally, we do not
    write off accounts prior to utilizing the services of a
    collection agency. Once collection efforts have proven
    unsuccessful, an account is written off from our patient
    accounting system against the allowance for doubtful accounts.We determine the adequacy of the allowance for doubtful accounts utilizing a number of analytical tools and benchmarks. No single statistic or measurement alone determines the adequacy of the allowance.As it relates to our recently- acquired hospitals, we monitor trends in revenues and cash collections on a monthly basis for 18 to 24   months subsequent to the acquisition on a facility-by-facility basis.As it relates to our core hospitals, which we refer to as same- hospital, we monitor the revenue trends by payor classification on a month-by-month basis along with the composition of our accounts receivable agings. This review is focused primarily on trends in self-pay revenues, accounts receivable, co-payment receivables and historic payment patterns.In addition, we analyze other factors such as revenue days in accounts receivable and we review admissions and charges by physicians, primarily focusing on recently recruited physicians.   63




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##### Table of Contents



Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisAllowance for doubtful
    accounts and provision for doubtful accounts (continued)The allowance for doubtful accounts relating to the former Province facilities increased by $21.0   million during 2005, which resulted in a decrease in our diluted earnings per share of $0.25 for 2005, to conform the former Province facilities allowance for doubtful accounts to our critical accounting estimate. This adjustment constituted a change in
the estimation process from the former Province critical accounting estimate and is reflected as transaction costs in our consolidated statement of operations for 2005. The adjustment is the result of our review of Provinces patient accounts receivable and the application of the same assumptions and processes we use.Revenue recognition/Allowance for contractual discountsWe recognize revenues in the
    period in which services are provided. Accounts receivable
    primarily consist of amounts due from third-party payors and
    patients. Amounts we receive for treatment of patients covered
    by governmental programs, such as Medicare and Medicaid, and
    other third-party payors such as HMOs, PPOs and other private
    insurers, are generally less than our established billing
    rates.  
      Accordingly, our gross revenues and accounts receivable are
    reduced to net realizable value through an allowance for
    contractual discounts. Approximately 83.5% of our revenues
    during 2006 relate to discounted charges.


Revenues are recorded at estimated net amounts due from patients, third- party payors and others for healthcare services provided. We utilize multiple patient accounting systems. Therefore, estimates for contractual allowances are calculated using computerized and manual processes depending on the type of payor involved and the patient accounting system used by each
of our hospitals. In certain hospitals, the contractual allowances are calculated by a computerized system based on payment terms for each payor. In other hospitals, the contractual allowances are determined manually using historical collections for each type of payor. For all hospitals, certain manual estimates are used in calculating contractual allowances based on   64




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##### Table of Contents



Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisRevenue
    recognition/Allowance for contractual discounts
    (continued)The sources of these revenues were as follows (as a percentage of total revenues):


historical collections from
    payors that are not significant or have not entered into a
    contract with us. All contractual adjustments regardless of type
    of payor or method of calculation are reviewed and compared to
    actual experience.  
    Medicare  34.8%;  
       Medicaid  10.0%; and  
       Managed care  38.7%.


Governmental payors 
      The majority of services performed on Medicare and Medicaid
    patients are reimbursed at predetermined reimbursement rates.
    The differences between the established billing rates (i.e.,
    gross charges) and the predetermined reimbursement rates are
    recorded as contractual discounts and deducted from gross
    charges. Under this prospective reimbursement system, there is
    no adjustment or settlement of the difference between the actual
    cost to provide the service and the predetermined reimbursement
    rates.  
      Discounts for retrospectively cost-based revenues, which were
    more prevalent in periods before 2000, are estimated based on
    historical and current factors and are adjusted in future
    periods when settlements of filed cost reports are received.
    Final settlements under these programs are subject to adjustment
    based on administrative review and audit by third party
    intermediaries, which can take several years to resolve
    completely.


Governmental payors 
      Because the laws and regulations governing the Medicare and
    Medicaid programs are complex and subject to change, the
    estimates of contractual discounts we record could change by
    material amounts. Adjustments related to final settlements
    increased our revenues by the following amounts (in millions):
    
         2006  $13.7   2005  $9.4; and   2004  $10.6Managed care


Managed careAccounts receivable primarily consist of amounts due from third party payors and patients. Amounts we receive for the


If our overall estimated contractual discount percentage on all of our managed care revenues during 2006 were changed by 1%,   65




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##### Table of Contents



Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisRevenue
    recognition/Allowance for contractual discounts
    (continued)treatment of patients covered by
    HMOs, PPOs and other private insurers are generally less than
    our established billing rates. We include contractual allowances
    as a reduction to revenues in our financial statements based on
    payor specific identification and payor specific factors for
    rate increases and denials.  
      For most managed care plans, estimated contractual allowances
    are adjusted to actual contractual allowances as cash is
    received and claims are reconciled. We evaluate the following
    criteria in developing the estimated contractual allowance
    percentages each month: historical contractual allowance trends
    based on actual claims paid by managed care payors; review of
    contractual allowance information reflecting current contract
    terms; consideration and analysis of changes in payor mix
    reimbursement levels; and other issues that may impact
    contractual allowances.


our 2006 after-tax income from
    continuing operations would change by approximately
    $6.1 million. This is only one example of reasonably
    possible sensitivity scenarios. The process of determining the
    allowance requires us to estimate the amount expected to be
    received based on payor contract provisions, historical
    collection data as well as other factors and requires a high
    degree of judgment. It is impacted by changes in managed care
    contracts and other related factors.  
      A significant increase in our estimate of contractual
    discounts would lower our earnings. This would adversely affect
    our results of operations, financial condition, liquidity and
    future access to capital.Applying our process to the accounts receivable from Provinces third-party payors resulted in a $5.4   million charge and decreased our diluted earnings per share by $0.07 during 2005 to conform the former Province facilities allowance for contractual discounts to our critical accounting estimate. This adjustment constituted a change in the estimation
process from the former Province critical accounting  estimate and is reflected as transaction costs in our consolidated statement of operations for 2005. The   66




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##### Table of Contents



Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisRevenue
    recognition/Allowance for contractual discounts
    (continued)adjustment is the result of our
    review of Provinces patient accounts receivable and the
    application of the same assumptions and processes we use.Accounting for stock-based compensationWe issue stock options and other stock-based awards to our key employees and directors under various stockholder- approved stock-based compensation plans. We currently have four types of stock- based awards outstanding under these plans: stock options; nonvested stock; restricted stock units; and deferred stock units. Prior to January   1, 2006, we accounted
for our stock-based employee compensation plans under the measurement and recognition provisions of APB No.   25, as permitted by SFAS   No.   123. We did not record any stock-based employee compensation expense for options granted under our stock-based incentive plans prior to January   1, 2006, as all options granted under those plans had exercise prices equal to the fair market
value of our common stock on the date of grant. We also did not record any compensation expense in connection with our Employee Stock Purchase Plan prior to January   1, 2006, as the purchase price of the stock was not less than 85% of the lower of the fair market value of our common stock at the beginning of each offering period or at the end of each purchase period. In accordance with SFAS  
No.   123 and SFAS   No.   148, prior to January   1, 2006, we disclosed our pro forma net income or loss and pro forma net income or loss per


In January 2006, we changed from
    the Black-Scholes-Merton option valuation model
    (BSM) to a lattice-based option valuation
    model, the Hull-White II Valuation Model (HW-
    II). We prefer the HW-II over the BSM because the HW-II
    considers characteristics of fair value option pricing, such as
    an options contractual term and the probability of
    exercise before the end of the contractual term, that are not
    available under the BSM. In addition, the complications
    surrounding the expected term of an option are material, as
    clarified by the SECs focus on the matter in SAB 107.
    Given the reasonably large pool of our unexercised options, we
    believe a lattice model that specifically addresses this fact
    and models a full term of exercises is the most appropriate and
    reliable means of valuing our stock options. We used a third
    party to assist in developing the assumptions used in estimating
    the fair values of stock options granted during 2006.  
      We estimated the fair value of stock options granted during
    2006 using the HW-II lattice option valuation model and a single
    option award approach. We are amortizing the fair value on a
    straight-line basis over the requisite service periods of the
    awards, which are the vesting


The fair value calculations of our stock option grants are affected by assumptions that are believed to be reasonable based upon the facts and circumstances at the time of grant. Changes in our volatility estimates can materially affect the fair values of our stock option grants. If our estimated weighted-average volatility during 2006 were 10% higher, our 2006 after-tax
income from continuing operations would decrease by approximately $0.3   million, or less than $0.01 per diluted share.   67




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Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisAccounting for stock-based
    compensation
    (continued)share as if we had applied the
    fair value-based method in measuring compensation expense for
    our stock-based incentive programs.


periods of three years. The stock
    options that were granted during 2004, 2005 and 2006 vest 33.3%
    on each grant anniversary date over three years of continued
    employment.Effective January 1, 2006,
    we adopted the fair value recognition provisions of
    SFAS No. 123(R), using the modified prospective
    transition method. Under that transition method, compensation
    expense that we recognize beginning on that date includes:
    (i) compensation expense for all stock-based payments
    granted prior to, but not yet vested as of, January 1,
    2006, based on the grant date fair value estimated in accordance
    with the original provisions of SFAS No. 123; and
    (ii) compensation expense for all stock-based payments
    granted on or after January 1, 2006, based on the grant
    date fair value estimated in accordance with the provisions of
    SFAS No. 123(R). Because we elected to use the
    modified prospective transition method, results for prior
    periods have not been restated. In March 2005, the SEC issued
    Staff Accounting Bulletin No. 107 (SAB 107),
    which provides supplemental implementation guidance for
    SFAS No. 123(R). We have applied the provisions of
    SAB 107 in our adoption of SFAS No. 123(R).  
      We determine the fair value of nonvested stock grants based on
    the closing price of our common stock on the grant date. The
    nonvested stock requires no payment from employees and
    directors, and stock-based compensation expense is recorded
    equally over the vesting periods (three to five years).


The weighted-average fair value per share of stock options
    granted by us during 2006 was $11.15. The following table shows
    the weighted average assumptions we used to develop the fair
    value estimates under our stock option valuation model for 2006
    and the paragraphs below this table summarizes each assumption:
    Expected

    volatility          32.8%
    Risk free interest
     rate (range) 4.38% - 5.21% Expected

    dividends               
    Average expected
     term
    (years)          5.4  
    Population Stratification  
      Under SFAS No. 123(R), a company should aggregate
    individual awards into relatively homogeneous groups with
    respect to exercise and post-vesting employment behaviors for
    the purpose of refining the expected term assumption, regardless
    of the valuation technique used to estimate the fair value. In
    addition, SAB 107 clarifies that a company may generally
    make a reasonable fair value estimate with as few as one or two
    groupings. We have stratified our employee population into two
    groups: (i) Insiders, who are the
    Section 16 filers under SEC rules; and (ii) Non-
    insiders, who are the rest of the employee   68




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Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisAccounting for stock-based
    compensation
    (continued)Our stock-based compensation, included in our results of
    operations, was as follows (in millions):  
         2006  $13.2;  
       2005  $6.5; and  
       2004  $1.8


population. We derived this
    stratification based on the analysis of our historical exercise
    patterns, excluding certain extraordinary events.  Expected Volatility  
      Volatility is a measure of the tendency of investment returns
    to vary around a long-term average rate. Historical volatility
    is still an appropriate starting point for setting this
    assumption under SFAS No. 123(R). According to
    SFAS No. 123(R), companies should also consider how
    future experience may differ from the past. This may require
    using other factors to adjust historical volatility, such as
    implied volatility, peer-group volatility and the range and
    mean- reversion of volatility estimates over various historical
    periods. SFAS No. 123(R) and SAB 107 acknowledge
    that there is likely to be a range of reasonable estimates for
    volatility. In addition, SFAS No. 123(R) requires that
    if a best estimate cannot be made, management should use the
    mid-point in the range of reasonable estimates for volatility.
    Effective January 1, 2006 we estimate the volatility of our
    common stock at the date of grant based on both historical
    volatility and implied volatility from traded options on our
    common stock, consistent with SFAS No. 123(R) and
    SAB 107.Risk-Free Interest RateLattice models require risk-free interest rates for all
    potential times of exercise obtained by using a grant-date yield
    curve. A lattice   69




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Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisAccounting for stock-based
    compensation
    (continued)model would therefore require the
    yield curve for the entire time period during which employees
    might exercise their options. We base the risk-free rate on the
    implied yield in effect at the time of option grant on
    U.S. Treasury zero-coupon issues with equivalent remaining
    terms.Expected DividendsWe have never paid any cash dividends on our common stock and
    do not anticipate paying any cash dividends in the foreseeable
    future. Consequently, we use an expected dividend yield of
    zero.Pre-Vesting ForfeituresPre-vesting forfeitures do not affect the fair value
    calculation, but they affect the expense calculation.
    SFAS No. 123(R) requires us to estimate pre- vesting
    forfeitures at the time of grant and revise those estimates in
    subsequent periods if actual forfeitures differ from those
    estimates. We have used historical data to estimate pre-vesting
    option forfeitures and record share-based compensation expense
    only for those awards that are expected to vest. For purposes of
    calculating pro forma information under SFAS No. 123
    for periods prior to January 1, 2006, we also used an
    estimated forfeiture rate.Post-Vesting CancellationsPost-vesting cancellations include vested options that are
    cancelled, exercised or expire unexercised.   70




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Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisAccounting for stock-based
    compensation
    (continued)Lattice models treat post-vesting
    cancellations and voluntary early exercise behavior as two
    separate assumptions. We used historical data to estimate
    post-vesting cancellations.Expected TermSFAS No. 123(R) calls for an
    extinguishment calculation, dependent upon how
    long a granted option remains outstanding before it is fully
    extinguished. While extinguishment may result from exercise, it
    can also result from cancellation (post-vesting) or expiration
    at the contractual term. Expected term is an output in lattice
    models so we do not have to determine this amount.Goodwill and accounting for business combinationsGoodwill represents the excess of the purchase price over the fair value of the net assets of acquired companies.


We follow the guidance in
    Statement of Financial Accounting Standard No. 142,
    Goodwill and Other Intangible Assets, and test
    goodwill for impairment using a fair value approach. We are
    required to test for impairment at least annually, absent some
    triggering event that would accelerate an impairment assessment.
    On an ongoing basis, absent any impairment indicators, we
    perform our goodwill impairment testing as of October 1 of
    each year. We determine fair value using widely accepted
    valuation techniques, including discounted cash flow and market
    multiple analyses. These types of analyses require us to make
    assumptions and estimates regarding future cash flows, industry
    economic factors and the


We performed our annual testing
    for goodwill impairment as of October 1, 2004, 2005 and
    2006 using the methodology described here, and determined that
    no goodwill impairment existed. If actual future results are not
    consistent with our assumptions and estimates, we may be
    required to record goodwill impairment charges in the future.
    
      Our estimate of fair value of acquired assets and assumed
    liabilities are based upon assumptions believed to be reasonable
    based upon current facts and circumstances. If 10% of the non-
    depreciable assets acquired during 2006 were allocated to a
    depreciable asset with an average life of 20 years,
    depreciation expense would have   71




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Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisGoodwill and accounting for
    business combinations
    (continued)Our goodwill included in our consolidated balance sheets as of December   31 for the following years was as follows (in millions):


profitability of future business
    strategies.


increased by approximately
    $0.4 million in 2006.   2006    $1,581.3; and   2005    $1,449.9The increase in our goodwill during 2006 was primarily the result of the acquisition of the two hospitals from HCA and the final purchase price allocations for the Province business combination and the acquisition of DRMC. Please refer to Note   4 to our consolidated financial statements included elsewhere in this report for a detailed rollforward of our goodwill.The purchase price of acquisitions are allocated to the assets acquired and liabilities assumed based upon their respective fair values and subject to change during the twelve month period subsequent to the acquisition date. We engage independent third-party valuation firms to assist us in determining the fair values of assets acquired and liabilities assumed. Such
valuations require us to make significant estimates and assumptions, including projections of future events and operating performance.Fair value estimates are derived from independent appraisals,
    established market values of comparable assets, or internal
    calculations of estimated future net cash flows. Our estimate of
    future cash flows is based on   72




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Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisGoodwill and accounting for
    business combinations
    (continued)assumptions and projections we
    believe to be currently reasonable and supportable. Our
    assumptions take into account revenue and expense growth rates,
    patient volumes, changes in payor mix, and changes in
    legislation and other payor payment patterns.Professional and general liability claimsWe are subject to potential
    medical malpractice lawsuits and other claims. To mitigate a
    portion of this risk, we maintained insurance for individual
    malpractice claims exceeding a self-insured retention amount.
    For 2004, our self-insured retention level was
    $10.0 million. For 2005 and 2006, we increased our
    self-insured retention levels to $15.0 million and
    $20.0 million, respectively. We maintained self-insured
    retention at $10.0 million for our sole facility located in
    Florida. Additionally, certain of our facilities operate in
    states having state specific medical malpractice programs. We
    have commercial insurance policies for claims in excess of
    $50,000 in the following states: Colorado; Indiana;  and Kansas.
    The state program in Louisiana limits our medical malpractice
    retention to $100,000.  
      Each year, we obtain quotes from various malpractice insurers
    with respect to the cost of obtaining medical malpractice
    insurance coverage. We compare these quotes to our most recent
    actuarially determined estimates of losses at various
    self-insured retention levels. Accordingly,


Our reserves for professional
    and general liability claims are based upon independent
    actuarial calculations, which consider historical claims data,
    demographic considerations, severity factors and other actuarial
    assumptions in the determination of reserve estimates. Reserve
    estimates are discounted to present value using a 5.0% discount
    rate.  
      During the first quarter of 2005, we revised our reserve
    estimation process by obtaining independent actuarial
    calculations every quarter, rather than twice each year, from
    two actuarial firms. Our estimated reserve for professional and
    general liability claims will be significantly affected if
    current and future claims differ from historical trends. While
    we monitor reported claims closely and consider potential
    outcomes as estimated by our independent actuaries when
    determining our professional and general liability reserves, the
    complexity of the claims, the extended period of time to settle
    the claims and the wide range of potential outcomes complicates
    the estimation process. In addition, certain states have passed
    varying forms of tort reform which attempt to limit the amount
    of


Actuarial calculations include a
    large number of variables that may significantly impact the
    estimate of ultimate losses that are recorded during a reporting
    period. Professional judgment is used by each actuary in
    determining their loss estimates by selecting factors that are
    considered appropriate by the actuary for our specific
    circumstances. Changes in assumptions used by our independent
    actuaries with respect to demographics and geography, industry
    trends, development patterns and judgmental selection of other
    factors may impact our recorded reserve levels and our results
    of operations.  
      We derive our estimates for financial reporting purposes by
    using a mathematical average of our actuarial results. Changes
    in our initial estimates of professional and general liability
    claims are non-cash charges and accordingly, there would be no
    material impact on our liquidity or capital resources.   73




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Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisProfessional and general
    liability claims
    (continued)changes in insurance costs affect
    the self-insurance retention level we choose each year. As
    insurance costs have increased in recent years, we have accepted
    a higher level of risk in self- insured retention levels.  
      The reserve for professional and general liability claims
    included in our consolidated balance sheets as of December
      31 was as follows (in millions):  
         2006  $61.8; and  
       2005  $55.3  
      The reserve for professional and general liability claims
    reflects the current estimate of all outstanding losses,
    including incurred but not reported losses, based upon actuarial
    calculations as of the balance sheet date. The loss estimates
    included in the actuarial calculations may change in the future
    based upon updated facts and circumstances.


medical malpractice awards. If
    such laws are passed in the states where our hospitals are
    located, our loss estimates could decrease.  
      We use the valuations of two actuaries and average their
    results in determining our recorded reserve levels on a
    quarterly basis. This averaging process results in a refined
    estimation approach that we believe produces a more reliable
    estimate of ultimate losses.  
      We currently receive actuarial calculations each quarter from
    two separate actuarial firms. Province did not use the services
    of either of these actuarial firms. Upon conforming the
    hospitals that we acquired from Province to our methodology by
    obtaining valuations from each of our actuarial firms and
    averaging the results, the reserves for professional and general
    liability claims were increased by $6.8 million. The impact
    of this change decreased our diluted earnings per share by $0.09
    for the second quarter of 2005 and is included in transaction
    costs in our consolidated statement of operations.The total expense for professional and general liability coverage, included in our consolidated results of operations, was as follows (in millions):2006    $19.7;2005    $19.3; and2004    $5.4Our expense for professional and general liability coverage each year includes the actuarially   74




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##### Table of Contents



Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisProfessional and general
    liability claims
    (continued)determined estimate of losses for
    the current year, including claims incurred but not reported;
    the change in the estimate of losses for prior years based upon
    actual claims development experience as compared to prior
    actuarial projections; the insurance premiums for losses in
    excess of our self-insured retention levels; the administrative
    costs of the insurance program and interest expense related to
    the discounted portion of the liability. The 2005 expense also
    includes $6.8 million of transaction costs recorded to
    conform the hospitals that we acquired from Province to our
    methodology for determining medical malpractice reserves.Accounting for income taxesDeferred tax assets generally
    represent items that will result in a tax deduction in future
    years for which we have already recorded the tax benefit in our
    income statement. We assess the likelihood that deferred tax
    assets will be recovered from future taxable income. To the
    extent we believe that recovery is not probable, a valuation
    allowance is established. To the extent we establish a valuation
    allowance or increase this allowance, we must include an expense
    as part of the income tax provision in our results of
    operations. Our deferred tax asset balances in our consolidated
    balance sheets as of December   31 for the following years
    were as follows (in millions):  2006    $133.5; and  2005  $97.0


The first step in determining
    the deferred tax asset valuation allowance is identifying
    reporting jurisdictions where we have a history of tax and
    operating losses or are projected to have losses in future
    periods as a result of changes in operational performance. We
    then determine if a valuation allowance should be established
    against the deferred tax assets for that reporting
    jurisdiction.  
      The second step is to determine the amount of the valuation
    allowance. We will generally establish a valuation allowance
    equal to the net deferred tax asset (deferred tax assets less
    deferred tax liabilities) related to the jurisdiction identified
    in step one of the analysis. In certain cases, we may not reduce
    the valuation allowance by the amount of the deferred tax
    liabilities depending on the nature and timing of future


Our deferred tax liabilities
    exceeded our deferred tax assets by $39.3 million as of
    December 31, 2006, excluding the impact of valuation
    allowances. Historically, we have produced federal taxable
    income. Therefore, we believe that the likelihood of our not
    realizing the federal tax benefit of our deferred tax assets is
    remote.  
      However, we do have subsidiaries with a history of tax losses
    in certain state jurisdictions and, based upon those historical
    tax losses, we assumed that the subsidiaries would not be
    profitable in the future for those states tax purposes. If
    our assertion regarding the future profitability of those
    subsidiaries were incorrect, then our deferred tax assets would
    be understated by the amount of the valuation allowance of
    $32.0 million at December 31, 2006.   75




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Balance Sheet orIncome Statement Caption/Nature of Critical Estimate Item


Assumptions/Approach Used


Sensitivity AnalysisAccounting for income taxes
    (continued)Our valuation allowances for
    deferred tax assets in our consolidated balance sheets as of
    December   31 for the following years were as follows (in
    millions):  2006  $32.0; and  2005  $5.7   
      In addition, significant judgment is required in determining
    and assessing the impact of certain tax-related contingencies.
    We establish accruals when, despite our belief that our tax
    return positions are fully supportable, it is probable that we
    have incurred a loss related to tax contingencies and the loss
    or range of loss can be reasonably estimated. We adjust the
    accruals related to tax contingencies as part of our provision
    for income taxes in our results of operations based upon
    changing facts and circumstances, such as progress of a tax
    audit, development of industry related examination issues, as
    well as legislative, regulatory or judicial developments. A
    number of years may elapse before a particular matter, for which
    we have established an accrual, is audited and resolved.


taxable income attributable to
    deferred tax liabilities.  
      In assessing tax contingencies, we identify tax issues that we
    believe may be challenged upon examination by the taxing
    authorities. We also assess the likelihood of sustaining tax
    benefits associated with tax planning strategies and reduce tax
    benefits based on managements judgment regarding such
    likelihood. We compute the tax and related interest on each
    contingency. We then determine the amount of loss, or reduction
    in tax benefits based upon the foregoing and reflect such amount
    as a component of the provision for income taxes in the
    reporting period.  
      During each reporting period, we assess the facts and
    circumstances related to recorded tax contingencies. If tax
    contingencies are no longer deemed probable based upon new facts
    and circumstances, the contingency is reflected as a reduction
    of the provision for income taxes in the current period.


The IRS may propose adjustments for items we have failed to
    identify as tax contingencies. If the IRS were to propose and
    sustain assessments equal to 10% of our taxable income for 2006,
    we would incur $9.1 million of additional tax payments for
    2006 plus applicable penalties and interest.    76




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##### Table of Contents



Results
    of Operations
  Managements Discussion and Analysis of Financial
    Condition and Results of Operations:
  Admissions.
  bps.
  Continuing operations.
  Emergency room visits.
  Equivalent admissions.
  ESOP.
  Medicare case mix index.
  N/A. .
  N/M.
  Outpatient surgeries.
  Same-hospital.
 77




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##### Table of Contents



Operating
    Results Summary
    Three Months Ended December 31,2005


2006% of





% ofAmount


Revenues


Amount


RevenuesRevenues

$
556.2



100.0
%

$
640.6



100.0
%Salaries and benefits


224.6



40.4



248.4



38.8Supplies


78.0



14.0



90.6



14.1Other operating expenses


94.2



17.0



112.6



17.6Provision for doubtful accounts


61.9



11.1



69.2



10.8Depreciation and amortization


32.6



5.9



32.8



5.1Interest expense, net


21.9



3.9



27.3



4.3Debt retirement costs


0.1











513.3



92.3



580.9



90.7Income from continuing operations
    before minority interests and income taxes


42.9



7.7



59.7



9.3Minority interests in earnings of
    consolidated entities


0.3



0.1



0.2



Income from continuing operations
    before income taxes


42.6



7.6



59.5



9.3Provision for income taxes


16.6



2.9



22.0



3.4Income from continuing operations

$
26.0



4.7
%

$
37.5



5.9
%   Years Ended December 31,2004


2005


2006% of





% of





% ofAmount


Revenues


Amount


Revenues


Amount


RevenuesRevenues

$
982.8



100.0
%

$
1,841.5



100.0
%

$
2,439.7



100.0
%Salaries and benefits


402.3



40.9



739.6



40.2



960.6



39.4Supplies


127.8



13.0



250.4



13.6



340.1



13.9Other operating expenses


163.7



16.7



308.3



16.7



421.6



17.3Provision for doubtful accounts


85.4



8.7



189.4



10.3



266.7



10.9Depreciation and amortization


47.4



4.7



100.4



5.4



111.1



4.6Interest expense, net


12.5



1.3



60.1



3.3



103.5



4.2Debt retirement costs


1.5



0.2



12.2



0.7







Transaction costs










43.2



2.3







840.6



85.5



1,703.6



92.5



2,203.6



90.3Income from continuing operations
    before minority interests and income taxes


142.2



14.5



137.9



7.5



236.1



9.7Minority interests in earnings of
    consolidated entities


1.0



0.1



1.1



0.1



1.3



0.1Income from continuing operations
    before income taxes


141.2



14.4



136.8



7.4



234.8



9.6Provision for income taxes


55.3



5.7



57.8



3.1



92.6



3.8Income from continuing operations

$
85.9



8.7
%

$
79.0



4.3
%

$
142.2



5.8
%  78




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##### Table of Contents



For
    the Three Months Ended December 31, 2005 and
    2006
  Revenues
        Three Months EndedDecember 31,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Revenues:Same-hospital

$
556.2


$
592.9


$
36.7



6.6
%Two former HCA facilities






47.0



47.0



N/AOther






0.7



0.7



N/A$
556.2


$
640.6


$
84.4



15.2     Continuing Operations


Same-Hospital2005


2006


2005


2006Medicare


35.9
%


34.8
%


35.9
%


34.6
%Medicaid


8.9



10.5



8.9



10.5HMOs, PPOs and other private
    insurers


41.4



39.3



41.4



38.9Self-Pay


12.8



11.7



12.8



12.2Other


1.0



3.7



1.0



3.8100.0
%


100.0
%


100.0
%


100.0
%  79




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##### Table of Contents



Three Months EndedDecember 31,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Admissions:Same-hospital


45,233



46,021



788



1.7
%Continuing operations


45,233



50,666



5,433



12.0Equivalent admissions:Same-hospital


86,717



90,441



3,724



4.3Continuing operations


86,717



98,426



11,709



13.5Revenues per equivalent admission:Same-hospital

$
6,414


$
6,555


$
141



2.2Continuing operations

$
6,414


$
6,508


$
94



1.5Medicare case mix index:Same-hospital


1.24



1.22



(0.02
)


(1.6
)Continuing operations


1.24



1.21



(0.03
)


(2.4
)Average length of stay (days):Same-hospital


4.2



4.2







Continuing operations


4.2



4.2







Inpatient surgeries:Same-hospital


13,409



13,368



(41
)


(0.3
)Continuing operations


13,409



14,721



1,312



9.8Outpatient surgeries:Same-hospital


32,796



33,935



1,139



3.5Continuing operations


32,796



36,623



3,827



11.7Emergency room visits:Same-hospital


202,000



207,276



5,276



2.6Continuing operations


202,000



223,121



21,121



10.5Outpatient factor:Same-hospital


1.92



1.97



0.05



2.6Continuing operations


1.92



1.94



0.02



1.0Number of hospitals at end of
    period:Same-hospital


49



49







Continuing operations


49



50



1



2.0Licensed beds at end of period:Same-hospital


5,333



5,197



(136
)


(2.6
)Continuing operations


5,333



5,697



364



6.8Weighted-average licensed beds:Same-hospital


5,364



5,205



(159
)


(3.0
)Continuing operations


5,364



5,705



341



6.4  80




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##### Table of Contents



Expenses
  Salaries
    and Benefits
    Three Months Ended December 31,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Salaries and benefitsSalaries and wages

$
171.7



30.9
%

$
193.2



30.2
%

$
21.5



12.6
%Stock-based compensation


2.3



0.4



3.7



0.6



1.4



68.9Employee benefits


36.7



6.6



36.3



5.7



(0.4
)


(1.4
)Contract labor


10.2



1.8



13.0



2.0



2.8



26.4ESOP expense


3.7



0.7



2.2



0.3



(1.5
)


(41.7
)$
224.6



40.4
%

$
248.4



38.8
%

$
23.8



10.6Continuing operations:Man-hours
    per equivalent admission


93.6



N/A



89.1



N/A



(4.5
)


(4.8
)Salaries and benefits per
    equivalent admission


2,465



N/A



2,431



N/A


$
34



1.4Corporate office salaries and
    benefits

$
7.2



1.3
%

$
10.0



1.6
%

$
2.8



38.9Same-hospital:Salaries and wages

$
166.3



29.9
%

$
171.5



28.9
%

$
5.2



3.1Stock-based compensation


0.6



0.1



0.9



0.2



0.3



54.0Employee benefits


36.6



6.6



32.9



5.6



(3.7
)


(10.1
)Contract labor


10.2



1.8



12.7



2.1



2.5



24.3ESOP expense


3.7



0.7



1.9



0.3



(1.8
)


(46.6
)$
217.4



39.1
%

$
219.9



37.1
%

$
2.5



1.2Same-hospital:Man-hours
    per equivalent admission


93.6



N/A


$
88.7



N/A



(4.9
)


(5.2
)Salaries and benefits per
    equivalent admission

$
2,455



N/A


$
2,422



N/A


$
(33
)


(1.3
)      81




---



##### Table of Contents



Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations
      Supplies
    Three Months Ended





%December 31,


Increase


Increase2005


2006


(Decrease)


(Decrease)Continuing operations:Supplies

$
78.0


$
90.6


$
12.6



16.4
%Supplies as a percentage of
    revenues


14.0
%


14.1
%


10
bps


N/MSupplies per equivalent admission

$
895


$
916


$
21



2.4
%Same-hospital:Supplies

$
77.6


$
82.1


$
4.5



5.8
%Supplies as a percentage of
    revenues


14.0
%


13.8
%


(20
)bps


N/MSupplies per equivalent admission

$
892


$
904


$
12



1.3
%    82




---



##### Table of Contents



Other
    Operating Expenses
    Three Months EndedDecember 31,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Other operating expenses:Professional fees

$
9.0



1.6
%

$
14.9



2.3
%

$
5.9



64.6
%Utilities


11.5



2.1



12.0



1.9



0.5



4.4Repairs and maintenance


10.6



1.9



13.9



2.2



3.3



31.6Rents and leases


5.2



0.9



7.0



1.1



1.8



31.9Insurance


5.1



0.9



3.8



0.6



(1.3
)


(23.0
)Physician recruiting


6.7



1.2



4.4



0.7



(2.3
)


(35.7
)Contract services


20.2



3.6



27.7



4.3



7.5



36.7Non-income taxes


7.2



1.3



8.6



1.4



1.4



20.4Other


18.7



3.5



20.3



3.1



1.6



8.6$
94.2



17.0
%

$
112.6



17.6
%

$
18.4



19.5Corporate office other operating
    expenses

$
6.1



1.2
%

$
7.1



1.1
%

$
1.0



14.3Same-hospital other operating
    expenses:Professional fees

$
9.0



1.6
%

$
13.3



2.2
%

$
4.3



48.7Utilities


11.3



2.0



11.0



1.9



(0.3
)


(2.4
)Repairs and maintenance


10.5



1.9



12.8



2.2



2.3



21.8Rents and leases


5.0



0.9



5.7



1.0



0.7



12.9Insurance


4.4



0.8



1.7



0.3



(2.7
)


(61.5
)Physician recruiting


6.7



1.2



4.1



0.7



(2.6
)


(38.5
)Contract services


18.2



3.3



22.1



3.7



3.9



21.5Non-income taxes


7.1



1.3



7.3



1.2



0.2



3.1Other


15.9



2.8



16.7



2.8



0.8



5.0$
88.1



15.8
%

$
94.7



16.0
%

$
6.6



7.5    83




---



##### Table of Contents



FIN 45-3
    Provision
    for Doubtful Accounts
    Three Months EndedDecember 31,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Continuing operations:Provision for doubtful accounts

$
61.9


$
69.2


$
7.3



11.8
%Percentage of revenues


11.1
%


10.8
%


(30
)bps


N/MCharity care write-offs

$
8.9


$
14.4


$
5.5



61.0
%Percentage of revenues


0.7
%


1.0
%


30
bps


N/MSame-hospital:Provision for doubtful accounts

$
61.9


$
64.9


$
3.0



4.7
%Percentage of revenues


11.1
%


10.9
%


(20
)bps


N/MCharity care write-offs

$
8.9


$
12.2


$
3.3



37.1
%Percentage of revenues


0.7
%


0.9
%


20
bps


N/M   Managements Discussion and Analysis of
    Financial Condition and Results of Operations
    Depreciation
    and Amortization
   84




---



##### Table of Contents



Three Months EndedDecember 31,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Same-hospital

$
32.1



29.5


$
(2.6
)


(8.9
)%Two former HCA facilities






1.6



1.6



N/MCorporate office


0.5



1.7



1.2



252.2$
32.6



32.8


$
0.2



0.3   Interest
    Expense
    Three Months EndedDecember 31,


Increase2005


2006


(Decrease)Interest expense:Senior credit facility, including
    commitment fees

$
19.9


$
26.9


$
7.0Province
    71/2% senior
    subordinated notes


0.1



0.1



31/4% convertible
    notes


1.8



1.8



Other


0.2



0.4



0.222.0



29.2



7.2Amortization of deferred loan costs


1.3



1.3



Less:Discontinued operations interest
    expense allocation


(0.2
)


(2.3
)


(2.1
)Interest income


(0.5
)


(0.4
)


0.1Capitalized interest


(0.7
)


(0.5
)


0.2$
21.9


$
27.3


$
5.4   Managements Discussion and Analysis of
    Financial Condition and Results of Operations.
 85




---



##### Table of Contents



Provision
    for Income Taxes
    Three Months EndedDecember 31,


Increase2005


2006


(Decrease)Provision for income taxes

$
16.6


$
22.0


$
5.4Effective income tax rate


38.9
%


37.0
%


(190
)bps     For
    the Years Ended December 31, 2005 and 2006
  Revenues
        Years EndedDecember 31,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Admissions


154,029



191,644



37,615



24.4
%Equivalent admissions


299,740



373,897



74,157



24.7Revenues per equivalent admission

$
6,144


$
6,525


$
381



6.2Medicare case mix index


1.22



1.22







Average length of stay (days)


4.2



4.2







Inpatient surgeries


44,623



56,651



12,028



27.0Outpatient surgeries


116,804



142,113



25,309



21.7Emergency room visits


699,978



860,531



160,553



22.9Outpatient factor


1.95



1.95







Number of hospitals at end of
    period


49



50



1.0



2.0Licensed beds at end of period


5,333



5,697



364



6.8Weighted-average licensed beds


4,478



5,485



1,007



22.5  86




---



##### Table of Contents



2005


2006Medicare


36.5
%


34.8
%Medicaid


9.3



10.0HMOs, PPOs and other private
    insurers


38.8



38.7Self-Pay


12.3



12.7Other


3.1



3.8100.0
%


100.0
%   Expenses
  Salaries
    and Benefits
    Years Ended December 31,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Salaries and benefits:Salaries and wages

$
565.9



30.7
%

$
739.3



30.3
%

$
173.4



30.6
%Stock-based compensation


6.5



0.4



13.2



0.5



6.7



103.5Employee benefits


126.0



6.9



146.8



6.1



20.8



16.5Contract labor


26.5



1.4



48.1



2.0



21.6



81.3ESOP expense


14.7



0.8



13.2



0.5



(1.5
)


(10.6
)$
739.6



40.2
%

$
960.6



39.4
%

$
221.0



29.9Man-hours
    per equivalent admission


89.3



N/A



89.9



N/A



0.6



0.6Salaries and benefits per
    equivalent admission

$
2,312



N/A


$
2,446



N/A


$
134



5.8Corporate office salaries and
    benefits

$
29.1



1.6
%

$
43.8



1.8
%

$
14.7



50.5     Managements Discussion and Analysis of Financial
    Condition and Results of Operations
 87




---



##### Table of Contents



Supplies
    Years EndedDecember 31,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Supplies

$
250.4


$
340.1


$
89.7



35.8
%Supplies as a percentage of
    revenues


13.6
%


13.9
%


30
bps


N/MSupplies per equivalent admission

$
834


$
906


$
72



8.6
%    88




---



##### Table of Contents



Other
    Operating Expenses
    Years Ended December 31,% of





% of


Increase


% Increase2005


Revenues


2006


Revenues


(Decrease)


(Decrease)Other operating expenses:Professional fees

$
28.3



1.5
%

$
46.6



1.9
%

$
18.3



64.7
%Utilities


34.7



1.9



47.4



1.9



12.7



36.4Repairs and maintenance


35.1



1.9



50.6



2.1



15.5



44.2Rents and leases


17.9



1.0



24.7



1.0



6.8



36.6Insurance


18.3



1.0



25.9



1.1



7.6



41.9Physician recruiting


21.9



1.2



17.6



0.7



(4.3
)


(19.6
)Contract services


64.0



3.5



94.8



3.9



30.8



48.1Non-income taxes


26.7



1.4



34.8



1.5



8.1



30.2Other


61.4



3.3



79.2



3.2



17.8



29.0$
308.3



16.7
%

$
421.6



17.3
%

$
113.3



36.8Corporate office other operating
    expenses

$
21.3



1.2
%

$
27.8



1.1
%

$
6.5



30.4     FIN 45-3
  Provision
    for Doubtful Accounts
    Years EndedDecember 31,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Provision for doubtful accounts

$
189.4


$
266.7


$
77.3



40.8
%Percentage of revenues


10.3
%


10.9
%


60
bps


N/MCharity care write-offs

$
24.0


$
42.4


$
18.4



76.9
%Percentage of revenues


0.6
%


0.8
%


20
bps


N/M    89




---



##### Table of Contents



. Managements Discussion and
    Analysis of Financial Condition and Results of Operations,
    Depreciation
    and Amortization
      Years EndedDecember 31,


Increase


% Increase2005


2006


(Decrease)


(Decrease)Hospital operations

$
99.4


$
119.4


$
20.0



20.1
%Purchase price allocation
    adjustment






(13.5
)


(13.5
)


N/MCorporate office


1.0



5.2



4.2



400.6$
100.4


$
111.1


$
10.7



10.6  90




---



##### Table of Contents



Interest
    Expense
    Years Ended December 31,


Increase2005


2006


(Decrease)Interest expense:Senior credit facility, including
    commitment fees

$
51.1


$
96.8


$
45.7Senior subordinated credit
    agreement


2.1







(2.1
)41/2% convertible
    notes


4.5







(4.5
)Province
    41/4% convertible
    notes


0.3







(0.3
)Province
    71/2% senior
    subordinated notes


0.3



0.5



0.231/4% convertible
    notes


2.8



7.3



4.5Other


0.4



1.1



0.761.5



105.7



44.2Amortization of deferred loan costs


4.1



5.3



1.2Less:Discontinued operations interest
    expense allocation


(0.6
)


(4.4
)


(3.8
)Interest income


(1.9
)


(1.9
)


Capitalized interest


(3.0
)


(1.2
)


1.8$
60.1


$
103.5


$
43.4   Managements Discussion and Analysis of Financial
    Condition and Results of Operations
  Debt
    Retirement Costs
    Legal fees paid for retirement of
    assumed Province debt, our convertible notes and previous credit
    facility

$
1.2Tender premiums paid on
    convertible notes


4.8Deferred loan costs expensed on
    tender of our convertible notes and previous credit facility


5.7Creditor fees and other expenses


0.5$
12.2  91




---



##### Table of Contents



Transaction
    Costs
    Adjustment to Province acquired
    accounts receivable

$
26.4Adjustment to Province assumed
    liabilities, primarily related to professional and general
    liability claims


7.3Retention bonuses paid to former
    Province employees


4.2Compensation expense (primarily
    restricted stock vesting from change in control)


5.3$
43.2   Provision
    for Income Taxes
    Years EndedDecember 31,


Increase2005


2006


(Decrease)Provision for income taxes

$
57.8


$
92.6


$
34.8Effective income tax rate


42.3
%


39.4
%


(290
)bps    92




---



##### Table of Contents



For
    the Years Ended December 31, 2004 and 2005
  Revenues
        Years EndedDecember 31,


Increase


% Increase2004


2005


(Decrease)


(Decrease)Admissions


90,331



154,029



63,698



70.5
%Equivalent admissions


180,752



299,740



118,988



65.8Revenues per equivalent admission

$
5,438


$
6,144


$
706



13.0Medicare case mix index


1.18



1.22



0.04



3.4Average length of stay (days)


4.0



4.2



0.2



5.0Inpatient surgeries


26,120



44,623



18,503



70.8Outpatient surgeries


74,869



116,804



41,935



56.0Emergency room visits


411,050



699,978



288,928



70.3Outpatient factor


2.00



1.95



(0.05
)


(2.5
)Number of hospitals at end of
    period


28



49



21



75.0Licensed beds at end of period


2,625



5,333



2,708



103.2Weighted-average licensed beds


2,629



4,478



1,849



70.3     2004


2005Medicare


36.7
%


36.5
%Medicaid


11.1



9.3HMOs, PPOs and other private
    insurers


38.8



38.8Self-Pay


9.4



12.3Other


4.0



3.1100.0
%


100.0
%  93




---



##### Table of Contents



Expenses
  Salaries
    and Benefits
    Years Ended December 31,% of





% of


Increase


% Increase2004


Revenues


2005


Revenues


(Decrease)


(Decrease)Salaries and benefits:Salaries and wages

$
309.0



31.4
%

$
565.9



30.7
%

$
256.9



83.1
%Stock-based compensation


1.8



0.2



6.5



0.4



4.7



272.0Employee benefits


70.3



7.2



126.0



6.9



55.7



79.2Contract labor


12.1



1.2



26.5



1.4



14.4



119.6ESOP expense


9.1



0.9



14.7



0.8



5.6



61.9$
402.3



40.9
%

$
739.6



40.2
%

$
337.3



83.8Continuing operations:Man-hours
    per equivalent admission


83.9



N/A



89.3



N/A



5.4



6.4Salaries and benefits per
    equivalent admission

$
2,060



N/A



2,312



N/A


$
252



12.2Corporate office salaries and
    benefits

$
18.2



1.8
%

$
29.1



1.6
%

$
10.9



60.3     Supplies
    Years EndedDecember 31,


Increase


% Increase2004


2005


(Decrease)


(Decrease)Supplies

$
127.8


$
250.4


$
122.6



96.0
%Supplies as a percentage of
    revenues


13.0
%


13.6
%


60bps



N/MSupplies per equivalent admission

$
702


$
834


$
132.0



18.8
%    94




---



##### Table of Contents



Other
    Operating Expenses
    Years Ended December 31,% of





% of


Increase


% Increase2004


Revenues


2005


Revenues


(Decrease)


(Decrease)Other operating expenses:Professional fees

$
12.4



1.3
%

$
28.3



1.5
%

$
15.9



128.9
%Utilities


16.4



1.7



34.7



1.9



18.3



112.1Repairs and maintenance


20.0



2.0



35.1



1.9



15.1



75.3Rents and leases


9.4



1.0



17.9



1.0



8.5



91.1Insurance


8.4



0.8



18.3



1.0



9.9



120.6Physician recruiting


14.7



1.5



21.9



1.2



7.2



49.2Contract services


31.6



3.2



64.0



3.5



32.4



101.9Non-income taxes


15.6



1.6



26.7



1.4



11.1



71.6Other


35.2



3.6



61.4



3.3



26.2



74.4$
163.7



16.7
%

$
308.3



16.7
%

$
144.6



88.3Corporate office other operating
    expenses

$
11.4



1.2
%

$
21.3



1.2
%

$
9.9



86.5     Provision
    for Doubtful Accounts
    Years EndedDecember 31,


Increase


% Increase2004


2005


(Decrease)


(Decrease)Provision for doubtful accounts

$
85.4


$
189.4


$
104.0



121.8
%Percentage of revenues


8.7
%


10.3
%


160bps



N/MCharity care write-offs

$
7.7


$
24.0


$
16.3



209.0
%Percentage of revenues


0.4
%


0.6
%


20bps



N/M   Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations
 95




---



##### Table of Contents



Depreciation
    and Amortization
    Years Ended December 31,


Increase


% Increase2004


2005


(Decrease)


(Decrease)Hospital operations

$
47.0


$
99.4


$
52.4



111.1
%Corporate office


0.4



1.0



0.6



165.3$
47.4


$
100.4


$
53.0



171.3   Interest
    Expense
    Years EndedDecember 31,


Increase2004


2005


(Decrease)Interest expense:Prior bank credit facility,
    including commitment fees

$
1.2


$



$
(1.2
)Senior credit facility, including
    commitment fees






51.1



51.1Senior subordinated credit
    agreement






2.1



2.141/2% convertible
    notes


10.6



4.5



(6.1
)Province
    41/4% convertible
    notes






0.3



0.3Province
    71/2% senior
    subordinated notes






0.3



0.331/4% convertible
    notes






2.8



2.8Other


0.7



0.4



(0.3
)12.5



61.5



49.0Amortization of deferred loan costs


1.5



4.1



2.6Less:Discontinued operations interest
    expense allocation


(0.1
)


(0.6
)


(0.5
)Interest income


(0.3
)


(1.9
)


(1.6
)Capitalized interest


(1.1
)


(3.0
)


(1.9
)$
12.5


$
60.1


$
47.6   . Managements Discussion and Analysis of
    Financial Condition and Results of Operations,
  Provision
    for Income Taxes
    Years EndedDecember 31,


Increase2004


2005


(Decrease)Provision for income taxes

$
55.3


$
57.8


$
2.5Effective income tax rate


39.1
%


42.3
%


320bps  96




---



##### Table of Contents



Liquidity
    and Capital Resources
  Liquidity
      2004


2005


2006Net cash flows provided by
    continuing operating activities

$
146.9


$
293.8


$
261.3Less: Purchase of property and
    equipment


82.0



169.1



199.5Free operating cash flow


64.9



124.7



61.8Acquisitions


(30.5
)


(963.6
)


(281.3
)Proceeds from sale of hospitals






32.5



69.0Proceeds from borrowings


30.0



1,967.0



260.0Payments on borrowings


(79.9
)


(1,156.9
)


(110.0
)Payment of debt issue costs






(40.7
)


(1.0
)Proceeds from exercise of stock
    options


10.2



43.6



0.5Other


0.8



(1.4
)


(1.8
)Cash flows from operations
    provided by (used in) discontinued operations


2.5



7.6



(15.4
)Cash flows from investing
    activities used in discontinued operations






(1.0
)


Net (decrease) increase in cash
    and cash equivalents

$
(2.0
)

$
11.8


$
(18.2
)     Working
    Capital
    2004


2005


2006Total current assets

$
242.2


$
433.3


$
614.2Total current liabilities


82.3



230.1



303.1Net working capital

$
159.9


$
203.2


$
311.1Current ratio


2.94



1.88



2.03  97




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##### Table of Contents



Capital
    Expenditures
      2004


2005


2006Capital projects, including de
    novo hospitals

$
52.5


$
94.0


$
118.8Routine


21.6



50.7



61.9Purchase of building






3.2



Information systems


7.9



21.2



18.8$
82.0


$
169.1


$
199.5Depreciation expense (excluding
    2006 price purchase allocation adjustments of $13.5 million)

$
46.6


$
99.1


$
95.9Ratio of capital expenditures to
    depreciation expense


176.0
%


170.6
%


208.0
%     Debt
    Proceeds from


Payments ofDecember 31, 2005


Debt Borrowings


Borrowings


Other


December 31, 2006Senior Credit Facility:Term B Loans

$
1,281.9


$
50.0


$
(10.0
)

$



$
1,321.9Revolving Credit Loans






210.0



(100.0
)






110.0Province
    71/2% Senior
    Subordinated Notes


6.1















6.1Province
    41/4% Convertible
    Subordinated Notes


0.1















0.131/4% Convertible
    Senior Subordinated Debentures


225.0















225.0Other, including capital leases


3.2







(0.5
)


4.5



7.2$
1,516.3


$
260.0


$
(110.5
)

$
4.5


$
1,670.3  98




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##### Table of Contents



December 31,


December 31,


Increase2005


2006


(Decrease)Current portion of long-term debt

$
0.5


$
0.7


$
0.2Long-term debt


1,515.8



1,669.6



153.8Total debt


1,516.3



1,670.3



154.0Total stockholders equity


1,287.8



1,450.0



162.2Total capitalization

$
2,804.1


$
3,120.3


$
316.2Total debt to total capitalization


54.1
%


53.5
%


(60
)bpsPercentage of:Fixed rate debt


15.5
%


14.3
%Variable rate debt*


84.5



85.7100.0
%


100.0
%Percentage of:Senior debt


84.8
%


86.2
%Subordinated debt


15.2



13.8100.0
%


100.0
%     *
    
    Effective November 30, 2006, we entered into an interest
    rate swap agreement to mitigate our floating rate risk on our
    outstanding variable rate borrowings which converts
    $900.0 million of our variable rate debt to an annual fixed
    rate of 5.585%. The above calculation does not consider the
    effect of our interest rate swap. Our interest rate swap
    decreases our variable rate debt as a percentage of our
    outstanding debt from 85.7% to 31.8% as of December 31,
    2006. Please refer to the Capital Resources 
    Interest Rate Swap section below for a discussion of our
    interest rate swap agreement.  Capital
    Resources
  Senior
    Secured Credit Facilities
  Terms
   99




---



##### Table of Contents



Borrowings
    and Payments
      Letters
    of Credit and Availability
    Interest
    Rates
  and/or
    Covenants
   100




---



##### Table of Contents



Level atRequirement


December 31, 2006Minimum Interest Coverage Ratio


33.50:1.00



4.55Maximum Total Leverage Coverage
    Ratio


£4.75:1.00



3.52Capital Expenditure Ratio


£12%



7.7
%       Interest
    Rate Swap
    Notional
    Schedule
  Date Range

Notional AmountNovember 30, 2006 to
    November 30, 2007

$
900.0 millionNovember 30, 2007 to
    November 28, 2008

$
750.0 millionNovember 28, 2008 to
    November 30, 2009

$
600.0 millionNovember 30, 2009 to
    November 30, 2010

$
450.0 millionNovember 30, 2010 to
    May 30, 2011

$
300.0 million      101




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##### Table of Contents



31/4% Convertible
    Senior Subordinated Debentures due August 15,
    2025
  1/4 1/4 1/4 1/4
  1/4 1/4 1/4 1/4 1/4 1/4
  1 4 1/4 1/4 1/4
  1/4 1/4 1/4 1/4
  1/4 1/4
  Senior
    Subordinated Credit Agreement
  1 2
  1 4
 102




---



##### Table of Contents



Previous
    Credit Facilities
    Province
    71/2% Senior
    Subordinated Notes
  1/2 1/2 1/2
  1/2 1/2 1/2
  1/2 1/2 1/2 1/2
  Province
    41/4% Convertible
    Subordinated Notes
  1/4 1/4
  Province
    41/2% Convertible
    Subordinated Notes
  1/2
  Historic
    LifePoints
    41/2% Convertible
    Subordinated Notes
  1/2 1 2 1/2
  1/2 1/2
 103




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##### Table of Contents



Debt
    Ratings
    
    Moodys Investors Service, Inc. (Moodys);
    Standard & Poors Rating Services,
    (S&P); and
    Fitch Ratings.      MoodysSenior


Senior Implied





S&P


Fitch RatingsUnsecured


Issuer





Issuer




IssuerDate

Issuer Rating


Rating


Outlook


Rating

Outlook


Rating

OutlookApril 1999













B+


Stable





October 1999






B1



Stable


B+


Stable





February 2001






B1



Positive


B+


Stable





May 2001






Ba3



Stable


B+


Stable





June 2001


B2



Ba3



Stable


BB(  )


Stable





June 2002


B2



Ba3



Stable


BB(  )


Stable





December 2003


B2



Ba3



Stable


BB


Stable





August 2004


B2



Ba3



Negative


BB


Negative





March 2005


B2



Ba3



Stable


BB


Stable





July 2005


B2



Ba3



Stable


BB


Negative





May 2006


B2



Ba3



Stable


BB


Negative


BB(  )


StableJanuary 2007


B2



Ba3



Stable


BB(  )


Stable


BB(  )


Stable   Liquidity
    and Capital Resources Outlook
     104




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##### Table of Contents



Contractual
    Obligations, Commitments and Off-Balance Sheet
    Arrangements
  Contractual
    Obligations
      Payment Due by PeriodContractual Obligations

Total


2007


2008-2009


2010-2011


After 2011Long-term debt obligations(a)

$
2,301.5


$
109.8


$
218.6


$
1,191.5


$
781.6Capital lease obligations


9.4



1.1



2.0



1.9



4.4Operating lease obligations(b)


59.5



14.7



18.9



9.2



16.7Other long-term liabilities(c)


2.6



0.3



0.4



0.4



1.5Purchase obligations(d)


194.2



95.8



90.2



3.2



5.02,567.2



221.7


$
330.1


$
1,206.2


$
809.2     (a)
    
    Included in long-term debt obligations are principal and
    interest owed on our outstanding debt obligations, giving
    consideration to our interest rate swap agreement. These
    obligations are explained further in Note 6 to our
    consolidated financial statements included elsewhere in this
    report. We used the 6.98% and 7.10% effective interest rates at
    December 31, 2006 for our $1,321.9 million outstanding
    Term B Loans and $110.0 million outstanding Revolving
    Credit Loans, respectively, to estimate interest payments on
    these variable rate debt instruments. Our interest rate swap
    agreement requires us to make quarterly interest payments at an
    annual fixed rate of 5.585% while the counterparty is obligated
    to make quarterly floating payments to us based on the
    three-month LIBO rate on a decreasing notional amount. Our
    calculation for long-term debt obligations includes an estimate
    for the net result of these payments between us and the
    counterparty using the difference between our required annual
    fixed rate of 5.585% and the three-month LIBO rate in effect as
    of December 31, 2006 of 5.370% based on the effective
    notional amounts for the indicated period. Holders of our
    $225.0 million outstanding
    31/4% Debentures
    may require us to purchase for cash some or all of the
    31/4% Debentures
    on February 15, 2013, February 15, 2015, and
    February 15, 2020. For purposes of the above table, we
    assumed that our
    31/4% Debentures
    would be outstanding during its entire term, which ends on
    August 15, 2025.(b)
    
    This reflects our future minimum operating lease payments. We
    enter into operating leases in the normal course of business.
    Substantially all of our operating lease agreements have fixed
    payment terms based on 105




---



##### Table of Contents



the passage of time. Some lease agreements provide us with the
    option to renew the lease. Our future operating lease
    obligations would change if we exercised these renewal options
    and if we entered into additional operating lease agreements.
    Please refer to Note 8 to our consolidated financial
    statements included elsewhere in this report for more
    information regarding our operating leases.(c)
    
    We had a $82.3 million other long-term liability balance on
    our consolidated balance sheet as of December 31, 2006.
    This balance reflected a $61.8 million reserve for
    professional and general liability claims, an interest rate swap
    liability balance of $14.7 million and $5.8 related to
    other liabilities. We excluded the $61.8 million reserve
    for professional and general liability claims, the
    $14.7 million interest rate swap liability and
    $2.6 million of other liabilities because of the
    uncertainty of the dollar amounts to be ultimately paid as well
    as the timing of such amounts. Please refer to Part II,
    Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations,
    Critical Accounting Estimates  Professional and
    General Liability Claims in this report for more
    information.(d)
    
    The following table summarizes our significant purchase
    obligations as of December 31, 2006 and the future periods
    in which such obligations are expected to be settled in cash (in
    millions):  Payment Due by PeriodPurchase Obligations

Total


2007


2008-2009


2010-2011


After 2011HCA-IT services(e)

$
88.6


$
27.9


$
60.7


$



$
Capital expenditure obligations(f)


22.2



10.0



8.0







4.2Physician commitments(g)


11.0



11.0











GEMS obligations(h)


19.8



15.8



4.0







Other purchase obligations(i)


52.6



31.1



17.5



3.2



0.8194.2



95.8


$
90.2


$
3.2


$
5.0   (e)
    
    HCA-IT provides various information systems services, including,
    but not limited to, financial, clinical, patient accounting and
    network information services to us under a contract that expires
    on December 31, 2009. The amounts are based on estimated
    fees that will be charged to our hospitals as of
    December 31, 2006 with an annual fee increase that is
    capped by the consumer price index increase. We used a 4.0%
    annual rate increase as the estimated consumer price index
    increase for the contract period. These fees will increase if we
    acquire additional hospitals and use HCA-IT for information
    system conversion services at the acquired hospitals.(f)
    
    We had projects under construction with an estimated additional
    cost to complete and equip of approximately $115.1 million
    as of December 31, 2006. Because we can terminate
    substantially all of the related construction contracts at any
    time without paying a termination fee, these costs are excluded
    from the above table except for amounts contractually committed
    by us. In addition, as discussed in Part I, Item 3.
    Legal Proceedingsof this report, we may be required to
    make significant expenditures in order to bring our facilities
    into compliance with the ADA. We are currently unable to
    estimate the costs that could be associated with modifying our
    facilities because these costs are negotiated and determined on
    a
    facility-by-facility
    basis and, therefore, have varied and will continue to vary
    significantly among facilities.(g)
    
    In consideration for a physician relocating to one of the
    communities in which our hospitals are located and agreeing to
    engage in private practice for the benefit of the respective
    community, we may advance certain amounts of money to a
    physician, normally over a period of one year, to assist in
    establishing the physicians practice. We have committed to
    advance a maximum amount of approximately $43.1 million at
    December 31, 2006. The actual amount of such commitments to
    be subsequently advanced to physicians is estimated at
    $11.0 million and often depends upon the financial results
    of a physicians private practice during the guarantee
    period.(h)
    
    General Electric Medical Services (GEMS) provides
    diagnostic imaging equipment maintenance and bio-medical
    services to us pursuant to a contract that expires on
    March 31, 2008. The amounts in this table reflect our
    obligation based on the equipment we owned as of
    December 31, 2006.(i)
    
    Reflects our minimum commitments to purchase goods or services
    under non-cancelable contracts as of December 31, 2006. 106




---



##### Table of Contents



Legal
    and Tax Matters
    Off-Balance
    Sheet Arrangements
    Recently
    Issued Accounting Pronouncements
        Segment
    Reporting
   107




---



##### Table of Contents




    the nature of the products and services;
    the nature of the production processes;
    the type or class of customer for their products and services;
    the methods used to distribute their products or provide their
    services; and
    if applicable, the nature of the regulatory environment, for
    example, banking, insurance, or public utilities.    
    the treatment of patients in a hospital setting is the only
    material source of revenues for each of our operating divisions;
    the healthcare services provided by each of our operating
    divisions are generally the same;
    the healthcare services provided by each of our operating
    divisions are generally provided to similar types of patients,
    which are patients in a hospital setting;
    the healthcare services are primarily provided by the direction
    of affiliated or employed physicians and by the nurses, lab
    technicians and others employed or contracted at each of our
    hospitals; and
    the healthcare regulatory environment is generally similar for
    each of our operating divisions.    Inflation
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk.    Outstanding
    Debt
   108




---



##### Table of Contents



1 4
    Cash
    Balances
    Item 8.
    Financial
    Statements and Supplementary Data.  Page F-1
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Rule 13a-15.
  page F-1
   109




---



##### Table of Contents



Changes
    in Internal Control Over Financial Reporting
    Item 9B.
    Other
    Information.   110




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Executive
    Officers
    Code of
    Ethics
  www.lifepointhospitals.com
  Directors
    Compliance
    with Section 16(a) of the Exchange Act
    Stockholder
    Nominees
    Audit and
    Compliance Committee
    Item 11.
    Executive
    Compensation.   111




---



##### Table of Contents



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.   112




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.    Consolidated Financial Statements:
    Financial Statements and Supplementary
    Data Page F-1
  Consolidated Financial Statement
    Schedules:
    Exhibits:
  ExhibitNumber



Description of Exhibits3
.1



Amended and Restated Certificate
    of Incorporation (incorporated by reference from exhibits to the
    Registration Statement on
    Form S-8
    filed by Historic LifePoint Hospitals, Inc. on April 15,
    2005,
    File No. 333-124093).3
.2



Second Amended and Restated Bylaws
    of LifePoint Hospitals, Inc. (incorporated by reference from
    exhibits to the LifePoint Hospitals, Inc. Current Report on
    Form 8-K
    dated October 16, 2006,
    File No. 000-51251).4
.1



Form of Specimen Stock Certificate
    (incorporated by reference from exhibits to the Registration
    Statement on
    Form S-4,
    as amended, filed by Historic LifePoint Hospitals, Inc. on
    October 25, 2004,
    File No. 333-119929).4
.2



Form of 3.25% Convertible
    Senior Subordinated Debenture due 2025 (included as part of
    Exhibit 4.8 hereto.) (incorporated by reference from
    exhibits to LifePoint Hospitals Current Report on
    Form 8-K
    dated August 10, 2005, File
    No. 000-51251).4
.3



Registration Rights Agreement,
    dated August 10, 2005, between LifePoint Hospitals, Inc.
    and Citigroup Global Markets Inc. as Representatives of the
    Initial Purchasers (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K
    dated August 10, 2005, File
    No. 000-51251).4
.4



Rights Agreement, dated as of
    April 15, 2005, by and between LifePoint Hospitals, Inc.
    and National City Bank, as Rights Agent (incorporated by
    reference from exhibits to the Registration Statement on
    Form S-8
    filed by Historic LifePoint Hospitals, Inc. on April 15,
    2005, File
    No. 333-124093).4
.5



Subordinated Indenture, dated as
    of May 27, 2003, between Province Healthcare Company and
    U.S. Bank Trust National Association, as Trustee
    (incorporated by reference from exhibits to Province Healthcare
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003, File
    No. 001-31320).4
.6



First Supplemental Indenture to
    Subordinated Indenture, dated as of May 27, 2003, by and
    among Province Healthcare Company and U.S. Bank National
    Association, as Trustee, relating to Province Healthcare
    Companys
    71/2% Senior
    Subordinated Notes due 2013 (incorporated by reference from
    exhibits to Province Healthcare Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2003, File
    No. 001-31320).4
.7



Second Supplemental Indenture to
    Subordinated Indenture, dated as of April 1, 2005, by and
    among Province Healthcare Company and U.S. Bank National
    Association, as Trustee (incorporated by reference from exhibits
    to Province Healthcare Companys Current Report on
    Form 8-K
    dated April 5, 2005, File
    No. 001-31320).4
.8



Indenture, dated as of
    October 10, 2001, between Province Healthcare Company and
    National City Bank, including the forms of Province Healthcare
    Companys
    41/4% Convertible
    Subordinated Notes due 2008 (incorporated by reference from
    exhibits to the Registration Statement on
    Form S-3,
    filed by Province Healthcare Company on December 20, 2001,
    File
    No. 333-75646). 113




---



##### Table of Contents



ExhibitNumber



Description of Exhibits4
.9



First Supplemental Indenture,
    dated as of April 15, 2005, by and among Province
    Healthcare Company, LifePoint Hospitals, Inc. and U.S. Bank
    National Association (as successor in interest to National City
    Bank), as trustee to the Indenture dated as of October 10,
    2001, relating to Province Healthcare Companys
    41/4% Convertible
    Subordinated Notes due 2008 (incorporated by reference from
    exhibits to the Historic LifePoint Hospitals, Inc. Current
    Report on
    Form 8-K
    dated April 15, 2005,
    File No. 000-29818.4
.10



Indenture, dated August 10,
    2005, between LifePoint Hospitals, Inc. and Citibank, N.A., as
    Trustee (incorporated by reference from exhibits to LifePoint
    Hospitals Current Report on
    Form 8-K
    dated August 10, 2005, File
    No. 000-51251).10
.1



Tax Sharing and Indemnification
    Agreement, dated May 11, 1999, by and among Columbia/HCA,
    LifePoint Hospitals, Inc. and Triad Hospitals, Inc.
    (incorporated by reference from exhibits to Historic LifePoint
    Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999,
    File No. 000-29818).10
.2



Benefits and Employment Matters
    Agreement, dated May 11, 1999 by and among Columbia/HCA,
    LifePoint Hospitals, Inc. and Triad Hospitals, Inc.
    (incorporated by reference from exhibits to Historic LifePoint
    Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999,
    File No. 000-29818).10
.3



Insurance Allocation and
    Administration Agreement, dated May 11, 1999, by and among
    Columbia/ HCA, LifePoint Hospitals, Inc. and Triad Hospitals,
    Inc. (incorporated by reference from exhibits to Historic
    LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999,
    File No. 000-29818).10
.4



Computer and Data Processing
    Services Agreement dated May 11, 1999 by and between
    Columbia Information Systems, Inc. and LifePoint Hospitals, Inc.
    (incorporated by reference from exhibits to Historic LifePoint
    Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999,
    File No. 000-29818).10
.5



Amendment to Computer and Data
    Processing Services Agreement, dated April 28, 2004, by and
    between HCA-Information Technology and Services, Inc. and
    LifePoint Hospitals, Inc. (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2004, File
    No. 000-29818).10
.6



Comprehensive Service Agreement
    for Diagnostic Imaging and Biomedical Services, executed on
    January 7, 2005, between LifePoint Hospital Holdings, Inc.
    and GE Healthcare Technologies (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 000-29818.10
.7



Corporate Integrity Agreement
    dated as of December 21, 2000 by and between the Office of
    Inspector General of the Department of Health and Human Services
    and LifePoint Hospitals, Inc. (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2000, File
    No. 000-29818).10
.8



Amendment to the Corporate
    Integrity Agreement, dated April 29, 2002, between the
    Office of Inspector General of the Department of Health and
    Human Services and LifePoint Hospitals, Inc. (incorporated by
    reference from exhibits to Historic LifePoint Hospitals
    Annual Report on
    Form 10-K
    for the year ended December 31, 2002, File
    No. 000-29818).10
.9



Letter from the Office of
    Inspector General of the Department of Health and Human
    Services, dated October 15, 2002 (incorporated by reference
    from exhibits to Historic LifePoint Hospitals Annual
    Report on
    Form 10-K
    for the year ended December 31, 2002, File
    No. 000-29818).10
.10



Letter from the Office of
    Inspector of the Department of Health and Human Services, dated
    December 18, 2003 (incorporated by reference from exhibits
    to Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 000-29818).10
.11



Letter from the Office of
    Inspector of the Department of Health and Human Services, dated
    March 3, 2004 (incorporated by reference from exhibits to
    Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 000-29818).10
.12



Amended and Restated 1998 Long
    Term Incentive Plan (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K
    dated July 7, 2005, File
    No. 000-51251). 114




---



##### Table of Contents



ExhibitNumber



Description of Exhibits10
.13



LifePoint Hospitals, Inc.
    Executive Performance Incentive Plan (incorporated by reference
    from Appendix C to Historic LifePoint Hospitals Proxy
    Statement dated April 28, 2004, File
    No. 000-29818).10
.14



Form of LifePoint Hospitals, Inc.
    Nonqualified Stock Option Agreement (incorporated by reference
    from exhibits to LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2005, File
    No. 000-51251).10
.15



Form of LifePoint Hospitals, Inc.
    Restricted Stock Award Agreement (incorporated by reference from
    exhibits to LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2005,
    File No. 000-51251).10
.16



Form of LifePoint Hospitals, Inc.
    Deferred Restricted Stock Award (incorporated by reference from
    exhibits to LifePoint Hospitals Current Report on
    Form 8-K
    dated May 12, 2006, file
    No. 000-51251).10
.17



LifePoint Hospitals, Inc. Employee
    Stock Purchase Plan (incorporated by reference from exhibits to
    Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2001,
    File No. 000-29818).10
.18



First Amendment to the LifePoint
    Hospitals, Inc. Employee Stock Purchase Plan (incorporated by
    reference from exhibits to the Registration Statement on
    Form S-8
    filed by Historic LifePoint Hospitals, Inc. on June 2,
    2003, File
    No. 333-105775).10
.19



Second Amendment To Employee Stock
    Purchase Plan (incorporated by reference from exhibits to
    LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006,
    File No. 000-51251).10
.20



LifePoint Hospitals, Inc. Change
    in Control Severance Plan (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Current Report on
    Form 8-K
    dated May 16, 2002, File
    No. 000-29818).10
.21



LifePoint Hospitals, Inc.
    Management Stock Purchase Plan, as amended and restated
    (incorporated by reference from exhibits to Historic LifePoint
    Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2002, File
    No. 000-29818).10
.22



Form of Outside Directors
    Restricted Stock Agreement (incorporated by reference from
    exhibits to LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006,
    File No. 000-51251).10
.23



Summary of LifePoint Hospitals,
    Inc. Non-Employee Director Compensation (incorporated by
    reference from exhibits to LifePoint Hospitals Current
    Report on
    Form 8-K
    dated May 12, 2006, File
    No. 000-51251).10
.24



LifePoint Hospitals, Inc. Outside
    Directors Stock and Incentive Compensation Plan (incorporated by
    reference from exhibits to Historic LifePoint Hospitals
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999, File
    No. 000-29818).10
.25



Amendment to the LifePoint
    Hospitals, Inc. Outside Directors Stock and Incentive
    Compensation Plan (incorporated by reference from
    Appendix B to Historic LifePoint Hospitals Proxy
    Statement dated April 28, 2004, File
    No. 000-29818).10
.26



Second Amendment to the LifePoint
    Hospitals, Inc. Outside Directors Stock and Incentive
    Compensation Plan (incorporated by reference from exhibits to
    LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006, File
    No. 000-51251).10
.27



Employment Agreement of Kenneth C.
    Donahey, as amended and restated (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 000-29818).10
.28



Separation Agreement dated
    June 26, 2006, by and between LifePoint CSGP, LLC and
    Kenneth C. Donahey (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K
    dated June 26, 2006, File
    No. 000-51251).10
.29



Consulting Agreement, dated as of
    August 15, 2004, by and between LifePoint Hospitals, Inc.
    and Martin S. Rash (incorporated by reference from
    Appendix A to the Registration Statement on
    Form S-4,
    as amended, filed by LifePoint Hospitals, Inc. on
    October 25, 2004, File
    No. 333-119929). 115




---



##### Table of Contents



ExhibitNumber



Description of Exhibits10
.30



Credit Agreement, dated as of
    April 15, 2005, by and among LifePoint Hospitals, Inc., as
    borrower, the lenders referred to therein, Citicorp North
    America, Inc. as administrative agent, Bank of America, N.A.,
    CIBC World Markets Corp., SunTrust Bank, UBS Securities LLC, as
    co syndication agents and Citigroup Global Markets, Inc., as
    sole lead arranger and sole bookrunner (incorporated by
    reference from exhibits to Historic LifePoint Hospitals
    Current Report on
    Form 8-K
    dated April 15, 2005, File
    No. 000-29818).10
.31



Incremental Facility Amendment
    dated August 23, 2005, among LifePoint Hospitals, Inc., as
    borrower, Citicorp North America, Inc., as administrative agent
    and the lenders party thereto (incorporated by reference from
    exhibits to LifePoint Hospitals Current Report on
    Form 8-K
    dated August 23, 2005,
    File No. 000-51251).10
.32



Amendment No. 2 to the Credit
    Agreement, dated October 14, 2005, among LifePoint
    Hospitals, Inc. as borrower, Citicorp North America, Inc., as
    administrative agent and the lenders party thereto (incorporated
    by reference from exhibits to LifePoint Hospitals Current
    Report on
    Form 8-K
    dated October 18, 2005, File
    No. 000-51251).10
.33



Incremental Facility Amendment
    No. 3 to the Credit Agreement, dated June 30, 2006
    among LifePoint Hospitals, Inc. as borrower, Citicorp North
    America, Inc. as administrative agent and the lenders party
    thereto. (incorporated by reference from exhibits to LifePoint
    Hospitals Current Report on
    Form 8-K
    dated June 30, 2006, File
    No. 000-51251).10
.34



Incremental Facility Amendment
    No. 4 to the Credit Agreement, dated September 8,
    2006, among LifePoint Hospitals, Inc. as borrower, Citicorp
    North America, Inc. as administrative agent and the lenders
    party thereto (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K
    dated September 12, 2006, File
    No. 000-51251).10
.35



ISDA 2002 Master Agreement, dated
    as of June 1, 2006, between Citibank, N.A. and LifePoint
    Hospitals, Inc. (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K/A
    dated September 8, 2006, File
    No. 000-51251).10
.36



Schedule to the ISDA 2002 Master
    Agreement (incorporated by reference from exhibits to LifePoint
    Hospitals Current Report on
    Form 8-K/A
    dated September 8, 2006, File
    No. 000-51251).10
.37



Confirmation, dated as of
    June 2, 2006, between LifePoint Hospitals, Inc. and
    Citibank, N.A. (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K/A
    dated September 8, 2006, File
    No. 000-51251).10
.38



Stock Purchase Agreement, dated
    July 14, 2005, by HCA Inc. and LifePoint Hospitals, Inc.
    (incorporated by reference from exhibits to LifePoint
    Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006, File
    No. 000-51251).10
.39



Amendment to the Stock Purchase
    Agreement, dated June 2, 2006 (incorporated by reference
    from exhibits to LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006, File
    No. 000-51251).10
.40



Repurchase Agreement, dated
    June 30, 2006, by and between HCA Inc. and LifePoint
    Hospitals, Inc. (incorporated by reference from exhibits to
    LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006, File
    No. 000-51251).10
.41



Executive Severance and
    Restrictive Covenant Agreement by and between LifePoint CSGP,
    LLC and William F. Carpenter III, dated December 11,
    2006 (incorporated by reference from exhibits to LifePoint
    Hospitals Current Report on
    Form 8-K
    dated December 15, 2006, File
    No. 000-51251).12
.1



Ratio of Earnings to Fixed Charges21
.1



List of Subsidiaries23
.1



Consent of Independent Registered
    Public Accounting Firm31
.1



Certification of the Chief
    Executive Officer of LifePoint Hospitals, Inc. pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200231
.2



Certification of the Chief
    Financial Officer of LifePoint Hospitals, Inc. pursuant to
    Section 302 of the Sarbanes Oxley Act of 2002 116




---



##### Table of Contents



ExhibitNumber



Description of Exhibits32
.1



Certification of the Chief
    Executive Officer of LifePoint Hospitals, Inc. pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2



Certification of the Chief
    Financial Officer of LifePoint Hospitals, Inc. pursuant to
    Section 906 of the Sarbanes Oxley Act of 2002  117




---



##### Table of Contents



Compensation
    Plans and Arrangements
  Form 10-K:
  1.
    LifePoint Hospitals, Inc. Amended and Restated 1998 Long Term
    Incentive Plan, as amended (filed as Exhibit 10.12)2.
    LifePoint Hospitals, Inc. Executive Performance Incentive Plan
    (filed as Exhibit 10.13)3.
    Form of LifePoint Hospitals, Inc. Nonqualified Stock Option
    Agreement (filed as Exhibit 10.14)4.
    Form of LifePoint Hospitals, Inc. Restricted Stock Award
    Agreement (filed as Exhibit 10.15)5.
    Form of LifePoint Hospitals, Inc. Deferred Restricted Stock
    Award (filed as Exhibit 10.16)6.
    LifePoint Hospitals, Inc. Employee Stock Purchase Plan, as
    amended (filed as Exhibits 10.17, 10.18, 10.19)7.
    LifePoint Hospitals, Inc. Change in Control Severance Plan
    (filed as Exhibit 10.20)8.
    LifePoint Hospitals, Inc. Management Stock Purchase Plan, as
    amended and restated (filed as Exhibit 10.21)  9.
    Form of Outside Directors Restricted Stock Agreement
    (filed as Exhibit 10.22)  10.
    LifePoint Hospitals, Inc. Outside Directors Stock and Incentive
    Compensation Plan (filed as Exhibits 10.23, 10.24, 10.25,
    10.26)  11.
    Employment Agreement of Kenneth C. Donahey, as amended and
    restated (filed as Exhibit 10.27)  12.
    Separation Agreement of Kenneth C. Donahey (filed as
    Exhibit 10.28)13.
    Executive Severance and Restrictive Covenant Agreement of
    William F. Carpenter III (filed as exhibit 10.41) 118




---



##### Table of Contents



INDEX TO
    FINANCIAL STATEMENTS
  PageManagements
    Report on Internal Control Over Financial Reporting


F-2Report of
    Independent Registered Public Accounting Firm on Internal
    Control Over Financial Reporting


F-3Report of
    Independent Registered Public Accounting Firm


F-4Consolidated
    Balance Sheets  December 31, 2005 and
    2006


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


F-6Consolidated
    Statements of Cash Flows  for the years ended
    December 31, 2004, 2005 and 2006


F-7Consolidated
    Statements of Stockholders Equity  for the
    years ended December 31, 2004, 2005 and 2006


F-8Notes to
    Consolidated Financial Statements  December 31,
    2006


F-9  F-1




---



##### Table of Contents



Managements
    Report on Internal Control Over Financial Reporting                /s/ William F. Carpenter III

/s/ Michael J. CulottaChief Executive Officer and
    President

Chief Financial Officer     F-2




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm on Internal
    Control 
    Over Financial Reporting                      F-3




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm          Share-Based Payment FIN 45-3, Application of FASB Interpretation No. 45 to Minimum
    Revenue Guarantees Granted to a Business or its Owners
    
    F-4




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.CONSOLIDATED BALANCE SHEETS
    December 31, 2005 and 2006
    (Dollars in millions, except per share amounts)
  2005


2006ASSETSCurrent assets:Cash and cash equivalents

$
30.4


$
12.2Accounts receivable, less
    allowances for doubtful accounts of $252.9 and $328.1 at
    December 31, 2005 and 2006, respectively


256.8



325.9Inventories


56.9



66.9Assets held for sale


22.0



115.2Prepaid expenses


12.0



13.0Income taxes receivable






11.2Deferred tax assets


44.2



49.2Other current assets


11.0



20.6433.3



614.2Property and equipment:Land


64.4



80.0Buildings and improvements


986.9



1,085.2Equipment


540.3



610.8Construction in progress (estimated
    cost to complete and equip after December 31, 2006 is
    $115.1)


77.8



72.11,669.4



1,848.1Accumulated depreciation


(373.1
)


(474.5
)1,296.3



1,373.6Deferred loan costs, net


35.4



31.1Intangible assets, net


4.2



33.7Other


5.5



4.5Goodwill


1,449.9



1,581.3$
3,224.6


$
3,638.4LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
85.6


$
108.6Accrued salaries


58.7



69.0Other current liabilities


71.6



124.8Income taxes payable


13.7



Current maturities of long-term debt


0.5



0.7230.1



303.1Long-term debt


1,515.8



1,669.6Deferred income taxes


124.0



120.5Professional and general liability
    claims and other liabilities


60.3



82.3Minority interests in equity of
    consolidated entities


6.6



12.9Stockholders equity:Preferred stock, $0.01 par
    value; 10,000,000 shares authorized; no shares issued






Common stock, $0.01 par value;
    90,000,000 shares authorized; 57,102,882 and
    57,365,018 shares issued and outstanding at
    December 31, 2005 and 2006, respectively


0.6



0.6Capital in excess of par value


1,053.1



1,044.4Unearned ESOP compensation


(9.7
)


(6.4
)Unearned compensation on nonvested
    stock


(31.0
)


Accumulated other comprehensive loss






(9.6
)Retained earnings


274.8



421.01,287.8



1,450.0$
3,224.6


$
3,638.4    F-5




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS
    For the Years Ended December 31, 2004, 2005 and 2006
    (In millions, except per share amounts)
  2004


2005


2006Revenues

$
982.8


$
1,841.5


$
2,439.7Salaries and benefits


402.3



739.6



960.6Supplies


127.8



250.4



340.1Other operating expenses


163.7



308.3



421.6Provision for doubtful accounts


85.4



189.4



266.7Depreciation and amortization


47.4



100.4



111.1Interest expense, net


12.5



60.1



103.5Debt retirement costs


1.5



12.2



Transaction costs






43.2



840.6



1,703.6



2,203.6Income from continuing operations
    before minority interests and income taxes


142.2



137.9



236.1Minority interests in earnings of
    consolidated entities


1.0



1.1



1.3Income from continuing operations
    before income taxes


141.2



136.8



234.8Provision for income taxes


55.3



57.8



92.6Income from continuing operations


85.9



79.0



142.2Discontinued operations, net of
    income taxes:Income (loss) from discontinued
    operations


(0.2
)


0.4



(0.9
)Impairment of assets






(5.8
)


Gain (loss) on sale of hospitals






(0.7
)


4.2Income (loss) from discontinued
    operations


(0.2
)


(6.1
)


3.3Cumulative effect of change in
    accounting principle, net of income taxes










0.7Net income

$
85.7


$
72.9


$
146.2Basic earnings (loss) per share:Continuing operations

$
2.32


$
1.57


$
2.56Discontinued operations


(0.01
)


(0.12
)


0.06Cumulative effect of change in
    accounting principle










0.01Net income

$
2.31


$
1.45


$
2.63Diluted earnings (loss) per share:Continuing operations

$
2.18


$
1.55


$
2.53Discontinued operations


(0.01
)


(0.12
)


0.06Cumulative effect of change in
    accounting principle










0.01Net income

$
2.17


$
1.43


$
2.60Weighted average shares and
    dilutive securities outstanding:Basic


37.0



50.1



55.6Diluted


42.8



53.2



56.3    F-6




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Years Ended December 31, 2004, 2005 and 2006
    (In millions)
  2004


2005


2006Cash flows from operating
    activities:Net income

$
85.7


$
72.9


$
146.2Adjustments to reconcile net income
    to net cash provided by operating activities:Loss (income) from discontinued
    operations


0.2



6.1



(3.3
)Cumulative effect of change in
    accounting principle, net of income taxes










(0.7
)Stock-based compensation


1.8



6.5



13.2ESOP expense (non-cash portion)


9.1



12.0



9.3Depreciation and amortization


47.4



100.4



111.1Amortization of deferred loan costs


1.5



4.0



5.3Debt retirement costs


1.5



12.2



Transaction costs






43.2



Minority interests in earnings of
    consolidated entities


1.0



1.1



1.3Deferred income taxes (benefit)


4.4



(3.2
)


45.2Reserve for professional and
    general liability claims, net


(0.2
)


1.8



6.2Excess tax benefits from employee
    stock plans


6.2



8.9



Increase (decrease) in cash from
    operating assets and liabilities, net of effects from
    acquisitions and divestitures:Accounts receivable


(14.1
)


(26.1
)


(52.1
)Inventories and other current assets


(6.5
)


9.4



(11.3
)Accounts payable and accrued
    expenses


12.0



23.1



21.5Income taxes payable / receivable


(0.1
)


20.3



(28.5
)Other


(3.0
)


1.2



(2.1
)Net cash provided by operating
    activities-continuing operations


146.9



293.8



261.3Net cash provided by (used in)
    operating activities-discontinued operations


2.5



7.6



(15.4
)Net cash provided by operating
    activities


149.4



301.4



245.9Cash flows from investing
    activities:Purchase of property and equipment


(82.0
)


(169.1
)


(199.5
)Acquisitions, net of cash acquired


(30.5
)


(963.6
)


(281.3
)Other


(1.1
)


0.3



(3.6
)Net cash used in investing
    activities-continuing operations


(113.6
)


(1,132.4
)


(484.4
)Net cash provided by investing
    activities-discontinued operations






31.5



69.0Net cash used in investing
    activities


(113.6
)


(1,100.9
)


(415.4
)Cash flows from financing
    activities:Proceeds from borrowings


30.0



1,967.0



260.0Payments of borrowings


(79.9
)


(1,156.9
)


(110.0
)Proceeds from exercise of stock
    options


10.2



43.6



0.6Proceeds from employee stock
    purchase plans






2.2



3.0Payment of debt issue costs






(40.7
)


(1.0
)Other


1.9



(3.9
)


(1.3
)Net cash (used in) provided by
    financing activities


(37.8
)


811.3



151.3Change in cash and cash equivalents


(2.0
)


11.8



(18.2
)Cash and cash equivalents at
    beginning of year


20.6



18.6



30.4Cash and cash equivalents at end of
    year

$
18.6


$
30.4


$
12.2Supplemental disclosure of cash
    flow information:Interest payments

$
12.1


$
55.7


$
107.2Capitalized interest

$
1.1


$
3.0


$
1.2Income taxes paid, net

$
44.6


$
32.0


$
75.8    F-7




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
 CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
    For the Years Ended December 31, 2004, 2005 and 2006
    (Amounts in millions)  Unearned


AccumulatedCapital in


Unearned


Compensation


OtherCommon Stock


Excess of


ESOP


on Nonvested


Comprehensive


Retained


TreasuryShares


Amount


Par Value


Compensation


Stock


Loss


Earnings


Stock


TotalBalance at December 31, 2003


37.9


$
0.4


$
301.7


$
(16.1
)

$



$



$
137.2


$
(28.9
)

$
394.3Net income


























85.7







85.7Non-cash ESOP compensation earned










6.2



3.2



















9.4Exercise of stock options,
    including tax benefits and other


0.8







16.4























16.4Stock activity in connection with
    employee stock purchase plans










1.9















(0.1
)






1.8Nonvested stock issued to key
    employees and outside directors, net of forfeitures


0.2







6.4







(6.4
)














Amortization of nonvested stock
    grants


















1.9















1.9Balance at December 31, 2004


38.9



0.4



332.6



(12.9
)


(4.5
)






222.8



(28.9
)


509.5Net income


























72.9







72.9Non-cash ESOP compensation earned










8.8



3.2



















12.0Exercise of stock options,
    including tax benefits and other


1.5







52.6























52.6Stock activity in connection with
    employee stock purchase plans


0.1







1.4















(2.4
)






(1.0
)Nonvested stock issued to key
    employees and outside directors, net of forfeitures


0.8







37.2







(37.2
)














Amortization of nonvested stock
    grants


















6.7















6.7Common stock issued in connection
    with the Province Business Combination


15.0



0.2



595.7























595.9Change of control vesting in
    connection with the Province Business Combination


















4.0















4.0Conversion of Convertible Notes to
    common stock


0.8







35.2























35.2Retirement of treasury stock










(10.4
)














(18.5
)


28.9



Balance at December 31, 2005


57.1



0.6



1,053.1



(9.7
)


(31.0
)






274.8







1,287.8Comprehensive income:Net income


























146.2







146.2Net change in fair value of
    interest rate swap, net of tax benefit of $5.1






















(9.6
)










(9.6
)Total comprehensive income


































136.6Reclassification of unearned
    compensation on nonvested stock balance upon adoption of
    SFAS No. 123(R)










(31.0
)






31.0















Non-cash ESOP compensation earned










6.4



3.3



















9.7Exercise of stock options,
    including tax benefits and other










0.6























0.6Stock activity in connection with
    employee stock purchase plans










3.0























3.0Stock-based
    compensation  nonvested stock










6.5























6.5Stock-based
    compensation  stock options










5.8























5.8Nonvested stock issued to key
    employees, net of forfeitures


0.3































Balance at December 31, 2006


57.4


$
0.6


$
1,044.4


$
(6.4
)

$



$
(9.6
)

$
421.0


$



$
1,450.0    F-8




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 December 31,
    2006
  Note 1.
    Organization
    and Summary of Significant Accounting Policies  Organization
  and/or
    Principles
    of Consolidation
    Use of
    Estimates
    Reclassifications
    Discontinued
    Operations
   F-9




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    General
    and Administrative Costs
    Fair
    Value of Financial Instruments
    31/4% Convertible
    Senior Subordinated Debentures. 1 4 1 4
  Interest Rate Swap.
  Revenue
    Recognition and Allowance for Contractual
    Discounts
     F-10




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           Concentration
    of Revenues
   F-11




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Hospitalsin State as of


Percentage of Total RevenuesState

December 31, 2006


2004


2005


2006Kentucky


8



35.7
%


21.0
%


16.6
%Virginia


4







10.3



14.0Louisiana


6



4.6



9.3



8.7New Mexico


2







7.4



8.7Tennessee


6



18.3



10.4



8.2Alabama


5



11.1



8.8



7.6West Virginia


2



8.1



4.3



6.2Texas


3







5.2



5.6Arizona


2







3.6



5.5     Hospitalsin State as of


Percentage of Total RevenuesState

December 31, 2006


2004


2005


2006Kentucky


8



4.1
%


2.3
%


2.1
%Virginia


4







0.4



1.1Alabama


5



0.7



0.9



0.9Louisiana


6



0.4



0.9



0.9Tennessee


6



2.5



1.3



0.8New Mexico


2







0.3



0.7Arizona


2







0.3



0.6Texas


3







0.5



0.5West Virginia


2



1.0



0.4



0.5Mississippi


1







0.4



0.5Utah


2



0.9



0.4



0.3Wyoming


2



0.6



0.4



0.3Florida


1



0.5



0.3



0.3Kansas


1



0.2



0.2



0.1Nevada


1







0.1



0.1Colorado


1







0.1



0.1South Carolina


1







*



0.1Indiana


1







0.1



0.1California


1







0.1



0.1     *
    
    Less than 0.05% F-12




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Cash
    and Cash Equivalents
    Accounts
    Receivable and Allowance for Doubtful Accounts
        Balances


Additions


Accountsat


Charged to


Written Off,





BalancesBeginning


Costs and


Net of





at Endof Year


Expenses(a)


Recoveries


Acquisitions


of YearAllowance for doubtful accounts:Year ended December 31, 2004

$
111.7


$
94.7


$
(102.8
)

$



$
103.6Year ended December 31, 2005


103.6



216.1



(172.8
)


106.0



252.9Year ended December 31, 2006


252.9



273.7



(198.5
)






328.1     (a)
    
    Additions charged to costs and expenses include amounts related
    to the Companys continuing and discontinued operations in
    the Companys accompanying consolidated financial
    statements.  Inventories
  (first-in,
  Long-Lived
    Assets
  (a)  Property
    and Equipment
   F-13




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     YearsBuildings and improvements


10  40Equipment


3  10Assets under capital leases:Buildings and improvements


10  40Equipment


3  5       2005


2006Buildings and improvements

$
140.9


$
200.8Equipment


18.4



18.6159.3



219.4Accumulated amortization


(11.8
)


(21.7
)$
147.5


$
197.7     (b)  Deferred
    Loan Costs
    (c)  Goodwill
    and Intangible Assets
   F-14




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Physician
    Minimum Revenue Guarantees
    No. FIN 45-3, FIN 45-3), FIN 45-3, FIN 45-3 FIN 45-3 FIN 45-3.
  FIN 45-3 FIN 45-3 FIN 45-3, FIN 45-3
  Income
    Taxes
   F-15




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Point
    of Life Indemnity, Ltd.
    Professional
    and General Liability Claims
         F-16




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Workers
    Compensation Reserves
       F-17




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Self-Insured
    Medical Benefits
    Minority
    Interests in Consolidated Entities
    Segment
    Reporting
      
    the nature of the products and services;
    the nature of the production processes;
    the type or class of customer for their products and services;
    the methods used to distribute their products or provide their
    services; and
    if applicable, the nature of the regulatory environment, for
    example, banking, insurance, or public utilities.    
    the treatment of patients in a hospital setting is the only
    material source of revenues for each of the Companys
    operating divisions;
    the healthcare services provided by each of the Companys
    operating divisions are generally the same;
    the healthcare services provided by each of the Companys
    operating divisions are generally provided to similar types of
    patients, which are patients in a hospital setting; F-18




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    the healthcare services are primarily provided by the direction
    of affiliated or employed physicians and by the nurses, lab
    technicians and others or contracted at each of the
    Companys hospitals; and
    the healthcare regulatory environment is generally similar for
    each of the Companys operating divisions.    Stock-Based
    Compensation
      Earnings
    (Loss) Per Share
   F-19




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Recently
    Issued Accounting Pronouncements
        Note 2.
    Acquisitions  Acquisitions 
    2006
  Four HCA
    Hospitals
   F-20




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Inventories

$
13.0Prepaid expenses


1.6Other current assets


0.7Property and equipment


151.5Other long-term assets


0.1Goodwill


99.0Total assets acquired, excluding
    cash


265.9Accounts payable


0.4Accrued salaries


5.6Other current liabilities


2.2Total liabilities assumed


8.2Net assets acquired

$
257.7     Havasu
    Joint Venture
   F-21




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Acquisitions 
    2005
  Business
    Combination with Province Healthcare Company
    one-for-one
  Rule 12g-3(c)
      20-day
 F-22




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fair value of Company Common Stock
    issued

$
596.0Cash


586.3Fair value of assumed Province
    debt obligations


511.6Severance and Province stock
    option costs


73.8Direct transaction costs


30.5$
1,798.2   99-12, No. 99-12). EITF No. 99-12,
   F-23




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Cash

$
2.7Accounts receivable, net


122.1Inventories


21.0Prepaid expenses


4.6Other current assets


15.7Property and equipment


575.6Other long-term assets


15.8Goodwill


1,177.3Total assets acquired


1,934.8Accounts payable


33.0Accrued salaries


28.1Other current liabilities


43.4Long-term debt


511.6Professional and general liability
    claims and other liabilities


30.1Minority interests in equity of
    consolidated entities


2.0Total liabilities assumed


648.2Net assets acquired

$
1,286.6     Adjustment to Province acquired
    accounts receivable

$
26.4Adjustment to Province assumed
    liabilities, primarily related to professional and general
    liability claims


7.3Retention bonuses paid to former
    Province employees


4.2Compensation expense, primarily
    restricted stock vesting from change in control


5.3$
43.2   change-of-control
   F-24




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    2005 Acquisitions
        Impact of
    Final Valuations of Fixed Assets
    Acquisition 
    2004
    Unaudited
    Pro Forma Results of Operations
     F-25




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Years EndedDecember 31,2004


2005Revenues

$
2,091.5


$
2,227.9Income from continuing operations


138.9



104.7Net income


135.5



97.6Earnings per share:Basic:Income from continuing operations

$
2.66


$
1.92Net income

$
2.60


$
1.79Diluted:Income from continuing operations

$
2.53


$
1.88Net income

$
2.48


$
1.75   Note 3.
    Discontinued
    Operations  Two
    Former HCA Hospitals
    Smith
    County Memorial Hospital
    Three
    Former Province Hospitals
   F-26




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Current assets

$
4.2Property and equipment


1.7Goodwill


3.08.9Income tax benefit


(3.1
)$
5.8   Bartow
    Memorial Hospital
    Impact
    of Discontinued Operations
        2004


2005


2006Revenues

$
46.8


$
61.7


$
108.4Income (loss) before income taxes


(0.1
)


0.7



(0.5
)  F-27




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill andCurrent


Property and


Intangible Assets,Assets


Equipment


Net


TotalBalance at December 31, 2005

$
1.6


$
14.7


$
5.7


$
22.0Sale of Smith County


(0.3
)


(6.0
)


(5.7
)


(12.0
)Sale of Southern Indiana and
    Ashland


(1.3
)


(8.7
)






(10.0
)Saint Francis and St. Josephs


8.3



106.5



0.4



115.2Balance at December 31, 2006

$
8.3


$
106.5


$
0.4


$
115.2   Note 4.
    Goodwill
    and Intangible Assets    Balance at December 31, 2004

$
138.7Purchase price allocation for
    Province Business Combination


1,176.4Purchase price allocation for 2005
    Acquisitions


137.8Impairment recognized in
    discontinued operations


(3.0
)Balance at December 31, 2005


1,449.9Goodwill acquired as part of
    acquisitions during 2006


108.7Consideration adjustments and
    adjustments to purchase price allocations for 2005 Acquisitions
    and Province Business Combination


22.7Balance at December 31, 2006

$
1,581.3  F-28




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    GrossCarrying


Accumulated


NetClass of Intangible Asset

Amount


Amortization


TotalAmortized intangible assets:Contract-based physician minimum
    revenue guarantees2006

$
21.0


$
(1.7
)

$
19.32005










Non-competition agreements2006

$
16.6


$
(4.8
)

$
11.82005


5.9



(3.1
)


2.8Total amortized intangible assets2006

$
37.6


$
(6.5
)

$
31.12005


5.9



(3.1
)


2.8Indefinite-lived intangible assets:Certificates of need2006

$
2.6


$



$
2.62005


1.4







1.4Total intangible assets:2006

$
40.2


$
(6.5
)

$
33.72005


7.3



(3.1
)


4.2   Contract-Based
    Physician Minimum Revenue Guarantees
  FIN 45-3,
  FIN 45-3
  Increase of income from continuing
    operations before income taxes (included in other operating
    expenses)

$
8.7Provision for income taxes


(3.4
)Increase of income from continuing
    operations

$
5.3Increase of income per share from
    continuing operations:Basic

$
0.10Diluted

$
0.09   Non-Competition
    Agreements
   F-29




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Certificates
    of Need
    Amortization
    Expense
  FIN 45-3,
  2004

$
0.82005


1.32006


3.4     2007

$
6.12008


5.32009


5.22010


4.62011


2.9Thereafter


7.0$
31.1  F-30




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5.
    Income
    Taxes    2004


2005


2006Current:Federal

$
48.0


$
52.7


$
50.0State


2.3



6.9



5.250.3



59.6



55.2Deferred:Federal


3.7



(1.3
)


32.5State


2.0



(2.8
)


(1.1
)5.7



(4.1
)


31.4Increase (decrease) in valuation
    allowance


(0.7
)


2.3



6.0Total

$
55.3


$
57.8


$
92.6       2004


2005


2006Federal statutory rate


35.0
%


35.0
%


35.0
%State income taxes, net of federal
    income tax benefit


2.7



3.0



1.7ESOP expense


1.5



2.2



1.0Valuation allowance


(0.3
)


1.1



1.7Other items, net


0.3



1.0



Effective income tax rate


39.2
%


42.3
%


39.4
%  F-31




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2005


2006Deferred income tax liabilities:Depreciation and amortization

$
(151.0
)

$
(152.7
)Prepaid expenses


(6.2
)


(6.9
)Other


(13.9
)


(13.2
)Total deferred income tax
    liabilities


(171.1
)


(172.8
)Deferred income tax assets:Provision for doubtful accounts


38.2



43.7Employee compensation


16.9



23.7Professional liability claims


21.5



24.4Other


20.4



41.7Total deferred income tax assets


97.0



133.5Valuation allowance


(5.7
)


(32.0
)Net deferred income tax assets


91.3



101.5Net deferred income tax liabilities

$
(79.8
)

$
(71.3
)     2005


2006Current

$
44.2


$
49.2Long-term


(124.0
)


(120.5
)Total

$
(79.8
)

$
(71.3
)      F-32




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           F-33




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 6.
    Long-Term
    Debt    2005


2006Senior Borrowings:Credit Agreement:Term B Loans

$
1,281.9


$
1,321.9Revolving Credit Loans






110.01,281.9



1,431.9Subordinated Borrowings:Province
    71/2% Senior
    Subordinated Notes


6.1



6.1Province
    41/4% Convertible
    Subordinated Notes, due 2008


0.1



0.131/4% Convertible
    Senior Subordinated Debentures, due 2025


225.0



225.0231.2



231.2Capital leases/other


3.2



7.2Total long-term debt


1,516.3



1,670.3Less: current portion


0.5



0.7$
1,515.8


$
1,669.6     2007

$
0.72008


0.82009


0.62010


0.72011


992.2Thereafter


675.3$
1,670.3   Senior
    Secured Credit Facilities
  Terms
  co-syndication
 F-34




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Borrowings
    and Payments
      Letters
    of Credit and Availability
    Interest
    Rates
  and/or
   F-35




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Covenants
      Level atRequirement


December 31,2006Minimum Interest Coverage Ratio


33.50:1.00



4.55Maximum Total Leverage Coverage
    Ratio


£4.75:1.00



3.52Capital Expenditure Ratio


£12%



7.7
%       Senior
    Subordinated Credit Agreement
  1 2
  1 4
  31/4% Convertible
    Senior Subordinated Debentures due August 15,
    2025
  1/4 1/4 1/4 1/4
  1/4
 F-36




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  1/4 1/4 1/4 1/4 1/4
  1 4 1/4 1/4 1/4
  1/4 1/4 1/4 1/4
  1/4 1/4
  Previous
    Credit Facilities
    Province
    71/2% Senior
    Subordinated Notes
  1/2 1/2 1/2
  1/2 1/2 1/2
 F-37




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   1/2 1/2 1/2 1/2
  Province
    41/4% Convertible
    Subordinated Notes
  1/4 1/4
  Province
    41/2% Convertible
    Subordinated Notes
  1/2
  Historic
    LifePoints
    41/2% Convertible
    Subordinated Notes
  1 2 1 2
  1/2 1/2
  Interest
    Rate Swap
   F-38




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Notional ScheduleDate Range

Notional AmountNovember 30, 2006 to
    November 30, 2007

$
900.0 millionNovember 30, 2007 to
    November 28, 2008

$
750.0 millionNovember 28, 2008 to
    November 30, 2009

$
600.0 millionNovember 30, 2009 to
    November 30, 2010

$
450.0 millionNovember 30, 2010 to
    May 30, 2011

$
300.0 million       Note 7.
    Stockholders
    Equity  Preferred
    Stock
    Preferred
    Stock Purchase Rights
     F-39




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Common
    Stock
    Comprehensive
    Income (Loss)
      ESOP
    Compensation
  10-year 10-year
   F-40




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Allocated shares


2,237,375Shares committed to be released


Unreleased shares


559,344Total ESOP shares


2,796,719   Stock-Based
    Compensation
  Impact of
    the Adoption of SFAS No. 123(R)
    Reduction of income from
    continuing operations before income taxes (included in salaries
    and benefits)

$
5.7Income tax benefit


(2.1
)Reduction of income from
    continuing operations

$
3.6Reduction of income per share from
    continuing operations:Basic

$
0.06Diluted

$
0.06    F-41




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Description
    of Stock-Based Compensation Plans
  1998
    Long-Term Incentive Plan
       F-42




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Outside
    Directors Stock and Incentive Compensation Plan
          ESPP
   F-43




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Shares Availablefor IssuanceDecember 31, 2003


189,323Issuances


(27,924
)December 31, 2004


161,399Issuances


(53,422
)December 31, 2005


107,977Issuances


(71,847
)December 31, 2006


36,130   MSPP
  cliff-vesting
    Shares Availablefor IssuanceDecember 31, 2003


144,534Forfeitures


7,704Issuances


(25,932
)December 31, 2004


126,306Forfeitures


857Issuances


(22,037
)December 31, 2005


105,126Forfeitures


2,176Issuances


(31,179
)December 31, 2006


76,123  F-44




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock
    Options
  Change in
    Stock Option Valuation Model
    Valuation
      2004

2005

2006Expected volatility

53.1%

54.7%

32.8%Risk free interest rate (range)

2.11 - 3.43%

3.76 - 4.34%

4.38 - 5.21%Expected dividends





Average expected term (years)

3.0

4.0

5.4Fair value per share of stock
    options granted

$12.66

$19.62

$11.15   Population
    Stratification
    Expected
    Volatility
   F-45




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Risk-Free
    Interest Rate
    Expected
    Dividends
    Pre-Vesting
    Forfeitures
    Post-Vesting
    Cancellations
    Expected
    Term
   F-46




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Stock
    Option Activity
    WeightedWeighted


Weighted








AverageAverage


Average





Aggregate


RemainingNumber


Exercise


Fair


Total


Intrinsic


ContractualStock Options

of Shares


Price


Value


Fair Value


Value(a)


Term(In millions)


(In millions)


(In years)Outstanding at December 31,
    2005


3,559,674


$
29.98


$
12.24


$
43.6


$
32.4



7.17Exercisable at December 31,
    2005


2,794,401


$
26.60


$
10.26


$
28.7


$
32.4



N/AGranted


918,245



33.24



11.15



10.2



N/A



N/AForfeited (pre-vest cancellation)


(302,974
)


37.74



15.59



(4.7
)


N/A



N/AExercised


(30,327
)


17.62



6.38



(0.2
)


0.5



N/AExpired (post-vest cancellation)


(23,094
)


36.92



15.72



(0.4
)


N/A



N/AVested


238,317



42.31



19.50



4.7



N/A



N/AOutstanding at December 31,
    2006


4,121,524


$
30.19


$
11.77


$
48.5


$
24.5



6.14Exercisable at December 31,
    2006


2,979,297


$
27.87


$
11.00


$
32.8


$
24.1



5.07     (a)
    
    The aggregate intrinsic value represents the difference between
    the underlying stocks market price and the stock
    options exercise price.      Nonvested
    Stock
   F-47




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     WeightedNumber


Average


Total


AggregateNonvested Shares

of Shares


Fair Value


Fair Value


Intrinsic Value(In millions)


(In millions)Outstanding at December 31,
    2005


865,034


$
42.76


$
37.0


$
32.4Granted


418,344



33.23



13.9



N/AVested














Forfeited (pre-vest cancellation)


(268,644
)


40.34



(10.8
)


N/AOutstanding at December 31,
    2006


1,014,734


$
39.47


$
40.1


$
34.2      F-48




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Comparable
    Disclosures
    2004


2005(a)


2006Net income, as reported in prior
    period(b)

$
85.7


$
72.9Add: Stock-based compensation
    expense included in reported net income, net of income taxes


1.1



6.7Less: Stock-based compensation
    expense determined under fair value based method for all awards,
    net of income taxes(c)


(9.0
)


(16.5
)Net income, including stock-based
    compensation(d)

$
77.8


$
63.1


$
146.2Net income per share:Basic  as reported in
    prior period(b)

$
2.31


$
1.45Basic  including
    stock-based compensation(d)

$
2.10


$
1.26


$
2.63Diluted  as reported in
    prior period(b)

$
2.17


$
1.43Diluted  including
    stock-based compensation(d)

$
1.99


$
1.24


$
2.60     (a)
    
    All outstanding stock options as of April 15, 2005, except
    for 28,500 stock options granted in December 2004, and all
    outstanding nonvested stock awards became fully vested on
    April 15, 2005, as a result of the Province Business
    Combination and the change of control provisions in the
    Companys stock-based compensation plans. The estimated pro
    forma after-tax charge the Company would have incurred during
    the year ended December 31, 2005 as a result of the
    accelerated vesting of stock options was $4.9 million. In
    addition, as a result of the accelerated vesting of nonvested
    stock awards, the Company recognized an after-tax charge of
    $2.5 million for the year ended December 31, 2005.(b)
    
    Net income and net income per share as reported for periods
    prior to January 1, 2006 did not include stock-based
    compensation expense for stock options and the Companys
    ESPP because it did not adopt the recognition provisions of
    SFAS No. 123.(c)
    
    Stock-based compensation expense for periods prior to
    January 1, 2006 is calculated based on the pro forma
    application of SFAS No. 123.(d)
    
    Net income and net income per share including stock-based
    compensation for periods prior to January 1, 2006 are based
    on the pro forma application of SFAS No. 123. F-49




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Summary
    of Stock-Based Compensation
    Stock Options


Nonvested StockOutstanding


Outstanding


DeferredWeighted





Weighted


Stock UnitsShares





Average





Average


OutstandingAvailable


Number of


Exercise


Number of


Grant Date


Number offor Grant


Shares


Price


Shares


Price


SharesDecember 31, 2003


2,640,452



4,393,442


$
23.91






$




9,478Increases in shares available
    (approved by stockholders)


2,200,000







N/A











Stock option grants


(906,300
)


906,300



33.49











Deferred stock unit grants


(2,376
)






N/A











2,376Deferred stock units vested










N/A











(1,544
)Nonvested stock grants


(196,000
)






N/A



196,000



33.67



Stock option exercises






(774,635
)


13.23











Stock option cancellations


165,526



(165,526
)


33.64











Nonvested stock cancellations


10,000







N/A



(10,000
)


33.17



December 31, 2004


3,911,302



4,359,581



27.43



186,000



33.70



10,310Increases in shares available
    (approved by stockholders)


2,000,000







N/A











Stock option grants


(785,813
)


785,813



42.65











Deferred stock unit grants


(2,088
)






N/A











2,088Deferred stock units vested










N/A











(1,230
)Nonvested stock grants


(911,951
)






N/A



911,951



42.76



Stock option exercises






(1,515,080
)


28.72











Stock option cancellations


70,640



(70,640
)


40.02











Change of control vesting










N/A



(186,000
)


33.67



Nonvested stock cancellations


46,917







N/A



(46,917
)


42.80



December 31, 2005


4,329,007



3,559,674



29.98



865,034



42.76



11,168Stock option grants


(918,245
)


918,245



33.24











Deferred stock unit grants


(6,255
)






N/A











6,255Deferred stock units vested










N/A











(799
)Nonvested stock grants


(418,344
)






N/A



418,344



33.23



Stock option exercises






(30,327
)


17.62











Stock option cancellations


326,068



(326,068
)


37.68











Nonvested stock cancellations


268,644







N/A



(268,644
)


40.34



December 31, 2006


3,580,875



4,121,524


$
30.19



1,014,734


$
39.47



16,624  F-50




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2004


2005(a)


2006Nonvested stock

$
1.8


$
6.5


$
7.5Stock options










5.7Total stock-based compensation
    expense

$
1.8


$
6.5


$
13.2Tax benefits on stock-based
    compensation expense

$
0.6


$
2.4


$
5.2     (a)
    
    This excludes the $4.0 million ($2.5 million, net of
    income taxes) of compensation expense the Company recognized
    that was the result of the accelerated vesting of nonvested
    stock due to the Province Business Combination.    Note 8.
    Commitments
    and Contingencies  Americans
    with Disabilities Act Claim
  facility-by-facility
   F-51




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Legal
    Proceedings and General Liability Claims
    Physician
    Commitments
  FIN 45-3
  Capital
    Expenditure Commitments
        40-year
 F-52




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Acquisitions
    Leases
      Operating


Capital LeaseLeases


Obligations


Total2007

$
14.7


$
1.1


$
15.82008


10.5



1.1



11.62009


8.4



0.9



9.32010


5.4



0.9



6.32011


3.8



1.0



4.8Thereafter


16.7



4.4



21.1$
59.5



9.4


$
68.9Less: interest portion






2.2Long-term obligations under
    capital leases





$
7.2  F-53




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Tax
    Matters
    Note 9.
    Earnings
    (Loss) Per Share    2004


2005


2006Numerator:Numerator for basic earnings
    (loss) per share  income from continuing operations

$
85.9


$
79.0


$
142.2Interest on convertible notes, net
    of taxes


7.3



3.3



Numerator for diluted earnings per
    share  income from continuing operations


93.2



82.3



142.2Income (loss) from discontinued
    operations, net of income taxes


(0.2
)


(6.1
)


3.3Cumulative effect of change in
    accounting principle










0.7$
93.0


$
76.2


$
146.2Denominator:Denominator for basic earnings
    (loss) per share  weighted average shares outstanding


37.0



50.1



55.6Effect of dilutive securities:Employee stock benefit plans


0.8



0.9



0.7Convertible notes


5.0



2.2



Denominator for diluted earnings
    (loss) per share  adjusted weighted average shares


42.8



53.2



56.3Basic earnings (loss) per share:Continuing operations

$
2.32


$
1.57


$
2.56Discontinued operations


(0.01
)


(0.12
)


0.06Cumulative effect of change in
    accounting principle










0.01Net income

$
2.31


$
1.45


$
2.63Diluted earnings (loss) per share:Continuing operations

$
2.18


$
1.55


$
2.53Discontinued operations


(0.01
)


(0.12
)


0.06Cumulative effect of change in
    accounting principle










0.01Net income

$
2.17


$
1.43


$
2.60   Note 10.
    Change in
    the Companys Chief Executive Officer and
    Chairman   F-54




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 11.
    Other
    Current Liabilities    2005


2006Cash received in advance in
    connection with the sale of Saint Francis (see Note 13)

$



$
40.4Accrued interest related to
    long-term debt


13.6



11.3Workers compensation
    liability


12.9



10.7Medical benefits liability


9.4



13.7Physician minimum revenue
    guarantee liability






11.0Other


35.7



37.7$
71.6


$
124.8  F-55




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 12.
    Unaudited
    Quarterly Financial Information    2005First


Second


Third


FourthRevenues

$
272.0


$
464.4


$
548.9


$
556.2Income (loss) from continuing
    operations

$
25.8


$
(3.1
)

$
30.3


$
26.0Discontinued operations:Income (loss) from discontinued
    operations


0.8



0.6



(0.5
)


(0.5
)Impairment of assets






(4.7
)


(0.2
)


(0.9
)Gain (loss) on sale of hospitals


(0.8
)


0.1







Loss from discontinued operations






(4.0
)


(0.7
)


(1.4
)Net income (loss)

$
25.8


$
(7.1
)

$
29.6


$
24.6Basic earnings (loss) per share:Continuing operations

$
0.68


$
(0.06
)

$
0.55


$
0.47Discontinued operations






(0.07
)


(0.01
)


(0.03
)Net income (loss)

$
0.68


$
(0.13
)

$
0.54


$
0.44Diluted earnings (loss) per share:Continuing operations

$
0.63


$
(0.06
)

$
0.54


$
0.46Discontinued operations






(0.07
)


(0.01
)


(0.02
)Net income (loss)

$
0.63


$
(0.13
)

$
0.53


$
0.44   F-56




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2006First


Second


Third


FourthRevenues

$
589.6


$
569.2


$
640.3


$
640.6Income from continuing operations

$
33.8


$
36.4


$
34.5


$
37.5Discontinued operations:Income (loss) from discontinued
    operations


(0.2
)


(1.3
)


(0.2
)


0.8Gain (loss) on sale of hospitals


3.8



(0.3
)


0.6



0.1Income (loss) from discontinued
    operations


3.6



(1.6
)


0.4



0.9Cumulative effect of change in
    accounting principle


0.7











Net income

$
38.1


$
34.8


$
34.9


$
38.4Basic earnings (loss) per share:Continuing operations

$
0.61


$
0.65


$
0.62


$
0.67Discontinued operations


0.07



(0.02
)


0.01



0.02Cumulative effect of change in
    accounting principle


0.01











Net income

$
0.69


$
0.63


$
0.63


$
0.69Diluted earnings (loss) per share:Continuing operations

$
0.60


$
0.65


$
0.61


$
0.66Discontinued operations


0.07



(0.03
)


0.01



0.02Cumulative effect of change in
    accounting principle


0.01











Net income

$
0.68


$
0.62


$
0.62


$
0.68   Note 13.
    Subsequent
    Events   F-57




---



##### Table of Contents



SIGNATURES      By:
    /s/  WILLIAM
    F. CARPENTER III   Chief Executive Officer and President
    Name

Title

Date/s/  OWEN
    G. SHELL, JR.Owen
    G. Shell, Jr.

Chairman of the Board of Directors

February 6, 2007/s/  WILLIAM
    F. CARPENTER IIIWilliam
    F. Carpenter III

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

February 6, 2007/s/  MICHAEL
    J. CULOTTAMichael
    J. Culotta

Chief Financial Officer 
    (Principal Financial Officer)

February 6, 2007/s/  GARY
    D. WILLISGary
    D. Willis

Chief Accounting Officer 
    (Principal Accounting Officer)

February 6, 2007/s/  RICHARD
    H.
    EVANSRichard
    H. Evans

Director

February 6, 2007/s/  DEWITT
    EZELL,
    JR.DeWitt
    Ezell, Jr

Director

February 6, 2007/s/  MICHAEL
    P.
    HALEYMichael
    P. Haley

Director

February 6, 2007/s/  RICKI
    TIGERT
    HELFERRicki
    Tigert Helfer

Director

February 6, 2007/s/  WILLIAM
    V.
    LAPHAMWilliam
    V. Lapham

Director

February 6, 2007/s/  JOHN
    E. MAUPIN, JR.,
    D.D.SJohn
    E. Maupin, Jr., D.D.S

Director

February 6, 2007




---



##### Table of Contents



ExhibitNumber



Description of Exhibits3
.1



Amended and Restated Certificate
    of Incorporation (incorporated by reference from exhibits to the
    Registration Statement on
    Form S-8
    filed by Historic LifePoint Hospitals, Inc. on April 15,
    2005, File
    No. 333-124093).3
.2



Second Amended and Restated Bylaws
    of LifePoint Hospitals, Inc. (incorporated by reference from
    exhibits to the LifePoint Hospitals, Inc. Current Report on
    Form 8-K
    dated October 16, 2006, File
    No. 000-51251).4
.1



Form of Specimen Stock Certificate
    (incorporated by reference from exhibits to the Registration
    Statement on
    Form S-4,
    as amended, filed by Historic LifePoint Hospitals, Inc. on
    October 25, 2004, File
    No. 333-119929).4
.2



Form of 3.25% Convertible
    Senior Subordinated Debenture due 2025 (included as part of
    Exhibit 4.8 hereto.) (incorporated by reference from
    exhibits to LifePoint Hospitals Current Report on
    Form 8-K
    dated August 10, 2005, File
    No. 000-51251).4
.3



Registration Rights Agreement,
    dated August 10, 2005, between LifePoint Hospitals, Inc.
    and Citigroup Global Markets Inc. as Representatives of the
    Initial Purchasers (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K
    dated August 10, 2005, File
    No. 000-51251).4
.4



Rights Agreement, dated as of
    April 15, 2005, by and between LifePoint Hospitals, Inc.
    and National City Bank, as Rights Agent (incorporated by
    reference from exhibits to the Registration Statement on
    Form S-8
    filed by Historic LifePoint Hospitals, Inc. on April 15,
    2005, File
    No. 333-124093).4
.5



Subordinated Indenture, dated as
    of May 27, 2003, between Province Healthcare Company and
    U.S. Bank Trust National Association, as Trustee
    (incorporated by reference from exhibits to Province Healthcare
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003, File
    No. 001-31320).4
.6



First Supplemental Indenture to
    Subordinated Indenture, dated as of May 27, 2003, by and
    among Province Healthcare Company and U.S. Bank National
    Association, as Trustee, relating to Province Healthcare
    Companys 7
    1/2% Senior
    Subordinated Notes due 2013 (incorporated by reference from
    exhibits to Province Healthcare Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2003, File
    No. 001-31320).4
.7



Second Supplemental Indenture to
    Subordinated Indenture, dated as of April 1, 2005, by and
    among Province Healthcare Company and U.S. Bank National
    Association, as Trustee (incorporated by reference from exhibits
    to Province Healthcare Companys Current Report on
    Form 8-K
    dated April 5, 2005, File
    No. 001-31320).4
.8



Indenture, dated as of
    October 10, 2001, between Province Healthcare Company and
    National City Bank, including the forms of Province Healthcare
    Companys
    41/4% Convertible
    Subordinated Notes due 2008 (incorporated by reference from
    exhibits to the Registration Statement on
    Form S-3,
    filed by Province Healthcare Company on December 20, 2001,
    File
    No. 333-75646).4
.9



First Supplemental Indenture,
    dated as of April 15, 2005, by and among Province
    Healthcare Company, LifePoint Hospitals, Inc. and U.S. Bank
    National Association (as successor in interest to National City
    Bank), as trustee to the Indenture dated as of October 10,
    2001, relating to Province Healthcare Companys
    41/4% Convertible
    Subordinated Notes due 2008 (incorporated by reference from
    exhibits to the Historic LifePoint Hospitals, Inc. Current
    Report on
    Form 8-K
    dated April 15, 2005, File
    No. 000-29818.4
.10



Indenture, dated August 10,
    2005, between LifePoint Hospitals, Inc. and Citibank, N.A., as
    Trustee (incorporated by reference from exhibits to LifePoint
    Hospitals Current Report on
    Form 8-K
    dated August 10, 2005, File
    No. 000-51251).10
.1



Tax Sharing and Indemnification
    Agreement, dated May 11, 1999, by and among Columbia/HCA,
    LifePoint Hospitals, Inc. and Triad Hospitals, Inc.
    (incorporated by reference from exhibits to Historic LifePoint
    Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999, File
    No. 000-29818).10
.2



Benefits and Employment Matters
    Agreement, dated May 11, 1999 by and among Columbia/HCA,
    LifePoint Hospitals, Inc. and Triad Hospitals, Inc.
    (incorporated by reference from exhibits to Historic LifePoint
    Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999, File
    No. 000-29818).




---



##### Table of Contents



ExhibitNumber



Description of Exhibits10
.3



Insurance Allocation and
    Administration Agreement, dated May 11, 1999, by and among
    Columbia/ HCA, LifePoint Hospitals, Inc. and Triad Hospitals,
    Inc. (incorporated by reference from exhibits to Historic
    LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999, File
    No. 000-29818).10
.4



Computer and Data Processing
    Services Agreement dated May 11, 1999 by and between
    Columbia Information Systems, Inc. and LifePoint Hospitals, Inc.
    (incorporated by reference from exhibits to Historic LifePoint
    Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999, File
    No. 000-29818).10
.5



Amendment to Computer and Data
    Processing Services Agreement, dated April 28, 2004, by and
    between HCA-Information Technology and Services, Inc. and
    LifePoint Hospitals, Inc. (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2004, File
    No. 000-29818).10
.6



Comprehensive Service Agreement
    for Diagnostic Imaging and Biomedical Services, executed on
    January 7, 2005, between LifePoint Hospital Holdings, Inc.
    and GE Healthcare Technologies (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Annual report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 000-29818.10
.7



Corporate Integrity Agreement
    dated as of December 21, 2000 by and between the Office of
    Inspector General of the Department of Health and Human Services
    and LifePoint Hospitals, Inc. (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2000, File
    No. 000-29818).10
.8



Amendment to the Corporate
    Integrity Agreement, dated April 29, 2002, between the
    Office of Inspector General of the Department of Health and
    Human Services and LifePoint Hospitals, Inc. (incorporated by
    reference from exhibits to Historic LifePoint Hospitals
    Annual Report on
    Form 10-K
    for the year ended December 31, 2002, File
    No. 000-29818).10
.9



Letter from the Office of
    Inspector General of the Department of Health and Human
    Services, dated October 15, 2002 (incorporated by reference
    from exhibits to Historic LifePoint Hospitals Annual
    Report on
    Form 10-K
    for the year ended December 31, 2002, File
    No. 000-29818).10
.10



Letter from the Office of
    Inspector of the Department of Health and Human Services, dated
    December 18, 2003 (incorporated by reference from exhibits
    to Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 000-29818).10
.11



Letter from the Office of
    Inspector of the Department of Health and Human Services, dated
    March 3, 2004 (incorporated by reference from exhibits to
    Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 000-29818).10
.12



Amended and Restated 1998 Long
    Term Incentive Plan (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K
    dated July 7, 2005, File
    No. 000-51251).10
.13



LifePoint Hospitals, Inc.
    Executive Performance Incentive Plan (incorporated by reference
    from Appendix C to Historic LifePoint Hospitals Proxy
    Statement dated April 28, 2004, File
    No. 000-29818).10
.14



Form of LifePoint Hospitals, Inc.
    Nonqualified Stock Option Agreement (incorporated by reference
    from exhibits to LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2005, File
    No. 000-51251).10
.15



Form of LifePoint Hospitals, Inc.
    Restricted Stock Award Agreement (incorporated by reference from
    exhibits to LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2005, File
    No. 000-51251).10
.16



Form of LifePoint Hospitals, Inc.
    Deferred Restricted Stock Award (incorporated by reference from
    exhibits to LifePoint Hospitals Current Report on
    Form 8-K
    dated May 12, 2006, file
    No. 000-51251).10
.17



LifePoint Hospitals, Inc. Employee
    Stock Purchase Plan (incorporated by reference from exhibits to
    Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2001, File
    No. 000-29818).10
.18



First Amendment to the LifePoint
    Hospitals, Inc. Employee Stock Purchase Plan (incorporated by
    reference from exhibits to the Registration Statement on
    Form S-8
    filed by Historic LifePoint Hospitals, Inc. on June 2,
    2003, File
    No. 333-105775).




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##### Table of Contents



ExhibitNumber



Description of Exhibits10
.19



Second Amendment To Employee Stock
    Purchase Plan (incorporated by reference from exhibits to
    LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006, File
    No. 000-51251).10
.20



LifePoint Hospitals, Inc. Change
    in Control Severance Plan (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Current Report on
    Form 8-K
    dated May 16, 2002, File
    No. 000-29818).10
.21



LifePoint Hospitals, Inc.
    Management Stock Purchase Plan, as amended and restated
    (incorporated by reference from exhibits to Historic LifePoint
    Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2002, File
    No. 000-29818).10
.22



Form of Outside Directors
    Restricted Stock Agreement (incorporated by reference from
    exhibits to LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006, File
    No. 000-51251).10
.23



Summary of LifePoint Hospitals,
    Inc. Non-Employee Director Compensation (incorporated by
    reference from exhibits to LifePoint Hospitals Current
    Report on
    Form 8-K
    dated May 12, 2006, File
    No. 000-51251).10
.24



LifePoint Hospitals, Inc. Outside
    Directors Stock and Incentive Compensation Plan (incorporated by
    reference from exhibits to Historic LifePoint Hospitals
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999, File
    No. 000-29818).10
.25



Amendment to the LifePoint
    Hospitals, Inc. Outside Directors Stock and Incentive
    Compensation Plan (incorporated by reference from
    Appendix B to Historic LifePoint Hospitals Proxy
    Statement dated April 28, 2004, File
    No. 000-29818).10
.26



Second Amendment to the LifePoint
    Hospitals, Inc. Outside Directors Stock and Incentive
    Compensation Plan (incorporated by reference from exhibits to
    LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006, File
    No. 000-51251).10
.27



Employment Agreement of Kenneth C.
    Donahey, as amended and restated (incorporated by reference from
    exhibits to Historic LifePoint Hospitals Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 000-29818).10
.28



Separation Agreement dated
    June 26, 2006, by and between LifePoint CSGP, LLC and
    Kenneth C. Donahey (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K
    dated June 26, 2006, File
    No. 000-51251).10
.29



Consulting Agreement, dated as of
    August 15, 2004, by and between LifePoint Hospitals, Inc.
    and Martin S. Rash (incorporated by reference from
    Appendix A to the Registration Statement on
    Form S-4,
    as amended, filed by LifePoint Hospitals, Inc. on
    October 25, 2004, File
    No. 333-119929).10
.30



Credit Agreement, dated as of
    April 15, 2005, by and among LifePoint Hospitals, Inc., as
    borrower, the lenders referred to therein, Citicorp North
    America, Inc. as administrative agent, Bank of America, N.A.,
    CIBC World Markets Corp., SunTrust Bank, UBS Securities LLC, as
    co syndication agents and Citigroup Global Markets, Inc., as
    sole lead arranger and sole bookrunner (incorporated by
    reference from the exhibits filed to Historic LifePoint
    Hospitals Current Report on
    Form 8-K,
    dated April 15, 2005, File
    No. 000-29818).10
.31



Incremental Facility Amendment
    dated August 23, 2005, among LifePoint Hospitals, Inc., as
    borrower, Citicorp North America, Inc., as administrative agent
    and the lenders party thereto (incorporated by reference from
    exhibits to LifePoint Hospitals Current Report on
    Form 8-K
    dated August 23, 2005, File
    No. 000-51251).10
.32



Amendment No. 2 to the Credit
    Agreement, dated October 14, 2005, among LifePoint
    Hospitals, Inc. as borrower, Citicorp North America, Inc., as
    administrative agent and the lenders party thereto (incorporated
    by reference from exhibits to LifePoint Hospitals Current
    Report on
    Form 8-K
    dated October 18, 2005, File
    No. 000-51251).10
.33



Incremental Facility Amendment
    No. 3 to the Credit Agreement, dated June 30, 2006
    among LifePoint Hospitals, Inc. as borrower, Citicorp North
    America, Inc. as administrative agent and the lenders party
    thereto. (incorporated by reference from exhibits to LifePoint
    Hospitals Current Report on
    Form 8-K
    dated June 30, 2006, File
    No. 000-51251).




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##### Table of Contents



ExhibitNumber



Description of Exhibits10
.34



Incremental Facility Amendment
    No. 4 to the Credit Agreement, dated September 8,
    2006, among LifePoint Hospitals, Inc. as borrower, Citicorp
    North America, Inc. as administrative agent and the lenders
    party thereto (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K
    dated September 12, 2006, File
    No. 000-51251).10
.35



ISDA 2002 Master Agreement, dated
    as of June 1, 2006, between Citibank, N.A. and LifePoint
    Hospitals, Inc. (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K/A
    dated September 8, 2006, File
    No. 000-51251).10
.36



Schedule to the ISDA 2002 Master
    Agreement (incorporated by reference from exhibits to LifePoint
    Hospitals Current Report on
    Form 8-K/A
    dated September 8, 2006, File
    No. 000-51251).10
.37



Confirmation, dated as of
    June 2, 2006, between LifePoint Hospitals, Inc. and
    Citibank, N.A. (incorporated by reference from exhibits to
    LifePoint Hospitals Current Report on
    Form 8-K/A
    dated September 8, 2006, File
    No. 000-51251).10
.38



Stock Purchase Agreement, dated
    July 14, 2005, by HCA Inc. and LifePoint Hospitals, Inc.
    (incorporated by reference from exhibits to LifePoint
    Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006, File
    No. 000-51251).10
.39



Amendment to the Stock Purchase
    Agreement, dated June 2, 2006 (incorporated by reference
    from exhibits to LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006, File
    No. 000-51251).10
.40



Repurchase Agreement, dated
    June 30, 2006, by and between HCA Inc. and LifePoint
    Hospitals, Inc. (incorporated by reference from exhibits to
    LifePoint Hospitals Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006, File
    No. 000-51251).10
.41



Executive Severance and
    Restrictive Covenant Agreement by and between LifePoint CSGP,
    LLC and William F. Carpenter III, dated December 11,
    2006 (incorporated by reference from exhibits to LifePoint
    Hospitals Current Report on
    Form 8-K
    dated December 15, 2006, File
    No. 000-51251).12
.1



Ratio of Earnings to Fixed Charges.21
.1



List of Subsidiaries.23
.1



Consent of Independent Registered
    Public Accounting Firm31
.1



Certification of the Chief
    Executive Officer of LifePoint Hospitals, Inc. pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200231
.2



Certification of the Chief
    Financial Officer of LifePoint Hospitals, Inc. pursuant to
    Section 302 of the Sarbanes Oxley Act of 200232
.1



Certification of the Chief
    Executive Officer of LifePoint Hospitals, Inc. pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2



Certification of the Chief
    Financial Officer of LifePoint Hospitals, Inc. pursuant to
    Section 906 of the Sarbanes Oxley Act of 2002