##### Table of Contents



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
    September 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


22Item 3.


Quantitative and Qualitative Disclosures about
    Market Risk


54Item 4.


Controls and Procedures


54PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


55Item 1A.


Risk Factors


55Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


55Item 6.


Exhibits


56EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



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


Nine Months EndedSeptember 30,


September 30,2007


2008


2007


2008Revenues

$
641.0


$
675.1


$
1,925.0


$
2,025.9Salaries and benefits


252.8



265.6



752.5



797.5Supplies


86.4



93.0



263.4



279.3Other operating expenses


116.3



128.3



346.1



372.2Provision for doubtful accounts


76.9



78.9



227.9



234.7Depreciation and amortization


31.6



32.2



97.2



97.8Interest expense, net


21.5



22.1



72.7



66.2Impairment of long-lived assets






0.9







1.2585.5



621.0



1,759.8



1,848.9Income from continuing operations before minority interests and
    income taxes


55.5



54.1



165.2



177.0Minority interests in earnings of consolidated entities


0.7



0.5



1.5



1.6Income from continuing operations before income taxes


54.8



53.6



163.7



175.4Provision for income taxes


22.7



22.1



67.7



70.4Income from continuing operations


32.1



31.5



96.0



105.0Discontinued operations, net of income taxes:Loss from discontinued operations


(3.8
)


(3.3
)


(7.9
)


(6.5
)Impairment adjustment (charge)


0.3



(16.8
)


(16.1
)


(14.5
)Loss on sale of hospitals


(0.4
)






(0.6
)


(0.3
)Loss from discontinued operations


(3.9
)


(20.1
)


(24.6
)


(21.3
)Net income

$
28.2


$
11.4


$
71.4


$
83.7Basic earnings (loss) per share:Continuing operations

$
0.57


$
0.61


$
1.71


$
1.99Discontinued operations


(0.07
)


(0.39
)


(0.44
)


(0.40
)Net income

$
0.50


$
0.22


$
1.27


$
1.59Diluted earnings (loss) per share:Continuing operations

$
0.56


$
0.60


$
1.68


$
1.96Discontinued operations


(0.07
)


(0.38
)


(0.43
)


(0.40
)Net income

$
0.49


$
0.22


$
1.25


$
1.56Weighted average shares and dilutive securities outstanding:Basic


56.4



51.7



56.1



52.7Diluted


57.3



52.8



57.1



53.7    3




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##### Table of Contents



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


September 30,2007(1)


2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
53.1


$
51.5Accounts receivable, less allowances for doubtful accounts of
    $376.3 and $373.8 at December 31, 2007 and
    September 30, 2008, respectively


304.5



317.7Inventories


67.1



67.9Assets held for sale


37.0



26.1Prepaid expenses


12.3



14.2Income taxes receivable


27.9



25.1Deferred tax assets


113.6



124.8Other current assets


20.6



18.9636.1



646.2Property and equipment:Land


70.4



70.8Buildings and improvements


1,195.3



1,231.7Equipment


659.6



706.3Construction in progress (estimated cost to complete and equip
    after September 30, 2008 is $148.4)


32.6



43.11,957.9



2,051.9Accumulated depreciation


(574.9
)


(659.6
)1,383.0



1,392.3Deferred loan costs, net


38.6



33.1Intangible assets, net


52.4



62.5Other


4.4



9.3Goodwill


1,512.0



1,509.0$
3,626.5


$
3,652.4LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
95.6


$
86.8Accrued salaries


66.0



77.5Other current liabilities


99.6



96.5Current maturities of long-term debt


0.5



0.5261.7



261.3Long-term debt


1,516.7



1,512.9Deferred income taxes


113.2



111.3Professional and general liability claims and other liabilities


120.0



125.1Long-term income tax liability


55.5



73.4Minority interests in equity of consolidated entities


15.2



17.3Stockholders 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 58,768,587 shares issued at
    December 31, 2007 and September 30, 2008, respectively


0.6



0.6Capital in excess of par value


1,084.9



1,110.2Unearned ESOP compensation


(3.1
)


(0.8
)Accumulated other comprehensive loss


(19.8
)


(18.2
)Retained earnings


522.8



606.5Common stock in treasury, at cost, 1,356,487 and
    5,341,545 shares at December 31, 2007 and
    September 30, 2008, respectively


(41.2
)


(147.2
)1,544.2



1,551.1$
3,626.5


$
3,652.4    (1)
    
    Derived from audited consolidated financial statements.   4




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##### Table of Contents



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


Nine Months EndedSeptember 30,


September 30,2007


2008


2007


2008Cash flows from operating activities:Net income

$
28.2


$
11.4


$
71.4


$
83.7Adjustments to reconcile net income to net cash provided by
    operating activities:Loss from discontinued operations


3.9



20.1



24.6



21.3Stock-based compensation


5.3



5.5



12.4



17.6ESOP expense (non-cash portion)


2.3



2.2



6.8



6.1Depreciation and amortization


31.6



32.2



97.2



97.8Amortization of physician minimum revenue guarantees


1.4



2.6



3.4



6.8Amortization of deferred loan costs


1.9



1.8



4.9



5.5Minority interests in earnings of consolidated entities


0.7



0.5



1.5



1.6Deferred income tax benefit


(17.7
)


(10.6
)


(52.7
)


(1.0
)Reserve for professional and general liability claims, net


(0.1
)


(0.2
)


4.0



7.9Increase (decrease) in cash from operating assets and
    liabilities, net of effects from acquisitions and divestitures:Accounts receivable


(14.4
)


(9.5
)


(15.2
)


(12.3
)Inventories and other current assets


(5.6
)


(6.3
)


(12.6
)


(1.8
)Accounts payable and accrued expenses


(14.5
)


10.3



(25.6
)


6.4Income taxes payable/receivable


0.8



21.2



40.0



17.5Other


(0.2
)


0.9



(0.7
)


3.2Net cash provided by operating activities  continuing
    operations


23.6



82.1



159.4



260.3Net cash provided by (used in) operating activities 
    discontinued operations


9.1



(6.1
)


16.2



(11.2
)Net cash provided by operating activities


32.7



76.0



175.6



249.1Cash flows from investing activities:Purchase of property and equipment


(37.7
)


(37.5
)


(106.7
)


(111.5
)Acquisitions, net of cash acquired






(1.3
)






(10.6
)Other






(4.9
)






(4.9
)Net cash used in investing activities  continuing
    operations


(37.7
)


(43.7
)


(106.7
)


(127.0
)Net cash provided by (used in) investing activities 
    discontinued operations


33.8







103.1



(5.0
)Net cash used in investing activities


(3.9
)


(43.7
)


(3.6
)


(132.0
)Cash flows from financing activities:Proceeds from borrowings










615.0



10.4Payments of borrowings


(8.4
)


(10.0
)


(765.9
)


(10.0
)Proceeds from exercise of stock options


0.4



3.3



12.5



3.4Proceeds from employee stock purchase plans


1.0



0.5



1.5



0.8Proceeds received for completion of new hospital


14.7







14.7



Repurchases of common stock






(0.1
)






(118.2
)Payment of debt issuance costs


(0.9
)






(14.2
)


Distributions to (proceeds from) minority investors in joint
    ventures


(0.5
)


0.8



1.2



(0.2
)Capital lease payments and other






0.1



(0.5
)


(4.9
)Net cash provided by (used in) financing activities


6.3



(5.4
)


(135.7
)


(118.7
)Change in cash and cash equivalents


35.1



26.9



36.3



(1.6
)Cash and cash equivalents at beginning of period


13.4



24.6



12.2



53.1Cash and cash equivalents at end of period

$
48.5


$
51.5


$
48.5


$
51.5Supplemental disclosure of cash flow information:Interest payments

$
41.9


$
17.5


$
72.1


$
58.6Capitalized interest

$
0.2


$
0.3


$
1.6


$
0.6Income taxes paid, net

$
39.8


$
13.3


$
80.3


$
55.0    5




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##### Table of Contents



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


Unearned


OtherCommon Stock


Excess of


ESOP


Comprehensive


Retained


TreasuryShares


Amount


Par Value


Compensation


Income (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






















83.7







83.7Net change in fair value of interest rate swap, net of tax
    provision of $0.6


















1.6











1.6Total comprehensive income






























85.3Non-cash ESOP compensation earned










3.9



2.3















6.2Exercise of stock options, including tax benefits of stock-based
    awards


0.2







2.9



















2.9Stock activity in connection with employee stock purchase plan










0.8



















0.8Stock-based compensation


0.4







17.7



















17.7Repurchases of common stock, at cost


(3.9
)






















(106.0
)


(106.0
)Balance at September 30, 2008


53.4


$
0.6


$
1,110.2


$
(0.8
)

$
(18.2
)

$
606.5


$
(147.2
)

$
1,551.1    6




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##### Table of Contents



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




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 3.
    Discontinued
    Operations  Impact
    of Discontinued Operations
               8




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##### Table of Contents



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


Nine MonthsEnded


EndedSeptember 30,


September 30,2007


2008


2007


2008Revenues:Opelousas

$
10.2


$
7.6


$
30.5


$
26.3Starke


5.0



4.4



16.2



15.6Colorado River


1.9



(0.3
)


6.4



1.8Coastal


(0.5
)


(0.1
)


16.7



(0.4
)St. Josephs


(0.2
)


(0.1
)


34.1



(0.7
)Other


(0.1
)






(0.2
)


(0.3
)$
16.3


$
11.5


$
103.7


$
42.3Loss before income taxes

$
(6.2
)

$
(5.0
)

$
(12.5
)

$
(10.1
)   Impairment 
    Opelousas
      Property and equipment

$
6.1Goodwill


8.7Intangible assets


0.815.6Income tax benefit


(4.3
)$
11.3   Impairment 
    Starke
   9




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Property and equipment

$
4.4Goodwill


2.9Intangible assets


0.37.6Income tax benefit


(2.1
)$
5.5   Impairment 
    Colorado River
        Three Months


Nine MonthsEnded


EndedSeptember 30,


September 30,2007


2008


2007


2008Property and equipment

$
0.4


$



$
(4.1
)

$
Net working capital










(4.9
)


3.6Goodwill










(3.1
)


0.4







(12.1
)


3.6Income tax (provision) benefit


(0.1
)






3.8



(1.3
)$
0.3


$



$
(8.3
)

$
2.3  10




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Impairment 
    Coastal
      Goodwill

$
7.2Intangible assets


0.47.6Income tax provision


0.2$
7.8   Note 4.
    Goodwill
    and Intangible Assets  Goodwill
      Balance at December 31, 2007

$
1,512.0Goodwill acquired as part of the Dodge City Surgery Center and
    certain other acquisitions during the nine months ended
    September 30, 2008


8.6Impairment related to Opelousas


(8.7
)Impairment related to Starke


(2.9
)Balance at September 30, 2008

$
1,509.0    11




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##### Table of Contents



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




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##### Table of Contents



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


14.6



2.0



16.6Amortization expense






(6.8
)


(6.8
)Balance at September 30, 2008

$
58.6


$
(13.6
)

$
45.0Non-competition agreements:Balance at December 31, 2007

$
17.3


$
(7.0
)

$
10.3Additions


1.2







1.2Amortization expense






(0.9
)


(0.9
)Balance at September 30, 2008

$
18.5


$
(7.9
)

$
10.6Indefinite-lived intangible assets:Certificates of need:Balance at December 31, 2007 and September 30, 2008

$
6.9


$



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

$
68.2


$
(15.8
)

$
52.4Additions, net of terminations


15.8



2.0



17.8Amortization expense






(7.7
)


(7.7
)Balance at September 30, 2008

$
84.0


$
(21.5
)

$
62.5   Note 5.
    Stock-Based
    Compensation     13




---



##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock
    Options
        Nine Months EndedSeptember 30,2007

2008Expected volatility

27.1%

31.9%Risk free interest rate (range)

3.78%  5.21%

1.07%  3.89%Expected dividends



Average expected term (years)

4.7

5.3Fair value per share for stock options granted

$10.26

$8.15    14




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other
    Stock-Based Awards
           15




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##### Table of Contents



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


Nine MonthsEnded


EndedSeptember 30,


September 30,2007


2008


2007


2008Stock options

$
2.0


$
1.7


$
5.3


$
5.6Other stock-based awards


3.3



3.8



7.1



12.0Total stock-based compensation expense

$
5.3


$
5.5


$
12.4


$
17.6Tax benefits on stock-based compensation expense

$
2.1


$
2.2


$
5.0


$
7.2     Note 6.
    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  16




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  FAS 157-2, FAS 157-2).
         17




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 7.
    Earnings
    (Loss) Per Share    Three Months


Nine MonthsEnded


EndedSeptember 30,


September 30,2007


2008


2007


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

$
32.1


$
31.5


$
96.0


$
105.0Loss from discontinued operations, net of income taxes


(3.9
)


(20.1
)


(24.6
)


(21.3
)$
28.2


$
11.4


$
71.4


$
83.7Denominator:Denominator for basic earnings (loss) per share 
    weighted average shares outstanding


56.4



51.7



56.1



52.7Effect of dilutive securities:Employee stock benefit plans


0.9



1.1



1.0



1.0Denominator for diluted earnings (loss) per share 
    weighted average shares


57.3



52.8



57.1



53.7Basic earnings (loss) per share:Continuing operations

$
0.57


$
0.61


$
1.71


$
1.99Discontinued operations


(0.07
)


(0.39
)


(0.44
)


(0.40
)Net income

$
0.50


$
0.22


$
1.27


$
1.59Diluted earnings (loss) per share:Continuing operations

$
0.56


$
0.60


$
1.68


$
1.96Discontinued operations


(0.07
)


(0.38
)


(0.43
)


(0.40
)Net income

$
0.49


$
0.22


$
1.25


$
1.56   1 2 1 2 1 4 1 4 1 4 1 2
 18




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 8.
    Recently
    Issued Accounting Pronouncements       19




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    14-1, 14-1). 14-1 14-1 14-1
  Note 9.
    Contingencies  Legal
    Proceedings and General Liability Claims
   20




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##### Table of Contents



LIFEPOINT
    HOSPITALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Physician
    Commitments
    Capital
    Expenditure Commitments
    Acquisitions
   21




---



##### Table of Contents



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


Nine MonthsEnded


EndedSeptember 30,


September 30,2007


2008


2007


2008Revenues

$
641.0


$
675.1


$
1,925.0


$
2,025.9Income from continuing operations

$
32.1


$
31.5


$
96.0


$
105.0Diluted earnings per share from continuing operations

$
0.56


$
0.60


$
1.68


$
1.96   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 physicians and on adding or
    further emphasizing service lines that are needed in our
    communities.    Admissions2007


2008First Quarter


50,895



51,114Second Quarter


47,009



45,945Third Quarter


47,118



45,980Fourth Quarter


46,756



N/A191,778



143,039   
    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
    as a percentage of revenues, during the three and nine months
    ended September 30, 2008, as compared to the same periods
    in 2007, which is discussed later in this report under
    Operating Results Summary  Provision for
    Doubtful Accounts. 22




---



##### Table of Contents



Provision forDoubtful Accounts2007


2008First Quarter

$
71.5


$
80.9Second Quarter


79.5



74.9Third Quarter


76.9



78.9Fourth Quarter


79.1



N/A$
307.0


$
234.7       Charity andIndigent CareWrite-Offs2007


2008First Quarter

$
14.7


$
13.5Second Quarter


13.2



13.1Third Quarter


11.6



13.4Fourth Quarter


11.1



N/A$
50.6


$
40.0     Self-Pay Revenues2007


2008First Quarter

$
72.1


$
77.4Second Quarter


76.8



80.4Third Quarter


77.8



85.1Fourth Quarter


73.3



N/A$
300.0


$
242.9   10-Q
 23




---



##### Table of Contents



Revenue DaysOutstandingin AccountsReceivable2007


2008March 31


44.4



42.3June 30


43.8



42.3September 30


44.3



43.3December 31


43.5



N/A     December 31,


March 31,


June 30,


September 30,2007


2008


2008


2008Insured receivables


33.2
%


34.9
%


34.6
%


35.3
%Uninsured receivables (including co-payments and deductibles)


66.8



65.1



65.4



64.7100.0
%


100.0
%


100.0
%


100.0
%     December 31,


March 31,


June 30,


September 30,2007


2008


2008


20080 to 60 days


45.1
%


48.2
%


48.7
%


47.9
%61 to 150 days


19.9



17.6



18.8



19.2Over 150 days


35.0



34.2



32.5



32.9100.0
%


100.0
%


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. Recent and ongoing disruptions in the insurance industry
    could affect the cost and availability of insurance from third
    parties. 24




---



##### Table of Contents




    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 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
    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
    $1,513.4 million as of September 30, 2008, and we
    incurred $66.2 million of net interest expense during the
    nine months ended September 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 September 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
    2.6% for FFY 2008.  No. 110-90
 25




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##### Table of Contents




    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.    
    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
    September 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.
    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 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. 26




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##### Table of Contents




    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.
    General Economic Conditions.  Current
    conditions in the credit markets and stress in the banking and
    financial institution industries has not yet had a material
    impact on our volumes or our ability to collect outstanding
    receivables. In addition, a significant amount of our admissions
    comes through our emergency rooms and, therefore, is not usually
    materially impacted by broad economic factors. However, our
    levels of elective procedures and our ability to collect
    accounts receivable may be materially impacted if the current
    economic environment continues.  Hospital
    Acquisitions
  Properties Form 10-K
  Discontinued
    Operations
             27




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##### Table of Contents



Three Months


Nine MonthsEnded


EndedSeptember 30,


September 30,2007


2008


2007


2008Revenues:Opelousas

$
10.2


$
7.6


$
30.5


$
26.3Starke


5.0



4.4



16.2



15.6Colorado River


1.9



(0.3
)


6.4



1.8Coastal


(0.5
)


(0.1
)


16.7



(0.4
)St. Josephs


(0.2
)


(0.1
)


34.1



(0.7
)Other


(0.1
)






(0.2
)


(0.3
)$
16.3


$
11.5


$
103.7


$
42.3Loss from discontinued operations

$
(3.8
)

$
(3.3
)

$
(7.9
)

$
(6.5
)Impairment adjustment (charge)


0.3



(16.8
)


(16.1
)


(14.5
)Loss on sale of hospitals


(0.4
)






(0.6
)


(0.3
)Loss from discontinued operations

$
(3.9
)

$
(20.1
)

$
(24.6
)

$
(21.3
)Diluted loss per share from discontinued operations

$
(0.07
)

$
(0.38
)

$
(0.43
)

$
(0.40
)   Impairment 
    Opelousas
      Property and equipment

$
6.1Goodwill


8.7Intangible assets


0.815.6Income tax benefit


(4.3
)$
11.3   Impairment 
    Starke
   28




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##### Table of Contents



Property and equipment

$
4.4Goodwill


2.9Intangible assets


0.37.6Income tax benefit


(2.1
)$
5.5   Impairment 
    Colorado River
        Three Months


Nine MonthsEnded


EndedSeptember 30,


September 30,2007


2008


2007


2008Property and equipment

$
0.4


$



$
(4.1
)

$
Net working capital










(4.9
)


3.6Goodwill










(3.1
)


0.4







(12.1
)


3.6Income tax (provision) benefit


(0.1
)






3.8



(1.3
)$
0.3


$



$
(8.3
)

$
2.3   Impairment 
    Coastal
   29




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##### Table of Contents



Goodwill

$
7.2Intangible assets


0.47.6Income 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.  Form 10-K
  
    Allowance for doubtful accounts and provision for doubtful
    accounts;
    Revenue recognition/Allowance for contractual discounts;
    Accounting for stock-based compensation; 30




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##### Table of Contents




    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.
 31




---



##### Table of Contents



Operating
    Results Summary
    Three Months Ended September 30,


Nine Months Ended September 30,2007


2008


2007


2008% of





% of





% of





% ofAmount


Revenues


Amount


Revenues


Amount


Revenues


Amount


RevenuesRevenues

$
641.0



100.0
%

$
675.1



100.0
%

$
1,925.0



100.0
%

$
2,025.9



100.0
%Salaries and benefits


252.8



39.5



265.6



39.3



752.5



39.1



797.5



39.4Supplies


86.4



13.5



93.0



13.8



263.4



13.7



279.3



13.8Other operating expenses


116.3



18.1



128.3



19.0



346.1



18.0



372.2



18.3Provision for doubtful accounts


76.9



12.0



78.9



11.7



227.9



11.8



234.7



11.6Depreciation and amortization


31.6



4.9



32.2



4.8



97.2



5.0



97.8



4.8Interest expense, net


21.5



3.4



22.1



3.3



72.7



3.8



66.2



3.3Impairment of long-lived assets










0.9



0.1











1.2



0.1585.5



91.4



621.0



92.0



1,759.8



91.4



1,848.9



91.3Income from continuing operations before minority interests and
    income taxes


55.5



8.6



54.1



8.0



165.2



8.6



177.0



8.7Minority interests in earnings of consolidated entities


0.7







0.5



0.1



1.5



0.1



1.6



Income from continuing operations before income taxes


54.8



8.6



53.6



7.9



163.7



8.5



175.4



8.7Provision for income taxes


22.7



3.6



22.1



3.2



67.7



3.5



70.4



3.5Income from continuing operations

$
32.1



5.0
%

$
31.5



4.7
%

$
96.0



5.0
%

$
105.0



5.2
%   For
    the Three Months Ended September 30, 2007 and
    2008
  Revenues
   32




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##### Table of Contents



Three Months Ended





%September 30,


Increase


Increase2007


2008


(Decrease)


(Decrease)Admissions


47,118



45,980



(1,138
)


(2.4
)%Equivalent admissions


94,874



93,885



(989
)


(1.0
)Revenues per equivalent admission

$
6,756


$
7,191


$
435



6.4Medicare case mix index


1.24



1.26



0.02



1.6Average length of stay (days)


4.2



4.2







Inpatient surgeries


13,953



13,997



44



0.3Outpatient surgeries


35,760



36,926



1,166



3.3Emergency room visits


221,327



219,852



(1,475
)


(0.7
)Outpatient factor


2.01



2.04



0.03



1.5     Three MonthsEndedSeptember 30,2007


2008Medicare


31.5
%


30.2
%Medicaid


9.7



9.7HMOs, PPOs and other private insurers


43.4



44.9Self-Pay


12.1



12.6Other


3.3



2.6100.0
%


100.0
%   Form 10-Q
 33




---



##### Table of Contents



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





% of


Increase


% Increase2007


Revenues


2008


Revenues


(Decrease)


(Decrease)Salaries and benefits:Salaries and wages

$
195.8



30.6
%

$
209.5



31.0
%

$
13.7



7.0
%Stock-based compensation


5.3



0.8



5.5



0.8



0.2



3.0Employee benefits


36.5



5.7



39.5



5.9



3.0



8.5Contract labor


11.5



1.8



8.9



1.3



(2.6
)


(23.2
)ESOP expense


3.7



0.6



2.2



0.3



(1.5
)


(43.5
)$
252.8



39.5
%

$
265.6



39.3
%

$
12.8



5.0
%Man-hours
    per equivalent admission


89.3



N/A



90.0



N/A



0.7



0.8
%Salaries and benefits per equivalent admission

$
2,534



N/A


$
2,649



N/A


$
115



4.5
%       Supplies
    Three MonthsEndedSeptember 30,


Increase


% Increase2007


2008


(Decrease)


(Decrease)Supplies

$
86.4


$
93.0


$
6.6



7.6
%Supplies as a percentage of revenues


13.5
%


13.8
%


30bps



N/MSupplies per equivalent admission

$
910


$
990


$
80



8.8
%  34




---



##### Table of Contents



Other
    Operating Expenses
    Three Months Ended September 30,% of





% of


Increase


% Increase2007


Revenues


2008


Revenues


(Decrease)


(Decrease)Professional fees

$
16.8



2.6
%

$
16.6



2.5
%

$
(0.2
)


(1.5
)%Utilities


12.6



2.0



14.2



2.1



1.6



12.7Repairs and maintenance


13.5



2.1



14.6



2.2



1.1



7.8Rents and leases


6.7



1.0



6.7



1.0







Insurance


8.7



1.3



10.4



1.5



1.7



21.4Physician recruiting


2.8



0.4



6.1



0.9



3.3



118.0Contract services


31.0



4.8



33.9



5.0



2.9



9.3Non-income taxes


9.4



1.5



10.4



1.5



1.0



11.2Other


14.8



2.4



15.4



2.3



0.6



4.8$
116.3



18.1
%

$
128.3



19.0
%

$
12.0



10.5
%          35




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##### Table of Contents



Provision
    for Doubtful Accounts
    Three MonthsEndedSeptember 30,


Increase


% Increase2007


2008


(Decrease)


(Decrease)Provision for doubtful accounts

$
76.9


$
78.9


$
2.0



2.6
%Percentage of revenues


12.0
%


11.7
%


(30
)bps


N/MCharity care write-offs

$
11.6


$
13.4


$
1.8



16.9Percentage of revenues


0.8
%


0.8
%






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


Increase2007


2008


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

$
13.3


$
8.5


$
(4.8
)Province
    71/2% Senior
    Subordinated Notes


0.1



0.1



31/4% Debentures


1.8



1.8



31/2% Notes


5.0



5.0



Interest rate swap (including ineffective portion)


0.4



5.6



5.2Other


0.2







(0.2
)20.8



21.0



0.2Amortization of deferred loan costs


1.8



1.9



0.1Less:Discontinued operations interest expense allocation


(0.3
)


(0.2
)


0.1Interest income


(0.6
)


(0.3
)


0.3Capitalized interest


(0.2
)


(0.3
)


(0.1
)$
21.5


$
22.1


$
0.6  36




---



##### Table of Contents



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


Increase2007


2008


(Decrease)Provision for income taxes

$
22.7


$
22.1


$
(0.6
)Effective income tax rate


41.3
%


41.2
%


(10
)bps     For
    the Nine Months Ended September 30, 2007 and
    2008
  Revenues
   37




---



##### Table of Contents



Nine Months Ended





%September 30,


Increase


Increase2007


2008


(Decrease)


(Decrease)Admissions


145,022



143,039



(1,983
)


(1.4
)%Equivalent admissions


285,983



284,218



(1,765
)


(0.6
)Revenues per equivalent admission

$
6,731


$
7,128


$
397



5.9Medicare case mix index


1.24



1.27



0.03



2.4Average length of stay (days)


4.2



4.3



0.1



2.4Inpatient surgeries


42,750



41,463



(1,287
)


(3.0
)Outpatient surgeries


108,913



108,982



69



0.1Emergency room visits


653,832



663,703



9,871



1.5Outpatient factor


1.97



1.99



0.02



1.0     Nine Months EndedSeptember 30,2007


2008Medicare


32.7
%


31.4
%Medicaid


9.7



9.6HMOs, PPOs and other private insurers


42.5



44.2Self-Pay


11.8



12.0Other


3.3



2.8100.0
%


100.0
%   Form 10-Q
 38




---



##### Table of Contents



Expenses
  Salaries
    and Benefits
    Nine Months Ended September 30,% of





% of


Increase


% Increase2007


Revenues


2008


Revenues


(Decrease)


(Decrease)Salaries and benefits:Salaries and wages

$
579.5



30.1
%

$
622.3



30.7
%

$
42.8



7.4
%Stock-based compensation


12.4



0.7



17.6



0.9



5.2



42.0Employee benefits


113.9



5.9



121.5



6.0



7.6



6.8Contract labor


35.3



1.8



30.0



1.5



(5.3
)


(15.1
)ESOP expense


11.4



0.6



6.1



0.3



(5.3
)


(47.5
)$
752.5



39.1
%

$
797.5



39.4
%

$
45.0



6.0
%Man-hours
    per equivalent admission


88.8



N/A



89.9



N/A



1.1



1.2
%Salaries and benefits per equivalent admission

$
2,502



N/A


$
2,633



N/A


$
131



5.2
%        39




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##### Table of Contents



Supplies
    Nine MonthsEndedSeptember 30,


Increase


% Increase2007


2008


(Decrease)


(Decrease)Supplies

$
263.4


$
279.3


$
15.9



6.0
%Supplies as a percentage of revenues


13.7
%


13.8
%


10
bps


N/MSupplies per equivalent admission

$
922


$
982


$
60



6.5
%     Other
    Operating Expenses
    Nine Months Ended September 30,% of





% of


Increase


% Increase2007


Revenues


2008


Revenues


(Decrease)


(Decrease)Professional fees

$
44.0



2.3
%

$
47.8



2.3
%

$
3.8



8.5
%Utilities


35.3



1.8



38.6



1.9



3.3



9.2Repairs and maintenance


39.6



2.1



42.1



2.1



2.5



6.4Rents and leases


19.4



1.0



19.5



1.0



0.1



0.7Insurance


25.8



1.3



31.6



1.6



5.8



22.8Physician recruiting


9.7



0.5



16.2



0.8



6.5



67.1Contract services


100.3



5.1



101.4



4.9



1.1



1.1Non-income taxes


28.2



1.5



29.1



1.4



0.9



3.4Other


43.8



2.4



45.9



2.3



2.1



4.8$
346.1



18.0
%

$
372.2



18.3
%

$
26.1



7.6
%      40




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##### Table of Contents



Provision
    for Doubtful Accounts
    Nine MonthsEndedSeptember 30,


Increase


% Increase2007


2008


(Decrease)


(Decrease)Provision for doubtful accounts

$
227.9


$
234.7


$
6.8



3.0
%Percentage of revenues


11.8
%


11.6
%


(20
)bps


N/MCharity care write-offs

$
39.5


$
40.0


$
0.5



1.4
%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
   41




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##### Table of Contents



Interest
    Expense
    Nine MonthsEndedSeptember 30,


Increase2007


2008


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

$
59.9


$
28.4


$
(31.5
)Province
    71/2% Senior
    Subordinated Notes


0.3



0.3



31/4% Debentures


5.5



5.5



31/2% Notes


6.8



15.1



8.3Interest rate swap (including ineffective portion)


1.7



13.4



11.7Other


0.6



0.2



(0.4
)74.8



62.9



(11.9
)Amortization of deferred loan costs


4.9



5.6



0.7Less:Discontinued operations interest expense allocation


(3.5
)


(0.9
)


2.6Interest income


(1.9
)


(0.8
)


1.1Capitalized interest


(1.6
)


(0.6
)


1.0$
72.7


$
66.2


$
(6.5
)   1 2 1 2
    Provision
    for Income Taxes
    Nine MonthsEndedSeptember 30,


Increase2007


2008


(Decrease)Provision for income taxes

$
67.7


$
70.4


$
2.7Effective income tax rate


41.3
%


40.1
%


(120
)bps  42




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##### Table of Contents



Liquidity
    and Capital Resources
  Liquidity
      Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2008


2007


2008Net cash flows provided by continuing operating activities

$
23.6


$
82.1


$
159.4


$
260.3Less: Purchase of property and equipment


(37.7
)


(37.5
)


(106.7
)


(111.5
)Free operating cash (deficit) flow


(14.1
)


44.6



52.7



148.8Acquisitions, net of cash acquired






(1.3
)






(10.6
)Proceeds from (payments for) disposal of hospitals


33.8







103.1



(5.0
)Payment of debt issue costs


(0.9
)






(14.2
)


Proceeds from borrowings










615.0



10.4Payments of borrowings


(8.4
)


(10.0
)


(765.9
)


(10.0
)Proceeds from exercise of stock options


0.4



3.3



12.5



3.4Proceeds received for completion of new hospital


14.7







14.7



Repurchases of common stock






(0.1
)






(118.2
)Other


0.5



(3.5
)


2.2



(9.2
)Cash flows from operations provided by (used in) discontinued
    operations


9.1



(6.1
)


16.2



(11.2
)Net increase (decrease) in cash and cash equivalents

$
35.1


$
26.9


$
36.3


$
(1.6
)  43




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##### Table of Contents



Working
    Capital
    December 31,


September 30,2007


2008Total current assets

$
636.1


$
646.2Total current liabilities


261.7



261.3Net working capital

$
374.4


$
384.9Current ratio


2.4



2.5   Capital
    Expenditures
      Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2008


2007


2008Capital projects

$
27.5


$
30.1


$
75.6


$
78.6Routine


8.9



6.9



26.9



31.3Information systems


1.3



0.5



4.2



1.6$
37.7


$
37.5


$
106.7


$
111.5Depreciation expense

$
31.1


$
31.9


$
95.3


$
96.9Ratio of capital expenditures to depreciation expense


121.2
%


117.6
%


112.0
%


115.1
%  44




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##### Table of Contents



Debt
    December 31,


Proceeds from


Payments of





September 30,2007


Borrowings


Borrowings


Other(1)


2008Senior Secured Credit Facilities:Term B Loans

$
706.0


$
0.4


$



$



$
706.4Revolving Loans






10.0



(10.0
)






Province
    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


5.0







(5.0
)


0.8



0.8$
1,517.2


$
10.4


$
(15.0
)

$
0.8


$
1,513.4     (1)
    
    Represents the assumption of capital lease obligations in
    connection with certain acquisitions completed during the nine
    months ended September 30, 2008.    October 1, 2008 through December 31, 2008

$
0.12009


0.12010


0.12011


529.92012


176.82013


6.4Thereafter(2)


800.0$
1,513.4     (2)
    
    Includes our $225.0 million
    31/4% Convertible

    Senior Subordinated Debentures due August 15, 2025. On or
    after February 20, 2013, we may redeem for cash some or all
    of the
    31/4% Debentures

    at any time at a price equal to 100% of the principal amount of
    the
    31/4% Debentures

    to be purchased, plus any accrued and unpaid interest. Holders
    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 or upon the occurrence of a fundamental
    change, at 100% of the principal amount of the
    31/4% Debentures

    to be purchased, plus any accrued and unpaid interest. 45




---



##### Table of Contents



December 31,


September 30,


Increase2007


2008


(Decrease)Current portion of long-term debt

$
0.5


$
0.5


$
Long-term debt


1,516.7



1,512.9



(3.8
)Total debt


1,517.2



1,513.4



(3.8
)Total stockholders equity


1,544.2



1,551.1



6.9Total capitalization

$
3,061.4


$
3,064.5


$
3.1Total debt to total capitalization


49.6
%


49.4
%


(20bps
)Percentage of:Fixed rate debt


53.5
%


53.3
%Variable rate debt(1)


46.5



46.7100.0
%


100.0
%Percentage of:Senior debt


46.9
%


46.7
%Subordinated debt


53.1



53.3100.0
%


100.0
%     (1)
    
    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 46.7% to zero as of
    September 30, 2008. Please refer to the Capital
    Resources  Interest Rate Swap section below for
    a discussion of our interest rate swap agreement.  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
 46




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##### Table of Contents



Borrowings
    and Payments
      Letters
    of Credit and Availability
    Interest
    Rates
  and/or
  90-day 90-day
  Covenants
   47




---



##### Table of Contents



Level atSeptember 30,Requirement

2008Minimum Interest Coverage Ratio

> 3.50:1.00


5.83Maximum Total Leverage Ratio

< 4.25:1.00


3.17       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
  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  48




---



##### Table of Contents



FAS 157-2.
          Debt
    Ratings
    
    Moodys Investors Service, Inc. (Moodys);
    Standard & Poors Rating Services,
    (S&P); and
    Fitch Ratings.   49




---



##### Table of Contents



MoodysSeniorSenior

Implied



S&P

Fitch RatingsUnsecured

Issuer



Issuer



IssuerDate

Issuer Rating

Rating

Outlook

Rating

Outlook

Rating

OutlookJanuary 2007

B2

Ba3

Stable

BB(− )

Stable

BB(− )

StableMay 2007

B2

Ba2

Stable

BB(− )

Stable

BB(− )

StableSeptember 2008

B1

Ba1

Stable

BB(− )

Stable

BB(− )

Stable   Liquidity
    and Capital Resources Outlook
           50




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##### Table of Contents



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

Total


December 31, 2008


2009-2010


2011-2012


After 2012HCA-IT services

$
251.7


$
5.9


$
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.  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; 51




---



##### Table of Contents




    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;
    future acquisitions and dispositions;
    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 and/or Form 10-K
   52




---



##### Table of Contents




    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. 53




---



##### Table of Contents



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
    54




---



##### Table of Contents



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)July 1, 2008 to July 31, 2008(2)


1,727


$
28.76






$
5.1August 1, 2008 to August 31, 2008





$







$
5.1September 1, 2008 to September 30, 2008(2)


556


$
33.28






$
5.1Total


2,283


$
29.56






$
5.1     (1)
    
    In November 2007, our Board of Directors authorized the
    repurchase of up to $150.0 million of outstanding shares of
    our common stock either in the open market or through privately
    negotiated transactions, subject to market conditions,
    regulatory constraints and other factors. We are 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 September 30, 2008, we had
    repurchased in the aggregate, approximately 5.3 million
    shares at an aggregate purchase price, including commissions, of
    approximately $144.9 million. We have designated these
    shares as treasury stock.(2)
    
    These relate to shares redeemed for tax withholding purposes
    upon vesting of certain previously granted stock awards under
    the LTIP and MSPP plans. 55




---



##### Table of Contents



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

Retirement Agreement and General Release dated August 21,
    2008 by and between LifePoint CSGP, LLC and William M. Gracey.10
.2

Form of Indemnification Agreement (incorporated by reference
    from exhibits to the LifePoint Hospitals, Inc. Current Report on
    Form 8-K
    dated August 29, 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.  56




---



##### Table of Contents



SIGNATURES
      By:
    /s/  David
    M. Dill        57




---



##### Table of Contents



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

Retirement Agreement and General Release dated August 21,
    2008 by and between LifePoint CSGP, LLC and William M. Gracey.10
.2

Form of Indemnification Agreement (incorporated by reference
    from exhibits to the LifePoint Hospitals, Inc. Current Report on
    Form 8-K
    dated August 29, 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.