UNITED STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 2008oro

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
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)103 Powell Court, Suite 200
    Brentwood, Tennessee

37027(Zip Code)(Address of Principal Executive
    Offices)   (615) 372-8500
 (Registrants Telephone
    Number, Including Area Code)
  Not Applicable
 (Former name, former address and
    former fiscal year, if changed since last report)
   þ o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




---



##### 



TABLE OF
    CONTENTS
  PART I  FINANCIAL INFORMATIONItem 1.


Financial Statements


3Item 2.


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


20Item 3.


Quantitative and Qualitative Disclosures about Market Risk


50Item 4.


Controls and Procedures


50PART II  OTHER INFORMATIONItem 1.


Legal Proceedings


51Item 1A.


Risk Factors


51Item 2.


Unregistered Sales of Equity Securities and Use of Proceeds


51Item 4.


Submission of Matters to a Vote of Security Holders


52Item 6.


Exhibits


53




---



##### 



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements.  LIFEPOINT
    HOSPITALS, INC.
  CONDENSED
    CONSOLIDATED STATEMENTS OF OPERATIONS
 Unaudited
    (In millions, except per share amounts)
  Three Months Ended


Six Months EndedJune 30,


June 30,2007


2008


2007


2008Revenues

$
654.3


$
680.8


$
1,315.5


$
1,380.7Salaries and benefits


257.1



271.6



514.0



547.0Supplies


89.7



95.3



182.1



190.8Other operating expenses


123.0



126.5



237.3



251.8Provision for doubtful accounts


81.2



76.7



154.4



159.4Depreciation and amortization


34.4



34.2



66.9



67.5Interest expense, net


25.4



22.2



51.8



44.7Impairment of long-lived assets






0.3







0.3610.8



626.8



1,206.5



1,261.5Income from continuing operations before minority interests and
    income taxes


43.5



54.0



109.0



119.2Minority interests in earnings of consolidated entities


0.8



0.6



1.1



1.3Income from continuing operations before income taxes


42.7



53.4



107.9



117.9Provision for income taxes


18.1



21.9



44.6



46.7Income from continuing operations


24.6



31.5



63.3



71.2Discontinued operations, net of income taxes:Loss from discontinued operations


(2.6
)


(0.7
)


(3.5
)


(0.9
)Impairment (charge) adjustment


(8.5
)






(16.4
)


2.3Loss on sale of hospitals


(0.1
)


(0.3
)


(0.2
)


(0.3
)(Loss) income from discontinued operations


(11.2
)


(1.0
)


(20.1
)


1.1Net income

$
13.4


$
30.5


$
43.2


$
72.3Basic earnings (loss) per share:Continuing operations

$
0.44


$
0.60


$
1.13


$
1.34Discontinued operations


(0.20
)


(0.02
)


(0.36
)


0.02Net income

$
0.24


$
0.58


$
0.77


$
1.36Diluted earnings (loss) per share:Continuing operations

$
0.43


$
0.59


$
1.11


$
1.31Discontinued operations


(0.20
)


(0.02
)


(0.35
)


0.02Net income

$
0.23


$
0.57


$
0.76


$
1.33Weighted average shares and dilutive securities outstanding:Basic


56.1



52.2



56.0



53.1Diluted


57.2



53.2



57.0



54.2    3




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##### 



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


June 30,2007(1)


2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
53.1


$
24.6Accounts receivable, less allowances for doubtful accounts of
    $376.3 and $368.8 at December 31, 2007 and June 30,
    2008, respectively


304.5



309.2Inventories


69.3



69.7Prepaid expenses


12.4



17.7Income taxes receivable


27.9



34.5Deferred tax assets


113.6



119.3Other current assets


20.6



10.2601.4



585.2Property and equipment:Land


72.8



72.8Buildings and improvements


1,219.6



1,251.5Equipment


674.1



709.8Construction in progress (estimated cost to complete and equip
    after June 30, 2008 is $137.6)


34.1



27.72,000.6



2,061.8Accumulated depreciation


(582.9
)


(643.3
)1,417.7



1,418.5Deferred loan costs, net


38.6



34.9Intangible assets, net


52.4



60.4Other


4.4



4.4Goodwill


1,512.0



1,521.0$
3,626.5


$
3,624.4LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
95.6


$
88.2Accrued salaries


66.7



72.0Other current liabilities


98.7



85.7Current maturities of long-term debt


0.5



0.5261.5



246.4Long-term debt


1,516.9



1,523.1Deferred income taxes


113.2



116.6Professional and general liability claims and other liabilities


120.0



124.1Long-term income tax liability


55.5



72.1Minority interests in equity of consolidated entities


15.2



15.5Stockholders 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; 58,101,477 and 58,553,268 shares issued at
    December 31, 2007 and June 30, 2008, respectively


0.6



0.6Capital in excess of par value


1,084.9



1,098.3Unearned ESOP compensation


(3.1
)


(1.5
)Accumulated other comprehensive loss


(19.8
)


(18.8
)Retained earnings


522.8



595.1Common stock in treasury, at cost, 1,356,487 and
    5,339,372 shares at December 31, 2007 and
    June 30, 2008, respectively


(41.2
)


(147.1
)1,544.2



1,526.6$
3,626.5


$
3,624.4     (1)
    
    Derived from audited consolidated financial statements.   4




---



##### 



LIFEPOINT
    HOSPITALS, INC.
  CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS
 Unaudited
    (In millions)
  Three Months Ended


Six Months EndedJune 30,


June 30,2007


2008


2007


2008Cash flows from operating activities:Net income

$
13.4


$
30.5


$
43.2


$
72.3Adjustments to reconcile net income to net cash provided by
    operating activities:Loss (income) from discontinued operations


11.2



1.0



20.1



(1.1
)Stock-based compensation


3.6



5.8



7.2



12.2ESOP expense (non-cash portion)


2.5



2.2



4.7



4.0Depreciation and amortization


34.4



34.2



66.9



67.5Amortization of physician minimum revenue guarantees


1.2



2.2



2.1



4.3Amortization of deferred loan costs


1.7



1.9



3.0



3.7Minority interests in earnings of consolidated entities


0.8



0.6



1.1



1.3Deferred income taxes (benefit)


(16.6
)


8.3



(35.0
)


9.6Reserve for professional and general liability claims, net


4.6



7.3



4.1



8.4Increase (decrease) in cash from operating assets and
    liabilities, net of effects from acquisitions and divestitures:Accounts receivable


7.0



5.9



(0.5
)


(2.7
)Inventories and other current assets


4.0



7.7



(7.2
)


4.5Accounts payable and accrued expenses


20.5



(7.0
)


(12.8
)


(3.2
)Income taxes payable/receivable


(3.5
)


(26.3
)


38.7



(3.7
)Other


(0.5
)






(0.3
)


2.3Net cash provided by operating activities  continuing
    operations


84.3



74.3



135.3



179.4Net cash (used in) provided by operating activities 
    discontinued operations


(5.2
)


(2.2
)


7.6



(6.3
)Net cash provided by operating activities


79.1



72.1



142.9



173.1Cash flows from investing activities:Purchase of property and equipment


(40.6
)


(42.3
)


(72.6
)


(75.7
)Acquisition, net of cash acquired






(9.3
)






(9.3
)Other


0.1







0.1



Net cash used in investing activities  continuing
    operations


(40.5
)


(51.6
)


(72.5
)


(85.0
)Net cash provided by (used in) investing activities 
    discontinued operations


72.7



(3.3
)


72.8



(3.3
)Net cash provided by (used in) investing activities


32.2



(54.9
)


0.3



(88.3
)Cash flows from financing activities:Proceeds from borrowings


575.0



10.4



615.0



10.4Payments of borrowings


(705.1
)






(757.5
)


Proceeds from exercise of stock options


11.1



0.1



12.1



0.1Purchases of treasury stock






(30.5
)






(118.1
)Payment of debt issuance costs


(13.3
)






(13.3
)


Distributions to minority investors in joint ventures, net of
    proceeds


1.9



(0.7
)


1.7



(1.0
)Capital lease payments and other


(0.4
)


(4.8
)






(4.7
)Net cash used in financing activities


(130.8
)


(25.5
)


(142.0
)


(113.3
)Change in cash and cash equivalents


(19.5
)


(8.3
)


1.2



(28.5
)Cash and cash equivalents at beginning of period


32.9



32.9



12.2



53.1Cash and cash equivalents at end of period

$
13.4


$
24.6


$
13.4


$
24.6Supplemental disclosure of cash flow information:Interest payments

$
1.4


$
24.0


$
30.2


$
41.1Capitalized interest

$
0.7


$
0.2


$
1.4


$
0.3Income taxes paid, net

$
38.1


$
40.8


$
40.5


$
41.7    5




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##### 



LIFEPOINT
    HOSPITALS, INC.
  CONDENSED
    CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
    For the Six Months Ended June 30, 2008
 Unaudited
    (In millions)
  AccumulatedCapital in


Unearned


OtherCommon Stock


Excess of


ESOP


Comprehensive


Retained


TreasuryShares


Amount


Par Value


Compensation


Loss


Earnings


Stock


TotalBalance at December 31, 2007


56.7


$
0.6


$
1,084.9


$
(3.1
)

$
(19.8
)

$
522.8


$
(41.2
)

$
1,544.2Comprehensive income:Net income






















72.3







72.3Net change in fair value of interest rate swap, net of tax
    provision of $0.2


















1.0











1.0Total comprehensive income






























73.3Non-cash ESOP compensation earned










2.4



1.6















4.0Exercise of stock options, including tax benefits and other










(1.5
)


















(1.5
)Stock activity in connection with employee stock purchase plan










0.3



















0.3Stock-based compensation


0.4







12.2



















12.2Purchases of treasury stock, at cost


(3.9
)






















(105.9
)


(105.9
)Balance at June 30, 2008


53.2


$
0.6


$
1,098.3


$
(1.5
)

$
(18.8
)

$
595.1


$
(147.1
)

$
1,526.6    6




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##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Unaudited
  Note 1.
    Basis of
    Presentation    Form 10-Q Regulation S-X. Form 10-K.
      Note 2.
    Treasury
    Stock     7




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##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 3.
    Stock-Based
    Compensation    Stock
    Options
     8




---



##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Six Months EndedJune 30,2007

2008Expected volatility

25.4%

32.0%Risk free interest rate (range)

4.48%  5.21%

1.07%  3.74%Expected dividends



Average expected term (years)

5.1

5.3Fair value per share for stock options granted

$10.38

$8.08       Nonvested
    Stock
       9




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##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Summary
    Three Months Ended


Six Months EndedJune 30,


June 30,2007


2008


2007


2008Nonvested stock

$
1.7


$
4.0


$
3.9


$
8.3Stock options


1.9



1.8



3.3



3.9Total stock-based compensation expense

$
3.6


$
5.8


$
7.2


$
12.2Tax benefits on stock-based compensation expense

$
1.5


$
2.5


$
2.9


$
5.0    10




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##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4.
    Earnings
    (Loss) Per Share    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2007


2008


2007


2008Numerator:Numerator for basic and diluted earnings (loss) per
    share  income from continuing operations

$
24.6


$
31.5


$
63.3


$
71.2(Loss) income from discontinued operations, net of income taxes


(11.2
)


(1.0
)


(20.1
)


1.1$
13.4


$
30.5


$
43.2


$
72.3Denominator:Denominator for basic earnings (loss) per share 
    weighted average shares outstanding


56.1



52.2



56.0



53.1Effect of dilutive securities:Employee stock benefit plans


1.1



1.0



1.0



1.1Denominator for diluted earnings (loss) per share 
    weighted average shares


57.2



53.2



57.0



54.2Basic earnings (loss) per share:Continuing operations

$
0.44


$
0.60


$
1.13


$
1.34Discontinued operations


(0.20
)


(0.02
)


(0.36
)


0.02Net income

$
0.24


$
0.58


$
0.77


$
1.36Diluted earnings (loss) per share:Continuing operations

$
0.43


$
0.59


$
1.11


$
1.31Discontinued operations


(0.20
)


(0.02
)


(0.35
)


0.02Net income

$
0.23


$
0.57


$
0.76


$
1.33   1 2 1 2 1 4 1 4 1 4 1 2
 11




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##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5.
    Goodwill
    and Intangible Assets  Goodwill
      Contract-Based
    Physician Minimum Revenue Guarantees
    No. 45-3, FIN 45-3). FIN 45-3,
  Non-Competition
    Agreements
    Certificates
    of Need
   12




---



##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Summary
    of Intangible Assets
    GrossCarrying


Accumulated


NetClass of Intangible Asset

Amount


Amortization


TotalAmortized intangible assets:Contract-based physician minimum revenue guarantees:Balance at December 31, 2007

$
44.0


$
(8.8
)

$
35.2Additions, net of terminations


11.6



1.3



12.9Amortization expense






(4.3
)


(4.3
)Balance at June 30, 2008

$
55.6


$
(11.8
)

$
43.8Non-competition agreements:Balance at December 31, 2007

$
17.3


$
(7.0
)

$
10.3Amortization expense






(0.6
)


(0.6
)Balance at June 30, 2008

$
17.3


$
(7.6
)

$
9.7Indefinite-lived intangible assets:Certificates of need:Balance at December 31, 2007 and June 30, 2008

$
6.9


$



$
6.9Total intangible assets:Balance at December 31, 2007

$
68.2


$
(15.8
)

$
52.4Additions, net of terminations


11.6



1.3



12.9Amortization expense






(4.9
)


(4.9
)Balance at June 30, 2008

$
79.8


$
(19.4
)

$
60.4   Note 6.
    Discontinued
    Operations  Impact
    of Discontinued Operations
         13




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##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Three Months Ended


Six Months EndedJune 30,


June 30,2007


2008


2007


2008Revenues

$
18.3


$
(0.3
)

$
55.9


$
1.0Loss before income taxes


(4.2
)


(0.9
)


(5.4
)


(1.2
)   Impairment 
    Colorado River
   14




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##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Six Months EndedJune 30,


June 30,2007


2008


2007


2008Property and equipment

$
(1.1
)

$



$
(4.5
)

$
Net working capital










(4.9
)


3.6Goodwill










(3.1
)


(1.1
)






(12.5
)


3.6Income tax benefit (provision)


0.4







3.9



(1.3
)$
(0.7
)

$



$
(8.6
)

$
2.3   Impairment 
    Coastal
      Goodwill

$
(7.2
)Intangible assets


(0.4
)(7.6
)Income tax provision


(0.2
)$
(7.8
)   Note 7.
    Interest
    Rate Swap    15




---



##### 



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

(In millions)November 30, 2006 to November 30, 2007

$
900.0November 30, 2007 to November 28, 2008

$
750.0November 28, 2008 to November 30, 2009

$
600.0November 30, 2009 to November 30, 2010

$
450.0November 30, 2010 to May 30, 2011

$
300.0   FAS 157-2,
         16




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##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 8.
    Recently
    Issued Accounting Pronouncements         17




---



##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    14-1, 14-1). 14-1 14-1 14-1 14-1
  Note 9.
    Contingencies  Legal
    Proceedings and General Liability Claims
    Physician
    Commitments
   18




---



##### 



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Capital
    Expenditure Commitments
    Acquisitions
   19




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Form 10-K.
  Overview
      Six MonthsThree Months Ended


EndedJune 30,


June 30,2007


2008


2007


2008Revenues

$
654.3


$
680.8


$
1,315.5


$
1,380.7Income from continuing operations

$
24.6


$
31.5


$
63.3


$
71.2Diluted earnings per share from continuing operations

$
0.43


$
0.59


$
1.11


$
1.31   Key
    Challenges
    
    Inpatient Volumes.  We have experienced
    declining inpatient volumes during the past year. This was the
    result of physician attrition in several of our markets, lack of
    disease across our markets, the closure of certain unprofitable
    service lines at a few of our hospitals and the long-term
    industry trend of inpatient services shifting to outpatient
    services. We will focus on adding or further emphasizing service
    lines that are needed in our communities.    Admissions2007


2008First Quarter


52,207



52,358Second Quarter


48,191



47,076Third Quarter


48,367



N/AFourth Quarter


47,990



N/A196,755



99,434   
    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. However,
    we experienced a decrease in our provision for doubtful accounts
    during the three months ended June 30, 2008, as compared to
    the same period in 2007, which is discussed later in this report
    under Operating Results Summary  Provision
    for Doubtful Accounts. 20




---



##### 



Provision forDoubtful Accounts2007


2008First Quarter

$
73.2


$
82.7Second Quarter


81.2



76.7Third Quarter


78.7



N/AFourth Quarter


81.1



N/A$
314.2


$
159.4       Charity andIndigent CareWrite-Offs2007


2008First Quarter

$
14.9


$
13.6Second Quarter


13.5



13.3Third Quarter


11.8



N/AFourth Quarter


11.4



N/A$
51.6


$
26.9     Self-Pay Revenues2007


2008First Quarter

$
74.7


$
79.5Second Quarter


79.4



82.3Third Quarter


80.3



N/AFourth Quarter


75.6



N/A$
310.0


$
161.8   Form 10-Q
 21




---



##### 



Revenue DaysOutstandingin AccountsReceivable2007


2008March 31


43.4



41.4June 30


42.7



41.3September 30


43.3



N/ADecember 31


42.5



N/A     December 31,


March 31,


June 30,2007


2008


2008Insured receivables


33.2
%


34.9
%


34.6
%Uninsured receivables (including co-payments and deductibles)


66.8



65.1



65.4100.0
%


100.0
%


100.0
%     December 31,


March 31,


June 30,2007


2008


20080 to 60 days


45.1
%


48.2
%


48.7
%61 to 150 days


19.9



17.6



18.8Over 150 days


35.0



34.2



32.5100.0
%


100.0
%


100.0
%     
    Physician Recruitment and
    Retention.  Recruiting, attracting 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. The
    success of our recruiting efforts will depend on several
    factors. In general, there is a shortage of specialty care
    physicians. We face intense competition in the recruitment and
    retention of specialists because of concerns sometimes held
    about practicing or remaining in practice in non-urban
    communities. If the growth rate slows in the non-urban
    communities where our hospitals operate, then we could
    experience difficulty attracting and retaining physicians to
    practice in our communities.
    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. Additionally, we experienced unfavorable claims
    development results recently, which are reflected in our
    professional and general liability costs. We self-insure a
    substantial portion of our professional and general liability
    costs.
    Shortage of Clinical Personnel and Utilization of Contract
    Labor.In recent years, many hospitals, including
    some of the hospitals we own, have encountered difficulty in
    recruiting and retaining nurses and other clinical personnel.
    When we are unable to staff our nursing and other clinical
    positions, we are required to use contract labor to ensure
    adequate patient care. Contract labor generally costs more 22




---



##### 



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 nurses and other clinical personnel. However,
    we expect that staffing issues related to nurses and other
    clinical personnel will continue in the future. Additionally, we
    have incurred an increase in professional fees primarily for
    anesthesiology, hospitalists, fees for on-call coverage for
    physicians, and emergency room services. Our expense for
    professional fees paid to hospital-based physicians has
    increased as the shortage of these physicians becomes more acute.  
    Indebtedness.  Our consolidated debt was
    $1,523.6 million as of June 30, 2008, and we incurred
    $44.7 million of net interest expense during the six months
    ended June 30, 2008. Our indebtedness 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 June 30,
    2008 and believe we will be in compliance with them throughout
    the remainder of 2008.
    Medicare Changes  Hospital Inpatient Prospective
    Payment System.Changes with respect to
    governmental reimbursement affect our revenues and earnings. On
    August 1, 2007, the Centers for Medicare and Medicaid
    Services (CMS) issued its hospital inpatient
    prospective payment system (IPPS) final rule for
    Federal Fiscal year (FFY) 2008, which began on
    October 1, 2007. Among other items, the final rule created
    745 new severity-adjusted diagnosis-related groups
    (Medicare Severity DRGs or MS-DRGs) to
    replace Medicares previous 538 DRGs. The new MS-DRGs are
    being phased-in over a two-year period. In addition, the final
    rule also provided for a market basket increase of 3.3% in FFY
    2008 for hospitals that report certain patient care quality
    measures and an increase of 1.3% for hospitals that do not
    submit this information. However, to offset the effect of the
    coding and discharge classification changes that CMS believes
    will occur as hospitals implement the MS-DRG system, the final
    rule also reduced Medicare payments to hospitals by 1.2% in FFY
    2008 and 1.8% in both FFY 2009 and 2010. Subsequently, on
    September 29, 2007, President Bush signed Public Law
    No. 110-90,
    effectively decreasing these reductions for FFY 2008 to 0.6% and
    FFY 2009 to 0.9%. CMS has announced that it plans to conduct a
    look-back beginning in FFY 2010 and to make
    appropriate changes to the reduction percentages based on actual
    claims data. The implementation of the MS-DRG system and the
    other provisions of the final rule have resulted in our Medicare
    acute inpatient hospital reimbursement increasing approximately
    2.5% for the first nine months of FFY 2008.  No. 110-90
  
    Medicare Changes  Medicare Hospital Outpatient
    Prospective Payment System.On November 1,
    2007, CMS issued its final hospital outpatient prospective
    payment system rule for calendar year 2008. Among other
    provisions, this includes a 3.3% market basket update and
    requires hospitals to begin reporting on seven quality measures
    of emergency department and perioperative surgical care. 23




---



##### 




    Medicare Changes  Inpatient Rehabilitation
    Facility Prospective Payment System.On
    July 31, 2007, CMS published its Medicare inpatient
    rehabilitation facility prospective payment system final rule
    for FFY 2008. The final rule increased the inpatient
    rehabilitation facility (IRF) payment rate by 3.2%
    and the high-cost outlier threshold from $5,534 to $7,362 for
    FFY 2008. The final rule also continued the phase-in of the
    requirement that at least 75% of an IRFs patients have one
    of 13 designated medical conditions, which has resulted in
    decreased volume in our rehabilitation units. However, the
    Medicare, Medicaid and SCHIP Extension Act of 2007
    (MMSEA), enacted on December 29, 2007,
    permanently froze the compliance threshold at 60% effective for
    cost reporting periods beginning on or after July 1, 2006,
    and allows co-morbid conditions to count toward this threshold.
    MMSEA also set the IRF prospective payment system rate increase
    factor for FFYs 2008 and 2009 at 0%, effective for discharges
    beginning on or after April 1, 2008. On July 31, 2008,
    CMS issued its final IRF payment system rule for FFY 2009. In
    addition to implementing the changes required by MMSEA, the
    final rule sets the outlier threshold for FFY 2009 at $10,250
    and updates the IRF prospective payment systems case mix
    group relative weights and average length of stay values using
    FFY 2007 information. CMS anticipates that the final rule will
    decrease aggregate IRF payments by $40.0 million in FFY
    2009.
    Medicaid Changes.  States have adopted, or may
    be considering, legislation designed to reduce coverage and
    program eligibility, enroll Medicaid recipients in managed care
    programs
    and/or
    impose additional taxes on hospitals to help finance or expand
    the states Medicaid systems. Future legislation or other
    changes in the administration or interpretation of government
    health programs could have a material adverse effect on our
    financial position and results of operations. On May 25,
    2007, CMS issued a final rule entitled Medicaid Program:
    Cost Limit for Providers Operated by Units of Government and
    Provisions to Ensure the Integrity of Federal-State Financial
    Partnership, which was expected to reduce federal Medicaid
    funding by $4.0 billion over five years. On the same date,
    President Bush signed into law HR 2206, which placed a
    moratorium on the implementation of this rule for one year. On
    June 30, 2008, President Bush signed into law HR 2642, the
    Supplemental Appropriations Act of 2008. This legislation
    extends the moratorium on this rule and five other pending
    Medicaid rules until April 1, 2009. However, when the
    moratorium expires next year, this final rule could
    significantly impact state Medicaid programs and our revenue
    from these programs.
    NPI Implementation.  To improve the efficiency
    of the national healthcare system, the Health Insurance
    Portability and Accountability Act of 1996 (HIPAA)
    required the Department of Health and Human Services
    (HHS) to adopt regulations that, among other things,
    established a uniform set of national standards for electronic
    healthcare transactions. As part of those regulations, HHS
    adopted a requirement that all covered healthcare providers
    obtain and use a National Provider Indentifier (NPI)
    in all covered electronic healthcare transactions, which
    includes the electronic submission of healthcare claims. The NPI
    is intended to replace the multiple legacy or
    existing Medicare, Medicaid, and private third party payor
    provider numbers healthcare providers are currently required to
    use. CMS has been phasing in the use of the NPI in the Medicare
    program over the past several months. However, beginning
    May 23, 2008, all Medicare claims must be submitted under
    the providers NPI and Medicare fiscal intermediaries will
    no longer accept claims that contain the providers
    existing Medicare provider number. Some providers have
    encountered difficulties and have had their claims rejected by
    the Medicare payment system for issues relating to the
    implementation of the NPI.
    Increases in Supply Costs.  During the past few
    years, we have experienced an increase in supply costs
    per-equivalent admission, 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 24




---



##### 



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.  
    Dependence on Information Systems.  Our
    business depends significantly on effective information systems
    to process clinical and financial information. 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. HCA-IT provides us with
    financial, clinical, patient accounting and network information
    systems. Effective May 19, 2008, we entered into an
    agreement with HCA-IT, which superseded and replaced our
    previous agreement with HCA-IT dated May 11, 1999, as
    amended. Our new contract with HCA-IT expires on
    December 31, 2017 (including a wind-down period) unless
    extended by the parties.
    Summary.  Each of our challenges are
    intensified by our inability to control related trends and the
    associated risks. Therefore, our actual results may differ from
    our expectations. To maintain or improve operating margins in
    the future, we must, among other things, increase patient
    volumes by developing service lines in response to needs in the
    communities we serve.  Hospital
    Acquisitions
  Properties Form 10-K
  Discontinued
    Operations
           25




---



##### 



Three Months


Six MonthsEnded


EndedJune 30,


June 30,2007


2008


2007


2008Revenues

$
18.3


$
(0.3
)

$
55.9


$
1.0Loss from discontinued operations

$
(2.6
)

$
(0.7
)

$
(3.5
)

$
(0.9
)Impairment (charge) adjustment


(8.5
)






(16.4
)


2.3Loss on sale of hospitals


(0.1
)


(0.3
)


(0.2
)


(0.3
)Income (loss) from discontinued operations

$
(11.2
)

$
(1.0
)

$
(20.1
)

$
1.1Diluted (loss) earnings per share from discontinued operations

$
(0.20
)

$
(0.02
)

$
(0.35
)

$
0.02   Impairment 
    Colorado River
      Three Months Ended


Six Months EndedJune 30,


June 30,2007


2008


2007


2008Property and equipment

$
(1.1
)

$



$
(4.5
)

$
Net working capital










(4.9
)


3.6Goodwill










(3.1
)


(1.1
)






(12.5
)


3.6Income tax benefit (provision)


0.4







3.9



(1.3
)$
(0.7
)

$



$
(8.6
)

$
2.3  26




---



##### 



Impairment 
    Coastal
      Goodwill

$
(7.2
)Intangible assets


(0.4
)(7.6
)Income tax provision


(0.2
)$
(7.8
)   Revenue
    Sources
  Business,
      Form 10-K
        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. 27




---



##### 



Form 10-K
  
    Allowance for doubtful accounts and provision for doubtful
    accounts;
    Revenue recognition/Allowance for contractual discounts;
    Accounting for stock-based compensation;
    Goodwill and accounting for business combinations;
    Professional and general liability claims; and
    Accounting for income taxes.  Critical
    Accounting Estimate Update
    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.
 28




---



##### 



Operating
    Results Summary
    Three Months Ended June 30,


Six Months Ended June 30,2007


2008


2007


2008% of





% of





% of





% ofAmount


Revenues


Amount


Revenues


Amount


Revenues


Amount


RevenuesRevenues

$
654.3



100.0
%

$
680.8



100.0
%

$
1,315.5



100.0
%

$
1,380.7



100.0
%Salaries and benefits


257.1



39.3



271.6



39.9



514.0



39.1



547.0



39.6Supplies


89.7



13.7



95.3



14.0



182.1



13.8



190.8



13.8Other operating expenses


123.0



18.8



126.5



18.5



237.3



18.1



251.8



18.3Provision for doubtful accounts


81.2



12.4



76.7



11.3



154.4



11.7



159.4



11.5Depreciation and amortization


34.4



5.3



34.2



5.1



66.9



5.1



67.5



5.0Interest expense, net


25.4



3.9



22.2



3.3



51.8



3.9



44.7



3.2Impairment of long-lived assets










0.3















0.3



610.8



93.4



626.8



92.1



1,206.5



91.7



1,261.5



91.4Income from continuing operations before minority interests and
    income taxes


43.5



6.6



54.0



7.9



109.0



8.3



119.2



8.6Minority interests in earnings of consolidated entities


0.8



0.1



0.6



0.1



1.1



0.1



1.3



0.1Income from continuing operations before income taxes


42.7



6.5



53.4



7.8



107.9



8.2



117.9



8.5Provision for income taxes


18.1



2.8



21.9



3.2



44.6



3.4



46.7



3.3Income from continuing operations

$
24.6



3.7
%

$
31.5



4.6
%

$
63.3



4.8
%

$
71.2



5.2
%   For
    the Three Months Ended June 30, 2007 and 2008
  Revenues
   29




---



##### 



Three Months Ended





%June 30,


Increase


Increase2007


2008


(Decrease)


(Decrease)Admissions


48,191



47,076



(1,115
)


(2.3
)%Equivalent admissions


96,121



95,059



(1,062
)


(1.1
)Revenues per equivalent admission

$
6,807


$
7,162


$
355



5.2Medicare case mix index


1.24



1.27



0.03



2.4Average length of stay (days)


4.2



4.3



0.1



2.4Inpatient surgeries


14,459



13,897



(562
)


(3.9
)Outpatient surgeries


37,531



37,455



(76
)


(0.2
)Emergency room visits


221,645



221,186



(459
)


(0.2
)Outpatient factor


1.99



2.02



0.03



1.5     Three Months EndedJune 30,2007


2008Medicare


33.3
%


31.6
%Medicaid


9.4



9.5HMOs, PPOs and other private insurers


41.9



44.1Self-Pay


12.1



12.1Other


3.3



2.7100.0
%


100.0
%   Form 10-Q
 30




---



##### 



Expenses
  Salaries
    and Benefits
    Three Months Ended June 30,% of





% of


Increase


% Increase2007


Revenues


2008


Revenues


(Decrease)


(Decrease)Salaries and benefits:Salaries and wages

$
197.4



30.2
%

$
211.6



31.1
%

$
14.2



7.2
%Stock-based compensation


3.6



0.5



5.8



0.8



2.2



61.9Employee benefits


39.3



6.0



40.7



6.0



1.4



3.6Contract labor


12.7



2.0



11.3



1.7



(1.4
)


(11.7
)ESOP expense


4.1



0.6



2.2



0.3



(1.9
)


(47.7
)$
257.1



39.3
%

$
271.6



39.9
%

$
14.5



5.6
%Man-hours
    per equivalent admission


90.5



N/A



91.9



N/A



1.4



1.5
%Salaries and benefits per equivalent admission

$
2,554



N/A


$
2,690



N/A


$
136



5.3
%        31




---



##### 



Supplies
    Three Months EndedJune 30,


Increase


% Increase2007


2008


(Decrease)


(Decrease)Supplies

$
89.7


$
95.3


$
5.6



6.0
%Supplies as a percentage of revenues


13.7
%


14.0
%


30
bps


N/MSupplies per equivalent admission

$
935


$
994


$
59



6.3
%     Other
    Operating Expenses
    Three Months Ended June 30,% of





% of


Increase


% Increase2007


Revenues


2008


Revenues


(Decrease)


(Decrease)Professional fees

$
13.9



2.1
%

$
16.2



2.4
%

$
2.3



16.6
%Utilities


11.6



1.8



12.8



1.8



1.2



10.3Repairs and maintenance


13.7



2.1



14.3



2.1



0.6



4.4Rents and leases


6.6



1.0



6.8



1.0



0.2



6.3Insurance


11.7



1.8



11.7



1.7







Physician recruiting


3.5



0.5



5.9



0.9



2.4



66.2Contract services


35.9



5.5



34.5



5.0



(1.4
)


(3.7
)Non-income taxes


9.4



1.4



8.8



1.3



(0.6
)


(6.2
)Other


16.7



2.6



15.5



2.3



(1.2
)


(6.8
)$
123.0



18.8
%

$
126.5



18.5
%

$
3.5



3.1
%        32




---



##### 



Provision
    for Doubtful Accounts
    Three Months EndedJune 30,


Increase


% Increase2007


2008


(Decrease)


(Decrease)Provision for doubtful accounts

$
81.2


$
76.7


$
(4.5
)


(5.7
)%Percentage of revenues


12.4
%


11.3
%


(110
)bps


N/MCharity care write-offs

$
13.5


$
13.3


$
(0.2
)


(1.5
)Percentage of revenues


0.9
%


0.8
%


(10
)bps


N/M   Managements Discussion and Analysis of
    Financial Condition and Results of Operations Form 10-K.
  Depreciation
    and Amortization
    Interest
    Expense
    Three MonthsEndedJune 30,


Increase2007


2008


(Decrease)Interest expense:Senior Secured Credit Facilities, including commitment fees

$
21.3


$
8.7


$
(12.6
)Province
    71/2% Senior
    Subordinated Notes


0.1



0.1



31/4% Debentures


1.8



1.8



31/2% Notes


1.8



5.0



3.2Interest rate swap (including ineffective portion)


0.8



5.0



4.2Other


0.2







(0.2
)26.0



20.6



(5.4
)Amortization of deferred loan costs


1.8



1.9



0.1Less:Discontinued operations interest expense allocation


(0.8
)






0.8Interest income


(0.9
)


(0.1
)


0.8Capitalized interest


(0.7
)


(0.2
)


0.5$
25.4


$
22.2


$
(3.2
)  33




---



##### 



1 2 1 2
    Provision
    for Income Taxes
    Three MonthsEndedJune 30,


Increase2007


2008


(Decrease)Provision for income taxes

$
18.1


$
21.9


$
3.8Effective income tax rate


42.5
%


41.1
%


(140
) bps    34




---



##### 



For
    the Six Months Ended June 30, 2007 and 2008
  Revenues
      Six Months Ended





%June 30,


Increase


Increase2007


2008


(Decrease)


(Decrease)Admissions


100,398



99,434



(964
)


(1.0
)%Equivalent admissions


195,575



194,592



(983
)


(0.5
)Revenues per equivalent admission

$
6,726


$
7,095


$
369



5.5Medicare case mix index


1.24



1.27



0.03



2.4Average length of stay (days)


4.3



4.4



0.1



2.3Inpatient surgeries


29,430



28,161



(1,269
)


(4.3
)Outpatient surgeries


74,454



73,405



(1,049
)


(1.4
)Emergency room visits


443,920



455,252



11,332



2.6Outpatient factor


1.95



1.96



0.01



0.5     Six Months EndedJune 30,2007


2008Medicare


33.9
%


32.2
%Medicaid


9.7



9.7HMOs, PPOs and other private insurers


41.4



43.5Self-Pay


11.7



11.7Other


3.3



2.9100.0
%


100.0
%   Form 10-Q
 35




---



##### 



Expenses
  Salaries
    and Benefits
    Six Months Ended June 30,% of





% of


Increase


% Increase2007


Revenues


2008


Revenues


(Decrease)


(Decrease)Salaries and benefits:Salaries and wages

$
393.6



29.9
%

$
423.6



30.6
%

$
30.0



7.6
%Stock-based compensation


7.2



0.6



12.2



0.9



5.0



70.7Employee benefits


79.2



6.0



84.0



6.1



4.8



6.0Contract labor


26.1



2.0



23.2



1.7



(2.9
)


(11.0
)ESOP expense


7.9



0.6



4.0



0.3



(3.9
)


(49.5
)$
514.0



39.1
%

$
547.0



39.6
%

$
33.0



6.4
%Man-hours
    per equivalent admission


88.9



N/A



90.2



N/A



1.3



1.5
%Salaries and benefits per equivalent admission

$
2,504



N/A


$
2,643



N/A


$
139



5.6
%        36




---



##### 



Supplies
    Six MonthsEndedJune 30,


Increase


% Increase2007


2008


(Decrease)


(Decrease)Supplies

$
182.1


$
190.8


$
8.7



4.8
%Supplies as a percentage of revenues


13.8
%


13.8
%



bps


N/MSupplies per equivalent admission

$
933


$
980


$
47



5.0
%     Other
    Operating Expenses
    Six Months Ended June 30,% of





% of


Increase


% Increase2007


Revenues


2008


Revenues


(Decrease)


(Decrease)Professional fees

$
28.7



2.2
%

$
32.8



2.4
%

$
4.1



14.2
%Utilities


23.5



1.8



25.2



1.8



1.7



7.2Repairs and maintenance


27.0



2.1



28.4



2.0



1.4



5.2Rents and leases


13.2



1.0



13.3



1.0



0.1



1.2Insurance


17.5



1.3



21.6



1.6



4.1



23.3Physician recruiting


7.3



0.6



10.6



0.8



3.3



44.3Contract services


71.5



5.4



69.4



5.0



(2.1
)


(3.0
)Non-income taxes


18.9



1.4



18.8



1.4



(0.1
)


(0.6
)Other


29.7



2.3



31.7



2.3



2.0



6.9$
237.3



18.1
%

$
251.8



18.3
%

$
14.5



6.1
%        37




---



##### 



Provision
    for Doubtful Accounts
    Six MonthsEndedJune 30,


Increase


% Increase2007


2008


(Decrease)


(Decrease)Provision for doubtful accounts

$
154.4


$
159.4


$
5.0



3.2
%Percentage of revenues


11.7
%


11.5
%


(20
)bps


N/MCharity care write-offs

$
28.4


$
26.9


$
(1.5
)


(5.2
)%Percentage of revenues


0.9
%


0.8
%


(10
)bps


N/M   Managements Discussion and Analysis of Financial
    Condition and Results of Operations, Form 10-K.
  Depreciation
    and Amortization
   38




---



##### 



Interest
    Expense
    Six MonthsEndedJune 30,


Increase2007


2008


(Decrease)Interest expense:Senior Secured Credit Facilities, including commitment fees

$
46.6


$
19.9


$
(26.7
)Province
    71/2% Senior
    Subordinated Notes


0.2



0.2



31/4% Debentures


3.7



3.7



31/2% Notes


1.8



10.1



8.3Interest rate swap (including ineffective portion)


1.3



7.8



6.5Other


0.3



0.2



(0.1
)53.9



41.9



(12.0
)Amortization of deferred loan costs


3.1



3.7



0.6Less:Discontinued operations interest expense allocation


(2.5
)


(0.1
)


2.4Interest income


(1.3
)


(0.5
)


0.8Capitalized interest


(1.4
)


(0.3
)


1.1$
51.8


$
44.7


$
(7.1
)   1 2 1 2
    Provision
    for Income Taxes
    Six MonthsEndedJune 30,


Increase2007


2008


(Decrease)Provision for income taxes

$
44.6


$
46.7


$
2.1Effective income tax rate


41.3
%


39.6
%


(170
)bps    39




---



##### 



Liquidity
    and Capital Resources
  Liquidity
      Three Months Ended


Six Months EndedJune 30,


June 30,2007


2008


2007


2008Net cash flows provided by continuing operating activities

$
84.3


$
74.3


$
135.3


$
179.4Less: Purchase of property and equipment


(40.6
)


(42.3
)


(72.6
)


(75.7
)Free operating cash flow


43.7



32.0



62.7



103.7Acquisition, net of cash acquired






(9.3
)






(9.3
)Proceeds from (payments for) disposal of hospitals


72.7



(3.3
)


72.8



(3.3
)Payment of debt issue costs


(13.3
)






(13.3
)


Proceeds from borrowings


575.0



10.4



615.0



10.4Payments on borrowings


(705.1
)






(757.5
)


Proceeds from exercise of stock options


11.1



0.1



12.1



0.1Repurchase of common stock






(30.5
)






(118.1
)Other


1.6



(5.5
)


1.8



(5.7
)Cash flows from operations (used in) provided by discontinued
    operations


(5.2
)


(2.2
)


7.6



(6.3
)Net (decrease) increase in cash and cash equivalents

$
(19.5
)

$
(8.3
)

$
1.2


$
(28.5
)    40




---



##### 



Working
    Capital
    December 31,


June 30,2007


2008Total current assets

$
601.4


$
585.2Total current liabilities


261.5



246.4Net working capital

$
339.9


$
338.8Current ratio


2.3



2.4   Capital
    Expenditures
      Three Months Ended


Six Months EndedJune 30,


June 30,2007


2008


2007


2008Capital projects

$
30.6


$
28.9


$
50.1


$
50.7Routine


8.6



12.4



19.6



23.7Information systems


1.4



1.0



2.9



1.3$
40.6


$
42.3


$
72.6


$
75.7Depreciation expense

$
33.7


$
33.9


$
65.5


$
66.9Ratio of capital expenditures to depreciation expense


120.5
%


124.8
%


110.8
%


113.2
%    41




---



##### 



Debt
    December 31,


Proceeds from


Payments of





June 30,2007


Borrowings


Borrowings


Other


2008Senior Secured Credit Facilities:Term B Loans

$
706.0


$
0.4


$



$



$
706.4Revolving Loans






10.0











10.0Province
    71/2% Senior
    Subordinated Notes


6.1















6.1Province
    41/4% Convertible
    Subordinated Notes


0.1















0.131/2% Notes


575.0















575.031/4% Debentures


225.0















225.0Other, including capital leases


5.2







(5.0
)


0.8



1.0$
1,517.4


$
10.4


$
(5.0
)

$
0.8


$
1,523.6     December 31,


June 30,


Increase2007


2008


(Decrease)Current portion of long-term debt

$
0.5


$
0.5


$
Long-term debt


1,516.9



1,523.1



6.2Total debt


1,517.4



1,523.6



6.2Total stockholders equity


1,544.2



1,526.6



(17.6
)Total capitalization

$
3,061.6


$
3,050.2


$
(11.4
)Total debt to total capitalization


49.6
%


50.0
%


40bpsPercentage of:Fixed rate debt


53.5
%


53.0
%Variable rate debt(*)


46.5



47.0100.0
%


100.0
%Percentage of:Senior debt


46.9
%


47.1
%Subordinated debt


53.1



52.9100.0
%


100.0
%     (*)
    
    Our interest rate swap mitigates our floating rate risk on our
    outstanding variable rate borrowings which converts 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 46.5% to zero as of
    December 31, 2007 and from 47.0% to zero as of
    June 30, 2008. Please refer to the Capital
    Resources  Interest Rate Swap section below for
    a discussion of our interest rate swap agreement. 42




---



##### 



Capital
    Resources
  31/2% Convertible
    Senior Subordinated Notes due May 15, 2014
  1 2 1 2 1 2 Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations 1 2 Form 10-K 1 2
  Senior
    Secured Credit Facilities
  Terms
  1 2
    Borrowings
    and Payments
      Letters
    of Credit and Availability
   43




---



##### 



Interest
    Rates
  and/or
  90-day 90-day
    Covenants
      Level atJune 30,Requirement


2008Minimum Interest Coverage Ratio


>3.50:1.00



5.73Maximum Total Leverage Ratio


<4.25:1.00



3.24       31/4% Convertible
    Senior Subordinated Debentures due August 15,
    2025
  1 4 1 4 1 4 Managements Discussion and Analysis of Financial
    Condition and Results of Operations, 1 4 Form 10-K 1 4
 44




---



##### 



Province
    71/2% Senior
    Subordinated Notes
  1 2 1 2 1 2 1 2 1 2
  Province
    41/4% Convertible
    Subordinated Notes
  1 4
  Interest
    Rate Swap
    Notional AmountDate Range

(In millions)November 30, 2006 to November 30, 2007

$
900.0November 30, 2007 to November 28, 2008

$
750.0November 28, 2008 to November 30, 2009

$
600.0November 30, 2009 to November 30, 2010

$
450.0November 30, 2010 to May 30, 2011

$
300.0   FAS 157-2,
       45




---



##### 



Debt
    Ratings
  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations, Form 10-K Form 10-K.
  Liquidity
    and Capital Resources Outlook
         46




---



##### 



Contractual
    Obligations
  Form 10-K.
  Payment Due by PeriodJuly 1, 2008 toPurchase Obligations

Total


December 31, 2008


2009-2010


2011-2012


After 2012HCA-IT services

$
257.6


$
11.8


$
49.1


$
52.1


$
144.6      Off-Balance
    Sheet Arrangements
    Recently
    Issued Accounting Pronouncements
    Contingencies
    
    Legal proceedings and general liability claims;
    Physician commitments;
    Capital expenditure commitments; and
    Acquisitions. 47




---



##### 



Forward-Looking
    Statements
  and/or
  
    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 acquisitions, divestitures,
    business strategies and initiatives;
    interpretations of Medicare and Medicaid law and their effects
    on our business; and
    descriptions of assumptions underlying or relating to any of the
    foregoing.    
    future financial performance and condition;
    future liquidity and capital resources;
    repurchases of our common stock;
    future cash flows;
    existing and future debt and equity structure;
    compliance with debt covenants;
    our strategic goals;
    our business strategy and operating philosophy, including the
    manner in which potential acquisitions or divestitures are
    evaluated;
    supply and information technology costs;
    changes in interest rates;
    our plans as to the payment of dividends;
    industry and general economic trends;
    the efforts of insurers and other payors, healthcare providers
    and others to contain healthcare costs;
    reimbursement changes;
    patient volumes and related revenues;
    future capital expenditures;
    expected changes in certain expenses;
    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;
    staffing issues relating to nurses and other clinical
    personnel; and
    physician recruiting and retention.  Risk Factors Form 10-K Form 10-K
 48




---



##### 



and/or Form 10-K
    
    reduction in payments to healthcare providers by government and
    commercial third-party payors, as well as changes in the manner
    in which employers provide healthcare coverage to their
    employees including high deductible plans;
    the possibility of adverse changes in, and requirements of,
    applicable laws, regulations, policies and procedures;
    our ability to manage healthcare risks, including malpractice
    litigation, and the lack of state and federal tort reform;
    the availability, cost and terms of insurance coverage;
    the highly competitive nature of the healthcare business,
    including the competition to recruit and retain physicians and
    other healthcare professionals;
    the ability to attract and retain qualified management and
    personnel;
    our reliance on contract labor;
    the geographic concentration of our operations;
    changes in our operating or expansion strategy;
    the ability to operate and integrate newly acquired facilities
    successfully;
    the availability and terms of capital to fund our business
    strategy;
    changes in our liquidity or the amount or terms of our
    indebtedness and in our debt credit ratings;
    the potential adverse impact of government investigations and
    litigation involving the business practices of healthcare
    providers, including whistleblowers investigations;
    changes in generally accepted accounting principles or practices;
    volatility in the market value of our common stock;
    changes in general economic conditions in the markets we serve;
    ability to add or further emphasize service lines that are
    needed in our communities;
    our reliance on information technology systems maintained by
    HCA-IT;
    the costs of complying with the Americans with Disabilities Act;
    possible adverse rulings, judgments, settlements and other
    outcomes of pending litigation; and
    those risks and uncertainties described from time to time in our
    filings with the SEC. 49




---



##### 



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk.  Interest
    Rates
    Outstanding
    Debt
      1 4 1 2
  Cash
    Balances
    Item 4.
    Controls
    and Procedures.  Rule 13a-15
   50




---



##### 



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings.    Item 1A.
    Risk
    Factors.  Form 10-K.
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.    Total Number


Approximateof Shares


Dollar ValuePurchased as


of Shares thatWeighted


Part of a


May Yet beTotal Number


Average


Publicly


Purchasedof Shares


Price Paid


Announced


Under thePeriod

Purchased


per Share


Program(1)


Program(1)(In millions)April 1, 2008 to April 30, 2008(2)


77,532


$
28.37







May 1, 2008 to May 31, 2008


548,039


$
31.37



548,039


$
16.2June 1, 2008 to June 30, 2008


359,424


$
31.08



359,424


$
5.1Total


984,995


$
31.03



907,463


$
5.1     (1)
    
    In November 2007, the Companys Board of Directors
    authorized the repurchase of up to $150.0 million of
    outstanding shares of the Companys common stock either in
    the open market or through privately negotiated transactions,
    subject to market conditions, regulatory constraints and other
    factors, to utilize excess cash flow after its capital
    expenditure needs have been satisfied. The Company is not
    obligated to repurchase any specific number of shares under the
    program. The program expires on November 26, 2008, but may
    be extended, suspended or discontinued at any time prior to the
    expiration date. As of June 30, 2008, the Company had
    repurchased in the aggregate, approximately 5.3 million
    shares at an aggregate purchase price, including commissions, of
    approximately $144.9 million. These shares have been
    designated by the Company as treasury stock.(2)
    
    This relates to shares redeemed for tax withholding purposes
    upon vesting of certain previously granted restricted shares
    under the LTIP. 51




---



##### 



Item 4.
    Submission
    of Matters to a Vote of Security Holders.    Proposal 1  Election of Directors
  Votes


VotesFor


WithheldWilliam F. Carpenter III


46,726,758



1,676,097Richard H. Evans


44,535,561



3,867,294Michael P. Haley


44,531,790



3,871,065     Proposal 2  Ratification of the selection of
    Ernst & Young LLP as our independent registered public
    accounting firm for the year ending December 31, 2008
  Votes

Votes

VotesFor

Against

Abstain47,915,124

485,661

2,070   Proposal 3  Amendment of Amended and Restated
    1998 Long-Term Incentive Plan
  Votes

Votes

VotesFor

Against

Abstain36,856,924

8,697,839*

187,890     *
    
    Includes 2,660,202 broker non-votes    Proposal 4  Amendment of Management Stock
    Purchase Plan (MSPP)
  Votes

Votes

VotesFor

Against

Abstain35,843,763

9,704,578*

194,312     *
    
    Includes 2,660,202 broker non-votes   52




---



##### 



Item 6.
    Exhibits.  ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation (incorporated
    by reference from exhibits to the Registration Statement on
    Form S-8
    filed on April 19, 2005, File
    No. 333-124093).3
.2

Second Amended and Restated Bylaws (incorporated by reference
    from exhibits to the LifePoint Hospitals, Inc. Current Report on
    Form 8-K
    dated October 16, 2006, File
    No. 000-51251).3
.3

Amendment No. 1 to the 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 May 20, 2008, File
    No. 000-51251).10
.1

Computer and Data Processing Services Agreement dated
    May 21, 2008, by and between HCA Information Technology
    Services, Inc. and LifePoint Hospitals, Inc. (incorporated by
    reference from exhibits to the LifePoint Hospitals, Inc. Current
    Report on
    Form 8-K
    dated May 21, 2008, File
    No. 000-51251).10
.2

First Amendment, dated May 13, 2008, to the LifePoint
    Hospitals, Inc. Amended and Restated 1998 Long-Term Incentive
    Plan.10
.3

First Amendment, dated May 13, 2008, to the LifePoint
    Hospitals, Inc. Management Stock Purchase Plan.10
.4

Amended and Restated LifePoint Hospitals, Inc. Outside Directors
    Stock and Incentive Compensation Plan, dated May 14, 2008.10
.5

Form of LifePoint Hospitals, Inc. Deferred Restricted Stock
    Award Agreement.10
.6

Recoupment Policy Relating to Unearned Incentive Compensation of
    Executive Officers (incorporated by reference from exhibits to
    the LifePoint Hospitals, Inc. Current Report on
    Form 8-K
    dated May 20, 2008, File
    No. 000-51251).31
.1

Certification of the Chief Executive Officer of LifePoint
    Hospitals, Inc. Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2

Certification of the Chief Financial Officer of LifePoint
    Hospitals, Inc. Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1

Certification of the Chief Executive Officer of LifePoint
    Hospitals, Inc. Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.32
.2

Certification of the Chief Financial Officer of LifePoint
    Hospitals, Inc. Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.  53




---



##### 



SIGNATURES
      By:
    /s/  David
    M. Dill       54




---



##### 



EXHIBIT INDEX
  ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation (incorporated
    by reference from exhibits to the Registration Statement on
    Form S-8
    filed on April 19, 2005, File
    No. 333-124093).3
.2

Second Amended and Restated Bylaws (incorporated by reference
    from exhibits to the LifePoint Hospitals, Inc. Current Report on
    Form 8-K
    dated October 16, 2006, File
    No. 000-51251).3
.3

Amendment No. 1 to the 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 May 20, 2008, File
    No. 000-51251).10
.1

Computer and Data Processing Services Agreement dated
    May 21, 2008, by and between HCA Information Technology
    Services, Inc. and LifePoint Hospitals, Inc. (incorporated by
    reference from exhibits to the LifePoint Hospitals, Inc. Current
    Report on
    Form 8-K
    dated May 21, 2008, File
    No. 000-51251).10
.2

First Amendment, dated May 13, 2008, to the LifePoint
    Hospitals, Inc. Amended and Restated 1998 Long-Term Incentive
    Plan.10
.3

First Amendment, dated May 13, 2008, to the LifePoint
    Hospitals, Inc. Management Stock Purchase Plan.10
.4

Amended and Restated LifePoint Hospitals, Inc. Outside Directors
    Stock and Incentive Compensation Plan, dated May 14, 2008.10
.5

Form of LifePoint Hospitals, Inc. Deferred Restricted Stock
    Award Agreement.10
.6

Recoupment Policy Relating to Unearned Incentive Compensation of
    Executive Officers (incorporated by reference from exhibits to
    the LifePoint Hospitals, Inc. Current Report on
    Form 8-K
    dated May 20, 2008, File
    No. 000-51251).31
.1

Certification of the Chief Executive Officer of LifePoint
    Hospitals, Inc. Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2

Certification of the Chief Financial Officer of LifePoint
    Hospitals, Inc. Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1

Certification of the Chief Executive Officer of LifePoint
    Hospitals, Inc. Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.32
.2

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